Thank you for inviting the Canadian Bankers Association (CBA) to appear this morning to participate in the Committee’s pre-budget consultations. My name is Alex Ciappara and I am the Head Economist with the CBA.

The CBA works on behalf of more than 60 domestic and foreign banks operating in Canada and their employees. The CBA advocates for effective public policies that contribute to a strong banking system that benefits all Canadians. We promote financial literacy to help Canadians make informed financial decisions and work with banks and law enforcement to help protect customers against financial crime and promote fraud awareness.

A healthy banking system is a cornerstone to help households manage their finances, spur growth for small businesses and promote Canada’s economy internationally. Our submission, which the committee has received - offers the banking industry’s views and recommendations in areas that are of interest to the Committee to support vibrant communities and clean, sustainable economic growth.

Canada’s banks have a longstanding track record of supporting the Canadian economy. They have:

• Contributed approximately $70 billion (or 3.6%) to Canada’s economy in 2022.
• Paid close to $18 billion in taxes in 2022.
• Provided $26 billion in dividend income in 2022 that went to Canadian seniors, families, pension plans, charities, and endowments.
• Invested approximately $115 billion in technology across Canada over the last decade.

Additionally - at the end of 2022, Canadian banks have lent, in total, close to $1.6 trillion in residential mortgages and authorized $1.7 trillion in business credit. Of business credit, $278 billion was authorized to small businesses. Canadian small businesses are well-served by the financial sector owing to robust competition. In fact, according to Statistics Canada, 94% of debt financing requests for small businesses were approved in 2021 with the debt approval rate consistently above 81% since 2010.

Our recommendations for the 2024 budget revolve around 5 key areas. The first is productivity and tax reform. We support removing the Financial Institutions (FI) Tax and the Canada Recovery Dividend (CRD) to give investors and the banking industry confidence that Canada is committed to attracting investment. We also suggest the federal government undertake a comprehensive review of Canada’s tax system with the objective to improve labour productivity, meet the needs of Canada’s evolving economy, ensure Canada can compete internationally, and recommit to tax neutrality. Bank specific taxes hinder the industry’s ability to positively impact Canada’s productivity.

The second focuses on the market conduct regulation of un- and under-regulated financial service providers. We encourage the federal government to develop financial consumer protection standards for un- or under-regulated financial service providers, such as e-commerce platforms and similar entities, for provincial adoption, and work with provinces to adopt these standards. To the greatest extent possible, the standards should emulate relevant FCAC regulations to which FRFIs must adhere.

Third, housing is top of mind for all Canadians right now, to correct supply-demand imbalances contributing to the affordability crisis, we suggest the federal government pursue greater policy coordination through a forum for relevant stakeholders, including federal, provincial, and municipal officials responsible for housing, infrastructure and immigration, as well as representatives of the construction industry and advocacy groups.

Fourth, Financial crime & fraud continues to be a significant issue in Canada. We recommend the federal government build, implement and maintain a comprehensive single pan-Canadian beneficial ownership registry, which would include information on both federally and provincially regulated corporations and other legal arrangements (including partnerships, trusts, and associations). We also need to ensure legislation progresses to allow resources and activity to be targeted at areas of highest risk, and facilitates collaboration and the lawful sharing of information between financial institutions, and from FINTRAC and law enforcement to financial institutions. We also suggest allocating additional funding to organizations like the federal government’s Cyber Centre to increase individual cyber security awareness and cross-industry collaboration.

Finally, on the transition to net zero, the CBA applauds the government for its commitment to achieve net zero emissions by 2050. The financial sector is central to securing an orderly transition to a low-carbon economy. By financing the climate transition, banks are helping Canada meet its net-zero ambitions while helping meet interim energy demands in a volatile global context. A national or harmonized process is needed for Canada to meet its climate goals and enhance productivity and economic growth. Businesses, governments, and individuals working together on the fundamental reshaping of our economies and societies is critical in achieving these goals. Banks look forward to opportunities to support the generation of more clean energy, grow our economy, and cut emissions in Canada.

Thank you for your time and I’m happy to answer any question you may have.