CHAIRMAN'S MESSAGE

As we approach the 21st century, Canadians are being called upon to deal with rapid changes at every level. Social, political, demographic and technological changes are shaking the foundations of long-held beliefs that have defined our society throughout the current century.

Various applications of new technology are revolutionizing every aspect of the industrialized world's economy, from resource extraction, to manufacturing, to the service sector.

Communications technology, especially telecommunications, has also been fundamentally changed by the information revolution, and this is having a deeply felt impact on our society. Indeed, the transformations in information technology and communications technology are the cornerstones of globalization. We now live in a world where you can instantly reach a person almost anywhere on the planet by telephone, by fax or over the Internet. Billions of people around the world watch the same news events at the same time. The global village is now a reality.

Globalization: The New Reality

To an ever increasing degree, governments, corporations and individuals are making decisions in the context of a global market. Men and women are building careers that include periods of work in Southeast Asia, Europe and North America. Around the globe, financial markets are woven together into a seamless web, one where trading in Tokyo, Taipei and Hong Kong influence London, Paris and Frankfurt which in turn help shape trends in New York, Toronto and Chicago. Billions of dollars fly through the atmosphere at the touch of a computer key.

With the support of information and communications technology, corporations run truly global operations. In many emerging sectors, senior management of a firm can be located in London or New York or Montreal while the firm's workers are in Singapore or Belfast or Moncton, effortlessly serving customers in Stuttgart or Osaka or Seattle. The new world economy has redefined time and space.

The global economy is a reality. It offers new opportunities and, as we have seen recently in Japan, East Asia and Russia, it also presents new risks. Everyone, both individuals and corporations, are doing their best to adapt to globalization. Therefore, it should surprise no one that financial service sectors around the world are changing in order to adapt as well. Canadian banks, insurance companies, mutual funds, credit unions, trust companies, caisses populaires and other financial service providers are adopting a variety of strategies to ensure their long-term growth in this new environment. These strategies can include the introduction of new services, an increase in the use of new technology, acquisitions across sectors, or mergers between players within the same sector.

The Government of Canada has a responsibility to ensure that Canadians continue to benefit from a sound financial service sector. Its major role is to safeguard the public interest and see that Canadian citizens are able to gain access to financial services. And it also has a duty to ensure that the financial services industry is able to take full advantage of new opportunities around the world, and compete with foreign rivals. After all, we should be mindful of the fact that this key sector directly employs over 550,000 Canadians in jobs which are increasingly highly skilled and well paid.

The Challenge Facing the Committee

Clearly, this has been the principal challenge facing our Committee during our hearings on the Task Force Report on the Future of Canada's Financial Services Sector, also known as the MacKay Report. The Committee's goal was to chart a direction for the future of this sector that strikes a balance between the expectations of the financial service providers and the needs of their customers, including individual Canadians, small and medium-sized businesses, and others.

The MacKay Task Force Report was the opening statement in an important national dialogue which must take place between Canadians, their elected representatives and the financial services sector. Our report, the product of intensive work by the members of the Finance Committee, is a response to the MacKay Report.

The Finance Committee's report presents what we heard from Canadians in their reaction to the MacKay Report. We heard from firms and individuals that look toward the future full of confidence; witnesses who see the MacKay Task Force Report as a blueprint for a more open system that will enable established firms to maintain their strong positions while allowing new players to emerge and prosper.

The Committee also heard from groups, companies and people who have serious misgivings about globalization and who are concerned about being left behind by the transformation of the financial sector, either as the result of consolidation within the sector, or corporate lay-offs, or the increasing reliance on technology at the expense of traditional modes of service delivery. Still others expressed strong opinions about being excluded from the system, either through their inability to secure basic services or financing for commercial ventures. Furthermore, some believe the result of enacting the MacKay recommendations will include a new level of onerous and rigid bureaucratic controls.

While there was disagreement on these and other points, there was also a surprising level of consensus of a number of important issues. For example, the Canadian system is respected around the world as one of unparalleled soundness, safety, efficiency and effectiveness. We have a payments system that is the envy of the world.

What all this amounts to is a deeply rooted connection between customers and their financial service providers. It is clear that, for many Canadians, banks and other financial institutions are, in fact, an important part of their everyday lives. There is no doubt that this bond is real for millions of Canadians.

The Goal: Building a Modern Financial Services Sector

As a Parliamentary body providing the government with input on an important matter of public policy, it is incumbent on us all to recommend actions that are in the public interest. Our recommendations reflect that commitment.

We cannot predict the future, but we can help shape it. In the opinion of this Committee, the concept of "the public interest" must be defined by a long-term vision. In the interest of serving Canadians, we must try to gain some sense of what the world of financial services will look like when our children are establishing their families and building their careers. The world is changing so rapidly thus, trying to stop the clock is unrealistic.

Members of this Committee recognized that they had the responsibility of using their judgment to carefully weigh the divergent opinions we heard.

We have approached this exercise in a clear-headed manner, focussing on the goal we all share: building a modern financial services sector that serves the interests of all Canadians. We believe our report provides the government with a realistic plan to achieve this important objective.

On behalf of the Committee, I would like to thank the many individuals and organizations that took part in our cross-country consultations. Through written submissions, Committee appearances and townhall meetings organized in various ridings, these Canadians provided the Committee with the full spectrum of opinion and analysis that enabled us to conduct this study.

I would also like to express my gratitude to my fellow Committee members for their tireless efforts that they invested in this process. This year the Committee simultaneously undertook two major studies, the Pre-Budget Consultations and the Study of the Task Force on the Future of the Canadian Financial Services Sector. This was truly a demonstration of the dedication of our Members to the public consultation process. We all feel that it is important for Canadians to be heard on such vital matters.

The Members, however, could not undertake their work without the support of our staff. The Committee wishes to thank our clerks, Jacques Lahaie and Roxanne Enman for their contributions. We also thank Lise Tierney and Denyse Croteau from Committees Branch, as well as the interpreters, sound technicians and other members of the House of Commons staff.

The Committee also wishes to thank our research staff, Richard Domingue and Marion G. Wrobel of the Parliamentary Research Branch. We thank Joseph Mayer and Robert Kermode for their editorial services. And we are grateful to the production team, the translators and everyone else who worked on the report to ensure its quality. In addition I am grateful for the assistance of Julie Cusson.

Finally, I wish to thank my Special Assistant, Jennifer Demers for her hard work and dedication these past few months.

Maurizio Bevilacqua
Chairman