FINA Committee Meeting
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STANDING COMMITTEE ON FINANCE
COMITÉ PERMANENT DES FINANCES
[Recorded by Electronic Apparatus]
Thursday, September 28, 2000
The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I call the meeting to order and welcome everyone here this afternoon. As everyone knows, the order of the day is Bill C-38.
We have the pleasure to have with us the Secretary of State for International Financial Institutions. Minister, you have approximately whatever time you need, and then we'll get into the question and answer session.
Hon. Jim Peterson (Secretary of State (International Financial Institutions)): Thank you very much, Mr. Chairman, honourable members, terrific staff.
I'm back here with a feeling of great nostalgia and many fond memories of having worked with so many of you. I'm in a different position; I'm in the receiving end this time.
As all of you know, this is the seventh major initiative dealing with financial institutions in the past four and a half years. In early 1996 we had Bill C-15, dealing with enhanced powers for the superintendent to intervene in a troubled institution. In 1997 we had the WTO agreement on financial services, giving our institutions enhanced access to foreign markets. In 1997 we had Bill C-82, which strengthened consumer protection measures dealing with coercive tied selling. In 1998 we had the bill dealing with demutualizations, which proved incredibly successful. In 1999 we had the foreign branching regime, which is in place. In June we had the money-laundering bill, and now Bill C-38.
I want to thank this committee for its excellent work on all of these bills. Your suggestions have been very important to us.
With Bill C-38, as you know, we're dealing with certainly one of the most important industries in this country, which employs over 500,000 Canadians. About 40% of its revenue is from exports. It impacts consumers and small businesses of all sorts, from one corner of this country to the other. This is a huge bill.
It is very complicated, and I am aware of the scope of the task members of the committee are undertaking. Indeed, the bill to be studied is very long and complex.
Accompanying me today are, from the financial sector policy branch, the general director—you met him this morning—Mr. Frank Swedlove; Mr. Gerry Salembier, the acting director of the financial institutions division; Rhoda Attwood, legal counsel, Department of Justice; and Normand Bergevin, director of legislation and regulation, OSFI. I think I need their help.
Let me begin by saying that quite simply this bill seeks to foster a dynamic, strong, and profitable financial services sector benefiting all Canadians. There are four broad objectives: promoting the efficiency and growth of Canadian FIs, fostering competition here at home, empowering and protecting consumers, and improving the regulatory environment. We believe that this strikes a careful balance between promoting the interests of FIs, which are so important to our future, and safeguarding the interests of consumers.
As a result of this bill, banks and insurance companies will profit from the new ownership regime that will facilitate joint ventures and alliances. They will be able to take advantage of enhanced investment powers, and a new holding company structure will give them much greater flexibility to compete with, among others, unregulated institutions and monolines. These will give the sector more tools and flexibility to compete and prosper here and abroad.
Mr. Chairman, I'd like to point out that the consumer protection provisions contained in this bill are a major step forward for consumers. Simply stated, the bill goes a long way in terms of protecting the rights of consumers of financial services. Canadians will now be able to rely on the Financial Consumer Agency of Canada and an independent ombudsman for oversight and redress. They'll be able to take advantage of measures to improve access to financial services such as standard low-cost accounts and a process covering closures.
A number of measures are here to protect and respect transparency and promote good business practices.
These provisions and several others provide among other things for relaxing the requirements where capital is concerned, improving access to the payments system, as well as measures to meet credit co-operatives' aspirations and promote the increased presence of foreign banks, which will stimulate competition here. The outcome will be a broader range of quality services for the consumer at the best possible price.
I believe, Mr. Chairman and members, that the bill achieves what it's set out to do. It's difficult. It's comprehensive. But we believe it will be good for consumers and for the industry itself.
I appreciate very much the opportunity to be with you and the effort I know you will put into this bill.
The Chair: Thank you.
Mr. Epp, we'll begin our question and answer session now. We'll have a ten-minute round.
Mr. Ken Epp (Elk Island, Canadian Alliance): Before you start the clock on me, I wonder whether I could request that the interpretation services check their switching. In order for us to get the French-to-English translation we had to switch, and when that quit I had to switch again to get back to the English. It went from the French to the English translation.
Mr. Jim Peterson: It might have been my French.
The Clerk of the Committee: You might be on floor sound.
Mr. Ken Epp: Actually, I was getting the interpretation of just the opposite language that was being spoken, so it is a switching problem. Anyway, let's get back to this job here.
Thank you for appearing here today, Mr.... Do we call you “Mr. Minister” or “Mr. Secretary”?
Mr. Jim Peterson: Just “Jim”.
Mr. Ken Epp: Well, I wouldn't want to do that. Mr. Peterson. You're not like me. I always say, “Call me anything you want, but don't call me late for supper”. As you can see, they never have.
I'd like to begin with probably the most important question to me. We have a number of previous documents, including the MacKay report, that really stress the need for greater competition in the Canadian industry. And one of the things that should provide greater competition would be the entry of as many possible Canadian players into the field as is possible. We have, in this legislation, a lack of provision for the cooperatives. I'm wondering what your reason was for excluding them.
Mr. Jim Peterson: Well, we certainly believe that the cooperatives are going to be a very important part of providing domestic competition and alternative services in the future. We've seen already how they've been expanding by picking up bank branches in a number of areas. We want them to grow, and we want them to flourish. They've done a very good job for their people in many areas of this country.
Having said that, we started off dealing with two major tracks. One was a national services entity, which would give them greater capacity to work together, to have economies of scale, to have some savings, to achieve some national size without losing their identity and character. I think these provisions are in here and are applauded by the cooperatives. The second provision was trying to form a cooperative bank.
As with all of the provisions here, we've worked very closely with the sector and with the industries. There was a group that came together originally, including some of the biggest in Vancouver, which made certain suggestions to us. We took the idea of a co-op bank ahead a certain degree, but then that fell off the rails. They did not really have an agreement on something that would be actually productive and working. So with that off the table, we concentrated on the rest of the package.
Later on, a particular smaller group came to us with the concept of trying to get a people's bank or a Rabobank, such as from Holland, established. We continue to work with them on this possibility, but we were not far enough along in being able to bring forth concrete legislation on this, Mr. Epp, that we could present at this time. We did not want to hold up the package for everybody else for an idea and a concept that came to us late in the game.
Mr. Ken Epp: The concern, of course, is that if it isn't done now, it probably won't be done for the next five or eight years.
I suppose one could argue that just because one or two of the larger players lost interest in it or couldn't come to an agreement, that's no reason to penalize the others who are still very much interested in it. I'm just wondering whether there would be any openness to amendments that would include this possibility in this round.
Mr. Jim Peterson: Well, if the committee can come up with amendments that create the viable entity that is actually desired, that is certainly a possibility. I would encourage the members of the committee—and I probably don't have to say this to you.... In every one of these provisions that we brought forward there has been extensive consultation with experts, with the sectors involved, with the stakeholders. Every one of these things that we brought in has undergone an incredible number of amendments before it has actually found its way into this legislation.
