Financial System Review Act

Tuesday, February 14, 2022

Source :  Hansard

             House of Commons Debates 

                           OFFICIAL REPORT (HANSARD)

                               Tuesday, February 14, 2012 

Hon. Scott Brison (Kings—Hants, Lib.):

Mr. Speaker, it is with pleasure that I rise today to speak to this legislation. The legislation does not make extraordinary changes to the Canadian banking system but I would like to speak to some of the changes that it would make.

I will be sharing my time today with the hon. member for Markham--Unionville.

The reality is that the Canadian economy is doing better than some of the other global economies with which we compete. There are three principal reasons for that. One is the fact that we do have a somewhat stronger fiscal situation than other countries, and I will speak to that in a moment. Second, we are riding a global commodity boom as a country that has a remarkable amount of natural resource wealth in oil and gas and minerals. Third is the prudential strength of our banks and our banking system.

I have heard throughout the debate today the Conservatives taking credit for all three. First, in terms of the fiscal situation, when the Conservatives were elected in 2006 they inherited the best fiscal environment of any incoming government in the history of Canada with a $13 billion surplus. The Conservatives spent through that surplus at a rate of three times the rate of inflation and put Canada into a deficit position even before the downturn of 2008.


Second, it is very hard for the Conservatives to take credit for the fact that we are benefiting as a country from an oil and gas and mining boom. The recovery, as it exists in Canada, is largely focused in a couple of provinces. Over 60% of the new jobs created in the last year were created in one province, Alberta. We know that we are hemorrhaging jobs in other parts of the country. We are seeing a bit of a Dutch disease where a commodity boom is shoving our dollar higher and is driving out and crowding out value added jobs in some of the other provinces, like Ontario, Quebec and the Maritimes.

However, the Conservatives almost seem to be taking credit for the strength of the overall numbers, which would be a little like saying that they were responsible for putting the oil and gas under the ground or the potash under the ground in Saskatchewan. They cannot take credit for that, obviously, and they cannot take credit for the oil and gas under the water off Newfoundland because everyone knows that was Danny Williams.

The fact is that it gets a bit silly in the House sometimes when the Conservatives go on and on taking credit for where the Canadian economy is when they did not really have a lot to do with the decisions made or the good fortune we have as a country in terms of our natural wealth.

The third area where the Conservatives have been doing this throughout the day is when they take credit for the prudential strength of the Canadian banks. It was, of course, in the nineties when Paul Martin, as finance minister, and Jean Chrétien, as prime minister, fought the global trend of deregulation of the financial services sector. At that time, people in the Reform Party were critical of the Liberal government and said that we were missing out on the global trend of deregulation and that--  


Mr. Speaker, the reality is that, in opposition, the Reform Party fought vigorously against the decision of the Chrétien government to maintain strong regulations around Canadian banks, the very regulations that kept Canadian banks from following the global trend and off the cliff like the lemmings in Europe, in the U.K. and in the U.S.


What did the Conservatives do in government in terms of the prudential management of banks? One of the first things the Minister of Finance did in 2006 in his first budget was to bring in 40 year mortgages with no down payments. This created the loosest approach to mortgage lending in the history of Canada.


Furthermore, in 2007, the Conservatives went further. Under the Liberal government, Canadians needed mortgage insurance if the down payment on their mortgage was less than 25%. In 2007, the Conservatives changed that and lowered the threshold to 20%.


Those were just some of the changes they made to create looser mortgages, looser regulations, which led to, among other things, what many economists are now referring to in Canada as a housing bubble, certainly a personal debt bubble. We have the highest level of personal debt in Canada today, which is $1.53 of personal debt for every dollar of annual income. That is the highest in our history and it is higher than that of our neighbours to the south in the U.S.


The February 4 edition of The Economist magazine states:


"When the United States saw a vast housing bubble inflate and burst during the 2000s, many Canadians felt smug about the purported prudence of their financial and property markets."


It went further and cited the Prime Minister at that time boasting in 2010. It then states:


"Today the consensus is growing on Bay Street... that [the Canadian Prime Minister] may have to eat his words."


The Economist then said that Canada's housing prices had doubled since 2002. This has coincided with a massive growth in our personal debt levels. We see a great increase in speculation in the housing markets, particularly in some hot markets, such as Toronto and Vancouver, among others, and we see this growth having occurred, in part, in a response to the deliberate decisions by the Minister of Finance to loosen up debt and mortgage regulations back around 2006 and 2007.


The government must be held to account for those decisions, which actually helped create what we hope is not a housing bubble that ends badly but is certainly a personal debt bubble that needs to be managed.


It is important to realize that the Conservative government cannot take credit for the prudential decisions made by the previous Liberal government, and that the current government must be held to account for some of the foolhardy decisions it made as a government to loosen banking regulations and to loosen mortgage rules early in its term.


I want to note a couple of other things about Bill S-5 because some of the changes would have an impact on Canada's incredibly strong banking sector and its role in the world. One change is requiring the minister, in order to approve foreign acquisitions by a Canadian entity, under certain circumstances, for instance if the foreign entity being acquired has equity of at least $2 billion and if the acquisition of the entity would increase the size of the Canadian entity by at least 10%.


Under those circumstances and conditions in this legislation, it would mean that the Bank Act would require the minister to approve the acquisitions of these foreign financial institutions by Canadian banks. That is a change. The previous rules simply required that the Superintendent of Financial Institutions, OSFI, would approve those within the public service, within the bureaucracy.


Recent deals that would have triggered this mechanism of ministerial approval would have been the Manulife John Hancock deal, the TD Commerce Bancorp deal, the BMO Marshall & Ilsley deal and Sun Life. There are other large acquisitions that have occurred in the last couple of years: Scotia Bank bought Banco Colpatria, Colombia's fifth largest bank, and it also bought the Royal Bank of Scotland's Colombia assets as well 20% of the Bank of Guangzhou.


I want to raise as a concern, that the government consider the politicization of these foreign investments by our Canadian banks and the potential risk to the capacity that we have in doing so. The fact is we now have some of the largest banks in the world that are world leaders in terms of governance and success. With the capacity to significantly increase Canada's influence in the world in terms of a very important financial services sector, this politicization could lead to some highly political and potentially bad decisions in the future which would limit the role of Canadian banks in the world.


I raise that as a concern and I look forward to questions from my colleagues. 



Find me on

Facebook Scott Brison M.P. on Facebook
Twitter Scott Brison M.P. on Twitter

Constituency Office

24 Harbourside Dr., Suite 101A
Railtown Building
Wolfville, NS
B4P 2C1

Tel: (902) 542-4010
Toll Free (NS): 1-888-585-0550
Fax: (902) 542-4184


Office Hours:
Monday to Friday
9:00 to 12:30
1:30 to 4:30

Ottawa Office

Ottawa Office - Scott Brison, M.P. 
915 Confederation Building
House of Commons
Ottawa, ON
K1A 0A6
Tel:  (613) 995-8231
Fax: (613) 996-9349

website design and development by outrageous creations! and bald eagle consulting inc.