:
I call this meeting to order.
This is meeting number 68 of the Standing Committee on Finance, orders of the day pursuant to Standing Order 108(2), study of the Canadian Renminbi Trading Centre.
We're very pleased to have three witnesses presenting here this morning. First of all, from the Canadian Council of Chief Executives, we have Mr. Brian Kingston. Welcome.
[Translation]
We also have Eric Lemieux, Director General of Finance Montréal.
Welcome to the committee.
[English]
From Toronto by video conference we have the Toronto Financial Services Alliance, the president and CEO, Ms. Janet Ecker. Welcome. Thank you so much for being with us.
I want to thank all of you for being here. You'll each have five minutes for your opening statement, and then we'll have questions from members.
We'll begin with Mr. Kingston, please.
:
Good morning, Mr. Chairman, committee members. Thank you for the invitation to appear before you to discuss the Canadian Renminbi Trading Centre, or RMB hub.
The Canadian Council of Chief Executives represents 150 chief executives and leading entrepreneurs in all sectors and regions of the economy. Our members collectively lead companies that administer $6 trillion in assets; have annual revenues in excess of $850 billion; and are responsible for the majority of Canada's private sector exports, investment, and training.
The CCCE strongly supported Canada's efforts to secure an RMB hub, as we believe it will deliver significant benefits to Canadian businesses, financial institutions, and the economy. I'm going to begin today by discussing some of the benefits of the RMB hub and then conclude with recommendations on what Canada needs to do to ensure the hub is a success.
To start with the benefits, the most significant benefit to Canada of the RMB hub is its potential to facilitate trade. Canada and China have a large and growing trade relationship. China is Canada's second largest national trading partner, while Canada is China's 13th largest trading partner. Despite historically resource-intensive trade between Canada and China, trade is diversifying with services trade trending upward, increasing more than 50% from 2007 to 2012. There is also a shift toward trade in value-added goods like manufacturing exports. But there is room for significant growth in our trade relationship, as Canada remains a much smaller partner to China than other countries with similar complementary sectors. For example, China's imports from Canada only represent 1.3% of total imports, which is low when compared with those from Switzerland or Germany where imports are 1.5% and 5.1% respectively.
A number of sectors hold great potential for increased trade. Canada only provides 0.2% of China's total petroleum and gas compared with Saudi Arabia at 19%, Angola at 14%, and Russia at 9%. Similarly, China has significant export capacity in industries such as machinery and equipment, manufacturing and electrical machinery, but only supplies 10% and 16% of imports to Canada compared with the U.S., which provides 56% and 46% respectively.
The RMB hub has the potential to improve Canada's trade with China by reducing foreign exchange costs for importers and exporters, facilitating both trade and investment. Dealing in RMB also gives Canadian businesses a competitive advantage when selling to Chinese trading partners that prefer RMB-denominated transactions. According to estimates from the Canadian Chamber of Commerce, whom you heard from last week, denominating exports in RMB has the potential to grow Canadian exports to China by an additional $21 billion to $32 billion over the next 10 years.
In addition to benefiting both importers and exporters, the RMB hub creates new opportunities for Canadian financial institutions. Along with the Mexican peso, the RMB has witnessed the most significant rise in market share among major emerging market currencies. The RMB is expected to become one of the three most traded currencies in the world in 2015. This will take China's financial integration with global markets to a new level. Securing the first RMB hub in the Americas gives Canadian financial institutions a distinct first mover advantage and the provision of RMB-denominated financial services to Canadian businesses and firms in the western hemisphere that have commercial ties with China. Such services can include corporate RMB accounts, lines of credit, and facilities to transact foreign exchange and make payments in RMB.
Now moving on to what needs to be done to ensure the success of the RMB hub. As you heard last week from the ICBC, Canada has a relatively short window of three or four years to take advantage of its RMB trading hub before China is expected to liberalize its capital account, reducing the competitive advantage that the hub creates. To make the most of this opportunity, Canada must establish a long-term vision for deeper Canada-China engagement that includes the following two actions. One, it must create a strategic partnership with China. The lack of a more developed and on-going China strategy in Canada is a major gap in our economic portfolio, especially considering that China is Canada's second largest trading partner after the U.S. Without such an agreement we risk falling behind our competitor nations. Two, it must launch free trade negotiations with China. Canada must take the next step in our trade relationship by launching bilateral free trade negotiations. Eliminating trade and investment barriers will give Canadian businesses a competitive advantage.