We continue to work with interested parties on this. When we have worked out something to their satisfaction, which we have had a chance to review with stakeholders everywhere, Mr. Epp, then we would be quite prepared as a government to bring that forward as a separate bill, dealing with cooperative banks.
Mr. Ken Epp: Should I interpret that as saying you will not be open to amendments in this round?
Mr. Jim Peterson: No. If there are amendments we would want to see them before we comment on whether we could accept them or not. We have had to work very hard refining, revising, and having reviewed by many people any provisions that finally found their way into this legislation. We would certainly review them.
Mr. Ken Epp: We'll work more on that end of it.
I would like to also ask you about the safety concept. We hear about some countries where there are many banks, it's sort of a free-for-all, and a certain number of their financial institutions fold from time to time, with some loss to their depositors. This happens occasionally in Canada as well, but I think proportionally probably less often.
Are you satisfied that there is, first, enough supervision over the financial institutions of this country as provided in this bill? Second, just on the opposite end of the spectrum, I have the opinion that perhaps there's a little bit of overkill with duplication of functions by several different agencies that are in the oversight industry here.
Mr. Jim Peterson: My primary concern, and I think that of government, should be the safety and soundness of our financial institutions. I think you quite rightly said—and I think the superintendent has said this—that failures are the sign of a healthy dynamic system. He expects them. I told him I sure don't want one on my watch.
Having said that, to me, the biggest example of overlap and duplication really is exhibited by the entire financial services sector in Canada. When you have so many bodies, federal and provincial, that are dealing with them, I believe our financial institutions are at a competitive disadvantage in many ways.
We have been working in many areas with the provinces, with the various industry groups, to try to eliminate overlap and duplication. Where we cannot do that, we're trying to encourage harmonization of laws so that people don't have to deal with ten different laws for every different province. This will continue to be a thrust of ours, but in a federation you have to respect provincial jurisdiction. At least we are trying to get the institutions within federal jurisdiction to harmonize their laws as much as possible and end overlap and duplication.
Mr. Ken Epp: Another question I have is with respect to an ombudsman role and more the interaction with the small deposit consumer, perhaps even sometimes the one who just needs to have the ability to cash and maybe write two or three cheques a month. Sometimes these people get into trouble with their banks or there are disagreements and they go to the bank ombudsman, and yet you are requiring that all of these financial institutions now also sign on to the Canadian Financial Services Ombudsman program. Is that not mandated unnecessary duplication? What can you tell the people of Canada that this financial services ombudsman is going to provide for them over and above what they already have access to?
Mr. Jim Peterson: The way the ombudsman works today and will work in the future, I believe, Mr. Epp, is that the Canadian Financial Services Ombudsman will act like a court of appeal. If a consumer has difficulty with his particular branch or bank, he should be informed right away that there is an ombudsman in that bank, a local ombudsman, who can deal with his complaints. If he is not satisfied with what that ombudsman works out, he should be referred to the Canadian Financial Services Ombudsman. It would work as a court of appeal in that way. So it's not excess regulation; it's an attempt to ensure that there is a process in place whereby an outsider can look at the work done by the in-house ombudsman.
Mr. Ken Epp: Why would you mandate that the organizations have to sign on to the Financial Services Ombudsman and at the same time set up the Financial Consumer Agency? Is that not just duplication? All we're doing is looking for bureaucracy added to bureaucracy and an additional ability for everybody to pass the buck to the next agency.
Mr. Jim Peterson: I think that's a valid concern. We envisage that the FCAC, the agency, will be doing things totally different from the ombudsman. The ombudsman will be dealing with disputes with the bank. The FCAC is really a regulator.
Currently, there are three different federal bodies dealing with consumer measures: Finance, Industry, and OSFI. We're taking those three different consumer responsibilities out of three different agencies and we're putting them in one.
Mr. Ken Epp: [Inaudible—Editor]...all the agencies.
Mr. Jim Peterson: No. To me, this is a consolidation. We're taking all of the consumer-related regulatory powers from three different bodies and putting them into one discrete agency. To me, this is a consolidation, and it will be a streamlining so that you won't have three different bodies going into a bank looking at consumer legislation. You will have one dealing with things like coercive tied selling, or low-cost accounts, or whether they're giving adequate notice of what their interest rates are, and things like this. So this is really an attempt to streamline.
Mr. Ken Epp: I humbly beg to disagree, because it looks to me like it's a multiplication of the bureaucracies instead.
The Chair: Thank you, Mr. Epp.
Mr. Ken Epp: Is my time up already?
The Chair: Yes, it is.
Mr. Ken Epp: How time flies when you're having fun.
The Chair: Mr. Loubier.
Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ): You said earlier that you were nostalgic and that you had good memories of some of us. I hope that I am among those. I would like to welcome you. As I too would like to remember your passage here fondly, I hope I obtain good answers to my questions.
You recently agreed to complete financial transaction assessment criteria contained in the bill, pursuant to a letter sent by the Quebec minister of finance. I would like to know when we can expect the legislative version of these criteria which you have agreed to add to the bill.
Mr. Jim Peterson: Mr. Loubier, certainly it's up to this committee to discuss and look at any particular issues it may want to in terms of criteria for mergers. We certainly believe the issue of a merger affecting only a region or a particular province—and this would be the case of, say, the Laurentian Bank, the National Bank in Quebec, the Bank of Western Canada. There are regional, local considerations that must be taken into consideration, and this of course is the import of what the minister's letter said to Mr. Landry. We believe that letter certainly addresses those regional concerns.
Mr. Yvan Loubier: I did not explain myself properly. When we spoke, you agreed... [Editor's Note: Technical Difficulties]
The Chair: Maybe we'll try another questioner.
Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): That's not a bad idea, Mr. Chair.
Mr. Yvan Loubier: Minister, you had committed yourself before the vote at second reading to including the four criteria contained in Mr. Landry's letter in the bill. You undertook to do so before witnesses, furthermore. It was not conditional on our support at second reading or on anything else. You stated it before witnesses and in the presence of my leader in the House.
You even countersigned Mr. Landry's letter next to the four criteria and said that you would include them in the bill in order to take into account, for instance, the effects of changes in financial transactions consisting in increasing the individually-held share ratio, the effects of this change on a bank's activities, on jobs, on growth and on the region's financial position as a promising arena for the evolution of the financial sector. Now I understand that you have changed your mind and that you will not be keeping your word.
I'm very disappointed by that because you had committed yourself before witnesses. Have you changed your mind? Are you going back on your commitment to see to it that the four criteria contained in Mr. Landry's letter be enshrined in the bill? If that is the case, that is very unfortunate.
