Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 29 - Evidence - February 6, 2013

OTTAWA, Wednesday, February 6, 2013

The Standing Senate Committee on Banking, Trade and Commerce met this day at 3:15 p.m. to study Bill C-28, an Act to amend the Financial Consumer Agency of Canada Act.

Senator Céline Hervieux-Payette (Deputy Chair) in the chair.


The Deputy Chair: Good afternoon and welcome to the meeting of the Standing Senate Committee on Banking, Trade and Commerce. Today, the committee is beginning its study of Bill C-28, the Financial Literacy Leader Act. In other words, we are trying to understand how our own affairs are managed.

In December 2010, after examining the issue for 18 months, the Task Force on Financial Literacy issued its report. The first of its 30 recommendations was the appointment of a financial literacy leader.

In that recommendation, the task force suggests that the Government of Canada appoint an individual, directly accountable to the Minister of Finance, to serve as dedicated national leader. This financial literacy leader should have the mandate to work with stakeholders to oversee the national strategy, implement the recommendations and champion financial literacy on behalf of all Canadians, as well as, I suppose, the report in question.

The bill will implement this first recommendation. Today, we will have two one-hour sessions. During the first hour, we will hear from Mr. Menzies, Minister of State for Finance, and Ursula Menke, Commissioner of the Financial Consumer Agency of Canada. Ms. Menke was appointed commissioner in December 2007 for a five-year term, and in December 2012, she was reappointed for another six months. I would have liked to say six years. They are joined by Jeremy Rudin, Assistant Deputy Minister at the Department of Finance.

You have the floor, Mr. Minister.


Hon. Ted Menzies, P.C., M.P., Minister of State (Finance): Thank you for introducing the other two witnesses who are here with me today. I appreciate this opportunity to meet with you and the members of this committee to speak to Bill C-28.

The legislation proposes to amend the Financial Consumer Agency of Canada Act to provide the framework for the appointment by the Governor-in-Council of a financial literacy leader, which you already referred to, whose main priority will be to collaborate with stakeholders on initiatives designed to improve the financial literacy of Canadians.

The financial literacy leader will be dedicated to ensuring that Canadians across the country have the financial knowledge and skills they need to save, pay their bills and invest in their future.

The true costs of uninformed decisions, as we all know, can be substantial. This is true for young Canadians who face increasingly complicated decisions when it comes to applying for a credit card, buying their first car or figuring out how they are going to pay for their schooling.

It is also true for seniors, who must deal with a range of financial products that have expanded greatly and become more and more complex. It is just as true for middle-aged Canadians who are saving for their retirement.

The ever-changing world we live in makes it difficult for most Canadians, in fact, to understand fully the risks or the fees involved in products like savings accounts, loans and mortgages.

Our government has long recognized that strong financial literacy is not a luxury; in fact, it is a necessity. For the benefit of Canadian families and our overall economy, we make it a priority.

With the help of the Financial Consumer Agency of Canada, we have moved forward with a range of effective consumer measures. Among these were our recently announced proposed regulations dealing with network-branded prepaid cards issued by federally regulated financial institutions. We want to be sure Canadians fully understand what fees and conditions apply to network-branded prepaid cards so they can continue making informed financial decisions in their day-to-day lives.

For example, some fees associated with these network-branded prepaid cards are actually not made very clear to consumers. Our regulations would require that fees be disclosed to consumers in an information box displayed prominently on the exterior packaging and that other consumer-oriented information be provided prior to purchase in a manner that is clear, easy to understand and not misleading.

Once in force, the FCAC will be responsible for monitoring compliance, as they are for a range of other measures that make up the consumer protection framework, such as the requirement for a 21-day interest-free grace period for credit cards, and banning the unsolicited distribution of credit card cheques by federally regulated financial institutions.

Through the FCAC, our government is helping consumers make better and more informed choices, for example, through their existing financial literacy initiatives and tools for budgeting, calculating mortgage payments and selecting the right credit card.

The appointment of a financial literacy leader will only strengthen these efforts and build on the good work already achieved by FCAC and all the folks that Ms. Menke works with. This will increase financial knowledge for many Canadians. By both educating the consumer and ensuring financial institutions comply with federal regulations, they help contribute to a stronger and more effective financial system for everyone.

To conclude, I strongly believe that the measures in Bill C-28 and the appointment of a financial literacy leader will greatly benefit the people of Canada by adding to the competitiveness and the stability of our financial system. I would therefore encourage all honourable senators to support the principles of this bill and join the government in our ongoing efforts to create a more knowledgeable economy.

Thank you very much. I would welcome your questions.

The Deputy Chair: Before I go to questions, maybe I could clarify one thing. I see that the person receives instructions from the commissioner and reports to the minister directly, and what the role of the deputy minister is. What is the level of that job in the public administration?

Mr. Menzies: Within the FCAC, we see it as a fairly superior role, but certainly not at the deputy level. Perhaps Mr. Rudin, who has dealt more with the actual structure, can give us a structural chart of where this person would actually be placed.

Jeremy Rudin, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance Canada: I would be happy to. Formally, the position has not been classified. Parliament needs to pass the bill and create the Governor-in- Council position, and then there is a process for slotting them in.

Mr. Menzies: Him or her.

Mr. Rudin: Slotting the position.

Mr. Menzies: I thought you said ``him.''

Mr. Rudin: I meant to say ``the position.'' That said, the commissioner will remain the deputy head of the FCAC, and the financial literacy leader will have a very senior position.

The Deputy Chair: What is the level in your language of public administration? Is it EX or lower? It is important for us to know how broad the mandate is and how much power that person will enjoy.

Mr. Rudin: The responsibilities and authorities, to the extent there are any, of the financial literacy leader will be established by Parliament, and are set out in the act. The classification will be inspired by that. That said, this is not part of the Department of Finance and so it does not correspond to the public service rank, such as the position I hold, but rather the various Governor-in-Council appointees, of which there are a wide variety.

The Deputy Chair: It will be decided by the commissioner?

Mr. Rudin: No. At the end of the day, the Governor-in-Council gets to decide not only who the person is, but how the position is classified and what the resulting remuneration will be. That said, we would expect, based on the description of duties in the act, that the commissioner will remain the deputy head, but this will be a very senior position within the FCAC.

The Deputy Chair: You understand, minister, that for us it is an important position and that person has a broad mandate. Obviously, for me, they should be bilingual, because they have to relate with the ministers across the country. We have to start early if we talk about literacy, to ensure that that person enjoys not only your support but, at the same time, has a level that will command the possibility of having an assistant and working with all the stakeholders in that matter.

Mr. Menzies: If I may, we have had such a good working relationship with the Financial Consumer Agency of Canada. They have done a great job. We look at this as the perfect spot to house that person. They have worked so well in getting this message out. This person will be a coordinator all across the country, working with groups that you will be hearing from, with not-for-profits all across the country, working with the provinces, and the financial institutions certainly will play a very important role.

