The Hon. the Speaker: There is one more. Is leave granted?

The Hon. the Speaker: I’m sorry, but the senator’s time has expired. Would you like to ask for a little more time?

The Hon. the Speaker: There is one more. Is leave granted?

The Hon. the Speaker: I’m sorry, but the senator’s time has expired. Would you like to ask for a little more time?

The Hon. the Speaker: Leave is not granted.

(On motion of Senator Martin, debate adjourned.)

[English]

On the Order:

Resuming debate on the motion of the Honourable Senator Downe, seconded by the Honourable Senator Verner, P.C., for the second reading of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts.

Hon. Victor Oh: Honourable senators, I rise today to speak to Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts. This bill aims to establish a public beneficial ownership registry in Canada, requiring companies to disclose information about their beneficial owners. These individuals own or control, directly or indirectly, 25% or more of a corporation’s shares.

To be clear, this bill is not establishing a beneficial ownership registry; Canada already has one, just not one that is public.

Corporations incorporated under the Canada Business Corporations Act have been required to keep a registry of beneficial owners since 2019. The corporations themselves maintain these registries and shareholders have had the right to access them via affidavit, along with law enforcement agencies.

Last year’s budget made additional amendments to the Canada Business Corporations Act, which required federally incorporated businesses to submit their registry information to Corporations Canada annually and to provide updates of any changes to their registry information within 15 days.

The amendments in Bill C-42 build upon this existing framework to allow Corporations Canada to disclose all or part of that information to investigative bodies and the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC. This information will be accessible to tax authorities, law enforcement agencies and other governmental bodies for investigative and compliance purposes. In addition to that, portions of the registry will be publicly accessible and searchable.

Colleagues, the need for such legislation is well-documented. The infamous Panama Papers leak in 2016 revealed how criminals exploit loopholes in Canada’s corporate beneficial ownership schemes to engage in corruption. Those were not mere allegations but documented proof that put the vulnerability of our systems on international display.

Yet those vulnerabilities were well-known before then and have been repeatedly pointed out by the Financial Action Task Force, or FATF. The FATF is an intergovernmental organization founded in 1989 on the initiative of the G7. Its primary objectives are to develop and promote policies to protect the global financial system against money laundering, terrorist financing and other related threats. Over the years, the organization has become a pivotal global body in setting international standards for combatting these financial crimes.

The Financial Action Task Force, or FATF, monitors countries’ progress in implementing necessary measures and reviews their compliance. Their recommendations are highly influential, serving as the international standard for combatting money laundering, terrorist financing and other related threats to the integrity of the global financial system. Many countries, including Canada, voluntarily align their financial regulatory policies closely with FATF recommendations to ensure they are part of a coordinated international effort to combat financial crimes.

In 2016, the FATF’s Mutual Evaluation Report of Canada’s anti-money laundering and counter-terrorist financing measures noted four items concerning the “transparency of legal persons and arrangements” in Canada.

In 2021 — five years later — the FATF’s follow-up report indicated that no progress has been made on these four points. Specifically, there was no reported improvement in our technical compliance ratings for FATF’s Recommendations 24 and 25, focusing on the transparency and beneficial ownership of legal entities and arrangements. This lapse is not just a tick box that we have missed; it is a gap that poses a significant risk to our financial system and to our reputation on the global stage.

Allow me to quote these four points from the FATF Mutual Evaluation Report and note that, while this is the 2016 report, each issue remains unchanged in the 2021 follow-up report.

Point 1:

Canadian legal entities and legal arrangements are at a high risk of misuse for [money laundering and terrorist financing] purposes and that risk is not mitigated. This is notably the case with respect to nominee shareholding arrangements, which are commonly used across Canada and pose real obstacles for law enforcement agencies.

Point 2:

Basic information on legal persons is publicly available, but beneficial ownership information is more difficult to obtain. Some information is collected by [financial institutions] and to a limited extent [designated non-financial businesses and professions], the tax authorities and legal entities themselves, but is neither verified nor comprehensive in all cases. [Law enforcement agencies] have the necessary powers to obtain that information, but the process is lengthy. Information exchange between [law enforcement agencies] and the CRA is also limited by stringent legal requirements.

Point 3:

The authorities have insufficient access to information related to trusts. Some information is collected by the CRA as well as by [financial institutions] providing financial services, but that information is not verified, does not always pertain to the beneficial owner, and is even more difficult to obtain than in the case of legal entities.

Point 4:

[Law enforcement agencies] have successfully identified the beneficial owners in limited instances only. Despite corporate vehicles and trusts posing a major [money laundering] and [terrorist financing] risk in Canada, [law enforcement agencies] do not investigate many cases in which legal entities or trusts played a prominent role or that involved complex corporate elements or foreign ownership or control aspects.

Colleagues, the urgency for Canada to enact immediate and decisive improvements is undeniable. According to the Canadian Security Intelligence Service’s 2020 report, money laundering in Canada is estimated to range between approximately $45 billion and $113 billion annually. This is a staggering amount of money, and it is due, in part, to the fact that the vulnerability of our systems is no secret.

Internationally, Canada is known to have lax laws to prevent money laundering and terrorist financing, which has affected our reputation with other nations. Bill C-42 is critically necessary to continue correcting this perception.

