Mr. Speaker, I know that with the wonderful words of wisdom I was expressing to the House prior to question period, the Speaker will recall that I was speaking about the fact that the Liberals and Tories all seem to enjoy the process of interfering in normal natural processes within a marketplace. The proposed bill is a classic example of exactly that.
The Liberals have an opportunity under the Canada Deposit Insurance Corporation Act to make some substantive changes that would continue to protect Canadians while giving Canadians a responsibility for their own lives, their own affairs.
It makes me think a lot of an occasion when I was in my constituency in the town of Invermere a few weeks ago. There was a gentleman who was the park warden from Glacier National Park in the United States, which I am sure members will recall is considered to be part of the Peace Park. It is right across the border from Waterton Lakes National Park. They have a wide swath cut from mountaintop down through the valley up to the other side of the mountain approximately 60 feet wide to designate the border.
The superintendent was saying it does not really make any sense for us to have this wide swath out in the middle of the wilderness. Here we are talking about this being a peace park, about how there is this desire on the part of Canadians and Americans to come together in the Peace Park, so why do we have this 60-foot wide swath? He was going to be proposing to the powers that be that this wide swath be permitted to simply regrow. What it would mean is that no longer would there be vegetation-destroying chemicals put into the area. It would save money. Above all, it would make sense.
At that point I put up my hand at the back of the room and he acknowledged me. I told him he had a serious problem: you are proposing to the governments of the United States and Canada something that makes sense and saves money; you do not have a chance of this passing. Unfortunately, in spite of the fact that I said that with tongue in cheek, it is exactly this kind of problem we have with the old line parties, with this government. If it saves money and makes sense we can count on the fact that the Liberals are going to reject it.
What am I referring to specifically? We propose a different way of handling the Canada Deposit Insurance Corporation. We call it, as it is called in the industry, co-insurance. This bill rejects deposit co-insurance.
Since the introduction in 1967 of 100 per cent deposit insurance, that is up to the maximum value, 30 financial institutions have failed, with 20 failures in the last 10 years. This has cost the CDIC about $5 billion as of March 1994.
Before 1967 there were no bank failures. Governments over the years have exhibited a reluctance to institute market based measures of reform such as co-insurance instead of opting for more regulation and oversight.
The use of the market through the implementation of co-insurance and market based criteria as early warning signals would alleviate the problem in the financial system in a less costly yet more effective manner than proposing further regulatory change. Regulatory attempts to mimic the efficient results only achievable by the free market will always be more costly for all parties involved and will rarely, if ever, achieve the same quality of results.
Under the proposed system, depositors are only encouraged to seek out the best rate, regardless of the risk profile of the institution in question, since they know that they will be fully compensated by the CDIC in the event of a failure. This facilitates the entrance, growth and eventual failure of risky and recklessly managed institutions. It also discriminates against healthy, strong, financial sector players who minimize risk by conservative lending and borrowing policies. The act does set the stage for risk based CDIC premiums.
It makes me think a lot, in terms of the government interference the Liberals and Conservatives have always practised, of a Canada Cup hockey game between Team Canada complete with Wayne Gretzky and all the rest of the superstars against Team Jamaica. The government would not set the rules for the game. It would set the rules for the result. It would probably make the Canadian goal the goal line, that is from side to side on the ice, and make the Jamaican goal the size of a shoebox. That way we could know what the results of the game were going to be. That is the attitude that has consistently, without fail, been the approach of both the Liberals and the Conservatives in the way they have governed Canada.
We have to realize that money is a medium of exchange. Money has no morality nor does it have nationality. We must restore balance in the marketplace, which is what this bill is about.
I am referring to making the depositor take some responsibility because what is going on right now is that the solid financial institutions are being basically penalized. The people investing in those solid financial institutions are being penalized by people who know they can invest up to the limit covered by CDIC and bear no risk as long as those deposits are guaranteed by CDIC.
The 100 per cent coverage creates a situation parallel to the situation I described with regard to regional development grants, in that it shifts the responsibility away from the depositor and on to the backs of (a) the larger, more responsible financial institutions that have a long track record and (b) ultimately the taxpayer.
Let us get government interference in the marketplace under control. Maybe that is too much to expect from the Liberals. We can only hope. But above all, I ask the members of the government side to consider this. Canada has to be prepared to compete in the real world. This issue of the Canada Deposit Insurance Corporation is just one small indicator of the kind of government interference that is distorting an orderly marketplace. It is reflective of the real world and of that marketplace. As long as we continue to shift responsibility ultimately from the people in that marketplace, we are not doing anything to create any health, vibrancy or cleansing within the marketplace.
It is for that reason, the fact that the government refuses to consider the prospect of co-insurance, that we will be voting against this bill.
