Recommendations

• Recommendation 1: We recommend the Government of New Brunswick take action to remove interprovincial trade barriers and recognize all standards, certifications, regulations issued by any other province as automatically valid in New Brunswick.
• Recommendation 2: To protect New Brunswickers, we recommend that additional resourcing and specialized training be provided to law enforcement and the courts to address and stop the increasing occurrence of scams.
• Recommendation 3: We urge the Government of New Brunswick to work closely with the federal government and authorities to combat money laundering (ML) and terrorist financing (TF). In particular, we urge investments in New Brunswick’s enforcement and prosecution of ML and TF and the harmonization of its existing tools with the federal government. A harmonized approach will ensure efficiency by avoiding duplication of efforts across different levels of government.
• Recommendation 4: We encourage the Government of New Brunswick to support the adoption of a financial consumer protection regime targeted at payment service providers (PSPs), as part of New Brunswick’s consumer protection framework. Enhancing standards for financial consumer protection should also extend to entities that embed payments processing for merchants on behalf of consumers that have the potential to fall outside the federal framework, as they introduce the same risks as PSPs. We also encourage New Brunswick to work with other provinces and the federal government to achieve a consistent market conduct framework across the country for the benefit of consumers and PSPs.
• Recommendation 5: We urge the Government of New Brunswick to provide policy and regulatory support to provincially regulated credit unions that want to transition to the federal credit union framework and mandate more frequent financial disclosures to increase transparency in the provincial credit union system.
• Recommendation 6: We recommend implementing innovative, aggressive, and comprehensive solutions to address public safety and security challenges that impact community vitality and economic growth. Urgent and additional funding is required to enhance community vitality projects, expand pre-and post-addiction recovery services and support enhanced mobile crises response units. Additional efforts should be made to expand the adoption of digital payment options for all social benefits recipients.
• Recommendation 7: We recommend the Government of New Brunswick remove capital taxes as a first step in promoting economic growth in the province. Additionally, we recommend the Government of New Brunswick undertake productivity-enhancing tax reforms in the province and advocate at the federal level for a comprehensive review of our country’s tax system. Canada, its provinces and territories, must modernize its tax system and avoid asymmetrical, sector-specific, and retroactive taxes that ultimately impact businesses and consumers as well as undermine the investment climate.

Introduction

The CBA is grateful for the opportunity to contribute to the Government of New Brunswick’s upcoming budget. As the voice of more than 60 domestic and foreign banks, and their 280,000 employees, we advocate for public policies that contribute to a sound and safe banking system and help drive prosperity and strong economic growth for Canadians.

Banks play an important role in New Brunswick’s economy. In 2023, banks¹:

• Contributed approximately $1 billion (or 2.9%) to New Brunswick’s GDP
• Paid approximately $75 million in provincial and municipal taxes
• Employed close to 5,500 people, a workforce represented by women (59.4%) and self-identified visible minorities (24%)
• Generated over $28 billion in dividend income that went to Canadian (including New Brunswick) seniors, families, pensions, charities, and endowments
• Operated 135 branches and 450 ABMs in the province

Banks are key in providing access to capital for New Brunswickers. By the end of 2023, they had:

• Over $16 billion in residential mortgages outstanding
• Close to $56 billion in authorized business credit, of which over $16 billion went to support small- and medium-sized enterprises (SMEs)²
• Since 2010, small business debt approval rates in Atlantic Canada averaged over 90% per year ³

The financial services market is highly competitive in New Brunswick. For example, in the province’s market for retail, SME and commercial deposits, seven credit unions as well as a caisse populaires and four small- and medium-sized banks (SMSB) account for over 30% of deposits with the six domestic systemically important banks (DSIBs) holding the remainder (Chart 1). Competition in the lending market is also high, with over 26 banks and federal credit unions able to underwrite insured mortgages to New Brunswickers, competing with non-bank financial institutions such as provincial credit unions as well as caisse populaires, mortgage finance companies, trust companies, and insurance companies.⁴ Competition in the market for uninsured mortgages is particularly high due to mortgage investment companies and private lenders operating in the mortgage market.

Furthermore, while Canadians increasingly prefer digital banking,⁵ as Chart 2 shows, banks have a dedicated network of branches providing local presence and access to in-person banking services that accounts for nearly 70% of all deposit-taking institution branches in the province.

