EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, September 26, 1995

.1109

[English]

The Chairman: Order.

There being eight of us, I think we should roll right along here and try to work as expeditiously as possible.

You have the agenda for the meeting. If you will look at the order of the day, with your permission I would like to deal first with item two, for this reason. The last time we agreed as a committee to look at the tourism report. We altered it. The document dated September 1995 reflects the alterations.

We were all ready to pass it - to accept it - Is that the word?

The Clerk of the Committee: Adopt.

The Chairman: We were all ready to adopt it as a report when we ran out of time.

.1110

We had a pretty good meeting of the minds on this, and it's really just to finish this item of business. If it is okay with you, unless there are any other questions about it -

You will remember that we changed various things like the date. The recommendations were altered; recommendation 1 on page 4 was altered to put in a date of October 19, 1995, as it had no date.

What else was changed?

The Clerk: The wording of that paragraph.

The Chairman: We also altered the second-last paragraph on page 4.

Ms Bethel (Edmonton East): Can I move it as amended?

The Chairman: Okay.

Do I need a seconder?

The Clerk: No.

Mr. Mayfield (Cariboo - Chilcotin): Is the amendment adding the word ``recommending''?

The Chairman: That's right.

Mr. Mayfield: Is that the only amendment on that page?

The Chairman: No. The other amendment is to put a date in under recommendation 1, October 1995, at the top of that same page, page 4, because it didn't have a date.

Is that it for the changes?

Mr. Murray (Lanark - Carleton): There was one typo in the earlier one. I'm just trying to find if it is in the current document. I think it was the word ``federal'' -

The Chairman: We misspelled ``federal''?

Mr. Murray: No, I think a word was left out. I marked it on an earlier copy.

The Chairman: Can we understand that if there's that kind of an editing mistake, then we'll correct it?

Mr. Murray: It might have been cleaned up already.

The Chairman: The motion to abolish tourism in Ottawa is what we're - Oh, hello. That was done a month ago.

What we're doing, dear late joiners, is taking the tourism commission report, which we had changed. We ran out of quorum the last time, and we just want to move it along. We have made a couple of changes to it. We have a motion to adopt.

Is there any further discussion?

We have to make one adjustment here. In the third line from the bottom on page 2 is a typo: ``$50 million being spent by the federal'' - ``government'' should be added.

Thanks, Ian. That's an amendment that's needed because of a typo.

Before I move to the vote, are there any other comments or questions?

I guess the other issue is when you want me to table it in the House.

The Clerk: At the earliest possible opportunity.

The Chairman: The earliest possible opportunity.

The Clerk: We can do it tomorrow, if you like.

The Chairman: Fine.

[Translation]

Do you see any problems with that?

[English]

Motion agreed to

The Chairman: We will table it at our earliest possible convenience.

So item two is out of the way.

.1115

We have two more items. Number one is the somewhat confused discussion that came out of the meeting about what we're asking the banks to give us in terms of statistics. So we should be working off two documents. One is Andy Mitchell's one-pager, a memo to me. The second is from the Library of Parliament. It is dated September 21, Mr. Discepola's motion. It was distributed. If you don't have a copy -

This is the best attempt of the research staff to pull out of those meetings what the committee wanted.

I haven't done the textual analysis here. Is there any discrepancy between what Mr. Mitchell says and what we have on this document under Mr. Discepola's motion?

Ms Brown (Oakville - Milton): Mr. Chairman, could we get to the comparison between Mr. Mitchell's letter and the Library of Parliament document, which I think is the question you just raised?

The Chairman: Right.

Ms Brown: Could we look at the Library of Parliament document? On page 3, half-way down, it says, ``Mr. Nunziata's motion''. I read that paragraph, which is fairly moderate. For example:

...members of the committee have expressed the opinion that they would like to invite the ombudsman for the banking sector in the UK and benefit from that foreign experience before deciding on any further steps related to the issue.

That, to me, is a very moderate position. The motion that follows is much stronger than the paragraph above indicates. It says:

...endorse the principles of the establishment of the office of an independent bank ombudsman and that this Committee commence hearings in the fall with a potential view to drafting and presenting to Parliament legislation...

It seems to me that the paragraph before that suggests that before we make any decisions to go further, we should meet with this man and find out what he thinks and what he does. As far as I can see, those two paragraphs do not jibe. One is far too strong in comparison to the other.

For example, if the motion were just to put in motion from the last sentence under Mr. Nunziata's motion, then I think that would be good: that this committee do invite the ombudsman from the banking sector in order to learn from that foreign experience before deciding on any further steps. It seems to me that is a logical conclusion of the discussion, whereas the motion below that is a leap forward in time and logic.

The Chairman: May I make two comments. First, what is here is a context for the motion and what follows is the best attempt to recreate a historical record of what was decided by the group at the time, which did not include you or me.

We can do a couple of things with this. We could revisit it obviously, but all we're trying to do now is clean up what was decided by people who weren't me or you.

Mr. Mills (Broadview - Greenwood): I think the motion is basically saying the same thing, because the first sentence basically said to look at the principles, did it not, Bonnie?

Ms Brown: No, it says ``endorse the principles of the establishment''. It means that they've already made the decision to establish. If they're going to endorse those principles, then they will gather a little bit of information and then present legislation. That's very strong.

Mr. Mills: After listening to the ombudsman, the committee can decide what its recommendations will be; but one thing we wanted to convey was that we, as a committee - and it was virtually unanimous - are not really satisfied with the way in which the current system is going and we wanted to send out a signal that we are heading down that pathway of the ombudsman, so unless the banks can make the current system work a lot better than it is now, we're not going to back off from having an ombudsman.

It was like a heads-up to them, saying that we're committed to an ombudsman because the current system isn't working.

The Chairman: So I shall understand where we are in the grand scheme of things, before we return to the two motions to take in sequence, we're having a general discussion about the whole package here.

So I'm hoping that's what this is, because we will have to return to this in due course, to deal with it as a motion after we've dealt with the previous one.

.1120

Ms Bethel: Mr. Chairman, of course I like to do things in order, but that's fine. We're on this route, so that's fine.

The Chairman: We need not be. This could be just a general discussion.

Ms Bethel: But it seems to be the route by which we're going. This is what I thought was our third decision, but we're talking about our third decision. That's fine.

I just need to be clear on the intent here. I thought the banks had agreed to put in their own system and that after a certain length of time, we would review it to see if in fact it is effective and is working and is doing what we hoped it would. If we feel that it isn't, I guess we will then use a heavier hand.

If we endorse this motion, then in my view we won't have waited long enough to evaluate the voluntary system.

Mr. Mills: Excuse me. We did endorse that motion.

The Chairman: Sure. I'm just going by directive.

Mr. Mills: That motion sits on the books.

The Chairman: Even this motion could be consistent with what you're saying, because it says ``with a potential view to drafting''. In other words, by continuing the discussion, it puts pressure on the banks to come up fast with their own mechanism. Then this becomes a sort of parallel track: we're looking at other instruments in case it doesn't work.

Ms Bethel: In that case, I would ask what process is in place to evaluate the present system.

Ms Nathalie Pothier (Committee Researcher): I have a follow-up that might be related to this discussion. This weekend there was an article announcing that three banks had agreed to appoint their own ombudsmen. In terms of evaluation or mechanisms, it might give something different from August to continue with.

Ms Bethel: So, in essence, the banks are setting up a system by which they will evaluate their own system.

Mr. Mills: May I respond to that? First, two banks already have ombudsmen, and they have had them for a year. The other banks don't. But all of a sudden, when they heard about this motion at our last committee, within 30 days we already have had three other banks getting into the business of having an ombudsman with their own self-evaluation mechanisms. So the very principle we were trying to achieve - as John said, a parallel track of activity - has already had what I would consider to be a very positive effect.

Ms Bethel: We're committing ourselves, then, to having the hearings?

Mr. Mills: Absolutely. We have to have the hearings. We're not walking away from that.

Mr. Mayfield: I want to clarify a bit beyond your statement, Dennis. As we were talking to the banks in August, it seemed to me that there was a fairly uneven appreciation by the various banks of the value of an ombudsman. I wonder if the committee felt encouraged by what we saw, say, at the Bank of Commerce, where we had an opportunity to sit down and meet the ombudsman and have him talk about what he was doing - with a degree of enthusiasm, I thought. On the other hand, I thought other banks were pretty clear that this was not an idea they liked and they were not going to go in that direction if there was any way they could get out of it.

If we decide not to go the way of establishing an ombudsman, would we want to consider some criteria or standards of performance that the banks should adhere to if they are establishing their own in-house ombudsman?

The Chairman: That's a question.

Mr. Schmidt (Okanagan Centre): I think the point Philip made is correct. I like the idea that this is really a back-up position; that's really what this is. Perhaps the motion itself doesn't have to say that, but it might be ideal if it did.

The Chairman: The word ``potential'' is in there.

Mr. Schmidt: Yes, and that's the other point I wanted to raise - ``a potential view''.

I didn't understand ``view'' to be referring to drafting. It seems to me that ``potential view'' - Well, everybody has a view, so how could you have a potential view?

.1125

So the language should be cleaned up a little bit.

The idea here is that it's a heads-up notice, saying if you guys don't establish an ombudsman or, number two, if your ombudsman doesn't work, then we're jolly well going to introduce legislation and create an independent office. That's really what's intended here.