Senator Harb: Years ago when I was in the House of Commons, the Canadian Bankers Association played big lead role in financial literacy. They used to go to schools and continue to do so, I believe. A number of committees have recommended that we do more financial literacy. I presume this is along those lines, that this is in response to the task force, as well as in response to the parliamentary committees that have called on the government to do that.

Mr. Menzies: Yes, you are right, Senator Harb. There have been many recommendations, and unfortunately it has taken a lot of time to get this done. It is the final task force that actually spelled out what we should do. This is number one. I think, then, the leader will actually be able to unfold the rest of the recommendations and make them fit.

I met with the Canadian Bankers Association specifically to find out what they are doing, and it is actually amazing how much they are doing. As you say, they go into the classrooms, communities, into seniors' facilities as well. They face the challenge of being accused of having other interests in promoting financial literacy.

My argument to that is this: The more customers they have who are informed, the easier it is for them to explain the different options and then provide the options to those people. People ask better questions of the financial institutions. They know what to ask and they know what to demand too, if you will. It is to their benefit, but it is difficult for them to be out promoting it publicly. Certainly Ms. Menke's team is in a better situation to be able to promote that.

Senator Harb: Would it be fair to say that the job description of this position will be developed at some point in time using data consultation and stakeholder participation to determine exactly how this position will be complementary to what has already taken place so as to not work on a parallel track?

Mr. Menzies: Exactly. You have got it. We have many not-for-profit groups, and I believe you have some of them coming to speak to you. It is actually amazing. Junior Achievement has done an incredible job of taking business leaders on their own time and gone into schools to teach financial literacy, but we do not have a coordinated effort. We are not coordinating what the financial institutions are doing and some of the not-for-profits are doing. We are not coordinating what is happening with the First Nations as well as with new Canadians. The beauty of this position is this person will be able to coordinate that all together and make a far more effective message.

Senator Harb: How fast would this position come into play once the bill has gone through the Senate?

Mr. Menzies: You just reminded us that you sat in the House of Commons for quite some time. I think you know how slow things move. I would like to see it much quicker, but I cannot give you a time when this will happen. The sooner the better, as far as I am concerned.

Senator Tkachuk: The literacy leader will be someone from the government here to help you. Is that what this is all about?

Mr. Menzies: Let us hope not.

Senator Tkachuk: I want to get back to the chair's questions. Who will this person be responsible to?

Mr. Menzies: I guess it would be to the Commissioner of the FCAC who reports back to the Minister of Finance. That has been Ms. Menke's role.

Senator Tkachuk: The position will be responsible to you, Ms. Menke? Is that the way it will work?

Ursula Menke, Commissioner, Financial Consumer Agency of Canada: The draft bill as worded right now says ``under the direction of the commissioner,'' so I guess that means that the leader will be reporting through me.

Senator Tkachuk: They may be reporting to you, but does that mean responsible to you? In other words, will they take direction from you?

Ms. Menke: Yes, that is what the bill says right now.

Senator Massicotte: If that is the case, why is there a need for legislation? Why not just hire this person?

Do you want to hold a caucus meeting to get the answer?

Mr. Rudin: The bill establishes this as a Governor-in-Council position, and this, in the government's view, is appropriate for the profile and importance of the position. It is important that this person be named by the Governor- in-Council on the recommendation of the minister so that they are seen as a representative of the government as a whole, that they can then be paid the remuneration appropriate for the position, and that this will make it more likely that we can attract a suitable candidate who can exercise leadership on a national basis.

As we were just discussing, although the leader functions under the direction of the commissioner, the legislation also provides that the Minister of Finance may issue written directions specifically to the financial literacy leader in connection with his or her responsibilities.

Senator Massicotte: Short answer: PR, image making? That is what you said. It does not change if one reports to this person. It looks better. You are able to hire the right person and it gives it more attention. The bottom line is that when they come to the office in the morning, they report to the commissioner.

Mr. Rudin: I would say there are a number of organizations for which the Governor-in-Council appoints more than just the top person but also appoints some of the senior executives. There is nothing exceptional about it. It is a government judgment as to whether the decision should rest with the person appointed by the Governor-in-Council to lead the position or whether the Governor-in-Council should exercise that responsibility.

The Deputy Chair: Where do we have other examples like that?

Mr. Rudin: With one technical footnote that I will come back to, both the Governor and Senior Deputy Governor of the Bank of Canada are appointed with the approval of the Governor-in-Council. That is one example. Similarly, the Superintendent of Financial Institutions and, if I am not mistaken, the Deputy Superintendent of Financial Institutions are appointed by the Governor-in-Council. The superintendent can appoint, in this case, her assistants directly, but the deputy superintendent, if there is one, is a Governor-in-Council appointee — at least I am pretty sure it is. If I am wrong, I will correct myself at the break.

The Deputy Chair: Who will do the recruitment?

Mr. Rudin: The process is coordinated through the Privy Council Office because at the end of the day the Governor- in-Council will make the appointment. The Privy Council, which serves the cabinet, takes charge of the administration of the appointment process.

The Deputy Chair: For those watching on television, it is the Prime Minister's Office who will appoint that person.

Mr. Rudin: It is the Governor-in-Council on the recommendation of the Minister of Finance.

The Deputy Chair: The ordinary person at home does not necessarily know what the Governor-in-Council means, and in this case it means the appointment comes from the Prime Minister's Office.

Senator Tkachuk: My next topic is the research you talked about that brought this position to the fore or this question of literacy to the fore. Maybe you can talk a little bit about that. I do not know who of the three of you should talk about it.

I would like to know what you found in the research. Was there any difference in knowledge about basic financial matters as far as demographic groups or educational groups? How much of this is the responsibility of the school system? Are university students any more knowledgeable than high school students? Why are these people so ignorant?

Mr. Menzies: Many fingers could be pointed. As parents, I would suggest we are all a little guilty of not taking enough time to educate our children about financial literacy.

Senator Tkachuk: It is easier just to give them money.

Mr. Menzies: As I say, we are all a little guilty, myself included. It is very interesting.

I would encourage you to look at the report, because they travelled all across the country and spoke to all sorts of groups — school groups and people in the financial advisory field — who gave them some pretty good recommendations. It is very interesting to see some of the dynamics.

Let me give you one example. At one of the events — and I believe Ms. Menke was there; I forget exactly which one it was — I met a bright young university graduate. She came here from South Korea to go to university and graduated at the top of her class. The first thing she needed was a credit card to do anything, so she got one. No one told her that she should pay more than just the basic minimum payment. No one provided that information to her when she got the card, so she paid her basic minimum payment. She could not understand why all this money was adding up. No one told her, even the credit card provider.

Senator Ringuette: The credit card requires that specifically in the statement.