Mr. Jim Peterson: As I recall, Mr. Loubier, you told me a long time ago that you'd be submitting amendments. You said we'd have them before that week began. I received them from you I believe late on Wednesday. I took a quick look at them. These were amendments that you were proposing. I compared the amendments to the letter Mr. Landry sent.
In looking at your suggested amendments—your suggested amendments applied only to Quebec. I was suggesting to you by writing that I thought your amendments would prove better and more acceptable from a legislative point of view if you just didn't use the word “Quebec” in them, but if you referred to criteria that would respect not only Quebec banks but other regional banks in the country.
So my suggestion to you, in writing out the piece of paper and having only had a few minutes to see them, was that that would be the better way for you to proceed.
Mr. Yvan Loubier: No, listen to me. When we spoke before witnesses you took Mr. Landry's letter and crossed out the word “Quebec”. I agreed with that because in a pan-Canadian bill you have to consider that it must be applied from coast to coast in Canada, east to west. You undertook at that time to include the four criteria contained in Mr. Landry's letter, after having amended them to take that fact into account.
Now you are telling me that you are reneging on your commitments, and that the word you gave us before witnesses is no longer good. I'm extremely disappointed by what you are telling me because it was supposed to be otherwise. There were no conditions. There was nothing. You recognized at that time that the arguments were good and that this could complete assessment criteria in the bill. If your word is not to be trusted, that is a problem.
Mr. Jim Peterson: Excuse me, but you are the one who proposed several amendments and I discussed with you the three amendments you submitted. I shared my first impressions with you...
Mr. Yvan Loubier: So you are telling us you are not a man of your word.
Mr. Jim Peterson: ...after a few minutes of discussion.
I find it a little bit bizarre that I would have made an agreement with you that would have resulted in you opposing this bill, voting against it at second reading, and not wanting it to come forward to committee for discussion. That seems a little bit unusual to me.
Mr. Yvan Loubier: Mr. Chairman, I would prefer to stop here, since the gentleman is not a man of his word. He has just changed his mind. He has just said that his word is not worth the paper upon which he signed his agreement to include Mr. Landry's four criteria in the bill. I was not alone here; there were people here from the leader's office. The leader was also here and the next day he also went to re-check this commitment again. The commitment was made on behalf of the government. Mr. Peterson even signed next to the criteria and undertook to do this.
Mr. Jim Peterson: Of course I signed it, and I—
Mr. Yvan Loubier: He has just said that he does not respect his own word. How can I continue to question a man who does not keep his word? If he does not respect his word the answers he will be giving me will not be worth any more than the man who will be giving them. That is that. I am extremely disappointed. I have nothing to add for Mr. Peterson because I don't talk to people who do not keep their word.
Mr. Jim Peterson: Mr. Chairman, I'm quite used to this type of attack from Mr. Loubier. But let me say this. If he thinks there was an agreement, I had two people there with me, and I just can't imagine what type of an agreement he thinks I would have undertaken that would have resulted in Mr. Loubier opposing this bill coming forward to this committee, opposing it in principle—
Mr. Yvan Loubier: Moreover, he signed it, Mr. Chair.
Mr. Jim Peterson: Of course I signed it.
Mr. Yvan Loubier: He says that his signature is worth nothing.
Mr. Jim Peterson: I signed it. You can show them what I signed. I was showing you where I thought you could improve your amendments. You can bring your amendments forth to this committee, if you wish, and I was trying to help you improve your amendments.
The Chair: Thank you, Mr. Loubier. Mr. Cullen.
Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman.
Mr. Peterson, I have just a couple of questions at this point, one relating to insurance companies and one relating to the access to the payment system. With regard to the access to the payment system for insurance companies, stock brokerage firms, etc., it seems to me that it creates great opportunities to give Canadian consumers more choice, more flexibility, and more latitude in terms of the products and services that might be available to them. I wondered if you could describe how you see this playing out and what types of additional choices it will provide to Canadians. Maybe you or the officials could describe some of the products you see emerging on the landscape that would encourage more competition in the marketplace and that would provide consumers with more choice.
Mr. Jim Peterson: As you pointed out quite rightly, Mr. Cullen, I think there'll be a lot more competition. First of all, I think that instead of insurers paying a claim—say, $1 million for life insurance—to an individual and then having that individual put it in a bank, they can in fact keep that money with the insurance company and issue cheques on it. So we will then have competition at that level. I think people could issue cheques on their money market mutual funds, for example, and that again is another financial entity that will provide service to people. These are things they have sought. They said it would give them added capacity. Therefore, we have to believe they will be a much stronger force in the marketplace.
Mr. Roy Cullen: Do you see a point in time when they would actually become like deposit-takers, where I could send a cheque for $100,000 to Clarica and say put it on my account? I might buy—
Mr. Lorne Nystrom: Did you say $100,000?
Mr. Roy Cullen: That's Lorne talking about Italian restaurants.
I could buy some term deposits, mutual funds, or money market instruments, whatever. Do you see it evolving over time to that, or is it never going to get there?
Mr. Jim Peterson: Insurance companies will not be able to take deposits. But what I see happening is the holding company structure giving rise to one entity that is really consolidating under one name, one ultimate direction, all of this conglomeration of financial services. So I think we've provided that flexibility, maybe not directly but indirectly, whereby one will be able to achieve what you're talking about. Maybe the day will come when any institution will be able to do anything.
Mr. Roy Cullen: Good. I think there's going to be more choice for consumers, and that's a good thing.
I would like to ask you something about insurance companies. If we look at proposed subsection 407(4), the bill prohibits any person from being a major shareholder of a converted company that had equity and surplus of $5 billion or more prior to its demutualization. That has to do with the big insurance companies. Then in proposed subsection 407(8) it permits the minister to specify that subsection (4) no longer applies in respect of a particular converted company beginning two years after December 31, 1999.
I'm wondering if in that context you could clarify the policy of the government. Is it the policy of the government that SunLife and ManuLife would be widely held?
Mr. Jim Peterson: That is our intention. Through policy we are declaring that we want those companies to be widely held. They have considerable bulk and size now and considerable foreign operations. We believe they have the intention of becoming even bigger and expanding. I don't know what type of financial architecture we'll eventually end up with in Canada, but there will probably be some consolidations along the way. There will probably be a lot of new entrants, but these have the potential to be Canadian champions, as some of our banks do, and international champions. So the thought is that we will give them a certain period in order to be widely held so that they can get on with the business of expanding and not be worried about being taken over.
Mr. Roy Cullen: Thank you.
The Chair: Mrs. Barnes.
Mrs. Sue Barnes (London West, Lib.): Thank you, Mr. Chair.
Welcome, Mr. Peterson. I just want to touch on something that was mentioned in the presentation given by the officials this morning. It was the opening of a bank account. We've often heard the stories over the years about problems with people having to produce two pieces of photo ID and going through a lot of hoops. It was said that this is going to be less strenuous. I just wanted to hear from you what you believe “less strenuous” to mean. Does it mean a library card or one piece of ID? Does it mean that somebody does have to have a photo ID like the OHIP card or the driver's licence?
