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Michael Hatch
View Michael Hatch Profile
Michael Hatch
2019-05-14 11:24
Thank you, Mr. Chair.
I want to thank the committee members for giving me the opportunity to speak this morning.
My name is Michael Hatch, as the chairman mentioned, and I am the Associate Vice-President for Financial Sector Policy with the Canadian Credit Union Association. Try saying that five times fast.
We represent 248 credit unions and caisses populaires outside of Quebec. Collectively, our sector contributes $6.5 billion to the Canadian economy. We have 5.8 million members. We employ almost 30,000 Canadians and we manage over $225 billion in assets. In 2018 we donated $62.5 million back to community initiatives and projects across the country, which is a much higher share of our after-tax income than the large banks.
Credit unions are owned by the people who bank with them, as many of you will know and appreciate, and that's what sets us apart. We're the only banking services provider with a physical branch in 395 communities across Canada, many of which are represented around this table today.
Despite our smaller size, we have market share comparable to the big five banks in agricultural and small business lending. We lend to small businesses because we are small business. In the western provinces, for example, credit unions often have between 30% and 50% of the market. In Manitoba, one out of every two consumers banks with a credit union.
The important work we do in our communities is why credit unions have been asking the government to modernize some outdated provisions within the Bank Act, which are obsolete and a barrier to innovation and competition in financial services. We were pleased to see two of our pre-budget recommendations included in budget 2019, back on March 22. These were changes to federal credit union member voting for AGMs, and an elimination of the outdated requirement for federal credit unions to send paper statements to all members each year.
We thank the government for hearing our concerns and for working to address some of our recommendations in budget 2019. However, we were disappointed that only one of these two recommendations was included in Bill C-97. This means that federal credit unions will have to continue sending out inefficient, costly and environmentally unfriendly paper statements to all of their members, including children, preventing the credit unions from returning the savings that electronic notices would provide back to their communities, until at least 2020 and perhaps beyond.
One of our federal credit unions has estimated that this costs it nearly $1 million every year. This money would be much better spent on reinvestment in the credit union or on the community programs that our members support so generously.
While the Bank Act does apply directly to only federal credit unions, it is important to note that modernization of outdated provisions eliminates barriers to entry for credit unions considering going federal, as well as sending an important message to provincial regulators, encouraging them to re-examine their own outdated provisions in their own legislation. Several provinces still have similarly outdated provisions. These recommendations will have an impact not only in the federal sphere but across Canada in increasing competitiveness and innovation within the sector.
With the support of the all-party credit union caucus—of which many members are here this morning—and all parties, credit unions remain hopeful that the Parliament elected in October will follow through with the budget measure on the elimination of the requirement to send paper statements, and our other recommendations to support innovation and competition within the financial services sector.
Ultimately, policy should encourage competition in financial services in Canada. Our financial sector is not noted for its high levels of consumer choice. Credit unions represent the only real alternative to the large banks in Canada. Further, policy-driven concentration in financial services in this country is not in the interests of the consumer or the economy.
Credit unions will continue to advocate for the changes that the government committed to in its budget this year but that did not make it into this bill, regardless of the outcome of the election later this year. The sector appreciates the support of the all-party credit union caucus and asks this committee for its support in ensuring that these changes are implemented at the earliest legislative opportunity.
Thank you very much.
View Francesco Sorbara Profile
Lib. (ON)
Michael, good morning to you. It's great to have the chair of the credit union caucus here this morning. We have worked together, I believe, very co-operatively with all parties in ensuring consumers have greater choice and that there's competition in the marketplace.
I understand the two budget measures are the budget measures that were introduced in budget 2019, one of which just made it to the BIA. I would argue that the actual governance structure that is being put in place is a longer term work in progress amongst yourselves, the government and the finance officials, but it has generally been very co-operative.
Just to clarify, the rules that have been put in place under the BIA would only impact those credit unions that are federally regulated.
Michael Hatch
View Michael Hatch Profile
Michael Hatch
2019-05-14 11:42
That's right. Thank you for the question and thank you for your leadership on the all-party credit union caucus. It's been a really instrumental piece of the puzzle, along with Mr. Albas from the Conservatives and Mr. Julian co-chairing that group.
Yes, to answer your question, these provisions directly apply to only federal credit unions. There are only two of them, and two more soon to be going through that process, but if I may add, there's an important downstream effect at the provincial level. I can tell you that in B.C., for example, they are currently undergoing a review of their FIA, their Financial Institutions Act, and this same provision exists for provincial credit unions in B.C.