In conclusion, the CCCE congratulates the government on securing an RMB hub in Canada. Canada has the opportunity to be a market leader but we must act quickly.
I'd be happy to answer any questions. Thank you.
Thank you very much for inviting me to participate in this committee.
As a representative of Montreal's financial services industry, let me share our views on the implementation of a renminbi trade centre in Canada. Overall, we are very positive about establishing a renminbi trade centre in Canada. Canada and China have long-standing relationships. Those historic ties are deep and represent a very good foundation on which we can continue to build, notably in the financial services industry.
The internationalization of the renminbi represents an opportunity to write a new chapter in the bilateral relationship between Canada and China. In our view, there are two main areas that will be impacted by this major development.
First, Canadian companies will be able to trade directly in renminbi with their Chinese business partners. This should increase commerce between our two countries and increase the competitive advantage of Canadian companies versus those of other countries due to lower foreign-exchange costs.
Second, Canada's financial services industry, including that of Montreal and the province of Quebec, will be able to create and distribute financial products in renminbi. This will generate a new line of business for financial institutions, provide new investment opportunities for institutional and retail clients, and further increase the profile of recognition of the expertise found within Canada's financial services industry.
The Canadian renminbi trading centre will also benefit China, whose economy is shifting from being oriented to the production of manufactured goods towards favouring national consumption and global investment in strategic industries. With a renminbi trading base in Canada, China will have direct access to North and South American financial markets that operate within the same time zones. The Chinese will also benefit from a solid financial system in Canada with its world-class expertise, proven legal framework protecting investors and consumers, and a favourable fiscal regime.
I would like to add that increasing financial relationships between Canada and China isn't just a bet on growth. It's also an investment in change. Change in the way we do business together. Change in the vehicles allowing access to Chinese markets. Change in the behaviour of Chinese and Canadian finance professionals as they become more accustomed to the practices of one another. To summarize, it's an investment in a more collaborative future between our countries and financial communities.
Finance Montréal supports Toronto and Vancouver in their will to act as the main Canadian hubs of renminbi trade. As Canada's biggest financial centre with most of the foreign exchange operations, Toronto has the capacity and the know-how to handle a significant share of the renminbi transactions and their clearing activities in Canada.
Vancouver, for its part, as the Pacific gateway to Asia, is also very well-positioned. It has a substantial Chinese-speaking population and British Columbia has an incentive program that exempts foreign exchange trading from provincial taxes. B.C. also took the lead in the renminbi market in November 2013, becoming the first provincial government to launch a "dim sum", or renminbi-denominated bond, worth nearly $425 million.
Now, what specific role can Montreal play in establishing and operating an offshore renminbi market in Canada?
In Quebec, there are about 150,000 jobs in the financial services industry, out of which 100,000 are located in Montreal. The GDP of the financial services industry amounts to 6.2% of the province's total economic output. Montreal is ranked 18th in the world in the Global Financial Centres Index. In 2008, Montreal was 31st in this global ranking. So the local industry has performed well since the crisis and the volume of international business has increased in Montreal over the last few years.
Montreal wants to play an active role in putting in place and operating a renminbi trading centre in Canada. On top of creating and distributing financial products in renminbi, Montreal's financial community will play a specific role in the renminbi market: on the derivatives side. As the Montréal Exchange is the derivatives trading hub for Canadian securities, renminbi derivatives created by financial institutions will be traded in Montreal. Our city is specialized in this cutting-edge area of financial services.
Renminbi futures or currency swaps will diversify the offer of products traded on the Montréal Exchange, while increasing its international appeal.
Montreal has a special relationship with the city of Shanghai, which has been its sister city for nearly 35 years now. One example of the close collaboration between Montreal and Shanghai is a partnership signed in 2013 between Finance Montréal and the Shanghai Financial Association. This deal will increase exchanges of students and professionals of our financial services industries, particularly in the derivatives trading sector.
In 2013 and 2014, representatives of Finance Montréal visited the newly created Shanghai free trade zone, which was designed to facilitate the international trade of goods and services. It was also conceived to increase investment and financial liberalization, including full convertibility of the renminbi, which will further open up the banking sector.