Mr. Jim Peterson: That's a very good question. There was a concern that people would have to be ID'd, fingerprinted, pictured, and everything else. We're hoping that it's a very flexible thing. There is no requirement for photo ID in this whole thing, and in some cases one piece will do.
Mr. Frank Swedlove (General Director, Financial Sector Policy Branch, Department of Finance): Generally, the concept is of two pieces of ID and one a photo ID. However, what we plan to look at including in the regulations is the ability of an individual who is known to the financial institution to vouch on behalf of that individual opening an account, so that might serve as a piece of ID. We're going to be specifying it in regulations. But what we are obviously looking at is as many opportunities as possible for an individual to open an account.
Mrs. Sue Barnes: Okay.
I'm sure there are still many parties out there that would consider, especially in the merger review process, that there's still a fair amount of ministerial discretion. I'd be interested to hear your views on how you would defend that ministerial discretion as the bill is currently drafted.
Mr. Jim Peterson: I think that's a very good question, Mrs. Barnes. We have opted deliberately for ministerial discretion in many areas in order not to be bound by the straitjacket of actual law and legislation. This, I believe, will give us the capacity to respond to the needs of individual institutions and individual consumers with a great deal more alacrity than we could without it. So I think in every area where we've put ministerial discretion, it has been to expedite processes and to attempt to cut red tape rather than to increase it.
Do you want to add anything to that?
Mr. Frank Swedlove: That's all right.
The Chair: Mr. Nystrom.
Mr. Lorne Nystrom: Thank you, Mr. Chair.
I welcome the minister and the officials to the committee this afternoon.
My first question is one I think the banks and the financial institutions might be interested in. It's asked in a serious way. I want to ask the minister a question in his capacity as a brilliant political tactician. What happens if the Prime Minister accepts his advice and calls an election three years and four months into his mandate? What is the backup for this bill? The bill would obviously die on the Order Paper, and the banks and financial institutions want this bill through as quickly as possible. So if the Prime Minister accepts his advice and calls an early election, what happens to the bill? What's the backup plan?
Mr. Jim Peterson: I would just add that consumer groups have asked that we get this through quickly as well. I'm very gratified by the overwhelming support from all stakeholders to see early passage. That's why I'm here today: to ask for your unanimous consent to pass this bill today. We'll go back to the House tomorrow.
Some hon. members: Oh, oh!
Mr. Jim Peterson: The Senate is quite prepared, we understand, to pass this on one reading. Then we would have the best of all possible worlds. And thank you very much for your support, Mr. Nystrom.
Mr. Lorne Nystrom: Since Ms. Bennett denies unanimous consent, what's plan B?
Mr. Jim Peterson: I hope it won't die on the Order Paper, because it represents the result of an incredible input from members of this committee. Look at all the work you've put into financial institutions in the past. This is the culmination of it. This is really the apex of it and it ties it all together. Your foreign branching bill, for example, is completed here. This creates a level playing field for all of the foreign banks or the domestic banks.
I am sure this committee will give this bill due consideration. I'm sure this committee is cognizant of the necessity of trying to get it into law and that you will do as you have in the past, and give every consideration to an expeditious passage. I'll certainly work with the House leader to try to ensure expedition on third reading, report stage, passage, Senate.
Mr. Lorne Nystrom: That's a pretty tight timetable before the writs are dropped or the PM follows your advice.
Anyway, I want to ask questions on a couple of things concerning a number of areas that are important to Canadians. I want to ask the minister about a proposition that was made by the Canadian Union of Postal Workers, CUPW, that the post offices become a provider of more financial services, and how he would react to that. That's an interesting proposition made by the union representing postal workers.
I think the minister knows how big the post office is. I think it has about 50,000 in the country. It's all over the place. It's in many communities where the banks have pulled out. There have been a lot of banks pulling out recently in rural communities, as the minister knows, and post offices are often in those communities.
Mr. Jim Peterson: These are two important suggestions, and they're different. Having the post office go directly into competition with the private sector does create problems. A publicly funded organization competing directly with the private sector does raise issues.
Where banks cannot profitably operate in a particular region and choose to pull out, we very often have a post office presence there, and I am anxious that those post offices be one of the alternatives open to that community to ensure ongoing financial services. This is why, as you know, we do have the notice requirements for closures—six months if you're the last one in town in a remote area. This is why we have the power in the agency if necessary to order public consultations on how those people can best be served if a bank is pulling out. Often the banks negotiate a lesser presence. We think that in a number of communities the post office's presence is going to be a very good alternative to providing those services.
Mr. Lorne Nystrom: Therefore the policy position would be, if it's not in competition with a bank or a credit union, that the post office might be the provider of some of those services.
Mr. Jim Peterson: We want that community to have an opportunity to look at how it can best have its needs met, in consultation with the institution. What we're saying is that the post office could be one of those alternatives. We're not mandating that it be. The post office has expressed their acceptance to us of the possibility of in many cases providing that alternative service.
Mr. Lorne Nystrom: I appreciate the minister's answer. If the post office is interested, the union is interested, and the minister is interested, then that might be a very positive move for a lot of people in rural Canada.
Keeping on my rural hat, Mr. Minister, would you have the same attitude for the Farm Credit Corporation? They sometimes operate in places where the banks are pulling out. That too, of course, is a federal crown corporation.
Mr. Jim Peterson: I think that's an excellent idea. We've seen other cases where they've gone into general stores in a region. We've seen cases where they've gone into a drugstore and set up an operation.
Where they do it, I don't think we should dictate. But I think we should encourage openness for the community to work with the institution to find a way to best meet its particular needs—not only where, but also the level of service.
Mr. Lorne Nystrom: Maybe the minister can put on the record some things that were said this morning about credit unions. When can we expect more changes? How does he see this avenue being folded out before us in the next few months?
Mr. Jim Peterson: Well, our officials will continue to work with the interested parties, and there aren't too many of them right now, who are pushing the Rabobank or co-op bank proposal. But we will continue to work with them because we think it has merit.
As with everything, we just want to make sure that we get it right. We have been working with them on an ongoing basis, and we will continue to do so. To me, it's a good alternative in terms of creating domestic competition.
Mr. Lorne Nystrom: Does the minister have any idea of a timetable that he might expect? I'm not surprised if he doesn't know the answer; it depends on what the credit union agenda is too. If he could shed a bit of light on that, it might be helpful.
Mr. Jim Peterson: Do you have any sense of that, Frank?
Mr. Frank Swedlove: What we would be certainly willing to do is to sit down and work with the interested parties on this issue. We will need to look at the governance structure that is now in the Bank Act, because it's essentially set up for a stock company, and this would be a company that's based on cooperative principles. So some of the governance elements would need to be reviewed.