This competition is even more intense when the market is examined from the perspective of all financial services offered to New Brunswickers. Market competitors include other deposit-taking institutions, life and health insurance companies, general insurance companies, trust companies, mutual funds, securities dealers, investment advisers, and specialized and non-traditional firms entering and expanding the market. This includes large technology platforms with growing access to consumer data, fintech payment services providers, buy-now-pay-later companies, digital currency exchanges, robo-advisors, etc. Int this evolving financial services marketplace, New Brunswick’s economy would benefit from harmonized legislation across the country that protects the privacy of New Brunswickers and facilitates inter-provincial trade.

Amidst the growing competition in the evolving financial marketplace, the top six Canadian banks have invested approximately $120 billion in technology over the past decade. These investments have contributed to making the banking sector among the most highly productive business sectors in the Canadian economy. The banking sector has seen labour productivity growth of 2.4% a year since 2007, making the Finance and Insurance sectors the second fastest growing in the Canadian economy.⁶

These investments also underpin Canadian banks’ commitment to further consumer trust. It is one of the reasons why five of the world’s top 15 safest and most dependable commercial banks are Canadian.⁷ According to the 2024 Edelman Trust Barometer, Canadian banks have increased trust with the public over the past two years and Canadian banks are leading in trust with the public compared to banks in other developed countries (Chart 3)⁸.

Recommendation 1

Canada works best when we are working together. Indeed, the Canadian economy has long benefitted from a strong, national banking system that has allowed banks to operate across the country in order to take advantage of business opportunities that allow banks to grow while mitigating risk. Other sectors of Canada’s economy do not have the same benefits due to interprovincial trade barriers.

However, it’s often easier for businesses to trade goods with foreign countries than across provincial borders. Statistics Canada data shows that just one-third of Canadian trade (both exports and imports) by GDP is interprovincial, with the rest of it moving to other countries (namely the U.S. which currently receives approximately 75 percent of Canadian exports). In the emerging uncertain international trade environment, placing roadblocks in the way of Canadian businesses trading with each other simply cannot continue. As the recent threats to Canada-U.S. trade relations have highlighted, we need to remove interprovincial trade barriers in order to enable Canada’s economy to grow, prosper and be more resilient. Canadians cannot afford to be complacent about their economic prosperity.

For far too long, the interprovincial barriers to the free flow of goods, services, and labour across provinces and territories have hindered businesses’ ability to grow and expand. By removing these barriers, businesses and consumers can benefit through:

• Increased choices in goods and services
• Increasing the effective scale of production thereby improvements in productivity growth
• Improved security and resiliency of supply chains
• Greater affordability through competition
• A more efficient labour market
• A more resilient national economic union

These interprovincial barriers are typically non-tariff in nature and come in the form of prohibitive, technical, regulatory/administrative barriers. More specifically, prohibitive barriers arise from provincial and territorial laws that prohibit the sale of certain goods to customers in other provinces. Technical barriers stem from sector specific regulations that differ across provinces and territories, while regulatory/administrative barriers stem from provincial and territorial permits, licensing, and other paperwork requirements imposed on businesses that operate in multiple provinces/territories.

Reducing the cost of internal trade barriers can benefit the whole economy. It is estimated that the effect of interprovincial trade barriers adds between 8 to 15 percent to prices of goods and services – addressing these trade barriers would put a dent in prices. Furthermore, Canada’s economy could increase by between 4 and 8 percent over the long-term – a significant gain of between $110 and $200 billion per year, equivalent to between $2,900 and $5,100 per capita – if internal trade barriers are eliminated by mutual recognition policies. Not only would the elimination of these barriers decrease prices and increase GDP, they would also grow the overall tax base. New Brunswick would be one of the provinces that has the most to gain from the removal of interprovincial trade barriers given that imports from other parts of the country amount to 33 per cent of its economy. Furthermore, an analysis from the same IMF Working Paper stated that the removal of interprovincial trade barriers solely on goods would increase New Brunswick’s real GDP per capita by 6 per cent and employment by 3 per cent.