These personal ties and direct contacts between Montreal's and Shanghai's financial communities could be leveraged and further increased by the new renminbi trading centre in Canada. We also see an increasing interest from Chinese banks in opening up branches in Montreal, such as the Bank of China, which opened its first office in 2013. Industrial Bank of China has also announced its intentions to open its first branch in Montreal in 2015.
The Canadian renminbi trading centre could accelerate the penetration of the Montreal market by Chinese financial institutions, a development which we support. All these elements bode well for the financial relationship between China and Canada and also for Montreal, as part of Canada's financial community.
It is now up to us as a nation to seize the opportunities that will arise from this renminbi trading centre and thus further develop a win-win partnership with our Chinese counterparts.
Thank you.
:
Thank you very much, Mr. Chair and committee, for this opportunity.
I'm Janet Ecker, president and CEO of the Toronto Financial Services Alliance. With me is Sheryl Kennedy, who is the CEO of Promontory Financial Group Canada and a former deputy governor of the Bank of Canada. Sheryl and her firm were advisers to the TFSA in its leadership role on the RMB initiative.
We are a unique public-private partnership dedicated to growing Toronto region as a top 10 international financial centre. We're a collaboration involving three levels of government, the financial industry, and academia, and we work to grow the sector, to strengthen our global reputation, and to enhance our competitiveness as an international centre.
It was a logical step for us to seek an agreement with China to designate Canada as an RMB trading hub. Let me explain.
As members know, Canada's economy is becoming more globally oriented. International trade and investments contribute more to the country's bottom line, with China now our second-largest trading partner, after the U.S. Bank of Canada governors and the Canadian government are encouraging our businesses to reach out around the world.
Our financial industry is part of that story. After surviving the global crisis relatively unscathed, financial firms used this strength to grow their global footprint, thus benefiting our economy.
For example, financial services trade continues to expand. Since 2000, global exports have tripled, while Canadian exports have nearly quadrupled. The financial services share of total Canadian services exports rose steadily, almost doubling from 5.9% a decade ago to 11% in 2013. Canada's outward financial services foreign direct investment has more than tripled since 1999. In 2013, the sector accounted for 53% of Canada's total FDI stock abroad, up from 44% a decade earlier. One third of Canadian banks' revenue is generated from outside Canada. Canadian insurance firms such as Manulife and Sun Life rank among the top 20 in the world and are active in Asian markets and beyond. Canada's large pension funds rank number three in the world in terms of assets and are well regarded global investors, particularly in infrastructure projects, a pressing need in Asian and other markets.
We also recognize that China was seeking to internationalize its currency and had already designated a number of trading hubs in such places as Hong Kong, Singapore, and London. A centre for the Americas only made sense.
To achieve it, however, would take the collaborative efforts of the financial industry and government. As is typical of TFSA initiatives, we reached out to our industry and government partners to create a working group to drive this initiative. Its members include representatives of a cross-section of domestic and international institutions active in Canada, as well as the federal and Ontario governments and the Bank of Canada as observers.
We were also very pleased that a broad spectrum of business and other organizations supported the initiative. The Canadian Chamber of Commerce, the Canadian Manufacturers & Exporters, the Canada China Business Council, the Canadian Council of Chief Executives, Toronto, Finance Montréal, AdvantageBC, the B.C. government, the Asia Pacific Foundation, and Export Development Canada have all lent their support. It is particularly worth drawing the committee's attention to the fact that AdvantageBC, TFSA, and Finance Montréal are working collaboratively on this initiative, underlining both the national reach of the industry, despite the fact that it is headquartered in Toronto region, and the fact that the benefits of this agreement will accrue across the country.
As the committee knows, in November signed the agreement with China to designate Canada as an RMB trading hub for the Americas. I had the privilege of attending the announcement in Beijing and would like to congratulate the government on this successful initiative.
The committee knows that there are three measures that were part of the agreement: designating the Industrial and Commercial Bank of China as the clearing bank, setting up the reciprocal currency swap line, and also establishing a renminbi qualified foreign institutional investor quota to Canadian financial institutions
What does this mean for the economy and Canadian business? The measures announced will allow direct exchange and trade operations between our two countries. As a result, Canadian firms doing business with China will no longer be required to settle their transactions through an intermediate currency such as the U.S. dollar, thereby mitigating currency risks and reducing transaction costs. An HSBC survey showed 55% of Chinese businesses said they would offer discounts to their trading partners for RMB-denominated transactions.