Also, I think it would be appropriate that there be consultations that would take place with not only the credit union movement more generally, but also with the provinces. Individual credit unions are provincial institutions, and the co-op bank model suggests that there is the ability for individual credit unions to essentially change a provincial charter to potentially a federal one. So there are issues the provinces will want to have the opportunity to have discussions on.
Mr. Jim Peterson: That was really Mr. Epp's question as well.
Mr. Lorne Nystrom: Yes.
I wonder if the minister can tell us why he rejected the idea of a community reinvestment act, similar to what you find in some American states.
Mr. Jim Peterson: It's a very important question, and we looked at it very carefully. It was one of the major preoccupations of the MacKay committee. I actually took time and visited with a number of the CRA operations in the States and looked at some of the community banks.
It seemed to MacKay that the CRA arose out of red-lining in the United States, where institutions would line a red circle around a particular area, particularly in ghettos, in inner city areas, where they just would not, for love nor money, put any money into it. The government stepped in, and they have had some excellent success down there.
We have not had evidence before the government or before this committee, as I understand it, Mr. Chairman, of that type of practice where there's been a wholesale denial of credit in areas where it's needed. So we didn't want to create a shotgun where maybe a fly swatter would work. We wanted a bit of a mechanism whereby the institutions would have a sense of community accountability. I believe many of them do without legislation.
I'm very proud of the record of our financial institutions in many areas, but I think through the annual reports that the bigger institutions will be putting out they'll be commenting on some of these things. The government will always be very sensitive to representations it receives from groups as to where people are being denied the services they require. This will be a preoccupation for us, and I know it will be for this committee.
So if it turns out that there are problems in the future, I think we can react to them very quickly. I think we can do this by making phone calls to institutions. If that doesn't clean it up, we and this committee can act.
Mr. Lorne Nystrom: I guess my final question, Mr. Chairman—I have one more minute. I am pleased to see there is a reference to some guidelines in the legislation about bank mergers. I'm wondering why they are guidelines instead of part of the legislation itself. Wouldn't it be stronger to have the actual guidelines as part of the statute? What's the reason for not making that decision?
Mr. Jim Peterson: It's a pretty big bill anyway. We've operated under guidelines to date. The financial services task force gave us, in the summer of 1997, guidelines that they had developed that we should follow when we're involved in a merger. We have followed those. They are public. It's obvious if we are following them, if we've addressed them or not. We don't think these are things that have to be legislated. The minister, who makes the final decision, is publicly accountable for that decision and has to be able to answer all of those questions.
It gives us a certain flexibility if new things arise that should be considered. There may be new technologies that come along that are going to require something special. Why would we want to have to amend the act?
I think the guidelines, combined with transparency, give Canadians the assurance that these things will be looked at, but they give us the flexibility to meet continually evolving needs, not only of the industry and the sector but also of Canadians, communities, provinces.
The Chair: Thank you, Mr. Nystrom.
I have a couple of brief questions. I've always had some concerns about this public accountability statement. What does it achieve exactly? The banks issue these nice glossy reports to the public and they say how much money they give the charities, how many jobs they've created. Tell me what they achieve.
Mr. Jim Peterson: This is a very difficult question, so I'll call on Frank.
Mr. Frank Swedlove: I think it goes back somewhat to the issue of a desire to see more information provided about the kinds of ways the institutions provide services to Canadians, and to have it in some kind of formalized sense, which to some extent provides accountability and would allow for people, including this committee, to give consideration to the kinds of things that are carried out by institutions. We will be specifying in regulation all of the areas where they will be required to provide information, so there will be a clear understanding of all of those areas, carried out by all the institutions—
The Chair: Give me a sense. Give me a couple of things that I can look forward to.
Mr. Frank Swedlove: Some of the areas that will be included in the regulations will be the small business lending activity, broken down on a regional basis. There is also the branch closures that are taking place. There will have to be a reporting of that. There would also be a reporting of charitable contributions to the community. Those are the kinds of examples....
The Chair: So they publish these public accountability statements. Let's say we ask them to appear in front of us. What do we do with them after they've done that? Do we report to the House that Scotiabank or the Royal or whoever is...? Tell me exactly what the end result is of this action.
Mr. Frank Swedlove: No sanction applies. That's a CRA kind of concept that we felt was not necessary. What it does provide is the transparency; it does provide people with a clear understanding of the contributions these institutions make to the Canadian community. That's the objective and that's the intention, and that's the end point in terms of providing the information. What policy makers do with that information of course is another issue.
Mr. Jim Peterson: I have the sense, Mr. Chairman, that we may be mandating a very good PR campaign on behalf of many of these institutions, which do play an incredibly important and constructive role in so many of our communities.
The Chair: You said it. I didn't.
As chair of the committee, I'm trying to figure out what our role is and exactly what is the.... Like everything we do there has to be an end game; there has to be a reason why we do it. If it's in fact to allow an opportunity to showcase what banks are doing for the Canadian economy and society, that's fine—which raises another interesting point about the Bank Act and the merger review guidelines.
We have here a merger proposal for banks. By the way, I'm looking at page 4 of the presentation you made this morning. You have the House of Commons finance committee, you have the Competition Bureau, OSFI, and then you have “The Finance Minister decides whether to proceed to negotiation of remedies.”.
What is expected of us in a merger...? If in fact we have to review a merger, one of our major responsibilities would be to look at public impact sort of assessments. Is that correct? Do we go back to these public accountability statements, or are we going to be looking at things like the impact on jobs, the impact on competition, and other issues?
Mr. Jim Peterson: We've provided in the guidelines for public impact analysis that would be presented by merging parties, which would deal with a lot of these issues. I suspect, Mr. Chairman, that you would probably have a very wide-ranging scope. You could look at anything you wanted and call any witnesses you wanted. I would suspect you would want to do so in these particular circumstances, and it may be different in every case.
I'll turn it over to Gerry.
The Chair: Would I be correct in saying that our role would be an advisory one to the minister?
Mr. Jim Peterson: Certainly advisory, but also maybe just as importantly a vehicle, and an excellent vehicle, by which public consultations can be held. I can't think of a better vehicle for the public and the stakeholders, affected parties, to come forth and publicly state why they're for it or why they're against it. You have that expertise; you understand the concerns of the consumers of these institutions and the industry itself. To me, you're the ideal body to take a look at it.
The Chair: Mr. Salembier.
Mr. Gerry Salembier (Acting Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance): Just to clarify, Mr. Chairman, the document the House committee would be asked to examine in the context of a merger is a separate document from the public accountability statement. What the committee would have in front of it is a public interest impact assessment prepared by the banks proposing to merge. That document would be specific to that merger proposal, and would include, among other things, the employment impacts, the impacts on technological development, the impacts on international competitiveness and service to consumers of the proposed merger.
The Chair: So the elements that appear in the public accountability statement would in fact appear also in the other statement you're referring to. No?
