Bill C-26 (Historical)

An Act to amend the Criminal Code (criminal interest rate)

This enactment amends the Criminal Code by exempting persons from the application of section 347 of that Act in respect of agreements for small, short-term loans. The exemption applies to persons who are licensed or otherwise authorized to enter into such agreements by designated provinces that have legislative measures that protect recipients of payday loans and that specify a limit on the total cost of those loans.

Tackling Violent Crime Act

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, before I begin to speak to Bill C-2, I have to address my hon. colleague's contradictory comments about the lack of mandatory minimums. On the one hand, he lambasted the Liberal Party for not wanting mandatory minimums. On the other hand, he said very clearly that we had them and we called for a strengthening of them.

When the member for Mount Royal was the justice minister, he introduced mandatory minimums for weapons offences. That was a good thing. That is why we support Bill C-2. We have been trying to drive forward much of what is in the legislation. Ironically, we have been obstructed by the government.

I will go through the facts. Unfortunately, in the House one could look at the old adage that “in war, truth is the first casualty”. What we have here is war by another name. Sometimes truth is the first casualty in the House of Commons, and that is sad for the public.

Let me talk about the facts for a minute and give viewers a bit of history on the bill.

Bill C-2 is an omnibus bill involving a combination of five bills, including mandatory minimum penalties. We support mandatory minimum penalties. I caution the government, however, to ensure that the mandatory minimum penalties for weapons offences, violent offences and sexual offences cannot be plea bargained away and that they run consecutively and not concurrently. Too many times people who have committed serious offences receive penalties that get plea bargained away, so there is no effective penalty.

We also support an increase in mandatory minimums for weapons trafficking. My colleague from Mount Royal introduced many mandatory minimums for these offences in the last Parliament.

The Liberal Party supports the provisions for dangerous offenders, impaired driving and reverse onus in firearms offences. Many years ago there really was no penalty for a person using a weapon in the commission of an offence. That was changed by the last government. The Liberal Party supports the changes in Bill C-2.

Let me talk for a few moments about a few facts around the passage of the bill.

On October 26, 2006, our Liberal leader made a first offer to fast track a package of justice bills in the House, including Bill C-9, as it had been amended, Bill C-18, the DNA identification legislation, Bill C-19, the street racing legislation, Bill C-22, the age of consent legislation, Bill C-23, the animal cruelty legislation and Bill C-26, respecting payday loans. We also added Bill C-35, on March 14 of this year, a bill for bail reform, and we support that.

On March 21, we attempted to use our opposition day to pass the government's four justice bills: Bill C-18, Bill C-22, Bill C-23 and Bill C-35. The Conservative House leader raised a procedural point of order to block the motion. Those four government bills would have been fast tracked through this place in the same day, yet the government House leader, for reasons unknown to us and the public, blocked this. Those are facts.

What has been the path of government justice bills through the Senate? Of the six justice bills that had been passed before the summer break, only four went to the Senate. How on earth could the Senate pass bills that it just received prior to the government proroguing Parliament? It could not do that. It is disingenuous for government members to stand and suggest that the Senate was trying to block their bills. By the time the Senate received the bills, the government closed Parliament. Those are the facts. Anybody can check them out if they wish.

We support Bill C-2. However, I want to bore down on a few dangerous issues that the government is pursuing. One deals with the issue of drug trafficking. The government has said that it will increase the penalties for those who traffic in drugs.

There are two populations of traffickers.

There are those parasites in society who are involved in commercial grow operations, frequently attached to organized crime. We should throw the book at them. Those people are a cancer in our society and they deserve to be in jail.

There is another population that will be swept up in the government's anti-trafficking bill. It is the low level dealers who sell small amounts of illegal drugs to people, but they themselves are addicts. In essence, they are selling drugs to pay for their addictions.

If we criminalize people who have addiction problems and throw them in jail, they come out being hardened criminals. We also do not deal with the underlying problem, which we will have at the end of the day when they come out. In effect, we increase public insecurity and costs to the taxpayer. We do not address the underlying problem and we make our streets less safe. That is stupid, not to put too fine a point on it.

If the government goes through with the bill to criminalize people who are addicts, the low level people buying and selling drugs, it will end up with the situation we see south of the border, which has used a war on drugs approach. It has proven to be an abysmal failure.

What we see south of the border is a view of the future for us if the government pursues its course of action. There have been increased rates of both soft and hard drugs use, increased numbers of people have been incarcerated, increased costs to the taxpayer and more violent crime. Society loses.

The government ought to work with the provinces to implement solutions that address some of the underlying problems.

I will get to the organized crime aspects in a moment.

For the drug problems, I cannot overemphasize what a disaster this will be. The government has been warned of this by people across the country.

Let us take two projects, in particular, that have been extremely effective in dealing with people who have intravenous drug use problems. Both of them are found in Vancouver and championed by Dr. Julio Montaner and Dr. Thomas Kerr, superb physicians and research scientists, who have underneath them the Insite supervised injection program and the NAOMI project.

The supervised injection program is a place where addicts can go to a supervised setting and take the drugs they are given. What has that done? It has reduced harm, put more people into treatment, reduced crime and saved the taxpayer money. Fewer people have gone to emergency and there has been less dependence on our health care system. It works.

The other project I would recommend we pursue is the NAOMI project. Before I get to it, I point out that in the eleventh hour the government extended Insite's ability to engage in its program up until June 2008.

All the evidence published from The Lancet to The New England Journal of Medicine shows, without a shadow of a doubt, that the Insite supervised injection program saves lives, reduces crime and gets people into treatment. It is good for public security and it saves the taxpayer money. Why extend it to only eight months?

If the government gets a majority, it will kill the program. That, in short, will be murder. The government knows full well the program saves lives. To remove that program, would result in, essentially, the killing of people.

A program that works better, which the government does not support but ought to expand, is the NAOMI project. The NAOMI project deals with hard-core narcotics abusers. These people are over the age of 26. They have had five years of drug addictions and two failed attempts at treatment. They are the hard nuts of intravenous drug use.

The NAOMI project took 243 addicts and randomized them into three populations. One population received intravenous heroine, the other one received intravenous dilaudid, which is a prescription narcotic that is legal, and the third was to take oral methadone, which is a weak narcotic.

What happened to those populations? Of the population on IV drugs, more than 85% of people were still taking those drugs, receiving treatment and counselling, getting their lives together, obtaining skills training and being able to live while not being on the street and not engaging in criminal behaviour to feed their addictions. Of the third population, the ones in the methadone program, 50% of people were still in treatment after a year. It works.

What the government should be doing for both Insite as well as NAOMI, is expanding those programs across our country. Our urban centres need it.

In Victoria there are 1,243 people living on the street, 60% of which have what we call dual diagnoses, which means some of them have both a drug problem and a psychiatric problem. I would also add that some people within that population have had brain injuries in the past and have fallen into the terrible spiral of drug use by being on the street. Those people could be you or I, Mr. Speaker, who one day fall off a ladder or get into a car accident, sustain a significant closed head injury, have major cerebral trauma and as a result their lives are affected forever.

Some of those people are on the street and take drugs. Do we throw those people in jail? Do we throw the psychiatric patient, who is dealing to pay for his or her addiction, in jail? That is what would happen with the bill that the government has introduced. Those people need medical treatment. They do not need to be in jail.