On the broader economic impacts, TFSA sponsored the Canadian Chamber of Commerce report that cited direct trade benefits alone of an RMB trading hub at over $32 billion over the next 10 years. In addition, Canadian financial institutions will benefit by being able to provide a broad range of services and products throughout the Americas: trade finance, contract bonding, chequing accounts, short-term liquidity, long-term financing, and investment products.
The bottom line is that this agreement will continue to raise our stature as a global financial centre with a major financial industry in this country, facilitate increased investment in trade, and strengthen Canada's broader economic relationship with China. As we seek to broaden our base of trading partners, building the reach and expertise of our financial sector and emerging economies around the world is critical. This is another important step in that direction. We now need to take advantage of this opportunity.
Thank you very much.
:
I have a
Wall Street Journal article in front of me that speaks of the China Investment Corporation, CIC.
CIC has a fund of almost $900 billion Canadian. In 2009, I met Gao Xiqing, who was their chief investment officer at that time, and he told me they chose Toronto over New York because Canada was more open to Chinese investment than the Americans.
The Wall Street Journal article is headlined “CIC May Move North American Headquarters to New York from Toronto”. The article refers to concerns that the Canadian government “might be rolling up the welcome mat it once laid out for Asian” investment. It referred specifically to tighter rules around state-owned enterprise investment and ambiguity for Chinese investment in Canada post CNOOC-Nexen.
Mr. Kingston, you referred to some areas where the government could do a better job of potentially promoting Canadian investment opportunities in China. Would making our rules around foreign investment clearer and less ambiguous be one of the areas we should tackle?
:
We work on several levels.
First, we talk to Montreal and Quebec companies about the benefits of trading in RMB.
Second, we work with financial institutions to ensure that they can use the opportunity to provide RMB-denominated products. They are currently looking into that with colleagues from Toronto, among others, and giving thought to various types of products and ways to make them available.
Third, as I already mentioned, we are trying to determine whether developing derivatives could be more of a long-term opportunity.
Finally, we work with portfolio managers to see whether they could potentially provide RMB-denominated products to Chinese clients, be they institutions or individuals. A number of portfolio managers in Montreal are already managing money for a Chinese pension fund. In that context, we are looking into potentially complementing the product range.
We work with companies, financial institutions and portfolio managers. We will eventually also be working with types of derivatives.
:
First of all, regarding one of your comments that you made earlier, it needs to be—and it has been very much—both a government and an industry partnership to get this going and make it work. It does require both sides of the equation, if you will.
We have been working with the Canadian Chamber of Commerce, for example, and the Canada China Business Council to reach out to business. Obviously, there's a learning curve for a company if they wish to take advantage of this opportunity.
There are things like AdvantageBC, for example, that has been running workshops for company treasury functions. There are people who do the financing for the companies to say here's how you go about doing it.
We've been working with some of our financial institutions that are doing sessions with their clients to say here's what it's all about, here's how you do it. There will be a number of other initiatives, meetings, workshops, etc., over the course of the year that are designed to basically promote how to use this, how to take advantage of this, and how to move forward.
As Mr. Lemieux mentioned, one of the exciting things about this is the collaboration between AdvantageBC, TFSA, and Mr. Lemieux's group. We are looking at how we can collaborate on this to make sure that Canadian business has an opportunity, whether it's financial companies or other businesses, to grow with this.
Ladies and gentlemen, thank you very much for joining us today.
Mr. Kingston, I read the message from your President and CEO, John Manley, in the 2014 report. I thought his observations were very insightful. He talked about a problem with the quality of education. In other words, Canada has dropped off in terms of various indicators used in global studies. I share that concern.
We are carrying out a study on the Canadian Renminbi Trading Centre. The fact is that the centre is universally supported. I am very happy to hear your testimony and your observations on the topic. Even so, we may wonder whether our companies and Canada are ready to meet the challenges involved. Last week, witnesses told us that our window of opportunity to use the Canadian Renminbi Trading Centre's competitive advantage was limited. I see that you agree with that.
Can you tell us about other areas of concern? What can the federal government do to ensure that we take full advantage of this business opportunity?
