Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 9 - Evidence - June 16, 2010
OTTAWA, Wednesday, June 16, 2010
The Standing Senate Committee on Banking, Trade and Commerce, to which were referred Bill S-201, An Act to amend the Office of the Superintendent of Financial Institutions Act (credit and debit cards); and Bill S-206, An Act to establish gender parity on the board of directors of certain corporations, financial institutions and parent Crown corporations, met this day at 4:20 p.m. to give consideration to the bills.
Senator Michael A. Meighen (Chair) in the chair.
[English]
The Chair: Honourable senators, we have the pleasure to begin the examination of two private members' bills, each of which is sponsored by a member of our committee. The first of these bills, Bill S-201, is sponsored by the Honourable Senator Pierrette Ringuette, who is here today, and we welcome her in a different role from the one she normally plays. Today, she will appear as a witness rather than a questioner.
[Translation]
Bill S-201 seeks to amend the Office of the Superintendant of Financial Institutions Act so as to broaden the mandate of the office and make it into an oversight body that would monitor and make recommendations related to the use of credit and debit cards in Canada.
[English]
Without further ado, Senator Ringuette, I reiterate a warm welcome in your new role and invite you to make your opening remarks.
[Translation]
Hon. Pierrette Ringuette, sponsor of the bill: It is always a pleasure to work at your side because of your great diplomacy.
[English]
Honourable senators, thank you for this meeting to start the review of Bill S-201, an act to amend the Office of Superintendent of Financial Institutions Act with respect to credit and debit cards, which I introduced in the Senate on March 4.
Canadians, per capita, have become some of the biggest consumers worldwide of debit and credit cards, and for many of us, they have become an indispensible tool when it comes to our everyday lives.
Here are a few facts about these cards: In a Bank of Canada survey, which we were told about at this committee a month ago, it was shown that the use of debit cards is 100 times per year, per person, and for credit cards, it is 78 times per year, per person.
Canadians hold a total of 68 million Visa and MasterCard credit cards, and 80 per cent of the credit cards in the Canadian market are Visa or MasterCard. Canadians use these cards to purchase a total average of $267 billion worth of goods and services a year in Canada.
[Translation]
For anyone who travels, booking plane tickets, hotel rooms or renting a car is next to impossible without a credit card.
[English]
Debit cards have made it unnecessary for us to keep large sums of cash on hand when it comes to grocery shopping or running our day-to-day errands. Unfortunately, our financial institutions, as well as the big credit-card players, Visa and MasterCard, have kept us largely in the dark when it comes to the nuts and bolts of these handy little cards, and this is an issue that I have been working on passionately for almost three years.
I would like to address two distinct issues in this respect. First and foremost in my mind is how these cards, specifically credit cards, impact each of us, the average consumer.
No doubt everyone in this room is aware that interest rates, specifically those set by the Bank of Canada, have been at 0.25 per cent and now at 0.5 per cent as a response to the global financial crisis. With interest rates at this historic low, how many people in this room noticed a corresponding drop in their credit card interest rates? Not too many, I am afraid.
While interest rates were frozen near 0.25 per cent, our credit card rates have remained locked in at anywhere from 18 per cent to 24 per cent. It is even higher for merchant-specific cards. Those are the same rates as in the 1980s, when the Bank of Canada rate was roughly 14 per cent.
Since beginning my efforts in this area, I have heard many heartbreaking stories from seniors on fixed incomes, who have been forced to resort to credit cards to pay for their prescriptions, groceries and heating bills. They soon find themselves in a vicious circle, unable to clear their monthly balance and slowly drowning underneath interest charges that keep growing and growing.
None of these people have asked me to get them a handout. All they ask is for fairness in the system. Furthermore, the credit card companies and their allies in the big banks have gone and continue to go to great lengths to get an increasing number of Canadians hooked on their credit products.
Let me tell you a story of a Senate colleague. This senator made the unfortunate mistake of overpaying his credit card balance by $200. To be clear, he overpaid his balance. Rather than the company simply carrying over that overpayment, this senator quickly noticed that he had been charged an additional $75 on his next statement as a handling fee for the overpayment. I would ask, is this a fair and equitable system?
The second issue I would like to address is the fees paid by our small and medium-sized businesses that are processing our credit and debit card transactions, and, to be clear, this is not simply an issue for those business owners. The ever-increasing cost of these transactions are certainly being built into the price of that pack of gum that you bought this morning at your local convenience store.
Several countries have already legislated limits on these fees. I am talking about Australia, England, Sweden and many more European countries, not to mention the United States Senate legislating, in the last few weeks, fees and caps on fees for debit card transactions. In my opinion, Canada lags far behind in revising the credit and debit card fee system and introducing legislation to ensure that you are charged fair and reasonable fees.
For example, five years ago, Australia passed legislation capping interchange fees at 0.45 per cent for businesses, 0.33 per cent for governments, and 0 per cent for charities.
If we assume that average interchange fees for Canadian businesses are 2 per cent, they are paying 1.55 per cent more than their Australian counterparts. Retail and tourism businesses are in good financial shape if they can generate a 3 per cent profit from sales. Just imagine what an additional 1.5 per cent could do. I talked about the tourism industry. Look at the grocery industry. They are lucky if they have a 1 per cent margin of profit.
In 2008, had Canadian businesses benefited from the same interchange fee legislation as their Australian counterpart, they would have saved close to $6.7 billion, sales dollar for sales dollar. In 2009, 2,900 convenience stores closed across the country in Canada, at the same time that our Canadian banks had record profits. To put the figure in perspective, $6.7 billion is more than what the last budget gave in tax cuts to businesses.
In fact, introducing legislation to cap excessive fees in Canada would have cost the government nothing and eliminated $20 billion from the deficit over two years, while stimulating the economy.
Last year, following my motion, we, on this committee, conducted a study into the credit card market in Canada. I questioned representatives from Visa and MasterCard, as well as representatives from Canada's big banks, and asked specifically why Canadians were not getting a break on their interest rates, and why there was no clarity.
The companies lacked any response. These companies were understandably concerned that revealing their profit margins in the public setting of a Senate committee would hinder their ability to compete.
In the end, our committee — and I would like to stress, both Conservative and Liberal senators — unanimously agreed on a report. We made a number of sensible recommendations to this government on changes that could be made to the debit and credit card market in Canada.
By the way, you will remember that last year, when we had our meeting while doing our study, the Competition Bureau Canada advised us that they were undertaking a study about Visa and MasterCard having the major portion of the Canadian market and that it was unhealthy. Well, it is now a year later, and more, and we still do not have an answer from the Competition Bureau.
Unfortunately, the government did not respond directly to the recommendations made by our committee, and instead, as you may have read, last month introduced a voluntary code of conduct for the credit and debit card industry.