The Chairman: Or with the option -

Mr. Schmidt: Yes.

The Chairman: - of drafting and presenting. Would ``the option'' clarify the -

Mr. Mayfield: That's a much better word.

Mr. Schmidt: Let's do it in that way.

Mr. Mills: That's precisely what we were trying to do, but we weren't going to wait for a year to have them play their evaluation game and then we would have to start the process. As you said quite accurately, this is a parallel track, so if their system fails in six months, then, bang, ours is in place immediately.

Ms Brown: I'm just going to comment on a bit of process here. When I read it, I didn't realize what Dennis is saying, that this is an accurate reflection of what went on at the meeting. So we can't change that, in which case these become what I would call informal minutes of that meeting. So isn't the motion that you just want to approve the minutes of the meetings held in Toronto in August 1995?

The Clerk: Again, it is unusual for a committee to come back to something. The problem has been that the various interpretations of what the motion stated or should have stated vary considerably. So this is bringing back our best guess as to what was decided and asking the members, particularly those who were there, to confirm that this is indeed what they wanted to say. Then the minutes will be confirmed for those meetings and it will be done.

Ms Brown: What do you mean by ``the minutes will be confirmed''?

The Clerk: The text of those motions -

The Chairman: - will reflect -

The Clerk: - will be cast in stone at that point.

Ms Brown: Does that mean that this has to come back again with the wording change?

The Chairman: No. If we agree today and it's really what was intended by - We're dealing with the historical record here. Of course we have the right to reopen it, but for the time being let's try to figure out what people were trying to get at at that meeting. So far we've simply tried to clear up the language by putting in ``option of'', but it's simply to make clear what was intended. All we're talking about is whether we can agree that this was the intention of that meeting.

Mr. Valeri (Lincoln): I just want to clarify the discussion. This is my understanding of what went on at that meeting. This motion was to represent, first, a back-up position. As you said, it would be a parallel track along with what the banks are already doing. There should be potential there - and I stress the word ``potential'' - to draft legislation. We were not committing to draft new legislation. Some banks have an ombudsperson in place.

Certainly the consensus at the meeting in August was that we were not happy with the information we've received from the banks, so this was a sort of wake-up call for them that we are investigating what is going on in the U.K. and, if it is deemed to be required, we have the information to move forward on that issue.

That's my understanding of it. We weren't committing to anything, with the exception of the potential of performing some legislation and certainly inviting the ombudsperson to come.

The Chairman: And to some extent responding to what Paul Martin asked us to look at.

Mr. Valeri: Exactly.

[Translation]

Mr. Bélanger (Ottawa - Vanier): I have a question on the process. Since I have the English version of the motion, I can follow more easily the discussion because the words used are not quite the same in both languages. The English version says ``the potential'' and the French version says ``avec l'intention éventuelle'', which means that it will be done, but that we do not know when.

The Chairman: What if we wrote in French ``l'option de'' or something to that effect?

Mr. Bélanger: Yes, we could change the wording accordingly.

When we talk about the motion, we are referring strictly to the four last lines of the document, page 3, aren't we?

The Chairman: Exactly.

.1130

Mr. Bélanger: This motion says that the hearings are to begin this fall. However, in looking at the tentative schedule that the sub-committee submitted to us along with its ninth report, I see that meetings have been scheduled every Tuesday and Thursday until mid-December. That does not leave us with a great deal of time to hold hearings.

The Chair: No, because we decided, for instance, to invite the British Banking Ombudsman to appear. Therefore, we have already begun.

Mr. Bélanger: If that's what we mean by hearings, then I don't see any problem. However, if we are talking about holding a series of hearings this fall to hear representations from various groups in our society on the issue of an ombudsman, then I'm wondering when we are going to be able to hold these hearings.

The Chair: But we are holding the hearings now. We are beginning with the British Banking Ombudsman.

Mr. Bélanger: Okay.

My other question pertains to the substance. Where are we going to stop?

We started talking about an ombudsman and already a few banks have told us that they were going to create an internal ombudsman position. Are we going to stop when every financial institution has its ombudsman or are we going to leave it up to them whether or not they want to have one, reserving the right, as the government, to perhaps impose one on them?

I would like you to clarify just where we want to go, because if we want to impose an ombudsman on all the banks, I'm not sure that I'm in agreement.

The Chair: This is more of a moral pressure, isn't it?

Mr. Bélanger: Yes.

The Chair: It's to encourage the others.

Mr. Bélanger: But if a bank states that it doesn't want an ombudsman, are we going to force one on it? I would like to know the feelings of the members around this table on this matter.

[English]

Mr. Mills: Mr. Chairman, my understanding is that our former chairman had a meeting with the ombudsman in England and he was amazed at the effectiveness of that role he was playing. I don't know specifically what he does or why it was so effective, but I don't think we can really answer your questions until we hear what this British ombudsman does.

With all the best intentions of these banks having their own internal ombudsmen - and they might all have them even before this ombudsman arrives - we might discover that, guys, you can keep yours, but we've heard so much from this one that we want to have an independent ombudsman as well. I don't know, but I don't think we can answer, Mauril, until we've heard why this guy is so effective over there and whether or not it even applies in our banking culture.

[Translation]

The Chair: Mr. Rocheleau.

Mr. Rocheleau (Trois-Rivières): The way I see it is that, following some rather pathetic stories that we heard during committee meetings about the way that banks handled certain cases, or, following the stories, which bothered everyone, I believe, about the arbitrary and mysterious way that certain banks made decisions, the committee decided to recommend the creation of an ombudsman office for people who borrowed from the banks and not the creation of a bank ombudsman. Bankers reacted by stating that they were going to create an internal ombudsman position for people borrowing from the bank. However, we observed in Toronto that the process lacked credibility and that the complainants didn't use it because they didn't believe in it.

In conjunction with that, the Chairman met with the British Ombudsman. This meeting enabled us to discover that the banking sector's main problem had to do with excessive delays, when in fact it was when the process was pushed to the limit that the delays became excessive. On average, the delays were quite reasonable. I do not remember what they were, but they were quite reasonable.

All that shook us up and led to the suggestion that we examine this issue perhaps more quickly than we had planned. This is how things developed, according to me, Mr. Chairman.

.1135

The Chairman: I agree with what you've just said. We didn't promise that we would have a federal ombudsman, although that is a possibility, but moral suasion has given us some positive results.

Mr. Rocheleau: What was perhaps offensive to committee members, Mr. Chairman, was that one bank in particular told us outright that it had no intention of appointing an ombudsman while the others admitted that only on rare occasions did they resort to an ombudsman. So we were tempted to say that we were going to act. In any case, that is my understanding of what happened.

The Chairman: So everything is possible, but we are continuing to exert pressure with that motion.

[English]

Are there any other - Again, I'm feeling a little out of the discussion because I wasn't there, but it does seem to me that it enables us to keep it up without committing ourselves to a definite conclusion - unless I've got something wrong there.

Mr. Mills: That's exactly it.

Mr. Mayfield: Can I ask a point of clarification?

The Chairman: Sure.

Mr. Mayfield: It's my understanding that we have decided to make contact with the British ombudsman, either by a conference call or by inviting him here, by some means. Has that decision definitely been taken?

The Chairman: There have been conversations. There is discussion of a specific date in December for that person to come before us.

The Clerk: Mr. Zed's office has spoken with their office. At that point it was a discussion of -

The Chairman: And we've pencilled that into our schedule.

Mr. Mills: He gave us a couple of dates when he could come.

The Clerk: Yes, December 4 and 11.

Mr. Mayfield: So I guess I'm wondering why this conversation is happening they way it is.

The Chairman: Well, I think it's useful to help us -

Mr. Mills: For clarification for new members to the committee, as to what we were intending to do at our last meeting.

The Chairman: We're most appreciative.

Is there any further -

Ms Bethel: Mr. Chairman, I just want to be clear here. We're talking now about this one. Has this motion been moved, or if we approve the report, is that good enough? I think we are ready for a vote if it's necessary.

The Chairman: I think it was voted on.

Mr. Mills: Yes, it was approved.

The Chairman: What we're doing is simply accepting the record to make sure we understand what was voted on because of a certainly lack of clarity of record-keeping at the meeting.

Ms Bethel: That's not my understanding. I thought the motions were put before us as motions that we would deal with. I was confused, too, at that meeting, because usually someone will make a motion and then it will be tabled until a time in the future when it will be discussed. I'm just having trouble with the procedure.

The Chairman: That's from the clerk.

Ms Bethel: Has this passed, and if it has passed, why are we discussing it?

The Clerk: I apologize, and I wasn't at those meetings either, so I'm operating a little bit in the dark.

My understanding is that there was considerable discussion, primarily I gather on the first part of what's in this document, but also on a motion that resembled this. However, there was no transcript of that meeting, and that's the biggest problem from our point of view.

The Chairman: Was there actually a vote, as far as we know?

Ms Bethel: Would it not be cleaner and clearer if someone moved this motion and we voted on it right here?

The Chairman: Fine. I agree.

Ms Bethel: I think we're in agreement.

The Clerk: Yes. Decide what you want and that will be what's on the record.

Ms Bethel: All right.

Mr. Bélanger: We're talking about Mr. Nunziata's motion.

