Official Report * Table of Contents * Number 093 (Official Version)

Mr. Speaker, under the provisions of Standing Order 32(2) I have the honour to table, in both official languages, copies of the action plan for drinking water in first nations communities progress report and the report of the expert panel on safe drinking water for first nations.

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[Translation]

Competition Act

[Table of Contents]

Hon. Maxime Bernier (Minister of Industry, CPC)

moved for leave to introduce C-41, An Act to amend the Competition Act.

(Motions deemed adopted, bill read the first time and printed)

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[English]

Committees of the House

Public Accounts

[Table of Contents]

Hon. Shawn Murphy (Charlottetown, Lib.):

Mr. Speaker, I have three committee reports to table in the House today. The first report I have the honour to present, in both official languages, is the 10th report of the Standing Committee on Public Accounts on chapter 4, Canadian firearms program of the May 2006 report of the Auditor General of Canada.

In addition, pursuant to Standing Order 109, the committee requests that the government table a comprehensive response to this particular report.

I also have the pleasure to present, in both official languages, the 11th report of the Standing Committee on Public Accounts on chapter 2, National Defence, military recruiting and retention of the May 2006 report of the Auditor General of Canada.

In addition, pursuant to Standing Order 109, the committee requests that the government table a comprehensive response to this report.

Finally, I have the pleasure to present to the House, in both official languages, the 12th report of the Standing Committee on Public Accounts on the Public Accounts of Canada, 2006.

In addition, pursuant to Standing Order 109, the committee requests that the government table a comprehensive response to this report.

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(1005)

Procedure and House Affairs

[Table of Contents]

Mr. Gary Goodyear (Cambridge, CPC):

Mr. Speaker, I have the honour to present the 24th report of the Standing Committee on Procedure and House Affairs.

As a result of the replenishment of Tuesday, October 31, 2006, the committee recommends that the following item, which it has determined should not be deemed or designated non-votable, be considered by the House: Bill C-377, An Act to ensure Canada assumes its responsibilities in preventing dangerous climate change.

In addition, the committee recommends that Motion No. 262, standing in the name of the hon. member for Vancouver Island North, which it has determined should not be designated non-votable, should also be considered by the House.

[Translation]

[Table of Contents]

The Speaker:

Pursuant to Standing Order 91.1(2) the report is deemed adopted.

(Motion agreed to)

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[English]

Status of Women

[Table of Contents]

Hon. Judy Sgro (York West, Lib.):

Mr. Speaker, I have the honour to present, in both official languages, the 11th report of the Standing Committee on the Status of Women entitled “A Comprehensive Strategy to Combat Human Trafficking in Canada”. It calls on the government to develop, in cooperation with the provinces, a comprehensive strategy to combat the whole issue of human trafficking in Canada.

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[Translation]

Finance

[Table of Contents]

Mr. Brian Pallister (Portage—Lisgar, CPC):

Mr. Speaker, I have the honour of presenting, in both official languages, the eighth report of the Standing Committee on Finance entitled “Canada: Competing to Win”.

[English]

I would ask the House to accept this report on behalf of the members of our standing committee. The prebudget consultation hearings are designed to receive the input of Canadians regarding future budgetary priorities and I believe the committee fulfilled this mandate very well.

The theme of this year's prebudget consultation hearing process was Canada's place in a competitive world. We met with over 450 presenters. We travelled to a number of locations throughout Canada. The committee was keen to receive as broad an input as possible and, as a consequence, we travelled to locations which the committees in previous years had not visited. I believe we were very successful as a committee in capturing the broad view.

In conclusion, all committee members were honoured and humbled by the enormity of this task. The challenges were many, including bringing together members, not only from all the political parties, but cataloguing the input from people across the country from coast to coast and then sorting through hundreds of prebudget submissions and coming up with a final report.

I would like to thank the members of the House who took advantage of the prebudget consultation input opportunity they were given by conducting hearings in their own areas. I send a special thanks to the clerk's office for the organization and implementation of the prebudget consultation hearings. Canadians should be proud, not only of this committee but also of the staff who put so much effort into preparing this report.

I sense your impatience, Mr. Speaker, but you should understand that thousands of hours were put into the preparation of this report and therefore two or three minutes should not be too much to ask to introduce the report to the House and to thank you for your patience.

[Table of Contents]

The Speaker:

The hon. member knows he is entitled to make a speech when he moves concurrence in the committee report, which I am sure he will do in due course, and we will all get to hear him then for more than two or three minutes and we are all looking forward to it, I am sure.

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Public Service Labour Relations Act

[Table of Contents]

Hon. Dan McTeague (Pickering—Scarborough East, Lib.)

moved for leave to introduce Bill C-392, An Act to amend the Public Service Labour Relations Act (RCMP members and special constables) and the Royal Canadian Mounted Police Act.

He said: Mr. Speaker, I promise not to tax your patience in this very brief introduction of this important bill. I am pleased to introduce today a bill to amend the Public Service Labour Relations Act and the Royal Canadian Mounted Police Act.

The bill seeks to provide rank and file members of the RCMP with access to collective bargaining in a grievance procedure. These two fundamental labour rights are available to members of the federal public service and are the main elements in any labour relations agreement. In addition, most police forces across Canada already provide their members with a collective bargaining process and a grievance procedure.

I thank the hon. member for Vancouver East for her co-sponsorship of the bill. We hope it will help establish more harmonious labour relations inside the RCMP, one based on trust, dialogue and, of course, mutual respect.

(Motions deemed adopted, bill read the first time and printed)

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(1010)

Immigration and Refugee Protection Act

[Table of Contents]

Ms. Peggy Nash (Parkdale—High Park, NDP)

moved for leave to introduce Bill C-394, An Act to amend the Immigration and Refugee Protection Act (sponsorship of relative).

She said: Mr. Speaker, I am pleased to introduce this important private member's bill which seeks to amend the Immigration and Refugee Protection Act.

The bill is similar to ones introduced by my hon. colleagues from Burnaby—Douglas and Vancouver East in previous Parliaments. I thank the hon. member for New Westminster—Coquitlam for seconding this bill.

The bill, which we call the once in a lifetime bill, would allow any Canadian citizen or landed immigrant to sponsor, once in their lifetime, one family member from outside the family class as currently defined in the act. Specifically, this could be a son or daughter who is not a dependant and who is over age 22, a brother or sister, an aunt or uncle, a niece or nephew or a first cousin.

Most important, the bill would ensure that family reunification is a key to immigration policies. This is important to my riding of Parkdale—High Park with its large and vibrant immigrant population that contributes so much to our riding, our city and our country.

(Motions deemed adopted, bill read the first time and printed)

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Budget Implementation Act, 2006, No. 2

Bill C-28. On the order: Government orders:)

December 6, 2006--Report stage of Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006--the Minister of Finance.

[Table of Contents]

Mr. Tom Lukiwski (Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform, CPC)

moved:

That, notwithstanding any Standing Order or usual practices of the House, the report stage motion on the notice paper for Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be deemed adopted and the report stage of Bill C-28 be deemed concurred in on division.

[Table of Contents]

The Speaker:

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

Some hon. members: Agreed.

(Motion agreed to, bill, as amended, concurred in)

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Petitions

Volunteerism

[Table of Contents]

Mr. Kevin Sorenson (Crowfoot, CPC):

Mr. Speaker, I rise today to present a petition on behalf of hundreds of Canadians who are in support of young Canadians volunteering in communities in Canada and all over the world.

We appreciate their efforts as Canada's new government is committed to working with the voluntary sector to promote citizen participation and engagement in Canadian society.

In budget 2006, Canada's new government ensured that we focus our support to front line volunteer organizations. We exempted donations by publicly listed securities to public charities from capital gains tax. Volunteer organizations will continue to receive funding from a broad range of government programs.

The petitioners want young Canadians to have the benefits and rewards from the experience that volunteer community work provides. They support Canada's new government taking legislative measures to assist in this effort.

[Table of Contents]

Ms. Dawn Black (New Westminster—Coquitlam, NDP):

Mr. Speaker, I have the honour to present a petition signed by thousands of Canadians from every area of the country who say that there are many young Canadians who desire to serve their society as volunteers in Canada and abroad but that the majority of them are denied this opportunity because the government funds are not there for respective NGOs to continue this kind of work.

Thousands of communities in Canada and abroad are therefore denied the stimulating presence of young, enthusiastic and dynamic volunteers, not to mention the substantial economic spinoff that comes from this kind of activity.

The petitioners are calling upon Parliament to enact legislation that will allow young Canadians, who wish to do so, to serve their community here in Canada and abroad in this way.

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(1015)

Marriage

[Table of Contents]

Hon. Gurbax Malhi (Bramalea—Gore—Malton, Lib.):

Mr. Speaker, pursuant to Standing Order 36, I have the honour to present the following petition to the House.

The petitioners of the riding of Bramalea—Gore—Malton call upon the government to reopen the debate on same sex marriage and restore the traditional definition of marriage.

I respectfully submit the petition and have signed my name to it.

[Translation]

[Table of Contents]

Mr. Roger Gaudet (Montcalm, BQ):

Mr. Speaker, I have two petitions to present to you. The first is a petition from the citizens of my riding regarding the Civil Marriage Act.

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Volunteerism

[Table of Contents]

Mr. Roger Gaudet (Montcalm, BQ):

Mr. Speaker, I also present a second petition requesting that Parliament take measures that will allow all young Canadians, who wish to do so, to serve in communities as volunteers at the national or international levels.

[English]

[Table of Contents]

Ms. Alexa McDonough (Halifax, NDP):

Mr. Speaker, I take pleasure in tabling a petition signed by literally thousands of Canadians recognizing the enormous contribution of young people who devote their energies and talents as volunteers to the cause of building a more equitable and peaceful world, both here at home and abroad.

The petitioners urge Parliament to adopt legislative and other measures to support this valuable work of the volunteers and of the NGOs, like Crossroads International, Katimavik Canada World Youth and countless other agencies that facilitate and coordinate this tremendous contribution to building a better world, both here at home and abroad.

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Automotive Industry

[Table of Contents]

Mr. Massimo Pacetti (Saint-Léonard—Saint-Michel, Lib.):

Mr. Speaker, I have the honour to table a petition from Canadians mainly from Ontario but not necessarily from my riding.

The petitioners are asking the Government of Canada for a new automotive trade policy. This is the last of a series of petitions that I have tabled in the House. It basically calls upon the Government of Canada to cancel negotiations for a free trade agreement with Korea which would worsen the one way flow of automotive products into our market and to develop a new automotive trade policy that would require Korea and other offshore markets to purchase equivalent volumes of finished vehicles and auto parts from North America as a condition of their continued access to our market.

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[Translation]

Immigration

[Table of Contents]

Mrs. Maria Mourani (Ahuntsic, BQ):

Mr. Speaker, I have two petitions to table in this House. The first calls on the Government of Canada to create an immigration service at the Canadian embassy in Beirut to deal with visa applications by persons who wish to come to Canada as permanent residents. At present, they must go to the Canadian embassy in Damascus. This petition was signed by 1,559 individuals who are asking that immigration issues be dealt with at the existing Canadian embassy in Beirut.

* * *

Transport

[Table of Contents]

Mrs. Maria Mourani (Ahuntsic, BQ):

Mr. Speaker, the second petition urges the Canadian government to authorize a direct air route between Montreal and Beirut. Most individuals are currently forced to travel by air routes with several stops in different countries. It costs a fortune for these individuals to visit their families. This petition was signed by 1,793 people.

These two petitions were signed by Quebeckers and Canadians from all parts of Canada and Quebec, and not just individuals in my riding.

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[English]

Afghanistan

[Table of Contents]

Mr. Wayne Marston (Hamilton East—Stoney Creek, NDP):

Mr. Speaker, pursuant to Standing Order 36 I have two petitions to table today.

The first petition states that the Government of Canada has committed Canadian Forces to an unbalanced counter-insurgency mission in southern Afghanistan. The petitioners support the brave men and women of the Canadian Forces and, therefore, call upon the Government of Canada to begin with the withdrawal of Canadian Forces from the counter-insurgency mission in southern Afghanistan. This is very important to the people of Hamilton.

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(1020)

Iraq

[Table of Contents]

Mr. Wayne Marston (Hamilton East—Stoney Creek, NDP):

Mr. Speaker, the second petition is a weighty petition with thousands of signatures. It is regarding war resisters.

During the period of 1965 to 1973 more than 50,000 draft age Americans made their way to Canada because they refused to conscientiously participate in what they saw as an immoral war. Thirty years later we are facing the same choices in Canada. The petitioners call upon the Canadian government to demonstrate its commitment to international law and treaties to which it is a signatory by making provisions for U.S. war objectors to have sanctuary in this country.

[Table of Contents]

Ms. Olivia Chow (Trinity—Spadina, NDP):

Mr. Speaker, I have two petitions.

The first petition is from thousands of Canadians who are asking that Parliament allow the American-Iraq war resisters stay in Canada. The petitioners believe there is a moral choice for Canada, which is to give refuge to those who refuse to be accomplices in a U.S. led war in Iraq. If we were to reject war resisters, they would be returned to the United States, face incarceration, and possibly even the death penalty. Therefore, Canada should not facilitate the persecution of American war objectors by returning them to the United States.

* * *

Volunteerism

[Table of Contents]

Ms. Olivia Chow (Trinity—Spadina, NDP):

Mr. Speaker, the second petition is also from over 1,000 young people who call on Parliament to allow them to participate overseas as volunteers.

They point out that over 40 countries worldwide rely on young people to assist them. By going overseas these young people acquire another language to better appreciate Canada's rich cultural diversity. They would also learn different cultures and respect different values. This is a very important experience that young people should have, and Parliament should ensure there is legislation and funding to allow them to participate as volunteers in Canada and overseas.

* * *

Iraq

[Table of Contents]

Ms. Peggy Nash (Parkdale—High Park, NDP):

Mr. Speaker, I am tabling a petition in the House today with thousands of signatures from Canadians who are calling on the Canadian government to demonstrate its commitment to international law and the treaties to which it is a signatory by making provision for U.S. war objectors to have sanctuary in this country.

They point out that there are many legal opinions that have deemed that the U.S. invasion and war in Iraq is illegal, and recognize that there are a growing number of American soldiers and their families who have made the decision to seek sanctuary in Canada. However, Canada's Immigration and Refugee Board has asserted that the legality of the war has had no relevance in deciding their claims.

The petitioners are saying that Canada should not be punishing U.S. war objectors for exercising their conscience and refusing to fight, given that they would face severe punishment if they were returned to the U.S.

* * *

Questions on the Order Paper

[Table of Contents]

Mr. Tom Lukiwski (Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform, CPC):

Mr. Speaker, I ask that all questions be allowed to stand.

[Table of Contents]

The Deputy Speaker:

Is that agreed?

Some hon. members: Agreed.

* * *

Private Members' Business

Bill C-265--Employment Insurance Act--Speaker's Ruling

[Speaker's Ruling]

[Table of Contents]

The Deputy Speaker:

Order. At this time I would like to share with the House a ruling. The Chair would like to take a brief moment to provide some information to the House regarding the management of private members' business.

On May 31, 2006, after having reviewed all of the bills on the order of precedence which, at first glance, appeared to involve spending, I shared with the House a list of bills that caused the Chair some concern. Without making any decision on these bills at that moment, hon. members were invited to present arguments as to why, in their view, each of these bills did or did not require a royal recommendation. This practice of preliminary review is one that the Chair intends to continue.

[Translation]

Accordingly, following the replenishment of the order of precedence in November, I have reviewed the additional bills that have come forward for consideration. I can report that only one of these bills, Bill C-265, An Act to amend the Employment Insurance Act (qualification for and entitlement to benefits), standing in the name of the member for Acadie-Bathurst, gives the chair some concern, given the spending provisions it appears to contemplate.

(1025)

[English]

The Chair would encourage hon. members who would like to make arguments regarding the need for a royal recommendation for this bill to do so at an early opportunity.

I thank the House for its indulgence in this matter.

Government Orders

[Government Orders]

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[English]

Tax Conventions Implementation Act, 2006

[Table of Contents]

Hon. Jim Flaherty (Minister of Finance, CPC)

moved that Bill S-5, An Act to implement conventions and protocols concluded between Canada and Finland, Mexico and Korea for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, be read the second time and referred to a committee.

[Table of Contents]

Ms. Diane Ablonczy (Parliamentary Secretary to the Minister of Finance, CPC):

Mr. Speaker, I appreciate the opportunity to present Bill S-5, the tax conventions implementation act, 2006 for second reading today.

This bill is part of Canada's ongoing network of tax treaties with other countries, which happens to be one of the most extensive of any country in the world. At present Canada has tax treaties in place with over 80 countries.

Bill S-5 would enact updated tax treaties that Canada has signed with three countries: Finland, Korea and Mexico. These treaties will provide taxpayers and businesses both in Canada and in those countries with more predictable and equitable tax results in their cross-border dealings.

The conventions in Bill S-5 would replace existing treaties that have been in force for some time and need to be updated. The Canada-Korea treaty, for example, was originally signed in 1978. In the case of Finland and Mexico, the original treaties were signed in 1990 and 1991 respectively.

Through this bill our bilateral arrangements with these three countries would be updated to make them consistent with current Canadian tax treaty policies. For these treaties to have effect depends on the countries involved completing the legislative requirements. All indications are that all three countries, Finland, Korea and Mexico, are anxious to ratify these conventions as soon as possible.

Before discussing these treaties I want to take a few minutes to provide the House with a brief overview of the importance of tax treaties and why it is necessary for this bill to be passed.

Canada's new government is committed to enhancing fairness in the tax system. Tax treaties or income tax conventions, as they are sometimes called, are an integral part of our tax system.

Basically, they are agreements signed between countries that are primarily concerned with setting out the degree to which one country can tax the income of a resident of another country. In this regard, since income tax was first put in place back in 1917, Canada has taxed both the worldwide income of Canadian residents and the Canadian source income of non-residents.

The benefits to Canada of having tax treaties in place with other countries are significant. The fact that Canada has over 80 tax treaties already in place attests to this. Our tax treaties, for example, assure us of how Canadians will be taxed abroad. At the same time, they assure our treaty partners of how their residents will be treated here in Canada.

Tax treaties also impact on the Canadian economy, particularly because they are directly related to international trade and investment. Their direct impact on Canada's domestic economic performance is quite substantial. For example, Canadian exports account for more than 40% of our annual GDP.

In addition, Canada's economic wealth each year depends on direct foreign investment, as well as inflows of information, capital and technology. As a result, eliminating tax impediments in these areas has become even more important and contributes toward the creation of a competitive tax advantage for Canada.

In fact, there are definite economic disadvantages for countries that do not enter into tax agreements with other countries. Not having a tax treaty in place can have a negative impact on the expansion of trade and on the movement of capital and labour between countries.

It is only natural that investors, traders and others with international dealings want to know how they will be taxed before they commit to doing business in a country. For example, when considering doing business in Canada, investors and traders are anxious to know the tax implications associated with their activities both in Canada and abroad. They also want assurances that they will be treated fairly.

Tax treaties establish a mutual understanding of how the tax regime of one country will interface with that of another, thus removing any uncertainty about the tax implications associated with doing business, working or visiting abroad. Such an understanding can be achieved by allocating the right to tax between the two countries together with incorporating measures that resolve disputes and eliminate double taxation. All these measures promote certainty and stability, and help produce a better business climate.

(1030)

Tax treaties, including the ones enacted in this bill, are specifically designed to facilitate trade, investment and other activities between Canada and its treaty partners. They are developed with two main objectives in mind: the avoidance of double taxation and the prevention of tax evasion.