Bill C-42 is one of those rare instances where we find ourselves with government legislation that echoes the Conservative Party of Canada’s core principles, including a commitment to economic transparency, good governance and the rule of law. This bill also aligns with the efforts our party has taken in years past to strengthen Canada’s resilience against money laundering and the financing of terrorism.

Under Stephen Harper’s leadership, the previous Conservative government took meaningful steps to fight money laundering and terrorism financing. We strengthened the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and expanded the investigative powers of the Canada Border Services Agency and the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC.

In 2021, the Conservative Party of Canada committed to establishing a federal beneficial ownership registry for residential property. We also pledged to bring comprehensive changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Conservative MP Adam Chambers’s recent private member’s bill aimed at implementing the latter commitment reflects our dedication to this cause. Bill C-42 is another crucial step on the path toward these goals.

But while this bill seeks to address critical issues, it is essential to understand that its success is not guaranteed: It is tied to its execution.

The federal government’s jurisdiction extends to only about 500,000 corporations incorporated under the Canada Business Corporations Act, or CBCA. This represents only 15% of Canadian corporations. The vast majority of corporations in Canada are incorporated under provincial or territorial legislation — but not the CBCA. Provincial and territorial adoption is crucial for the success of this initiative. The corporate registry must be expanded and see the provinces and territories opt into it to be effective.

Without a robust and public corporate beneficial ownership registry, Canada remains vulnerable to a host of financial crimes that threaten our economic stability and national security. Opaque corporate structures offer convenient veils for money laundering, terrorist financing and tax evasion and avoidance.

Right now, it is relatively straightforward for individuals or entities to hide behind shell corporations, nominee shareholders or trusts to conduct illicit activities anonymously. Such secrecy can turn our country into a playground for criminals and corrupt individuals — who can exploit our financial systems and real estate markets, among other sectors.

It is hard-working Canadians who bear the economic brunt of this problem — whether it’s through inflated housing prices, or lost tax revenue that could have been used for public services. The lack of a transparent registry creates loopholes that make it difficult for authorities to track criminal activity, weakening our ability to enforce existing laws effectively.

Bill C-42 is part of a growing global trend toward increased corporate transparency and accountability. Countries such as the United Kingdom — with its public register of people with significant control — and the European Union — through its Fifth Anti-Money Laundering Directive — have already made reforms. The United States is also moving in this direction via the Corporate Transparency Act, signed into law as part of the National Defense Authorization Act for Fiscal Year 2021. According to Transparency International, there are currently 108 countries around the globe that have made commitments to implement publicly accessible registries.

In addition: The International Monetary Fund, or IMF, is considering adopting regulations that will require beneficial ownership registries in countries receiving IMF loans; organizations, such as Transparency International, and think tanks, such as the C.D. Howe Institute, have been unequivocal in their support for a central, publicly accessible beneficial ownership registry; and in 2019, the B.C. Cullen Commission recommended that a pan-Canadian corporate beneficial ownership registry be in place by the end of 2023.

There is a broad consensus among experts that this is the right path for Canada. However, there remain several questions about privacy and personal security rights that need to be examined by a committee. In a brief to the House of Commons Standing Committee on Industry and Technology, the Canadian Bar Association has noted that:

In its current form, we are concerned that Bill C-42 will disproportionately impair the privacy and personal security rights guaranteed by the Canadian Charter of Rights and Freedoms.

Individuals have legitimate personal and business reasons for not publicly disclosing sensitive personal information of beneficial owners. Canada should be mindful that businesses will look carefully at the requirement to make information public and determine how and in which jurisdiction they want to structure their corporations.

Their letter continues:

Public disclosure of additional corporate information may deter corruption and money laundering, and frustrate the efforts of fraudsters to use sham corporate vehicles for criminal purposes. However, it may also increase identity theft (as recently observed in schemes to defraud the government of COVID-19 relief funds) which could undermine the anti-fraud rationale of the registry. We urge the government to carefully consider the policy intent of Bill C-42 to ensure it meets its stated objective.

I am sure you will agree that these severe concerns have not been addressed in the other place. I encourage the committee studying the bill to look into these and any other concerns carefully to ensure that the legislation is well crafted and will achieve its important objectives.

Colleagues, while the Conservative Party may be the opposition, we are not opposed to good legislation. This is one of the rare times when we see such a thing under this Liberal government, which we are committed to working with in a spirit of cooperation when it serves the national interest.

That is why we will be supporting Bill C-42 at second reading. We look forward to studying it further at committee. Thank you.

The Hon. the Speaker: Leave is not granted.

(On motion of Senator Martin, debate adjourned.)

[English]

On the Order:

Resuming debate on the motion of the Honourable Senator Downe, seconded by the Honourable Senator Verner, P.C., for the second reading of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts.

The Hon. the Speaker: Is it your pleasure, honourable senators, to adopt the motion?

An Hon. Senator: On division.

(Motion agreed to and bill read second time, on division.)

The Hon. the Speaker: Honourable senators, when shall this bill be read the third time?

(On motion of Senator Downe, bill referred to the Standing Senate Committee on Banking, Commerce and the Economy.)

The Hon. the Speaker: Is it your pleasure, honourable senators, to adopt the motion?

Some Hon. Senators: Agreed.