Mr. Menzies: I am sure that was before the code of conduct. You have a lot of help here, senator. I am using that as an example. We are trying to offset those challenges — seniors dealing with these new ways of paying bills and the lack of understanding for how they pay their bills; and the responsibilities that come along with a debit and credit card. We have all seen children go in and buy a small item from a confectionary with a debit card. They have no clue that there is actually a money exchange at the end of that.

We have not done a good job of educating. Good work is being done by a number of these organizations in schools. Some provinces, such as British Columbia and Manitoba, are mandating it in their curriculum but not all provinces and not on a uniform basis. Ontario is bringing it in. They are at different levels in that some are bringing it into high schools, some are recommending it for the lower grades and some are recommending that it be in college courses as well because we have missed a generation or two. There are all sorts of opportunities to insert this and help seniors and, as I mentioned, First Nations. There is a real challenge to getting that financial education to First Nations in dealing with money.

Senator Tkachuk: Is it not appalling that we spend all this money on education for kids in kindergarten to grade 12, and we have universities, technical schools and all these business leaders out there, but students do not know the difference between 5 per cent and 18 per cent and that money is earned and money is spent? Basically, it is adding and subtracting — it is not that complicated. You should be able to apply for a mortgage when you finish school, one would think. There should be some responsibility there. Here we have the government hiring a person to coordinate financial literacy. It shows the failure of the system dramatically. Maybe we have failed.

Mr. Menzies: I could not agree with you more.

Senator Tkachuk: We may have failed, but we cannot let it continue or soon we will need a whole department for this.

Mr. Menzies: The financial literacy leader will be able to coordinate that. I am sure that the educators in the provinces will pull their hair out and ask, ``When will we be able to fit this into the curriculum?'' They do not fit it in because the demands to fit everything into their curriculum are immense. However, the financial literacy leader could work with the local and provincial school boards along with the educators to get this into the curriculum.

I had a discussion with a professor from the University of Purdue whose recommendation was to start educating children at the age of four. He said that if you have not taught them financial literacy, or in his words ``economic literacy,'' by the time they are 12 years old, you have lost them. Certainly, there is a need.

Senator Moore: I was a bit confused. Minister, did you say that the FLL is to report to the Minister of Finance? I made a note of it here.

Mr. Menzies: No; forgive me if I said that.

Senator Moore: He will report to the commissioner.

Mr. Menzies: Yes, and the commissioner reports to the minister.

Senator Moore: If the Minister of Finance asked a specific chore of the financial literacy leader, then the financial leader would go back to the Minister of Finance; or would he go through the commissioner?

Mr. Menzies: I think he would follow that generally. That would be my understanding.

Senator Moore: Part of this provides that the commissioner could impose an assessment on any financial institution in order to cover some or all of the expenses associated with initiatives designed to strengthen the financial literacy of Canadians. I would assume that means a financial institution would not be doing what it should be doing and, therefore, if the commissioner says you should be doing X, we will do it for you, I guess, and charge you so many dollars because you are not doing what we think should be done. Is that how this will work?

Mr. Rudin: If I may, the Financial Consumer Agency of Canada is funded principally through assessments on the financial institutions. These are not fines or punishments but, rather, to pay for the costs of administering the Financial Consumer Agency of Canada Act in the same way that the Office of the Superintendent is principally funded through assessments on the financial institutions.

The existing FCACA, before these amendments are passed, provides that the Minister of Finance can make payments from the Consolidated Revenue Fund to the Financial Consumer Agency of Canada in support of financial literacy activities of the agency as it exists. This bill proposes to expand, to some extent, the activities and objectives of the Financial Consumer Agency of Canada. It makes it clear that the commissioner can levy an assessment on the financial institutions in order to pay for those activities as well.

Senator Moore: Currently, who funds the FCAC, which receives $2 million a year? Is that right?

Mr. Rudin: Yes. It is from the Consolidated Revenue Fund.

Senator Moore: Are there more monies than that going into that budget? What is the budget for that office?

Mr. Rudin: The government's plan is to fund an additional $3 million a year from the Consolidated Revenue Fund in support of financial literacy activities. The commissioner will have the legislative ability, although not the necessity, to recommend to the minister that an additional assessment be placed on financial institutions to augment those funds. However, that authority may or may not be exercised.

Senator Moore: Ms. Menke, what is the current total budget per year of the FCAC?

Ms. Menke: The total budget, including $2 million received annually from the Consolidated Revenue Fund, is approximately $13.5 million.

Senator Moore: How large is your staff?

Ms. Menke: About 65.

Senator Moore: As well, you will have another person, the financial literacy leader. Will he or she need support staff or will support be provided by the existing staff?

Ms. Menke: There will be additional staff. Significant additional responsibilities will be carried out by the financial literacy leader, which are not being done now.

Senator Moore: How many staff will be added?

Ms. Menke: We anticipate initially about five or six people.

Senator Moore: You have $13.5 million and you need another $3 million. That totals $16.5 million. Will that be it or will there be another demand on the Consolidated Revenue Fund for additional monies?

Ms. Menke: That will be it — that is the budget.

Senator Moore: Who does what? I will use an example.

A while ago, mortgages were extended to a 40-year amortization period, with no down payment and no equity and with low interest rates. People were grabbing the money. If interest rates go up, we will have serious problems. The ensuing two years after that 2006 budget, 50 per cent of the mortgages taken out were of the 40-year-amortization variety. I do not think I heard anyone speak out to caution consumers about potential issues and financial problems if the interest rates went up and what they could be in for with a 40-year commitment. I do not think I heard anyone speak out about the amount of one's annual income required to service debt. I believe that it is 165 per cent of household income. I have heard the Governor of the Bank of Canada speak out about it but I have not heard your office, commissioner, or anyone else speak about it. Is it your function to caution consumers? I thought your function would be to caution consumers. Whose job is it to do that? I did not hear anyone do that. It sounds like this new person will be more of a coordinator of the stuff that is out there now, but I never heard anyone caution consumers about that situation besides the Governor of the Bank of Canada.

Mr. Menzies: I will start on that and then I will let Ms. Menke continue.

I think we have all been concerned about that. It is a matter of debate as to when people first started listening to those cautionary statements. People who wanted 35-year or 30-year mortgages understood what they were taking on. CMHC just took it upon itself to offer 40 years. It was never mandated or regulated to do that.

Senator Ringuette: No, no.

Mr. Menzies: We chose to reduce that.

Senator Ringuette: It was not an omnibus budget.

Mr. Menzies: If I can continue answering the question, I would appreciate that.

Senator Moore: I know that you did improve it.

Mr. Menzies: Yes, we have. With that, Minister Flaherty has been very vocal about cautioning people. It is a blunt statement, but interest rates only have one way to go and that is up. I think he has articulated that.

