Madam Speaker, it is my pleasure to speak to the NDP motion today moved by the member for Sudbury. I have tremendous respect for him but he could have done a little better job in terms of researching the issue that he has brought in front of the House, particularly the way the motion is worded.
Part of the motion is factually incorrect. The credit card accountability responsibility and disclosure act of 2009 was not introduced by the Obama administration. It was introduced by Senator Christopher Dodd of Connecticut who is not a member of President Obama's administration. This is not that difficult to verify. The information is public and the member could have found out.
For us to have credibility when we talk about issues, we need to do proper research to ensure the information provided to the House is accurate. All we are asking for on this side is accuracy.
Instead of proposing something tailored for Canada, I find it ironic that the NDP is supporting a motion today that is a copy of a U.S. plan. There is not a day, not even an hour when NDP members are not up speaking and comparing us to America and saying that we cannot be doing things like the Americans are doing.
All of a sudden, however, they are giving credit to somebody else south of the border and applying it to the credit card system for consumers here in Canada that is not accurate and does not even reflect the Canadian experience. I am not sure why the NDP has proposed this today basing it on the American system, a system that it likes to criticize over and over again in the House.
In addition to that, the Senate committee on banking is conducting a review of the credit card situation here in Canada. I can say, from being on both the finance and industry committees, that both committees have plans in the very near future to review the credit and debit card system in this country. Why would there be a motion prior to getting information from all sides of the issue at the Senate committee and at the industry and finance committees?
Motions have passed in the committees and we on this side of the House have supported them. I am on both committees so I know that for a fact. A motion that passed at the finance committee was originally proposed by the Bloc member on that committee. We added to it and it became our motion. Our parliamentary secretary added some wording and broadened the study in order to allow us to look at more issues dealing with credit and debit card issues in Canada.
I do not want anybody to forget that in our economic action plan, which was supported by the House, there is an indication that the finance minister will be looking at that issue. The finance minister told everyone in the House earlier this week to stay tuned because it was being worked on and it was part of the plan that was coming. Why would the NDP introduce this Americanized motion today without having all of that good information from all sides of the argument to see where we are going?
What we want to do is look at what is good for Canada and Canadians and not necessarily look at what is good for Americans, which is what this motion tends to do based on the way it has been presented: that we should look at what the American motion does for the American system, which is different.
Even more strange for me is that the NDP motion comes just weeks after its members voted against budget 2009 when we announced our intention to bring tough but fair new regulation on disclosure requirements for credit cards and to limit business practices that are not beneficial to consumers. What is more, we introduced the necessary legislation to allow us to proceed with these new regulations. and, as we know, the NDP voted against that.
The NDP has clearly shown itself, in my view, to be incapable of standing up for consumers in this case. The NDP members cannot claim one thing on one hand, and then in their actions do something different. I think that is a sad commentary on where we are today and why this motion does not make any sense to me and to my colleagues on the Conservative side.
On the other hand, as I mentioned, our Conservative government is taking significant and decisive steps to help Canadian consumers who use credit cards, steps which my fellow Conservative, the parliamentary secretary, outlined for members earlier today. I would like to address another aspect of the strategy to help Canadian consumers who use credit cards or other financial services or products improve their financial literacy.
Witnesses appeared at the industry committee and the finance committee to talk about financial literacy. Through no fault of their own in my view, it has not been a priority for Canadians to understand how the system works. There are organizations that will help. In my riding in the fall, because we only have one more break week to be back in the riding, I have committed to organizing a public meeting strictly on financial literacy. Experts in the field of financial literacy will talk to the people of Burlington to educate them, to give them the tools they need to make proper financial decisions.
We are living in an increasingly complex world of financial services and products, many of which have become much more difficult for the average consumer to comprehend. Based on my experience, there are a number of financial products that have been put together over the years which many of those who sell those financial products have a hard time understanding. The range of financial products on the market or available through our local banks has been rapidly expanding, not only in availability but in complexity. This makes it difficult for the average investor to fully understand the risks or the fees that are involved. In this environment, and in light of the economic volatility we face today, strong financial literacy is not a luxury; it is an actual necessity.