The first and perhaps most important objective of tax treaties is the avoidance of double taxation. This occurs when a taxpayer lives in one country and earns income in another. Without a tax treaty in place to set out the tax rules, this income can be taxed in both countries. In other words, income can be taxed twice.

The absence of a tax treaty leaves open the threat of double taxation, which is, of course, of great concern to taxpayers.

To alleviate the potential for double taxation, a tax treaty between two countries allocates the exclusive right to tax with respect to a number of items. The other country is thereby prevented from taxing those items and double taxation is avoided.

As a rule, the exclusive right to tax is conferred on the state of residence.

For example, if a Canadian resident employed by a Canadian company is sent on a short term assignment, let us say for three months, to any one of the three treaty countries in this bill, Canada has the exclusive right to tax that person's employment income.

However, in the case of most items of income and capital, the right to tax is shared, although for certain types of income such as dividends and interest, the amount of tax that may be imposed in the state of source is limited.

Put another way, the tax treaties in this bill reduce the frequency with which taxpayers of one country are burdened by the requirement to file returns and pay tax in another country when they are not meaningful participants in the economic life of that other country.

The second objective, the prevention of tax evasion or tax avoidance, comes about as a result of cooperation between tax authorities in Canada and our tax treaty partners.

Tax treaties play an important role in protecting Canada's tax base by allowing information to be exchanged between our revenue authorities and their counterparts in other countries with which we have tax treaties. This helps ensure that taxes owed are paid.

Another aspect of tax treaties that I want to discuss is the importance of withholding taxes. Bill S-5 provides for several withholding tax rate reductions.

Withholding taxes are a common feature of international taxation. In Canada's case, they are levied on certain payments that Canadian residents make to non-residents. These payments include interest, dividends and royalties, for example.

Withholding taxes are levied on the gross amounts paid to non-residents and represent their final obligation with respect to Canadian income tax. Without tax treaties, Canada usually taxes this income at a rate of 25%, which is the rate set out under our domestic law or, more precisely, under the Income Tax Act.

Our tax treaties specify the maximum amount of withholding tax that can be levied by Canada and its treaty partners on certain income, and these rates are always lower than the 25% rate provided for in the Income Tax Act.

The tax treaties in this bill all provide for certain reductions in withholding tax rates.

For example, each treaty provides for a maximum rate of withholding tax of 15% on portfolio dividends paid to non-residents. The maximum withholding tax rate for dividends paid by subsidiaries to their parent companies is reduced to as low as 5%.

Withholding rate reductions also apply to royalty, interest and pension payments. Each treaty in this bill caps the maximum withholding tax rate on interest and royalty payments at 10%. In addition, with respect to periodic pension payments, the maximum rate of withholding tax is set at 15% or 20%.

(1035)

Time does not permit me to go into detail about all the measures in these treaties, which I am sure the House will be disappointed to hear. However, I do want to emphasize that the proposals in Bill S-5 ensure that the tax consequences of certain transactions are in line with current Canadian tax policy.

In closing, I want to point out that Bill S-5 is standard and routine legislation. These treaties, like their predecessors, are all patterned on the OECD model tax convention, which is accepted by most countries around the world. The provisions in the treaties in the bill before us comply fully with the international norms that apply to such treaties.

In other words, Bill S-5 addresses fair taxation and good international and trade relations.

Bill S-5 meets these issues head on. The bill eliminates double taxation. It provides taxpayers living in treaty countries with a more simplified tax treaty system in which to operate. It provides investors and traders with a more stable environment in which to do business.

In short, Bill S-5 represents an integral part of our government's priority to ensure fairness in our tax system. I encourage the House to support this bill and to pass it today.

[Table of Contents]

Mr. Massimo Pacetti (Saint-Léonard—Saint-Michel, Lib.):

Mr. Speaker, I understand from the hon. member's speech that investment is an important part of why we sign tax treaties. It is important for the flow of goods and services, but for investment as well.

I wonder if the member opposite has any idea of how much foreign direct investment there is in Canada, in particular by the U.S., or about why these tax treaties important, because they do lead to additional investment.

[Table of Contents]

Ms. Diane Ablonczy:

Mr. Speaker, foreign direct investment in Canada this year was $433.8 billion. That is nearly half a trillion dollars.

In fact, foreign investment in Canada is increasing. By the end of the second quarter of this year, foreign direct investment in Canada had increased by $7.5 billion. This is an enormous part of our economy. It is why these tax treaties facilitating this kind of investment and international cross-investment are so important to our country and to the international marketplace.

[Table of Contents]

Mr. Massimo Pacetti (Saint-Léonard—Saint-Michel, Lib.):

Mr. Speaker, I wish to speak on Bill S-5. Some of the points that I am going to speak about were already addressed by my colleague from the Conservative Party, but I want to speak today on the Liberal point of view.

Bill S-5 is an act to implement conventions and protocols concluded between Canada, Finland, Mexico and Korea, all separate tax treaties from what I understand, for the avoidance of double taxation and the prevention of fiscal evasion with respect to income taxes. It is also known as the 2006 tax convention implementation bill.

While international tax law does not always make for the most exciting of debates, its importance is indisputable, especially as we move toward greater globalization and greater free movement of labour and capital across international borders.

This bill seeks to obtain tax treaties between Canada and, as I said, three other countries, those being Mexico, Korea and Finland. We have had tax treaties in place with these countries for many years. As with most laws, there comes a time when they need to be amended in order to reflect changing times.

Consequently, the bill presents some routine amendments that I believe will help ensure Canada remains a leading participant in the global economy.

Our party will support the updates contained in the bill.

There are two primary areas with which the bill occupies itself. The first is to help combat tax avoidance between signatory countries. The second is to avoid the double taxation of nationals working abroad in these other countries.

I will begin with the issue of international tax avoidance. As an accountant, I can tell the House that combating tax evasion is not an easy task, but it is an urgent one. It is also a task that Canada cannot fight on its own. As the former chair of the finance committee during the last parliamentary session, I can say that this is why our committee looked at how Canada can increase its battle in curbing the increase of tax evasion.

With the call of the election by the opposition parties, our work was never completed, but during this session the finance committee, forced to conduct a parliamentary review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, has hopefully given FINTRAC more tools to help combat tax evasion, through Bill C-25.

Stemming international tax evasion is something that requires the efforts of all countries among which capital and people flow back and forth, and they are perhaps flowing more freely now than at any other point in history. It is therefore not only advantageous for us to close tax avoidance loopholes in order to protect our own tax base, but it also speaks about our commitment to the international community. We have to show our partners, allies and competitors that Canada takes its international responsibilities seriously. We have to be willing to exchange information and work with foreign revenue authorities to help stem the tide.

I will now move on to the second part of the bill, the avoidance of double taxation. We are living in a highly globalized economy. Without international tax treaties such as this one, a Canadian working abroad would likely be taxed twice on the same income, once by the Canadian government and then again by the country in which that income is earned.

There are several ways to ensure that double taxation does not occur when the citizen of one country works in a foreign country.

A tax treaty can ensure that worker's income is taxed solely in the country where the work is done. Conversely, a treaty can also ensure that only the country of which the worker is a citizen taxes that person. Or again, finally, a tax treaty can see both countries tax a worker but at lesser rates, to ensure that the taxpayer who pays in one country will receive a tax credit in the other country in which he or she files his or her income tax return based on global income, to avoid double taxation.

(1040)

[Translation]

The treaties in Bill S-5 cap the tax rate at 15% on portfolio dividends paid to investors who do not reside in Canada. In the case of dividends paid by subsidiaries to their parent companies, the maximum withholding tax rate is reduced to 5%. The withholding rate reductions also apply to royalty, interest and pension payments.

Each treaty in Bill S-5 caps the withholding tax rate on interest and royalty payments at 10%, which is in line with current trends in this area and current Canadian tax policies.

[English]

At this point what does concern me are the recent rumblings by the present government that seem to indicate it would like to rip apart many of the 90 tax treaties that were signed by the previous Liberal government in order to prevent the double taxation of Canadian dual citizens who work outside of Canada.

It was a little over a month ago when the Minister of Foreign Affairs told the Senate committee that the government was considering imposing a tax on Canadians living abroad under a second nationality. This would not only violate our bilateral treaty obligations with dozens of other countries, but it would also go against the fundamental value of what it means to be a Canadian at home and in the world.

Furthermore, it would also represent a complete U-turn from what Bill S-5 attempts to do. Bilateral tax treaties signed between Canada and other countries, such as the one we are discussing today, allow for dual nationals to live and work in one country without having to pay income tax in their country of citizenship. In a world of increasing international movement, these tax treaties have become more and more vital. As such, Canada has been hard at work to extend its tax treaty network for decades.

International arrangements such as these allow for relatively free movement of people and capital across borders, contributing greatly to the rich multicultural nature of our country. Imposing an income tax on dual citizen Canadians living abroad would not only violate these treaties, it would seriously reduce our domestic tax base by opening up the likelihood that foreign dual nationals here would face double taxation from their country of citizenship.

While I am happy to support the bill, which will ensure there is no double taxation between Canada and either Finland, Mexico or Korea, I am very concerned about the government's commitment to respecting the bill over the long term. I am also concerned about what that says about the government's commitment to making Canada internationally competitive in terms of taxing its citizens working abroad and potentially foreigners coming to Canada to work.

There is another aspect of what international tax treaties such as Bill S-5 achieve. It is just as important as avoiding double taxation or stemming tax avoidance. That aspect has certainty. With so much investment, goods, services and labour flowing across international boundaries, it is important for the people involved to hold a fair degree of certainty that the tax situation that exists today will more than likely exist tomorrow.

In short, it is a commitment that the rate of taxation will not change on the whim of a government. It is kind of guarantee to the international community and to Canadians that the government will not, for instance, suddenly decide to tax its dual citizen nationals living abroad like the present government decided to do by taxing income tax after promising not to do so in the last election. I have no idea why the government wanted to erode that confidence by musing about taxing its dual citizens living abroad.

Finally, I am also concerned that the government is not moving important legislation through Parliament as fast as it should. I am told that the bill needs to receive royal assent by January 1, 2007. Fortunately, it is a Senate bill and it has already passed in that place in a very speedy manner, which is why it is before us in the House.

The bill arrived in the House just two short weeks ago. It has taken the agreement of all opposition parties to fast track the bill through second and third readings. In short, it took the three opposition parties to ensure the bill, a bill that may not be tremendously exciting but is nonetheless important to Canada's competitiveness, was passed on time.

That being said, we on this side of the House are happy to support the bill at all stages.

(1045)

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Ms. Diane Ablonczy (Parliamentary Secretary to the Minister of Finance, CPC):

Mr. Speaker, my colleague has sat as chair of the finance committee. I know he has a real interest in investment in Canada. He asked me a question about that. Could he share with the House, on the basis of his experience on the finance committee, additional details about the importance of international investment in Canada and the benefit to our country of treaties like this to facilitate investment?

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Mr. Massimo Pacetti:

Mr. Speaker, we agree on this one. Any type of treaty legislation that will enhance Canada's place in the world will benefit all Canadians. I travelled with my colleague across Canada and saw that Canadians live on trade. Whether it is the exporting of manufactured products or natural resources, Canada has to be more competitive.

We talked about keeping a competitive tax structure or maintaining our social programs. Those are all important aspects of keeping Canada competitive. We live in a global economy and a global world and the tax treaties represent only one aspect of the whole competitive package that Canada has to maintain on the international stage.

[Translation]

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Mr. Pierre Paquette (Joliette, BQ):

Mr. Speaker, I am pleased to speak to Bill S-5 because this will allow me to talk about something we have not talked about much in this House for the past weeks and months, and that is tax havens.

The bill before us is on tax treaties with Korea, Finland and Mexico. These tax treaties do not pose any problem. The Bloc Québécois agrees with all the parties in this House, I imagine, that we should not double tax taxpayers who earn income in any one of these countries or in two countries at the same time. Tax treaties to ensure information sharing to prevent tax evasion and double taxation are perfectly acceptable.

However, as far as tax havens are concerned—and that is what I want to focus on today—tax treaties do not prevent double taxation, they prevent taxation, period. I am referring to the tax treaty with Barbados, in particular. I will provide some detail on this situation, which we have denounced a number of times in the past.

It is now known, internationally, that Barbados is a tax haven for Canadian capital. The Conservative government has a responsibility to ensure that taxpayers pay their fair share of the taxes that fund our collective tools and our social programs.

There is cause for concern. For example, look at how eager the Minister of Finance was to plug the loophole of income trusts. The issue of tax havens also constitutes a major loophole in terms of our ability to collect all the taxes to which the Canadian government, the provinces and Quebec are entitled. It is a little surprising to see how slow they are to plug this hole.

As I said, we are in favour of Bill S-5 and we will continue to call on the government to find ways to tighten up the use of countries like Barbados and several other jurisdictions that, through their regulations, allow taxpayers in countries like Canada to shirk their collective responsibilities.

Subsidiaries of Canadian companies can be found in Barbados, for instance. Since information sharing is practically non-existent with that country, as with other tax havens, we have good reason to be concerned.

As I said, the previous government did nothing. As we all know, we were even able to prove that the companies once belonging to the former Prime Minister and now belonging to his sons—of course, I am referring to the hon. member for LaSalle—Émard—had used the legislation and regulations in Barbados to avoid paying a portion of their Canadian income tax, through a company called Canada Steamship Lines.

Thus, this is a serious problem. As I mentioned, it is unfortunate that we have not had the opportunity to discuss this more over the past few months, because it is a growing problem.

In 2002, the Auditor General expressed concern that the use of tax havens was leading to the erosion of the tax base, which could call into question the capacity of the federal, provincial and Quebec governments to assume their full responsibilities. In any case, this tax burden, which is evaded by those businesses and taxpayers who use tax havens, must then be carried by all other tax payers who do not wish to or are unable to shirk their responsibilities.

I would remind the House that a tax haven is a country where the rate of taxation is nil or very low and whose tax system is extremely lax. This obviously encourages many wealthy taxpayers to discreetly transfer a portion of their fortune and many businesses to set up subsidiaries and then be able to avoid paying taxes on part of their revenue. It is not just Canadian taxpayers who do this, but Americans and Europeans, too.

Since many of these countries are known for the absolute secrecy surrounding their financial sectors, it is very difficult to know with any certainty the total amounts invested in such places.

(1050)

Might I remind you that, according to the OECD, a significant proportion of the money used in this kind of tax avoidance is associated with money laundering operations. Recently, we have had discussions about the tools Canada can use to ensure that we avoid this kind of money laundering. States are becoming increasingly concerned about the financing of illegal activities, including international terrorism, mafia activity and international organized crime.

That is why it is surprising that although the issue of tax avoidance via tax havens is becoming a growing concern for us, most governments, including the current government and the former Liberal government, are virtually unconcerned about it.

As I said, in 1998, the Organisation for Economic Co-operation and Development found that from 1989 to 1994, direct foreign investment had grown three times faster in tax havens than elsewhere. That is a sure sign that those investments are not intended to promote economic activity—the production of goods or services—but simply to avoid paying the taxes we all have a legitimate responsibility to pay.

The OECD compiled a list of tax havens in 1998 using four criteria: non-existent or insignificant taxation; no real exchange of tax information; no taxation or legislation transparency; and no significant activity. Companies that set themselves up in these countries must have real activities to be considered productive investments.

Now that Barbados has become the third most popular destination for Canadian investment—I will come back to this—we might well wonder where all that investment goes in a small country with a small population. Clearly, it is not going into actual operations. It is just a way to avoid Canadian taxation and, as I said earlier, that is detrimental to the common good.

In 1998, the OECD established a list of 35 countries that met these four criteria. It also identified 47 other countries that met, in certain areas, one, two or three of these criteria. It nevertheless established a list of 35 countries that met these criteria. Barbados was one of those countries. I will take a closer look at Barbados' tax system because it is the most popular tax haven for Canadian taxpayers who wish to avoid paying taxes. I would like to make it clear that no illegal activities are involved. That is what I said. If I recall correctly, only 20% of this tax avoidance represents money laundering. The avoidance is legal.

However, what makes it legal is the fact that we have established rules for it. This by no means makes it moral or legitimate. Others are made to pay the price of this irresponsibility and unwillingness to assume a fair share of the collective responsibility to pay taxes.

Under the Barbados' tax system, domiciled taxpayers and companies pay a flat tax of US $250 per year. Then, the first $5 million in profit, in US currency naturally, is taxed at a rate of 2.5%. What is interesting is that unlike most tax systems in industrialized countries, the rate diminishes as profits increase. Starting at 2.5% on the first $5 million, the rate drops gradually to 1% on $15 million or more in profits earned by the company or income declared by the taxpayer.

(1055)

Barbados obviously meets this criterion of a tax haven because of its ridiculously low tax rate. In my opinion, the fact that an individual who pays income tax in Barbados would not have to pay tax in Canada and Quebec is clear evidence that the tax agreement with Barbados is not intended to avoid double taxation, but to help people avoid paying taxes in Canada.

Barbados' tax laws include a special section on international business corporations. This refers to companies that are registered in Barbados but conduct most of their business activities abroad.

For example, the head office of CSL International was in Barbados. I remember a report on Radio-Canada—I think it was on the program Enjeux, but I am not sure—where journalists went to see where CSL International's head office was. They found that it was a law firm where there were approximately 130 different names of foreign companies that are international business corporations. These truly are shell companies.

A company has very few conditions to meet to be recognized as an international business corporation. It must be registered in Barbados, have its headquarters there—as I just mentioned—and hold its board of directors meetings there. A conference call will suffice, however. The company must keep its board meeting minutes in Barbados and make a Barbadian one of its directors. As members can see, these are truly minimal requirements. However, by unanimous decision of the shareholders, this director may have no powers. Registration fees are US$390, plus $250 annually, as I mentioned earlier. These companies are subject to a regressive tax. They are exempted from tax on capital, from exchange controls and from tax on transactions. They can import duty free all the equipment they need to do business.

However, international business corporations must actually conduct business in order to meet the criteria that Canada sets to ensure that a tax agreement avoids double taxation. There has to be productive activity, so that a company does not simply serve as a way to avoid paying taxes. A company must therefore have a business line, receive company dividends and actually conduct business. That is enough to comply with the law, but simply owning an asset such as a building that generates revenue is not.

For example, in the case of a ocean-going fleet of boats, each boat can be considered to be an active business. CSL International was the holding company and received the dividends. These were considered to have been received by a company with real activities, even though that company does not actually operate a boat but rather is the proprietor of companies that themselves operate boats. One can see that by means of this provision it would be easy to avoid tax responsibilities here in Canada. Some 98% of international business corporations are foreign corporations created to oversee the foreign activities of the parent corporation.

So much for the tax system in Barbados. Now, what is the Canadian equivalent? That is interesting because we can see that the tax system in Canada is designed expressly for Barbados. As I have said, it is widely known internationally that Barbados is a tax haven for Canadian financial interests, and there are a great many Canadian banks in Barbados. As a general rule, all income earned in this country or abroad is taxable in Canada, except of course where there is a tax treaty, as we are discussing in connection with Bill S-5. The Income Tax Act provides as a general rule that a Canadian taxpayer will be taxed on all of his or her income, including income generated in the form of dividends from a foreign subsidiary, according to section 90 (1) of the Income Tax Act.

(1100)

The calculation of income for a taxation year of a taxpayer resident in Canada must include any amounts received by the taxpayer during the year on account or in full or partial payment of dividends in respect of a share that he or she owns in the capital stock of a corporation that is not resident in Canada.

However, if the income was earned in a country with which Canada has signed a tax treaty—in this case, Barbados—one avoids double taxation. That income can be non-taxable.