Mr. Gerry Salembier: In general, some of the contents would cover the same general terrain, but the public interest impact assessment would be aimed at explaining what the consequences of the proposed merger were, rather than just the banks' activities generally throughout that year as expressed in the annual public accountability statement. This would be something they would have to produce at the time the merger proposal first is made.
The Chair: Good.
Mr. Ken Epp: I want to come back briefly, if I can, to the cooperatives. It occurred to me when you were talking about banks pulling out of smaller communities, and there are many of them, that this would perhaps be an area where, if there were a substantial cooperative banking system, the local people there could maybe buy into that, and suddenly they could have their own bank.
Certainly all the clues that we have in the legislation and in all the statements that you've made and that have been made by others in the government on this topic, all the way back from the last seven years that I've been here, were looking for more competition in the financial services sector. The MacKay report I think recommended it strongly. I think there was a slot on it in the white paper later on. All of these indications are there.
I somehow feel that we're missing an opportunity here, and one that perhaps could really serve Canadians well if we don't do it at this time. So I would like to know, what really is the reason why we can't proceed with this at this time? I suppose I would just ask the question: what should we do so that we can do it?
Mr. Jim Peterson: Well, we've been talking to the interested group. It's fallen from a very big critical mass of credit unions, which were interested in the concept of a cooperative bank. There are a number of models they tested and looked at, a number of concepts, and then they lost interest in it. Following that, and after quite a hiatus, another group came in and said they were still interested in pursuing it. We have told them we will work with them, because we thought it was a good idea. MacKay recommended it, but we have to have one that meets the needs of the people who are on the ground and working with us.
In the meantime, what we are doing to the cooperative movement is we are allowing this national services entity to go ahead, which will give them some economies of scale. I'm delighted that we've seen already, particularly in western Canada, a number of bank branches that have been bought by the co-op movement. This means that they're expanding their operations, their capital, their customer base. So meanwhile, in spite of the fact that we don't have this brand-new entity, which we will work on, they are prospering and growing.
Mr. Ken Epp: But under the aegis of the credit unions, as opposed to the cooperative bank, right?
Mr. Jim Peterson: Yes, and they feel very comfortable with that. This cooperative movement—and Mr. Nystrom can certainly tell us more about it—is something cultural, and not just in banks, but particularly in the west, where people actually own their own entity.
Mr. Ken Epp: Yes. I'm one of those.
Mr. Jim Peterson: Good.
Mr. Ken Epp: I own my own bank. It's in the shape of a pig and it sits on my desk at home.
Mr. Jim Peterson: I'll tell you that we are happy and anxious to work with interested and affected groups, and we will do so on an ongoing basis until we get something that not only satisfies them, but which has been tested—and I mean road-tested. We want this to be out there for the public to see, so that the other groups can see it so that we can test it against what is happening in other countries, test it against all of our other institutions. We want everybody to have a look at it so we can have the benefit of the best advice. And we will certainly give it our best expertise.
Mr. Ken Epp: I have another question, totally unrelated. This reflects back on what you said a little earlier. You admitted that there was a lot of authority given to the minister in this bill, and we noticed that too. Pretty well four or five times on every page, the minister can do this, the minister can do that. A lot of the stuff is totally undefined; it just sort of says this is subject to the minister's approval, and so on. A few minutes ago you said that was good, because that gives us the flexibility of responding quickly.
I would suggest to the secretary of state that probably what we need is a great sense of stability in the financial institutions in this country, rather than the idea that things can change overnight in this direction and then that direction because the minister has the freedom to do that so rapidly. I really question all of the authority you're giving to the minister in this bill.
Mr. Jim Peterson: Let me just say a few things, and then I want to turn it over to Frank and Gerry and Rhoda.
Probably the ultimate power of the minister in this bill is to do things such as allow a bank or a financial institution to be incorporated, or to approve a merger or amalgamation of some sort, a takeover. You can see in those cases why it's very important to have discretion, because the consideration on behalf of the public interest can be so diverse in every situation.
In a lot of the cases, Mr. Epp, we've taken out of the old act cases where the minister did have discretion, useless discretion, where you had paper come across your desk that you shouldn't have had to see; it was routine. A lot of that stuff has gone to OSFI and gotten right off the minister's desk. Frank, Gerry, and Rhoda can give you examples of where we think it is streamlining or we think it is important to have this discretion, as opposed to hard-letter, hard-wired, unchangeable criteria.
Mr. Ken Epp: If I can interrupt before the other speaker, I just gave a cursory reading to this thing as my bedtime reading last night, and I see in there, for example, that the minister has the right to essentially take over the management of a bank.
Mr. Jim Peterson: That will be OSFI. And this is very important to us. We have found that where you get into trouble is where you don't have the possibility of early intervention in the case of a failing institution. This is why we have provisions whereby OSFI can move in there very quickly, where they can dismiss directors if they have to. We think this is in the interests of all Canadians, because they're the ones who pay for failures through the Canada Deposit Insurance Corporation.
Mr. Ken Epp: So when it says “Minister”, that's just a euphemism for OSFI; when it says that throughout this bill, it can be any one of these four or five different agencies that are listed.
Mr. Frank Swedlove: The approval of the minister.... There are superintendent approvals in legislation and there are ministerial approvals. Generally, there is a difference when there is a broader public interest that's associated with the decision. The superintendent would only review things where the sole issue is a prudential concern. If there is any opportunity for a broader public interest, then the minister has responsibility.
With that thinking, for example, there are a number of ministerial approvals in the present act that Bill C-38 changes to superintendent approval. Such things as name changes, reorganizations within institutions, which previously required ministerial approval and consequently more time, have now been moved to superintendent approval. In our estimation, just in looking at last year's approvals list, we will be reducing ministerial approvals. If we look at the approvals the minister had to carry out in the last 12 months, that will be reduced in the area of 30% to 35%. So I think we have made some great strides there.
Where there are some additional ministerial approvals is in new areas the legislation covers that didn't effectively exist previously, but they were comparable approvals by the minister with respect to regulated banks or regulated insurance companies. For example, approval of a change of control of a bank holding company applies in a similar fashion as it does to approval of a change of control in a regulated bank. These, of course, have added to ministerial approvals, but it's consistent with the present legislation.
Mr. Ken Epp: Is it your really careful opinion that with these changes there will be more attention given to that than if it's just a stack of things on the minister's desk to sign? Is that the reason? If that is, I think we can probably support that in principle.
Mr. Jim Peterson: Let me say to you, Mr. Epp, in the case of ministerial discretion, in the event of a troubled institution or threatened insolvency, that would be foremost on the minister's mind. He would want to know about it. He would have to know about it, because this is cataclysmic. It could have systemic implications for other institutions. It could have an incredible impact for the depositors or for the policyholders.