But partially as a result of the progress that we've made on this requirement to send paper statements at the federal level, B.C. is now strongly considering eliminating that for provincial credit unions in that province, which would obviously be a huge win.
View Rachel Bendayan Profile
Lib. (QC)
Thank you very much.
If there is time, I would like to address a question to Mr. Hatch.
Being a member of Parliament from Quebec, I do appreciate the work that you do for credit unions outside Quebec. You mentioned that you lend to small businesses because you are a small business, and I think that is a very important element of credit unions' work right across the country.
You mentioned your concern about continuing the paper statements to your members. Do you have any concrete proposals or suggestions in order to ensure that seniors who are your members, who might not have access as easily to email or other forms of electronic statements, could receive those statements?
Michael Hatch
View Michael Hatch Profile
Michael Hatch
2019-05-14 12:30
It depends on, one, how the regulation is written, and two, how credit unions go about their own affairs, but absolutely it's in their interest to make this information available to all their members, whether or not they have access to electronic means of communication.
What I would argue for is an opt-in option so that if you as a credit union member want to have that paper statement delivered to you, by all means, make the request. Right now, what we have is an opt-out, so as we all know, human nature being what it is, nobody opts out of these things. Nobody is organized enough to go online to say they don't want this thing mailed to them. Maybe a very small percentage do but not enough to make a meaningful difference.
We can make it an opt-in, which would save 95% or more of those bricks of paper from being shipped out across the country but still give people the opportunity. If they want to get that paper statement, obviously they should be able to have access to it.
View Carla Qualtrough Profile
Lib. (BC)
Thank you. I will do the introductions via my opening statement.
Mr. Chair and committee members, good afternoon.
I'm very pleased to be here today, and to have the opportunity to appear before you to discuss our supplementary estimates (B) as well as updates on some of our recent accomplishments.
It is a pleasure for me to speak for the first time in the newly renovated West Block. As Minister of Public Services and Procurement and Accessibility, I am proud of how much has been accomplished to restore and modernize the parliamentary precinct.
Joining me today are Public Services and Procurement Canada's new deputy minister, Bill Matthews; our chief financial officer, Marty Muldoon; our associate deputy ministers, Michael Vandergrift and Les Linklater; and our assistant deputy minister of defence and marine procurement, André Fillion.
From Shared Services Canada, we have Paul Glover, who was recently appointed president; Sarah Paquet, executive vice-president; and Denis Bombardier, chief financial officer.
Mr. Chair, these two organizations serve Canadians every single day by providing services and support to other departments and agencies. To support our operations, we are requesting $102.3 million in supplementary estimates (B). This amount is comprised of $75.5 million for PSPC and $26.8 million for SSC.
Allow me to begin with our request related to PSPC, starting with one of the most pressing issues the Government of Canada is facing today, which is stabilizing the Phoenix pay system. While we're making progress, we know there is still a lot of work to do to ensure Canada's public servants are paid accurately and on time, every time.
As I reported to this committee in December, we have significantly increased our capacity to address pay issues, and we have introduced measures to ensure that public servants receive more useful help and support when they call the client contact centre.
I will also inform this committee about the success we've had with our pay pods. You'll recall that this approach assigns compensation advisers to the employees of the specific organization. These dedicated advisers develop departmental expertise and relationships, and work to address all outstanding transactions in an employee's pay file, rather than addressing issues by transaction type. New pay pods were rolled out just last week, bringing us up to 34 departments that are being served using the pay pod model. This represents approximately 154,000 employees. We're also on track to have all 46 departments served by the pay centre using the pod model by May of this year.
Since January 2018, we've decreased the backlog by nearly 160,000 transactions and reduced the overall queue for pod and non-pod departments combined by an average of 25%. Pod departments alone have seen a 29% reduction in their queue, which demonstrates the success of this approach.
I should also add that we've processed more than $1.5 billion in retroactive payments for employees.
We are also supporting employees during tax season by working with Canada Revenue Agency and Revenu Québec to ensure that employees are provided with accurate tax slips. And we continue to offer flexible repayment options for employees who have received overpayments. We are committed to making this situation right for public servants and their families.
For supplementary estimates (B), we are requesting $25.1 million for continued efforts to stabilize the Phoenix pay system. Although we still have work to do, I can assure you that we'll continue working to ensure people get paid accurately and on time.