While governments have made efforts to liberalize trade in the country through initiatives such as the Agreement on Internal Trade (AIT), the Canada Free Trade Agreement (CFTA) and the New West Trade Agreement (NWTA), progress however valuable has been slow. A mutual recognition approach would be preferable due to the speed it could be implemented. All standards, certifications, regulations issued by any other province could be automatically valid in New Brunswick in a form of mutual recognition. Mutual recognition would enable a host province such as New Brunswick to accept the standards set out by the province from which the good or service originates, and in return New Brunswick’s businesses could provide their goods and services across Canada on the basis of New Brunswick standards and regulations. As a result, mutual recognition can lessen the compliance burdens of goods and service providers and eliminate duplicative requirements which makes it a powerful tool for eliminating policy-relevant interprovincial trade costs. Canada works best when we are working together. Indeed, the Canadian economy has long benefitted from a strong, national banking system that has allowed banks to operate across the country in order to take advantage of business opportunities that allow banks to grow while mitigating risk.

Recommendation: We recommend the Government of New Brunswick take action to remove interprovincial trade barriers and recognize all standards, certifications, regulations issued by any other province as automatically valid in New Brunswick.

Recommendation 2

Scams are a growing threat, with scam losses reaching historic highs in the Canadian context. Seventy-five per cent of Canadians report encountering a scam at least once a month and the Canadian Anti-Fraud Centre (CAFC) reported a staggering $638 million lost to scams by Canadians in 2024.⁹ However, as an estimated 90% of incidents are unreported, actual losses are believed to be significantly higher and may be over $12 billion annually (or about 0.5% of Canada’s GDP).¹⁰

Banks are committed to limiting the growing threat of scams and have invested heavily in advanced security systems and layered fraud detection to protect consumers. However, the majority (65%) ¹¹ of scams originate outside of the financial sector’s purview and are perpetuated through telecommunications or digital platform channels. Protecting Canadians against scams must be a shared responsibility that requires a coordinated cross-sector strategy to combat the evolving sophistication of scammers and mitigate rising consumer angst. A robust anti-scam strategy should:

• Educate Canadians on what they can do to reduce their exposure to scams and how to report them since financial literacy is a core component of scam prevention and the broader well-being of Canadians
• Prevent scams by creating the conditions to minimize opportunities for scammers to target Canadians
• Respond effectively and with empathy to scam victims

We must learn from the experience in other jurisdictions and take steps to proactively protect Canadians. Australia, for example, saw a significant increase in scams following the launch of real-time payments and consumer-driven banking. With the Real-Time Rail and consumer-driven banking on the horizon in Canada, Canada could see a significant increase in payments fraud unless action is taken. These two initiatives, combined with the growing use of artificial intelligence, could see more sophisticated scams, and an increase in both number and amounts of financial losses. These risks underline the urgency to be proactive and mitigate potential harm to Canadians.

Canadians, governments, financial institutions, telecommunication companies, online platforms, technology companies, law enforcement, and the courts all have a significant role to play in this fight to reduce the occurrence of scams. Only by working together can we identify scammers more quickly and limit the damage they cause. We must focus on reducing the occurrence of scams by ensuring that scammers face consequences through the threat of capture and subsequent criminal prosecution. In order to do so, law enforcement requires sufficient resourcing and training across all areas of the judicial process (e.g., including courts, prosecutors) to be able to effectively prosecute identified scammers and deter future scam deployment.

Recommendation: To protect New Brunswickers, we recommend that additional resourcing and specialized training be provided to law enforcement and the courts to address and stop the increasing occurrence of scams.

Recommendation 3

It is critical that the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) continues to comprehensively govern the fight against money laundering (ML) and terrorist financing (TF) across Canada. While the CBA acknowledges that the PCMLTFA needs to continue its evolution into a risk-based framework that is fit for purpose, we caution against applying new provincial requirements, reporting or otherwise, to this space. We are concerned that any fragmentation of the national regime could inadvertently:

• Empower bad actors by creating opportunities for legislative arbitrage in Canada, if regional or provincial requirements are misaligned with those at the federal level
• Impact the ongoing, important national policy work of the federal government
• Create coordination concerns amongst a growing number of authorities; and
• Potentially exacerbate concerns with high-level, low impact reporting