My plea to the government, to the Minister of Health, the Minister of Justice and the Prime Minister is to bury their ideology, follow the facts and implement the solutions that will help people with addictions, keep our streets safe, and reduce costs to the taxpayers. It is a win-win situation for all concerned.

The interesting thing about the NAOMI project is that because NAOMI actually gave the drug to an individual who was proven to be an addict, that person did not have to go on the street to get the drugs. If that were done in a broader sense, it would be horrific to organized crime that benefits from this situation because the NAOMI project severs the tie between the addict and organized crime. That is what we need to do.

Organized crime would be horrified if a forward thinking government one day were to enable drug addicts to receive their drugs. Doing that enables addicts to get into the treatment programs that they need. It enables them to detoxify, obtain addiction counselling, skills training and the psychiatric therapy they need. If we do not do that, we will not make a dent in what we see on the ground. There will not be any affect on addictions and it will actually increase the criminal population in our country.

The other side of this coin, of course, deals with organized crime gangs, as I mentioned, the parasites and cancer in our society. These parasites are essentially people in $3,000 suits who benefit from a substance that is nearly worthless but has a value well beyond what it ought to have because it is illegal.

I have a bill on the order paper that would decriminalize the simple possession of marijuana. No one condones anybody using marijuana, everybody wants to prevent people from using it, and everyone certainly encourages children not to use this or any other illegal drug. The fact of the matter is that people do use it and a significant percentage of Canadians have used it at one time in their lives, particularly when they were very young.

Do we throw those people in jail? Do we throw an 18-year-old who has a joint in his or her back pocket in jail? Do we throw an 18-year-old in jail who exchanges or sells or gives a couple of marijuana cigarettes to a friend? That would be trafficking under the government's bill. Do we throw that 18-year-old in jail? Do we give an 18-year-old a criminal record, which is what we have today, affecting his or her ability to work or gain employment and have access to professional facilities for the rest of his or her life? Is that a humane way to deal with our population? It is not.

The worst news for organized crime, in my personal view, would be that marijuana is legal and regulated. It is not to say that marijuana is safe. It is not. It is dangerous, but so are alcohol and cigarettes.

If we can imagine today that cigarettes were going to come onto the market and were proposed as being something that ought to be sold today, do we think for a moment that they would be allowed, with all the cancer, respiratory and cardiac problems that cigarettes cause? No, they would not be, and neither in fact would alcohol. Alcohol would not be allowed today either, for all of the damage it does, but the fact of the matter is that cigarettes and alcohol are legal today.

The groups that benefit the most from the status quo, from marijuana being illegal, and it is just a weed with its value elevated well beyond what it ought to be because it is illegal, are the organized crime gangs. They are making billions of dollars off the status quo, and those billions are used to do any number of things including: trafficking of weapons and people, prostitution, embezzlement, fraud and murder. That is what organized crime is involved with.

What the government should be doing is coming up with a more comprehensive plan to deal with the biker gangs and organized criminal gangs who are--

Motions in amendment

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, as I was mentioning, as parliamentarians we have to be cognizant and not pass bad legislation. We have to ensure that we do not interfere in the justice process as well.

These bills were thoroughly debated when they came before committee. Bills have to be handled properly if they are to get through Parliament. If they are to be handled properly, they have to be prioritized. It appears the Conservatives have no priorities. They only want to create a hodgepodge of stuff.

On October 26, 2006, the Liberals offered to fast track a package of justice bills through the House. These included Bill C-9, as it had been amended, Bill C-18, the DNA identification legislation, Bill C-19, the street racing legislation, Bill C-22, the age of consent legislation, Bill C-23, the animal cruelty legislation and Bill C-26, respecting payday loans. This offer effectively guaranteed that the Conservatives would have a majority to pass the legislation.

On March 14, the Leader of the Opposition added Bill C-35, the bail reform legislation, to the list of bills the Liberal caucus would fast track. Despite this offer, it took the Conservatives until May 30 to get the bill through committee. If the Conservatives were so keen on being hard on crime, as they have claimed, they should have taken this offer.

According to a report entitled “Unlocking America: Why and How to Reduce America’s Prison Population”, produced by the JFA Institute, the tough measures, which the government claims it is bringing through its omnibus bills, are costly and pointless. The report says that due largely to tough on crime policies, there are now eight times as many people in U.S. prisons and jails as there were in 1970, yet the crime rate today in the U.S. is about the same as it was in 1973. There is little evidence that the imprisonment binge has had much impact on crime.

As legislators, we are supposed to be here to pass good legislation, not bad legislation. We are here to debate and to amend. Amendments were proposed to the bills and the members of the Conservative Party on the committee did not want to pass them.

It is important that we reflect on what these bills talked about.

Bill C-10 talked about minimum penalties. It proposed five years for a first offence and seven years on a second or subsequent offence for eight specific offences involving the actual use of firearms, attempted murder, discharging a firearm with intent, sexual assault with a weapon, aggravated sexual assault, kidnapping, hostage taking, robbery, extortion and when the offence was gang related or if a restricted or prohibited firearm such as a handgun was used.

The bill was brought to committee and the committee made the necessary amendments. The committee still has very grave concerns that the bill needs to be properly documented and it has to be properly put in place so legislators know the intent of the legislation.

There is the creation of two new offences, an indictable offence of breaking and entering to steal a firearm and an indictable offence of robbery to steal a firearm. There is no difference with the version of Bill C-10, which passed through the House, and the language used in Bill C-2.

The question to be asked is why then group this in an omnibus bill? No one on the government side seems to give us an answer. All the members do is repeat their mantra that they are hard on crime. However, as I pointed out, the U.S. crime policy, which they so desperately want to follow, fails the system. It does nothing right.

Bill C-22, which was the age of protection bill, proposed to raise the age at which youth could consent to non-exploitative sexual activity. The age would be raised from 14 to 16 years of age and the age of protection of 18 years would be maintained for exploitative sexual activities.

Through amendments, the committee brought about a five year close in age. This was not there when it was proposed by the government. Therefore, another question arises. What happened to the good amendments in the mandatory minimum penalties in the age of protection?

What about Bill C-23, which was criminal procedure? According to the Official Languages Act, the committee ensured that there were changes to the bill. We said that a person who was a French-speaking person, if he or she were in court, should get a French counsel. It is important to protect language rights. In a country that has two official languages we have to protect minority rights as well. Why is this bill not mentioned at all?

Bill C-27 deals with dangerous offenders. It would provide that an offender who was serving a long term supervision order in the community and who was violating the conditions of the order would be guilty of an offence and the crown could choose to hold a dangerous offender hearing following convictions.

That was originally proposed by the Liberal justice critic. The bill would expand the possible sentence available to a judge following a finding that an individual would be a dangerous offender. The judge could now impose a long term supervision order or simply impose the sentence for the offence for which the offender had been convicted in addition to the previous option of detention in prison for an indeterminate period, which was previous available.

The Conservatives love to introduce bills. They want to take credit for a lot of things and make it on the six o'clock news. If something does not make the six o'clock news, like Bill C-23 because it was protecting minority language rights, they do not bother.

The last bill I will speak about is Bill C-32, the drug recognition experts to conduct roadside sobriety tests. It is good to promise all sorts of things, but there is no funding. When we do not have funding, how will we get these experts? For example, in Seacow Pond where would we get a person who is an expert?