Thanks to our witnesses.
I've been on the international trade committee since 2006, and I'm a new member on the finance committee, so I understand the importance of Canada's economic future in regard to our ability to be successful global traders. We rely on those one-in-five jobs, the 20% of our GDP, and the expanding of our markets. Minister has been working out 38 new markets in trying to expand and to diversify outside the United States, even though the United States will continue to be our number one ally. This initiative with China and the RMB trading hub is definitely of great importance, as they are the world's number two trade economy right now.
I want to clarify one point before I go to Mr. Kingston for a question. Mr. Brison alluded to an article in The Wall Street Journal that stated the CIC may move its North American headquarters to New York from Toronto. I just wanted to say that it was an article from December 2013. Since then, the government has provided, as you mentioned, certainty with the FIPA and the predictability and the confidence that businesses require to have both bilateral trade and investment both ways.
Mr. Kingston, in your opening comments, you mentioned the need for “a strategic partnership”. Could you elaborate on what would be envisioned there from the perspective of the Canadian Council of Chief Executives?
:
I want to stress the fact that government support is crucial if we want to increase trade with China. The Prime Minister's trade mission was mentioned earlier. I myself accompanied the Premier of Quebec, Mr. Couillard, when he led an economic mission to China too. Government support is key to further developing our relationship with China. Considering the way that country operates, it's very important to know that we have your support.
As for the question about how many jobs could be created, it's difficult for me to provide an exact answer. What I do know, however, is that, as my colleague pointed out, increasing our trade with China is extremely important.
China has transformed itself. It used to be a manufacturer and the world's factory, but it is now becoming a country of consumers. It needs raw materials and commodities. It is buying more and more. The country's middle class now consists of more than 200 million people, perhaps even more than 300 million. That's the population of the United States.
This is an important opportunity for us. If there is a place for our Canadian companies to grow, it is China. You will understand that it's difficult for me to quantify this, but China represents a wonderful opportunity for Canadian companies over the next 10, 15 and 20 years. We should pay close attention to this, while keeping in mind that business is done differently in China. That is why we need governments to provide us with significant support. I think the RMB's implementation is greasing the gears and helping us contribute to both countries' economic growth.
:
One of the things that is exciting for Canada is that we have four cities that are considered international financial centres on a global financial centres index that ranks and does this kind of thing: Vancouver, Calgary, Toronto, and Montreal. It's clearly showing the national reach of this industry.
You see from Mr. Lemieux's comments that derivative functionality is certainly happening in Montreal, energy deals are certainly happening in Calgary, and there is a lot of trade financing happening in Vancouver. The infrastructure for the industry in financing for a whole range of products is headquartered here in Toronto. There will definitely be an across-the-country benefit to this.
We're trying to make sure that among the financial regions, if you will, we are coordinating what we're doing. We're keeping each other in the loop in terms of what we're doing. We're sharing information. There's research and survey information we still have to get to meet the terms of the agreements.
We're making sure that we're sharing the information that we're getting. We're also looking at what kind of education needs to occur, as I mentioned earlier, for businesses to potentially do renminbi business. We have a bit of a steering committee between B.C. and Ontario, between AdvantageBC and TFSA. We actually just had a call yesterday to compare notes on what we're hearing, what we're seeing, and what we're doing.
So it's mostly collaboration, cooperation, and sharing of research and information.
:
I know Mr. Zhu. I've heard him say that China is Canada's second-largest economic partner, but that Canada is a small market for China.
Mr. Raymond Côté: Exactly.
Mr. Eric Lemieux: I think we are strategic. That's what I wanted to show by saying that our country has an excellent regulatory system. We came through the 2008 financial crisis. So we have significant advantages that put us in a good position to play a major role in this area. That much has been recognized.
During our discussions, my Shanghai counterpart showed a lot of interest in our regulations and the way we weathered the 2008 economic crisis. The U.S. wasn't as successful.
I think that sound regulations and an economic relationship or even friendship with China, which we have had for a number of years, put us in a good position to play an important role.
:
I remember that when I read that figure, I thought I'd just try to understand derivatives, so I started reading. After about an hour I was more confused than when I started.
I'm hearing great things about the financial market, about how that's going to impact us, and how that's going to be beneficial.