I would like to be clear: As many of you very well know, I am not someone who usually praises this Conservative government. However, I like much of what Minister Flaherty has proposed, but some significant problems still exist.
If the minister truly believes that this code of conduct is necessary for the industry, why is it voluntary and why rely on the goodwill of banks and credit card companies? Why has the minister proposed no specific penalties for companies who are found to be in breach of the code? Last, and most importantly, why did the minister completely ignore one of the biggest issues facing this industry, which is, of course, the question of fees and interest rates associated with these cards?
In light of these problems, I have proposed two specific pieces of legislation, and the first one is before us: Bill S-201 would expand the mandate of the Office of the Superintendent of Financial Institutions, OSFI, to allow this institution to make an annual report to the Minister of Finance, including recommendations about the state of fees and interest rates in Canada for the use of debit and credit cards.
You may ask why particularly OSFI? First and foremost, in proposing any changes, I wanted to make sure to keep an eye on the government's bottom line. Taxpayers in this country are already footing a heavy burden, and I think we can all agree that the last thing we want to see is the creation of a new government bureaucracy.
Second, OSFI already has access to the balance sheets for Canada's banking industry. OSFI is designed to ensure that our banks remain stable and well regulated. Expanding their mandate in this regard is simple common sense.
To be clear, however, this bill takes no power out of the hands of the Government of Canada. Any recommendations made by OSFI in this industry would still be subject to approval by the Minister of Finance.
Now I understand there will be some opposition to these measures. I know that the banking community, as well as Visa and MasterCard, are hesitant about additional oversight of their own affairs, and while I can understand their reluctance, I simply cannot support it — and from what I have been hearing, neither can Canadians.
Canadians simply cannot understand why, while interest rates have dropped to a historic low across the board, credit card interest is as high as it is and continues to rise. They cannot understand why they can find an unsecured line of credit at 6 per cent but can open their credit card statements and see that they are paying 24 per cent.
Small- and medium-sized businesses are struggling to survive this recession while their fees are being hiked without justification by Visa, MasterCard and their terminal operators.
There is widespread agreement that regulations on the banking industry, put in place by Liberal Finance Minister Paul Martin, are the reason why — and I am not saying this for political reasons — our Canadian banks escaped the recent global economic downturn relatively unscathed, while their American counterparts were not quite so lucky.
``Regulation'' does not have to be a dirty word. When used responsibly, as I believe we can do with respect to debit and credit cards in Canada, it can help provide a level playing field for Canadian consumers, as well as merchants and business owners.
This is an issue I have been working on for almost three years, and it is one I will continue to work on until we have an equitable system that does not penalize those who have already fallen on hard times and have turned to credit cards as a last resort.
I have told you about the U.S. Senate passing legislation. I am also a member of the Standing Senate Committee on National Finance. We have started to do our overview of Bill C-9. In that bill is a section about the voluntary code of conduct and the fact that the Financial Consumer Agency of Canada, FCAC, has been given the mandate within that legislation to oversee the voluntary code of conduct.
I have asked a few questions. May 17 was the deadline for all the operators of the payment network by debit and credit cards — the issuers and so on — to tell the Minister of Finance that they would adhere to this voluntary code of conduct. We are one month passed that deadline and, as yet, no one has been able to access the list of people who are volunteering to follow this code of conduct.
An additional issue relates to the FCAC and whether there is a certain conflict there. I will try to explain it to you as best I can. FCAC has the mandate to provide education services for consumers about financial services. Most of their operating budget comes from the financial institutions that they will now be asked to supervise on a voluntary code of conduct.
With respect to this voluntary code of conduct and the consumer voluntary code of conduct in Bill C-9, there is reason to be concerned about conflicts with the agencies in question. On both these issues, I have asked for a written submission from the Department of Justice Canada to clearly say that it is not a situation of a conflict of interest. I am still waiting on that response.
With that, I am open for questions. I hope that I can answer most of them.
The Chair: Thank you very much, Senator Ringuette. For my edification if not for everyone's, I have a point of clarification. My understanding is that the Minister of Finance announced on May 18 that all payment card networks, major credit and debit card issuers and payment processers, had adopted the code of conduct. Your concern is that, so far, you do not have access or have not been given a list of each one of those; is that correct?
Senator Ringuette: Exactly. The press release said that most have adhered.
The Chair: Therefore, you would like to know who has.
Senator Ringuette: Yes. It has not only been my concern. All the major players such as the merchants, the Retail Council of Canada, Interac, and others have been asking the department for that list, and they have not received it yet. It should be public knowledge as to who has adhered and who is subject to it.
The Chair: Fair enough. I presume, though, that if credit card issuer X is not on that list and has adhered, then it is no longer voluntary.
Senator Ringuette: That is not clear.
The Chair: You keep saying ``voluntary,'' but if I adhere to something and say that I will follow that, then presumably I am bound by what I say.
Senator Ringuette: Yes, exactly.
I agree with Minister Flaherty; namely, that he should proceed with regulation if institution X has not volunteered. Bill C-9 provides for that but only one year from now. FCAC must provide a report a year from now on how much the institutions and the players have adhered to the voluntary code of conduct before putting forth some regulations.
The Chair: Is it the fact that it is a year that concerns you?
Senator Ringuette: Yes, it is another delay. I think we could have done with maybe a period of three or four months. It is important to further enhance or entice the participants to adhere.
As far as the legislation in Bill C-9 is concerned right now, it only applies to the entities that volunteer.
The Chair: We do not know who they are.
Senator Ringuette: That is correct; we do not know who they are. Nothing applies to the entities that have not adhered to the voluntary code of conduct.
The Chair: Perhaps the idea would be bad publicity in due course.
Senator Ringuette: Perhaps that would be a good idea for me.
The Chair: Yes. That will give you something to chew on.
I have abused my position as chair. Thank you for answering those questions.
Senator St. Germain: Thank you, Senator Ringuette, for presenting this.
As we have discussed in the past, I do not see myself as a real friend of the chartered banks because of the way they have conducted business in this country. However, in the same breath, I have to agree with the minister that our banks did survive quite well.
If I go years back, they scorned people that charged fees for arranging loans. Then, all of a sudden, when they became part of the process, it became totally acceptable. I have a real history with a couple of particular banks.
In your bill, do you feel that full disclosure will bring these people into line? You do not indicate, in your legislation, any guidelines as to what they should charge.
Senator Ringuette: No.
Senator St. Germain: You want full disclosure so that the world can see exactly what these people are charging and how they are going about their processes; is that correct?
Senator Ringuette: No. The bill gives the responsibility to OSFI to have access and to determine and make recommendations to the minister. It does not specifically say that there should be cap X.