Ms Bethel: My understanding is that there are two motions that I don't think we've dealt with. Some may think we have, but I don't think we have dealt with them yet.

I thought we would adopt the report and then somebody would move this motion, we'd discuss it and so on. Then someone would move the second motion, and that would be clearly on the record as having been supported. That's what I thought we could do.

The Chairman: From a procedural point of view, does it make - We can go at it either way. We can do the bits first and then adopt the whole report. Maybe that's the best, just to take care of the component parts to make sure we understand them, and then we can say, we've taken care of the component parts, so now let's do the whole thing and adopt it as a record of the proceedings.

Ms Brown: That's all this is.

Ms Bethel: But if you move adoption of minutes or if you approve a report, that's still not the definite decision. You still have to move these two motions separately.

Mr. Mills: I'll move the Nunziata motion. Should we add the amendment ``option of'' instead of -

The Chairman: Yes.

Mr. Mills: Fine. So put ``option of'' in. We're all in agreement. It needs a seconder and that's it.

The Chairman: As amended.

Ms Bethel: Then I think there must be opportunity for people to speak for or against, because some of our new members have reservations. I think that's fair.

The Chairman: Fine. The motion has been put. Are there any -

Mr. Mills: Mr. Chairman, just for clarification, I believe we voted on this motion and it is approved. We are trying to cooperate here with newer members of the committee. I'm willing to remove the motion, but I'm not willing to back off on the motion and I believe that a majority of members aren't. If we're going to get into reopening it and rediscussing it, then I stand by the original vote.

.1140

Ms Bethel: I don't mean to make it long or arduous. I think one minute each, to support or not -

Mr. Mills: But it has already passed.

Ms Bethel: No, I think our clerk has suggested that it hasn't passed.

The Chairman: Mr. Valeri.

Mr. Valeri: I just want to clarify this once and for all. My recollection of this was that a motion was presented, it was voted on, and it passed - done.

An hon. member: Then how can we change the words?

Mr. Mills: Would you please put that on the record, that it's what you thought, too, Philip?

Ms Bethel: Except there is no official transcript.

Mr. Mills: But we have four members who were there.

Mr. Murray: I agree as well. It is my understanding that we voted on the motion and passed it.

Mr. Mayfield: I sat next to John when we made the motion, we discussed it, and the motion was carried.

Ms Brown: Mr. Chairman, if in fact that's the case, looking at minutes - we can't change the minutes to suit ourselves.

The Chairman: No, that's my point.

Ms Brown: So if those are the words that came off the videotape, and that passed, the only motion left to us is to approve the report of that meeting.

The Chairman: But there was agreement by the people who were at the meeting to put in the words ``option of'' as a more accurate reflection of what was intended.

Ms Brown: But you can't adjust minutes. If that came off a videotape - You cannot doctor the minutes; that's against every rule of procedure I've ever heard.

Mr. Mills: Fine. Then let's just adopt the whole thing and let's move on.

Ms Brown: This is the best picture we can get. We have to adopt it.

Mr. Valeri: There's one point I'd like to raise before we do that, though, and it has to do with Mr. Discepola's motion. I believe we discussed it and decided to include in the size of the loan by threshold the category from $0 to $24,999 and from $25,000 to $499,000, continuing on there.

Ms Bethel: That's my understanding, too.

The Chairman: I don't think we have a lot of problems here, but I think we can resolve them in a -

Mr. Valeri: Mr. Chair, can we just accept these motions as being passed as they were, and can we then, as a committee, pass a motion as to our understanding of the intent of this motion, and that's it?

The Chairman: Okay, that's a good point.

The first issue, then, is that we can accept both of these motions as simply a record of what was said and done in Toronto. We can then move even minor amendments to help them along. Okay?

Ms Bethel: I just want to be clear. So we would remake the motion and then rebuild it, and we can do it quickly because we have agreement.

The Chairman: Right. This now applies to the package. To the best of the knowledge of the people there, even if there's a lack of clarity, which we will return to, this seems to be the best available record from the videotape of what was said in Toronto. May I have a motion to accept this report?

Mr. Mills: I so move.

The Chairman: Is there any discussion about that being the best effort?

Motion agreed to

The Chairman: Now, let's do the Nunziata one, because we've been talking about it, all right? Would someone care to move an amendment to the motion that simply eliminates ``potential view to'' for ``option of''. It's at the bottom of page 3, the second-last line.

Ms Bethel: Is this the Library of Parliament document?

The Chairman: The Library of Parliament document.

Mr. Mayfield: I move that motion.

Mr. Mills: I second it.

The Chairman: Okay, the motion has been made to amend to include ``option of'', and it has been seconded. Is there any discussion on this particular amendment?

Ms Bethel: So what we're voting on is this motion:

That this Committee endorse the principles of the establishment of the office of an independent bank ombudsman and that this Committee recommends the hearings in the fall with the option of drafting and presenting to Parliament legislation for consideration.

The Chairman: Right.

Ms Bethel: Good.

The Chairman: That's what we're up to. Is there any further discussion on this point?

Motion agreed to

The Chairman: Okay, that's done. So that's cleared, and we're going to go ahead with the British ombudsman and we understand what we're doing.

Now, as for the second one, what we're trying to do is really deal with any lack of clarity or consistency between what people thought they were doing then and what has appeared here. The one item that has been raised is, was there a first category - if you're looking at number one - of $0 to $25,000, and - what was the next category going to be, $25,000 to $50,000 or $25,000 to $99,000? Oh, it was $25,000 to $50,000.

.1145

Mr. Mayfield: As I remember the discussion, one of the banks, I believe, made the statement that half their customers were borrowing amounts of less than $25,000.

The Chairman: That's a pretty significant group of people.

Ms Bethel: But also they were consumer loans and not business.

The Chairman: That's true. So were they able to figure out which were consumer and which were business? Below $25,000 or -

Ms Bethel: They said they couldn't.

Mr. Murray: They couldn't, really.

The Chairman: In terms of a general discussion, just so I understand the magnitude of what we may have to deal with on this, are there any other questions of record or any other issues that are not covered off by this motion? That's the only one I've heard.

Mr. Bélanger: Are we to understand, Mr. Chairman, that this also was voted on?

The Chairman: Correct.

Mr. Bélanger: And approved? So if one has questions or disagreements about it, they're s.o.l.?

Mr. Mills: No, we redo it.

Mr. Chairman, I want to speak to that. We were coming down to the end of a long period and there was a spirit at that time that if we needed to amend, we could. For example, by SIC code is something we cannot do. That has to be corrected. It has to be by municipality.

The Chairman: By which?

An hon. member: By the first three digits of the postal code?

Mr. Mills: We can't do it by postal code, and I'll tell you why. We discussed this in our Taking Care of Small Business report. You could have a situation in certain parts of the country where in a certain postal code there are only two companies, and that postal code actually identifies what the company would be. So that's why we settled on the words ``by municipality''.

The Chairman: What I'm trying to do now is put out on the table a list of things we might want to amend once we've had a discussion. So we have -

Ms Bethel: Mr. Chairman, I think it would be quicker and easier if someone were just to move this, and we could vote on it.

The Chairman: No, that happened when we passed the report. Remember, we agreed that there had been -

Ms Bethel: I need to hear it procedurally.

The Clerk: My understanding was that you had agreed to accept what's here as what happened in Toronto and now you will consider the possibility of amending what was done in Toronto.

The Chairman: That was passed. In other words, by accepting the report, that -

Ms Bethel: You could do that. Then you have to go back and reconsider, and then you have to have three-quarters - We can't amend a passed motion.

The Clerk: If we assume this was adopted in Toronto as it appears here and somebody disagrees with what's here and wants to change it, then you just make a motion to amend the motion adopted in Toronto at such-and-such a meeting.

Mr. Mills: Yes, if it's unanimous you can amend it, and it was unanimous that we amend it.

The Chairman: So what I'm hearing is that there was a spirit in the room that this was simply the best effort on that day to get through it, that there were issues left unresolved such as the postal code issue. Should we do it by -

Ms Bethel: Mr. Chairman, I do accept the clerk's ruling, but there are some question marks here: ``Loan loss ratios per threshold above (or in 1 above?)'' There's a question mark there, so -

Mr. Mills: Let me deal with this and try to be helpful to the committee.

There was a general consensus - and I stand to be corrected on this by those colleagues who were there - that Andy Mitchell, who had some experience in what banks do and what they report and not report, was to refine our objective that we tabled. I think that today he has taken a shot at refining that, and I would ask all members to see that they got it. And with the exception of SIC code converting to municipality, I think basically it represents what we discussed that day.

The Chairman: There's that. The thing I would like to put on the table as an element of confusion, just to make things even muddier, is this. I noticed in the testimony of the meeting that was held in April, in which Helen Sinclair produced a document - These are the opening comments: ``With proposed performance benchmarks - '' and this is marked page 16 on the document of September 21.

.1150

Some of the same data is being offered to be collected by the Canadian Bankers Association. But what I find curious is that there's even more stuff they are proposing to collect information on that is not included in our motion. The one that leaps out to me is that they offered to collect some stuff on knowledge-based industries. My question is, if they are doing it anyway, wouldn't we want to throw that in since they are collecting it -

Ms Bethel: And it's by industry.