Ms. Menke can explain their role at FCAC. I personally do not see that as their role. I think it is more a legislator's role to caution people. The Governor of the Bank of Canada is in a good position to caution people about that. The FCAC does a lot of consumer advocacy and reaching out to consumers, I would suggest more so than wagging your finger at them, if I can put it that way.

Ms. Menke: Well, we do not wag our fingers very much.

I think it has been wonderful that the Governor of the Bank of Canada, the minister and other politicians have been raising the issue of indebtedness because it is a significant issue of concern, and it has been a concern for the agency for some time. We work not quite so publicly; we work behind the scenes with a lot of agencies. We have a website where we talk about some of these issues. We have a variety of debt management tools to help consumers do what is best for them. We have budgeting tools. We have a terrific interactive budgeting tool that we introduced a couple of years ago that is very popular with people. We have a variety of debt management tools. We encourage people to ensure that they know what their situation is and to plan.

Senator Moore: Before you get into debt management, we want them to know whether or not they can handle it.

Ms. Menke: We came out with a tip sheet because of this. It is on a more subjective level, trying to get people to understand the issue of debt from a more emotional level than a strictly numeric level. For a lot of people, the numbers do not touch them. We want to try and get people to look at their debt situation precisely because the concern is that there is only one way interest rates can go, which is up, and to prepare now for that eventuality. We have done quite a bit around that. We have used that tip sheet with a variety of agencies to spread the word on trying to ensure that people manage their money.

Senator Moore: Do you do that with the banks and the other mortgage issuers or funders?

Ms. Menke: The banks tend to do their own thing. They work in their own directions for their own purposes. We work with credit counselling organizations and local community organizations that have an interest and are offering information and courses to people. That is where we tend to work to a much greater extent. Our issue is always getting at people. The problem with adults is that unless they are interested in the subject, they are not likely to pay a lot of attention. We focus on where adults go to look for help themselves.

Senator Moore: One of the things creating the most anxiety is probably financial pressure. Whatever you or the new financial leader can do would be helpful. We have seen it in students who have come before this committee in the past. It is a thing that leads to health issues and family breakups. I do not need to tell you this, but it is needed.


The Deputy Chair: Might we hope that, when filling the five or six new positions in your organization, you will give priority to people whose jobs have been cut in the government.

Ms. Menke: Absolutely. As long as they have the necessary qualifications, they will definitely be given priority.

Senator Bellemare: Some of my questions have been answered in response to Senator Moore's inquiries. I would like to know how the results achieved in terms of financial literacy can be measured. Have you considered that to determine whether the new position will have results? In the case of digital literacy or calculations, some tests can be done, but the context is different here. We still want to reach out to young people. So how do you intend to measure the results achieved in terms of financial literacy?

Ms. Menke: That is a good question, as this is a fairly complex area. We are currently doing research to determine the effectiveness of our courses and the overall effectiveness of courses on financial literacy, to see whether we can show effective results. The results I am talking about are not the kind that can be measured through a test — where people can show they have learned A, B, C, D. I am really talking about results in terms of subsequent behaviour.

So the process is fairly difficult. We are actually now trying to measure that. A number of other organizations have tried similar tests in the past. It is not an easy process. We have previously had some results to show that an education in financial literacy does in fact have a positive result — although it may not be as positive as we would like. That is why we continue to develop courses in order to achieve better results. However, we are testing to determine whether long-term results are involved.

Senator Bellemare: Will you use the sporadic investigation system to try to gauge whether a specific activity in a given region, sector or school has had an impact in the medium term?

Ms. Menke: Yes. We are currently gathering the required data for each group, so that we can gauge the before and after. So all the courses are provided in a specific region. We test the target group to see whether progress is being made.

Senator Ringuette: Ms. Menke, over the past four years, you have appeared either before this committee or the Standing Senate Committee on National Finance, and we have noted that training and information in financial literacy are among your priorities.

I have some serious doubts. You have told us many times that you were doing an excellent job under your current mandate, even though cuts have been made to your budget over the past three years. All of a sudden, a financial literacy leader is needed, along with five or six new support positions. It makes you wonder. That will require an additional $3 million from the government. I am wondering whether we are not jumping from pillar to post, both when it comes to your mandate and how it has been carried out, and when it comes to the success of your objective. You have confirmed that many times for us.

You said that you were able to fulfill your mandate and do an excellent job of it despite the cuts to your budget. And here we have before us today a bill that calls for creating a position appointed by the Prime Minister, with unknown conditions and salaries, and an additional support staff of five or six people. And all that to fulfill the mandate you had previously told us you were carrying out remarkably well.

Serious doubt is being cast on the past statements made before this committee. We should also ask ourselves some serious questions regarding the bill, its objectives and the staff. We are told about the task force's report, and yes, we need to provide information and additional education on all the financial rackets Canadian consumers are facing.

Basically, Ms. Menke, my question is how Canadians can now accept that, all these years, you have been saying that —


— you were on top of the issue and were doing a fantastic job and had enough employees even though your budget had been cut for the last three years. Now all of a sudden you need probably seven more people and a new position appointed by the Prime Minister.

Ms. Menke: Perhaps I could start with a small correction. My budget was never cut over the last period of time. That is one thing. Remember that financial literacy is a relatively new thing, a relatively new preoccupation — occupation, preoccupation — for the agency. Over a period of time we have gone through stages as we have developed along the spectrum of financial literacy.

In the first stage, which roughly corresponded with the first five years of my mandate and a little bit with the previous mandate as well, we were focused on financial literacy for youth and we did what we felt was the biggest need. We did a lot of research and examined what was the greatest need at that point in time. We felt the greatest need was actual tools for the school system because at that point in time we were focused on youth. The greatest need was tools for teachers to be able to teach financial literacy to young people, and we spent a lot of time developing tools.

We started with THE CiTY, which is a resource for 15- to 18-year-olds to be taught in the schools, and we promoted that one extensively throughout the school systems. I am happy to report that all across Canada the tool is being used in every province in Canada, both electronically and, more importantly, more so on paper. It was launched in 2008 and has become a very popular tool, highly praised by the people who use it. We have trained roughly 8,000 teachers throughout the country who use that tool.

The next tool we developed was called Financial Basics, a slightly different tool geared at a slightly different audience. It was geared to a post-secondary audience because we felt that there was a gap because there had not been that much done in the school system and many young people still had no training. We developed a five- to six-hour seminar on the basics of financial literacy, including things like budgeting, debt management, saving, investing and fraud. It is very popular, particularly at the post-secondary level. It is also very popular with community groups because they find it is a relatively compact thing to develop.

The third tool we developed is more of a resource tool than a teaching tool, but it can be used as a teaching tool as well. It is kind of what every Canadian adult should know in order to consider themselves reasonably financially literate. It was launched just this fall by Minister Menzies. Since the launch, we have had almost 30,000 people on our website looking at it. We are very pleased. We had no direct advertising of that and already have had 30,000 hits on that particular tool. Things are going well.