On May 14, the United States Senate tackled a major issue. Their legislation gives power to the Federal Reserve Bank to cap the fees to ``an amount that is reasonable.'' It is particular to the debit card industry in the U.S. In the last year, Canadians, especially merchants, have been facing the same marketing of the debit card market in Canada as they have in the U.S.
Currently, the U.S. has a fee per transaction plus a percentage of the sale. The current situation in Canada, with Interac, is a fee per transaction. MasterCard wants to do the same in Canada as in the U.S. — the fee per transaction plus a percentage of the sale.
You must bear in mind that the cost of a debit card transaction is limited to the technology to take money from your bank account and put it into the bank account of the business. It has no relationship whatsoever to the amount of the transaction.
We have a transaction fee in Canada; it is not the same in the U.S. The United States Senate gave the mandate to the Federal Reserve Bank to establish a cap that is reasonable.
Senator St. Germain: Historically, our system has run on a free-enterprise system. I am scandalized by some of the rates charged. If we were to take the American example and cap the fee, we interfere in the free-market flow of business. This is a business, whether you sell houses or are in the construction business as I was.
Do you not see a danger of becoming involved in and interfering with the free-market process, which has served us well? The living proof is that this country currently has a huge economic advantage over the rest of the world. If you cap the fees at a reasonable rate, you will interfere with the competitive aspect of our communities. Why would we not try to establish a policy that makes information available so that people can make choices, which is possibly hindered currently by the lack of information?
Senator Ringuette: For the last century, the world has been bombarded by marketing from the biggest free-market system in the world, which is our neighbour, the U.S. The United States decided to put a cap on those fees because this free market was being abused. If Canada would have had such a free-market situation in relation to our Canadian banks, they would not be in the financial situation that they are in today; they would be in the same financial situation as their counterparts in the U.S. and elsewhere in the world.
Canadian banks are in this situation thanks to regulations. If we look at legislation imposing regulations on the banks and the supervision of OSFI over the past two decades, I am sure that we will find that the banks were utterly opposed at the time, that it was interference in their free market and competition amongst the banks. That is not the situation currently.
As legislators, one of our responsibilities is to ensure we have a balanced system in our financial institutions and a system that is not abusive to consumers and small and medium-sized businesses.
Senator St. Germain: Thank you, and good luck with your legislation.
Senator Hervieux-Payette: First, I want to congratulate my colleague for her extensive work, good research, data and dedication shown to this file. She is a real example of what senators can contribute to Canada.
Senator St. Germain: Hear, hear.
Senator Hervieux-Payette: Senator St. Germain talked about freedom in the business sector. How much freedom do users have? How much freedom do businesses have on a day-to-day basis?
In French, we say, ``un contrat d'adhésion'' — they can take it or leave it. There is no negotiation. Free trade means that you have a ``rapport de force,'' and you can negotiate. However, there is no negotiation. Moreover, conditions are imposed on those using the product that impedes them from giving a discount if people paid cash. This is even worse because it removes one of the first things that should be considered, which is that a person who pays directly should not be charged. Banks will eventually have a transaction because the business will send the money to the bank.
I want to hear your point of view on whether those using the service are in a negotiating position.
Senator Ringuette: I certainly agree, although I want to recognize that the voluntary code of conduct allows a business to cancel its contract upon 90 days notice if there is too large of a hike in price, et cetera. That is a voluntary code of conduct; there is no legislation. Even though there is a small amount of oversight from FCAC, there is absolutely no penalty system.
Knowing what we know after investigating this issue for the last two years, are we to expect no abuse will occur? There is no complaint mechanism or process to receive a complaint, follow up or do any oversight.
I want to be positive about the step that has been taken. However, major gaps still remain in balancing the issue of fees. Taking that into consideration, the voluntary code of conduct says that the service provider must give notice of X days in the case of an increase in fees. As a merchant, you can give me notice that I will have an increase in fees, but if I want customers, I need to offer them access to the credit and debit card systems. That is the way that we purchase; that is the circle.
If you completely break your contract, you will not be able to provide the debit and credit card service. There is the issue of us not knowing yet, and we have to bear in mind that it is not the bank or Visa and MasterCard per se that sign the contract with the merchant. It is the provider of the technology, Verizon and so on. Do they adhere to the voluntary code of conduct? No one can tell you right now.
Senator Greene: Trade associations, of course, are always very vocal about what they like and what they do not like, what they want and so on. The list of associations in support of the code of conduct that the minister announced is rather long: the Canadian Federation of Independent Business, CFIB, the Retail Council of Canada, the Canadian Council of Grocery Distributors, the Canadian Restaurant and Foodservices Association. Some very small businesses are in that group. For example, mom-and-pop type organizations are members of the CFIB, plus rather large retail businesses, and also the Consumers' Association of Canada has reacted positively to the minister. I do not recall any of those associations asking for more regulation or saying that we are not doing enough. I wonder if you could comment on that.
Senator Ringuette: Senator Greene, I partially agree with you. There have been associations that do not support it, such as the Association canadienne des dépanneurs en alimentation, which has issued a statement saying that they do not agree.
Senator, you could add my name to that list that you just mentioned. I said earlier that it was a good first step, but it is not enough. The issue is that it is not enough. It is a voluntary code of conduct.
Senator Greene: How do you know that it is not enough? It seems to me that we have only had this voluntary code of conduct for a couple of months at the most. People are incorporating it into their websites, their mailing addresses and so forth. How do you know it is not enough? Maybe it is enough. Why do we not give it a chance?
Senator Ringuette: I would give it a chance if, on the date that everyone was supposed to have adhered to this voluntary code of conduct, if a list of volunteer entities would have been published. However, as of yet, even the Retail Council of Canada has written a letter to all the intervenors, all the banks, Visa, MasterCard, and all the providers of the technology to ask them if they have adhered to the voluntary code of conduct. That is not very inspiring for transparency and being positive in your adherence to the code. If you were proud to adhere to the code, you would say it publicly. However, the Retail Council of Canada has to write a letter to all of them to know if they have adhered.
Senator Greene, I give credit to the minister, and I have said that. It is a step forward. However, some issues exist with respect to who has adhered to the voluntary code. Also, I have highlighted other issues this week in our study of Bill C-9 in the Finance Committee about FCAC; for example, the oversights and the lack of a complaint mechanism and penalties.
Senator Greene: Maybe the chair should write to the minister to ask for a list, and we should look at that list and then decide whether to support the bill or not, depending on whether the list is adhering to the voluntary code of conduct.
Senator Ringuette: Further to what you are saying, Senator Greene, yesterday I asked the department officials who were at the Standing Senate Committee on National Finance for the list. They said that they would send it to the clerk of our committee this week, so as soon as I have the list, I will be happy to circulate it to our members.