Mr. Mills: Excuse me, I was just corrected by our colleague from the clerk's office. By SIC code means by industry. I didn't realize that.

The Chairman: Where is this?

Mr. Mills: Column 3.

The Chairman: Oh, I see. What is a SIC code?

Mr. Mills: Can somebody explain that to the committee?

Mr. Tony Jackson (Committee Researcher): Standard industrial classification.

The Chairman: Standard industrial classification. The things you learn.

Mr. Mills: I was thinking of zip code.

The Chairman: That does make a difference.

Mr. Mills: It sure does. And the word ``region'' should read ``municipality''.

Ms Bethel: It says by municipality.

Mr. Mills: Andy's letter doesn't.

The Chairman: I'd like to come back to the point that the CBA said it would collect this data. They had their view of how it might go, but they've offered to bring forward more stuff than we've asked for. Why wouldn't we ask for it?

Mr. Mills: First of all, the CBA's exercise, Mr. Chairman, was the CBA collectivity, number one. We're talking by bank.

The Chairman: We want it disaggregated.

Mr. Mills: Exactly. The second point is that the CBA's was a survey. It was going to do a survey approach; it wasn't going to be precise. We felt we wanted accurate and very specific reporting by aggregate, by bank.

Ms Pothier: Exactly. With respect to survey, as you mentioned, some aspects of the proposal with CBA would have to be done by survey. I understood that the deadline of June 1996 was a bit of a problem. With respect to that, I must mention that I had to speak with Mr. Mitchell about the survey, and - would specify that if results from the survey were available before June 1996, then let the CBA not wait until June 1996.

The Chairman: Okay. I think what I see -

Mr. Mills: We're talking about two different things, Mr. Chairman.

The Chairman: No, I understand now.

I think what I'd like to do, then, is this. This is our opening position. What the CBA is talking about and what this longer report is talking about is further down the road. I was just curious to know if perchance they had got any of this stuff in by -

Mr. Mills: It's called the MAD treatment, maximum administrative delay.

The Chairman: I see.

So let's get on with it. Let's start by asking for as much precise information as quickly as possible, but with the view of broadening it out in some of these other categories.

Mr. Bélanger.

Mr. Bélanger: When I read the motion, I found that we might be asking for a lot of information that may or may not be totally relevant to what this committee is trying to do and that may or may not be of much significance.

For instance, it was on the employee category that I had some questions. I'm prepared to be convinced, but to know at any given time how many employees are involved would be to keep them to almost weekly or monthly contact with the business. They may very well start at 15 employees or drop to 6 or go to 25 and so forth. If that's the case, we have three categories.

So I thought perhaps we were looking for a little too much detail, which may or may not be relevant, as I said.

Also, I'm looking at what Andy has prepared in terms of numbers of the loan. I have no problems with what he is suggesting. I think it's fairly clear. It moves in step and it flows well.

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If what we're looking for is what is in Mr. Mitchell's note to you, Mr. Chairman, I have no problem. Is that to replace the Discepola motion?

Mr. Mills: Yes, it is.

Mr. Bélanger: Then, fine, I have no comment.

The Chairman: What I understand is that this is Andy Mitchell's take on what was intended by the Discepola motion. It's not seen as -

Ms Bethel: No.

The Chairman: What is it, then? I guess you had to be there.

Ms Bethel: Even then I'm not sure. It helped.

Mr. Discepola's motion, as I understand it, is in place. When I look at what Andy Mitchell is suggesting, I don't see any differences, except that he no longer wants statistical data on some things that I think are quite important: age of business, gender of borrower. Also, I still haven't got clarification on what was meant by ``loan loss ratios per threshold above'', ``loan turndown ratios''.

Mr. Mills: He has not missed what you just said. it's on the back.

Ms Bethel: I take it back.

Mr. Bélanger: You're right about the age; the age is missing.

Mr. Mills: I think that's a bit much.

The Chairman: Sorry, which is a bit much?

Mr. Mills: Age.

The Chairman: You mean how long they've been in business?

Ms Bethel: Except that there is some feeling that there's some discretion against new business.

The Chairman: I think that is very important.

Ms Bethel: Yes.

The Chairman: It tells you how long a company has to be around before it can get financing. It means a lot of things that are contained in the age category.

Mr. Mills: I thought you meant age in terms of personal age.

The Chairman: No, the age of the company, not the age of Dennis Mills.

Mr. Mills: If it's age of company, I have no problem with it.

The Chairman: You thought it was like gender, you mean?

Ms Bethel: I'd like it to be clear. Are we saying now that this motion is going to replace this motion?

Mr. Mills: Yes.

The Chairman: I think what we're trying to discuss is whether that is going to be the case. We're trying to come to the best possible melding of these two things. They're not hostile; we're just trying to make it as clear as possible.

Ms Bethel: In order to replace a motion, you do have to go through a motion.

The Chairman: Can I suggest this? I think it helps if we know which is the template we're working from and which are the things we're reading into it. Since in some technical way we have already passed the Discepola motion, what I'd like to do is see running through it - Why don't we just go through it, see what would have to be altered and have whatever discussions are necessary, and then just work from that as the draft. Can we do that? I can do it the other way around, but we actually have one that we've passed as record here.

Ms Bethel: You're missing all the turndowns.

The Chairman: All right. What I would ask everyone to do, then, because we have to work from one draft or the other -

Ms Bethel: Just the one that's passed, Mr. Chairman.

The Chairman: That's what I'm suggesting. What I'd like to do is propose that we go through it in the order in which it appears before us, altering as we go, and if there's something that's not there, we will put that in as well at the appropriate moment.

Let's start with size of loan by threshold. There doesn't seem to be any difference except the one issue of $25,000 and under -

Ms Bethel: You're missing 200 and 400.

The Chairman: No, I'm now assuming that the text, unless amended, is the Discepola text and we're using the Mitchell text to improve, plus any other comments people have on the way through. The only comment I've heard is $0 to $25,000, $25,000 to $50,000, and so on. Can we add that? Would that be okay? Are there any problems with that as an amendment?

Ms Bethel: Except that it's all there. You don't have to amend it. You have to amend to delete.

The Chairman: No, you have to amend to add, because we're adding a new category: $0 to $24,999, $25,000 to $49,999 becomes the next category, and then after that it follows on. We're just adding a subcategory that has not been captured, for smaller loans -

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Ms Bethel: Discepola says $0 to $49,999.

The Chairman: And what we're adding is this: we're breaking out $0 to $24,999 and making the next category $25,000 to $49,999. Are there any problems with that?

Ms Bethel: That's not what was being suggested by Mr. Mitchell.

The Chairman: I know, because there's a third point on the table that was debated at that time, which I'm trying to clean up as we go.

Ms Bethel: So you want someone to amend to add.

The Chairman: We're having a discussion on whether it would be a useful idea.

Mr. Bélanger.

Mr. Bélanger: I have no problems with the notion of getting information and making it useful. I'd like someone who's proposing that we go to $0 to $25,000 to say why. It seems to me that $0 to $50,000 is a reasonable range for a business. We're not talking about personal loans here, I take it, but strictly business loans. I've dealt with venture capital notions, and $25,000 and $50,000 are virtually the same. To operate a business at $25,000 or $50,000 - again, the margin there is so small. How much detail do we want and need? I have to be convinced here.

The Chairman: The historical record is that the person who is particularly keen on this category, Mr. Iftody, is no longer with us, as I understand it.

But did I hear you say something? Would you like to speak? Do you think it's a useful category?

Mr. Mayfield: I would be happy to speak to that.

I think that what you're saying, Mr. Bélanger, is accurate in some instances, but I think in many instances $25,000 is a lot of money for someone who has never got started before, who is facing the most difficulty with the banks and is in a category probably with the most turndowns, because there would be more in that. I'm talking about small operators, and I believe that kind of smallness should not be a deterrent for someone with an idea and the imagination and energy to go ahead and do it.

I think that if there are significant numbers of people encountering that kind of difficulty from the banks, we should know about that. I've so often heard the banks say that the problem is that it costs as much to administer a $10 million loan as it does a $50,000 loan, and yet there are not going to be as many $10 million loans as there are $50,000 or $25,000 loans. It's a matter of degree, and I think $25,000 is a lot of money for some people.

The Chairman: Welcome, Mr. Ianno. What we're talking about, to come right into it, is a report that has the date of September 21, from the Library of Parliament. It's Mr. Discepola's motion. We're on page 2. We're talking about the utility of breaking down the category from $0 to $50,000 to from $0 to $25,000.

That's an argument. Are there any other questions or discussion on that point? I think probably all of us have met people in this category who've been turned down by banks or had difficulty.

Mr. Mayfield: Perhaps what we need to do is sit through a couple of days of confronting these banks. It generates a certain attitude in the committee that facilitates these discussions.

The Chairman: Do I hear any vehement objection? I think those are compelling and useful -

Ms Bethel: Mr. Chairman, I would be against the suggestion. I feel that $0 to $50,000 is adequate, and according to Mr. Mitchell it's one that the banks already track. It would be easy for them to provide it for us as early as November 30.

The Chairman: Do we know for a fact one way or the other that they do not track from $0 to $25,000 in this category? Do we know that?

Ms Bethel: I think they told us that they don't.

The Chairman: They do not.

Mr. Mills: I'm not sure.

Mr. Mayfield: I think at least one of them did.