It is very important that when we prepare bills and we make promises, those promises have to be kept. We have to provide the legislators with enough resources.

Tackling Violent Crime Act

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I am very pleased to have the opportunity to speak to Bill C-2, an Act to amend the Criminal Code and to make consequential amendments to other Acts, the so-called tackling violent crime bill, something which our party has been working on for some time. I am quite proud of the work that we have already done on this very issue. It is critically important that Canada have safe communities and that we do everything possible to ensure that.

Canada has long been and continues to be one of the safest countries in the world. Although firearm homicides decreased between 1975 and 2003, even one death, or one violent episode involving guns, is one too many. When our communities challenge that it is decreasing, I am sure the reason is that statistics do not matter if people feel unsafe in their communities. People in my riding are very concerned about this issue, as are people in other ridings. It is important that we do everything we possibly can to ensure the laws are there to protect Canadians.

The Liberal government implemented a wide variety of measures in order to make our streets safer. We had a very successful crime prevention strategy that involved more than imprisonment. There is much more required than just imprisonment, which is why the former Liberal government took a more proactive role with a wide range of measures to stem gun violence and crack down on organized crime.

Since 2002 our anti-gang legislation has meant new offences and tougher sentences, including life in prison for involvement with criminal organizations. It is currently being used in cities like mine, Toronto, where it has been used numerous times. It is a tool the police are very pleased to have and they use it to its maximum amount.

We also broadened powers to seize the proceeds and property of criminal organizations. As well, we increased funding for the national crime prevention strategy, which is something again, we cared very much about and it was very effective. The decrease in crime clearly is because the Liberal government's crime strategy was effective and it continues to be effective.

Since it was launched in 1998 the national crime prevention strategy has helped numerous communities across Canada by giving them the tools, the knowledge, and the support that they need to deal with the root causes of crime at the local level, which is where it has to start. It has supported more than 5,000 projects nation-wide dealing with serious issues like family violence, school problems, and drug abuse.

These are just some of the measures that my party, while in government, undertook. Our campaign was working, hence, the reason there has been a decrease in crime, especially in violent crime. Whether funding programs to prevent crime or ensuring that violent criminals are brought to justice, the Liberal Party while in government was and now continues to be committed to protecting our communities.

Even though we are now in opposition, we, the Liberals, have been dealing seriously with crime legislation for the past year and a half while the Conservatives have been playing partisan games and doing everything they can to prevent those bills from being passed. We actually put more effort into passing the government's crime bills in the last session than the Conservatives did. So, we will not take any lectures from them on how we should be proceeding. Had they not blocked it, the legislation would have been passed and enacted already.

People will remember that on October 26, 2006 the Liberals made the very first offer to fast track a package of justice bills through this House. In spite of the government saying something different, we made every effort to work with the Conservatives to ensure the passage of anything that would make our country safer. This included Bill C-9, as amended; Bill C-18, on DNA identification; Bill C-19, on street racing; Bill C-22, on the age of consent; Bill C-23, on criminal procedures; and Bill C-26, on payday loans. All were important legislation.

The Conservatives like to claim, as I said earlier, that the Liberals held up their justice bills, but anyone who has been paying any attention knows that simply is not true. We are doing our job as a responsible opposition party. We are certainly not going to play partisan politics with the Criminal Code. I would ask the government to keep that in mind so that we can work together in a positive way to ensure the safety of Canadians and our country.

The Liberal Party, while in government, made great progress on making our communities safer. As I mentioned earlier, we increased funding for the national crime prevention strategy. We took steps to prevent gun violence by cracking down on organized crime in a very concentrated effort across the country. We focused on attacking the root causes of why people get involved in organized crime. We worked together with all of the crime prevention people across the country and with all of the officials in the various policing jurisdictions, because it certainly takes a coordinated effort in order to tackle organized crime.

When we are back in government, and we look forward to and expect to be the government after the next election, we have our own plans.

A new Liberal government would immediately provide additional funds to the provinces so they could hire more police officers. We would give the RCMP money for 400 additional officers to help local police departments deal with guns and gang activity, organized crime and drug trafficking.

We would also ensure that more money was made available to the provinces to hire more crown attorneys, which continues to be a problem and clogs the courts. It is one thing to arrest people but it is another thing to get them through the system.

We would continue to support reverse onus bail hearings for those arrested for gun crimes. We would establish a fund that would help at-risk communities cover the cost of security in their places of worship, which was started by the previous Liberal government, but which unfortunately was abandoned by the Conservatives.

A new Liberal government would make sure that children in vulnerable neighbourhoods got the very best start in life. We hear that all the time. It costs approximately $120,000 a year for each person who is kept in prison. We would reverse that and invest right at the very beginning. We are talking about early learning programs and high risk communities.

I represent a high risk community and I talk to many of the kids and their parents. Those parents are struggling to keep their kids on the straight and narrow. They truly need a variety of programs and help at that point. I realize that the Conservatives understand that as well. It is important to be investing early so that we can keep kids out of the justice system and make sure they know they have options and alternatives in life so that they are not dragged into the drug and gang culture, which is clearly happening now.

Many of the parents I talk to, the single mothers, are frantic with worry. They are looking for other places to live where it will be safer, where their kids will not be drawn into the gang activity that is very prevalent in my own riding.

By ensuring that children get the best possible start in life, we will be encouraging them to become positive contributing members of society and do not fall victims to poverty and crime. From providing resources for young mothers to interact and to learn about nutrition, to supplying early learning opportunities for their precious children, our communities need our support and we must provide it.

We invested in many worthwhile crime prevention initiatives. A few of those programs are the gun violence and gang prevention fund, support for community based youth justice programs and partnerships to promote fair and effective processes, community investments through the youth employment strategy, and the justice department's programming and partnerships to provide hope and opportunities.

We also committed another $2 million to the city of Toronto in support of programming under the Liberal government's youth employment strategy. This was all part of the $122 million that was dedicated to the youth employment strategy programming to help youth across the country.

Conflict Mediation Services of Downsview was a not for profit organization that helped people and families, workplaces, schools and neighbourhoods. Unfortunately, its restorative justice program was not funded because priorities have changed of course with the new government, and that no longer fits into that grouping.

In closing, I would like to say that this legislation is important. We look forward to it getting through the House and being enacted as we all move forward in a joint effort to ensure safety. Our communities will appreciate it.

[Marlene Jennings, Liberal, Notre-Dame-de-Grâce—Lachine, QC]

Thank you, Mr. Chairman.

Thank you very much, Minister, for your presentation. There are a few facts I would like to raise before asking you two questions. I will be very brief.

On October 26, 2006, the Liberals made the first offer to fast-track a package of justice bills through the House. This included Bill C-9 as it had been amended; Bill C-18, which is the DNA identification; Bill C-19, street racing; Bill C-22, age of consent, which we now find as part of Bill C-9,; Bill C-23, criminal procedure; and Bill C-26, payday loans. This offer effectively guaranteed the Conservative government a majority in the House to pass those pieces of legislation, including the one that is in Bill C-9, the age of consent, at that time. Had the government accepted the Liberal offer, Bill C-22, the age of consent, would have become the law before the end of 2006 and our children would no longer have been vulnerable to sexual predators.

On March 14, the Honourable Stéphane Dion, leader of the official opposition, added Bill C-35, bail reform, to the list of bills that the Liberal caucus was offering to the Conservative government to fast-track. Despite again this offer of majority support, it took the Conservatives until May 30 to actually move it up on the order paper so that it would get to committee.