The Chair: As you said, Senator Greene, it would be interesting to see that, and then we could pursue our discussion, and, certainly, we want to hear from other witnesses. Bill C-9 suggests FCAC as the monitoring agency. This bill before us suggests OSFI. There may be reasons, pro or con, that I hope might be explored by one of our next two questioners, if Senator Greene is finished.
Senator Greene: I wanted to ask a general question. I agree with your point that too little regulation is a bad thing. Humans need regulations. We are basically animals, and we need a regulation. Do you not agree that there can be too much regulation?
Senator Ringuette: I will be 54 years old. When I was 15 and 16 years old, I thought there was too much regulation, but as you experience different issues in life, you appreciate regulations. It is part of our human evolution to have some type of discipline around us — it gives us a comfort zone.
Senator Greene: Yes, but with too much regulation, we become stifled.
Senator Ringuette: I have not seen any situation yet where there was too much regulation.
Senator Greene: That is what I thought.
Senator Ringuette: That is except when I was 16 years old.
The Chair: We are getting very philosophical. I do not want to go too far down that line, either. All of us did interesting things at 16 years old. I will go over to Senator Harb who perhaps can remember when he was 16 years old.
Senator Ringuette: I am sure it was not too long ago.
Senator Harb: When we made our recommendation, we said, at the time, that we wanted the government to have an oversight board. We did not want to pick a specific organization because we thought we would see what they would come up with. We had diverse opinions around the table as to whether OFSI was the proper mechanism, so we decided to do that, and we also asked for a report by December 2009.
The government is proposing now, as part of the budget, FCAC to be that particular oversight board. You have an issue with that. My question is then for us to consider this particular bill, we would have to pretty well defeat the element as part of Bill C-9 because if Bill C-9 is implemented FCAC will become the agency.
Senator Ringuette: In Bill C-9, technically, the agency is the oversight body for the voluntary code of conduct.
Senator Harb: Is it not to observe and report?
Senator Ringuette: Not on the rates and fees for the industry.
Senator Harb: My second question is dealing with the actual mandate of OSFI. I will describe a situation here. Their mandate is to ensure financial institutions and pension plans are regulated by an office of the Government of Canada, so as to contribute to public confidence in the Canadian financial system. You suggest giving them another mandate, which is obliquely not the opposite but one could say the opposite to what they already do, so they are almost the judge and the prosecutor at the same time if we were to proceed with what you are proposing. In a sense, I would not trust them whether I was on one side or the other. If I was on the side of financial institutions, I would say that they are not looking after my interests; they are looking after consumer interests and could not care less about what I stand for. If I was on the consumer side, I would say that I do not trust them because they are looking after the interests of the financial organizations, banks, et cetera.
That creates a degree of a conflict, would you not agree?
Senator Ringuette: Senator Harb, I thank you for your question. I do not agree with you, based on the fact that, in my research, I found that it is the only federal government entity that has access to both the banks and the insurance, to financial documents of those both entities and also has the responsibility of confidentiality of that data.
No one, not even a House of Commons committee or a Senate committee has that power. If we look at the issues of rates and fees with a view to ensure a balance and no abuse, they are the only current federal entity, without creating a new bureaucracy, that has that power.
Senator Harb: What about the Competition Bureau, for example?
Senator Ringuette: I would think the Competition Bureau would probably be a nice entity. However, as I said earlier, a year ago, in front of this committee, on this issue, they declared to us that they were investigating a monopolistic situation with Visa and MasterCard in the Canadian market, the same as their counterpart in Europe was doing. That was a year ago, and we still do not have a ruling from them.
I do not know if it is a question of efficiency or if that the file is becoming too big to provide a report, but it is certainly a concern that one has not been provided in a reasonable amount of time.
Senator Massicotte: We have had some discussions on this bill.
Senator Ringuette: Yes, we almost divorced due to our discussions.
Senator Massicotte: You will know a little about what I am about to say. However, for the sake of responding and maybe to give you one last chance to change my mind, I have three issues. I will state them in order of least importance.
The first issue I have, which is very technical, is that when you read the French copy versus the English copy of the bill — and you know my comments — in English, we say, ``monitor and publish,'' in proposed new section 7.2(1)(a), but in French we say:
[Translation]
. . . ``le surintendant contrôle l'utilisation''. . .
[English]
``Control'' is much harsher in my mind than ``monitor and publish.'' I know the senator will tell us that the translation department told us that that is the proper translation. I beg to differ strongly because it is very different.
The second issue — and I am raising points that I have already raised — is the use of OSFI. I have reviewed the charter of OSFI, and if you look at the act that created OSFI, the Office of the Superintendent of Financial Institutions, the whole purpose is clear. Even in the preface of the act, it is for prudency, for creating confidence for Canadians to invest in financial institutions, and it is basically solvency, to ensure that they are strong and stable — and they did a good job if you look at the recession we have been through.
I always have a problem with using OSFI. I do not think it is the right choice if you had a choice. I reviewed the charter that created the Financial Consumer Agency of Canada Act. I believe that would be the right one. In fact, that is the agency that the minister is actually recommending. There has been a history with that organization. In fact, our own Senate reports would say that they have not been vigilant enough to represent the consumer and have not done their job. However, nothing stops us from doing it, and I would suggest that that would be the better government institution to do the job.
The third and more significant issue is the merits of the bill and whether it is necessary. I think Senator Greene raised the issue. To be very frank, I think the work you have done, the work our committee has done, has incited the government to respond. Therefore, Canadians owe you a great deal of credit for the government response in the proposed code of ethics, and the good news is that they did much of what we wanted them to do.
I know your argument is that they have not done enough, and I do not think they can do enough, but I guess I would give credit to the person who has the ball. If the ball is in their court, hopefully the Financial Consumer Agency of Canada will do their work, and at this point I share some of the other comments. I do not think we have enough information or experience at this point to say, no, they are guilty and they will not do their job well.
It is the beginning of a process, so unless we have something specific, I would say that it is premature to respond. I know in your discussion with Senator Greene you said that they have not done anything, but your proposed act does not deal with those issues. Maybe if you did that, I would get onside. Your proposed act simply says for us to create another institution that will monitor and publish. It does not deal with the imperfections you think exist. That is the problem I am having, but I think I know your response. Perhaps you could respond and convince me I am wrong.
Senator Ringuette: Senator Massicotte, I do not know if anyone has ever been able to convince you of anything. However, I will take your issues one at a time.
On the wording of the bill — and we talked about this a few months ago — I have had legal counsel revisit the wording to compare the English and the French with very sophisticated legal translators. That is the proper French word for ``monitor.''
On the use of OSFI, you are right that OSFI, in their act, was to provide for prudent reserve and investment and so forth from our financial institutions in order for Canadians to have confidence in our financial institutions.