Ms Bethel: You can call the question, I think.

The Chairman: All those in favour of amending it - I think we've had enough discussion at this point - to include a new category from $0 to $25,000, please raise your hands.

Mr. Mills: Could I speak to this motion?

The Chairman: I'm sorry. Sure.

Mr. Mills: Philip has a very good point here, but I also know where Mauril is coming from. We don't want to paper-burden these guys to a point where we become challenged in terms of our logic. I go back to the Federal Business Development Bank, and we discovered that something like 60% or 70% of their loans are under $50,000. I think that one of the reasons why they have so many loans under $50,000 is that a lot of those people don't really get the help they need with the other six or seven main banks.

.1205

So I'm torn on this. I really have to tell you I think Philip is on to something, but I know it's going to be a hell of a lot of work for the banks.

The Chairman: The main thing is that whether they produce the material in that kind of detail for us or not, it won't be an excuse to give us that which they already have. So it might be a future target.

Mr. Ianno (Trinity - Spadina): If everything's computerized right now and the banks have a lot of information, as we saw with three of the banks presenting us with the information in August and the others not producing it - not that they didn't have it, but they agreed amongst themselves not to provide it. I guess similarly somewhere down the line, I wonder how much of the information is readily available but somehow they don't want, as of yet, to release.

So I would like to see the request go in for the $0 to $25,000, and if they can't accommodate or they need some time, then you deal with it accordingly.

Mr. Mills: Speaking on that point, it's coming back now. One of the problems we have is that the local branch managers quite often don't have a line of credit to approve a loan of more than about $25,000.

The Chairman: Right.

Mr. Mills: And what we heard from a lot of bankers is that once something gets over $25,000 it goes to the central credit system, and quite often it's in that bureaucracy in the middle in the bank that you have the real difficulties, because they are just working on paper, whereas the branch manager has a much better feel.

The Chairman: Which would be revealing. That might come out in the statistics.

Mr. Mills: Yes.

Mr. Bélanger: These are starting to be very good points. Would it seem that we're trying to accommodate the banks too much by asking them about this very question, whether or not they have this information, and if not, how difficult it would be to obtain it, how much of a burden would it be? Let's find out.

Mr. Mills: Why don't we put the $0 to $25,000 optional.

Mr. Bélanger: That's a good point. See what happens.

Mr. Valeri: I'm a big believer in giving everybody an opportunity to provide us with as much information as they can. I refer to a recent article in The Toronto Star, where it says that the CIBC and the Bank of Nova Scotia and the TD are in the process of wrenching credit decisions from their ivory towers and restoring them to communities and branches. So they're bringing that information back; let's get the information from them.

The Chairman: Mr. Ianno.

Mr. Ianno: I was just going to say that their public relations now are working on basically saying how they're putting the decision-making process back into the branches, and that was the big story on the front page of The Toronto Star, to make it seem like, hey, we're moving, we're really listening to you guys and to The Toronto Star.

So let's help them along with their public relations. Since it's going into the branches where they make easy decisions and easy information gathering, then let's ask for that information and let them say no to us.

Ms Brown: Mr. Chairman, the Canadian Bankers Association have a lobbying group. If it really is terribly onerous, I'm sure we would get a letter saying, did you realize this is going to mean such-and-such to us?

Mr. Mills: Don't upset the CBA, Bonnie. You'll be removed from the committee.

An hon. member: There are already two down.

The Chairman: I could be an ambassador to Israel if I play my cards right.

Mr. Ianno: No, I think that was the reward.

The Chairman: Actually, Paris - no, no, it was just a thought. We have illusions of far-flung places.

Yes, Mauril.

Mr. Bélanger: Don't let it ever be said that I cannot be convinced.

The Chairman: I detect a consensus on the point that we shall ask for this new category. Do we need a formal amendment to that? We've had it moved by Mr. Mayfield.

Some hon. members: Agreed.

The Chairman: All right. So that's the new category.

.1210

What I'm hoping people will do is keep referring back to Mr. Mitchell's document.

The next thing we have here is this employment size. We've had a bit of discussion from Mr. Bélanger on this point. First of all, what does Mr. Mitchell have to say about - Does he talk about employment size?

Ms Bethel: He doesn't include it.

The Chairman: All right, shall we have a discussion of whether this is a useful category, and if so why, and are these the right numbers?

Ms Bethel: Mr. Chair, I have a question to the researcher. Are these tracked by Statistics Canada? Where do these come from?

Mr. Mills: Which ones?

Ms Bethel: Why are they relevant? I need the rationale for why they're relevant.

Mr. Jackson: It's a question of definition. You can define it as the number of cuts by size of revenue, by size of employment. Because there's no right definition, you would want to get all these tables out there to enable you to compare and come to some sort of average conclusion.

Ms Bethel: Thank you.

Mr. Chair, I guess it's my preference that it remain.

The Chairman: That the category remain?

Ms Bethel: Yes, that's my preference.

Ms Brown: Why don't we just call it ``average number of full-time employees over the past twelve months''? That way it's just one number - as opposed to monitoring -

Mr. Ianno: When they classify it, it's at the time of the loan approval, so it's a specific number versus an average.

Ms Brown: Okay, I get it. It's just at the time of the loan approval. Then that's easy.

Ms Bethel: I think we're generally agreed.

The Chairman: I think so. Mr. Jackson points out that the number of employees - and I guess if it adds clarity, ``average'' would be part of the loan application anyway.

Mr. Ianno: No average required, because it's on that specific request that you have a certain number of employees, and that's the classification.

The Chairman: So this language is clear enough for that purpose. They collect that information. We think it's useful as another cut at it. It's not going to be burdensome, because they're collecting it right on the loan form. Are we agreed that this category goes forward?

Mr. Bélanger: My logic is similar to the previous one. If they don't agree they'll let us know, I presume. But perhaps we want to entertain a notion -

The Chairman: A notion or a motion?

Mr. Bélanger: - a notion - that if the banks are going to be doing surveys as opposed to their own statistics, which is what we're talking about, we might want to suggest that they also, at that point, survey the number of employees to see if there is a progression or something. If we're going to get a snapshot every once in a while through a survey mechanism, there's no problem there getting the number of employees, and perhaps a more accurate reflection at that time.

I'm asking for more information here, not less. I'm talking about both. This is fine. If they have it on the loan application it shouldn't be a problem.

The Chairman: That's right. But can you hold that point until we come to a point - What I'm trying to do - This is strictly statistical, whereas you're talking more of service and survey.

Mr. Bélanger: The other one is the numbers here. Do we need categories, or do we need the number of employees, period?

The Chairman: I think it would be a better snapshot, because you can do more cross-referencing, can't you, of sums of money and -

Are they standardized? When they put a number down, it could be any old number. So they'd have to do a little search.

Mr. Schmidt: Mr. Chairman, that's a very interesting question, because if they are categorized, then they are lumping groups together. They're aggregating the numbers, zero to five, and then the other categories. If we had them by number of employees, we could aggregate them to suit our purposes as we want them. It creates more flexibility if we simply ask for the number of employees rather than categorizing them.

I don't think it's going to make a big difference to us. If it's easier for them to categorize them, I concede that. But I can also see the value statistically of having the freedom and the flexibility.

Ms Bethel: One of the reasons I do like the categories is that at one point we might want to know how many small businesses between 20 and 49 are taking loans of between $250,000 and $500,000. You'll be able to cross-reference.

.1215

Mr. Schmidt: I want the flexibility for both.

Ms Bethel: But if you break it down too much, maybe it won't be as meaningful.

Mr. Schmidt: I don't think it's a big issue.

The Chairman: Are there any other views on this, one way or the other? I can see that obviously -

An hon. member: That's how I feel too.

The Chairman: Shall we let her lie where we flung her? Okay, so category 2 goes as is.

Sorry. B is by revenues. Are there any problems with that?

Ms Bethel: No.

Mr. Mayfield: May I back up to 2 just for clarification? Have we decided that this number is set at the time of loan approval? Is that what we have decided?

The Chairman: That's what they put on the form itself.

Item 2 has a lot of subcategories. We've done revenues. We're now looking at age of business.

Ms Bethel: That's not included in Andy's, but I think it's important.

Mr. Bélanger: We went rather rapidly on -

The Chairman: On 2B, or whatever it's called.

Mr. Bélanger: Yes. Or not to be?

The Chairman: Yes. Or not to be, as you say.

Let's go back to revenues, then.

[Translation]

Mr. Bélanger:

By revenues at the time of the loan application.

[English]

The Chairman: That's on the form?

Mr. Jackson: I suppose to get a loan you have to have some sort of business plan and forecast revenues. There may be a problem, because in some cases it's actual and in some cases it's forecast revenues. But people at banks should try to apply uniform standards to the data.

Mr. Bélanger: If there are no sales, because it's strictly a new business, then it's zero. So maybe you want to have a category of zero for start-up businesses.

Mr. Ianno: It's covered under $0 up to $250,000.

Mr. Bélanger: Is it?

The Chairman: No, but you wouldn't know. It could be $249,000. It would give you a rather false figure.

Mr. Bélanger: Have the banks ever lent a penny to a business that had zero annual revenues? The answer is probably zero.

Is it sales or profits? Which is it?

The Chairman: I think that's an interesting point. We could add a category of - What is the next category? If the first category is zero -

Ms Bethel: $1 to $2.