Hon. Patti LaBoucane-Benson (Legislative Deputy to the Government Representative in the Senate), pursuant to notice of September 21, 2023, moved:

That, notwithstanding any provision of the Rules, previous order, or usual practice, until the end of the day on June 30, 2024, any joint committee be authorized to hold hybrid meetings, with the provisions of the order of February 10, 2022, concerning such meetings, having effect; and

That a message be sent to the House of Commons to acquaint that house accordingly.

(On motion of Senator Martin, debate adjourned.)

[Translation]

On the Order:

Resuming debate on the motion of the Honourable Senator Ringuette, seconded by the Honourable Senator Ravalia, for the second reading of Bill S-239, An Act to amend the Criminal Code (criminal interest rate).

(On motion of Senator Petitclerc, debate adjourned.)

Hon. Diane Bellemare moved second reading of Bill S-275, An Act to amend the Bank of Canada Act (mandate, monetary policy governance and accountability).

She said: Honourable senators, I want to begin by acknowledging that the lands on which we are gathered are part of the unceded traditional territory of the Anishinaabe Algonquin people.

On August 31, the premiers of British Columbia, Ontario and Newfoundland and Labrador asked the Governor of the Bank of Canada to stop raising the key interest rate and consider the human impact of its monetary policy. Some commentators challenged those remarks and felt that the provinces were attempting to engage in political interference with the Governor of the Bank of Canada.

Personally, I saw those remarks more as an expression of the deep economic insecurity felt by the people in those provinces and echoed by the provincial premiers.

We all want to live in a country where our governments work to ensure our basic physical and economic security. Economic security alone can’t buy happiness, but family life is certainly happier and more optimistic when we can plan our income and expenses and pay the mortgage or rent without having to cut back on food or our children’s education. That has been my main motivator throughout my career: combatting economic insecurity and promoting ways of achieving it. That is what sparked my interest in the labour market, social dialogue and monetary policy.

Are you wondering what this anecdote has to do with my bill? It’s quite simple. A country’s prosperity depends in large part on the quality of its human and natural resources, and on its collective ability to develop them.

Monetary policy largely determines the basic cost of investment or development of our human and natural resources. Monetary policy therefore has a major role to play in promoting a country’s lasting prosperity, a basic condition for a nation’s economic security. Monetary policy is a serious and delicate issue, one that deserves particular attention, because a country’s standard of living largely depends on it.

For that reason, no one person, even surrounded by an excellent team, can be asked to take full responsibility for it and assume the consequences.

Colleagues, in the speech that follows, I’ll explain first in French and then in English the nature of my bill and the main principles behind it. I hope you’ll understand why it’s important to move it quickly through to committee.

I hope to see you take part in this second reading debate by asking me questions. My formal speech will be relatively brief.

What is the purpose of my bill, summed up in one sentence? It aims to strike a better balance between the Bank of Canada’s independence and the need for transparency and accountability.

To that end, it amends the Bank of Canada Act by adding a section on monetary policy, a mandate and objectives. This bill seeks to fill an existential void in the existing legislation, which is utterly silent on monetary policy and does not specify the objectives of such a policy.

This bill helps to bring the Bank of Canada’s legal framework into line with those of comparable central banks. The bank was established in 1935, and its preamble, which serves as its mandate, has not been rewritten since, even though the act was amended in 1985. This bill does not change the spirit of the objectives set out in the 1935 preamble. It simply expresses the bank’s mandate clearly and in contemporary language.

Bill S-275 also seeks to recognize the bank’s institutional independence while adding transparency and accountability requirements and safeguards. That relieves the governor of part of the decision-making burden. Believe it or not, the governor is currently the only person deciding the fate of millions of families, although he works with his governing council, of course. My bill will also strengthen public confidence in the bank’s decisions.

To that end, my bill creates a permanent committee on monetary policy. This committee will be chaired by the governor and will include deputy governors and experts not affiliated with the central bank. This good governance practice exists in several other countries, including New Zealand, England and, to an extent, the United States. Australia is also considering this approach.

This committee of experts from different backgrounds will provide assurances to the public that monetary policy is determined independently and is not subject to partisan political influences. The committee will also be responsible for supervising the cost-benefit analysis of the monetary policy and the assessment of its effectiveness. There is currently no regular analysis of the monetary policy’s effects. Unlike in other countries, the bank itself analyzes or assesses the monetary policy.

The committee will also take part in drafting the five-year agreement between the bank and the government to set the monetary policy framework. This committee could also propose alternative strategies as buffers against such supply-side shocks as unpredictable spikes in oil prices or adverse weather conditions leading to crop failures.

This expert committee will reassure Canadians that the bank is fulfilling its role of promoting economic prosperity. It goes without saying that the composition of the external members of the permanent committee is of the utmost importance. That is why Bill S-275 sets out specific eligibility conditions and skill requirements. The appointment process will also have to be open and transparent, and the members will have to be selected after consultations with key players in the economy, including representatives from major employer and labour organizations. It is essential that these experts, who do not necessarily work within these organizations but are recognized by them, come from diverse backgrounds. We don’t want experts who all went to the same school and don’t have field experience.

[English]

As you know, Canadians and the financial markets are often nervous on the day the Governor of the Bank of Canada announces the key interest rate. It is not surprising given the financial consequences for people’s wallets and the impact of this decision on the economy. Besides, most Canadians don’t really know how this decision is made.