From the moment that a business, an international business corporation, says that it has paid US$250 in addition to 1% of its profits—a little more because, as I mentioned, it starts at 2.5%—it can take advantage of the tax treaty and not pay income tax in Canada.

If the foreign subsidiary is considered to be not resident in Canada and the tax treaty prohibits double taxation, we are stretching the general rule that all income received by a Canadian is taxable. It is the tax treaty that applies, as I have already said.

In the case of Barbados, of course, the treaty does not apply to subsidiaries that have a tax rate of virtually zero. The Canada-Barbados tax treaty specifically excludes international business corporations or any other similar kinds of companies that enjoy favourable tax treatment in Barbados.

One might think, therefore, that corporations pay a normal tax rate, but since the normal tax rate in Barbados is around 40%, virtually all the Canadian corporations that have a subsidiary in Barbados established it specifically to enjoy favourable tax treatment. It is the rule, therefore, but obviously not the reality. What possible interest might a Canadian corporation have in opening a subsidiary in Barbados if it had a higher tax rate than in Canada while not engaging in any activity?

They are therefore established mostly under the aforementioned legislation that makes it possible to set up international business corporations that are not covered by the treaty. The corporations covered by this provision of the tax treaty are therefore considered under the Income Tax Act to be residing in Canada and subject to Canadian taxes. That is the way it is supposed to be according to the Canadian legislation.

However, based solely on the Income Tax Act and the tax treaty between Canada and Barbados, dividends received by the Canadian parent corporation of a subsidiary in Barbados should be taxed in Canada when they are transferred home.

What actually happens, though, is this: the regulations under the Income Tax Act are specifically designed to enable corporations to circumvent this difficulty and transfer profits from Barbados tax-free in Canada.

We find, therefore, in paragraph 5907(11.2)(c) regulations under the Income Tax Act that render moot article 30 of the tax treaty, the one that excludes international business corporations. This section of the regulations sets forth a series of criteria for a corporation to be considered non-resident in Canada and therefore not subject to tax, in particular:

5907(11.2)(c) where the agreement or convention entered into force before 1995, the affiliate would, at that time, be a resident of that country for the purpose of the agreement or convention but for a provision in the agreement or convention that has not been amended after 1994 and that provides that the agreement or convention does not apply to the affiliate.

Barbadian subsidiaries of Canadian companies fall into this category because the treaty entered into force before 1995—in 1980, to be precise—and has not been modified since. Annexes have been added, but the body of the treaty has not changed, and only one section of the treaty, section 30, excludes the majority of Canadian owned subsidiaries.

Thus, by invalidating article 30 of the tax treaty, subparagraph 5907(11.2)c) of the regulations allows the dividends of Barbadian subsidiaries of Canadian companies to be covered under subsection 250(5) of the Income Tax Act and to be tax exempt in Canada.

We can therefore see how Canadian taxation, through these corporations created under Barbadian laws, allows Canadian businesses to avoid paying taxes in Canada.

Through access to information, the Bloc Québécois obtained a copy of correspondence between the Minister of Finance and an accounting firm, confirming that this section of the regulations was drafted specifically to allow Canadian businesses to use Barbados as a tax haven. Wallace Conway, of the taxation policy branch of the finance department, confirmed to Craig Cowan that subparagraph 5907(11.2)c) assures international businesses that they will not have to pay their taxes in Canada. Perhaps Mr. Conway is no longer in that position because he wrote this in July 1994.

(1105)

Their draft regulation did not come into force until 1997, but it was specified that it would be retroactive to 1994. With this amendment to the regulations, Canadian businesses with a subsidiary in Barbados win on two fronts. First of all, since their business is not covered by the tax treaty, Barbados is under no obligation to share information with Canadian tax authorities and, second, since the Income Tax Regulations disregard that exclusion, profits sent back to Canada are tax exempt. It is crucial that the government and the Minister of Finance act quickly in order to correct this loophole, just as the minister did in the case of income trusts.

(1110)

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Ms. Judy Wasylycia-Leis (Winnipeg North, NDP):

Mr. Speaker, this is a very interesting debate on a serious issue, that pertaining to tax havens.

Bill S-5 itself, I would concede, is rather routine in the sense that the purpose of it is to deal with a loophole, to bring some harmony to this whole issue of tax havens. In particular, the bill addresses clearing up some problems in terms of the tax treaties between Canada and Finland, Mexico and Korea. The bill is one we will support; let me say that right at the outset.

When the bill went through the Senate, we all got a pretty clear understanding of what it was about. The parliamentary secretary today confirmed the routine nature of the bill. It is clearly, as many have said, about dealing with the issues of double taxation and about preventing misuse of offshore venues in terms of tax havens. This is all well and good. We are glad that this small step has been taken.

However, as my colleague from the Bloc has pointed out, the bill begs the much larger question of the Conservatives and forces us to ask why in the world the government did not do what it said it wanted to do in opposition. The Conservatives said repeatedly in opposition that they were bound and determined to close all tax loopholes. They said that they were bound and determined to close tax havens, that they were bound and determined in particular to deal with Barbados.

I have just been going through the Hansard from a year ago. A little more than a year ago, in October 2005, there was a fairly significant debate in the House, some of it initiated by the Conservatives when they were in opposition, about tax havens and about Barbados. I will refer to a few of the speeches that were made on October 6, 2005. The member for Durham, who is now the Minister of Canadian Heritage and Status of Women, the person who is cutting all of our women's programs across the country and taking away from women the right to help shape their own futures, that same person back then said:

Closing tax loopholes that allow Barbados to operate as a tax haven for Canadian companies should be part of an overall strategy to restrict the use of tax havens.

That is interesting. She went on to say:

Merely closing tax loopholes that allow the Barbados to operate as a tax haven without addressing other tax havens will cause many companies to shift their operations to other tax havens. More important, the government should make Canada more attractive to business by implementing competitive corporate tax levels.

We know that the Conservatives have moved significantly on reducing corporate taxes. That was clear in the budget of May 6, 2006. The Conservatives clearly moved on making it more attractive for businesses to operate in this country, but did they close any tax loopholes? Was there a mention of Barbados anywhere in that budget? Was there any indication that they were committed to fulfilling a long-standing commitment to Canadians to join with us in the House, knowing full well they had the support of the Bloc and the NDP to deal with a most egregious situation? No, they did not.

Instead, today we have a tiny piece of the problem being addressed, which is fair enough. We appreciate that the Conservatives took one small step to deal with some outstanding issues on this front, but why in heaven's name did the government not decide to do it all at once? Why does this bill not deal with the whole range of concerns that the Conservatives themselves enunciated when they were in opposition?

(1115)

Moving on to other speeches, there is an interesting one by the chair of our finance committee, the member for Portage—Lisgar. He interestingly started off his speech on January 31, 2005, almost two years ago, in a way that only the member for Portage—Lisgar could do, saying:

I learned the other day that goldfish apparently cannot create new memories, which is interesting. I guess that every time they swim around their bowl that little plastic castle is a brand new thing to them, an exciting new event.

Of course, he was mocking the Liberals, making fun of the Liberal government, suggesting that the Liberals never seem to learn how to deal with a situation and they continue to make promises that they never keep. They keep forgetting, apparently, that they ever made those promises. He went on to say:

This may be humorous when it comes to goldfish, but it is not an appealing quality in a government. It is not an appealing quality for a government to be unable to learn from its mistakes or to learn from the past. Unfortunately that is what we have in this country. Canadians deserve better.

In the context of that speech, he enunciated some actions that he thought were necessary and which he thought the Liberals should have taken, thereby suggesting that the Conservatives themselves would have taken them. That has to do with tax havens.

In his speech, our chairperson for the finance committee said:

This is a government that continues to allow the diversion of profits from this country to tax havens abroad by the creation of debt-reducing tactics allowed here, such as leveraging on Canadian assets and borrowing money to invest offshore, which results in the shifting of profit and the reduction of tax obligations for Canadian corporations so located, such as Canada Steamship Lines International.

That is interesting. We all agree on the saga around Canada Steamship Lines. In fact no one was more active on this file than the federal New Democratic Party caucus in this House. We repeatedly asked questions of the then prime minister, now sitting as the member LaSalle—Émard, about his own private company and why in fact he chose not to deal with the situation in Barbados and instead left it as a clear opening for investment by Canada Steamship Lines.

I can remember, going back to 1994, when the then finance minister said:

Certain Canadian corporations are not paying an appropriate level of tax. Accordingly, we are taking measures to prevent companies from using foreign affiliates to avoid paying Canadian taxes which are otherwise due.

It sounds familiar, does it not? Those are the same words that the government is using today. It is concerned about closing tax havens and it is taking the initiatives as we see under Bill S-5, all the while avoiding the big, tough questions, avoiding previous statements, acting like goldfish in a bowl, refusing to learn from their mistakes, refusing to be consistent in their approach to Canadians.

Just as we saw back then, the former prime minister said one thing and did another. He made all these fine statements about tax havens but did not shut down Barbados. When his company was asked why it moved its shell company to Barbados in 1995, the company representative answered that it was moved because of the change in Canadian tax rules.

Question: Was the member for LaSalle—Émard aware of this when the company moved to Barbados in 1995? Answer: His assets are in a blind management trust. Question: Was he part of this decision to move to Barbados? Answer: This is a question that should be asked of Mr. Wilson, the federal ethics counsellor. Question: Was this discussed at any of their meetings? Answer: These are all questions that should be put to Mr. Wilson.

The questions were put to Mr. Wilson and the questions went like this: Question: What was discussed at these meetings? Answer from Mr. Wilson: “Well, I'm not really in a position to go and tell you. These are matters that are covered by the Privacy Act”. Question: We are just asking what went on in those meetings. And what was discussed in those meetings. Answer from Mr. Wilson: “Well, you've got my answer on that”. Question: We are not going to know. Mr. Wilson: “No”.

Clearly the situation back then of the continued presence of the Barbados tax haven is still of paramount concern today. Obviously at that point we were certainly concerned about the whole issue of conflict of interest and the possibility of a prime minister doing something untoward. That is all well and good.

(1120)

The Liberals paid the price at the polls for their failure to be completely open and transparent and for their failure to be honest with Canadians about closing tax havens. They paid the price for their failure to address the real needs and concerns of Canadians around a fair deal for ordinary working families as opposed to always catering to the interests of big corporations and wealthy individuals.

Today we had a chance to start over. This was a new beginning. We were rather encouraged by the fact that the Conservatives had agreed with us several years back and every year since then about the need to close this tax loophole. We had discussions at the finance committee. The Bloc brought forward a motion. There was complete agreement on the part of the Conservatives at that table to review this issue and to find ways to close the tax loophole.

There was very definite interest and a firm belief that the government would act. Today is a disappointment because the Conservatives still have not answered the question of when they will come to us with a complete package dealing with tax loopholes and tax havens. Every day we see the dire consequences of that inaction.

A month or so ago the news came out that Revenue Canada was seeking $2 billion from a huge brand name drug company by the name of Merck Frosst in Montreal for unpaid taxes and for using the Barbados tax haven as a way to avoid paying those taxes. As was reported back then, it was clear that Merck Frosst, which is one of the largest pharmaceutical companies in Canada employing some 1,600 workers, had actually used the Barbados tax haven to avoid paying taxes and the government was now spending our hard-earned taxpayers' money to pursue the company to make it pay the taxes owing to Canadians.

This process has just begun and it will be a lengthy and costly one. Why did it have to come to this? Why was action not taken earlier, or at least now with the benefit of this knowledge, why is the government not prepared to say it will close the Barbados tax haven and bring forward a complete package of legislative proposals dealing with problems in this regard generally?

It was not too long ago that we dealt with the project loophole case. A prominent family in this country had managed to ship $2 billion out of Canada and to put it in an offshore haven, thereby avoiding paying any taxes on that money. That became a Canada-wide case. It was headed up by a volunteer organization in Winnipeg, Cho!ces--A Coalition for Social Justice. It was George Harris who took it upon himself to champion this case right through the court system. In the end he did not win the case, but there was a clear statement from the court that this was a situation that the finance department had to deal with and that there were problems within the administration of the Department of Finance around oversight in this regard.

It became a high profile case which brought our attention to this whole problem. It is not news. We are dealing with an old situation that continues to be very disturbing for Canadians because it means lost revenue for this country at a time when we have seen so many of our important programs gutted and destroyed by the present government and the former government, all under the guise of inadequate resources. Yet here we are with incredible resources available, if only we had the courage, the guts and the willpower to actually crack down on some of these tax havens.

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The problem gets even more serious when we look at the statistics. It was not that long ago when we received information about how much money was being invested in offshore tax havens. Information was also released less than a year ago indicating that the amount of money had increased many times over. I will quote from a study, and I think my colleague from the Bloc also mentioned it. It states:

Between 1990 and 2003, the amount of money Canadian corporations put into tax havens, mainly in the Caribbean, soared to $88--billion from $11--billion, according to a study by Statistics Canada. Direct investments in these countries increased 18 per cent annually on average. That compared with an annual increase of 8 per cent for investments in the United States and 14 per cent annually for investments in other countries. Tax haven countries “accounted for more than one-fifth of all Canadian direct investment abroad in 2003, double the proportion 13 years earlier”.

The most popular tax havens were Barbados, Ireland, Bermuda, the Cayman Islands and the Bahamas.

This was the first time we had a serious measure of the amount of direct investment that was occurring. It was an eye opener for all of us. I know at the time it caused the Conservative members to describe their horror at this development and call even more forcefully on the Liberal government at the time for action.

What did the government do at the first chance it had to put its words into action? Nothing. Yes, there was some rhetoric. The House will recall that a couple of weeks ago, when the government decided to deal with the loophole made available to corporations through income trusts, the Minister of Finance suggested the Conservatives were interested when asked to close other tax havens and loopholes. We expected something to be forthcoming by now.

Here we have legislation that deals with tax havens, with offshore investments, with levelling the playing field, with double taxation and with trying to keep money in our country, but it does nothing about the most egregious, biggest, notorious tax haven that ever existed. It was used by the Liberals apparently. I will not make unsubstantiated comments, but we all know that questions remain about Canada Steamship Lines and the role of the member for LaSalle—Émard in the continuation of that tax haven.

Why in the world did the Conservatives not decide it was time to shut that loophole? Why do we have to fight Merck Frosst? Why do we have to spend money to try to collect money that is rightfully ours? How many other cases are there out there that Revenue Canada is pursuing?

I tried to get that information and I cannot. We are told this is a matter of confidentiality and privacy. It is time the government told us exactly, at least in broad terms, the kind of situation with which we are dealing. I would expect a plan of action from the government to help correct this problem.

We are talking about billions of dollars that belong in Canada, money that ought to be put to use in Canada and invested in Canada so Canadians can be a part of our economy in the fullest way possible, using their talents to the fullest. We are talking about an incredible loss of talent and resources, which has a very direct impact on our productivity and prosperity.

It is absolutely unfair and improper of the government to continue to heap problems on top of ordinary working families, while allowing big corporations and wealthy Canadians to make use of these tax loopholes. It is time the government kept its word.

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Mr. Wayne Marston (Hamilton East—Stoney Creek, NDP):

Mr. Speaker, I always look forward to hearing the comments of the member for Winnipeg North. I was struck during her speech that at one point we only had 11 members present in the House. We barely have quorum at this moment. When we consider the fact that both the opposition Liberals and the government of the day seem to have a reluctance to deal with this particular issue, perhaps that is why.

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Ms. Judy Wasylycia-Leis:

Mr. Speaker, I appreciate my colleague from Hamilton pointing out the poor attendance in the House, although I know we are not supposed to talk about who is or is not here.

This is a very important issue and it needs a full and complete debate. We should not simply let the government off the hook because the legislation it brought to us is routine and perfunctory. We should not simply allow the government to skirt through the legislative process without being reminded about its promises.

In the end we are going to support the bill. However, we still have not received any indication from the government as to why it has not addressed the tax loopholes and why they continue to exist. We still have not received any indication from the government as to why it has not closed the Barbados tax haven, which it has talked about for many years. If the debate continues, I will ask the Conservatives about this. This issue begs for the full attention of the House. It requires a major commitment on our part to deal with this very egregious situation.

The statistics about these tax havens and offshore investments indicate that not only did the increase in the use of offshore financial centres go up eight-fold, but the largest growth in Canadian direct investment occurred in the Barbados, the very tax haven the Conservatives talked about vis-à-vis the member for LaSalle—Émard's Canadian Steamship Lines. Is this something that is useful in a pre-election period only and then dropped like a hot potato because the government is afraid to take on the corporate world? Is the government afraid to take on the wealthiest in our country? Perhaps this is what we really are talking about.

There is no evidence in the last budget or the minister's most recent economic update to indicate that the government is committed to finding a way to reduce the burden on ordinary working families. There is no evidence that the government is prepared to provide the supports and services that working families need in order to be productive members of our society. Every day we hear about people struggling. Every day we hear about people dying on the streets, about the homeless in Vancouver and Victoria who have no shelters. There has been no commitment on the part of the government to treat this as a serious emergency situation. It is mind-boggling.

Here we are in the comfort of this place while people are basically dying on the streets in cities that have no preparations for emergency response in terms of serious weather conditions, yet the government will not close a tax haven that causes us to lose billions of dollars. If we could get our hands on that money or if the government had the commitment to reign it in, it could be put to good use.

Canada is a wealthy country, yet people are dying on the streets, aboriginal people are living in third world conditions and Status of Women offices are being totally eliminated. The North End Women's Centre in Winnipeg, which provides services for women to help them become financially knowledgeable so they can build a future for themselves and their families, was totally eliminated because the government did not have a couple of hundred thousand dollars to support it.

That is the dilemma we face today and that is why my colleague's question is so important. This is a serious issue. It is about how we build a country. It is about our priorities. If we can sit back and let that money disappear through our fingers because we do not want to trouble the big corporate entities or big families like the Bronfman's, which was named in the project loophole, and we do not want to touch issues around Canada Steamship Lines any longer, then we will continue to be in a disgraceful and embarrassing situation for Canada on the world scene.

(1135)

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Mr. Dean Del Mastro (Peterborough, CPC):

Mr. Speaker, I listened to the member with great interest. I have the opportunity to listen to her quite often in finance committee. I do not always agree with her, but I do have respect for her.

The issue of which she is speaking deals with the broader issue of tax fairness, an issue on which our government has the courage to act. Only a couple of weeks ago, the member complimented the finance minister or having the courage to pursue tax fairness.

The issue of which she is speaking is one that I have certainly been advocating on finance committee as a member of the government. She knows that full well. I suggest that the member be patient. We are moving toward tax fairness.

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Ms. Judy Wasylycia-Leis:

Mr. Speaker, I am glad to hear from my hon. colleague, who I respect and work with in the finance committee, about his belief that the government will to eventually deal with these outstanding egregious matters.

However, I am not raising the broad issue of tax fairness today. I accept that is an ongoing battle we will have. We have very different views on this. The Conservatives believe in this trickle down theory of giving tax breaks to corporations in the hope that eventually we will pay off the debt and then we can all start again, with the hope that we have not lost medicare, post-secondary and cultural institutions by that point.

What I am raising is the question of tax havens specifically because the bill is about that. The bill is very narrow and routine. It was an opportunity for the government to do something more. It was an opportunity for the Conservatives to do what they said when in opposition. I will read another quote from a year ago in the House when a Conservative member stood and said:

The government has for far too long put off renegotiations on tax treaties that serve as tax havens for Canadian companies. Why is the government not closing those loopholes? It might be because they serve its self-interest in one way or the other.

If the Conservatives are not prepared to address this situation, then that statement applies to them. If they are not prepared to act, then it must be because it serves their self-interests in some way or another.