I can tell you this. Right now we have meetings on an ongoing basis with our regulators, with a view to examining the health of institutions, to try to see if there are institutions that are facing difficulties. We want to try to know about it in advance. It doesn't mean we'll always be able to save them, but this is of paramount importance to us.
Mr. Frank Swedlove: Mr. Chairman, maybe it would be worthwhile for us to explain a little bit the process that is involved when there is a financial institution that is potentially in a failure situation and the relationship between the superintendent and the minister in that regard. That may clarify it. It's essentially in the existing legislation, but it might be worthwhile to specify what it is, and maybe I'll ask Mr. Bergevin to respond.
Mr. Normand Bergevin (Director, Legislation and Regulations, Office of the Superintendent of Financial Institutions): I think I should start by pointing out that in the act that governs the Office of the Superintendent, the OSFI Act, as we refer to it, there is a provision that actually creates a committee, which is called the financial institutions supervisory committee, which consists of the heads of the four agencies that have responsibilities towards federal financial institutions. Those four are the Deputy Minister of Finance, the Superintendent of Financial Institutions, the Governor of the Bank of Canada, and the Chairman of CDIC. This committee meets regularly to discuss issues related to the supervision of financial institutions, and certainly problem financial institutions. So there's a lot of information sharing on this issue.
When an institutions gets into what I would call dire straits or severe financial difficulties, OSFI definitely steps up its supervision program. We have a guide, which is a public document, that is available to all financial institutions. It guides our intervention scheme, if you want, towards these problem institutions. The institutions are staged anywhere from not being staged at all to stage one, stage two, stage three, or stage four. At stage four you're out of the business. As institutions flow through that guide, as I mentioned earlier, the measures of intervention increase and become more severe. OSFI and CDIC, at the severe stages, also have powers to intervene. OSFI takes a very close look and works very intimately with the management and the boards of these institutions.
If at some point the institutions cross the line, in terms of the criteria that are in the Bank Act and in the other financial institutions statutes, those are the thresholds that are laid out in the act that give us the authority to actually take control of the institution. At that point we take control; we dismiss the board. We have all the powers to run the financial institution. When we reach that stage, the act lays out a period of time when the institution can make representation when they're heading towards liquidation or winding up of the institution.
At that stage, the minister has a veto power, and he can actually veto the closure of the financial institution on public interest grounds. But that's basically where the minister's role comes in with that kind of scenario. He can stop the process and say, listen, there are particular circumstances here that I have to take a close look at; we cannot afford to close this financial institution, potentially for certain public interest reasons, and we need to take a close look at that before the process takes its course—in a nutshell.
Ms. Rhoda Attwood (General Counsel, Legal Services, Department of Finance): Following that, the superintendent could request the Attorney General to bring winding-up proceedings under the Winding-up and Restructuring Act.
Mr. Jim Peterson: [Inaudible—Editor]...gives parliamentarians an opportunity to make their voices heard in a public way.
The Chair: Bennett, Nystrom, and Barnes.
Ms. Carolyn Bennett (St. Paul's, Lib.): Thank you, Mr. Chair.
In the Bank Act changes, the merger review guidelines, do the guidelines include any time line as to whether the banks could expect that this would be done in a timely fashion?
Mr. Jim Peterson: Good question. Yes, we hope it will be five months. We can't mandate that it be five months because we have provision for parliamentary committee review. It would not stand very well with this committee if the government could dictate how long the committee could take.
What we're basically saying is we think, based on review of foreign mergers by other institutions and governments...how long has it taken for governments to give approvals? This is on the side of being fairly expeditious, but we believe that would be adequate to have the processes we've put in place, including the very important committee review here.
If you have suggestions to us in terms of what you think the proper timing might be—could it be speeded up or would that not be enough time for you—you of course would know better than we would.
Ms. Carolyn Bennett: Wouldn't you expect that the finance committee would come and meet in the summer, Mr. Chair, if that was necessary? I don't think you could expect people—this is a serious business—to wait from the time Parliament rises in June and maybe doesn't sit again until October. That doesn't seem fair in real business.
Mr. Jim Peterson: That of course would be up to this committee. I have heard incredibly fine things not only about the competence of this committee but also about its diligence—on division.
Ms. Carolyn Bennett: In the reclassifying of a small or medium-sized bank, are there time lines on that?
Mr. Jim Peterson: Good question. No. We would think it would take less time than that.
The Chair: Mr. Nystrom.
Mr. Lorne Nystrom: I have a couple more brief questions.
I notice the minister has created a banking ombudsman, and that's a step in the right direction because the banks now do have an ombudsman system funded by the banks. That could certainly be a conflict when they fund their own watchdog. I guess my question is why the minister didn't give more teeth to the ombudsman. For example, in Britain the ombudsman has the ability to fine an institution they find in violation of certain guidelines. In this country they can't fine the institution. I guess my question is why the minister prefers pussycats over tigers.
Mr. Jim Peterson: This is a very important issue you've raised. It was one of the toughest issues we had to deal with when the ombudsman was originally created. We were very conscious of the U.K. experience in this. Our people went over and talked to them.
If the ombudsman can make binding decisions enforceable upon either an individual customer or an institution, then a whole new set of legal parameters come into play. Laws of natural justice have to be adhered to. You have to have the right to hearings, the right to counsel, and the right to witnesses. You're into a lawsuit, because that person can deprive a person of property. We don't want something that is a lawsuit. We wanted an alternative that wouldn't cost the consumer one cent, and where they wouldn't have to hire counsel to do it. The price we pay for that is that the ombudsman's decision cannot be mandated.
This is why it is critical that we follow the decisions of the ombudsman to see if his orders are in fact agreed to by the institution. So far we've had 100% implementation, I believe, of ombudsman rulings. So we're getting the best of both worlds. We're getting the definitive result that you get in the U.K., but without all of the cost, the time, and the rigmarole. In the United Kingdom, for example, they were saying that a lot of the cases took up to two years to be resolved through this process. We don't want that either. We want something that's fast. I think certainly the minister will want to do this, but this committee might want to have the ombudsman before them on an ongoing basis to see if their decisions are working, how many cases they have had, how many they have been able to solve to the satisfaction of the complainant, all this sort of thing.
But I must say this. I'm pleased with the experiment that started out on the ombudsman. We've modified it. Here we've gone further, and we've made the possibility that it will not be just for banks but for other financial institutions, Mr. Nystrom. We think this is good. This is ending overlap and duplication. If we can get all of the financial institutions into this, then we will have created something that every consumer of financial services in this country will know about automatically. It will have that profile. They will know that if they have a problem, be it with their securities, their insurance, their banking, or whatever, they can go to this one ombudsman. So this is our attempt to end overlap and duplication and to have something that is terribly affordable and quick.
Mr. Lorne Nystrom: If this approach works, then why does the U.K. use the other approach? Are they considering going the pussy cat route instead of the tiger route? You make it sound as if the arguments are one-sided toward not going the same route as the U.K. Are they considering this kind of model? Does it not work well in the U.K.? Is there too much litigation in the U.K.? Is it too costly or too slow? Mr. Peterson seems to think the evidence is quite overwhelming. Otherwise, he wouldn't be so enthusiastic about going with the route he's going with.