Mr. Bélanger: We were talking about my first question and the clerk indicated yes, but I would like the chairman to confirm that.

No disrespect meant, madam.

This is annual sales at the time of the loan application, is it?

Ms Bethel: Sometimes it's revenue.

The Chairman: Revenue.

Mr. Schmidt: That's a key point. Is it sales or is it revenue? Revenue is the net figure.

The Chairman: Does anyone -

Mr. Valeri: I would speak to the interpretation of revenue for the purposes of this statistical information, and I would say revenue is meant to be sales, not profits. Or net. We're not getting a net figure here.

An hon. member: Gross revenue.

Mr. Ianno: But I think revenue is understood as coming in versus going out.

Mr. Valeri: Sales.

Mr. Schmidt: Cost of sales. Well, okay; but just a minute, are you talking about the gross?

Mr. Ianno: How does the bank determine your authorization? They do it by ten times the sales, and then they do your authorization. They multiply by ten. What would that be?

Mr. Schmidt: Well, sure, but they have at least three categories. There are your gross sales. There's your cost of sales. Then there are your administration and operational costs. Then there are your other costs. Those are quite independent of cost of sales. Which number are we looking at here?

The Chairman: What number did they -

An hon. member: - I think it's cost of sales.

An hon. member: We're looking at capitalization instead of revenue here.

The Chairman: What numbers are put on the loan application form? I guess the business plan would need them all, right? Which one would you like?

Mr. Ianno: The question is what do they use? They always went on the basis of revenues. That was where I asked the questions, often, and that's how they determined what their potential authorization of borrowing was.

Mr. Schmidt: I have a sneaking suspicion, Mr. Chairman, that ``revenue'' is one of those weasel words; it gets to mean a lot of different things. Revenue in a consulting firm is defined one way. Revenue in a manufacturing firm is defined a different way. Revenue to a rental agency is defined in still another way. So we really have to identify what it is that we're after here.

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The Chairman: We want to be as clear as we can. I'll look for any phrase that does the job.

Mr. Valeri: My understanding is it is gross sales. But I want to go back to the report. We need to stay consistent with the definition in our report.

Mr. Schmidt: I think sales is the issue.

Mr. Bélanger: You can call it ``billings'', but it's still sales.

The Chairman: Does it help to call it ``gross sales''?

Mr. Bélanger: Sales at the time of application.

The Chairman: It's interesting. I'm looking back to the CBA proposal, and they break it out by sales level. I guess that's the same thing.

Do we then remove the words - just put in ``sales'' and understand that the next line is $0 to $249,000 - annual sales?

An hon. member: The zero?

The Chairman: That's another discussion. Does anyone want the zero category of sales? We could vote on it. Are there any other strong feelings, yea or nay, for this zero?

Mr. Ianno: What we're trying to do is promote more sales by small businesses. So even if they have zero sales, that's a bonus to us. We're not trying to curtail that in any way. It's just that I guess if you're looking at a large company that has no sales and that is just in the initial stages, and if it can borrow $10 million with no sales, versus a small company that can't borrow even $10,000 - That's the only place of value I can see in the classification.

The Chairman: It's really about start-ups.

Mr. Ianno: Yes.

The Chairman: Are there any other strong feelings about it, one way or the other?

Mr. Ianno: I think it's an important aspect to have, because you get to determine who can borrow with zero sales and who can't.

The Chairman: Well, it's an interesting point.

Is there any other discussion on this? We can just vote on it and decide what the group thinks.

Mr. Mayfield: If we're getting down to zero sales, we need to talk about capital too, I suppose. I don't know if you want to bring that into the conversation or not.

[Translation]

Mr. Rocheleau: I believe we should keep the zero sale category, because a new business approaching a potential lender is, effectively, at point zero.

The Chairman: Therefore, the first category is zero, the following one is $1 to -

Mr. Rocheleau: Yes.

[English]

The Chairman: All right, do we have a proposal moved by Mr. Mayfield?

Are you a zero enthusiast? No.

Who's an enthusiast? The motion was moved by Mr. Bélanger.

[Translation]

Mr. Bélanger: Move the motion, Mr. Rocheleau, and it will be my pleasure to second it.

[English]

Motion agreed to

The Chairman: So we have a new category. I like the fact that this is a very flexible group.

I'm now moving along through item 2 to ``age of business'', and that includes the next three lines under it. Are there any problems?

Mr. Rocheleau.

[Translation]

Mr. Rocheleau: I believe that we should add a new category ``new business''.

[English]

The Chairman: To go along with zero?

[Translation]

Mr. Rocheleau: To be in line with what was said earlier.

[English]

The Chairman: For start-ups. Okay. Less than five years, minus start-ups. That's what that means.

Are the other categories fine? Age of business. Is there anything - Mr. Mitchell didn't even talk about it, so we don't have to look over there.

Ms Bethel: We didn't include that.

The Chairman: About the industry sector, do we understand this is the SIC one - this is a SIC joke? To make it clear that we mean standard, should we put in brackets ``standard industrial classification''?

.1225

Okay. By the way, I am hoping the researchers, if they hear anything dreadful going on, will stop us before we sin again.

Gender of borrower.

Ms Bethel: Mr. Mitchell didn't include that in his -

The Chairman: Wait a minute. Have we looked over -

Ms Bethel: Not as statistical. He included it as survey.

The Chairman: I see. All right. We will get to that.

Ms Bethel: We will have a discussion.

The Chairman: Shall we censor Mr. Mitchell now?

Ms Bethel: No, we'll censor him later. We want him to be here for it.

The Chairman: Gender of borrower, no problem.

I think we heard ``municipality'' was going to work, whereas the first three digits of the postal code would be too close to identifying a specific company. We are now at the top of page 3, ``by municipality''. So we can just strike the lines -

Ms Bethel: I want to move deletion of ``or first 3 digits of Postal Code (whichever the committee decides - )''.

Mr. Ianno: I don't know if you've discussed this before, but I have a slight concern about trying to protect some companies where there is only one in an industry and you are identifying all aspects of that business regarding its loan possibilities. The intent of this is not in any way to divulge anyone's private dealings.

The Chairman: Point a finger.

Mr. Ianno: I don't know how you protect that, but I certainly would be concerned that in a small town where the industry then is identified and you can just look it up -

The Chairman: It's a one-industry town. McCain's would leap off the page if you were looking at -

Mr. Ianno: Or whatever. I don't think that's our intent in determining that, at least not from my perspective.

Mr. Jackson: We could have the banks apply the standard Statistics Canada levels of confidentiality in their data, so they will not report one-entry columns.

The Chairman: That's good.

Mr. Ianno: Fine.

The Chairman: Is there a nifty form of words? If I understand, ``by municipality'' - then there's a bracket that says - because we have struck out ``Postal Code'' -

Ms Bethel: Yes.

Mr. Ianno: Adhere to the Statistics Canada approach of not divulging -

Ms Bethel: The confidentiality.

The Chairman: Or maybe that could be up in the - Chris makes a suggestion that we go right into the lead of the whole thing and say somewhere - what would the form of the words be? - ``in conformity with'' -

Ms Bethel: Mr. Chair, your suggestion is that it should be included under ``That all major banks in Canada be obliged to provide quarterly statistics'' -

The Chairman: Then ``and every quarter thereafter, in conformity - '' Keep going there, Tony.

Mr. Jackson: It would be ``with Statistics Canada standards of confidentiality''.

The Chairman: Yes, ``with Statistics Canada standards of confidentiality''. That will cover the one-industry -

Ms Bethel: Perfect.

The Chairman: All right. Can I get an amendment to that opening line on page 2 from one of the enthusiasts I heard? Did I hear Ms Bethel say that was a good place to put it?

Would you move that as an amendment? Great.

Any further discussion on that amendment?

Mr. Mayfield: Does that mean we go back to the postal code again?

The Chairman: No, this is putting in, right at the top on page 2, right where the motion begins, after we've said each bank has to provide statistics, `` - and every quarter thereafter, in conformity with Statistics Canada standards of confidentiality''. That becomes an overall thing that will cover off the one-industry town in the municipality.

Mr. Schmidt: Mr. Chairman, that may cause us some problems.

The Chairman: How so?

Mr. Schmidt: You're now covering that under each of the areas under fewer than five employees, zero employees, zero sales.

Ms Bethel: Good question.

Mr. Schmidt: I think this applies in particular to municipalities, so it should be restricted to that phrase rather than to the omnibus phrase at the beginning.

The Chairman: Okay.

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Ms Bethel: I have a question of clarification for the researcher. What impact would that clause have on all the other categories?

The Chairman: Or do you know?

Mr. Jackson: None. You are presumably going to get very large aggregate tables from the banks, for example by industry: for the restaurant sector, for the computer software sector, and so on. Inside that, where that would be done on a nationwide basis, you'd lose nothing. You're going to lose detail in the local data but not in the national data.

The Chairman: But really it's very local data. In other words, you could still have regional stuff coming through. So it's only down to when you can actually use the data to talk about company X.

Ms Bethel: But that's a good point.

The Chairman: Do you feel reassured by that?

Mr. Schmidt: No, because it's an omnibus phrase if it comes at the beginning. It covers all subsequent sections.

The Chairman: Okay. Does it matter if we put it right under the word ``municipality''?