I think I'm the average Canadian. I said at the last meeting I do a little farming, I sell a few cars.... My term of accounting is I take in x, I hand out y, and I hope there's a little bit of z left. Most people understand that.
This is all very complicated—at least it is to me.
Before I get to the question I want to ask, Mr. Brison talked about trade missions in the past. I remember those days. I remember when Mr. Chrétien led Canadian companies by the hordes into China. The result was that we lost a lot of manufacturing. What took place, in essence, was the manufacturers found that they could manufacture their goods much cheaper in China. Frankly, they handed us our butts when it came to that agreement. That's my own personal opinion.
What's to say that we're not going to have the same situation happen to us again with these extremely complicated financial transactions? What kinds of guarantees do you have that this is not going to happen again?
Anybody—Mr. Lemieux, Mr. Kingston?
:
You're saying we're going to do well in the financial sector.
Mr. Lemieux, I think you talked about Bombardier. I guess I'm looking for an example of that kind of thing. We do manufacture some things really well. We're world-class leaders in high-tech and in agriculture. I'm always flabbergasted at some of the innovation that comes from our agricultural sector. In mining, we're tops. There's nobody better.
Are there examples? Can you see where the Chinese are buying our products? I'm not talking about these other things that I'm not even going to try to understand. Substantial things that mom and pop I think was what Mr. Cullen talked about earlier...those sorts of things that the guy or gal who's producing this commodity or this product, tangible product, is going to say, after this agreement is made, “Geez, things are a whole lot better.” Can you give an example of that?
:
I can give you one example.
As I already mentioned, I had an opportunity to accompany Premier Couillard on an economic mission with a number of entrepreneurs. I have a very simple and concrete example for you.
A company based in Drummondville, a small city in Quebec, manufactures tools used to verify and increase fibre-optic capacity. So we are talking about physical equipment. Since 2008, that company has obtained many contracts to sell its equipment in China. In a case like that, using the RMB would avoid having to go through a change in currency from Canadian to U.S. and then from U.S. to Chinese.
According to estimates, that would help business owners gain 1% and be protected in terms exchange rate, which would be simpler to do. That's an example of a specialized product that has helped China support its growth. A number of companies were in the same situation.
:
Mr. Chair, if I may, if you look at the Prime Minister's trip last year, he signed some $2-billion worth of different trade agreements in aviation, nuclear technology, blueberries, actually, as well as our particular agreement.
Premier Wynne was over in China in October and she signed about a billion dollars' worth of deals in clean technologies such as in food safety, pollution control, those kinds of things. The Chinese are quite keen to learn from the expertise that Ontario brings to that. I think you're seeing a number of examples where we do have expertise or products and services that are of use to Chinese consumers. For example, when I was in China last year I noted that Ontario icewine is very popular with young Chinese women.
So I think there's a long list and I think with the renminbi deal that list is only going to get longer. It's not just about complicated financial transactions. Those are a part of it, those are important, but the exciting potential of this is that it's across the economy if we can take advantage of it. We have to step up to the plate, all of us, to make it happen.
:
Thank you very much, Chair.
Thank you to all the witnesses for being here this morning.
I do want to follow up on a number of things that were brought up and one in particular, talking about how we can best promote the hub. Now, just stepping back a bit, let me make a few statements and then what I want to know is...and perhaps Ms. Ecker could first answer this question.
First of all, the World Economic Forum has rated Canada's financial sector as the world's best for the seventh year in a row. We have created 1.2 million net new jobs since the end of the recession in July 2009. We will have the first balanced budget of any G-7 country, with the strongest economic fundamentals. How key are those factors in the decision by China to select Canada as an RMB hub?
Thank you very much, Mr. Adler.
I'm just going to finish up. I have one question. I want to thank you all for your presentations. I think they were all very informative.
Mr. Kingston, talking about the benefit of having a currency chain rather than going through U.S. dollars, I think the point has been made very well, and you made that extremely well here today.
Mr. Lemieux, with respect to derivatives and Montreal's role, I think, as was mentioned, you had a very informative presentation.
Ms. Ecker, you talked about Canada's financial services' outward foreign direct investment. You talked about our banks, our insurance firms, and large pension funds, and I very much like that argument.
