Finance Minister Bill Morneau says he wants to hear from Canadians about whether Ottawa should scrap the 70-year-old Canada Savings Bonds program.
For decades, the federal government has run folksy television ads promoting “safe, cashable, Canada Savings Bonds” as a reliable option for savers. But as Ottawa expanded its backstop of private-sector savings options through the Canada Deposit Insurance Corp., many fixed-income investors have shifted their savings elsewhere.
The value of bonds under the program has fallen from -billion in 1987 to just over -billion in 2015. A 2015 review by KPMG for the Department of Finance found it was costing Ottawa -million a year and there was “no valid economic rationale” for the program.
“I know that there are Canadians who make use of Canada Savings Bonds. I also know that my ongoing responsibility is to make sure that the programs that we have in place function as we expect them to,” Mr. Morneau told reporters Tuesday following a cabinet meeting on Parliament Hill.
The minister was responding to a report by the French service of the CBC that said the government is considering whether to phase out the program in the 2017 budget. Mr. Morneau said Tuesday that no decision has been made.
“If Canadians have a point of view on the importance of Canada Savings Bonds for them, we’d be happy to hear them in our prebudget consultations,” he said. “We will, on an ongoing basis, consider all Canadian programs to make sure that they’re efficient, that they meet the objectives that are set out and, in that regard, we will look at this one as well. Should we hear points of view from Canadians that help us to best evaluate that, we’ll take them into consideration.”
The question of whether to wind down the program has surfaced from time to time as its popularity continued to wane. It currently operates in two parts under a heading called the Retail Debt Program. That includes Canada Savings Bonds that are sold through payroll deductions and Canada Premium Bonds that are sold by banks, investment dealers and over the phone.
Canadian Labour Congress president Hassan Yussuff said he’s been using Canada Savings Bonds for decades and has the amount deducted from his pay.
“I appreciate the fact that it’s there and I obviously find it of value,” he said, noting that the savings are secure and easy to access. “It’s a good structure and I don’t know why the government would want to get rid of it.”
Mr. Yussuff suggested the program could be expanded by offering green bonds for Canadians who want to support the financing of environmental projects.
In 2015, under the Conservative government, Finance Canada responded to the KPMG recommendations by noting that the program could come in handy when interest rates inevitably rise. The department also argued that KPMG’s finding that the program was not cost effective was based on the current historically low interest-rate environment.
“Approximately 2.5 million Canadians continue to hold over -billion of Government of Canada Retail Debt products, demonstrating Canadians’ continuing support for the program,” the department said last year.
Many alternatives to savings bonds are protected by the government through Canada Deposit Insurance Corp. Protected savings include up to 0,000 per depositor per category of savings, such as savings accounts or term deposits that mature within five years.