Is that not what my bill is all about? It is to bring confidence that there is no abuse in the rates and fees of the debit and credit cards used by Canadians, whether you are on the consumer or the small and medium-sized business side of the issue.
Yesterday, we were looking at Bill C-9 with respect to FCAC. Their original mandate is to provide financial education and information to the general public. That is being paid for by financial institutions; their operating budget is paid by the financial institutions.
We have the same saying in French as the English: Do not bite the hand that feeds you.
I have many concerns about the additional mandate that is given to FCAC in Bill C-9, to give oversight to the voluntary code of conduct. The voluntary code of conduct has really nothing to do with what I am proposing in Bill S- 201. Bill S-201 is about fees and rates, namely, whether they are balanced or there is abuse.
The United States Senate gave that responsibility to the Federal Reserve Bank, which has access to all the financial documents of their financial institutions. Their wording in their bill says, ``an amount that is reasonable.'' They do not say, ``a cap''; they say, ``an amount that is reasonable.''
If you look at all the financial institutions we have in Canada, I think OSFI has the confidence of the Canadian population to fulfill their mandate, and I also feel that they have the confidence of the financial industry that the data provided to them is kept in confidence and not leaked from whatever source.
FCAC has a mandate to provide education. When they were in front of us when we were studying this issue last year, the witness said that she was having numerous meetings and receiving great cooperation and support from the financial institutions, as well as Visa and MasterCard, to provide information to consumers. How can you do one thing on the one hand and have to tell them on the other hand that they are not being fair and balanced to consumers or to the business community?
Senator Massicotte, ``merit'' is about as undefined as ``reasonable.'' You can say that maybe my bill has no merit, and I can say to you that my bill has a great deal of merit. When you say that the toughest issue for you is the merit of the bill, I invite you to spend the next few months to going around with me to talk to the small businesses and consumers. We will do that after May 17, when the voluntary code of conduct is in place. We will get their reaction to see if it has established some fairness in the system for them and if it has established discipline.
Then, perhaps, our discussion on the merit of this bill will be skewed a little toward my terminology of merit.
The Chair: We are just about out of time, colleagues. Do you have a final question?
Senator Massicotte: I would like to take the discussion further, if I could. Let me briefly read to you what section 4(2) of the OSFI act says:
The objects of the Office, in respect to financial institutions, are
(a) to supervise financial institutions in order to determine whether they are in sound financial condition . . . .
(b) to promptly advise the management and board of directors of a financial institution is not in sound financial condition . . . .
It is not to run the institutions. However, the more money the financial institutions make, the more OSFI is doing its job. The higher the fees, the happier OSFI is. You are now asking OSFI to lower the fees, but they will create a conflict. Meanwhile, if you read section 3(2) of the Financial Consumer Agency of Canada Act, it says:
The objects of the Agency are to
(a) supervise financial institutions to determine whether they are in compliance with the consumer provisions applicable to them;
(b) promote the adoption by financial institutions of policies and procedures designed to implement consumer provisions applicable to them;
(c) monitor the implementation of voluntary codes of conduct . . . .
My point is that that seems to fit in much better.
I have a last point. I was talking about the merits of your bill at this point in time. Maybe you are right; maybe the proposed act is not adequate and maybe in the fall we should ask these witnesses to come and tell us if it has worked. If it has not, then we do something. It is the timing of the bill for me, not the essence of it.
Senator Ringuette: Let me first reiterate my commitment to this issue. Whether it is this week, next week or next year, I am committed to this issue. Regarding the responsibility of OSFI and the responsibility in their respective acts to the Financial Consumer Agency of Canada, I would remind you that if you look closely at the 900 pages of Bill C-9, you will see that there is a need to change and add to the mandate of FCAC.
We can argue about the current act and the current mandate of both these organizations. However, I would also like to remind you that Bill C-9, the omnibus budget bill in front of the Standing Senate Committee on National Finance, changes and adds to the mandate of FCAC. We can also add to the mandate of OSFI.
Senator Peterson: I take it no one is providing this oversight now, is that correct?
Senator Ringuette: No.
Senator Peterson: Did you have OSFI or FCAC in front of the committee to get their view?
Senator Ringuette: Are you asking about when we did the study last year, Senator Peterson? We are only starting the study of this bill today.
Senator Peterson: This is the first day? Maybe we will get those people in and see what they have to say.
You talk about credit card rates of 20 per cent or 24 per cent, but some cards are at 12 per cent. Why are they not having any impact?
Senator Ringuette: Since our committee completed its study at the end of June last year, the slate of credit card products having low interest rates that you see at the different banking institutions or on the sight of FCAC has been reduced considerably.
We were told many times by interested parties last year that low interest rate credit cards were available. If you compare the situation last year to what is currently available — I watch the situation closely — immediately after we completed our hearings, those 7 per cent, 8 per cent and 9 per cent credit cards were eliminated. The credit card with the lowest rate available now is 14 per cent.
The Chair: Does that mean Senate hearings have the reverse effect? I am disappointed to hear that.
Senator Ringuette: No. I think that means that pressure from the economic crisis on different banking institutions was high. They knew Canadians did not have many options for except credit card products, so they abused the situation. It is such a profit builder that it is public. CIBC bought Citigroup's credit card portfolio for about $2.3 billion.
The Chair: I do not think there is any doubt that credit cards are a profit centre.
Senator St. Germain: For clarification, did the Financial Consumer Agency of Canada appear before the committee when you had your hearings?
The Chair: Yes. We will probably bring them back when we consider this particular bill. The time has come to thank Senator Ringuette for her testimony and thank honourable senators for their participation in the discussion. We will have more to discuss in the fall when we have other witnesses.
We now have the pleasure to welcome as a witness, rather than as a questioner, our committee's deputy chair, the Honourable Céline Hervieux-Payette, who is the sponsor of Bill S-206. The focus of this bill is gender parity on the board of directors of certain corporations, financial institutions and parent Crown corporations.
[Translation]
Certain publicly traded companies and financial institutions will be required to achieve parity in the number of men and women serving as directors, starting at the second annual meeting following the day on which the proposed act comes into force, although a deferral to the third annual meeting may be applied for in certain cases. The two-year requirement becomes three years for certain parent crown corporations.
[English]
I will remind both Senator Hervieux-Payette and the questioners that another committee will arrive here in about 45 minutes, so we must adhere to our time restrictions.
I invite Senator Hervieux-Payette to begin her presentation.
[Translation]
Hon. Céline Hervieux-Payette, P.C., sponsor of the bill: First of all, I would like to thank all my colleagues for joining us. I do not think that we have ever had so many participants and I think that is a good omen.
I will start with a brief history of this bill.