That was the first phase in the development of the financial literacy program as we saw it. We developed tools that were needed throughout the country.

The second stage is reflected in this bill where now tools are not as necessary anymore. The basic tools are in place. Now we need a lot more base time, awareness building, and coordinating and developing collaboration. That is the thing we have not been able to do in as organized a fashion as I would have liked. That is what this is all about. We will get a financial literacy leader who will really go out and promote financial literacy across the country in various places and also develop the collaboration.

There is an awful lot of work going on. Many community groups need materials, and many community groups have produced materials. It is a question of getting everyone together and getting people to know about that. That is the next step.

One of the foundation elements of the next phase of financial literacy is building a repository, if you will, on the Internet of all the tools that are available, who they are aimed at and what they are for. We have started to undertake this work with a view to helping the financial literacy leader do the work that is expected of him or her through this bill.

Senator Ringuette: Of the 65 staff you currently have, how many are dedicated to the function of developing the phase 1 tools that you indicated?

Ms. Menke: I cannot be exact, but it would be less than 10.

Senator Ringuette: What will they be doing?

Ms. Menke: They will be moving over into these functions. There will still be maintenance. These tools need to be maintained, so there will still be lots of work on that. However, some of them will be moving over and helping the leader with the new functions as well.

Senator Ringuette: We are talking about 10 support staff, plus another 5 or 6 additional support staff and the new leader. Are we looking at 17 people?

Ms. Menke: Yes.

Senator Ringuette: Do you think we will have better results?

Ms. Menke: It is a slow, steady progress. These things do not happen overnight. An awful lot of people have to learn, but there is progress. We can see it. It is not in leaps and bounds, but there is progress. Yes, I am confident that there will be more progress.

Senator Ringuette: For this new leader, plus the support staff, how much of their budget will come from the financial sector?

Ms. Menke: It is all from the Consolidated Revenue Fund.

Senator Ringuette: Out of your operating budget, you are getting $11.5 million from the financial sector.

Ms. Menke: Yes.

Senator Ringuette: Why is this not included in the proportional operation expense?

Ms. Menke: Financial literacy is all funded through the CRF. There is other work on consumer education that is also funded by the financial institutions, but that is more traditional work; that is more information. It is more specific work. It is not the programs. The programs were all developed.

Senator Ringuette: Contrary to your current mode of operation with regard to funding, which this year is $2 million from the Consolidated Revenue Fund and $11.5 million from the financial institutions, will you not get one penny's worth of all the financial institution credit card companies with regard to financial literacy for these new positions? Not a penny?

Ms. Menke: No.

Mr. Menzies: There was $3 million set aside in the budget. I think one thing you are perhaps missing is that the financial institutions are contributing on a very large scale at the present time. We are not expecting that to stop. There is a tremendous amount of money from those organizations. The not-for-profits are continually raising money to help with this effort. There is no reason that they will zero their budgets just because we have a leader. This leader will coordinate and help direct the funding to perhaps make it more effective. For example, one bank provides programs — $25,000 grants and up to $100,000 grants — for educational programs in schools. That is not going to stop. This is not the only fund.

Senator Ringuette: We are talking about Ms. Menke and the agency budget —

Mr. Menzies: I am talking about financial literacy writ large.

Senator Ringuette: — and the new positions and financial requirements that will differ from the current financial structure from the agency.

The Deputy Chair: Mr. Minister, I know you have to leave at 4:15 p.m. You understand that we have left the Senate with permission.

Mr. Menzies: Thank you very much.

The Deputy Chair: The Senate was still sitting when we left for this meeting. We appreciate that you were able to come.


Senator Maltais: If everyone keeps saying they have one last question, when will we get the opportunity to ask our questions?

The Deputy Chair: We have another hour left.

Senator Maltais: Oh, all right. That is fine.


The Deputy Chair: For instance, I am giving a funny example, but if we were getting credit cards through cereal boxes — which I sometimes say is almost done right now — would you issue a directive to this new person saying you have to campaign against that? Leaving the private sector and the market forces to go on, but making sure that if there is an initiative on the part of the financial institution that would be creating a big problem — I am not talking about the interest rate or the length of time for mortgage repayment — when would you expect to intervene?

Mr. Menzies: Not the financial literacy leader, I do not think. I do not see that as their role. Their role is helping educate people as to this credit card from a box of Cracker Jacks, the responsibilities and the challenges that may come along with accepting that card, the cost to the individual. The financial literacy leader's role is to help educate people, through whatever means, and to help with the education systems in each province to look closely at that credit card that may come out of a Cracker Jack box and not choose that as their credit card of choice.

The Deputy Chair: If they were to do the perfect job, you will never intervene. However, since you are given the power to give some instruction to that person in the law, I am asking you: Under what circumstances will you intervene?

Mr. Menzies: I guess if we found that we were getting credit cards from Cracker Jack boxes, I would think the Minister of Finance might say to the financial literacy leader, through the commissioner: Perhaps you should share with Canadians that this may not be their best choice. That is the way I would look at it.

The Deputy Chair: That is what I was expecting from you. Thank you for appearing.


We are continuing our meeting. Joining us is a new witness from the Department of Finance. We have Eleanor Ryan, Senior Chief, Financial Institutions Framework Policy, Financial Institutions Division. Welcome to our committee.

Senator Maltais will be the first to ask questions, followed by Senator Massicotte.

Senator Maltais: Thank you, Madam Chair. Mr. Rudin, I will not discuss the curtains, chairs or the colour of the carpet in the new leader's office, as that does not interest me.

In Canada and all of our provinces, we are faced with a new global factor, which is information. Information spreads incredibly quickly.

That factor affects two types of individuals: young people, who produce information instantly, and older people, who do not understand anything about it. Major financial institutions are increasingly likely to use new electronic tools. Those older people, who did not grow up with iPads or iPods, have a very hard time understanding the information they receive from financial institutions. They do not even understand the importance of having an ATM card because they have their bank book.

They have not adapted to this new way of doing things, and they need protection. They do not understand why they have to change, as they would normally use their bank book. They have not yet made the transition. They need protection and they need financial institutions to adopt a positive and facilitating attitude. The law tends to emphasize that issue.

It is well and good to raise young peoples' awareness, but financial institutions have a duty to inform. When a credit card is issued to a young person, if they are not careful enough to check the small print, they will be in trouble.

Would it be possible to put the small print in front so that young people can be aware? Parents often end up paying their child's bill.

Financial institutions have a responsibility. I have nothing against credit cards being issued to everyone, even to a dog, as long as someone is responsible and knows that they will eventually have to pay back the money.

That is a major shortcoming. I spoke in the House about that, and I was very clear regarding the law. I am in favour of the law. I will not spend any time on staff and related issues. I am more interested in effectiveness on the ground.