I now turn to our request for new funds in support of the Receiver General's operation. Every year, the Receiver General incurs costs for processing transactions on behalf of federal organizations. They include the card acceptance fees we pay so that Canadians can make payments to the government of Canada using debit and credit cards, and postage fees to mail cheques to Canadians. These fees have been growing above our normal baseline and they fluctuate every year. We are requesting $13.5 million to address these costs.
Our supplementary estimates (B) also include $2.8 million in new funds to support the integrity regime program, aimed at addressing corporate wrongdoing. This more robust approach to improper, unethical and illegal business practices will come into effect soon following public consultation. The funds we have requested will address the increased workload and operational costs associated with administering the new regime, ensuring that our government conducts business with ethical suppliers and ultimately holds those suppliers accountable.
I'd also note that there are $22.9 million from the sale of surplus real property that PSPC will reinvest to preserve and maintain our real property portfolio and provide tenants with healthy and safe accommodations. This will help PSPC meet the needs of federal organizations and provide sound stewardship of federal buildings on behalf of Canadians.
I'd now like to provide some updates on some of our key achievements.
We have made great progress on our promise to replace Canada's fighter fleet. We worked closely with the Australian government to procure 18 F-18 fighter aircraft, plus equipment to supplement the current CF-18 fleet. We received the first two fighter aircraft from Australia on February 17, ahead of schedule. In addition, just last week we concluded the second round of one-on-one engagement with suppliers for the future fighter program, to purchase 88 modern fighter jets.
There have also been a number of major developments in Canada's national shipbuilding strategy. On February 8 we announced that Lockheed Martin Canada had been selected for the design of 15 new Canadian surface combatants that will be built at Irving Shipbuilding's Halifax shipyard. This is the largest and most complex procurement ever undertaken by the Government of Canada, and it was done in an open and transparent manner. With this contract, design work is proceeding, which will be followed by construction in the early 2020s. In addition, we are advancing construction work on other large ships on both coasts, generating substantial economic benefits across the country and revitalizing a world-class marine industry that supports Canadian innovation.
As noted earlier, we have also worked hand in hand with our parliamentary partners towards a successful transition of the operations of Parliament to the West Block and the newly restored Senate of Canada building. This will allow major restoration work to begin on Centre Block so that it can continue to serve as the seat of our democracy and proudly welcome future generations of Canadians.
Mr. Chair, let me now turn to Shared Services Canada. SSC has made tremendous progress over the last few years. Now led by Paul Glover, and with the appointment of Luc Gagnon to the newly created position of Chief Technology Officer, SSC is entering the next phase of its evolution. This new office will help SSC deliver a more coherent vision of modern and secure digital government.
To that end, SSC has closed nearly 180 legacy data centres, replacing them with new state-of-the-art enterprise data centres. This is resulting in more efficient and less costly IT operations for the Government of Canada. SSC also continues to support its clients in the implementation of the government's “cloud first” policy. There are now over 40 active cloud computing accounts that are helping to provide modern and efficient IT services to Canadians.
SSC completed the first phase of an e-cabinet initiative that allows ministers to access their secure documents from their tablets anywhere, any time.
In 2017-18 alone, more than 1,200 employees joined the department. This provided vital additional capacity to meet the growing technology demands of federal organizations.
Today we are requesting $26.8 million in supplementary estimates (B) funding. This request includes $20.3 million for cyber and information technology security initiatives to respond to the most pressing gaps in government systems. This funding will continue to allow SSC to provide modern, reliable and secure information technology infrastructure and provide world-class digital services to Canadians.
Public Services and Procurement Canada and Shared Services Canada have diverse yet equally important mandates. We are thankful for the many devoted and skilled public servants who help fulfill these mandates.
With the additional funding we are requesting today, these organizations will be better able to meet the needs of their client federal departments and agencies, and ultimately, all Canadians.
Thank you. We look forward to your questions.
View Daniel Blaikie Profile
NDP (MB)
Thank you very much.
I was wondering whether there is any money set aside in the supplementary estimates to reimburse Canada Post workers who were on short-term disability during the rotating strike.
View Daniel Blaikie Profile
NDP (MB)
They're already making 70% of their salary because they have a work-related disability. Do you think it was fair that they weren't paid for five weeks?
View Carla Qualtrough Profile
Lib. (BC)
It has to do with the fact that when the decision was made to do the rotating strike, the collective agreement was effectively terminated, and as a result the benefits under that agreement were terminated.
I don't think it was fair at all, but it—
View Daniel Blaikie Profile
NDP (MB)
That was a decision that the corporation made; they could have decided to carry on with those benefits. In fact, it's a decision you could have made.
View Daniel Blaikie Profile
NDP (MB)
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