Finally, on March 21, 2007, Liberals again attempted to use an opposition day motion that, if passed, would have immediately resulted in the passage at all stages of four justice bills: Bill C-18, DNA identification; Bill C-22, age of consent, which is the bill that we see again before the House in your tackling crime bill, Bill C-9; Bill C-23, criminal procedure; and Bill C-35, bail reform. Incredibly, the Conservative House Leader raised a procedural point of order to block the motion. In other words, the Conservatives have in fact fought the Liberals' attempts three times to pass justice bills, including the one that's incorporated in Bill C-9.

Now, I notice that in Bill C-9, the section that deals with the dangerous offender, two categories of amendments have been brought forward. One deals with the long-term offenders. A breach of supervision orders, for instance, could trigger a new dangerous offender hearing in order to make them liable to the kinds of sentences that dangerous offenders can be liable to. Minister, if you studied the transcripts of the House committee that studied Bill C-27, or was in the process of studying it last spring before the prorogation of the House, you would see that Liberals actually made proposals for the very kinds of amendments that we now find in the Bill C-27 section of Bill C-2, and they received support from the Canadian Police Association, Mr. Tony Cannavino, and from other witnesses who appeared and who thought it was a great idea and that it would actually strengthen Bill C-27 and make the system more effective.

So I'm pleased that the government listened; however, we also made another proposal. Right now the Crown continues to enjoy discretionary authority as to whether or not an application for remand and assessment for a dangerous offender designation will actually be made, and so your reverse presumption will operate and become effective only if the Crown makes that application. Liberals had been proposing that a third conviction automatically trigger a dangerous offender hearing. That would then allow every single offender who had been convicted three times of a type of crime that can lead to a dangerous offender hearing to actually be called before such a hearing, to actually be assessed and evaluated.

May I ask why the government has decided, in its wisdom, not to go forward with an automatic trigger rather than a reverse presumption, which will possibly never or very rarely be put into effect because the Crown retains the discretionary authority to make the application or not?

I am finished.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I did not realize we were going to be moving on this quickly, which is a good development because it will move these bills along, as opposed to the government's approach, which has been one of delay.

In that regard, I want to do a quick resumé of what has happened in this Parliament starting in roughly mid-February of 2006, at which time we were faced with a large number of crime bills by the government. I took the opportunity to go through the list of bills that have been dealt with in one form or another.

The list was quite lengthy, starting with Bill C-9, which was a bill on conditional sentencing. That went through both Houses and has royal assent. There was one on the Judges Act, Bill C-17, and it also went through all stages. Another one relating to DNA identification went through all stages. As for Bill C-19 on street racing, a particularly emotional point for the Conservative Party, we got that one through. There was one on criminal interest rates, Bill C-26, and it got through. There was one, Bill C-48, which dealt with international crime syndicates and the need to fight corruption at that level, coming out of the UN, and it got through. The next one, dealing with the illegal recording of movies, went very quickly through the House with all parties cooperating. It never even went to committee.

In addition to that, we have had Bill C-22, which actually is part of Bill C-2, the bill that is before us now, passed at second reading in the Senate. It went through the House all the way to the Senate. We have had Bill C-10, an important bill on mandatory minimums, go through this House and into the Senate, where it was at first reading.

Similarly, Bill C-23 went through this House and got to the Senate, but it is not part of this bill. I am not sure if the government is going to bring that one back or not. On Bill C-35, which was the bill dealing with bail reviews involving alleged gun crimes and the reverse onus being placed, again, it got through all the work in this House and went to the Senate.

The final bill with regard to work that we had done and which was almost through this House was the bill dealing with impaired driving. That had cleared the committee and was coming back to the House. It would have been back in the House if we had not prorogued in the middle part of September.

These are all the bills we have had from the government. The final bill was still in committee and we had just started on it. We had three or four meetings taking witnesses on that bill, which deals with dangerous offenders and amendments to recognizance in the Criminal Code.

In addition, there were at least four to six private members' bills, all of them coming from the Conservative Party interestingly enough, which we dealt with and passed or dealt with in some fashion. One had to be withdrawn. We dealt with those as well.

All of that work was being done at the justice committee, with the exception, and this is really interesting, of two bills that went to special legislative committees. Because the justice committee's workload was so great, we moved them into special committees. However, we worked on those bills and got them through.

All of that is work we have done in a little over 18 months, yet in spite of that, there are two things the government does. It constantly complains about the length of time it takes, in regard to which the Conservatives could have done much better by originally having omnibus bills. I have said that in the House to the point where I am almost sick of hearing it myself, and I am sure everyone else in the House is, but it is the way they should have conducted themselves. Of course, though, because of their political agenda of wanting to highlight each one of these bills, they did not put them together. They finally came to their senses and realized that it is a way of moving bills through the House more rapidly.

However, we did all of that work, and now what we are hearing, which is the second point I want to make about the government, is that the delay is the fault of the opposition. That is absolutely false.

One can see from the length of the list of bills we have had to deal with, plus the private members' bills, plus working on two legislative committees in addition to all the work that we have done at justice, that nobody in the opposition has done any delaying. The delay with regard to the five bills that are incorporated now into Bill C-2 is entirely at the feet of the government. It prorogued and that cost us a month.

It is interesting to note what could have happened in that one month's time. It is my opinion that all three of the bills that were in the Senate would have been through and ready for royal assent, which again is in the hands of the government. If the government had conducted itself with any kind of efficiency, those bills probably would be law today.

The fourth bill, the one dealing with impaired driving, which again is part of Bill C-2, would have come to the House in the middle part of September when we came back. There was not a great deal of debate, and although I and my party have some reservations about it, we in fact would support it.

The bill would have had some debate in the House at report stage and third reading, but it would have been through the House and at least at first reading in the Senate now, perhaps at second reading. It is not beyond the pale to think that the bill also would have cleared the Senate and would have been ready for royal assent.

This bill bothers me. Of all the ones we have, this one bothers me the most because of the conduct of the government in dealing with the individuals, including the police officers and police associations, who lobbied really heavily to get this legislation, and in particular the families and supporters of MADD, Mothers Against Drunk Driving. It bothers me that the government would have misused the loyalty and the support that those groups had given to the bill by leading them to believe that somehow it was the opposition that was holding it up, when in fact it was prorogation. Now there is this tactic of combining that bill with the other bills to actually slow down its passage. Otherwise there is a reasonably good chance it would have been law by now, and if not, it would have been in its final stages at the Senate and it certainly would have been law by the end of the year.

That is much less likely to happen now. It is more likely that this bill will not get final approval and royal assent until well into the spring, no matter what the government tries to do. Quite frankly we will do whatever we can to be cooperative in moving these bills forward.

Our party was quite prepared to have all four of those bills that I have mentioned which form 80% of Bill C-2 back at their original stages, again so they would be law or on the verge of becoming law, that is, receiving royal assent today, as opposed to what is likely to happen now. It is going to be into the new year and maybe well into the spring before these bills become law, assuming of course that the government does not collapse and there is an election, which is another problem.

The government has delayed it, and in addition, it has clearly pushed it back at least until the new year, with the real possibility of an election intervening and a number of these provisions never seeing the light of day until after the election, when we would come back and start the process all over again.