Visiting educational institutions has been discussed. I agree with that and I commend that suggestion, as I think those people should be well-informed. But when it comes to seniors, could not seniors federations in all provinces be used to spread the word, to inform seniors of financial institutions' attitudes?

Another issue is the fact that financial institutions are harassing seniors over the telephone. If you are 80 years old and have RRSPs in a bank, everyone is calling you with the best investments on earth. Seniors may see less of a difference between those investments and may allow themselves to be tempted by misleading statements and end up in trouble. Is there any aspect of the law that could provide them with some protection?

Mr. Rudin: Those are excellent questions. I have two or three things to say. The government's policy on consumer protection in the financial services industry is based on three principles. The first is clear and comprehensible disclosure. In recent years, the government has focused its efforts on improving disclosure and promoting disclosure that is not only clear but, as you say, comprehensible, especially when it comes to credit cards. That helps consumers understand the implications of having a credit card before they even have one. There is now a requirement to provide a very clear summary in a box on the first page and to avoid the use of small print in foot notes.

Another principle is to encourage competition in the financial sector, but also to promote a third principle on financial literacy. As you were saying, comprehensible disclosure is one thing, but if users lack basic knowledge and experience, the disclosure is much less effective than it could be. That is one of the reasons why the government has adopted this new policy to encourage education in financial literacy and create the position of leader to promote and coordinate those efforts.

That work will not be accomplished in one day or one year; it will take time. The government expects the leader to look into issues regarding target groups. In addition, part of the leader's mandate is supposed to focus on seniors, who have their own needs. The government conducted a survey in 2009 on Canadian financial capability, and the results regarding seniors' groups and needs are slightly different from others. We expected that, but it has been confirmed by those results. So that is what I have to say about financial literacy and disclosure.

As for the harassment, the federal government's ability to respond is somewhat dependent on who is on the other end of the line.

Senator Maltais: I apologize for interrupting you, but I want to be very specific when it comes to harassment. I want to give you some examples. Let us consider a 75-year-old couple who are selling their house. They receive a certain amount of money and move into a smaller apartment to have a better quality of life.

In three months, those people will have been harassed by pretty much everyone involved in financial institutions in Canada. The calls come even from as far as India, at 6 p.m. and 8 p.m. It is awful. I have experienced it.

Those people have sold their property and invested their money in their financial institution, and they no longer know what to do. They are worried they have made the wrong choice, and they do not know what to do. The best snake oil salesman strikes the deal.

Information disclosure must be protected. I do not know whether that can be included in this bill, but we should at least provide information, so that our seniors can be safer. They need protection. They are being harassed.

Senator Massicotte: Why even answer the telephone?

Senator Maltais: When the telephone rings, you answer it, otherwise why even have one? That is like having a dog. If the dog does not bark, you better get rid of it.

If you are over 75 years of age, you will see what happens between 6 p.m. and 8 p.m. Have financial institutions that are not governed by the federal legislation on banking objected to Bill C-28, or will they take the plunge like the institutions that are covered by that legislation?

Mr. Rudin: Regarding the first question, I will have to obtain that information. It all depends on the activity. If fraud is involved, it comes under federal jurisdiction because we would be talking about a criminal offence. If we are talking about how federally regulated institutions are behaving, it may be one thing, if we are talking about other institutions, it may be something else. I will have to obtain that information.

As for the financial institutions that are not under federal jurisdiction, they are not at all opposed to the ideas of the federal government regarding financial literacy, and mutual interest must be recognized.

Senator Maltais: Thank you.

Senator Massicotte: Thank you for joining us today. I am wondering why legislation is needed for this position. At the very least, it provides us with the opportunity to understand the importance of financial education for Canadians. That is crucial. All your efforts are appreciated, as this is an essential need.

Are there any people who are against the bill? Are there any people who have a valid reason to disagree with this piece of legislation being approved?

Mr. Rudin: No one is opposed to the bill.

Senator Massicotte: The legislation will give this office the authority to assess financial institutions regarding any initiative the office wants to implement. Is no one concerned that the $2 million may become $20 million or $40 million? That is very high. The office could do anything without parliamentary or government authority and impose on financial institutions any programs it feels are warranted, no? What kind of authority is involved? What is the scope of that authority?

Ms. Menke: I want to begin by saying that the $3-million amount represents a 150 per cent increase in the financial literacy budget. That is already a great deal of money for a small organization like ours to manage. We do not plan on exceeding that amount.

That being said, we are nevertheless subject to rules, even though we can make assessments. I still have to receive the minister's approval to increase the budget. And these days, the minister is not very generous.

Senator Ringuette: Are you saying that you will have a 150 per cent increase in the financial literacy budget?

Ms. Menke: The increase is from $2 million to $5 million.

Senator Ringuette: That is not your only responsibility in the agency. You have 65 employees. Earlier, you said that ten of them were assigned to financial literacy. The 150 per cent increase does not cover only financial literacy.

Ms. Menke: I think that going from two to five represents a 150 per cent increase.

Senator Ringuette: Yes, but for all of your agency responsibilities. Over the past two years, you have been responsible for the code of conduct for both consumers and merchants. What portion of your staff is assigned to that task? How much additional funding have you received from the government to assume those responsibilities?

Ms. Menke: We receive industry contributions for taking on those responsibilities.

Senator Ringuette: That is a conflict of interest. This, however, is not.

Senator Massicotte: Ten employees are involved in the education aspect. Following the budget increase, how many people will be involved?

Ms. Menke: At the outset, six additional employees will be required.

Senator Massicotte: So, an 80 per cent increase in staff.

Senator Rivard: I would like to know what results will be achieved by creating that position of financial literacy leader. Moody's Investors Service has downgraded the credit rating of six of Canada's biggest banks owing to consumer debt. The only bank whose rating was not downgraded was Royal Bank, but its rating had been downgraded previously. So we can say that the credit rating of seven of Canada's biggest banks has changed. How will we be able to measure that new department's results in terms of effectiveness? Do you think that, in the short or medium term, consumer debt will decrease, and banks' rating will improve as a result?

Mr. Rudin: As I said, the government has conducted a survey of Canadians regarding financial literacy. That has provided us with basic information. We can repeat the survey — I am not sure how often — to try to gauge Canadians' progress in terms of financial literacy in some specific groups.

That being said, any improvement or decline would not necessarily mean that our efforts in financial literacy caused the shift, as many other aspects are taken into consideration.

The other key aspect is to try to determine the effectiveness of specific efforts, and I will ask the commissioner to talk to you about that.

Ms. Menke: You have already been given most of the answer. Every five years, we conduct a major survey to try to measure the improvement in financial literacy among Canadians. The first survey was conducted in 2009, and the next one will be in 2014. I am not expecting any major differences in the first five years. We are really talking about a long- term project, and that should be expected because we are trying to change Canadians' behaviour.