Instead of considering new requirements to a comprehensively regulated space, the CBA urges the Government of New Brunswick to support existing Anti-Money Laundering (AML)/Anti-Terrorist Financing (ATF) tools and invest in law enforcement to better fight ML and TF. More specifically, the Government of New Brunswick should:

• Continue to support the federal government’s efforts to evolve the beneficial ownership registry into a single, pan-jurisdictional Canadian registry that reflects federal, provincial and territorial beneficial ownership information, as well as beneficial ownership information from other legal ownership structures (e.g., partnerships, trusts, and associations) – creating a one-stop-shop for users
• Invest in law enforcement to support its investigation and prosecution of ML and TF cases and coordinate that work with relevant federal authorities; and
• In coordination with the federal government, enhance and refine the provincial forfeiture regime (i.e., New Brunswick’s Civil Forfeiture Act, the Management of Seized and Forfeited Property Act and Judgment Enforcement Act) to adapt to the evolution of predicate offences and ML and be used to recover criminal property

In relation to the third point, we suggest the Government of New Brunswick provide funding and resources devoted to prosecutors and the courts in municipalities and regions with high volumes of financial crime. The funds would be used to establish specialist investigative units that boost the tools and knowledge to pursue financial crime charges. These municipalities and regions may be identified via a data sharing agreement with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

These investments are critical and they will bolster the federal regime and help transform FINTRAC intelligence into prosecutions, helping to protect everyday Canadians and the integrity of the Canadian financial system. The CBA and its members are eager to work with the Government of New Brunswick on this issue and look forward to consulting on and supporting provincial efforts.

Recommendation: We urge the Government of New Brunswick to work closely with the federal government and authorities to combat ML and TF. In particular, we urge investments in New Brunswick’s enforcement and prosecution of ML and TF and harmonize its existing tools with the federal government. A harmonized approach will ensure efficiency by avoiding duplication of efforts across different levels of government.

Recommendation 4

New Brunswickers, along with all Canadians, continue to adopt new payment methods offered by non-traditional payment service providers (PSPs), including Big Tech. At present, these PSPs are largely un- or under-regulated.

Globally, the G20 and OECD have recognized that financial consumer protection requires a more targeted set of principles than general consumer protection. These principles seek to mitigate key risks to consumers in financial transactions including, but not limited to:

• Incurring fees that have not been properly disclosed by a provider
• Not having access to funds held by a provider
• Being held responsible for fraudulent transactions; and
• Not having a line of recourse in the absence of a clear complaints-handling process

Failure to address these risks, among others, can decrease consumer trust in the financial system. Financial services and products have the potential to disproportionately impact the well-being of consumers and must be addressed specifically rather than through overarching consumer rights across banks and PSPs.

While the Bank of Canada and Finance Canada have developed a federal supervisory framework for PSPs under the Retail Payment Activities Act to address certain financial and security risks, the framework is silent on market conduct. Addressing the market conduct gap is important to ensure PSPs provide fair consumer outcomes that encompass consumer protection. With some 3,000 PSPs currently operating in Canada and expected increases in consumer usage of PSPs once they are supervised by Bank of Canada, ¹² the absence of market conduct regulation is a significant gap in consumer protection.

It is important that New Brunswick work to align its market conduct approach with other provinces and the federal government to provide an overall consistent framework in Canada. This would ensure similar protections for consumers across the country as well as avoiding duplication or differing rules for New Brunswick-based PSPs that operate in multiple provinces.

We believe that New Brunswickers and Canadians should continue to benefit from secure, reliable, and consistent financial services. Therefore, it is important that un- or under regulated players do not introduce risk into the existing stable financial system. Ultimately, any market conduct framework would abide by the principle of “same activities, same risks, same regulations.”

Recommendation: We encourage the Government of New Brunswick to support the adoption of a financial consumer protection regime targeted at PSPs, as part of New Brunswick’s consumer protection framework. Enhancing standards for financial consumer protection should also extend to entities that embed payments processing for merchants on behalf of consumers that have the potential to fall outside the federal framework, as they introduce the same risks as PSPs. We also encourage New Brunswick to work with other provinces and the federal government to achieve a consistent market conduct framework across the country for the benefit of consumers and PSPs.

Recommendation 5

Banks are regulated federally; however, New Brunswick directly regulates another component of the deposit-taking marketplace – provincial credit unions. New Brunswick presently has seven credit unions holding nearly $7 billion in assets and over $5.7 billion of deposits.