That is reprehensible conduct on the part of the government. The only reason the Conservatives are doing it is so they can stand up in public and say, “We are tough on crime”. They do the macho thing. They beat their chests. They do the King Kong thing as if they are coming out of a jungle. The reality is that the delay is all at their feet.

I am really angry when I think of all the work that so many groups have done, the victims of crime in particular, and now are being misused by the government in such a way.

I am not going to take up much more time but I do want to address the final bill that was at committee. Former Bill C-27 is now part of Bill C-2. It deals with two amendments to the Criminal Code. One would be on the provisions relating to dangerous offenders and the other is with regard to recognizance.

With regard to recognizance, I think I can safely say that all the opposition parties are in support of those provisions. They give additional authority to our judiciary to deal with people who are out in the community on their own recognizance, but we can put additional conditions on them.

The bill provides for things such as requiring them to wear a monitoring device. There is a number of other provisions that would substantially improve security in our communities regarding people who have now been released from charges and who have already served their time. It is a substantial step forward and one that has been needed.

I have said this in the House before, that when I started practising law back in the early 1970s we needed it at that time. Successive governments have tended to shy away from it. Our judiciary has attempted on a number of occasions to introduce these types of control devices, if I could put it that way, in terms of sentencing or conditions imposed on people and it has consistently lost in our courts of appeal. It required legislative intervention. The provision is in this bill and we need to pass that and get it into play so our judges can do a better job of helping protect Canadians, which they want to do.

The other part in this provision, the old Bill C-27 now part of Bill C-2, is with regard to dangerous offenders. We have significant problems with this. Originally when the bill came before the House as Bill C-27, all three opposition parties indicated that on principle they had to vote against it because it has a provision of reverse onus with regard to the dangerous offender.

All of us believe that that part of the bill would suffer a charter challenge that would be successful in striking it down. What I do not think the government has ever understood is that not only would it be struck down, but perhaps the whole dangerous offender section would be struck down. Just as we saw with the security certificates where the Supreme Court said that if it could not be fixed, they were all going down, the same type of thing could happen in a ruling on dangerous offenders. The government has never understood that.

Ultimately, the opposition parties decided that there were perhaps ways of amending this in committee to improve the use of the dangerous offender section, because we know we need to do that, and at the same time make sure that the section was not jeopardized by a successful charter challenge at some point in the future.

We were working on that when we ended in June. We fully expected that was one of the bills for the special legislative committee and that we would be back and working on it in September, that we would complete the witness testimony and improve the bill by way of amendment and if not, then I suppose we would have been faced with a conundrum of whether we could support it or not. That is where we are at this point.

That bill needs significant work in order to be sure that we do not lose the entire dangerous offender section of the Criminal Code. We will be doing that work as soon as we can get the committee up and running again and the bill into the committee.

It is very clear that the government, and I do not say this about the opposition parties, is prepared to play politics with public safety. The Conservatives want to be seen as the champions and they are prepared to take these kinds of manoeuvres of delaying these bills by incorporating them all into Bill C-2 so that they can do that. They want to stand up in the House and in the media and out on the hustings and say “we are the champions of it”, when in fact the truth is just the opposite. They were guilty. They are guilty of delay. The opposition parties are not.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, on Bill C-2 and justice issues in general, I heard just recently in the House the term “a revolving door”. The only revolving door is the justice minister and officials in the Conservative Party going in and out of press conferences announcing and reannouncing the same bills on which they pulled the plug.

With respect to Bill C-2, I have reviewed all the material. I sat in on all the committee hearings. What I have recently discovered, through obtaining a bill briefing, is a note from the Prime Minister about Bill C-2, in that it regurgitates all the bills we dealt with in the last Parliament. The message from the Prime Minister is that he is sorry that he pulled the plug on Parliament and flushed all the good work of the justice committee down the drain.

That is what happened. All these bills were well on their way. They were going through the due process of Parliament, which followed the rules of parliaments before, and they were on the way to being in effect.

The reason we are here today is that the Prime Minister prorogued Parliament and those bills were killed in their tracks. It is not true that perhaps that is why the Prime Minister prorogued Parliament but I think it is. In fact, I think that is why we have a new session.

I may be new and I may be in the back row but I read the papers and I know what is going on. Parliament was prorogued and all legislation was stopped in its tracks.

What is important to remind ourselves, and the Canadian public will want to know, is that there were 13 bills in the justice dossier and 7 of them were passed and are now the law of Canada.

As a member of the justice committee, I would expect all parties to tell all members of the justice committee that it was a job well done, that seven out of thirteen justice bills that affect the citizens of Canada are now law. Five of those bills are currently the subject of Bill C-2, which I will turn to, and one, mysteriously, of the thirteen bills, the criminal procedure act, which all parties agreed to unanimously, was a creature of a previous Parliament and which all prosecutors are waiting intently for. These prosecutors are the people who are on the front lines, as well as the police officers, in the criminal justice system. I suppose they are wondering why, despite the offer to fast track the bill by this party and despite the unanimous support by the justice committee, Bill C-23 has not been moved up. Perhaps in the government's haste and the revolving door of the press circle and the press club, it forgot to bring along an important bill.

Overall, the 13 bills, the 7 passed and the 1 dropped by an incompetent justice minister and the parliamentary secretary for forgetting that, and the 5 we are about to discuss, all of these bills need to be enforced. Each police officer, prosecutor, probation officer and corrections official, all those people in the system need to know that if there are 13 new laws, 12 because 1 was dropped by the incompetent ministry, but if there are 12 new bills we need to know we have the resources to put them into effect.

It is urgent for the public to know that despite a promise by the government, the law and order government, the tough on crime government, it is toothless without following up on the promise of 2,500 new police officers and the false promise in the Speech from the Throne for 1,000 new RCMP officers when the RCMP cannot recruit 1,000 officers. It is behind in its recruitment. It is a meaningless, toothless promise to the people of Canada but, even worse, it takes away the hope of the Canadian Police Association, the Canadian Association of Police Chiefs, the prosecutors and the probation officers, all the people who must put into effect, on a daily basis, the laws of the justice system.

I want to emphasize that the party on this side of the House is not so fickle. We support our justice system. We support our judges, our prosecutors, and all of the police officers who are responsible for protecting Canadians.

Over the past 18 months, the Liberal Party has undertaken a thorough review of the legislation pertaining to crime while the Conservatives have been busy playing political games. The Prime Minister put an end to this Parliament's activities and committee work, thereby throwing out the amendments that this bill sought to make to five acts. It is his fault that these five acts have not yet been amended.

We on this side of the House have faith in our justice system and are convinced that it will keep the peace in our communities.

I say that because it should be a non-partisan issue that we all believe in a safe community. We are all here as parliamentarians, surely, to ensure that we have a safe community. We may differ on the avenue to get there, but how much did we, the Liberal Party of Canada and its members on the justice committee, really differ from the plan of the Conservative Party in general and, more importantly, in the organic process which is called the development of criminal law through amendments to the Criminal Code?

I say to the House and to the public: not much.

There were 13 bills proposed. Seven passed and there are five in Bill C-2 that we are substantially in agreement on because they would have been law by now had Parliament not been prorogued, and I must say for the record that there is one that has been dropped by the government and that we are also in favour of.

