Finance Minister Bill Morneau has agreed to remove controversial changes to the Bank Act from his latest budget bill in response to strong objections from Quebec and some Senators.
The Quebec government opposes a section of Bill C-29 that asserts the federal government's exclusive jurisdiction over Canada's banking sector. Quebec insists that provinces have constitutional authority in areas such as consumer protection for bank customers and warns the bill would impose weaker standards than those currently in place provincially.
"We've listened to Quebeckers about their concern that they have a high level of protection in the banking sector," Mr. Morneau said Monday afternoon on Parliament Hill, where he announced the change.
The Finance Minister said he has instructed the government's representative in the Senate, Peter Harder, to introduce an amendment that would remove the banking sector provisions.
The government will then ask the Financial Consumer Agency of Canada to assure that the proposed federal protections for consumers are at least as strong as those available provincially. After that, the provision would be re-introduced as a standalone bill.
Mr. Morneau had previously urged Senators not to amend the bill, arguing that it should be adopted in its entirety. Mr. Harder had also asked Senators not to overstep their traditional role by amending a budget bill.
The government's decision to change course offers a clear example of the implications created by Prime Minister Justin Trudeau's decision to loosen party discipline in the Senate. Since coming to power in 2015, Mr. Trudeau has appointed a wave of new Senators who sit as independents.
While short of a majority, the 42 independent Senators now outnumber the 41 Senators who sit as Conservatives. Another 21 Senators sit as Liberals.
Independent Senator André Pratte, who had been rallying Senators to oppose that section of the bill, said it was good the government backed down. However ,he said he remains concerned that Mr. Morneau plans to come back with a similar proposal in a few months.
Mr. Pratte also said the situation highlights the fact that there is a new political dynamic in the Senate.
"These are not just words. It is true. This is an independent Senate," he said.