As the regulator of the credit union sector, the Government of New Brunswick must meet the dual challenge of managing risk to the province while letting credit unions with growth aspirations scale up and expand to grow and compete. The federal credit union charter was created to address this challenge – it provides an avenue for credit unions to develop to grow and diversify beyond their own province, which reduces risk to the provincial government. Given the human, technological, and financial resources needed to compete in the financial services market, expansion under the federal framework allows federal credit unions to benefit from economies of scale and scope, increase consumer and business coverage to better manage risk through geographical diversification, and attract and retain employees with specialized skills to better compete with both traditional existing and emerging competitors.

There are several steps that can be taken to help facilitate provincially regulated credit unions to transition to the federal credit union charter. The government should work with credit unions to ensure their Board of Directors’ and members’ choice for the optimal business structure is supported by:

• Regulation to ensure a smooth and efficient process for provincial credit unions to transition to the federal level as stand-alone or amalgamated entities and ensuring requirements (including approvals) be proportionate to the transaction

One of the benefits of the federal regulatory framework for financial institutions is that it provides an exceptional degree of transparency. Federally regulated credit unions and banks are required to provide quarterly and monthly financial disclosures that are published on the OSFI website.¹³ Such transparency would increase the understanding of key risks, promote confidence, and stability in New Brunswick’s financial system. The CBA recommends that the Government of New Brunswick collect and publish similar financial information for provincially regulated credit unions. While most credit unions annually disclose their financial reports on their respective sites, more frequent and consistent disclosures on a centralized portal will improve the transparency of the credit union system’s financial state, which will help inform depositors and borrowers when making personal financial decisions.

Recommendation: We urge the Government of New Brunswick to provide policy and regulatory support to facilitate framework for those provincially regulated credit unions that want to transition to the federal credit union framework, and mandate more frequent financial disclosures to increase transparency in the provincial credit union system.

Recommendation 6

New Brunswick has made encouraging efforts to address public safety concerns through a coordinated response between the province, city, and local partners. However, escalating crime and violence is affecting communities across New Brunswick in unprecedented ways. Increasing crime rates result in injuries, employees in fear of going to workplaces, businesses forced to close, loss of family-supporting jobs, and increased pressures on mental health support programs. Increasing resources for individuals with mental health concerns, economic stressors, or permanent housing would aid in alleviating the effects to the areas of concern.

Banks are committed to doing their part to support local communities. Thereby, we recommend the province work to expand the adoption of digital payments options for social benefits recipients and move away from physical cheques. This would not only deliver significant efficiency to the delivery model, but it would also further reduce risks to recipients while improving safety and security for branch staff.

The CBA also wants to highlight the importance of meaningful and appropriate response to incidents involving individuals experiencing mental health challenges or addiction-related crises. Other jurisdictions have developed programs where Mobile Crisis Units, comprised of crisis workers and specially trained police officers, are used to de-escalate such interactions and provide onsite and future community program support to the individuals as appropriate. We encourage the Government of New Brunswick to explore deploying such crisis response units in the province.

In Alberta, the CBA has contributed to the Edmonton Downtown Recovery Coalition (DRC), a group of for- and not-for-profit business and community leaders committed to revitalize the Edmonton downtown area. The DRC efforts focus on three pillars: safety and security, cleanliness and infrastructure, and transformational projects. The public safety challenges in Edmonton are also prevalent across all provinces and we recommend the Government of New Brunswick launch a similar coalition to address these issues in the province.

Recommendations: We recommend implementing innovative, aggressive, and comprehensive solutions to address public safety and security challenges that impact community vitality and economic growth. Urgent and additional funding is required to enhance community vitality projects, expand pre-and post-addiction recovery services and support enhanced mobile crises response units. Additional efforts should be made to expand the adoption of digital payment options for all social benefits recipients.