Mr. Frank Swedlove: The U.K. has a very formalized process. They also are in the midst of combining all of their financial services organizations into the Financial Services Authority. There were a multiplicity of ombudsman-type functions in their system, and they are attempting to merge all of that into one organization. We think the system we've established has significant advantages over the U.K. system. There have been discussions with U.K. and Australian officials and others on the best way to proceed with some of the difficult issues the U.K. has found themselves in with regard to this.
The Chair: You can get another question in, Mr. Nystrom.
Mr. Jim Peterson: Excuse me, just on this point, Mike Lauber, our ombudsman, has done a fair amount of study of the U.K. and other models. I don't feel competent to answer in the detail that I know you are entitled to.
The Chair: This will be the final question for Mr. Nystrom.
Mr. Lorne Nystrom: My final question is more of a general one to the minister. The minister knows that I have a great deal of interest in parliamentary and electoral reform, and I have the concern that Mr. Epp raised as well about the power going to the minister. The issue of bank mergers is an example of that. I think that in our parliamentary system in general too much power rests with the executive and the Prime Minister's Office. I'm not blaming any particular political party for it. It's the practice in the provinces as well. I think we should be evolving a parliamentary system that gives more power to members of Parliament to make decisions, to recommend major appointments, that type of thing, or to make major appointments.
Maybe the Prime Minister should make recommendations, and the relevant committee actually ratifies or rejects. Many democracies in the world do that. Under our Constitution we have a Prime Minister who appoints the head of the national police, the RCMP; the head of the Bank of Canada; the head of the Supreme Court of Canada; all the judges; all the cabinet ministers; the parliamentary secretaries; and the committee chairs. It just goes on and on. The list is endless. More and more power seems to be going through guidelines, Orders in Council, and regulations to the executive. The minister, of course, knows as well as I do that he and his colleagues are not there forever. Governments change and governments come and go, and ministers come and go, good ones, bad ones, incompetent ones, competent ones, and so on.
I know you have brought this bill to us and you've made a decision on this one, but I just wonder if in general you are concerned about too much power going to the executive and the ministry and less and less power going to parliamentarians. We're often called on now just to rubber-stamp things. At least in the opposition we have the freedom of getting up and asking questions, making public statements, and offering a critique of the government. Government backbenchers can't do that to the same extent under our system. I come from the province of Saskatchewan, where our party has been in power for most of the last 50 or 60 years. I'm not criticizing your party or any other party. It's part of the evolution of our parliamentary system that I think has taken too much power away from the people's representatives.
That was my last comment and question, Mr. Chair. Perhaps the minister would like to respond to that. I know his family background, which has included a lot of experience on both the federal and provincial sides. I don't know if he wants to make a general observation, perhaps divorcing himself from this bill. The relevancy of my question, of course, is that this bill continues that practice.
Mr. Jim Peterson: This is a terribly complicated question you've raised. It's a very important question. I don't think there's any right answer.
I have my own predilections, and let me tell you what they are. I am pleased that in this bill there is an opportunity for a parliamentary review of a major merger, because it could have incredible implications for all of the country. There are those who have criticized us. They say that this is ridiculous, that there's no other country in the world that calls automatically for public hearings on this type of merger. You're hamstringing us. You're making it difficult for our institutions to evolve on a global basis. We think we've met that by an expeditious process that will work to the benefit of both.
Having said that, let me go back to the question of whether Parliament itself should make major appointments or the executive should be responsible. I'm not sure I want the U.S. approach where judges and district attorneys are elected. I'm not sure you want necessarily the approach where appointments are subject to public cross-examination, where it can be brought out what your entire past is. This has scared off many good people. Perhaps you could say that if you have no skeletons in your closet, you shouldn't mind having those no skeletons being brought forth to the public.
There are those who say that it's a much more civilized process. You can get better people to come forward. What we've done in the case of judges I think is excellent. It's not an unfettered discretion. The bar has to approve who comes forth as a judge. So we're sharing this with the experts on the ground. I think there should be rules for consultation with experts, and we do this. If we're going to make an appointment to a board, I know the Prime Minister has people consult with the experts and others on these things too.
Mr. Lorne Nystrom: [Inaudible—Editor]...appointments?
Mr. Jim Peterson: We brought forward your name, and he's looking at it very closely, Mr. Nystrom. We think you'd be excellent. We think you'd shake it up a lot.
The Chair: Is that your final comment, Mr. Peterson?
Mr. Jim Peterson: Yes.
The Chair: Mrs. Barnes.
Mrs. Sue Barnes: There's just one quick concern. It's probably the opposite of Mr. Epp's concern. I know that having concrete rules allows for risk-averse people to have confidence that everything is transparent all the time and that we can go step by step through a process. My concern is that so many levels of your stakeholders will have to be talking constantly to the officials and all the levels of government to make sure that what we're creating here and legislating and reviewing mandatorily five years down the road is sufficiently flexible actually to do something worth while in the new economy.
I'd like you to address the opposite end of the spectrum from “let's have it all set out and safe”. Have we created a huge legislative and regulatory framework that is not going to be quick enough and flexible enough to get things done on a timely basis for potential industry that we don't even fathom will be there two years or six months down the road?
Mr. Jim Peterson: Mrs. Barnes, you've really hit on what is one of our major concerns; that is, whether we have built in too much rigidity. You know how difficult it is to get back to Parliament to get a bill through to amend the law in order to take.... If you find in this bill that we have built in too much rigidity and that we should have greater flexibility in certain areas, I would really welcome your views on that. We've tried to do it. I'm not sure that we have them all. We've tried to give us the flexibility to meet globalization and the explosion of technology. I'm not sure we have. I'm not sure the institutions know what will hit them a year from now. If you find areas where we have been too rigid, we want to know about it. Likewise, if you find areas where in terms of discretion we don't need it, then we would welcome that as well. These are judgment calls. We've been conscious of these two major issues you raise. I feel we've solved them, but you never know.
Mrs. Sue Barnes: Thank you.
The Chair: Are there any other comments or questions?
I'd like to thank the secretary of state, of course, and the officials. I want to, Minister, also tell you that this morning's presentation by your officials was excellent, and we want to congratulate them once again. On behalf of the committee, we look forward to studying this bill, and hopefully we'll get it approved before whatever happens.
Mr. Jim Peterson: Thank you, Mr. Chairman and members. We'll certainly welcome your views on this. I'm very appreciative of what you've said about our officials. I can tell you that they have been slaving, and this has been a marathon for them. Very few of them have had any time off at all. I am just so proud of them and so grateful to have them working with me. I'm glad you mentioned that. Thank you.
The Chair: The meeting is adjourned.