This bill is already in effect for crown corporations in Quebec. In 2011, 50 per cent of the members of the boards of directors of crown corporations in Quebec will be women. The last I heard, there have been no major problems or bankruptcies. I believe that Jean Charest, the Premier of Quebec, is still committed to and happy with this initiative, as is his cabinet. So I invite you to follow the lead of someone who, in the past, was associated with the Conservative Party. It is good that my colleagues know that the initiative comes from someone who once shared their views. Whether because of Mr. Chrétien or Mr. Harper, the growing number of female members of our own venerable institution underlines this trend. The same goes for the federal public service. I acknowledge that governments, both Liberal and Conservative, have made this effort, and women have had access to leadership positions.
Some things, like executive positions in companies, are hard to legislate. So I have opted for boards of directors because they are governed by legislation such as the Corporations Act.
It all starts with determining the role of a member of a board of directors. That position, that board member, represents the shareholders first and foremost. That person has a fiduciary duty to the shareholders. We tend to forget that board members do not serve the senior management; it is rather the senior management that serves the board of directors.
Therefore, my starting point is that women make up about 50 per cent of the workforce across Canada. Those women contribute the same to pension funds as men do, and are not exempt at all. The reason I added publicly traded companies to crown corporations is that, in 2010, the money invested in those companies came largely from pension funds. The individual investor does not carry much weight. In fact, most of these companies' shares are held by groups with an 80 per cent controlling interest. Individuals, therefore, have little say. Individuals may be on the list of those who vote for board members each year, but their votes carry little weight.
Instead, we talk of institutions, institutionalization and the future of our country. In that context, I would like to remind you of some figures. For the last ten years or so, 61 per cent of university graduates have been women — more than men. Last year, of the 195,200 graduates, 62 per cent were women. We need a qualified workforce and we need people capable of sitting on boards of directors. Of the 134,800 students earning a master's degree, 54 per cent were women. Only at doctoral level are women at 45 per cent, which is still a considerable percentage.
Among the qualities found in people who sit as members of boards of directors are, first, competence and then independence. If a person sits on several boards of directors, there is a risk of conflict of interest. People very often sit on half a dozen or more boards. With a little more discipline, it would be possible to ensure that board members do their work thoroughly, reading all the correspondence and the documents prepared for the meetings, and make decisions in the interests of the shareholders. If so, a diversity of points of view and, above all, a different way of looking at issues will have a significant effect on the company's performance.
If you would like proof, in American Fortune 500 companies with three or more women in senior management, those same women perform 10 per cent better, whatever the sector. And those are big companies.
Following this trend, other countries that we know have tried legislation have now reached a level of almost 50 per cent. This includes Norway, a pioneer in the field, although its legislation calls for only 40 per cent. So there must be enthusiasm for the idea because the results, with almost ten years' experience, are quite good.
Spain has followed that lead; I hope that women on boards of directors in Spain are going to work hard because the country has a lot of problems to deal with at the moment.
Just this past January, a motion was put before the French Parliament and passed. The process to have it passed by the Senate is now underway. This is to illustrate that OECD members are also moving in this direction.
There are studies in other countries, but having France, Spain and the United States as examples already validates the idea that having more women heading companies results in better performance. That is the objective, because the board of directors is there to oversee the company's direction.
I am also delighted to see that my colleague Nancy Ruth has done some very good research. She supports my bill and sees it as a practical and needed initiative. She shows clearly that, under section 15.2 of the Canadian Charter of Rights and Freedoms, passed in 1985, the principle of equality was adopted.
Legislation in Spain and Norway provides for 40 per cent; Quebec provides for 50 per cent, as does France. Why am I suggesting 50 per cent? Because I have no argument to support 40 per cent.
The principle of equality has been enshrined in the Canadian Constitution, and some of my colleagues around the table worked very hard to achieve that. Thanks to the efforts to place women in the senior management of companies, we now have organizations that taken stock and have women who are qualified. Currently, about 1,000 women are qualified to sit on boards of directors. So we will have plenty of resources.
My proposal is phased in over a period of three years. However, if, after research and reflection, my colleagues were to propose a phasing-in period of five or six years, as is the case in France, I think that would be a way to move to implement the measure.
It is important to give Canadian women a clear signal that Canada is ready to fully include them as leaders, economically and in the other sectors where we have employment equity programs.
I am now ready to answer your questions.
The Chair: Thank you for your very clear and complete presentation. We now move to questions from senators.
[English]
Senator Greene: I agree with you that today a majority of women are graduating from university and that we have more and more qualified women on whom to rely. That trend has been building, and it will persist for a long time. Eventually, whether it is 10 or 15 years from now, your bill will end up protecting men because the number of men available to participate on boards will be smaller. Have you thought about that?
Senator Hervieux-Payette: The best solution is probably 50-50. That is why 40 per cent was not my choice.
I agree with you, that it is sharing the future of the country. If I had my way, I have solutions even for the House of Commons. The idea is to be creative and imaginative. If you look at the contribution of women, even in Third World countries, you will see that women are the biggest contributors to their country's economic development.
As far as I am concerned, I have a prejudice. I must announce that prejudice. I have three daughters and five granddaughters. I am quite sure that senators and other Canadians agree that we have a population of 52 per cent women and 48 per cent men in our country. I think I would be able to cover the gap of the 2 per cent and give 50 per cent to men.
Senator Greene: Nothing is forever; circumstances change. That is the danger of quotas in general because circumstances do change.
As far as I am concerned, I would not mind sitting on a board with nine women at all. That would not bother me in the slightest. My daughter, who is a PhD student, or soon will be, would not appreciate the bill because she is determined to prove her own way and not have an advantage through an artificial means.
In the short term, perhaps your bill might be a good idea. However, in the long term, it might not be a good idea. Have you thought about a sunset clause so that, for example, after 10 years, the bill is gone and must be restarted?
Senator Hervieux-Payette: First, the equality clause, in my legalistic language, is not a quota. A quota would be 30 per cent or 40 per cent. ``Equality'' means 50-50. Let us be clear about that. That is one of my choices.
At the beginning of our careers, we do not experience this glass ceiling; there is no doubt about that. It is only when we reach the higher levels in the hierarchy of companies that things tend to be more difficult.
As I said, it has been done by a woman from Vancouver with very selective boards. We have 1,000 women, and I can tell you the phone does not ring. People need to be serious about rejuvenating their boards. Let me be clear about this: This does not apply to privately owned companies. My bill does not apply if you own 100 per cent of the shares in Cirque du Soleil with Guy Laliberté. He can put his mother, grandmother and whoever he wants in place. In this bill, I am talking about representing the people who put money into the companies. Women are in fact contributing to pension funds to the same extent as men. Who finances these companies?
Even our bankers are not necessarily like Mr. Beaudoin at Bombardier. He initiated a company and now has a controlling interest; he is taking a risk up and down.