Recommendation 7

Canada’s labour productivity growth has diminished considerably, making production more expensive and Canada less competitive. This diminished growth impacts Canada’s living standards, ability to pay for government programs, and economic resiliency. In fact, Canada ranks 18th in productivity among countries in the OECD and last among the G7. ¹⁴

While the IMF, OECD, and others have urged Canada to implement growth-oriented tax policies, Australia’s independent research and advisory body concluded that industry levies (sector-specific taxes) are likely to weigh on productivity growth in the country. ¹⁵ Yet, the provincial and federal government elect to impose sector-specific taxes on the banking sector, limiting its economic contributions. For banks, such taxes limit the amount of capital they can deploy to businesses for productivity enhancing measures, reducing Canadians’ ability to save and invest, thereby increasing investment uncertainty, and reducing banks’ ability to attract necessary capital.

These taxes include:

• Capital taxes of close to $30 million imposed on banks in New Brunswick ultimately reduces retained earnings and penalize banks for holding prudential and regulated buffers to support lending and absorb credit risks during economic downturns
• The Financial Institutions Tax and the Canada Recovery Dividend, announced in the 2022 Federal Budget, which reduced the amount of capital that can be deployed to businesses and consumers as every dollar reduction in retained earnings translates into over $7.50 of foregone new credit capacity. These taxes have also deterred foreign investment into Canadian banks. In the year before the 2022 Federal Budget, international investors made net purchases of $3.6 billion worth of Canadian bank equity. In the year afterwards, international investors made net divestments of $11.6 billion in Canadian bank equity
• The recent removal of the Dividend Received Deduction, which will negatively impact middle-class Canadians who hold over 3 million retail market-linked GICs and Notes. These investments allow middle-class households, mostly approaching or in retirement, to access higher returns and manage downside risk
• The federal government has implemented retroactive sales taxes on payment clearing services. Retroactive taxes undermine the principles of predictability, certainty, fairness and confidence in the tax system needed by businesses to make investment decisions

Comprehensive tax reform, including removal of sector-specific taxes, is needed to improve Canada’s productivity, living standard, competitiveness, and economic growth. Given the United States’ desire to substantially cut its already competitive business taxes, push for deregulation, and impose tariffs, Canada needs a comprehensive and competitive tax reform now more than ever to ensure prosperity for all Canadians.¹⁵

Recommendation: We recommend the Government of New Brunswick remove capital taxes as a first step in promoting economic growth in the province. Additionally, we recommend the Government of New Brunswick to undertake productivity-enhancing tax reforms in the province and advocate at the federal level for a comprehensive review of our country’s tax system. Canada, its provinces and territories, must modernize its tax system and avoid asymmetrical, sector-specific, and retroactive taxes that ultimately impacts consumers and undermine investment climate.

Conclusion

The CBA thanks the Government of New Brunswick for the opportunity to contribute to its upcoming budget. Our recommendations address critical areas that impact families and businesses in New Brunswick and aim to ensure Canada’s banking system continues to support vibrant and healthy communities across the province.

We welcome further opportunities to discuss our recommendations in more detail and to explore collaborative efforts to positively impact the future of New Brunswickers.

¹Banking contributions provided by CBA.

²CBA collects outstanding and authorized credit data from banks grouped for the Atlantic provinces

³ISED, Credit Conditions Survey, 2010 to 2022. Data is grouped for the Atlantic provinces.

⁴CMHC National Housing Act Approved Lenders.

⁵CBA, 2024

⁶CBA calculations and Bennett Jones, Economic Outlook 2025, Safeguarding a Vital Relationship and Investing in a More Productive Economy. While the Finance and Insurance produced $93 in real GDP per hour worked, banking and other depository credit intermediation produced $113.40 in real GDP per hour worked.

⁷Global Finance, World’s Safest Banks 2024: Commercial Top 50.

⁸Edelman Canada, 2024 Edelman Trust Barometer Supplemental Report: Insights for Financial Services in Canada, 2024.

⁹Global Anti-Scam Alliance, The State of Scams in Canada, 2023.

¹⁰Royal Canadian Mounted Police, Canadian Anti-Fraud Centre, as of December 31, 2024.

¹¹Royal Canadian Mounted Police, Canadian Anti-Fraud Centre Annual Report 2022, 2023. Based on data provided on page 23

¹²Bank of Canada, Future-proofing our payments systems, 2024.

¹³ OSFI, Financial data for banks

¹⁴ OECD Compendium of Productivity Indicators 2023.

¹⁵ The White House, Remarks by President Trump at the World Economic Forum, 2025.