Mr. Speaker, before I begin my remarks, I would like to note that I will be splitting my time with my colleague and friend, the chief government whip.
Since taking office in 2006, our Conservative government has been focused on what matters most to Canadians, and that is jobs, growth, and long-term prosperity.
We are on track to achieve balance by 2015, because we have been prudent. We cannot afford to risk the future of our country by engaging in reckless spending schemes and wild tax hikes. We will not lose focus.
Coming into government in 2006, the first thing our government did was fulfill some of our major campaign commitments. We cut the GST, created the universal child care benefit for families with children, and paid down the debt. In fact, we paid down about $38 billion worth of federal debt, which put us in good stead when bad economic times hit in the last quarter of 2008. This latter decision proved to be one of the best decisions our government made, as we would find out later.
Our government also created our economic roadmap, advantage Canada. It was an economic plan designed to position Canada for future prosperity. The basic principles of advantage Canada remain as relevant today as when our government created it back in 2006: no reckless spending, and lower taxes.
When Bear Stearns and Lehman Brothers collapsed in 2008, subprime mortgages in the United States caused a ripple effect through global economies and credit markets. Well, extraordinary times required extraordinary measures, and our government stepped up. When the dust began to settle, Canada was not only the last G7 country into the recession but the first G7 country out of the recession. Why? It was because our economic action plan worked. By paying down debt at the outset, we had more flexibility to take the necessary measures we did.
As a result of our economic performance, Canada has developed a great brand around the world. In fact, Tom Donohue, president of the United States Chamber of Commerce, has said about our government's achievements: “The great Canadian miracle is something we should follow”.
Notwithstanding the creation of 1.2 million net new jobs since the end of the recession, Bloomberg stating that Canada is the best place in the world to set up business, and our consistent AAA credit rating, we are not out of the woods yet. The Canadian economy still faces potential challenges from abroad. We must continue to take action where and when necessary. We must solidify our gains and take action now to mitigate against any potential dark economic clouds that may drift in from elsewhere.
Although the World Bank has ranked Canada's banking and financial sector as the world's best for six years in a row, our government has continuously been on the forefront to strengthen and bolster our financial sector so that it will remain number one.
As I noted, since the start of the global economic financial crisis, our government has implemented a number of measures to maintain Canada's financial sector's advantage and to reinforce stability for the sector. I want to highlight two of them contained within Bill C-43 that will continue to build on our strong foundation of stability within our financial system.
First are proposed changes to the Payment Clearing and Settlement Act. Second are proposed changes to the Canadian Payments Act. Both are key to maintaining Canada in the forefront of financial sector stability, otherwise known as the Canada brand.
The Payment Clearing and Settlement Act provides the Bank of Canada with the legislative authority and power to oversee clearing and settlement systems, also called financial market infrastructures, or FMIs, that may be operated in such a manner as to pose systematic risk to the Canadian financial system. Systematic risk arises when the inability of one participant to meet its obligations to the financial market infrastructure could cause other participants to be unable to meet their obligations.
The Payment Clearing and Settlement Act is the federal government's recognition of the essential role of major FMIs in the Canadian economy and the importance of regulatory oversight of these FMIs. The Payment Clearing and Settlement Act provides the Bank of Canada with two main oversight responsibilities: first, designating FMIs that have the potential to pose systematic risk as subject to bank oversight; and second, overseeing designated FMIs to ensure that they are adequately controlling systematic risk.
The amendments to the Payment Clearing and Settlement Act would expand and enhance the Bank of Canada's oversight of financial market infrastructures to ensure that risks to financial market infrastructures can be identified and addressed in a proactive and timely manner. These amendments would address the gaps in oversight identified in our government's review of the system undertaken in 2012. Addressing these gaps and the oversight of major clearing systems are critical to the efficient functioning of the Canadian financial system and the economy.
What are the gaps these changes seek to address? Under the current regime, the Bank of Canada's oversight is limited to clearing and settlement systems that pose systemic risk. It does not extend to non-systemically important systems for which a failure can have a serious impact on the economy and on general confidence in the payment system.
In addition, some of the regulatory tools currently available to the Bank of Canada are insufficient for addressing certain types of risk in clearing and settlement systems. These proposed amendments would broaden the scope of oversight to prominent payment systems and would enhance some of the tools available to the Bank of Canada to respond to these risks. The proposed changes would also expand the definition of “systemic risk” to capture disruptive effects, not just on financial institutions but on financial markets and their participants. The changes would also better align the definition with international standards.
How would the changes impact the industry? In fulfilling its oversight role, the Bank of Canada uses a co-operative approach to ensure that owners and operators of clearing settlement systems are adequately controlling risk. The changes would ensure that the Bank of Canada would be able to backstop this co-operative approach should it need to respond to risks in clearing and settlement systems. These changes would allow the Bank of Canada to respond to potential risks in a more timely and proactive manner.
The second set of amendments would be to the Canadian Payments Act.
The Canadian Payments Association owns and operates national payments and clearing systems. These systems are used by financial institutions to transfer money among themselves. Types of payments cleared and settled through the CPA system include payroll, debit transactions, and wire payments.
Everyone is in agreement that the CPA is a capable owner and operator of these systems. These amendments would improve the CPA's governance by, first, introducing greater independent decision-making to its board of directors by establishing a majority independent board, led by an independent chair; second, improving the CPA's accountability to government and the public by requiring the CPA to submit a corporate plan and to publish an annual report; and third, expanding the power of the Minister of Finance to issue directives to the CPA. These measures would ensure that the CPA system was operated for the benefit of Canadian consumers, businesses, and the economy. They would also support competition and innovation in the payments industry.
Canadians make roughly 25 billion payments, worth more than $44 trillion, each year. The payments system is vital to consumers and to the continued strength of the Canadian economy. Advances in information and communications technology are changing the way Canadians pay for goods and services.
While payments systems are evolving, they must always be safe and sound so that Canadians can have confidence in them. That is why we are seeking these changes. I look forward to the support of all members of this House for these amendments and for Bill C-43.