When it is a privately owned company, I feel that we do not have to interfere with that. However, with respect to the interests of the shareholders — and the fiduciary duty must be conducted on behalf of the shareholders — I would feel more comfortable as a shareholder if I was represented at the board.
Maybe we would change many of the products in the marketplace because we are the biggest buyers in society. It is the women who are buying. That is why it is important that we are on the boards.
You see that in the United States, especially in the food industry. In all the consumer industries, women run these businesses. They know what the client or customer wants. For me, it is in the best interest of the shareholders.
Senator Oliver: Congratulations; you have an interesting bill, and I think that you should be thanked for having the initiative to bring something such as this forward.
I have three questions. First, you gave some statistics about the university education and training of Canadian women. You mentioned that some have master's degrees. Do you know the percentage of women that you would think to go on these boards who have Master of Business Administration, MBA, degrees?
A number of universities and financial institutions across Canada now offer board of directors courses. Most people who have an interest today to become a director of a major public corporation know and learn early that they must go to these courses and graduate from them. They teach you how to be a director, how you to ask questions, about audit committees and about good principles of modern corporate governance.
What percentage of these women that you have given statistics on have taken those courses and have graduated?
My third question is about whether your bill is too narrow. You know that the Government of Canada, as a matter of public policy some 25 years ago, said that we recognize in Canada that not one but four groups of Canadians are in need of special measures, such as a bill such as yours, to ensure that they are treated equally and given the same opportunities as other members of Canadian society.
The Government of Canada said that those four groups are women; Aboriginal peoples, including Metis; the disabled; and a huge group of people called visible minorities. Visible minorities represent more than 75 per cent of the new Canadians coming into Canada each year. Between 260,000 and 270,000 new Canadians come here every year, and 75 per cent of them are visible minorities or people of colour.
Visible minorities who are coming here have more and better degrees than most Canadians here today. Most Canadians have a master's degree and one other; the new Canadians have a third degree. They are highly educated and trained, and these people are not getting on boards, either.
Do you think your bill is too narrow? Since this is a national bill, why not include these other groups? Why should the disabled not have an opportunity also? If your answer is that yours is only a gender bill, would you not want to consider making it a big broader to include other Canadians who are in need of special measures?
Senator Hervieux-Payette: I would have no problem with an amendment to my bill coming from you to include Aboriginal, disabled and visible minorities provided that, again, it is 50-50 men and women. Providing that we keep that ratio and that we have a fair percentage, I would be able to live with that.
I agree with you, but I do not want to get involved in this question of diplomas. However, when the provinces recognize degrees granted outside our country, I will be the happiest person. I regret very much that we lose a good deal of talent. I hope the professional organizations become more open, other than the engineers, who are already open more open than other professions, whether we are talking about accountants, doctors or administration. I feel this is not part of our jurisdiction. However, I certainly encourage provinces to speed up this process because I am appalled that we do not even have that recognition in our country.
If you want to add on to my 50 per cent the fact that we should cover and have a percentage of people who are more or less disenfranchised, I would have no problem with that whatsoever. I would be the happiest person.
Senator Oliver: In relation to the master's degree issue, you gave some statistics about the number of women who have master's degrees. However, if someone had a master's degree in anthropology, how can that contribute to a board such as the board of a bank, a life insurance company or a major pension fund? The education must fit the needs of the corporation.
Senator Hervieux-Payette: Yes. I can provide you with numbers. I do not have them here right now. However, women form the majority at the faculty of administration and to provide accounting, the faculty of law. Many professions now lead to a good and efficient administrator. I did law some years ago, and about 10 years after I graduated, women started to be the majority. These people have 25 years experience in the labour force.
Maybe having one person with an anthropology or a philosophy degree would not be a bad thing. Companies must also have a social conscience and should also understand the world in which they are living.
I am not saying that we should fill all the positions with those people and that they be women. The tendency to have traditional formal wear, the white shirt and blue pin-striped suit, for men and not have people with creative or other backgrounds tends to reduce the progress of these entities. The board is there to reflect on proposals by people who are specialists in their own sector. They are not supposed to be specialists necessarily of that sector. They have to bring better views to better serve the interests of the shareholders. If there were perhaps a philosopher or an anthropologist, at BP right now, that might not be bad thing.
Senator Massicotte: Will you provide us with those numbers? I think they would be useful.
Senator Hervieux-Payette: Yes.
Senator Massicotte: Not only today's numbers, but those from 20 years ago. Twenty years ago, how many businesses were run by women versus men, including scholastics but also experienced? If we had those statistics, that would be interesting.
Senator Hervieux-Payette: They are available. Statistics Canada has all those statistics. Certainly, if I go backward, I can provide them. I will bring them back in the fall.
Senator Oliver: Can you comment on the institute of directors and the number of women who have certificates from the institute of directors' courses?
Senator Hervieux-Payette: No, I do not have it. I have with me a brochure called ``Women on Board Mentoring Program.'' This group has training and many programs. Some smart people in the administrative faculty put the program together. The attendance is not limited to women; men and women are following it.
As far as I am concerned, I think this was overdue. Even men sitting on the board sometimes did not have the qualification to do so. I think we will have better boards. When I talk about the compilation of 1,000 women being ready to sit on boards, it is because they were vetted by people coming from these backgrounds.
The Chair: Senator Hervieux-Payette, we might consider having someone from the Institute of Corporate Directors as a witness in the fall.
Senator Hervieux-Payette: Yes, that would be a good idea.
Senator Harb: Between Senator Greene and Senator Oliver, most of my questions were asked.
I have a follow-up question on the idea to have a sunset clause. Perhaps we could have a review of the act every five years as we do with many acts of Parliament.
Also, I glanced through the bill. I do not see an exemption if a company is specialized in a certain field where they need certain expertise on the board and not enough women are in that particular field. For example, you could set up criteria that the company must meet. Could a company get an exemption by applying to the superintendent or person in charge? Is that something you will consider?
Senator Hervieux-Payette: Yes, we thought about having a temporary exemption when we drafted the bill. This means it would not be a permanent feature where people would be allowed to stay in those positions for 10 years.
To bring women onto a board, you either have to modernize your board and retire a few members or bring in more members, depending on the size of the board. Banks have large boards, but many public companies have small boards. It depends whether you add or subtract members.
As I mentioned earlier, expertise should be broader than simply the field where people work. My daughter is an applied physicist who worked on the F-18 program; three women in National Defence worked on that program. There are many new graduates, and I have spoken with people in other areas. We have an increasing number of women interested in the aerospace sector in Quebec.
It may be impossible to fill a gap for a limited amount of time. However, on your sunset clause, the bill gives three years for companies to comply. It could be extended. We have to look at what other outside witnesses tell us is best. It could be three, five or six years. France has chosen six years, but they created benchmarks.