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Mr. Pat Martin (Winnipeg Centre, NDP):

Mr. Speaker, I could not help but notice this. As my colleague was speaking about these outrageous tax loopholes, which still exist and are allowed to exist, both the Liberal and Tory members present were looking at their shoes. They were trying to pretend their laces were not tied so they would not have to look us in the eye and explain why on earth they allow these outrageous tax loopholes to continue, which allow tax fugitives to find tax havens.

In the context of trying to nickel and dime $1 billion out of virtually every social program, on which people our ridings have come to rely, how can the government knowingly and willingly show this wilful blindness? Sometimes I think the Tories view taxpayers the way P.T. Barnum viewed circus goers. They must think we are suckers if they think it is not ideologically driven to make cuts, yet show this wilful blindness and allow this egregious, outrageous loophole to continue on the other side.

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Ms. Judy Wasylycia-Leis:

Mr. Speaker, the member for Winnipeg Centre certainly knows how to describe an issue and get to the nub of it very quickly. He talked about tax fugitives going to tax havens. I could not have said it any other way if I had tried.

He makes a very important point. His riding is very similar to mine. Mr. Speaker, your riding is very similar. We deal daily with people who are struggling to make ends meet, who do not want to be a drain on their communities, who want to do it for themselves, but need some supports and encouragement through difficult times. The government is cutting the ground right out from under them, leaving them in very difficult situations that could cause very serious harm to their families and themselves.

The issue for us today, especially in the context of Winnipeg, is that big banks have left communities almost entirely. At the same time, they have been able to find money to put into tax havens. I just noticed that a couple of years ago the Auditor General pointed out that multinational companies operating in Canada had avoided hundreds of millions of dollars in taxes over the past decade through the use of tax havens.

The article goes on to say that a more recent university study charged that Canadian banks alone saved $10 billion in taxes over the past decade through the use of tax havens. This is at a time when the profits of banks have reached absolute record levels. Banks have never seen such profitability.

At this time of profitability, they are putting money into tax havens to avoid paying taxes, money that belongs here and could be spent on services, and they are destroying the ability of many communities to provide financial services to their own members because they abandon any community that is not adding astronomically to their profits. That has to end. The way to do it is by the government finally closing these tax havens.

(1140)

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The Deputy Speaker:

Pursuant to order made on Monday, December 4, Bill S-5 is deemed read a second time and referred to a committee of the whole, deemed considered in committee of the whole, deemed reported without amendment, deemed concurred in at report stage and deemed read a third time and passed.

(Bill deemed read the second time, considered in committee, reported without amendment, concurred in, read the third time and passed)

* * *

[Translation]

Bank Act

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Hon. Jim Flaherty (Minister of Finance, CPC)

moved that Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

He said: Mr. Speaker, I am pleased to lead off the debate, at second reading, of Bill C-37, which amends the legislative framework governing financial institutions operating in Canada.

[English]

This proposed legislation is significant for a number of reasons.

First of all, it will go a long way toward improving our entrepreneurial advantage in Canada, one of the five advantages at the core of our government's new long term economic plan for Canada, called Advantage Canada.

Advantage Canada sets out to create several advantages for our country: a tax advantage, a fiscal advantage, a knowledge advantage, an infrastructure advantage, and, as I mentioned, an entrepreneurial advantage for Canadian families, students, workers and seniors.

To gain an entrepreneurial advantage, we must build a more competitive business environment by reducing unnecessary regulation and red tape and improving services for consumers, so this bill is significant for another reason as well. It will have a positive impact on one of the most important drivers of our economy, and that is the financial services sector. This sector is one of the key foundations on which our economy, indeed any modern industrial economy, rests.

On a broader scale, this important sector plays a unique role in ensuring financial stability, safeguarding savings and fueling the growth that is essential for the success of the Canadian economy.

Moreover, the financial services sector plays a significant part in the daily lives of Canadians. Beyond those of us who use their services, the financial services industry employs about 700,000 Canadians in good, well-paying jobs. It represents about 6% of Canada's GDP and is a leader in the use of information technology.

We can no doubt appreciate the importance of ensuring that the framework governing this important and influential sector is current and effective.

Canada's new government is committed to doing just that with the proposals contained in this bill before the House today.

Before I outline the proposals in the bill, I would like to make a few remarks about the consultation process that led to this review of the financial institutions statutes and the legislation before the House today.

[Translation]

A representative number of stakeholders have shared their comments on the 2006 review of the financial sector legislation.

(1145)

[English]

Overall, stakeholders generally agreed that no major overhaul is needed, but many believe, as we do, that some steps could be taken to refine the legislative framework.

Stakeholders also made specific proposals for technical amendments. Those submissions in the consultations resulted in a white paper issued by the Department of Finance this past June, entitled “2006 Financial Institutions Legislation Review: Proposals for an Effective and Efficient Financial Services Framework”.

For the most part, the white paper is the basis for Bill C-37, which contains the government's proposals to amend the legislative framework for financial institutions. These proposals are aimed at achieving three key objectives: first, improving service for customers; second, increasing legislative and regulatory efficiency; and, third, adapting the framework to new developments.

Together, these objectives will contribute to a modern and competitive financial sector framework in which businesses of all sizes and consumers from every corner of the country will continue to be well served.

I would now like to briefly outline the intent of the three objectives contained in Bill C-37.

The first is improving service for customers.

Consumers are taking greater responsibility for their financial affairs. At the same time, we are seeing an increase in the breadth and complexity of financial products, service providers and delivery channels. Clearly, this means more choice for consumers. At the same time, it makes it more difficult for them to make informed choices in the marketplace.

That is why Canada's new government is acting to ensure that services are improved and customers are adequately protected. The government believes that the best approach to improving services for consumers is through competition and disclosure.

On the one hand, competition provides more choices to consumers and allows them to find financial products and services that best suit their individual goals and needs, at competitive prices. Disclosure, on the other hand, ensures that consumers and businesses alike have the relevant information they need to make the best decisions in light of the choices available to them.

As we all know from newspaper and TV ads, the range of financial services and products offered to consumers continues to evolve. In order to assist consumers to make choices, the disclosure regime for our financial institutions framework needs to stay current to accommodate the different types of products and services in the marketplace.

The proposed changes to the framework contained in this bill reflect that principle.

One example of consumer protection measures in the bill is with respect to online disclosure. As we know, federally regulated financial institutions must disclose in their branches information on the products and services they provide to their customers and the public. Many Canadians today are opting for the convenience of the Internet to meet their banking needs and current disclosure requirements do not extend to the online world.

To ensure that consumers have sufficient information, the bill proposes, first, to harmonize online and in branch disclosure requirements to allow consumers to compare products more easily and, second, to ensure adequate disclosure is provided to customers conducting transactions online.

The intent of this proposed measure is to provide consumers with the information they need in order to make informed decisions.

(1150)

[Translation]

The second major objective of the bill is to increase the efficiency of legislation and regulations governing the Canadian financial sector.

[English]

The regular review of the financial sector statutes allows this government to amend the framework as necessary so that financial sector legislation and regulations continue to be both effective and efficient.

Bill C-37 addresses a number of key areas identified in the review to achieve increased legislative and regulatory efficiencies.

One such area that is quite relevant to many Canadians is the area of residential mortgages. Mandatory insurance for high ratio mortgages was introduced over 30 years ago as a prudential measure to ensure that lenders are protected against fluctuations in property values and associated defaults by borrowers.

Of course, the marketplace has changed since then. Among other things, the risk management practices of lenders have improved significantly and the supervisory framework for federally regulated financial institutions has been strengthened significantly. This means that some homeowners may be paying more for mortgage insurance than they need to.

The proposed amendments to Bill C-37 reduce the cost of mortgages for some families by raising the loan to value ratio requiring mortgage insurance from 75% to 80%. This will lower the mortgage down payment consumers are required to make before the law requires the purchase of mortgage insurance. This proposal will create an opportunity for mortgage cost savings and ensure that more young families can realize the dream of owning their own home.

Another key area identified in the legislative review called for improvements to the regulatory approval regime. Ministerial approvals are currently required for a broad range of financial sector transactions related to market entry, structure and competition, as well as financial institution ownership.

There are, however, transactions that the minister reviews that are routine and do not raise significant policy issues. Bill C-37 proposes measures to streamline the regime to ensure that these transactions are dealt with more expeditiously.

As we know, the rate of change in the financial services sector has increased dramatically in recent years. Financial institutions must be able to respond to developing trends such as globalization, convergence, consolidation, and technological innovation. This adaptation to market changes often results in the creation of new products and services and innovative ways of doing business.

The government needs to ensure that the framework regulating financial institutions is up to date to allow them to respond to these changes so that they can evolve and grow. At the same time, the government is also committed to protecting consumers and small businesses adequately while maintaining the overall safety and soundness of the financial system.

Bill C-37 does that and more.

One way that this bill will improve our financial system is by allowing for the implementation of electronic cheque imaging. Currently banks process about one billion paper items, mostly cheques, annually valued at over $3 trillion.

The process of clearing a cheque includes the physical delivery of the cheque to the paying or issuing financial institution in order for it to decide whether or not to make the payment. This process is more labour intensive, time consuming and costly than necessary, particularly given today's developments in technology.

The proposal in this bill to allow for the implementation of electronic cheque imaging will result in significant efficiency gains, saving time and resources currently dedicated to the transport of cheques. This will allow banks to keep their costs down, a benefit that needs to be passed on to customers to ensure that the efficiencies derived from electronic cheque imaging will be shared by all users of the payment system.

(1155)

Another proposal in this bill relates to cheque hold periods. For most large banks, the maximum hold period on cheques deposited with tellers is 10 days. While the government recognizes the importance of cheque hold periods for risk management, a concern remains about the length of time that consumers may be subject to these hold periods. Cheque holds not only affect consumers who need to access funds to pay their bills, but also small and medium sized businesses that need to pay employees and operate their businesses out of the funds they deposit.

While the proposed legislation would be facilitating the establishment of a limit on the time that banks can hold a cheque, the government is finalizing the agreement with the banking industry. The agreement will reduce the maximum hold period immediately to seven days and reduce it further to four days once electronic cheque imaging is fully implemented.

This change will be a significant improvement over the current maximum hold period of 10 days or more. It is a major step forward for consumers and businesses. It will increase efficiency and free money up more quickly, having a positive impact on the Canadian economy overall.

[Translation]

In summary, the measures proposed in this bill will amend the legislative framework governing financial institutions in order to achieve three key objectives.

[English]

First and foremost, the bill proposes steps to improve services for consumers. Second, Bill C-37 would increase legislative and regulatory efficiency and contribute to a framework where financial institutions could grow and prosper in the global marketplace. Third, the proposed amendments in Bill C-37 would allow financial institutions to adapt to new trends in the industry by providing a framework that is up to date and, above all, dynamic.

I urge all members to give Bill C-37 careful consideration.

[Table of Contents]

Hon. Roy Cullen (Etobicoke North, Lib.):

Mr. Speaker, I have a couple of specific questions for the Minister of Finance.

The white paper mentions the need to deal with some measures that would allow foreign banks greater access to the Canadian market. I also see a number of technical areas in the white paper that I think have been, to a large extent, incorporated in the bill.

When our government looked at the Bank Act and the financial sector during our mandate, one of the objectives was to increase competition through credit unions and through the foreign banks. For the foreign banks there were some limits because of what we used to call the bricks and mortar advantage that Canadian chartered banks have. Therefore, a lot of foreign banks were not inclined to get into the retail market in Canada but to get into the wholesale level and others.

First, does the Minister of Finance see that these measures would realistically allow more competition from foreign banks in Canada and, in so doing, give Canadian consumers greater access and more product choice?

Second, one provision in the white paper refers to data processing outside of Canada. It basically says that the proposal is to eliminate the superintendent approval for processing information or data outside of Canada. As the minister knows full well, there were some issues, I think, last year with respect to outsourcing of data processing by Canadian financial institutions that raised certain privacy concerns, particularly with respect to the Patriot Act in the United States. It seems to me that this might be moving in the wrong direction. I wonder if the minister has followed through with that in the bill and if that is the right direction to go, given some of the privacy concerns of Canadians.

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Hon. Jim Flaherty:

Mr. Speaker, the question raised by the hon. member is a good one and engages us in the reality that the financial services sector is a global business and we want it to be a global business. This is one of the great sectors of the Canadian economy. It is a pillar of the Canadian economy. We want our insurance companies, our banks and our major financial institutions to be global players and to grow globally. They are doing a good job at that and that is good for Canada.

Being global sometimes involves using data sources outside the country. We know that because that was part of the strength of Ireland when the Celtic Tigers started in the west of Ireland processing data for companies in New York, in Canada and so on, subject always to the privacy rules and the jurisdiction of the Privacy Commissioner.

The member opposite raised the point that earlier this year there was a concern about data and privacy, on which the Privacy Commissioner exercised her jurisdiction and looked into on behalf of the people of Canada. We need to be mindful always of those important privacy concerns.

(1200)

[Translation]

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Mr. Pierre Paquette (Joliette, BQ):

Mr. Speaker, one of the objectives in the bill introduced by the minister is to enhance the interests of consumers and improve the system for disclosing information to consumers. We are obviously very pleased with that.

I want to ask the minister whether it would be possible to appoint a federal ombudsman who would have the necessary power to defend people based on law. He could also represent them when they have disputes with financial institutions. A great number of people are unable to defend their rights in legal situations with banks because they do not have the financial means.

Would the idea of appointing a federal ombudsman for consumers who feel duped by a banking practice be a possibility in this bill, or another bill?

[English]

[Table of Contents]

Mr. Jim Flaherty:

Mr. Speaker, there is substantial consumer protection with respect to financial institutions. Perhaps we view things somewhat differently on this side of the House.

Competition creates choice and disclosure creates knowledge. This bill emphasizes the encouragement of competition in the Canadian banking system among Canadian financial institutions, not just banks but also credit unions that play a very important role across Canada as members of the financial services sector.

We want to encourage competition that gives Canadians choices, selections and opportunities to exercise their own judgment. However, to exercise their judgment in an informed way, there must be disclosure of various options, not only in-branch but also online, and this bill includes provisions to accomplish those goals.

[Table of Contents]

Ms. Diane Ablonczy (Parliamentary Secretary to the Minister of Finance, CPC):

Mr. Speaker, one of the frustrations that the businesses and individuals have is that when they make a deposit to a bank they often cannot negotiate a cheque or an instrument for up to 10 days, which is a real hardship for many people.

I think it would be helpful if the minister were to remind Canadians of the positive changes in that regard that will be coming in this bill.

[Table of Contents]

The Acting Speaker (Mr. Andrew Scheer):

I just noticed that the hon. parliamentary secretary was not at her seat when she asked the question but I did not catch it, so I will allow the Minister of Finance to respond. However, in future I would ask all hon. members to be in their proper seats when they ask questions or make comments.

The hon. Minister of Finance.

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Mr. Jim Flaherty:

Mr. Speaker, the parliamentary secretary has worked hard on this bill and on her duties as parliamentary secretary in finance.

This is a big step forward, especially for small businesses in Canada. It is a problem when people deposit a cheque and they must wait 10 or more days for the cheque to clear. If the bills are not paid, the interest mounts up. This is a good step forward, particularly for small and medium sized enterprises and for individuals in Canada, that we will be moving forward with reducing that 10 day holding period down to 7 and then ultimately to 4 days. There does need to be a holding period based on the present state of affairs, but we can certainly reduce that by more than 50% down to four days over the course of the next while.

(1205)

[Table of Contents]

Hon. Roy Cullen (Etobicoke North, Lib.):

Mr. Speaker, I want to go back to my earlier question for the minister, which he did not have time to address, dealing with foreign bank entry and competition from foreign banks, which has the opportunity and potential to increase consumer choices and product lines for Canadians. The advantage for some of the Canadian charter banks is that they have retail branches across Canada.

I am wondering what changes he is proposing in Bill C-37, in lay terms, that he thinks will make a difference and allow more foreign bank competition in our financial markets.

[Table of Contents]

Hon. Jim Flaherty:

Mr. Speaker, actually the foreign banks are doing well in the Canadian markets and growing. Their participation in Canada is welcome for the same reason that we want our banks to grow globally, be competitive around the world and help Canadian businesses expand their businesses abroad, whether it is in China, India or in other of the emerging economies.

There is a change in the bill though that relates to the composition of the boards of directors of financial institutions. The bill would allow additional foreign directors to be on the bank boards. Canadian representation would be maintained as boards of directors would still be required to have a majority of directors who are Canadian residents. The Canadian majority requirement will still be there but adding some additional foreign directors is something that the banks are interested in doing because it helps them connect and expand their businesses globally.

[Table of Contents]

Hon. Roy Cullen (Etobicoke North, Lib.):

Mr. Speaker, I am happy to speak to Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

Last June, the Department of Finance released a policy paper on which much of the bill is based. The policy paper was commissioned by the previous Liberal government in preparation for the statutory five year review of the Bank Act.

The title of that white paper was “2006 Financial Institutions Legislation Review: Proposals for an Effective and Efficient Financial Services Framework”.

[Translation]

Given that it was inspired in large part by the white paper, the government's bill mirrors Liberal policy. The white paper stated that competition and disclosure are the best ways to protect the interests of consumers.

Consequently, we are seeing some positive measures in this area.

[English]

Bill C-37 would ensure that financial institutions provide greater and more timely disclosure to consumers in areas such as deposit type investment products and complaint handling procedures.

What these measures would ensure is that when a customer opens something like a savings or chequing account they are provided with all the information they require to make an informed decision. I think that little could be more important for consumers than ensuring that they have the appropriate information specific to the type of product they are purchasing.

The bill also makes some routine changes that need to be addressed every few years. The prime example of this is readjusting the equity thresholds that determine the size of financial institutions. When the Bank Act was last reviewed in 2001, it was determined that large institutions would be considered those that hold over $5 billion in equity.

Times do change, however, and as a result this bill proposes to increase that threshold to $8 billion to reflect growth in the sector and the general cost of living and inflation factors, small as they are.

Additionally, it would set a new threshold for what is considered to be medium sized institutions. These will be those institutions that hold between $2 billion and $8 billion in equity. As I said, these are some routine updates, but they are important nonetheless.

The bill also has a section devoted to electronic cheque imaging, something that we had asked to be addressed in the white paper. It would require banks and financial institutions to exchange electronic images of cheques, rather than physically exchanging them among themselves. Let us try to picture some five million cheques being transported from one financial institution to another every day, some of which must travel clear across the country.

Advances in recent technology means that this drawn out process is no longer required. Electronic images of the cheques can now be scanned, captured and transmitted in a safe and secure manner between banks. This saves time and it reduces the administrative burden. It is already used by several financial institutions and we have seen great results.

(1210)

[Translation]

This measure will be very advantageous for both consumers and businesses because cheques will clear quickly. Once electronic cheque imaging becomes widespread, cheques will no longer have to be held for more than four days.

[English]

Our previous Liberal government was constantly searching for new technologies to make business and government more efficient. For instance, last year the Canada Revenue Agency began a move toward 2D bar coding for corporate tax returns which would allow tax software to generate a bar code that could be affixed to a company's tax return. When it arrives at the Canada Revenue Agency processing facility, all that is required of the CRA is to scan in the bar code and all of the data contained in the return is transferred electronically into the CRA's computers. This not only would allow for faster processing time but would significantly reduce the occurrences of human error that often goes hand in hand with manual data entry.

This was just a small aside, but I think it illustrates the point that we need to be cognizant of new technology and seize the opportunities that they present us with. I am glad that the Conservatives are following our lead on this particular issue.

I am also in favour of the section in the bill that would make it easier for credit unions to establish cooperative credit associations as a means of expanding their business opportunities. Currently, the Cooperative Credit Associations Act requires a minimum of 10 credit union members in order to form a cooperative credit association. This is a fairly high threshold that precludes many credit unions from forming cooperatives. I am happy to see that the minimum number will be reduced.