Technically, the Governor of the Bank of Canada determines the key interest rate eight times a year in the context of its monetary policy. He is supported by his Governing Council, made up of deputy governors whom he has chosen and who work for the bank. In recent months, an external, non-executive deputy governor has joined the committee.

The governor and his team could get it wrong, and the Bank Act is of no assistance or protection.

The Bank of Canada Act was adopted in 1935. The act was amended through time and revised in 1985, but the objectives of the bank and the mandate of monetary policy were never specified in the act. It is completely absent.

The preamble to the Bank Act presents a list of objectives of equal importance. The bank, on its website, summarizes this preamble as the bank has the mandate, “. . . to promote the economic and financial welfare of Canada.” To this effect, section 8 of the act gives the governor full powers to act as he sees fit, without any transparency requirements.

However, since 1991 — more than 30 years — the monetary policy framework is specified in a five-year agreement prepared by the bank and agreed to with the government through the Minister of Finance. This framework determines the target in terms of inflation rate without specifying the timeframe for achieving it. For the last 30 years, and renewed in December 2021, this agreement has targeted a 2% year-on-year increase in the overall consumer price index.

This agreement is tabled in Parliament, but is not subject to any parliamentary approval or accountability. This document — which has no legal force, because it’s not in the law — allows the governor to raise the base interest rate if and when the overall CPI increases by more than 2%. This is a simple rule for a problem that is not, and it is a rule that has been created through time and never had any foundation in the Bank of Canada Act.

Honourable senators, as you know, inflation in the 21st century has become a more complex issue than in the previous one. It is not always an excess demand problem. Climate crisis, political uncertainty, reversed globalization, demographic issues, all may create supply shocks that will impact inflation. Rising interest rates reduce aggregate demand with certainty. But Canadians don’t have the same assurance that rising interest rates will cope with inflation because as you know, increased interest rates can have boomerang effects. When the Bank of Canada raises its basic rate, increases to mortgage rates follow.

According to Statistics Canada — and that’s a really important statistic — mortgage cost increases are responsible for more than 30% of the yearly cost of living increases. It’s 37% with rental living increases. It can also have detrimental effects on specific sectors such as housing, for example. When housing spaces are in short supply and construction starts decrease because of less affordable mortgage conditions, rental rates go up. The two together are around 37% of the increase in the CPI that can be attributed to the monetary policy.

It is hard to predict the consequences of monetary policy on the economy because it reacts with lags. The bank can easily be too severe or too loose, and it is easy to overshoot monetary policy and precipitate a recession.

Therefore, some countries have incorporated safeguards into their legislation. For example, in the U.S., Australia and New Zealand, monetary policy pursues a dual mandate, that is, price stability and maximum employment or full employment. Consequently, this dual mandate forces central banks to be prudent in the conduct of monetary policy.

Some countries have also put in place monetary policy committees where external members can help assess the risks involved and work on diverse scenarios.

If supply chain shocks are to become common, shouldn’t monetary policy consider the expertise of experts knowledgeable about those realities?

This bill adds safeguards in the conduct of monetary policy by specifying the dual mandate of monetary policy and by creating a monetary policy committee called the permanent committee. The composition of this committee and the process of selection of its members are of the utmost importance. The process needs to be open and transparent. These experts should be appointed after consultation, as I said previously, with organizations representing civil society and the economy, such as important business associations and labour organizations, so that the committee is best equipped to balance the goals of price stability and full employment. This committee would be credible to call for responsible behaviours from all economic actors.

The committee would participate in the discussion about setting the policy rate. When I say “the committee,” I mean the big committee chaired by the governor, with the deputy governor and the external experts. They would participate and vote on setting the policy rate, as they do elsewhere. The members would adopt the annual cost-benefit analysis framework that supports policy; supervise the assessment of the effectiveness of monetary policy — because we can, as I said, question the link between increasing interest rates and taming inflation — ensure that the use of non-traditional tools is consistent with the bank’s mandate; and participate in the drafting of the five-year agreement with Canada.

Last but not least, I have to say that some parts of this bill have been inspired by the work done by a special committee appointed by the government of Australia to review the Reserve Bank of Australia Act. This report is entitled An RBA fit for the future. It was published in March 2023.

When I read this report, I said that’s a gift from I don’t know whom that gave me the legitimacy to pursue what I wanted to do, which is to introduce an amendment to the Bank of Canada Act so that it is modernized. But do you know who was on the committee that wrote this? Three experts worked together on the report, and it benefited from the experience of a former deputy governor of the Bank of Canada. Guess who? It was Carolyn Wilkins. It’s very interesting, so I was inspired by the recommendation of this report to draft this bill.

The time has come, colleagues, to demand greater transparency on the real impact of short- and medium-term monetary policy on the Canadian economy and to give the governor and his team the tools to achieve its main objective, because the main objective of the Bank of Canada is prosperity. It is not price stability at all costs.

When I realized that, I said this is how I have to talk about that. The governor and his team have powers to do anything they want to promote prosperity. Nowhere in the Bank of Canada Act is it underlined that price stability is to be the sole objective. It cannot be the sole objective. Because of that, I think it is very important to think about that and to put in place the institutional change in the act to balance the independence of the bank and the accountability principle. By having this external committee, which would have the right to speak outside of the bank, it creates confidence in the population that the bank is doing the right thing.

I’m finished with my speech. I can take questions, if you want. I would be pleased to answer them. Thank you very much.