So how is it that we, in trying to keep the community safe, are against the elements in Bill C-2 and the elements in these bills? I will repeat them: Bill C-9, on conditional sentences; Bill C-18, on DNA identification; Bill C-19, on street racing; Bill C-25, on proceeds of crime; Bill C-26, on criminal rate of interest; and just to add two others that were not part of Bill C-2, Bill C-48, on the implementation of a UN convention against corruption, and Bill C-59, on the unauthorized recording of a movie. These have all been supported.

But there is more. I hear members on the opposite side talk about 13 years of inaction with respect to criminal justice and I think the Canadian public would be interested to know that these laws, while continuing on the evolution of our criminal law and making our community safer, are but part of the Criminal Code of Canada.

On the Criminal Code of Canada, I might say this in a moment of non-partisanship and to congratulate a Conservative politician, albeit a dead one.When Prime Minister John Thompson, a Conservative prime minister, was minister of justice he essentially created and adapted the criminal law of Canada into a code that we would follow in this country. I want to get credit for giving plaudits to a Conservative in this place.

A principal part of the Criminal Code of Canada, which we have been talking about since I have been in Parliament, is sentencing. What is sentencing? The purpose and principles of sentencing are set out in section 718. I hear very often in this place and at the revolving door of the press conference centre for the Conservative Party of Canada that there is but one principle in sentencing, that is, to put the bad guys away.

I know this is a novel concept for those who are directing the Conservative justice agenda, but why do we not refer to what the law says about the purpose and principles of sentencing? They are set out in section 718. I am not going to read this word for word because it tends to be bogged down in particularness and assuredness and literal things that, again, the Conservative justice team really knows nothing about, having adopted and written such sloppy legislation that it had to be sent to committee to be fixed.

However, in general, there are six important factors or principles in sentencing. It is the reason we have sentences for people who have committed crimes. One principle is to denounce unlawful conduct. That is the one I hear about most often from the Conservative justice team. That is a valid principle, but it is one of six.

What are the others? One is to deter the offender from doing it again. That is another one I hear a lot about. The point over here is that those two of the six are very important. We are not shirking the importance of those. The law does not say that any one is more important than the other. It is a guidepost to judges who make our law pursuant to what they read here. It is a guidepost to say that we will denounce unlawful conduct. Yes, we will, by bringing in this sentence. We will deter the person or any person in the public from doing it again. They are two very important objectives.

However, that is where the Conservative justice team stops most of the time. The Conservatives forget that they must separate offenders from society when necessary and that they must assist in rehabilitating offenders. This is not to mean that the criminal gets more justice than the victim. What it means is that if there is a chance to rehabilitate an offender before that offender is reintegrated into society, or after, we ought to take that chance. Society is not safer, and let us remember that this safety is the principal goal of all parliamentarians here, by sending a more dangerous person back into the community after his or her sentence is served. It is a very important principle, as important as deterrence and as important as denouncing unlawful conduct.

The fifth aspect is to provide reparations for harm done to victims. That is very key. I will get into speaking about Bill C-9, which was a failed bill and flawed until it was amended at committee by all parties. One of the key aspects of Bill C-9 was to amend it to allow some white collar criminals, for lack of a better term, who had done a very denunciatory offence, which should be deterred, such as acts of stealing money through a breach of trust from someone, say, the option of a conditional sentence. It was to allow them to make reparations and restitution during the term of their sentence when it might mean the difference between an aged person with a stolen RRSP account getting that money back or not.

It gave back discretion to the judge, which he or she had in the first place, and it was a very necessary amendment to a flawed and hasty bill to make sure that this principle of sentencing, that is, to provide reparation for harm done to victims, was put in place. It was made better law by the intervention of the committee.

The final principle is to promote a sense of responsibility in offenders, an acknowledgement of the harm done to victims and to the community. What that is about is making sure that these offenders are not so divorced from the community in which they live, so that they know when they have done wrong that they have a responsibility to that community to be remorseful, to make amends and, I think very importantly, to reintegrate into that community if possible. We should never forget that.

The overall principle, and it is written as the fundamental principle in section 718.1 of the code, is that of the proportionality, of the gravity of the offence and the degree of responsibility of the offender. This is a very important principle, which judges rely on all the time.

I hear members speak about 13 years of Liberal inactivity. Actually I was not here for any of those 13 years. I was on the outside looking at all of the criminal justice bills that had been brought in during that time. I remember that it was a Liberal minister of justice who brought in the whole concept of mandatory minimums, which at the revolving door of the Conservatives' press circle was as if it was invented by them. I wonder if they invented the laws of gravity and found the North American continent. I suspect not, Mr. Speaker, and I do not suppose you could answer objectively if they say they have somewhere else, but I am not sure that they would not stand here and say that they have.

They did not invent mandatory minimums. The other sentencing principles in section 718.2 were brought in, in successive Liberal governments, by amendments in 1995, 1997, 2000, 2001 and 2005. All of those amendments in section 718.2 were brought in to recognize the changing nature of our society and to allow judges for the first time in the history of the Criminal Code to take into account these factors when sentencing, either in increasing or in decreasing the sentences, and I am very proud of that.

These factors include evidence that the offence was motivated by bias, prejudice or hate. It is the first time that it was codified that a judge should take into account hate crimes when sentencing. For any crimes committed based on someone's ethnic origin, language, colour, religion, sex, age, mental or physical disability, sexual orientation and other factors, is it not correct, right and fair in this society that those sentences were brought in and that judges should be told to take into account those factors in section 718.2, or whether the violence was against a spouse or common law partner?

Is it not important, for instance, that a judge be given that discretion to increase a sentence if the crime was against a spouse or a common law partner, or if the crime was done to a person of tender years under the age of 18? Is it not important that this be taken into account?

Is it not important, as it says in subparagraph 718.2(a)(iii), whether or not the person who committed the crime “abused a position of trust or authority”, or also whether the person was a member of a criminal organization, or that the offence was a terrorism offence?

All of these factors were in judges' hands before 2005. These were not invented by the Newtons over there in the last 18 months. They were there, it was Liberal legislation, and I presume it had all party support because it makes such sense.

Finally, in the principles of sentencing categories, paragraph 718.2(e) has the all important factor of recognizing that if an offender is of aboriginal origin or from a first nations community special circumstances should be put in place. We found during much of the deliberation at committee that this sentencing principle was often ignored.

I look at the amendments in place with respect to Bill C-10 and Bill C-9. It is a particular affront to this established sentencing principle, and it seems to have been completely forgotten by the Conservative government, that these two important sections of the code had existed before the Conservative government took place and certainly will exist when it moves on into the sunset.

About the laws in Bill C-2 and why it is so easy on this side for us to say we support the bill, it is important to remember that we on this side, and the members of the justice committee from the New Democratic Party and the Bloc Québécois will vouch for this, and the members of the justice committee had made Bill C-10 and the mandatory minimum aspect a better bill when it left committee. Arrogantly, and without respect for the work of the all party committee, the Conservative justice team, coming yet again from the revolving door of the press club, suggested that it would put in at report stage the entire bill as it was before.

However, over the summer I think the Conservatives had blueberry festivals and strawberry festivals and must have eaten some humble pie at some festival, as they decided that they would accept the amendments as they came from the committee, reintroducing Bill C-2 with the Bill C-10 amendments to make our community a better place and enlarge upon the mandatory minimums that were already in place under the Liberal justice program before the Conservatives took office.