When our government reviewed the financial sector in 2001, there were key initiatives that we pursued when bank mergers were on the radar. We wanted to ensure that if bank mergers were ever proposed and were deemed in the public interest that there would be the opportunity for more competition and more products, services and choices available to Canadians through credit unions and foreign banks.

In questioning the minister earlier, I alluded to the fact that foreign banks, while they have an interest in doing business in Canada as the minister indicated, are doing well in certain areas. Most of their efforts are in the wholesale banking side because of the dominance in terms of retail branches across Canada that are maintained by Canada's chartered banks. However, I would encourage any measures in Bill C-37 that would create more opportunities for foreign banks to more aggressively enter the Canadian marketplace. This would give Canadian consumers more choice and more opportunities to shop around for different options and that is good for consumers and the Canadian economy.

I am glad to see that the minister is trying to deal with the credit unions as well. This is a great opportunity again for giving consumers more choice. I know the minister has indicated that there is no big appetite right now for bank mergers or cross-pillar mergers and I think that is a wise decision at this point in time. It is certainly providing clarity to the financial institutions with something that they were looking for.

However, at some point in time if the banks do come back, it would be important, for example, because certain branches of the credit unions would have to be divested and then perhaps foreign banks and others would be in a position to acquire those branches. In fact, the end result could be that consumers would have more choice, so I think it is important to try to build those institutions up in Canada so that Canadians do have more choice and more access to different products and services.

The minister talked about how the bill proposes to reduce the cost of mortgages for some borrowers by raising to 80% the loan to value threshold above which mortgage insurance is required by statute. The current threshold at which one requires mortgage insurance is 75%. Given changes in risk management practices and regulatory requirements, the white paper, which we commissioned under our government, made this exact recommendation. I am happy to see it included in the bill.

(1215)

One area I am concerned about that did not receive enough attention in this bill is extending customer protection. Beyond the requirement I mentioned earlier that financial institutions provide greater and more timely disclosure to consumers in areas such as deposit type investment products, there is very little mention of helping other types of customers. The bill does not seem to offer similar types of protection for Canadians who take out a mortgage, for example.

[Translation]

June's white paper recommended that the government amend laws governing financial institutions to require them to give all consumers full access to their complaints process, either in their branches or online.

[English]

One of the central pillars of consumer protection is providing them with the information required to make the right initial choice of product and the information required to properly lodge a complaint and seek compensation if that product is defective. Yet, the bill has largely ignored this recommendation from the white paper.

I do not think the majority of Canadians are very familiar with what the complaints process is at their local banks and legislating information in that respect to be readily available would have been a great idea and is still a great idea. My riding and I am sure many of my colleagues' ridings receive calls and complaints about banks, service charges and a range of other things. There is a bank ombudsman and there is actually an ombudsman of all ombudspeople. That is a very useful mechanism.

I would be willing to bet that there are a good number of Canadians who do not even know that there is an ombudsman for banking services should they exhaust all the avenues available to them. The banking services ombudsman and his office do fine work. I have worked with them before on a number of issues. I would have liked to have seen a requirement for information about the services of the ombudsman be made readily available.

The white paper called for the streamlining of the ministerial approval process. Currently, there are numerous ministerial approvals required for a broad range of important financial sector transactions related to market entry, structure and competition, as well as financial institution ownership. There are also many routine transactions that require multiple ministerial signatures. This could be dealt with in a more efficient manner and this bill would ensure that happens.

The bill also contains a few items that go beyond the white paper. For instance, the bill proposes to reduce the number of resident Canadians who are required to sit on the board of directors at a Canadian owned financial institution. Currently, two-thirds of such directors must be residents of Canada. The bill proposes to reduce this requirement to more than half of the directors being Canadian.

I know this issue comes up when financial institutions in Canada look to merge or acquire assets in the United States by way of example. When they try to merge, very often the U.S. enterprise will say it will merge but it would like a stronger representation on the board of directors. Frankly, I would encourage our financial institutions to grow north-south. This would give them options beyond just looking to cross-pillar mergers in Canada. This is a positive step.

[Translation]

The two-thirds requirement worked well in the past, but these days, our financial institutions have added a major international component to their activities. Relaxing these requirements would promote the growth and enhance the competitiveness of Canadian institutions on the world economic stage.

(1220)

[English]

I brought up with the Minister of Finance the question of data processing outside of Canada. The proposal in Bill C-37 says the approval of the Superintendent of Financial Institutions would be eliminated for the processing of information of data outside of Canada. While I appreciated the minister's remarks, I think that is in the domain of the Privacy Commissioner.

If a financial institution in Canada was proposing to outsource some of its data processing outside of Canada, keeping superintendent approval is probably still a wise thing to do because before the superintendent would give his or her approval, he or she would presumably ask whether the Privacy Commissioner had been consulted and whether the transactions would protect the privacy interests of Canadians. I am sure the superintendent and the Minister of Finance do not mean to pass this off to someone else to get out of a sticky situation. I am sure that is not the motivation.

Whatever the motivation, the government and perhaps a committee should look at whether this is a wise thing to do given the recent events where certain data processing activities in the United States came under the purview of the patriot act. The confidential information of Canadians was perhaps compromised.

As I said earlier, our government made changes to the financial sector framework in 2001 to set up the process where any bank merger would be required to pass a parliamentary committee test as to whether or not it was in the public interest. That was a good move.

However, in that period, the finance committee of the House of Commons did not review cross-pillar mergers. A cross-pillar merger would be, for example, when a Canadian bank wishes to merge with a Canadian insurance company. The minister has signalled that he is not interested right now in any sort of cross-pillar merger proposals, but if that day ever comes, the public interest criteria and framework that was set up for potential bank mergers needs to be looked at by the House of Commons Standing Committee on Finance because that work was not done for cross-pillar mergers.

Unfortunately, I am not at the stage where I could have proposed amendments to the Bank Act, but that may come one day. I just have to do more work on this particular issue.

An area of interest to me has to do with Internet betting. The Woodbine Racetrack is in my riding of Etobicoke North, and it is expanding at an incredible rate. It is developing its property to include the concept of Woodbine Live, which will have entertainment, hotels, shopping, et cetera. One of the issues that is of great importance to Woodbine is the growth in Internet betting which is actually taking some of its market share away. The irony is that Internet betting is illegal, but no one seems to want to prosecute. As a racetrack, Woodbine is regulated very carefully by the provincial and federal governments. It would be happy to get into the game of Internet betting if everybody else was doing it, but it is reluctant to do so because of the regulatory regime that oversees its operations. It could lose its licence.

I have looked at this from a number of different angles. I have tried to engage the RCMP and the Ontario Provincial Police. No one seems to really be interested in seeking prosecutions in this area. One way to come at it is to do what has been done in the United States where it is illegal for banks to accept cheques, debit or credit cards for Internet betting activity.

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Yesterday we debated a bill sponsored by my colleague from Bourassa with respect to video terminals in bars and restaurants. Young people could become addicted, and not just young people, but many people do become addicted. The reality is there are some people who sit in their homes, go online and play poker on their computers at poker.com, et cetera. I have never done it myself but I am told that in order to do that, people have to use a credit card or a debit card to create some credit authority.

If there were changes made to the Bank Act that the banks would not accept debit cards or credit cards associated with online Internet betting, this might be a way of trying to limit some of these activities. It would make sure that the playing field was level for organizations in my riding such as the Woodbine Racetrack, which has a very proud reputation in Canada. It hosts the Queen's Plate annually. It is a great institution and I am very proud of it.

In conclusion, I think that all parties can agree this bill contains some much needed updates for our financial institution legislation. I personally do not think the bill contains anything particularly contentious. I will be happy to provide it with my support, with the caveat that if it is referred to committee, the committee should look at a couple of the issues that I have raised today.

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Mr. Pierre Paquette (Joliette, BQ):

I am very pleased to participate in this debate. It might seem very technical, but it is extremely important, especially for consumers and all of our fellow citizens. We do business with financial institutions every day, especially with banks and near banks. Although these are private enterprises, they are for all intents and purposes public services.

Bill C-37 introduces certain changes to the banking system while ensuring its stability. The government is required to undertake consultations every five years to update legislation governing financial institutions. October 24 was the deadline for consultations on legislation governing financial institutions, but the government extended the application of these laws to next April 24 to enable Parliament to study the issue more thoroughly.

Bill C-37 follows the June 2006 publication of a document entitled 2006 Financial Institutions Legislation Review: Proposals for an Effective and Efficient Financial Services Framework, as well as Advantage Canada, which was recently published by the government during the economic and fiscal update. A lot of work went into drafting this legislation. Bill C-37 would implement new mechanisms to make Canada's financial system more efficient. This bill is aimed at achieving three key objectives. As I said earlier in my question to the minister, those objectives are to enhance the interests of consumers, increase legislative and regulatory efficiency, and adapt the regulatory framework to new developments. This is a sector that has seen a lot of technological, financial and service development over the past few decades.

On the whole, we are quite happy with this bill, because it meets a real need. Obviously, a number of things will need to be discussed in committee, and I will talk about those in my speech. We will therefore vote in favour of Bill C-37 at second reading, but we reserve the right to improve the bill, with the help of the other parties in this House, so that it better meets its objectives, which the Minister of Finance outlined earlier.

I spoke earlier of three key objectives. The first is to enhance the interests of consumers. This includes three main elements. The first consists in improving the system of disclosing information to consumers; the second consists in amending the regulatory framework to provide for the introduction of electronic cheque imaging; the third consists in reducing the hold period on cheques.

The first element of this first objective consists in improving the disclosure regime. As the minister has said, the intent is to help consumers make informed decisions about investment vehicles by providing them with more specific, more extensive, more easily accessible information. The government is therefore proposing higher standards for disclosure of charges and penalties that apply to various accounts and investment vehicles. It will also require institutions to clearly disclose this information on the Internet. Today, many Canadians use the Internet for their financial and banking transactions, paying bills and looking for information. Of course, not every household has Internet access yet, so this information will be available not only online, but also in all branches. That way, anyone who needs information will have access to it.

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The second element of this first key objective of enhancing the interests of consumers is amending the regulatory framework to provide for the introduction of electronic cheque imaging.

Bill C-37 will establish a legislative framework for electronic imaging in order to facilitate cheque processing by financial institutions and to reduce the hold period on cheques. I believe that the technological developments to which I referred earlier, particularly in the area of financial management, make it possible to use this new tool.

The third element in the first key objective of enhancing the interests of consumers also results in shorter hold periods by financial institutions on cheques.

As we know, following the publication of the 2006 Financial Institutions Legislation Review, the government undertook to reduce hold periods on cheques in order to make life easier for everyone, particularly SMEs and the public.

A hold on a cheque makes our life very difficult. When we receive a cheque, we deposit it and have bills to pay or debt payments to make. We realize that our money or our assets are on hold. They are frozen, in today's language, by the bank for 10 days, even in the case of cheques from major companies or the government. The solvency of the issuer of the cheque is not in question. To manage risk and security, a hold is placed on these cheques for 10 days.

With Bill C-37, the Superintendent will have the authority to establish the hold period on cheques. In the white paper, it is recommended that the hold period be reduced to a maximum of seven days, and then five days once electronic cheque imaging, about which I spoke earlier, is implemented.

Cheque holds not only affect consumers who need to access funds to pay their bills and make debt payments or simply to do their everyday shopping, they also affect small and medium-sized businesses that do not always have a large cash flow margin. They need that cash flow to pay their suppliers and employees and to operate their businesses from day to day. They often do this out of the funds they deposit into their bank accounts from day to day.

I think that this is something that everyone will be pleased to see. As I said earlier, the 10-day maximum hold period for funds deposited is a source of irritation to virtually everyone.

As well, the government would like to ensure that the efficiencies that will be gained through the Canada Payments Association initiative to change the payments system to facilitate electronic cheque imaging will be shared by all users of the payments system, including consumers.

We certainly cannot object to this first objective and the corresponding elements, but in our view it does not go far enough.

I am sure that some of my colleagues in all parties in this House regularly receive letters from consumers these days, as I do, saying that they have been victimized by the practices of banking institutions, and in particular the big banks, and who feel that they simply have no recourse. Starting a legal battle against a financial institution that is a billionaire several times over is something that most of our fellow citizens cannot do. We need to find solutions for this problem so that consumers have some assistance in seeking remedies against financial institutions.

A few minutes ago I proposed that an ombudsman be appointed who would have more power so that he or she could take on a case and go to bat in court for consumers who have been harmed—or who think they have been harmed—by banking practices, so that consumers would not have to use their own funds to defend themselves.

I think that we need to consider, in committee, how we can achieve the ultimate goal of giving consumers more power in their dealings with financial institutions, in terms of compliance with banking legislation but also their rights as consumers.

I would add that the minister’s answer was not what I was looking for. Helping consumers to make informed choices involves more than just handing out more information.

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Financial institutions are more familiar with the ins and outs of the financial system and the money market than consumers are. That is in fact why we have given consumers specific rights, to protect them, because the seller always has more information about what it is selling than the buyer does.

I think that the committee will have a lot of work to do in this regard. As I said earlier, we will be voting for the bill on second reading precisely so that we will be able to do that job. In recent days, I have assured some of my fellow citizens that the Bloc Québécois is eager to do this.

The second objective deals with increasing legislative efficiency. Obviously, this is a motherhood issue. There are three key elements. The first involves reducing the regulatory burden placed on foreign banks to facilitate their entry into the Canadian market and stimulate competition; the second is to streamline the by-law approval process; and the third is to refine the federal legislative framework for credit unions.

The reason I am interested in the first element of this second objective, increasing legislative efficiency, is that this measure, which will reduce the regulatory burden, is a response to the concerns expressed during consultations on the review of the Financial Institutions Act.

The Canadian market, as we know, is extremely concentrated and dominated by five major banks. Any legislation that aims to promote competition is desirable, in our opinion.

I know that, in the past, laws have been passed to promote competition, but we have to acknowledge that they have not produced many results up to now.

Moreover this is what caused the Standing Committee on Finance—I do not recall exactly in which month—in its report on bank mergers in 2004, to be extremely reluctant to lift the moratorium on bank mergers. A market that is already concentrated, with a merger of two large banks from among the five largest, would end up being even more concentrated. And when you have concentration, you have an oligopoly, and an oligopoly means that consumers are extremely short-changed.

This is the present situation in the Canadian banking system. I could give my region as an example. In the Joliette region, there are relatively few banks, so we are more or less at the mercy of those that are there. We do not have an unlimited choice.

Therefore a measure that would promote the introduction of foreign banks into the Canadian market is welcome. In that regard, as I mentioned, Bill C-37 would clarify the measures applying to foreign banks operating in Canadian territory by refocusing the regulatory framework on the chartered banks and simultaneously excluding the near banks.

I do not need to define near banks but for the benefit of our audience, I will say that they are companies that offer financial services of a banking nature. Unlike chartered banks, near banks cannot change their basic money supply, that is, they cannot borrow money from or lend money to the Bank of Canada to make new deposits or loans.

So this is an interesting measure. We will get a better idea, as the committee studies the bill, of the scope of these measures designed to increase competition in the Canadian market. As I said, previous legislation did not produce many results.

The second element is the streamlining of the regulatory approval régime. This measure is designed to simplify the process pertaining to routine transactions not having any effect on public policies. So Bill C-37 wants to transfer the power to approve or refuse certain operations or transactions from the minister to the Superintendent of Financial Institutions.

This is one aspect of the bill we would like to address in committee and study in depth because we have to ensure that only decisions that do not impact public policy, as provided for in the legislation, are in the hands of the superintendent. From that perspective, the criteria and characteristics will be extremely important. How do we define a transaction or an operation that has no affect on public operations?

The Bloc Québécois will not allow the minister to depoliticize operations that will have an impact on public policy. Those have to stay in his hands and also be subject to a democratic debate.

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The third aspect has to do with relaxing the federal framework governing credit unions. This is a request that has been made a number of times by the Standing Committee on Finance. In order to facilitate the opening of new credit unions, the government would lower to two the number of institutions required to constitute a credit union. At present, a minimum of 10 credit unions is needed to establish an association under the Cooperative Credit Associations Act.

However, in light of the new commercial possibilities offered by retail associations and the continued consolidation in the credit union system, the current requirement places too high a threshold for new entry. A lower requirement would add flexibility to the federal framework for the credit union system, improve the system’s capacity to adapt to new developments and enable it to better serve consumers and SMEs. As I was saying earlier, the major banks are in the process of leaving several regions in Quebec and Canada and, generally speaking, credit unions are picking up the slack. In Quebec, we are well served, but this is not the case in all the Canadian provinces.

The last objective includes all the other measures—and there are three. The first is to increase from 75% to 80% the loan-to-value ratio for which insurance is mandatory on residential mortgages. The second is to readjust the equity threshold above which a bank is required to be widely held and below which it can be more closely held. The third consists in increasing the limit, from one third to a minority, on the number of foreign members of the boards of directors of Canadian banks.

I will quickly outline what these measures entail and what the Bloc Québécois thinks of them. We agree with the first measure, which consists in raising the loan-to-value ratio requiring mortgage insurance from 75% to 80% for residential mortgages. The mortgage market has changed dramatically and is now much better known. Mandatory insurance for high loan-to-value ratio mortgages was introduced over 30 years ago as a prudential measure to ensure that lenders are protected against fluctuations in property values and associated defaults by borrowers. The last time the threshold was increased was following the Porter Commission in 1965, when it was raised from 66.7% to 75%. The market place has changed since then. The risk management practices of lenders have improved significantly. Regulatory risk-based capital requirements have been implemented. Capital markets have changed and matured. The supervisory framework for federally regulated financial institutions has been strengthened significantly

The restriction may therefore no longer serve the same prudential purpose. As a result, a statutory requirement for insurance set at 75% loan to value ratio may mean that certain consumers are paying more for their mortgage than is justifiable on a prudential basis. It is also preventing some Canadians from owning their own homes, whereas they could afford to own a home if the ratio were increased to 80%.

The second measure adjusts the equity thresholds that allow banks to be wholly owned or force them to be widely held. In 2001, a new sized-based ownership regime was implemented. Under the new regime, the equity threshold above which a bank is required to be widely held—I will come back to this definition—was set at $5 billion to capture the largest banks whose potential failure would have the greatest impact on the financial system and the economy. This was another fear that the Standing Committee on Finance had expressed in its report on bank mergers.

If a major bank were to go bankrupt in Canada, in such a highly concentrated market, how would the Canadian economy be affected? To ask the question is to answer it. The result would be disastrous. We therefore have to make sure that these banks are on extremely solid financial ground.

Under the 2001 regime, medium-sized banks with equity between $1 billion and $5 billion can be closely held, but are subject to a 35 per cent public float requirement (unless a ministerial exemption is obtained). Thus, there is at least some distribution of assets. This ensures that, if one of the shareholders is having difficulties, the financial institution itself can overcome the difficulties. Furthermore, the threshold for small banks, which can be wholly owned by a single shareholder, was set at $1 billion to encourage new entrants.

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The intent of Bill C-37 is to change the equity thresholds in order to adjust to the new reality of the considerable growth in the banking industry since 2001. Thus, the equity threshold for sole ownership, that is, a single shareholder, would be raised to $2 billion. Furthermore, banks whose equity varies between $2 billion and $8 billion, rather than between $1 billion and $5 billion, must henceforth have a minimum of 35% of their voting shares listed on the stock exchange. Lastly, banks whose equity is greater than $8 billion, rather than $5 billion, as in 2001, must be widely held. Of course, this is nothing new to anyone here, but once again, for our viewers, a widely held company means that no one shareholder can hold more than 50% of the voting shares.