For example, we could say that after three years, you need at least 25 per cent women. Currently, including Crown corporations, we have 14 per cent women. If I exclude Crown corporations, it is only 10 per cent women on boards. We have a large gap.
The sunset clause should come after we have completed the period of time to comply, and we have achieved the 50 per cent parity. I welcome Senator Oliver's remarks. It would be great to have people with diverse backgrounds rather than only focusing on men and women.
Senator Poy: It is wonderful that you propose this bill. This 50 per cent of a board includes Crown corporations and all public boards.
Qualifications must be the key consideration, as was mentioned earlier. There is no use in saying that we need 50 per cent women. The first consideration must be qualifications. You will allow companies three years to reach 25 per cent women. Is that correct?
Senator Hervieux-Payette: Yes.
Senator Poy: It is important to put a sunset clause after the 50 per cent requirement is met. I suggest it will make it easier at the other end if that is in the bill.
I also want to comment on what Senator Oliver said about visible minorities. In many cases, when people talk about women and men, visible minorities are not included, and they should be included. You can be a visible minority or disabled and still be female. I think it is important to add this.
I have been on a Schedule II bank board — Bank of East Asia (Canada) — for a long time. The board has 50 per cent men and 50 per cent women. It has worked extremely well. This year, the majority shares were purchased by the largest bank in the world — the Industrial and Commercial Bank of China Ltd. This shows that it works well.
You do not need to be a banker to be on a bank board. We always need people who can look outside the box. For example, British Petroleum cannot only have engineers. It would have been great if they had more environmentalists on their board. Maybe we would not be in as much trouble currently.
Can you add many of these items into your bill?
Senator Hervieux-Payette: You ask me, in my bill that brings in women, to correct everything that was not done in previous legislation. When I began my comments, I indicated that qualification is a must and qualifications should be diversified.
I also sat on the boards of financial-sector businesses, and I think coming from a different perspective brings something to the board. We ask questions that no one else asks. I took longer to read documents sent to us, and I was not shy to ask questions. I also was the only person to ask to have a two-day full briefing when I joined the board.
One wants to contribute and take the role of a board member seriously to represent shareholders, who are the millions in Canada's labour force. Board members are the people who make this country work.
To bring more diversified points of view and qualifications will be a winning card for Canada. We may be on top of the world, as my colleague mentioned earlier, because we did not go as deeply as other countries into the economic crisis. However, Canada will make progress in the future providing they also make progress.
Canada is a small entity in the global economy. We need all the available talent. This is another reason why I presented the bill. Let us include all the brain power and talent in this country. We cannot afford to lose one. We have invested billions of dollars in our education system. This measure is to help us run the country and run our businesses.
Senator Poy: This question may have more to do with what Senator Oliver said about the certificate for directors. In my experience, you can be on the board of directors, and you can think the way you want. Your thinking does not have to follow a pattern. Even toy companies have children on their boards so that they know what children like. It is the same thing, for example, with grocery stores. Women really know.
An Hon. Senator: What to cook.
Senator Poy: What to cook, what to buy and how they want to shop.
I simply find that it is not necessary to have an MBA to be on the board of a corporation.
Senator Hervieux-Payette: I agree. With respect to competence, if we disqualified right now all those who sit on boards but have not followed the course, probably half of the board would have to resign. We cannot have a double standard.
Senator Oliver referred to the fact that it became popular because of the question of having a more diversified and qualified board. You have to be able to read financial statements, at least, and you have to have some basic skills. That is what the women's organizations did when they qualified women. You could be a chartered accountant in charge of the auditing of a multi-million dollar company. You are doing financial analysis, and I do not think you need to do that course the next day.
Senator Oliver: There is directors' liability as well.
Senator Hervieux-Payette: Good boards usually have some courses or sessions to update their knowledge, and as Senator Oliver mentioned, the question of liability is increasingly on the shoulders of administrators. You are paid for it, most of the time, except when you are in a Crown corporation, where it is almost a token salary, but that is a service to the Canadian people. I am always ready to thank those who are sitting on Crown corporations because they are, in fact, doing a very good job.
I believe we would enhance our corporation boards if we had the standard of 50-50.
Senator Pépin: I have to admit my question was about qualifications.
[Translation]
I am going to make some comments that will bring back memories. Remember that the legislation on the equality of women was passed in 1980. Thirty years later, we are getting round to thinking that women must have equality on boards of directors.
I do not want to break down doors, but I think that we have reached that stage. We got our foot in the door, but now the door has to open.
I want to remind you of the battles we had to fight to get a woman judge onto the Supreme Court. In the 1980s, there were none; it was difficult. Then, later, we had the first women Speaker of the Senate. That was another major victory.
So, 30 years on, I am saying to myself that we need action. The doors have been open, but now, we will need, and have to find, the qualifications.
I am happy that Senator Hervieux-Payette has brought this matter to us; this is the point we have now reached. Equality has existed for 30 years and everyone is used to it. We will not get an equal percentage overnight. It will happen gradually. And I fully agree with the idea that it should be phased in over a period of three to six years. People will be less scared than if they are told that it is being done right away.
The Chair: You know whereof you speak.
Senator Hervieux-Payette: Senator Pépin was one of our pioneers, she was there when the equality clause was passed; it did not come easily and could not be taken for granted. There was even a certain amount of resistance, especially from provincial premiers at the time.
All that to say that, today, I would like to finish by saying this: when we say equality, we do not mean a quota. I hate quotas. A quota means giving someone a present so that he will shut up.
When I say a 50-50 percentage, that is a reflection of society; it is not a present.
I will end by saying that there is an organization in Toronto called Corporate Knights. They published a document called Diversity Whitepaper. This document explains in ten points why we must go in this direction. This is a group endorsed by a number of company presidents.
So, we are going to continue to think about this, in the fall, I hope. We will have people who will come and explain to us, in practical terms, the time that we will need to reach the figure of 50 per cent. Canadians have to think about their daughters; think about yours too, as I do about mine. I think we have to break this barrier that stops women becoming presidents of companies. Women with senior positions in companies are there because of their competence. But the question is not just about competence; it is also about equality.
The Chair: Thank you, Senator Hervieux-Payette. As a father of three sons, I thank you for your comments. In all seriousness, I feel that we have had an excellent exchange this evening. Since we now have two months to consider the matter, if you could provide the clerk with a copy of the study that you have just mentioned, it will give us some bedside reading for the summer.
[English]
Senator Massicotte: In Canada, a couple of large companies do many board searches, for example, Egon Zehnder International. We should have some of them as witnesses so that they can tell us about it.
The Chair: That is a good idea, Senator Massicotte.
[Translation]
The Chair: We will conclude with that and tomorrow, at 10:30 a.m., we will study the report on pension plans.
(The committee adjourned.)