The other bill that needs clarification on why it is an acceptable bill now, and why it was never acceptable when the amateur Conservative justice team brought the topic up before, is Bill C-22, the age of consent bill.

I have heard well-meaning, honest and forthright members of the House, such as the member for Wild Rose, say that he and his colleagues could never get an age of consent or age of protection bill through the Commons. I was disturbed by that. I asked why we would not protect our young persons. Why would we not get in line with many of the communities around the world which recognize that consent may not be freely given by a 14 year old when the world has become smaller and the age of the predator is upon us?

I looked into it. There were two very fundamental flaws with all bills that were presented as part of a justice package by an opposition entitled the Conservative opposition. They are as follows.

There was absolutely no close in age exemption. This bill, Bill C-22, contains a close in age exemption, making it flexible enough to recognize that not every relationship that is separated by a number of years is a relationship between an innocent young child and a sexual predator.

Finally, as I wrap up, age of consent as presented previously would have criminalized normal adolescent sexual activity which, whether the Conservatives like it or not, is out there, and 14 year olds and 15 year olds having relations are protected by this. It does prevent sexual predators from preying on the young. It is good legislation.

In summary, the five bills in Bill C-2 are good law because the committee made them so. I encourage the Conservative justice team, the Prime Minister and all Conservatives out there to watch what they write, to watch what they present to Parliament, and to not keep going through that revolving door called the press circle to give press releases without having done their homework to ensure that they are passing good laws which will make Canada safer.

[Rob Moore, Conservative, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

Mr. Speaker, I am pleased to rise today to join in the debate on Bill C-2, the tackling violent crime act.

As the Minister of Justice noted when he spoke in reply to the Speech from the Throne, safe streets and secure communities are the Canadian way of life. This is what I would like to focus my remarks on today, how we are building a stronger, safer and better Canada, beginning with Bill C-2.

I have had many opportunities, as probably all members in the House have had, to talk with my constituents, parents, community leaders, police, lawyers, and many others about their concern with crime and what we should do about it.

What I have heard has likely been heard by all hon. members as they have travelled throughout their ridings and indeed across Canada. Canadians are clearly expecting their government to take concrete and effective action to tackle crime.

Unlike previous governments on this issue, the current government listens. We share these concerns and we have made tackling crime a key priority for our government. We have made it a key priority for our government because it is a key priority for Canadians, but there is so much more that needs to be done.

We know what crime looks like in Canada. Crime statistics have been recorded since 1962 so we have 45 years of information. Statistics Canada reported last July that the overall national crime rate has decreased for the second year in a row.

We all want to see a lower crime rate. So this is the good news. But the national crime rate is an average and does not tell us about some of the more serious problems or localized problems.

The long term trends over the last few generations show us what we all know in the House, that crime has increased drastically. Since the 1970s, for example, the violent crime rate has increased 98%, but the national crime rate does not tell us what may be going on in individual communities. Community leaders, victims groups and law enforcement know their particular challenges, and we are listening to them.

Many Canadians have lost confidence in the criminal justice system and question if it is doing enough to protect them. They know that violent crime is all too common. They dread hearing statistics like those released on October 17 by Statistics Canada.

Those statistics tell us that 4 out of 10, or 40% of victims of violent crimes sustained injuries. They tell us that half of violent crimes occurred at private residences. They tell us that firearms were involved in 30% of homicides, 31% of attempted murders and 13% of robberies committed. They tell us that one out of every six victims of violent crimes was a youth aged 12 to 17 years old and children under 12 years of age account for 23% of victims of sexual assaults and 5% of victims of violent crimes.

Canadians are looking to the federal government to work with them to restore community safety. The government understands the need for leadership in criminal justice and this is what our tackling crime priority, and our commitment in this regard is all about. It is about reducing all crime and providing an effective criminal justice system. Our plan is ambitious, but Canadians can count on us to get it done. As they have seen on other issues, we have been able to get things done for all Canadians.

In the last session of Parliament the government tabled 13 crime bills. This is proof of our commitment to address crime and safety issues in our communities. It is interesting to note that it was 13 crime bills as it was 13 years of Liberal governments that have left us with a revolving door justice system in which Canadians have lost faith, a justice system that Canadians feel puts the rights of criminals ahead of the rights of everyday, law-abiding Canadians. This is what our government is going to address.

Six of these crime bills, of the 13, received royal assent and are now the law or will soon become the law. For example, one of the government's first bills and first priorities was to curtail the use of conditional sentences or house arrest for serious violent crimes.

We all know the issue of house arrest. In all of our ridings we have heard cases where someone has committed a very serious, sometimes violent, crime and there is an expectation in the community that there will be a severe consequence for someone who commits a severe crime. All too often the community is outraged when it hears that criminals will be serving out their sentence from the comfort of their own home.

Bill C-9, which received royal assent on May 31, 2007, and will be coming into force on December 1, 2007, makes it clear that conditional sentences or house arrest will not be an option for serious personal injury offences, terrorism offences, and organized crime offences where the maximum term of imprisonment is 10 years or more.

This change was a long time coming. It is well past due and Canadians will be better served by a justice system that does not allow, for these serious offences, criminals to serve a sentence in their own home. Canadians wanted this change.

Bill C-18 strengthened the laws governing the national DNA data bank. This will facilitate police investigation of crimes. Bill C-18 received royal assent on June 22, 2007. Some provisions are already in force and others will soon be proclaimed in force.

Bill C-19 made Canada's streets safer by enacting new offences to specifically combat street racing. These new offences built upon existing offences, including dangerous driving and criminal negligence, and provide higher maximum penalties of incarceration for the most serious of street racing offences.

As well, mandatory driving prohibition will be imposed on those convicted of street racing. In the most serious cases involving repeat street racing offenders, a mandatory lifetime driving prohibition can now be imposed.

We also took concrete steps to protect users of payday loans. Bill C-26, which received royal assent on May 3, 2007, makes it an offence to enter into an agreement or an arrangement to receive interest at a criminal rate or to receive payment of an interest at a criminal rate. The criminal rate of interest is defined as exceeding 60% per year.

We also took further measures to combat corruption. Bill C-48 enacted Criminal Code amendments to enable Canada to ratify and implement the United Nations convention against corruption on October 2, 2007. By ratifying the convention, Canada has joined 92 other state parties committed to working with the international community to take preventative measures against corruption.

Our bill to stop film piracy or camcording, Bill C-59, received widespread support. It was quickly passed and received royal assent on June 22, 2007.

Unfortunately, none of our other important crime bills progressed to enactment before Parliament prorogued. That is why the tackling violent crime act reintroduces the provisions of the following bills that died on the order paper.

The bill imposing mandatory minimum penalties of imprisonment for firearms offences, Bill C-10, is included in Bill C-2 as passed by the House of Commons.

Bill C-22, which increased the age of protection against adult sexual exploitation, has been included, as passed by the House of Commons.

Bill C-32, addressing drug impaired driving and impaired driving in general, has been introduced as amended by the House of Commons Standing Committee on Justice and Human Rights and reported to the House of Commons.

Bill C-35, imposing a reverse onus for bail for firearms offences, has been included in this new bill, as passed by the House of Commons. This bill will make it tougher for those who have committed a firearms offence to received bail and be back out on the street.

Bill C-27, addressing dangerous and repeat violent offenders, as originally introduced, is included in this bill, but with some further amendments, which I will elaborate on shortly.