So, my question is more in terms of the Chinese being known as very good savers. It's a perception but, in fact, it's true. The question is with respect to, perhaps, fewer Chinese institutional ventures but more Chinese investors with respect to what Canada can expect as an inflow perhaps on Toronto's exchanges or Toronto companies.
What kind of an inflow can we expect as a result of the RMB trading centre?
By now, most members of the committee have seen the letter from the to the committee requesting that we study the issue of terrorist financing, which is a very troubling issue right now.
I recently came back from a NATO conference in Brussels, and terrorist financing was a big part of NATO's main concerns right now. Obviously, if we could make some inroads into stopping financing for terrorist organizations, that would put a major hurdle up for them and stop them from growing and expanding as they have been in recent months and years. That's why this is an issue of priority; it's an issue of priority for the as well as for our government and therefore, it should also be an issue of priority for the finance committee. I think it's something that Canadians care about and are concerned about and therefore, the Minister of Finance has requested that we study the issue of terrorist financing.
My recommendation is that we begin the study after the second break week in March, which would be Tuesday, March 24. Depending on how many witnesses we're able to secure, we'll decide at a later date how many meetings are dedicated to this study. That being said, I think Mr. Adler wanted to add something.
I want to thank the Minister of Finance for requesting the finance committee to undertake this study and for Parliamentary Secretary Saxton for his remarks just now.
Certainly this is an important study that we need to undertake. We have seen in the past that certain organizations here in Canada have undertaken to raise money domestically that has been sent to terrorist organizations abroad. Clearly we need to investigate whether or not additional organizations are doing the same thing.
Certainly within my own community in York Centre, a number of my constituents have come forward to me, and have recommended for a while now that we undertake such a study to determine whether or not organizations are raising money here in Canada to send abroad for use in terrorist activities.
I fully support this motion and I would encourage the opposition members to do the same. It's an important issue for Canada, an important issue in our role to defeat terrorism on the world stage. Given the recent attacks here in Canada, both in Quebec and Ottawa, and on a daily basis we see them in Copenhagen, in Paris, in northern Iraq, and Syria. With the greatest urgency we need to conduct a thorough investigation of the potential for the domestic financing of terrorist organizations abroad.
Thank you.
I am not questioning the basic significance of the study. However, I am really worried about the way the study will be used, given the Conservative government's priorities. And that's really unfortunate. Motions on other issues have been moved, especially on an issue of particular importance at this time. Canada is facing major challenges, including the changing oil prices and all the resulting consequences. That issue is especially urgent.
I am referring to concerns this situation entails for provincial governments, especially those of Alberta, Saskatchewan and Newfoundland and Labrador. Some Canadian families are faced with the immediate problem of job loss or the need to find employment opportunities more locally. It's really disappointing to see this issue being rejected.
As for the proposed topic, I would like to remind the members of this committee that a Senate committee has also examined the matter. Many of the recommendations submitted following that study were incorporated into omnibus Bill . So some work has already been done on the topic.
What I'm really worried about is that we may potentially be taking up the committee's attention and resources to carry out a study that will probably deal with issues that have already been considered elsewhere and for which we may not have anything really new to propose.
I agree that it's important to identify the source of the money used to finance terrorist activities around the world. That said, we could have turned our attention to that matter before, as the Senate did. We could have done so in 2012 or 2013, as terrorist financing was already a known problem back then.
It seems to me that a study is always being requested in response to events and that we are lagging behind instead of anticipating those events. As for the proposal and the insistence of Conservative Party members, I think it's really deplorable that they want to do this now.
I thought we had agreed that the study on the impact of the renminbi hub would enable us to discuss the oil price drop and its impact on the economy. I thought that was what our friends opposite had implied. They are now putting forward a different list of priorities, whereby terrorist financing sources in Canada come before the impacts of falling oil prices on the Canadian economy.
Yet that impact is so significant that the government has pushed back the budget presentation to be able to come up with the revenues it needs to achieve its objectives. Clearly, unemployment is directly related to this. Many companies are hit hard by the situation. I would think that would be a priority for Canada.
I think our friends have stopped listening to me. I have no illusions about the outcome of today's debate, but I would just like to remind you that we made a commitment to discuss the impact of oil prices on the Canadian economy. We should study Mr. Cannan's motion before we move on to the motion Mr. Saxton put forward today.
Thank you.
:
I certainly recognize—we all recognize—the political urgency in the government's avoidance of talking about the economy in recent weeks.