Hon. Yuen Pau Woo: I’m happy to oblige, Senator Bellemare. Thank you for your speech.

To what extent would you make the deliberations of this proposed monetary policy committee public, particularly the minutes of their meetings and the detailed discussions that reveal the thinking of the members? As you know, in the Federal Reserve System there’s always a lot of speculation about the different governors of the Federal Reserve System and the positions they take. I’m not sure how beneficial that is and how much more transparent that makes the American system. What is your proposal for this approach that you’re suggesting?

Senator Bellemare: Thank you for the question, senator.

[Translation]

I’ll answer in French if I may.

I’m not sure the monetary policy committee should be televised, but it will produce a report, just like the one in New Zealand. I really like the New Zealand committee’s report, because it specifies who said what, which makes the outcome of the vote clearer.

In Western Canada, the C.D. Howe Institute created its own version of a monetary policy committee consisting of about 12 experts who discuss what they would do and then vote. Every member’s name is associated with their views. That beauty of that is that it results in a moderate, prudent monetary policy.

Senators may not be aware that, in the 1980s, when interest rates were very high, Canada had one of the most restrictive monetary policies in the world. Right now, given the current rate of inflation, Canada’s monetary policy is very restrictive. Leaving out the effects of mortgage rates and rent, we’re not far from our 2.6% target.

There was a time when the inflation rate target was between 1% and 3%, with some flexibility. Right now, the combination of a restrictive environment and rapid interest rate hikes means that many investments are not being made. We are not accelerating our transition to a green economy.

We can’t get that time back. We can’t get that lost prosperity back. We can’t make up for investments that weren’t made. That’s why the members of the Standing Senate Committee on Banking, Commerce and the Economy found that Canada’s per capita GDP wasn’t really up compared to other countries.

I know this is a difficult subject, but my bill has no financial implications because these experts will not be paid.

When I was appointed to the Economic Council of Canada, I was not paid. I did that work for six years. It took up a lot of my time, but I was very happy to be a member. In this case, I think there will be a lot of experts from different backgrounds and it won’t turn into a free-for-all — Earlier, I gave an interview on the radio and I was asked, “Don’t you think there will be bickering?” I said, “No, there will be votes and a result.”

Hon. Julie Miville-Dechêne: I have a question for you, senator. I am not an expert in monetary policy, but you made several references to the Australian example. These days, Australia is referred to for all sorts of examples. In this case, did having a mandate that you consider to be more balanced between prosperity and the fight against inflation have a measurable impact on monetary policy? For example, is Australia less likely than Canada to deal with inflation by raising interest rates? Is it possible to see whether this model has already had an impact?

Senator Bellemare: Thank you for that excellent question, senator. Unfortunately, I can’t say whether there’s been any impact in Australia.

What I can tell you, however, is that in the United States, there has obviously been an impact. The United States also has a dual mandate, specifically price stability and full employment. Pierre Fortin has been working on this issue, and I had the honour and opportunity to speak with Janet Yellen, who was chair of the Federal Reserve Board just before being appointed Treasury Secretary by President Biden. She told me this could explain why the unemployment rate was often much higher in Canada than in the United States in the 1980s and 1990s.

I examined this issue in a book I published, but it hasn’t been updated for the 1980s and 1990s. It’s clear that Canada didn’t increase its productivity as much as it could have, because of its strict monetary policy, but I didn’t do that kind of regression analysis. I compared the statistics for countries with dual mandates, and I studied the matter of Canada’s stringency. As for Australia, I can’t answer your question. Thank you.

Hon. Clément Gignac: I want to commend my colleague, Senator Bellemare, for her work on this bill. I know how motivated you are to protect the Bank of Canada’s independence and transparency. You know that I share your objectives. However, I’m wondering about the timing of your bill. Right now, every five years, the Department of Finance and the Bank of Canada sit down to review the bank’s mandate. Thanks to your intervention two years ago, which I applaud you for, the job market is briefly mentioned, not as much as you would have liked, but still.

Right now, the Bank of Canada is acting like a firefighter, as are many other central banks, to beat inflation, because the causes aren’t necessarily attributable to it. Don’t you think that launching a debate and sparking discussions in this regard at this stage — at a time when political leaders are prepared to show the current governor the door and when we are fighting hard against inflation, which is a major scourge affecting the most disadvantaged members of our society — rather than waiting three years might upset the financial markets? It will become political, and the independence of the Bank of Canada, which you and I both hold dear, will be called into question. The whole discussion surrounding the Bank of Canada will become political and politicized.

In your bill, you appoint six external members. As a result, the governor of the Bank of Canada and his two colleagues will be in the minority around the table. Since each member has an equal vote, only one third of the votes will go to the head of the Bank of Canada as opposed to the other six volunteers. Who will be flying the plane? Who will be accountable for the interest rate decisions that affect Canadians?

Senator Bellemare: Thank you, Senator Gignac. I understand your concern. You asked two questions. I think it’s too late to wait to better define the monetary policy framework. There are too many things to do. With that in mind, I think that the Senate is the best institution to begin wisely and carefully considering this issue. If we analyze a bill like this one, there is a lot less risk of things getting out of control than if we just asked the question more broadly. That is why I decided to choose specific aspects of the legislation to amend, to prevent a populist uprising or something of the sort. Australia has set up a panel of experts to make changes as part of a strict framework.