So, as I said earlier, the coordination and awareness-raising efforts will greatly increase once we have a leader. These activities are very important, but the surveys will help us determine what kind of results we are achieving.


Senator Moore: Ms. Menke, you mentioned that the agency received $11.5 million from the financial sector. Is that banks, credit unions, mortgage companies? Where does that $11.5 million come from?

Ms. Menke: Those are federally regulated financial institutions, so banks, trust companies and insurance companies. No credit unions are federally regulated at this point.

Senator Moore: What are the blocks of money you get from banks?

Ms. Menke: I do not have a precise breakdown of that in my head, unfortunately.

Senator Moore: Can you send that into the clerk, please?

Ms. Menke: Yes.

Senator Moore: I would like to know what the breakdown is.

On another topic, in terms of your advocacy on behalf of consumers — and this is a matter that Senator Ringuette has talked about and has a bill before the Senate on — could we address the matter of the fees charged by credit card issuers to merchants, who do not seem to have any say in it? Of course they pass on those fees to consumers, whether it is cost of goods or services, so it has a direct impact on consumers. Is it part of your mandate to speak out on that issue?

Ms. Menke: The part of my mandate in relation to that issue is that a code of conduct was developed about two years ago.

Senator Moore: I remember that.

Ms. Menke: We oversee the code of conduct. We monitor the implementation of that code of conduct and we report to the minister on it. We have been quite active in doing that, but that is the extent of the mandate of the agency in regard to that subject matter.

Senator Moore: You do not speak out on behalf of consumers. You monitor the situation and you give a report to the minister. Have you done so in this situation where recently the credit card companies have talked about the fees to be charged to merchants? Merchants have been told they will receive increased fees. They have no input in that but, of course, will pass that down to the consumers. Have you done something on that? Have you reported that to the minister and looked for some action on that, further to the code? That recent activity by those issuers I do not think is consistent with the code that the minister envisioned. Do you see change in that approach, maybe legislation? The minister was very hopeful when he came and told us about that, but I do not think he is getting the cooperation he was looking for.

Mr. Rudin: As we were discussing and as you mentioned, senator, the code has been adopted, and it is the responsibility of the commissioner and her organization to monitor adherence to the code. If there are any issues as to whether the parties who have adopted the code are abiding by it or if this question needs to be adjudicated in some way — is it inside or outside of the code? — that is the responsibility of the FCAC.

In terms of the evolution of the code, the government is currently consulting stakeholders —

Senator Moore: Are you saying, Mr. Rudin, that the FCAC has officially reported to the minister that this is happening and that we should be taking a look at it? Has that happened in this instance?

Mr. Rudin: In the instance of?

Senator Moore: I do not know why you are answering and the commissioner is not, by the way.

Mr. Rudin: Well, I was talking about the government's position about the code and the division of responsibilities.

You are asking a specific question: Has the commissioner ever made a report to the minister on adherence of the code? You are right. I will let the commissioner answer.

Ms. Menke: I have made several reports to the minister on adherence, on issues relating to the code.

Senator Moore: This would be one of the issues covered?

Ms. Menke: This specific issue has not been covered at this point, no.

Senator Moore: It has not been?

Ms. Menke: Not at this point in time.

Senator Moore: Is it a matter of the code being revised? That is an important, universal thing here.

Ms. Menke: The code already addresses this very issue that you are referring to.

Senator Moore: It does?

Ms. Menke: It absolutely does.

Senator Moore: But you say that it has not been acted on or that you have not reported on it.

Ms. Menke: At this point in time, we have not heard anything from the industry that has given us any reason to. I am not aware — let me put it that way — that we have heard anything from the industry that has raised a concern.

Senator Moore: By ``the industry,'' you do not mean restaurateurs.

Ms. Menke: I do mean that.

Senator Moore: Would you like some clippings?

Ms. Menke: We have not heard anything. I am not aware that we have heard of anything.

Senator Moore: I will send you something, Madam Commissioner. I am sure that Senator Ringuette can give you volumes.

Thank you. I think I have heard enough.

Senator Greene: I really appreciate the work that you are doing. Certainly, the economy is a priority for our government. I think that the way that you can ensure a well-functioning economy is if it is a financially literate one, so I appreciate that.

Could you tell me if there are any tests that you have or are designing that will tell you whether the level of financial literacy of Canadians is improving or not? I think that is very important because I would hope that at some point — and being a Conservative, I certainly hope this — we could say that Canadians are financially literate enough so that you can disband your office.

Ms. Menke: That would be the objective; I would be very happy if that happened. Unfortunately, I do not think it will happen any time soon.

Senator Greene: Is it a condition of modern life, then, that a certain segment of the population will always be illiterate because the financial tools are changing?

Ms. Menke: I think a variety of factors give rise to that, quite frankly. The minister alluded to it when he talked about parents. The first place children should be learning something about financial literacy is from their parents, which does not always happen. We were joking about the fact that it is easier to throw money, but that is, in some cases, a fact.

It is like education. There will always be a need to continue to educate. There will not necessarily always be a need for this office, but there will always be a need to educate. I think the key thing is that that will continue at all times.

Do we have any tests? We do. I was referring to the five-year survey that we do of Canadians, which is a very significant survey. The last time, 15,000 people were involved in it. We want to use that. We have used the first one as a benchmark. The next one will come in 2014. We will see then what kind of changes there are. I do not anticipate huge changes, but I do expect to see some.

We do smaller testing from time to time. For example, we test individual groups, and then we have surveys to see what changes in behaviour have occurred. Yes, we do test. We do see small changes, but they are small changes at this point in time.

Senator Massicotte: May I have a supplementary on that?

Senator Greene: Yes, I give permission.

The Deputy Chair: No, I do not give permission because he always sneaks in.

Senator Greene: I do; he is a good guy.

Senator Tkachuk: Were you finished, Senator Greene?

Senator Greene: Yes.

Senator Tkachuk: He is asking a supplementary?

The Deputy Chair: But it is always a supplementary. Keep your question because I have Senator Tkachuk, unless, of course, Senator Tkachuk is deferring.

Senator Tkachuk: Go ahead, Senator Massicotte.

Senator Massicotte: I have a quick question on the same issue. It is a supplementary. Do we have standards on how we compare to the rest of the world?

Ms. Menke: We have some work that is happening on the international level. It is not refined at this point in time, so we do not have rankings, if you will. However, some work is starting to be undertaken in that regard to get a more refined sense of that. The problem is that not everyone has exactly the same standard for what constitutes financial literacy because the rules change from country to country, and financial literacy and what you need to know in one country are different from what you need to know in another country.

Senator Massicotte: The OECD has nothing of that nature?

Ms. Menke: The OECD is one of the organizations working on this, but at this point in time I would say it is fairly rudimentary and very high level.

Senator Massicotte: Thank you, Senator Greene and Senator Tkachuk.