Finally, to account for the reality that Canadian banks are purchasing more and more foreign banks, the minority would be increased, which means that the voting majority on the board of directors must be Canadian citizens, not necessarily by birth or nationality, but Canadian citizens, nonetheless.

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Ms. Judy Wasylycia-Leis (Winnipeg North, NDP):

Mr. Speaker, this is an interesting debate for Canadians. This is a very major policy area that requires thoughtful deliberation and thorough debate.

I want to start by saying that we on our side of the House have no intention of speeding up the process around deliberations on this bill. Bill C-37 is a momentous moment for us, so to speak. This is the culmination of a review of our financial institutions that happens every five years. This is the moment when we actually reflect on how we are doing in terms of the Bank Act, what problems are outstanding and where we can still make a difference.

This is not a routine matter. This is not a quick overview and a resolution of a few outstanding issues. This is the time when we consider what is going on in the banking world and how we fix it. How do we change it? How do we make it better from the point of view of Canadians?

We are here today to talk about Canadians and whether or not they are served well by the Bank Act, whether they are served well by financial institutions, and let me tell members that coming from a community that has seen most of its banks up and leave in the space of less than 10 years, I can say that Canadians are not served well.

We look to this process and this legislative review opportunity to make changes that are necessary, so the first thing I want to do today is take some time to go over some of the situations my colleagues and I have experienced and that need to be addressed. I will say at the outset that while the issues in the bill may be necessary and while we may support them, my question is, just as it was for the last bill, where is the rest of it?

Where are the issues that Canadians have brought to the table? Where are the solutions to the problems that Canadians have identified? Why are we in slow motion in terms of an area that is so fundamental to the life of communities everywhere and to the health and well-being of Canadians?

This debate is not meant to be a boring, staid sort of dry discussion over technical details. This debate should be about whether or not the bill reaches out to deal with problems that Canadians have raised with the government and whether or not the government, once and for all, in fact is prepared to deal with some very serious situations.

We are at a moment when Canadians are feeling that their needs and concerns do not matter one bit and that all this government, like the past government, wants to do is defend the big banks, the big financial institutions and their profits.

Speaking of profits, let us look at the final quarter bank profits this year. Let us look at the fact that, by all accounts, on average we are dealing with record level profits for all major banks. Looking at some of the statistics, I see that for the Royal Bank in the last quarter profits were up by $1.4 billion, I believe.

Hon. John McKay: That's terrible.

Ms. Judy Wasylycia-Leis: Oh, my colleague from the Liberals asks if that is not terrible, in a mocking way.

No one is saying that it is terrible to make a profit. We are talking about whether or not those profits are then used to serve Canadians. Surely the Liberals have some interest, finally, in serving Canadians. Did they not get a lesson at the polls? Did they not realize from the spanking they got that in fact it was time to start listening to Canadians and stop ignoring the everyday needs of Canadians right across this country?

I do not expect much from them. I have tried in the House on numerous occasions to get the former parliamentary secretary for finance to listen to these concerns so that he might get through to the former minister of finance, but it was impossible. We tried on numerous occasions to get the former government to actually address the concerns of enormous profits in the face of absolute negligence at the community level, but to no avail.

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We are starting fresh. We are hoping that the Conservatives understand this issue. I am not going to give up just because the Conservatives and the Liberals so often seem like two peas in a pod. I am not going to give up, because there is too much at stake. What is at stake, in fact, are the health and well-being of communities that desperately need access to financial services.

My colleagues on the Liberal benches seem take some glee in the profits that banks make. The Royal Bank's total profits for this year are over $4 billion, as I understand it. The question we are asking is whether there is any way we can keep some of those profits in this country.

Why does so much of those bank profits go off to tax havens in the Barbados where banks do not have to pay any taxes on them? We have just dealt with that debate. Why are some of those profits not put back into the communities that were loyal to the banks over the years, instead of the banks up and abandoning communities?

I do not know if the members in the House who are smiling and laughing during this debate have any understanding of what it is like when an entire community loses every one of its banks, of what it is like to see 10 bank branches close in the space of a decade. I am not talking about just one riding, I am sure, but I can sure talk from personal experience, from the point of view of people in Winnipeg North, a community of older, inner city neighbourhoods.

I am talking about a huge area, if anybody knows Winnipeg, from the tracks to Inkster Boulevard in the north end and from Red River to McPhillips Street. If people know Winnipeg at all, they will understand that I am talking about a large, populated area, which has many small businesses, many families that are not wealthy, and many seniors who are not wealthy, who do not have cars to drive to the suburbs, who may find it difficult to access buses, and who do not have computers in their tiny apartments. Some of the people in my constituency do not even have phones, so access to a bank branch is a rather important necessity. It is a bread and butter issue that is part of one's day to day living and working experience.

We have seen communities like Winnipeg's north end deserted by banks. I want to see that addressed in this bill. I want the government to care about that situation. I would like to see some attention given to this matter.

This is the opportunity.

Back in 2000, when we agreed on the bill that set in motion the five year review with the opportunity to make changes as necessary, we put in place in that legislation, and we agreed with it, the Financial Consumer Agency of Canada, its purpose that of overseeing financial operations from the point of view of consumers, protecting consumer interests and speaking up when necessary. It was a place for consumers to take their concerns and have them addressed and it had some powers to oversee bank decisions in terms of branch establishments and closures.

We discovered through this whole process of bank closures that in fact the bill we supported back then did not have enough teeth in it to ensure that the Financial Consumer Agency of Canada could actually hold a stick over big banks to make sure they were following some due democratic process in terms of communities they were serving. Those communities were loyal to them for decades, sometimes for over 100 years, before the banks up and abandoned entire communities. When the last bank branch turned off its lights and closed its doors in this particular area of my riding, Winnipeg's north end, the community had to do something.

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I want to say that one big bank left a branch at the edge of that geographic area I described, and that is the Bank of Nova Scotia. We continue to work with that bank to make sure there is a good liaison between the bank and the people so that in fact that relationship stands us in good stead and that no corporate decision from Toronto will lead to the closure of that bank branch as well.

For this huge area, there are no banks. There are no branches. When faced with that alternative, the community did the right thing. The people of community stood up and said, “If the banks are not loyal to us, then we will not be loyal to them, and we will take things into our own hands”. Thank goodness for that kind of determination, perseverance and community spirit, because over the last several years that spirit, that perseverance and that determination have allowed for the establishment of an alternative community financial services centre.

That development occurred just a few weeks ago and officially opened on November 16, and in fact it is one way in which our community has been able to overcome this kind of neglect and abandonment by the big banks. I am here today first of all to give kudos to people in my community who made this happen and to actually acknowledge the fact that it did not happen because of some decision from government. It did not happen because of largesse from either government or the business community. It happened because local community members decided to fight back. They fought back until they got something, not everything, but something that will take the place of all those banks.

I want to acknowledge all of those people who fought so long and hard to get this centre, which is something that needs to be said in the context of this review of the Bank Act. It happened because of people like Jerry Buckland from the Winnipeg Inner-City Research Alliance. It happened because of his work and his studies, repeating the information over and over again and producing studies, including “The Rise of Fringe Financial Services in Winnipeg's North End”, “Fringe Banking in Winnipeg's North End”, and “There Are No Banks Here: Financial & Insurance Exclusion in Winnipeg's North End”.

Those studies clearly show that as the banks left, payday lenders moved in, and people were left at the whim of an unregulated sector. Fortunately, I believe and I hope, the government is moving on the legislation to actually close the loophole with respect to payday lenders and fringe financial services, but the point needs to be made that in fact there are still so few alternatives for people who have been left high and dry by our financial institutions.

It is important to recognize the work of a community like my own when it fights back and wins, so I want to acknowledge the work of Jerry Buckland, who helped produce all these studies, along with Nancy Barbour, who has since passed away and to whom we owe an enormous debt of gratitude.

We had hoped that in this legislation today there would be some amendments to put some teeth into the agency that is there overseeing consumers' interests. That does not appear to be in this package.

We had hoped that somehow the government would have realized the importance of emulating an initiative in the United States. We often point to initiatives from across the border, but in this case it is one that we should look at and consider seriously, and that is a community reinvestment act that requires big banks that choose to leave a community to put money made from that community back into that community to help with economic and social development.

That is an innovative proposition that needs to be seriously considered in this country. We need to ensure that there is some way to give back to the community that which has been taken out of it through long time loyalty to banks and the contribution to the kind of enormous profits we are seeing today.

Study after study has talked about consumers' interests in this regard. I want to reference a speech by Murray Cooke, who is with the Centre for Social Justice. He writes:

In terms of finance, we need to ensure that not only business has access to capital, but we need to ensure that all Canadians, including those living in rural and small town communities, including disadvantaged groups no matter where they live, have reasonable access to finance and basic financial services. While this is an issue of social justice, I think you could appreciate that there are also wider economic benefits involved in allowing and encouraging everyone to be economically active rather than economically marginalized.

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On that note, it is important to point out, again, the impact of the government's decisions in closing Status of Women offices and shutting down programs that were helping in this regard. I refer specifically to a program entitled “Money & Women” , which was organized by the North End Women's Centre in Winnipeg in the heart of my constituency. It works on a daily basis with women to ensure they have the financial knowledge, information and expertise to handle their own banking, to access banking services and not to become dependent on payday lenders.

This is a valuable service that is no longer available because of the government's heartless cuts. This is a case of government money helping a community to help itself. It was a case of money going through a program and an organization to women directly to help them manage their finances and put themselves on a stronger financial footing.

How in the world can that be described as money for bureaucracy and money for administrative purposes? This is money that goes directly toward the benefit of women, and the government has totally denied women that opportunity. Shame on it for that kind of heartless, disgusting cutback that gets at the very soul of the community and the very heart of an individual's desire to play a meaningful role in society today.

People in my community and everywhere do not want to be a drain on society. They do not want to stay on social assistance if they do not have to. They do not want to be dependent on anyone. They want to be independent and they want to manage their own affairs. Surely the most important thing government can do is provide the resources to help people help themselves, to give them the tools through literacy, through bank projects, through volunteer initiatives that help people to help themselves.

I cannot think of a single reason, from the civil society point of view or any perspective from a civilized society, why the government would take that program away. I cannot understand why the government wants to resort to the law of the jungle and the survival of the fittest. I thought it was against people staying on welfare and being dependent on the state. I thought government was about giving people the tools they needed to help themselves. Yet it is taking away the very things people need in order to participate fully in our economy so they can get a job, pay taxes and contribute to this country. It is beyond any kind of understanding and comprehension.

Let me get back to the Bank Act. Another fundamental issue for people around the Bank Act has to do with disclosure. It has to do with access to information and accountability and transparency. I know the bill touches on this issue of trying to deal with some of the numerous briefs that were presented during the development of the white paper.

Bill C-37 falls far short of what is needed. It by no means addresses the real concerns of Canadians. Let us remember, we are talking about a very complex world that provides to citizens a dizzying array of products, choices and services, yet we are doing nothing to ensure that people get the full information they need.

Some very important suggestions were made on that front. I think about the role of Democracy Watch. I think about the role of the consumer advocacy groups and others that have tried to get the now government, and the one before it, to consider the idea of citizen participation, citizen boards as a vehicle for ensuring the proper flow of information between big financial institutions and consumer groups and individuals so people would be fully aware of what was happening and would have some say when there were those possibilities for decision making.

Bill C-37 fails Canadians on some key issues. We need to stop and reflect on what is missing in the bill, what Canadians heard during the process and how we can make a better bill.

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[Translation]

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Mr. Thierry St-Cyr (Jeanne-Le Ber, BQ):

Mr. Speaker, I am pleased to address the House on the subject of Bill C-37, which we are debating today.

Every time it has to decide whether to support a bill or not, the Bloc Québécois considers its value for Quebeckers. If the bill offers real benefits for them, the Bloc Québécois supports it; if not, it does not.

We have examined Bill C-37 closely and, after weighing the pros and the cons, we have concluded that we support the principle underlying the bill.

What factors did we take into consideration in our analysis? There are several. First, the bill would implement mechanisms to transmit information to consumers, which would enable them to make more informed choices about banking services. Second, the bill would implement a regulatory framework to permit electronic cheque processing, which would reduce the time during which institutions hold cheques, thereby addressing an issue our citizens have often raised. I will come back to this later on.

Third, this bill would reduce the regulatory burden on foreign banks, credit unions and insurance companies, thereby making the regulatory approval régime more efficient.

We have also found a fourth advantage: Bill C-37 would change regulations governing mortgage loans, thereby enabling more people to take advantage of that financial tool. That is very good.

Last, the government would increase the equity threshold from $1 billion to $2 billion, thereby making it possible for a single shareholder to wholly own a bank, thus encouraging new entrants and promoting competition.

The Bloc Québécois supports the bill in principle, but we have some reservations. As members of the Standing Committee on Finance, my colleague from Joliette and I will work to ensure a number of things.

We will begin by ensuring that the regulations are changed, and we will make certain that those changes do not allow the kind of uncontrolled mergers and acquisitions we have seen before in the banking sector.

We will continue to insist that any change to the moratorium on bank mergers be in the best interests of the public, and not made just to satisfy the financial market. To that end, the Bloc Québécois will be ensuring that the Standing Committee on Finance will hear the appropriate witnesses. We will also be proposing the amendments that are needed for this bill to pass.

The Bloc Québécois will also be stepping up the pressure on the federal government to adopt the necessary measures to protect people’s savings, in particular by appointing a federal ombudsman for the financial sector. The ombudsman will have the powers needed to defend the public based on Canadian banking law and thus enable members of the Canadian public to exercise their rights without having to go through the endless and tedious legal battles that the banking institutions wage. We therefore believe that this is a flaw that must be remedied, and we will be working to persuade the federal government to create such an ombudsman position.

That is our stand on the bill that is before us. Nonetheless, it might be worthwhile to consider the context here and recall why we are dealing with this bill today.

Every five years, to ensure that the banking system has a degree of flexibility while remaining stable, the government must hold consultations leading to the review of the financial institutions statutes.

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October 24 was the date on which the financial institutions legislation expired. The government extended the sunset date for the legislation to April 24, 2007, so that Parliament could examine the matter.

Bill C-37 follows on the document entitled “Proposals for an Effective and Efficient Financial Services Framework”, released in June 2006, and the document entitled “Advantage Canada” published by the government at the time of the latest economic and fiscal update. Unfortunately, that document says nothing about the fiscal imbalance. We understand, of course, that this is not the topic of debate today, but I find it hard not to mention this serious omission in the economic update.

The object of Bill C-37 is to put in place new mechanisms to improve the efficiency of the Canadian financial system. There are three main components to this bill. The objectives of those components are, first, enhancing the interests of consumers; second, increasing legislative and regulatory efficiency; and third, adapting this regulatory framework to new developments.

I would now like to analyze the bill in more detail. Of course, I will come back to the three components I have listed.

The first component is enhancing the interests of consumers. This bill provides for a set of measures, the first of which is to improve the rules for disclosing information to consumers.

In order to allow consumers to make informed choices among their investment vehicles, the government will raise the standards concerning disclosure of charges, obligations and penalties relating to different accounts and investment vehicles. That is important because people often make that comment to us, as well as people with savings who are making choices. Later, when they realize the consequences, the charges and the penalties associated with their choice, they are often angry and feel that they have been betrayed by their financial institution. In fact, they were not in a position to have the full details of the information that would have allowed them to make proper choices.

The government will require those institutions to clearly disclose that information by means of the Internet, in all their branches, and in writing for any person who makes that request.

In the same vein, there is a second measure. This one will change the regulatory framework to enable the introduction of electronic imaging in the processing of cheques.

This bill will establish a regulatory framework to enable the introduction of electronic cheque imaging to facilitate processing and reduce the hold time in banking institutions.

That is a good example—I mentioned it previously—of the necessary evolution of the Banking Act. It is understandable that with the development of new technologies, the regulatory framework must also evolve to enable the use of digital imaging in processing cheques. We will have a legal financial framework for that, thanks to this bill.

Another measure involves the reduction of the time that banking institutions can hold a cheque. Following publication of the 2006 financial institutions legislative review, the government made a commitment to reduce cheque hold times to make life easier for small businesses and other Canadians.

Bill C-37 gives the superintendent the power to set cheque hold times. The white paper proposed an immediate reduction of the maximum hold time to seven days, and to five days once the digital cheque imaging system is in place.

Cheque holds affect not only consumers who need to have access to those funds to pay their bills, but also small and medium businesses that must pay their employees and keep the business operating out of the funds they deposit.

In addition, the government wants all users of the payments system—including, obviously, consumers—to benefit from the increased efficiency resulting from the Canadian Payments Association initiative that involved changing the payments system to facilitate electronic imaging of cheques.

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In my opinion, this need for faster processing of cheques may be seen quite concretely in the explosion of small businesses that cash cheques quickly and that are proliferating throughout our towns and villages. This clearly shows that there is a need and that people want to use the money available to them quickly, but that they cannot do so in the standard banking institutions, because their money is held for several days.

Probably everyone has already experienced something like this. It has happened to me personally to make a withdrawal and for it to be drawn on my line of credit instead of on my regular account, even though the money was in my account. The money was simply being held while waiting for the necessary checks to be made. It is a bit frustrating when we pay interest on funds that are already in our bank account. This is a real problem and if these delays can be reduced, it will be to the great advantage of consumers. So I was talking about the first objective, pertaining to consumers.

The second objective is to increase legislative efficiency. In this section, a first measure consists of lightening the regulatory burden on foreign banks so as to facilitate their access to the Canadian market and stimulate competition. This measure arises from the concerns expressed during the consultations pertaining to the review of the Financial Institutions Act. The Canadian market is already fairly open to foreign competition in the banking field. But certain problems were raised concerning the regulations governing foreign banks doing business in the Canadian market.

Bill C-37 aims to clarify the measures applying to foreign banks operating in Canadian territory by refocusing the regulatory framework on the chartered banks and simultaneously excluding the near banks. The near banks are companies that offer banking-type financial services. Unlike chartered banks, near banks cannot change their basic money supply, that is, they cannot borrow money from or lend money to the Bank of Canada to make new deposits or new loans.

Still in the same section, a second measure aims to streamline the regulatory approval regime. This measure is designed to simplify the process pertaining to routine transactions not having any implication for public policies. Thus the power to approve or refuse certain operations or transactions will be transferred from the minister to the Superintendent of Financial Institutions.

The Bloc Québécois is really concerned about this and it is a part of the bill that will need further study in committee to ensure that only decisions that have no public policy implications are put in the hands of the superintendent. In other words, we will not agree to any hint that the minister is allowing operations with public policy implications to be de-politicized.

The purpose of the third measure is to loosen the federal framework governing cooperative credit associations. In order to make it easier for new associations to emerge, the government will reduce the number of establishments needed to constitute a cooperative credit association to two.

At the present time, 10 cooperative credit associations are needed to form an association under the terms of the Cooperative Credit Associations Act. However, in light of the new commercial possibilities offered by retail associations and the continued consolidation in the credit union system, the current requirement places too high a threshold for new entry. A lower requirement would add flexibility to the federal framework for the credit union system, improve the system’s capacity to adapt to new developments and enable it to better serve consumers and mall businesses.

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That was in regard to the second aspect.

There are a number of measures as well in the third aspect. The first consists of increasing from 75% to 80% the loan-to-value ratio for which insurance is mandatory on residential mortgages.

Mandatory insurance on mortgages with high loan-to-value ratios was instituted more than 30 years ago—quite a while ago—as a precautionary measure to ensure that lenders were protected against fluctuations in property values and possible defaults by borrowers.