Your second question about the number of members on the monetary policy committee is a good one. I am open to discussion on that. This is the beginning of a negotiation. Perhaps the number is too high. Perhaps we should increase the number of deputy governors, or keep the number of deputy governors the way it is and have the six — I based the committee on the Australian model, but we could keep the six and add six or perhaps . . . In any case, that is something that could be considered in committee, to see what we come up with.

I am not worried about that. On the contrary, it may help us with our investments in the future.

Hon. Pierrette Ringuette: Senator Bellemare, thank you again for sparking our imagination and prompting discussion about the Bank of Canada. You’ll recall that a few months ago, when the Governor of the Bank of Canada appeared before our committee, I asked him who he was consulting. He replied that he was consulting several Crown corporations and interdepartmental committees to gather as much information as possible.

Given the evolving nature of the economy, whether because of the pandemic, supply chains or the environment, do you think it’s a good idea for this advisory committee to be a permanent committee? Shouldn’t it instead be made up of ad hoc members, so as to capitalize on experts in whatever field the geopolitical or economic situation calls for?

Senator Bellemare: Thank you for the question. I think that this should be a permanent committee whose members serve a renewable three-year term so they have time to really get into the files. The bill states that the chosen experts must be able to demonstrate outstanding expertise in two of the five following areas: the labour market, open-economy macroeconomics, supply chains, the financial system and risk management. These are important areas of expertise from different backgrounds.

Let’s get back to transparency. In your question, the governor relies, as he said, on core inflation, a statistic whose accuracy is unknown. We’ve been told that this is a metric calculated by stripping out the most volatile components of the consumer price index, but what exactly is core inflation?

These are questions that a permanent committee could study and then explain to people, and this would build confidence around what the bank is doing.

Hon. Amina Gerba moved second reading of Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management).

She said: Honourable senators, I rise to speak to you today from the traditional unceded territory of the Anishinaabe Algonquin nation.

Honourable senators, it is a privilege for me to address you as the sponsor of Bill C-282, which seeks to amend the Department of Foreign Affairs, Trade and Development Act regarding supply management.

This bill has to do with a policy established in our country half a century ago, a policy that applies to all of our regions and that has served Canadians well. I am talking about supply management.

I salute the work of Luc Thériault, the member of Parliament for the riding of Montcalm and sponsor of Bill C-282.

I consulted several people and reflected carefully before agreeing to sponsor this bill in the Senate. I eventually agreed for three reasons.

First of all, it addresses the needs of Canadians in terms of the reliability and sustainability of our food supply and its implications, particularly in terms of health. It also addresses the needs of our farmers as the producers of this food supply. I will come back to that a little later.

Second, we need to take into account the effects of the changes that are forever transforming the vast sector of the farming economy. I’m thinking in particular of climate change, which is dramatically affecting global agricultural production. We must also take into account the notion — if not the obligation — to ensure food security. This obligation recently became political, and a prime example is India’s decision to ban rice exports in order to meet the needs of its own population, which stands at 1.4 billion. I would remind the chamber that India is the world’s leading rice exporter. Admittedly, these policies contradict the notion of an open market. They are based on different considerations and on other values that are embodied in the concept and reality of food security.

I would like to remind senators that we all need to condemn the disgraceful use of agricultural commodities as weapons of war in Russia’s current war on Ukraine. This disgraceful tactic is jeopardizing the already fragile food security of many African countries.

Third, my decision to sponsor this bill was also influenced by the considerable support that it received in the other place last June, with 262 yeas versus 51 nays. That means that almost 80% of members voted in favour of the bill, including the four party leaders. This solid support has already been expressed several times in the past. There have been many unanimous motions calling for the supply management system to be protected when trade agreements are being negotiated.

It is also important to mention that Bill C-282 represents the second attempt to draft legislation on this subject. In 2021, Bill C-216 died on the Order Paper after reaching second reading stage and being sent to committee. The motion was adopted with 250 yeas and 80 nays. I also want to take this opportunity to commend the work of Louis Plamondon, the member for Bécancour—Nicolet—Saurel, who sponsored that bill.

In preparing this intervention, I recalled a time, an episode in my life as a business owner, that I will share with you in this chamber. There was a time when I worked closely with shea butter producers from Burkina Faso. These valuable female partners provided me with the raw materials needed to manufacture a range of body care products in Canada.

We collaborated in a very transparent manner with women who had formed a producer cooperative. Our company paid them a fair and equitable price for the fruits of their labour. Thanks to the fair trade system that we implemented, they could easily meet their needs and those of their families. They sent their children to school. What’s more, they contributed to the local economy and supported the development of their communities. This collaboration also enabled them to acquire new skills and meet very strict quality standards. That is how we helped these women become the very first producers in the world to obtain organic certification for shea butter. That meant value added for their products, and the sale price per kilo more than doubled.

Essentially, Bill C-282 seeks to preserve a certain system, supply management, that provides Canada with a number of benefits comparable to those received, on a smaller scale, by these producers in Burkina Faso.

I acknowledge and respect the arguments of those in this chamber whose convictions on the issue of supply management differ from my own. However, I believe that food security for Canadians is a fundamental and unavoidable objective. I would even go so far as to say that it is one of our country’s values and obligations. In that sense, it is non-negotiable. Consequently, it must be afforded solid and lasting protection.