In the words of Toronto District School Board trustee, Josh Matlow, who is spearheading an effort to get financial literacy added to the elementary school curriculum:
The reason that we're in this economic crisis right now is that many North Americans and people around the world didn't have the economic literacy that they needed to understand how to use credit cards properly and how to read the details of mortgage contracts.
That is the issue I propose to focus on today. First, I would like to consider what financial literacy actually means.
Financial literacy involves the ability to plan for one's financial future. Understanding the basics is crucial. Financial literacy is essential for people from all walks of life, including: the teenager who is setting up his or her first bank account and is trying to determine the best way to reach his or her goals; the family trying to make ends meet while saving for the family's first home; the investor trying to understand the risks and returns for his or her investments, or the benefits of compound interest; and the senior who is entering the world of Internet banking and ATMs.
May I add, as we were discussing pension plans and how they work at finance committee, it is obvious that people need more education on their pension plans. A lot of people do not even look at them until after the age 50. They do not understand what their defined benefit plan is offering them or, if they do not have one, what they have to do to save.
Those are the kinds of issues we need to get to, to ensure that Canadians are well versed on what is appropriate for their lifestyle and their future. Whether it is a sophisticated investment or a simple savings account, today's financial world cries out for improved financial literacy.
Indeed, a recent survey of the Canadian Foundation for Economic Education, which has appeared before us, suggested that Canadians “feel ill-equipped to make many of the economic and financial decisions that they face in today's volatile economic climate”. The survey also showed “troubling knowledge gaps among Canadians in basic areas of economic knowledge such as credit card interest rates and filling out tax returns”.
In the words of the foundation's president, Gary Rabbior, “When you have four in 10 Canadians who cannot calculate 8% on $1,000, and over 60% who do not know if their mutual funds held at financial institutions are insured, you are talking about a crisis of economic illiteracy”. Clearly, financial literacy is an essential skill that should be developed early in life. After all, a country's financial success is ultimately the sum of the financial successes of all of its households.
As Laurie Campbell, executive director of Credit Counselling Canada, has noted, “Two of the most fundamental things we need to learn as young people growing up are how to raise children and how to manage money. They are the most fundamental things in life”. They are fundamental as young Canadians now have more exposure to financial dealings than ever before. They have bank accounts, debit cards, credit cards, cell phone contracts, and online banking contracts. As they enter college or university, many will have loans and perhaps the beginning of an investment portfolio.
The world of finance is continually evolving and without strong financial literacy, it will be difficult for people to keep up. Without the ability to understand the financial products and services they use, consumers could wind up making unwise investment decisions or borrow well beyond their means and end up in a sea of debt.
By focusing on financial literacy, we can provide people with the knowledge to help keep their heads above water. When it comes to buying a house, for example, being financially literate means one may not have all the answers but at the very least would know the questions to ask, such as: what kind of mortgage can I get, what are my repayment options, what are the fees and taxes, how can I lower my payments, and can I really afford this?
Asking the right questions means understanding the true cost of borrowing. It means that knowing that the initial years of mortgage payments go toward servicing the debt, not paying down the principal.
Weak financial literacy could end up leaving people at a competitive disadvantage, unknowingly paying higher costs for basic banking transactions and short-term credit. They may face increased exposure to unregulated financial options and make themselves vulnerable to uninsured risks.
On the other hand, a greater understanding of financial information and increased financial literacy can result in better consumer choices, a larger and better market for their financial sector services and greater participation in capital markets. All that could translate into higher savings levels and decreasing indebtedness, making our economy even stronger. In study after study, the evidence is clear that the more we know financially, the more likely we are to save over the long term.
We have identified the issue: improving financial literacy. What about the solutions? We know the NDP does not have any, except maybe to call Senator Dodd in Connecticut to see what he is going to do with his bill. Luckily for Canadians, they have had the good sense in election after election never to have elected an NDP government federally.