The threshold was originally set at 66.7% or a two-thirds ratio. It was then increased to three-quarters or 75% following the Porter Commission in 1966. Markets have obviously continued to evolve ever since and we know, first, that lenders’ risk-management practices have improved considerably and second, regulatory risk-based capital requirements have been implemented. Financial markets have evolved and stabilized, and the supervisory framework for financial institutions under federal government regulation has been strengthened considerably.

It seems that restriction no longer plays the same prudential role it once did and, accordingly, a legal requirement by which borrowers must contract mortgage insurance at a fixed loan-to-value ratio of 75% could mean that some consumers are paying more for their mortgage than is justifiable on a prudential basis.

I know that because this summer I bought a house in Verdun—which is one of the most beautiful places in Quebec, and even Canada, as everyone knows.

Some hon. members: Oh, oh!

Mr. Thierry St-Cyr: Not all my colleagues agree, but that is a matter for discussion.

This experience allowed me to learn a little about the mortgage market. People are being given mortgages at increasingly lower rates—with a 5% or 10% down payment, and less in some cases. It is easy to get a mortgage. One might wonder why insurance would be mandatory with a down payment of up to 25% when the minimum down payment might now be decreased to 20%. This is only normal evolution.

The purpose of the second measure is to readjust the levels of equity capital to allow sole ownership or to force wide ownership. In 2001, a new size-based ownership regime was implemented. Under the new regime, the equity threshold above which a bank is required to be widely held was set at $5 billion to capture the largest banks whose potential failure would have the greatest impact on the Canadian financial system and the economy.

Medium-sized banks with equity between $1 billion and $5 billion can be closely held, but are subject to a 35% public float requirement, unless a ministerial exemption is obtained. The threshold for small banks, which can be wholly owned by a single shareholder, was set at $1 billion to encourage new entrants.

Bill C-37 would therefore change the equity thresholds in order to account for the new reality of the considerable growth in the banking industry since 2001. The equity threshold allowing sole ownership would be raised to $2 billion, or doubled.

Banks whose equity varies between $2 billion and $8 billion must henceforth have a minimum of 35% of their voting shares listed on the stock market. Banks whose equity is greater than $8 billion must be widely held, which means that no single shareholder can hold more than 50% of the voting shares.

The last measure in this section involves increasing the limit, which is currently one third, on the number of foreign members permitted on the board of directors of Canadian banks. As announced in the Advantage Canada plan—which, I would remind the House, says almost nothing about the fiscal imbalance, but that is not the topic of my speech here today—Bill C-37 amends the Bank Act by proposing a new measure that would make the boards of directors of Canadian banks subject to a new Canadian quota.

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At present, a minimum of two thirds of board members of Canadian banks must be Canadian residents. However, Bill C-37 would lower that threshold to a simple majority.

To justify this measure, the Conservatives argue that this new standard will foster the creation of international ties and open the Canadian banking sector to the rest of the world. Following the moratorium on all bank mergers in Canada, Canadian banks soon began acquiring foreign banks in order to increase their growth. Thus, a greater foreign presence on their boards of directors would allow Canadian banks to continue in that direction.

In closing, the Standing Committee on Finance still has a great deal of work to do on this. The Bloc Québécois will help with this work. For now, we support this bill in principle.

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Mr. Dennis Bevington (Western Arctic, NDP):

Mr. Speaker, I come from a northern part of Canada where banking services are limited in many small rural and remote communities and limited to the extreme. In some cases, people need to air freight their cheque to another community and have it cashed there and then returned to them, which is a huge expense.

Within any amendments that are being made to the acts governing the banks, I would think that we would want to see some attention paid to ensuring that there is some universality in some of the basic banking services across this country, especially in rural and remote communities. It may be that it will require some amendments to the act that would allow banks to provide more online services. I would say that there are things that could be done.

Although we have competition in the banking field, we do have very large companies that dominate the market. The banking industry needs to have some responsibility toward Canadians to ensure their services are available in all parts of this country.

Could the hon. member comment on how these amendments to the act will help people in rural and remote communities?

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[Translation]

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Mr. Thierry St-Cyr:

Mr. Speaker, I would first like to thank my colleague for his speech and point out that I believe his concerns are legitimate. I would even say that they are not limited to rural areas.

A few years ago, in the beautiful city of Verdun, in my riding—the city I spoke of earlier—the quality of service declined when a number of institutions closed. People are very concerned about this. I can understand that the impact may not be as serious as in a remote rural community. That is extremely disturbing. However, this is happening everywhere.

Earlier, I referred to the spread of instant cheque-cashing companies. Why should people have to pay fees that are often very high just to be able to use funds that should already be available to them? This is a real problem, and I think that some clauses of this bill will improve things, but will not solve the problem.

Of course, the whole problem of competition on the financial market remains. I also mentioned the importance of making sure that we do not go back to unrestrained bank mergers, that we impose a moratorium and that mergers always be made in the interests of consumers, which is often not the case, because too much attention is paid to financial markets.

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Mr. Wayne Marston (Hamilton East—Stoney Creek, NDP):

Mr. Speaker, I am very interested in these new measures for the banking industry and particularly in the area of foreign directors. I am wondering if the member, in considering this document, was concerned at all whether there should be any restrictions applied to directors from other countries.

[Translation]

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Mr. Thierry St-Cyr:

Mr. Speaker, in the bill as it currently stands, the measures apply essentially to foreign membership in boards of directors. That is the issue at present. In our opinion, this is acceptable as long as a majority of the directors are resident Canadians. With regard to officers of institutions, I must admit that I have never considered whether a problem actually existed or whether this was something that could eventually pose a problem.

However, I am convinced that if this issue were to be brought before the Standing Committee on Finance, the committee would examine it carefully and consider whether amendments should be added to place certain restrictions on officers. We believe that the measure currently proposed for directors is reasonable.

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Mr. Pat Martin (Winnipeg Centre, NDP):

Mr. Speaker, my colleague from the Bloc made reference to the blossoming of payday lenders and payday loan companies in his riding. I can tell him that the same applies in my riding of Winnipeg Centre where these outfits are sprouting up like mushrooms and where low income people, poor people I believe, are being exploited by these companies because they cannot find basic financial services anywhere else in the country.

Does my colleague share this view with me that the government should crack down on the payday lenders who are charging exorbitant usurious rates of interest, criminal rates of interest, and that rather than simply regulating the payday loan industry, it should prosecute people who charge more than 60% interest per annum?

[Translation]

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Mr. Thierry St-Cyr:

Mr. Speaker, I would like to clarify something. Perhaps what I said was misinterpreted. My riding does not have a problem with payday loans because they are prohibited in Quebec. The practice exists in the rest of Canada, but not in Quebec. Honestly, I hope that Quebec can continue to regulate the market to keep them out forever.

I was talking about people who receive cheques from their employer, businesses or individuals. They want to use the money right away, but they cannot. Once they deposit the cheque in the bank, they have to wait a week or two to get access to the funds. In my riding, there are businesses where people can take their cheques to get the money right away. The businesses charge a commission, which can sometimes be quite high. I used that example to show that there is clearly a problem.

When communities have a number of businesses whose revenue comes mostly from instant cheque cashing, that is because there is a need and a problem. People have money that they cannot use right away. That was what I was trying to explain. As for interest rates, it is true that the criminal interest rate is currently 60%. I think that is very high, and we should ensure that the limit is complied with. People who lend money at usurious rates exceeding 60% per year must be charged. If we did that, we would prevent a lot of exploitation. Unfortunately, it is often society's poorest people who have limited access to credit and good credit terms. Their debt eventually spirals out of control and they are trapped.

Personally, I really hope that the federal government will not interfere with provincial jurisdiction so that Quebec can continue to prohibit payday loans and enforce compliance with the criminal interest rate already provided for by law.

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Mr. Pat Martin (Winnipeg Centre, NDP):

Mr. Speaker, I am pleased to have this opportunity to enter the debate on Bill C-37. I thank my colleague for answering my questions and clarifying the view in the province of Quebec on some of these issues.

This is a massive piece of legislation affecting many consequential amendments and many pieces of legislation and acts. I may be proven wrong, but at first overview of the bill, I am afraid it may fail to address the single most compelling concern that we have about our financial and banking institutions and that is basic access to basic financial services for all Canadians.

I represent a low income riding in the inner city of Winnipeg. I can tell the House that there has been a flight of capital from the core area of the city of Winnipeg. My colleague from Western Arctic in his questioning of previous speakers told us today that there is a problem finding basic financial services in the rural and remote areas of Canada's north. This is a complex problem that is bigger than just an inconvenience.

In the core area of my riding of Winnipeg Centre, 15 neighbourhood bank branches have closed in the last five years. These branches have been there for 10 to 50 years. The bank that my parents banked at since 1948 when they were married and bought their first home also closed. This is a vote of non-confidence in the inner city.

Let me remind the House that our chartered banks are granted the exclusive monopoly on some very lucrative financial transactions, such as credit cards, in exchange for providing basic services to all Canadians even where that might not be the most profitable thing for them to do. That was the trade-off under which we granted their charters.

The Government of Canada should revisit these charters to ensure that our partners are in compliance with their obligations. In an era of record profits, I defy banks to justify why they are closing branches on every street corner in the inner city of Winnipeg. My colleague from Winnipeg North, who spoke before me, indicated that there had been 13 bank closures in her community.

Winnipeg Centre and Winnipeg North are venerable ridings with old established neighbourhoods full of hard-working people. These people trustingly trudged to the street corners year after year to cash their cheques at their banks. This is a thing of the past. I think it is a breach of trust. Banks have broken their contracts with Canadians because they are making record profits quarter after quarter. Every time we open the financial pages of newspapers we read about banks making record profits. We read in community newspapers about bank closures in the inner city of some major city or in rural Canada.

Ms. Dawn Black: In New Westminster too.

Mr. Pat Martin: In New Westminster too, my colleague from New Westminster--Coquitlam tells us.

I do not know if Bill C-37 satisfactorily addresses the one compelling issue facing Canadians and that is access to banking services. This has led to the proliferation of payday lenders. Every single vacancy in every strip mall across the country is being filled with another Money Mart or Payday Loans, et cetera. Why? Because they can charge 1,000% to 10,000% interest per year. Show me another business enterprise that receives 1,000% interest. Selling coke for God's sake does not provide 1,000% interest. Prostitution or any other illegal activity does not provide 1,000% interest.

The province of Manitoba did a study on payday lenders in my riding of Winnipeg Centre. One case study documented 10,000% per annum interest on some of the loans as a result of a series of surcharges and fees and roll-over loans. No wonder the Hells Angels are involved. No wonder terrorists are looking to this kind of activity to launder money. I trace it back directly to the banks and the abrogation of their duties to provide basic financial services. By abrogating their duties, they left a vacuum for these rip-off outfits to spring up.

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Without getting too over the top on what these reprehensible companies are doing in my riding, one thing they are doing is charging to cash cheques. If people knew their banking rights and if the charter banks were living up to their obligations, people should know that the banks have to open a bank account for them. If people have one piece of ID, even if they do not have any money, a bank has to open a bank account for them. It is in the Bank Act.

Yet poor, low income people do not know this, so they get maybe a government cheque and have no place to cash it because they do not have a relationship with a bank because the bank has abandoned their community. They wind up at a payday loan outfit where they are charged 3% or 4% of their social allowance cheque to cash it. It is illegal to charge to cash a government cheque. Another thing people do not know about their banking rights, and the present and past governments have made no effort to tell them.

Governments have allowed this burgeoning mini-industry of preying on the misery of poor people by taking a chunk of their meagre paycheques to provide basic financial services. I am not overstating it to say that it is morally and ethically reprehensible to be in the payday loan industry. It is morally negligent for the government not to police this industry and not to prosecute anybody who would exceed the usury laws in the Canadian Criminal Code and charge 1,000% per annum. They should be locked up. They should be led away in handcuffs. They should be dragged away in a paddy wagon and locked up, and the key thrown away because there is no lower form of animal in my view than someone who would prey on human misery by exploiting the poor and the desperate in the inner cities.

I am no big fan of the big banks. We do not need to do a tag day for the big charter banks in this country, but we should be holding their feet to the fire and make them live up to their basic commitments, their basic obligations under the Bank Act.

Bill C-37 would have been an opportunity to remind the charter banks of their obligations. In the inner city of Winnipeg where I live and at the corner of Portage and Arlington where I had my campaign offices two elections in a row in two different vacant buildings there are six payday lenders on that one intersection within a half a block in any direction and they are open all the time.

For low income people in my riding, because these firms have been around for almost a decade, people carry their Money Mart card in their back pocket as if that is their ID. That is a poor man's credit card today which is a licence to cheat that person. It is not a credit card. It is not even an ATM card where people can get money using it. It is their identification because payday lenders are smart. They have nice clean tile floors, they are well lit and illuminated. People are treated with some dignity because they want to cheat them. People are sucked in that way, but that used to be the type of service that banks offered legally to neighbourhoods and communities. They were big clean places too where people could go with their paycheques and be treated with some dignity. All that is gone.

We have to remind our charter banks that there was a reason why we gave them the exclusive monopoly on certain very lucrative financial transactions and that was so that they would provide basic services whether we were in Plum Coulee, Manitoba or New Westminster, British Columbia, or in the heart of downtown Toronto, or wherever they are needed.

An hon. member: Tuktoyaktuk.

Mr. Pat Martin: Let's not forget Tuktoyaktuk.

The deal was not that they could run those banks as long as they were profitable. The deal was that overall this would be one of the costs that they would assume in their overall activity, namely providing basic financial services. It seems to me the banks do not want ma and pa business any more. They are pawning it off to the credit unions.

There is this idea of the right wingers, the Conservatives, the neo-conservatives in this place. The right wing neo-conservatives have this idea that they should privatize the profits and socialize the losses. That seems to be their basic philosophy. They should privatize all that they gain and let the big banks have all the real good paying business, and they should pawn off the less profitable services such as mortgages, basic banking services, and let the credit unions have those. Somehow the non-profit sector can have all that non-profitable stuff and that will streamline our activities.

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Mr. Jeff Watson: Just nationalize it.

Ms. Dawn Black: Bigger and bigger profits for the banks.

Mr. Pat Martin: Bigger and bigger, there is no such thing as too much profit for the banks.

One of the right-wingers said that we should nationalize the banks. What an extremist point of view. I am going to use that in my literature the next time there is an election campaign.

The segue between the last bill we debated on offshore tax havens and the bill we are presently debating on Canada's chartered banks and financial institutions is interesting, because there are no worse culprits for tax avoidance and being tax fugitives than the big banks that are abandoning the inner city of Winnipeg. They are abandoning the inner city of Winnipeg and setting up shop in Barbados, the Cayman Islands and everywhere else they can think of to avoid paying their fair share of taxes in our country.

An hon. member: They are masters at it.

Mr. Pat Martin: They are masters at it. They have hundreds of tax lawyers working for them, looking for ways to avoid paying their fair share of taxes. I call them tax fugitives hiding out in tax havens. They certainly are not living up to their commitments to the good people of the riding that I represent. They abandoned my riding and I will never forgive them for it. Frankly, I will not bank in a major chartered bank in this country and I do not care who knows, although I guess everybody knows now.

There are many things that could have been done with this piece of legislation to try to impose some fairness into the financial institutions regime in this country. I remember when the former leader of the NDP, currently the member for Halifax, and I used to crash the shareholder meetings of the major banks. We had nine resolutions that we would put forward at every bank meeting. Two of them almost passed.

One of the resolutions that I moved at the Bank of Montreal failed to pass by less than 1%. In fact the result was 49.6 to 50.4. I remember because it was the same ratio as the Quebec referendum, 49.6 to 50.4. That resolution was gender parity on the board of directors. We came that close to dragging the banks into the 21st century kicking and screaming all the way, but the shareholders clearly wanted modernization of the banking system or they would not have supported gender parity on their own board of directors within one-half of one percentage point. We were very proud of that.

The other resolution that almost passed, and this one almost gave the CEO a heart attack, was that the salary of the CEO would be limited to 20 times that of the average employee. It would still be 20 times what an ordinary human being made, but CEOs were making 200 times and 300 times that of an average employee. That, sadly, did not succeed as a resolution.

It gives some indication of the amount of work that needs to be done if we are going to have a fair regime governing our financial institutions in this country, first to provide reasonable access to every person in this country. Whether people have any money or not, they deserve the right, and in fact they have the statutory right, to basic banking services. Even if people do not have any money but they want to open a bank account, they have to be allowed to open one. Do Canadians know that?

We would drive the payday lenders right out of business. People who have relationships with banks and need to borrow an extra $100 to get them through until their next paycheque could simply use their overdraft the way I or my colleagues do and pay a surcharge of a couple of dollars for that privilege instead of having to pay a surcharge beginning at 1,000% interest. Some of these institutions charge 10,000% interest on a simple loan. On title loans these companies are actually lending people $1,000 and making them sign over the title of their homes as collateral. If they fail to pay off the loan, they run the chance of forfeiting their homes.

Ms. Dawn Black: Unbelievable in a civilized society.

Mr. Pat Martin: This is unbelievable in a civilized society, as my colleague from New Westminster—Coquitlam pointed out.

I do not know why the Liberals and Conservatives refuse to address these basic inequities in the financial sector. It used to be they relied heavily on the big banks to finance and bankroll their political parties. That is not allowed any more. News flash: They do not have to be afraid of the banks any more. The banks are not allowed to give political parties money any more.

The banks would always line up with wheelbarrows full of money. They would dump an equal amount on the Liberals and on the Tories, but the laws have changed. We no longer have to be afraid of the big banks. If we stand up on our hind legs we can actually demand service from the big banks without jeopardizing our political future. It is a liberating feeling to be able to tell the truth about the banks without having to worry about our donations drying up. That was the beauty of the changes to the election financing laws.

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It begs the question, what is the barrier now? If it is no longer money, why do we not force the banks to live up to their obligations under the current Bank Act? Why do we not amend the Bank Act to make it even better so it serves the best interests of Canadians?

Mr. Gerald Keddy: I agree.

Mr. Pat Martin: My colleague from Nova Scotia, a Conservative, is agreeing with me. Now and then that Conservative member has the odd lucid moment I have noticed. It may be that in his home community he has suffered the same indignity as I have, that the corner banks are closing their doors, folding up their tents and abandoning us. They are bailing out. They have more investments offshore than they have in our own communities. We grant them a charter to exist and give them the exclusive monopoly to make a fortune on certain financial transactions and they refuse to live up to their end of the bargain. That is where I find fault. The little guy is not getting a fair shake from the big banks.

We create our own credit unions and we are left with the least profitable side of banking that nobody else seems to want. We seem to make it work. We are making it work in the non-profit sector through a vibrant credit union system throughout the land, but that is still no excuse. We cannot afford to backfill every place the banks have abandoned us, we simply cannot. No credit union can.

Imagine how devastating it is to represent an old established neighbourhood like mine and see 15 bank branches close their doors. There is another place in which they are failing to live up to their commitment. Right in the Bank Act it says that if a bank wants to close a branch, it has to have public meetings. It has to deal with the inconvenience to the long-standing customers. It has to help them find alternate banking services within a reasonable distance. One of the banks was even ordered to provide a van to drive seniors from the existing branch to the new branch, which was all the way across town. That lasted exactly four months. The van disappeared and the seniors at the Blue Bird Lodge in the inner city of Winnipeg are without service. It is just not working.

I am here to serve notice that the current Bank Act lets Canadians down. The Bank of Canada had Arthur Anderson as its auditor of record for the whole time of the Enron scandal. I have no confidence in that particular system.