To that end, we must look very carefully at the food needs of Canadians and protect what needs protecting, considering today’s climate, economic and commercial ecosystems.

The issue of supply management goes far beyond economic and financial considerations alone. I agree that they are important, but they cannot replace the requirements of food safety and availability for Canadians, the sanitary quality of the food and the impact its production has on all of the land in our country in the rural regions. This production and protection contributes to land occupancy, to the viability and prosperity of the communities that occupy that land, and to the maintenance of private and public services within them.

What’s more, supply management gives our country tools to ensure stability, predictability and good levels of investment in research and development in agriculture and agri-food, which are major economic sectors. In an era when severe climate change is unfortunately disrupting agricultural production around the world, supply management guarantees Canadians a secure supply of essential food items, the quality of which is verified and verifiable.

Supply management is not broadly known or understood, yet it has been at the heart of our agricultural production system for over 50 years. It seeks to regulate the price of three essential products: eggs, including hatching eggs, dairy products and poultry.

These three supply-managed sectors account for nearly 350,000 jobs, contribute up to $30 billion to Canada’s GDP and generate $7 billion in tax revenue. More specifically, supply management accounts for 125,000 jobs in Ontario, 115,000 in Quebec, 90,000 in the Western provinces and 20,000 in the Atlantic provinces. That makes it a truly Canada-wide system, as I mentioned earlier.

Supply management is built on three pillars. The first is efficient management of supply.

In the case of dairy products, for example, research on consumer demand is conducted regularly and is used to allocate production quotas, which the Canadian Dairy Commission distributes amongst the provinces. Provincial authorities then sell them to their respective producers.

The second pillar is price control. A floor price and a ceiling price are set, and prices can move freely within this range.

The third pillar is import control. By setting appropriate tariffs, the system regulates the quantity of the products concerned crossing our borders. This three-pronged approach to supply management is both simple and effective. This system has many benefits for Canadians.

The first of these benefits concerns agricultural producers themselves. With this policy, producers receive guaranteed, fair and equitable compensation for their work. Reliable compensation protects their businesses and enables them to invest in applied research. Furthermore, it makes it possible for them to invest in very expensive modern equipment, which relies heavily on digital technology and is likely to rely on artificial intelligence in the future.

Finally, it encourages investment in governance in this area according to private sector or cooperative sector standards.

Without these capabilities, our agricultural sector would be in real trouble because of the EU’s agricultural policy and its three generously funded programs: the European agricultural fund for rural development, the European agricultural guarantee fund and a program to compensate farmers for green agricultural practices. According to a recent study by Le Devoir, nearly 3,000 French farms have already received payments through the program, which was launched just two years ago.

According to France’s national strategic plan for the upcoming common agricultural policy 2023-27, 90% of medium and large businesses get subsidies that make up 21% of their revenue, and at least half of them would be in the red without that support.

Left to its own devices, our agricultural sector would also be threatened by the agricultural policy of our great neighbour to the south, which, according to the OECD, has “continued strong support for farm incomes.”

In both of these economic powerhouses, agriculture is protected, highly subsidized and fully protected from risk. Does it make sense for Canada to compete with those two giants on food production?

I would add that our supply management policy undoubtedly costs us less than our neighbour’s agricultural policies or those of the 27 EU countries, let alone China and India.

Another major advantage of our supply management policy is that it enables our producers to establish a strong presence in Canada and, as noted earlier, to ensure the sustainability and prosperity of our regions. Our regions greatly benefit from this source of employment, which contributes to regional vitality and economic activity. Conversely, when farm operations shut down, it has a major impact on the regions, particularly those that are far from our urban centres.

If supply management were to be done away with, it is estimated that 80,000 jobs would be directly at risk. The health of our farms goes hand in hand with regional development. The two are inextricably linked.

The COVID-19 health crisis made it clear that the offshoring of agricultural production is a major problem. It exposed dependencies that we were completely unaware of. It highlighted the urgent need to build resilient local supply chains around essential common goods, such as health, education, transportation, communications and food security.

Supply management protects us by making our most essential food items subject to our own rules and controls, particularly food safety controls.

In poultry farming, for example, the industry has implemented a food safety program called “Raised by a Canadian Farmer.” This program is now mandatory in all the provinces, and 100% of chicken farmers are certified. Supply management ensures not only that our products are of good quality, but also that they meet our animal husbandry and welfare standards.

Furthermore, by bringing our producers closer to consumers, supply management helps us meet our ecological objectives. In fact, shortening our supply chains is an inexpensive and effective way of reducing our greenhouse gas emissions.

According to a recent report from the United Nations Food and Agriculture Organization, the supply chain is becoming one of the largest contributors to greenhouse gas emissions from the agri-food system in many countries. Of the 16.5 billion tonnes of GHG emissions due to global agri-food systems in 2019, 5.8 billion tonnes came from supply chain processes. Clearly, supply management contributes significantly to our efforts to combat global warming.

By preserving Canada’s farms, supply management is helping to preserve a valuable agricultural ecosystem that is undergoing profound change. Over the past 20 years, our country has lost the equivalent of seven farms a day.