Beyond that, we will support this motion, with reservations. We recognize the importance of studying terrorist financing, and FINTRAC falls under the Department of Finance, but this study ought to be conducted by a parliamentary intelligence and security committee, the kind of committee that exists in the other Five Eyes countries. In Australia, New Zealand, the U.K., and the United States there is congressional or parliamentary oversight. These committees are better able to study terrorist financing than our finance committee, in part because members have a heightened level of security clearance and expertise to delve into the issues.
I'll give you an example of why security clearance is required and important, as we're studying FINTRAC and its efficacy around terrorist financing. FINTRAC uses very specific algorithms to identify suspicious transactions. These are highly secret. As the finance committee, we will be able to scratch the surface, but that's about it, because we don't have the same security clearance that parliamentarians or members of Congress have on their security committees in other countries. For the life of me, I don't understand why the government is resisting the same kind of parliamentary oversight of security that our international coalition partners in the Five Eyes have implemented.
Since there is no security and intelligence committee of Parliament in Canada, we can proceed as a finance committee with this study. But let's be clear: it is an imperfect situation, which will yield a study that does not provide as much information or as much clarity as one conducted by a true parliamentary intelligence and security committee, the kind we have been calling for and would put in place as a Liberal government in the future.
Mr. Chair, I have to tell you that I am always shocked to see that everything boils down to a very partisan game. My colleagues opposite are looking elsewhere and are busy with their cellphones instead of listening to what the opposition has to say.
The study Mr. Saxton proposed is important, but I will turn the question back to him. Why are all opposition proposals dismissed out of hand by the Conservatives? That's particularly absurd. We negotiate in good faith, but we are refused requests that are perfectly reasonable and, most importantly, entirely in the public interest. That's the substance of the problem, be it in the Standing Committee on Finance, in other committees, or as part of House business.
I have no problem with supporting this motion, quite the contrary. However, will our work always be a one-way street? Will the government representatives be open to considering the NDP's proposals during that study? Will we always have the will of the government imposed upon us, with its choice of study topics that don't reflect the problems business owners, families, workers and retirees deal with on a daily basis?
Canadians are aging. Fluctuations in oil prices and currency are leading to changes in the price of a number of daily necessities that have nothing to do with the higher income of retirees.
I don't understand why we are still working in a potential climate of free-for-all, when we could reach a consensus and come up with negotiated solutions much more easily.
I am asking Mr. Saxton to tell me when he will stop spitting in our face when we put forward perfectly reasonable and fundamental proposals for all Canadians, as is potentially the case with the notice in question. I hope that the study will be conducted under proper conditions and that we won't end up on a one-way street where the government's election platform would be imposed on us.
I thank Monsieur Dionne Labelle for that question.
As my colleague may recognize, in order for terrorist organizations to survive and continue, they need to be financed on a regular basis. Our concern, and the concern of many Canadians along with the international community, is that terrorist organizations are taking advantage of such organizations as charities and taking advantage of virtual currencies like Bitcoin in order to launder money and to funnel funds to their bank accounts in other countries. Obviously if we're in a position where we can stop this from happening, then that is a significant step forward in our fight against international terrorism.
These are just some of the issues that come up. I'm sure many other issues will come up as we have our witnesses describe their concerns, but this is a big topic. Financial institutions have put in place controls as well, but we have to find out whether those controls are actually working, because terrorist organizations are getting funding. They are perpetuating themselves and growing as a result of financing. We need to find out where that financing is coming from and stop it as much as we can.
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I hear what you are saying, but you have not answered my question regarding the motion's wording.
The motion talks about undertaking a study of costs, but what costs are those? It talks about terrorist financing in Canada. I'm not sure what kind of a revelation you are expecting here, in the Standing Committee on Finance, but anything that has to do with the illicit financing of terrorism in Canada must be handled by a public safety committee. It's a matter of conducting a study on the economic impact of terrorism, but I think your motion is poorly drafted to begin with. In it, you say you want to assess the impact of the cost of terrorism in Canada, but the motion is poorly worded in its current form.
I don't think this kind of a study will lead to any revelations. We can look at investigation results, but the nature of those investigations is such that it's clear they will not be made public in committee proceedings. That is actually part of CSIS research efforts. I don't see what we could learn here.