Mr. Jackson: That would be where it would apply.

The Chairman: Then why don't we do that?

Mr. Schmidt: That's exactly where it should apply. It shouldn't apply to everything else.

Mr. Bélanger: I would like to suggest that it's placed properly at the start as an omnibus phrase, because we may not have thought of every circumstance where indeed providing what we're asking for would divulge - or would enable someone astute enough to figure out exactly who was turned down in a certain place - By putting it there, we are making sure we're at least giving enough leeway to those who will be asked to provide the information to make sure that doesn't happen.

Ms Bethel: The other point I like about having it at the very beginning is it demonstrates very quickly -

The Chairman: Goodwill.

Ms Bethel: - that we don't want more information or information that would harm -

The Chairman: This is not intrusive big government going into your affairs and all that kind of stuff.

Mr. Schmidt: That's a very strong political argument. I'll concede.

The Chairman: I thought that would appeal to you.

Okay. So do we have agreement on that, moved by Judy Bethel - understanding that it's really going to focus on -

Motion agreed to

The Chairman: So we've done ``by municipality''. Now we move to - Golly, what's all this about?

Ms Bethel: Mr. Chairman, may I make one suggestion? As I read Andy's information here, he's talking about two kinds of data collection. One is statistical. The other is survey.

The Chairman: Right.

Ms Bethel: He has suggested that we do by survey many things we haven't agreed with. We've put it back in statistical. However, if there is a place for survey data - and I'm just suggesting this - this might be it, in the loan loss ratio, loan turndown ratio, loan approval ratio.

I'm not sure if you agree. That was just a suggestion. We could use his item 6 here, that the banks be required to provide data regarding turndowns on a quarterly basis by survey, with the following breakdowns, if there's general agreement. But maybe that's the point around which we could discuss it.

The Chairman: What is useful is that the last three points in Mr. Discepola's page, the top of page 3, are also all the things that are contained -

Ms Bethel: I think just the loan loss ratio is.

The Chairman: Aren't they? All I'm saying is that we're dealing with the same issues in both places, aren't we? In the Discepola motion we're trying to get it statistically, and in the Mitchell suggestion it's trying to do it by survey.

Ms Bethel: Okay, I take that back. We shouldn't do it by survey, then. But maybe we don't need loan turndown ratios and loan approval ratios if we have loan loss ratios.

Mr. Ianno: No, we want it, especially with your gender factor.

Ms Brown: We want to know who they're saying yes to and who they're saying no to.

Ms Bethel: Good point. All right. I move the next -

The Chairman: I'm being a little stupid about this. What is ``in (1) above''? What (1)? Do you mean in point 1?

Mr. Schmidt: Why don't we just leave that out?

Mr. Ianno: He's doing it by two different categories.

The Chairman: I see.

Ms Brown: We want to know if they're doing the easy thing, loaning $1 million all the time and saying yes, and saying no to everybody from $0 to $50,000.

The Chairman: So what is the suggestion here?

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Mr. Ianno: By category and all of the factors here. He wants it by municipalities. That's what it's under here, right?

The Chairman: No, I think this is separate.

Mr. Ianno: Oh, okay. Why are they not numbered?

Mr. Schmidt: I read it that way.

Mr. Ianno: And we definitely want loan loss ratio per threshold separately.

Mr. Schmidt: If we want that information, it should be in the same category as before. Otherwise it doesn't mean anything.

The Chairman: Sorry? So the loan loss ratio per threshold -

Mr. Ianno: Is an important aspect, because that's where the difference between small business and large business losses is determined; and that is what I think we have killed: the thought that somehow small business is riskier than large.

The Chairman: Now I've lost it. This would apply to all the categories we've talked about.

Ms Bethel: Yes, such as the $1 to $49,999.

Mr. Ianno: All of points 1 and 2 has to be done on these four points: by municipality, the loan loss ratio - In other words, as he breaks it down into very finite numbers, he wants it done also on these three factors.

The Chairman: That's okay. It's just that the language has to be clear -

Mr. Ianno: Yes, it has to be fixed.

The Chairman: - because we're all having -

Mr. Valeri: What Nick is requesting is loan loss ratio on the $0 to $25,000, if that's the amendment -

The Chairman: Right.

Mr. Valeri: - on the $50,000 to $99,999, $100,000 to - whatever. That's the loan loss ratio. Then he's requested the loan turndown ratio on those same categories, $0 to $25,000, $50,000 to - Then he's requesting loan approval ratios on the same breakdown.

The Chairman: But also by employment?

Mr. Valeri: Also by employment.

The Chairman: Can I make a suggestion for clarity, that this be a big point 3, starting with loan loss ratio? Therefore what we understand is that this point 3 applies to all categories in points 1 and 2. All right?

Can we find a nice form of words that will - I must say there is some confusion here.

Is that what we want? Okay. Will someone move that?

Mr. Schmidt: I so move.

Motion agreed to

The Chairman: The other issue that remains is do we wish to make a fourth point? Is there something in Mr. Mitchell's document such that we wish to make a fourth point, which is in addition to all of that -

Ms Bethel: Item 3.

The Chairman: I'm looking at the back of his page here.

Ms Bethel: No, that's survey. We did it all statistically.

The Chairman: Let's just have the discussion before we say we don't want it. I want to make sure we all don't want it.

I'm now looking at Mr. Mitchell's page, the back of page 6, which would be a fourth category. I would ask you to have a look at this to make sure that whatever we do, at least we've considered our colleague's suggestion here. That's what I'm concerned about.

Mr. Ianno: Does anybody think it should be in?

Mr. Schmidt: Mr. Chairman, I have a point of clarification. In the earlier motion we have on the top of page 3, that is contained in the statistical information. That's what we're requesting under section 2, loss turndown ratio.

The Chairman: Oh, I see.

Mr. Schmidt: So it's there. What I think Andy is saying is that this is not something they would capture in the normal course of business. He's saying that because they don't usually track this, they should do this by survey.

This is something the banks can tell us themselves. I don't think we should answer this ahead of time.

The Chairman: Is the critical point that what is not captured is the fact that it's on a quarterly basis? Is that the point of this?

Ms Bethel: No, the point is on the type of data. One is statistical and the other is by survey. What we've done is we have included everything by survey, as the original motion. The only exception I see there is new connections - I don't know what that means - in existing clients. Those are the only two factors there that are left; that we haven't dealt with, in my view, anyway.

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An hon. member: But we did it by statistics versus survey.

Ms Bethel: Yes.

I might offer an amendment that would say the banks should be required to provide data about - This is only about turndowns.

I don't think this is necessary.

The Chairman: Part of the deal was that, as Madam Pothier points out - the distinction was that the CBA offered this data on this particular stuff on an annual basis and he wanted it on a quarterly basis.

May I make this suggestion? This part of the work has been done. When Mr. Mitchell returns, nothing prevents us from returning to the subject to have him talk about it. He can't be here today and he regrets his absence. I would not want to shut out that conversation, because we'll be talking about benchmarks anyway.

Mr. Bélanger: Mr. Chairman, I don't know if it would be useful or not to have the staff obtain from each of the principal banks a copy of their business loan application. I don't know if it has been done by this committee.

The Chairman: And are they standard?

Mr. Bélanger: I think it would be good to have that, just to look at them.

The Chairman: Sure. Some of us have probably had one in front of us, but -

Mr. Bélanger: I have.

The Chairman: Yes, I think I have too.

Mr. Bélanger: They ask you everything.

The Chairman: Don't they, just.

Ms Bethel: The other thing I see different with what Andy Mitchell is suggesting here is dates. I think what the banks were saying to us is to ask for all of this statistically - they can't be up and running in the time we want it. Mr. Discepola's motion says this has to be done by December 31, 1995. Their point is they haven't been tracking this information now and it would be too difficult to do.

If we want to be cooperative, we may give them more time on that. We could make item 3 a motion, because as Mr. Mitchell says, they already do this. They can produce this information quite quickly. So if we would pass item 3 -

The Chairman: Mr. Mitchell's item 3.

Ms Bethel: Mr. Mitchell's item 3, because what he is saying is that they already gather this information; they can provide it to us quite quickly. He is suggesting November 30, 1995. That might be helpful for a start. Because we are requiring them to do statistical data collection, we should give them more time.

The Chairman: Does anyone have a problem with that?

Mr. Ianno: The question is where does Mr. Discepola - did he put it at December 31?

Ms Bethel: Yes.

Mr. Ianno: So you want it moved up?

Ms Bethel: No, I want it moved - Maybe we should give them until June 30.

Mr. Ianno: No way.

Ms Bethel: Hear me out. For this very comprehensive statistical data that we need, let us give them time to get up and running. But in the meantime we could have them come quarterly with this information that they already track.

Their objection to us has clearly been that they gather this information now, it's very difficult to do, do we know what we're asking, and -

The Chairman: The only difference between what Discepola is saying and what Mitchell is saying is that the quarter is more precisely spelled out in Mitchell. It says the first report shall be by January 3, 1996 - that's only four days after December 31 - for the quarter ending November 30, 1995.

Ms Bethel: But he's asking only for survey data -

The Chairman: I see.

Ms Bethel: - for all of those other ones.

Mr. Ianno: We're changing it to statistical.

Ms Bethel: We want statistical data.