This shift primarily affects farms that are not supply managed, and the result is that farmland ownership is being concentrated in the hands of major conglomerates. This threatens the family farm model in Canada. Between 2001 and 2021, the number of farms in Canada dropped by 23%, but active farms have grown in size from an average of 274 hectares in 2001 to 327 in 2021. Our neighbours to the south are experiencing the same phenomenon, only more dramatically. Canada still has 22 egg farms, but the United States has only a handful. A single one of them would be able to meet Quebec’s entire demand.

This concentration phenomenon is undermining supply management.

Having such diverse farms in our country is a major asset. In addition to ensuring the occupation and development of our territory, as I said earlier, it protects Canada’s supply from all kinds of adverse events. The latest of these was avian flu, which had a significant impact in the United States, driving price hikes. In contrast, the diversity of our farms protected Canadian consumers.

Clearly, supply management is good for consumers.

By keeping prices fair for the entire value chain, the system gives Canadians a guarantee that their supply is protected from shortages. The system also shelters them from significant and untimely price fluctuations. In an unregulated market, prices are volatile by nature, not least because of extreme weather phenomena that are occurring more and more frequently because of climate change.

Thanks to supply management, producers do not have to rely on government support programs or subsidies to survive. In that context, supply management can be seen as a sort of insurance policy for consumers. Not only does it contribute to protecting the work of farmers and producers by giving them stable incomes, but it also ensures consumers get a stable supply. It is a win-win partnership.

Like the majority of the senators in this chamber, I am unquestionably very much in favour of a market economy. However, I believe that we must take into account the context and the specific characteristics of certain essential fields that need to be protected and kept safe from adverse disruptions. Despite the clear and tangible benefits supply management offers our country, it is constantly under threat.

To the question of why we should include supply management in legislation, I would answer that recent free trade agreements have successively damaged this mechanism. They have progressively weakened it. Whether we’re talking about the Comprehensive and Progressive Trans-Pacific Partnership, CPTPP, the Comprehensive Economic and Trade Agreement, CETA, or the Canada-United States-Mexico Agreement, CUSMA, they have all chipped away at the supply management system.

For example, CETA allowed the import quota for European cheeses to be increased to 16,000 tonnes per year. As a result, small Canadian producers have seen their position greatly weakened. In particular, this has led to a drop in their cheese production and, in turn, a decline in milk producer sales. Furthermore, CUSMA provided additional access to the Canadian market equivalent to nearly 4%.

It is true that the producers who were affected were eligible for government compensation to make up for these breaches in the supply management system. However, this compensation proved to be not only insufficient, but also very expensive for Canadian taxpayers. For example, $250 million of public money has been spent to offset the losses incurred under CETA by the dairy sector alone. Since the supply management system works so well without taxpayers’ money, why dismantle it and then subsidize the producers who are affected? It just doesn’t make sense.

Honourable senators, Bill C-282 is about protecting the supply management system. It is very simple. The bill amends section 10 of the Department of Foreign Affairs, Trade and Development Act to safeguard the system by making it a ministerial responsibility. It adds supply management to the list of directives that the minister must adhere to in conducting Canada’s external affairs, specifically during free trade agreement negotiations. The minister responsible for international trade won’t be able to do anything that would hurt supply management. It can no longer be used as a bargaining chip. Taking supply management off the table in international negotiations will preserve it forever.

Some of our partners around the world were unable to defend their equivalent of our supply management system, and they are paying a heavy price for it today. For example, Australia abandoned this system in the 2000s, profoundly altering the landscape of the country’s dairy industry. Its farms were forced to undergo a transition. Farmers fought hard to compete with international prices for milk but were unsuccessful. The price that Australian farmers were getting per litre of milk was below the world average. In 20 years, from 2000 to 2020, the number of dairy farmers dropped from 22,000 to less than 6,000, which is a massive decrease. Since then, exports continue to fall, while imports continue to rise.

A growing share of the Australian dairy processing industry is ending up in the hands of foreign businesses. In the European Union, the end of the common framework signalled the start of industrial management of milk production. France has discovered that it is very difficult to promote and encourage small-scale markets and local producers. Between 2000 and 2010, 35% of the dairy farms in the Picardie region in northern France disappeared.

Honourable senators, supply management is like a shield. It protects Canadians from shortages and sudden price swings. It fights global warming by shortening supply chains. It ensures a decent income for our dairy, egg and poultry producers. It protects our regions from social and economic desertification and safeguards tens of thousands of jobs. Finally, it guarantees healthy, high-quality food on our plates.

Colleagues, we are at a crossroads, and the following questions should guide your decision. How do we want to treat our farmers? Do we want competitiveness at all costs or a resilient, sustainable and local ecosystem? How do we want to feed Canadians? How do we want our livestock to be raised? What role do we want our food sovereignty to play? These crucial questions are at the heart of our supply management policy.

When I began working with the women from Burkina Faso I mentioned earlier, I immediately saw the virtuous circle that had been created. If developing countries have benefited from this approach to trade, so too can developed countries like Canada. I’m convinced that Canada can take advantage of reasonable, regulated free trade, which will preserve its reputation as a responsible trading nation, while fully maintaining its supply management policy.

In closing, I just want to mention that, before this bill was introduced in the House of Commons, it underwent an external legal review, which confirmed that it did not infringe on the privileges of the Crown. As a result, I would ask you to vote in favour of sending Bill C-282 to committee as quickly as possible so that we can provide sober second thought, a process that I hope will be quick and have a positive outcome.

Thank you for your attention.