I am very concerned though that Bill C-37 is a lost opportunity, because the very things that I point out as being urgent needs for the communities that I have cited I do not find anywhere in the hundreds and hundreds of complex amendments to complex acts in here.

I would urge the government to get back to the basics and listen to what Canadians are saying. They are sick to their stomachs. Get back to the people. Let us do what is best for ordinary Canadians for a change, not for whoever gets affected.

Ms. Penny Priddy: Let's do what is right.

Mr. Pat Martin: My colleague from Surrey is saying let us do what is right. What better way to summarize why we were sent here. My colleague from New Westminster says it is despicable and my colleague from Surrey is suggesting that we do things right.

I do not think that is too much to ask. We were sent here on a mission to represent the views, the needs and the concerns of the people we represent. In the inner city of Winnipeg, one of the primary concerns of people is the complete lack, an absolute paucity of basic financial services. They are being forced to use payday lenders who I think are morally and ethically reprehensible. There is no lower form of animal than someone who would prey on human misery and exacerbate the poverty of low income people, stealing from the poor to give to the rich.

The last thing I would point out is if we are serious about putting a lid on organized crime, we should cut off their ability to raise money and cut off their ability to launder money. I say without any hesitation, without any fear of contradiction whatsoever, money, ill-gotten gains, is being laundered through these payday loan outfits in my riding and every riding in this country. If government were serious about stemming that tide and choking off their ability to carry on organized crime, this would be an important step that it should take.

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The Speaker:

When debate resumes on this matter, there will be 10 minutes of questions and comments for the hon. member for Winnipeg Centre.

STATEMENTS BY MEMBERS

[Statements by Members]

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Red Deer, Alberta

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Mr. Bob Mills (Red Deer, CPC):

Mr. Speaker, it is a great pleasure to congratulate the citizens of my constituency of Red Deer.

A week ago, the Festival of Trees was held, which involved a great many events. The volunteers were honoured on this first evening. Without them and their months of hard work, this event could not have occurred. Then the sponsors banquet was held, one of the highlights in our community every year. This 13th annual event was no exception. The big event was the live auction of a house, including the lot and furniture. A total of $660,000 was raised on this one evening alone.

The next night was the Festival of Wines, and Don Sim, the auctioneer, successfully auctioned off a wide selection of wines and auction items. The Santa breakfast and final closing again went well.

The events were all sold out and all the money went to the operating facilities at the Red Deer Regional Hospital Centre.

This level of support and volunteerism in our community is something we are very proud of. I congratulate Red Deer.

* * *

(1400)

Senior Women

[Table of Contents]

Ms. Bonnie Brown (Oakville, Lib.):

Mr. Speaker, the Conservatives continue their relentless assault on the vulnerable. This time it is senior women.

After the income trust fiasco, they tried to offer amends by allowing income splitting for pensioners. That is terrific, but just under half of all pensioners are single and nearly three-quarters of those are women. What about them? Worse, close to half of these women live at or below the official poverty line.

Yes, there is an increase in the age credit but this pales in comparison to the handouts provided to well-off senior couples who could see tax reductions of tens of thousands of dollars. This is a disgrace. After $1 billion budget cuts in September, they have now added to their hit list impoverished, senior single women.

We know they have another $1 billion in cuts to come. Canadians should be asking who they will attack next.

* * *

[Translation]

Status of Women

[Table of Contents]

Mr. Michel Guimond (Montmorency—Charlevoix—Haute-Côte-Nord, BQ):

Mr. Speaker, I am outraged by the draconian cuts to Status of Women Canada as we approach the 25th anniversary of the ratification by Canada of the UN Convention on the elimination of discrimination against women on December 10. What rhetoric will the Harper government use to justify wrecking the foundation of an organization still needed to improve the well-being of women?

In the Upper North Shore, the Sacré-Coeur and Forestville women's centres are affected by these cuts. But it is all women in my riding, as well as throughout Quebec and Canada, who are wronged when they are so clearly not yet on an equal footing with men.

To deprive women of the means to defend their rights is to be indifferent to their claims. To deny them the main means of waging their battle is to be disrespectful. With Ottawa accumulating a surplus, the Harper government cannot—

[Table of Contents]

The Speaker:

The member for Surrey North.

* * *

[English]

Violence Against Women

[Table of Contents]

Ms. Penny Priddy (Surrey North, NDP):

Mr. Speaker, yesterday we rose in the House to remember and recommit to stopping violence against women. I rise today because this commitment is something we must do every day.

In the city of Surrey, we have seen the murder of three South Asian women in a short period of time. After these tragedies, there was a large public forum where many South Asian women spoke of their personal experiences of violence in their families. This led to considerable public debate about the South Asian community and violence.

It is important for me to say today that there is violence in every community, regardless of country of origin, and it must be stopped everywhere. I do know that naming, shaming and blaming any particular cultural community will not lead to change.

We must continue to follow the path of listening to women. We must provide education and supports that meet individual needs. These are our sisters, daughters, mothers and friends. When a woman's life is lost to violence, we are deprived of their love and support and their special gifts and talents.

Let us recommit ourselves daily to stopping violence in our communities.

* * *

[Translation]

Yseult Roy Raby and Jeanne Turgeon-Lessard

[Table of Contents]

Mr. Luc Harvey (Louis-Hébert, CPC):

Mr. Speaker, I would like to point out the exceptional contribution to community life made by Mrs. Yseult Roy Raby, a woman who has dedicated 22 years to disadvantaged families and individuals in my riding. She has transformed thousands of lives in my riding and comforted many in need while director of community service delivery in Cap-Rouge.

Mrs. Raby will be retiring in less than two weeks and I would like to point out the excellent contribution she has made to community life in my riding.

I would also like to acknowledge the 100th birthday of Mrs. Jeanne Turgeon-Lessard, who dedicated her life to the people of my community. She will be signing the Quebec City livre d'or next week and I would like to express my heartfelt respect for her.

I can only hope that we will have the benefit of her wisdom for many more years to come.

* * *

(1405)

[English]

Parliamentary Poet Laureate

[Table of Contents]

Hon. Gerry Byrne (Humber—St. Barbe—Baie Verte, Lib.):

Mr. Speaker, on behalf of the people of the riding of Humber—St. Barbe—Baie Verte along Newfoundland's west and northwest coasts, I proudly welcome Mr. John Steffler to the position of the Parliamentary Poet Laureate.

John is a long way from home, Mr. Speaker, but my constituents and I share in your confidence and your enthusiasm for this distinguished appointment.

My colleagues might be interested to hear that John Steffler adopted Corner Brook and Sir Wilfred Grenfell College as his home back in 1974 but his roots are in Toronto.

He is a long time literary contributor to our province of Newfoundland and Labrador and to the entire country of Canada. He is an acclaimed and gifted writer.

Mr. Steffler demonstrates that Canada's poet laureate is a shared treasure of all Canadians.

* * *

Amateur Radio on the International Space Station

[Table of Contents]

Mr. Daryl Kramp (Prince Edward—Hastings, CPC):

Mr. Speaker, through a complex network of satellite radio signals and encrypted phone lines spanning two countries, nine students in my riding had an out of this world experience. They spoke live with NASA astronaut Michael Lopez-Alegria as he orbited the earth aboard the International Space Station.

These students are part of an amateur radio club shared between my alma mater, Centre Hastings Secondary School, and Madoc Public School.

ARISS, or Amateur Radio on the International Space Station, is a program that offers an opportunity for students to experience the excitement of amateur radio by talking directly with crew members of the International Space Station.

Centre Hastings Secondary School was the only school in North America that was granted this opportunity.

I would like to congratulate the local coordinators of the event, Rob and Liza Allan.

I would also like to recognize members of the local amateur radio club who provided their assistance. I would like to tell Liana Andrews, Tess Reid, Chelsea Freeman, Landen Kruger, Sara MacNeil, Megan Webb, Rebecca Bremner, Graham Wilcox and Sabrina Reid, the students of ARISS Club, how very proud they have made us.

* * *

[Translation]

Le Reflet

[Table of Contents]

Mrs. Carole Freeman (Châteauguay—Saint-Constant, BQ):

Mr. Speaker, on November 4, the newspaper that represents the eastern part of my riding celebrated its 40th anniversary. Le Reflet, a veritable regional journalistic institution, marked four decades of relaying the events that have shaped the history of Châteauguay—Saint-Constant and the surrounding area. It remains a key player in circulating the news and opinions of the people I represent.

After 40 years, the team at this Montérégie newspaper is still doing an excellent job, putting the vitality of the people from my area front and centre and reporting accurately and with objectivity the news in the 38,000 copies that go out every week in Montérégie. This excellence has also garnered a number of awards, many nominations and much recognition for the work done by the members of Le Reflet.

I want to acknowledge the remarkable efforts of the journalistic team at Le Reflet, and I want to take this opportunity to wish many more years to this newspaper, which is a true reflection of my community.

* * *

[English]

Status of Women

[Table of Contents]

Mr. Laurie Hawn (Edmonton Centre, CPC):

Mr. Speaker, this has been a week of women's issues. It is appropriate and proper that we spend time thinking about, talking about and acting upon issues that affect and support women.

We have talked about the Status of Women and I am proud to be a member of a party and a government that values actual programs for women over bureaucracy. I am proud that Canada's new government has diverted $5 million from non-productive administration to be available for the direct benefit of women in communities across Canada.

We have talked about combating violence against women and everyone in this place agrees. I am proud to be a part of Canada's new government that has committed $10 million this year toward institutions that support women who are victims of violence and $15 million as of April 1 next year. An additional $6 million has been committed over the next five years for on reserve women's shelters.

I have been blessed with many strong women in my life. The most important woman in my life is my wife, Judy, who has been successful, independent and strong in her own right. She has also been the love of my for 38 years as of today.

I wish her happy anniversary and I love her.

* * *

Vietnamese Canadian Community Scholarship Fund

[Table of Contents]

Hon. Navdeep Bains (Mississauga—Brampton South, Lib.):

Mr. Speaker, today I want to acknowledge the efforts of the Vietnamese Canadian Community Scholarship Fund.

This grassroots organization awards hard-working Vietnamese Canadian students with scholarships in order to assist them in pursuing a higher level of education.

Last month, I had the privilege of attending its award ceremony where I presented 11 outstanding students with their scholarship awards.

It is non-profit organizations such as this that are critical in helping young Canadians achieve their full potential. When I toured universities last year, students were asking the federal government to assist young Canadians with tuition, jobs and debt relief.

It is therefore incomprehensible why the Conservatives chose to eliminate the youth international scholarship program and why they cut $55 million from the youth employment initiative.

We need to invest in our future leaders, not hold them back.

I hope the House will join with me in recognizing the efforts of the Vietnamese Canadian Community Scholarship Fund and its scholarship recipients for their hard work in enriching our community and our great country.

* * *

(1410)

[Translation]

400th Anniversary of Quebec City

[Table of Contents]

Mr. Daniel Petit (Charlesbourg—Haute-Saint-Charles, CPC):

Mr. Speaker, in 390 days, Canadians will mark the 400th anniversary of the founding of Quebec City.

The new Government of Canada is a proud partner in the 400th anniversary celebrations and is making the substantial contribution of $110 million for organizing and hosting events.

Some 400 years ago, Quebec City became the starting point in the adventure of building the Canada of today: a dynamic and modern Canada that builds its strength on its linguistic duality and cultural diversity.

Our government is actively involved and working closely with the Société du 400e anniversaire de Québec, Quebec City and the Government of Quebec to ensure that this anniversary is celebrated by all Canadians, because the anniversary of the founding of Quebec City is also the anniversary of the founding of Canada.

I want to join the mayor of Quebec City, Andrée Boucher, who is on Parliament Hill today, in inviting all Canadians to Quebec City in 2008.

* * *

[English]

Status of Women

[Table of Contents]

Mrs. Irene Mathyssen (London—Fanshawe, NDP):

Mr. Speaker, yesterday, in the Standing Committee on the Status of Women, Conservative members of that committee declared that the Status of Women budget was not being cut but that the money was merely being shifted from the operating budget to the grant program. These same members accused fellow committee members and witnesses of not taking the time to understand the Conservative cuts.

After much research and many letters to the minister, I cannot find in writing anywhere that the money cut from the Status of Women's operating budget was ever intended to be reinvested.

The minister needs to clarify to the House and to women's organizations across Canada whether the money removed from Status of Women Canada, the government's so-called fat trimming, will be reinvested specifically in the grants program for Status of Women. Will it be increased from $10 million to $15 million?

Current funding is woefully inadequate and the loss of 12 regional offices and 61 experienced staff is hurting the goal of equality for Canadian women.

* * *

Frank Morgan

[Table of Contents]

Hon. Andrew Telegdi (Kitchener—Waterloo, Lib.):

Mr. Speaker, it is appropriate, on a day when we will be defeating a motion that promotes exclusion, to pay tribute to a man whose life was about teaching and practising inclusion.

Reverend Frank Morgan, Minister Emeritus of the Trinity United Church in Kitchener, and faith columnist for The Record for nearly three decades, passed away on November 29 with his wife of 63 years, Helen, by his side.

Frank was fearless and forthright in discussing the tough issues of faith and encouraged others to do the same. The late pastor's unflagging support for the disadvantaged, including immigrants, the poor, women and homosexuals, earned him many fans.

In recent years, Morgan turned to his typewriter to challenge fellow Christians to soften their interpretation of scripture. He endorsed and celebrated same sex marriage.

Frank was a principled and a humble man who enriched one's life just from having known him. He will be missed.

* * *

[Translation]

400th Anniversary of Quebec City

[Table of Contents]

Ms. Christiane Gagnon (Québec, BQ):

Mr. Speaker, in 2008, Quebeckers will celebrate the 400th anniversary of the founding of Quebec City by Samuel de Champlain in 1608. As North America's first francophone city, it is the birthplace of French America and the seat of the Quebec nation.

The mayor of Quebec City, Andrée Boucher, is here today to draw attention to the magnitude of this event. Governments from around the world, including the City of Bordeaux and the Government of France itself, have confirmed that they will participate.

The Bloc Québécois is working to ensure the success of the celebration. Several projects have yet to be completed. We will ensure that the federal government fulfills all of its responsibilities.

The Quebec bridge, PEPS stadium and various heritage sites under Parks Canada's jurisdiction are among our priorities.

We wish the provincial commissioner and the president of the Société du 400e anniversaire de Québec all the best for a successful event.

* * *

[English]

Foreign Affairs

[Table of Contents]

Hon. Irwin Cotler (Mount Royal, Lib.):

Mr. Speaker, Salah Uddin Shoaib Choudhury, a Muslim Bangladesh journalist and editor of a daily Bangladesh publication, is standing trial on charges of treason, sedition and blasphemy for promoting Muslim, Christian and Jewish dialogue, peace with Israel and seeking to attend a conference in Israel for the promotion of peace.

Mr. Choudhury has also been personally beaten, his life threatened and his office vandalized while none of the perpetrators have been brought to justice and a former Bangladesh home minister has indicated that there is no basis for the charges.

As counsel for Mr. Choudhury and as one who, while as minister of justice, was engaged in a joint Canada-Bangladesh rule of law project, I call upon the Bangladesh authorities to respect the rule of law, to review and, as appears just and appropriate, to drop the charges while working to apprehend those who have violated Mr. Choudhury's rights.

* * *

(1415)

Conservative Party of Canada

[Table of Contents]

Mr. Tom Lukiwski (Regina—Lumsden—Lake Centre, CPC):

Mr. Speaker, a historic event occurred three years ago today. What skeptics said was impossible came to fruition. Led by the current Minister of Foreign Affairs and our Prime Minister, the Canadian Alliance joined forces with the Progressive Conservative Party of Canada to form the Conservative Party of Canada.

Much has been accomplished in three years. In June 2004 a massive Liberal majority was reduced to a minority. In January of this year, Canadians from coast to coast to coast cheered as the Conservative Party of Canada became Canada's new government.

The future looks strong for our country and our party, as we are one election away from forming a majority that will benefit all Canadians. While we are still cleaning up Liberal corruption, Canada is better off knowing that Liberals no longer control the country's purse strings.

On behalf of Conservatives across the country, I thank the Prime Minister and the Minister of Foreign Affairs for their courageous actions three years ago today. Our party is better off and, more important, our country is better off.

Routine Proceedings

[Routine Proceedings]

* * *

[Translation]

New Member

[Table of Contents]

The Speaker:

Order, please. I have the honour to inform the House that the Clerk of the House has received from the Chief Electoral Officer a certificate of the election and return of Mr. Glen Pearson, member for the electoral district of London North Centre.

* * *

New Member Introduced

Glen Pearson, member for the electoral district of London North Centre, introduced by the Hon. Stéphane Dion and the Hon. Karen Redman.

ORAL QUESTIONS

[Oral Questions]

* * *

[English]

RCMP Commissioner

[Table of Contents]

Hon. Stéphane Dion (Leader of the Opposition, Lib.):

Mr. Speaker, yesterday the Prime Minister said, “I became aware of the differences in the story when everybody else did”, but the facts tell a different story. The commissioner admitted today that he told the public safety minister, after his first appearance in September, that he needed to change his testimony.

Now that the facts contradict him, is the Prime Minister ready, just like Mr. Zaccardelli, to change his story?

[Table of Contents]

Right Hon. Stephen Harper (Prime Minister, CPC):

Of course not, Mr. Speaker. That is not what the commissioner said.

In any case, I think the House is well aware of the fact that the Commissioner of the RCMP tendered his resignation after some consideration. It was the honourable thing to do. We accept that resignation and thank him for his service to the RCMP and to the country. I would note the commissioner said that he had no political interference in this matter.

(1420)

[Translation]

[Table of Contents]

Hon. Stéphane Dion (Leader of the Opposition, Lib.):

Mr. Speaker, the excuse of political interference does not hold water because, since the first testimony in September, the minister and the commissioner worked together to prepare the testimony. Thus, there was no political interference at that time any more than there was today.

The facts do not add up. The Minister of Public Safety was informed that the commissioner's testimony was going to change. The Prime Minister's chief policy adviser was told that the testimony was going to change.

Is the Prime Minister finally ready to do as Mr. Zaccardelli did and change his version of the facts as well?

[Table of Contents]

Right Hon. Stephen Harper (Prime Minister, CPC):

Mr. Speaker, the statements made by the Leader of the Opposition are completely false. This government did not meddle in the affairs of the RCMP like the previous Liberal government tried to do. Our government did not do that. We did not interfere in the RCMP commissioner's testimony. The commissioner said so himself.

[Table of Contents]

Hon. Stéphane Dion (Leader of the Opposition, Lib.):

Mr. Speaker, the minister and the commissioner worked very closely together on the commissioner's testimony. The Prime Minister must surely have known about it.

[English]

Canadian Press reported today that three senior ministers, including the Minister of Public Safety, pleaded with the Prime Minister to fire the RCMP commissioner months ago, but the Prime Minister refused.

Could the Prime Minister explain to Canadians why he rejected the advice of these ministers and what did these ministers know at that time to warrant their intervention? Is the Prime Minister ready, like Mr. Zaccardelli, to change his story, yes or no?

[Table of Contents]

Right Hon. Stephen Harper (Prime Minister, CPC):

Mr. Speaker, one can only imagine the howls of outrage from the opposition if the Prime Minister had politically intervened and fired the Commissioner of the RCMP before he even testified at a parliamentary committee. Could you imagine, Mr. Speaker?

Instead of these ridiculous rumours, what we do know for a fact is that the member for Malpeque, a former solicitor general, wanted to fire the Commissioner of the RCMP because he allowed the RCMP to criminally investigate the Liberals' actions in the sponsorship affair. This is the kind of dangerous political interference for which that party stands.

[Table of Contents]

Mr. Mark Holland (Ajax—Pickering, Lib.):