Our Conservative government, on the other hand, has actually come up with some made in Canada solutions, after consulting with Canadians, to encourage and foster improved financial literacy. I would like to share with the House what our government has done through the Financial Consumer Agency of Canada, the FCAC.
This agency, in addition to its mandate to look at financial institutions' compliance with the consumer protection legislation and regulatory requirements, also undertakes consumer education initiatives. In doing so, it develops plain language, unbiased and educational materials on a wide range of financial products and services, which are going to be sent to the NDP offices as soon as I am done speaking. For instance, the FCAC has also developed a mortgage calculator that quickly determines mortgage payments and the potential savings resulting from prepayments, and online tools that help consumers shop for credit card and banking packages suited to them.
Since 2006, our Conservative government has provided new support for FCAC to build on its mandate. For instance, in budget 2007 we provided significant new funding for FCAC to undertake financial literacy initiatives, focusing primarily on youth, and to support the sharing of information with other financial education providers across Canada. I remind the House that this was new funding that was not supported by the NDP. Why did the NDP oppose helping financial literacy with this new funding? The funding was used to develop a free web-based interactive tool, The City, designed to help young people acquire strong financial skills and explore financial situations in a risk-free setting.
We also helped jointly fund the organization of the Canadian Conference on Financial Literacy, which took place in Montreal in September 2008. This event brought together more than 260 representatives from the government and the private and voluntary sectors to discuss Canadian and international experiences in developing, delivering, measuring and evaluating financial literacy programs, products and services.
We heard here the Canadian perspectives on this issue about improving financial literacy in Canada, not solely what the American senator from Connecticut wants to do in his country. However, we were not done there. We did more. In budget 2008, our Conservative government once again took steps to improve financial literacy. We provided the FCAC with $2 million in new ongoing funding to continue its work in that area and expand its research. Once again, I want to remind the House that the NDP voted against that.
This new funding has helped work toward the goal of significantly improving financial literacy among Canadians. For example, another free web-based interactive tool, The Money Belt, has helped provide financial information and tools to increase the basic financial knowledge of Canadians. This initiative provides an entry point to access various resources that teach the fundamentals of managing money. The Money Belt includes interactive tools on topics such as credit cards and bank accounts, combined with other financial tools.
Through FCAC, our Conservative government will continue to improve the financial literacy skills of Canadians in the long term through training initiatives and community partnerships. However, we are not done. We are helping to foster better financial literacy in other key areas as well.
Building on investments in the two previous budgets, budget 2009, our economic action plan, announced the establishment of an independent task force to make recommendations on a cohesive national strategy for financial literacy. Our task force, to be launched in the near future, will include representatives of the business and education sectors, volunteer organizations and academics that will be supported by a federal secretariat. Its conclusions will allow us to take stock of where more work is needed and make a strong contribution to ultimately empowering Canadians to make wise financial decisions.
Public interest groups such as Social and Enterprise Development Innovations have heralded this announcement by noting:
The government's commitment to work with all sectors to develop “a cohesive national strategy on financial literacy” is a critically important component of any long term economic recovery plan in Canada. Financial literacy is an issue that matters to all consumers of financial services including lower-income Canadians. We applaud the Canadian government for its leadership on this issue.
As my time is almost up, I will conclude by mentioning a couple of things. In addition to our commitment to financial literacy, this government is also working to introduce programs to provide incentives for families to build a responsible and secure financial future. For instance, to ensure home ownership remains an effective and affordable way to save and build equity for the future, we have put limits on new mortgages backed by a government guarantee. This includes fixing the maximum amortization period for new government-backed mortgages to 35 years and requiring a minimum down payment of 5% for those mortgages.
There is more I could say. I have more pages of notes here, but the fact is that financial literacy is an important factor to make Canada a stronger place for our families in the future, and I am very happy to answer any questions on that matter.