Senator Tkachuk: I have a couple of questions on consumer debt. We had quite a conversation about that. Is most of it mortgage debt?

Mr. Rudin: Mortgage debt certainly represents the largest proportion of consumer debt, yes.

Senator Tkachuk: When you say the largest proportion, how large?

Mr. Rudin: I did not bring those numbers with me, but more than the majority I am sure.

Senator Tkachuk: The other part of consumer debt would probably be things like vehicles, trucks, cars.

Mr. Rudin: We think of mortgage debt and other secured debt — debt against a car, boat et cetera — and then unsecured debt, which is largely, although not exclusively, credit card debt.

Senator Tkachuk: Right. As far as the amount of debt that consumers have and the amount of debt that we have incurred in mortgages, a lot of it is the result of the fact that payments are lower because interest rates are lower. A person may take out a $400,000 mortgage when they may have been more prone to take out a $200,000 or $300,000 mortgage because they are paying at 4 or 3.5 percent mortgage interest tied up for five years, rather than at 7 per cent. I think that partly explains it. The worry is not the debt but what will happen if interest rates go up. I think that is more the concern of the rating agencies than the actual debt itself.

Mr. Rudin: There is no question that, historically, low interest rates have contributed to residential investment and the overall growth of mortgage debt. As you said, one of the key concerns in this regard is whether consumers are well positioned for higher interest rates when they arrive.

Indeed, this is a concern of the government in general. As we were discussing while the minister was here, both the Minister of Finance and the Governor of the Bank of Canada have urged Canadians to think carefully about how much debt they are taking on and to look at their capacity to service that debt if interest rates rise. A typical Canadian mortgage has an interest rate that is fixed for five years with an amortization period that is quite a bit longer. Consumers need to think about the realistic possibility that when they come to renew their mortgage, their interest rate will be considerably higher than it is now.

In that regard, the rules that the minister has established to govern high ratio mortgages look to that in a few ways. There is a limit on the amount of debt service that people are allowed to take on relative to their income. Furthermore, in calculating this limit for those consumers who do not have a five-year fixed-rate mortgage, the limit has to be calculated as if they have a five-year fixed-rate mortgage. For those consumers borrowing at a lower rate using a floating rate mortgage, their debt service limit has to be calculated as if they have the higher interest rate. That provides a certain amount of protection, but it is not a substitute for consumers thinking ahead about their ability to service their debt, particularly when their mortgage comes up for renewal.

The Deputy Chair: Do you supply the general information on that ability to service debt with X or Y or Z income? When there is a change in the interest rate, can people refer to information from the agency?

Ms. Menke: Yes, we have information like that. We have a variety of information, but not all of it is about not going over certain amounts because it is a little hard to be that cut and dried about it. We try to get people to take a look at those kinds of numbers and how far indebted they are. Basically, we take a more generic approach. We always try to tell people that the first debt they should pay is to themselves — in other words, save. After that, they should take a look at their budget and what their debt levels are. We strongly encourage ensuring that people actually put money away all the time in addition to keeping their debts within a reasonable range.

The Deputy Chair: With all the questions we have asked, we did not talk about the tools you have compared to the other tools that we will hear about. I was just told by the clerk that you will not come back and the minister will not come back, but we did not hear much about those tools. Do you have video games for young people? I feel that is probably the best way to teach them how to manage. In my time, it was a case of playing monopoly. Nowadays, I think it is better with video games.

Ms. Menke: You are right; they are very popular. Unfortunately, we do not have any video games. They are very expensive to develop. However, such games exist in the market, which is one of the reasons I explained earlier that we will not be doing developmental work on tools because others are doing that. We are going into awareness building and coordinating cooperation. We do not see any need for us to duplicate work that is already being done. However, we think it is very important that everyone knows about it so that we can match what they need to what is available.

The Deputy Chair: To make them available, for instance in the summer, could you have a special student program to train senior citizens? They could visit with senior citizens' in their homes. Who will take the initiative? How do you spread the information? That is my concern. I know we have some tools, but you will want to cover the entire country and all senior citizens.


I agree with Senator Maltais that these are clients at risk. Single-parent and low-income families are the first to experience difficulties in emergency situations.

Will those client bases be targeted for intervention? We may be talking about groups, non-profit organizations or banks. I feel that non-profit organizations and banks are not part of the same world. If we want to coordinate everything, people need to go on the ground, and priorities have to be set.

Ms. Menke: That is where the leader will come in. That person will start establishing those connections, which are not necessarily there at this time.


Senator Ringuette: There is a fact that I want to restate. I was correct when I said that your government funding had been cut. This information comes from your annual report 2010-11. You had $1.9 million although you had the additional responsibility of oversight of the credit card code of conduct. In 2011-12, your budget was cut to $1.7 million from the Consolidated Revenue Fund. I point out that my memory is very good on specific issues.

Senator Tkachuk: She did not notice it. She got by with less. Good management.

Senator Ringuette: Those are specific issues that I have at heart.

Senator Tkachuk: We should let her answer that.

Ms. Menke: I am sorry, but I have to correct that. The budget was $2 million. Senator Ringuette was looking at actual expenditures. They were less because some things were held up. The budget was $2 million, and it has never been cut.

Senator Tkachuk: Thank you for clarifying that.


The Deputy Chair: Are you saying that you have not spent it?

Ms. Menke: I have not spent it.


Senator Ringuette: I just received this information from our researchers, and they received it from the annual report of the agency.

Senator Tkachuk: There is a big difference between budget and expenditures. She just explained that the budget is the same, but they spent a little less. You were quoting expenditures numbers.

Senator Ringuette: No, no. We are looking at the funding numbers from both the Consolidated Revenue Fund and cash received from financial institutions.

Senator Tkachuk: I am sorry; please.


The Deputy Chair: The data is available. The Department of Finance regularly publishes bricks. One recommendation from the task group's report is implemented through this legislation. Have the remaining 29 recommendations been submitted to your management? They all have to do with financial literacy. The committee has certainly not been working on creating a committee and producing 30 recommendations, so that only one of them would be implemented. I would like to know where things stand.

Mr. Rudin: The most important recommendation for the federal government is to create the position of leader, and it is really up to Parliament to decide whether the government can go ahead with the approach discussed today. As for the other recommendations, some of them are aimed only at the federal government — not necessarily at the department or the minister of Finance, but at other departments. Some of the recommendations are aimed at provincial governments and others at the private sector. So the federal government feels that the most important step is to fill the position of leader and allow that person to exercise their leadership to consider and implement the other recommendations and, potentially, other initiatives.

The Deputy Chair: So we can hope that the remaining recommendations will eventually be implemented.

Mr. Rudin: Exactly.

The Deputy Chair: I would like to thank Ms. Ryan, Mr. Rudin and Ms. Menke for shedding light on this issue, which is certainly important, not only for the Conservatives, but also for the Liberals. Thank you.

(The committee adjourned.)