The Chairman: Provide the charts.

Ms Bethel: No, but on the back. All the information we added to the -

The Chairman: No, no, ``in addition''. The back says; ``in addition''. In other words, everything -

Ms Bethel: Required to provide data by survey.

The Chairman: No, ``in addition''. Everything on the first page, as I understand it - Points 1 to 5 on the Mitchell document are about statistics.

You turn over the page and it says, over and above all that stuff, in addition, this is the survey document we'd like.

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So his item 3 point is on statistics, a statistical chart. It doesn't change the intention of the Discepola motion. It simply says what's the first quarter we'd like to have this data on; we'd like it on the bank quarter, November 30. That's the quarter, isn't it?

It's really just a precision to help out. Does anyone have a problem with that precision? It doesn't change the nature of the beast in any way.

Ms Bethel: I will let that one go. May I make just one more suggestion? My suggestion is that the data shall provide statistical -

That's fine. I just don't want them coming back and saying, well, we're doing this by survey.

Mr. Bélanger: Mr. Chairman, I want to make sure I understand. I'm reading Mr. Mitchell's comments. He says in item 6 that because this information is not captured in their accounting records - the turndowns - it will have to be provided by survey.

Ms Brown: That's Judy's point.

Mr. Bélanger: It's a valid point, because he would seem to indicate that once something is turned down they don't track it, period. They don't keep a record. They just carry on. So the only way they could get at it is by survey; and my colleague here was raising some very interesting questions a while ago: who do they survey?

The Chairman: About order, the first point is do we think it useful - this is just a mechanical question - to use more the Mitchell phrasing for the date by which we want - for the statistical part, just because it tells you which quarter will be the one the clock starts with, which is the quarter ending November 30, and we would expect to have something by January 3. That's strictly for the statistical part. Can we agree that's a useful amendment to put?

So we would alter the opening phrase in the Discepola motion, ``all major banks be required'', and so on, and we just clean up the language - ``by January 3'' - I don't know why he's picked January 3; there must be some reason - January 3, 1996 for the quarter ending November 30, 1995 and every quarter thereafter''.

Is that okay? Could somebody move that, just as a clarification?

Mr. Valeri: I so move.

Motion agreed to

The Chairman: Now we come back to the issue of survey, which is the issue, really. It's not the quarterly part, it's the turndown part that is not statistically captured. Is that what's not being captured?

Ms Bethel: What I had felt was important, and I thought all of us did, was that we need statistical data on region, SIC codes, gender, but we need that not just based on turndowns but based on all these other things as well.

Mr. Schmidt: Mr. Chairman, we have already discussed that.

The Chairman: Right.

Mr. Schmidt: I would suggest to you that we stick to that; we don't now reintroduce survey except by separate motion. If somebody wants to do that, well, let them, but I'm not at all prepared to change this. I hark back to the experience of this committee. We were told at the beginning that we couldn't get any of these numbers. Lo and behold, we have all kinds of numbers now.

Ms Brown: Mr. Chairman, the discrepancy I see between the two papers is this. We have decided to follow the Discepola paper and to say, yes, we indeed do want all these things statistically; we don't want them by survey. Now we've taken a motion out of the Mitchell paper and used those dates. But Andy Mitchell puts in his paper very clearly to us that they couldn't possibly have this stuff by January 3, because they're not collecting it yet.

So I think the solution to this is to say something like this when we send a letter to them: by this January 3 we want these things, which we know you already collect; and by the way, we also want you to collect statistics on these other facets we've added, so you add a few of these facets every quarter.

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Mr. Ianno: How about if you do the flip side and say this is what we want; if for some reason you cannot give us that -

Ms Brown: By January 3.

Mr. Ianno: - by January 3, then please explain, hoping we will get it for the next quarter.

Ms Brown: That's right.

Mr. Ianno: As compared to giving them an out.

Ms Brown: I'm just saying you can't apply his dates to our new long list.

The Chairman: Actually, you can.

Ms Brown: You can if you add a proviso.

Mr. Ianno: They can provide almost everything.

The Chairman: There's a lack of clarity in the way this is expressed. His second point says:

Two types of information will be required. Information which can be gleaned from the financial institutions financial records

- and there should be a comma in there because that's the statistical part -

and that which they will be required to do by survey.

His third point refers to that first category of statistical data:

The banks should be required to provide the following statistical chart each quarter -

They have that. The survey part is going to be more problematic.

Mr. Ianno: It should be 2.1 and 2.2, or something like that. That way it's like a sub.

The Chairman: No, no. Let me make this suggestion. Right now we have a relatively clean proposal that deals with statistics that can be gathered by the dates that are proposed. It's not an unreasonable demand, and that's what he thinks we should do.

We should defer to another day the discussion about survey stuff, because he's the guy who knows about it. Let's bring closure to this particular issue -

Ms Bethel: John, let's bring closure to the whole thing. It seems to me what we have said is no, we're not interested in survey data.

Mr. Ianno: If he wants to open it up -

The Chairman: I'm just trying to defend the interests of a colleague who couldn't be at the meeting.

Ms Bethel: But we've taken all those -

Mr. Bélanger: I would like to support what you're suggesting, not only because we'll have Andy, presumably, the next time we address this, but also because the banks, if they do not indeed track this already - We have to know that and we have to know what's involved in getting them to do that. I'm trying to be reasonable here.

Mr. Ianno: Keep in mind one other factor that people are losing sight of. If you go in for a loan and they say no, they keep that record because they have to deal with you if there are any problems. So they have that data.

The Chairman: Could I just suggest, because the time is drawing nigh to the end of this, that we capture what we have here? This represents a complete unit of work. It allows us to write the letters to the banks saying this is what we've agreed to and to get on with it. So they're armed for our meeting to the extent that they're going to be ready for it, although they obviously can't produce the data for the quarter of which they'll be speaking to us. That gives them advance warning.

We then return to this question of survey data. The difference, as far as I understand, is they collect data on the loans they make; they don't collect statistical data on the turndowns. That's captured in another way of dealing with it.

Let's wait until Mitchell comes back, and let's roll that into the general discussion of benchmarking, which we will deal with on Thursday.

Is that okay?

Mr. Ianno: I don't know if you've discussed the definition of small business and putting in a definition from our perspective, taking into account what the banks have said over the past year and a half and actually stating what we classify as small business.

The Chairman: We haven't had that discussion properly. I think that would be part of the larger discussion of benchmarks that will flow out of the longer document, which we will look at on Thursday.

Mr. Schmidt: Will we be looking at benchmarks on Thursday?

The Chairman: Yes.

Ms Bethel: We agree to this, right? We've now got something that we have amended and passed?

The Chairman: That's why I'm trying to capture it before it goes away.

Last point?

Mr. Bélanger: If you're talking Thursday, Mr. Mitchell says ``I will not be able to attend the meetings next week''.

The Chairman: In fact, we can start the conversation bearing this in mind, because we have next Tuesday as well, or the following Thursday, isn't it, for the -

The Clerk: We have two meetings scheduled for next week, which are booked now, with the Standards Council and the CTC.

The Chairman: Oh, yes. But we will be able to come back to this.

Ms Bethel: Mr. Chairman, I have to be clear. Was that motion moved and passed as amended?

The Clerk: Which motion are you referring to?

Ms Bethel: The one we've just worked through.

The Clerk: We've worked through it and we have amended it by a series of new motions.

Ms Bethel: Yes, and we've passed it?

The Clerk: Yes, that's my understanding.

The Chairman: It was passed in the first place.

The Clerk: We've done it bit by bit, but we ended up with a complete picture.

Ms Bethel: The record will show that the motion passed.

The Chairman: Yes, as amended.

Ms Bethel: As amended. Nobody made that motion.

The Chairman: I hear you.

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Ms Bethel: You've got to tell us to do that, or else we're always going to be -

Ms Brown: I'd like to say something about the agenda. I have a pile of paper and I have three items on the agenda. The usual way I'm used to meetings is that each piece of paper is an agenda item, because the committee must make a decision about it: to file it, to approve it, to do something with it. It seems to me as if the order in which these are set up -

You came in right away and said let's do number two. Why we want to do number two should be thought of ahead of time. It should be number one.

What are you looking for? Resuming consideration is pretty vague. Are you looking for the idea that we're going to approve something for tabling in the House? I want to know the purpose of our going over a document.

The Chairman: My understanding is that we're trying to complete some unfinished business. The first two items we dealt with were more finished than the third one, which is this more philosophical discussion about benchmarks. So I tried to take the easy ones and get them out of the way.

I took the tourism one first because of the circumstance of the last meeting, which was that nearly all of us got there, we were all agreed, but then the quorum disappeared so we couldn't vote. That was the easiest, to get it off the table.

The next easiest was the question of establishing the historical record and then amending it, which we've just done.

The toughest is the last one, so that's why I jigged around with it.

Ms Brown: What about resuming consideration of the Canadian tourism commission, for possible approval? Then, I know, you're looking for a motion to approve the document.

The Chairman: Okay.

Ms Brown: Somehow or another in this wording I want to know what kind of motion you're looking for so we can move these things along.

The other thing is that we had those two documents on the same issue, which causes some trouble because Andy looked at it in one way in his and Mr. Discepola looked at it in another way. There has to be some kind of format for doing that.

The Chairman: This meeting stands adjourned.