The tackling violent crime act respects the parliamentary process and includes the bills as amended by committee or as passed by the House of Commons, and in the same state that they were when Parliament was prorogued. As a result, these reforms are familiar, or should be familiar, to all members of this House, and so I would call on all hon. members to quickly pass the tackling violent crime act.

Indeed, many hon. members have already stated that they support these reforms. There is therefore no need to further debate these reforms or for a prolonged study of the provisions that Parliament has already debated and committees have already scrutinized. It is time for us all to demonstrate our commitment to safeguarding Canadians and for safer communities, and to quickly move this bill forward.

For those who need more convincing, I would like to reiterate that the tackling violent crime act addresses a range of serious issues that put Canadians at risk: gun crimes, impaired driving, sexual offences against children and dangerous offenders.

We know that Canadians expect their government to take action and to protect them from these crimes. To do so, we need the support of all hon. members, as well as Canadians, our partners in the provinces and the territories, and law enforcement and community groups.

Time does not permit me to address each of the equally important elements of Bill C-2. I know that other members will rise to speak to the reforms that are of most concern to them. I propose to highlight a few of the issues that have been raised repeatedly with me by my constituents, and I am sure by constituents in ridings held by all hon. members, in particular, about impaired driving, the age of consent and dangerous offenders.

Alcohol and drug impaired driving have devastating effects for victims, for families and for communities. Impaired drivers are responsible for thousands of fatalities and injuries each year, not to mention billions of dollars in property damage.

Once the tackling violent crime act is the law, impaired drivers will face tough punishment, no matter which intoxicant they choose, and police and prosecutors will have the tools that they need to deal with these offences.

Although drug impaired driving has always been a crime, until recently, police have not had the same tools available to stop those who drive while impaired by drugs that they have to address alcohol impaired driving. Under this bill, they will.

The tackling violent crime act strengthens the ability of police, prosecutors and the courts to investigate, prosecute and sentence those who endanger the safety of other Canadians through alcohol or drug impaired driving. I know that all hon. members recognize the pressing need to ensure the safety of our streets, highways, communities and our schools. By giving police the tools they need to combat impaired driving, we are doing that.

These reforms were applauded by the stakeholders and supported in the House of Commons. I am sure every member of Parliament in the House has received correspondence urging them to support the bill. There should be no impediments to making progress on this part of the tackling violent crime act.

The act also reintroduces the reforms to raise the age at which young people can consent to sexual activity from 14 to 16 years of age. The bill takes away the ability, and let us be clear on what the bill does, of adult sexual predators to rely on claims that their young victims consented.

Again, these reforms were welcomed by child advocates and supported in the House as part of former Bill C-22, so there is no need for further debate. We can move ahead.

It is worth spending a few moments to focus on the dangerous and high risk offender provisions of former Bill C-27. Some of these provisions have been modified and, therefore, hon. members may want to scrutinize these aspects more than the other reforms included in the tackling violent crime act.

The dangerous offender reforms in Bill C-2 respond to the concerns highlighted in the debates and before the justice committee, and by provincial attorneys general. I am sure that all hon. members will agree that these modifications are welcomed.

As members will recall, former Bill C-27 was tabled in the House last October. That bill included dramatic enhancements to the sentencing and management of the very worst of the worst, those offenders who repeatedly commit violent and sexual crimes and who require special attention, because it has become clear that the regular criminal sentencing regime simply cannot effectively manage the small but violent and dangerous group of offenders.

The tackling violent crime act includes all of the original amendments to the Criminal Code from the former Bill C-27, as well as two important changes which will go further in protecting Canadians from dangerous offenders.

First, let me provide an overview of the provisions brought forward into the House under Bill C-27. It includes the requirement in dangerous offender hearings that an offender be presumed to meet the dangerous offender criteria upon a third conviction for a primary designated offence. In other words, an offence that is on the list of the 12 most violent or sexual offences that typically trigger dangerous offender designations.

Second, the bill would also place a requirement on crown prosecutors to inform the court that they had fully considered whether to pursue a dangerous offender application. This is to prevent these applications from falling through the cracks. This would occur in cases where an offender had been convicted for a third time of a relatively serious sexual or violent offence.

The declaration is intended to ensure more consistent use of the dangerous offender sentence by the Crown in all jurisdictions. Although the Crown must indicate whether it has considered bringing a dangerous offender application, we are not dictating to it that it must do so. We are not attempting to arbitrarily fetter the discretion of the Crown or of the court. Rather, we are providing a way to make sure that the Crown turns its mind to the issue of a dangerous offender application.

Third, Bill C-2 would also bring forward the very significant reforms to the section 810.1 and 810.2 peace bond provisions that enable any person to apply to a court to ask for stringent conditions to be imposed against individuals who are felt to pose a threat of sexual or violent offending in the community.

We have all heard the horror stories from one end of the country to the other of someone who is known to be a threat to commit a sexual or violent offence against an innocent member of the community. There is often great frustration among Canadians at the perceived inability for government, for officials, for police, to act to protect the community from a subsequent violent or sexual offence.

Specifically, we are doubling the duration of peace bonds from one year to two years. We are also providing specific authority for the court to impose conditions regarding curfews, electronic monitoring, treatment requirements and other prohibitions as well as making it very clear that the court may impose any conditions it feels are necessary to ensure public safety.

Since the tabling of the former Bill C-27 last October, provincial attorneys general have raised concerns about violent offenders who are found to be dangerous offenders, but are not receiving indeterminate sentences. This is due to a finding that they could be managed under the long term offender designation.

The long term offender sentencing option currently in the Criminal Code allows a court to sentence an individual to a regular sentence of imprisonment, but add up to 10 years of intensive community supervision to the sentence.

Based on the interpretation of the lower courts of the 2003 decision of the Supreme Court of Canada in R. v. Johnson, many individuals who fully meet the designation of a dangerous offender have nonetheless been given long term offender designation instead. The Crown has been unable to convince the sentencing court that the offenders could not be managed under the less severe sentence option.

The big concern is that some of these individuals may not in fact be suitable for community supervision sentences. Yet, until they commit another violent sentence, their status as a dangerous offender cannot be reviewed by a court. I should mention, and it should be obvious, until they commit another violent offence, then it is too late for the community, for innocent victims and for families.

Given the concerns expressed since former Bill C-27 was tabled, the government has been examining the scope of this problem and developing potential solutions. It is clear that a large proportion of the individuals who meet the dangerous offender criteria, but have been given a less severe sentence, have demonstrated that they simply refuse to cooperate. The majority eventually breach one or more of the conditions of their long term supervision order. This is a clear indicator that the original sentence was based on a flawed presumption that the offender was manageable. As such, there is a real need to revisit the original sentence in order to stop the reoffending right then and there before another tragedy occurs.

The tackling violent crime act addresses this problem and includes new provisions that were not included in the former bill.

First, the tackling violent crime act makes it clear that from now on if offenders meet the dangerous offender criteria, they will always be designated as a dangerous offender first, and that designation is for life. The court must then determine the appropriate sentence, either an indeterminate sentence or a determinate sentence, with or without the long term offender supervision order. Critical to this scheme is that from now on the court must impose an indeterminate sentence unless it is satisfied that the offenders can be managed under a less severe sentence.

Second, in cases where dangerous offenders are able to satisfy the court that they can be managed under the lesser sentence and are subsequently charged and convicted with a breach of a long term supervision order, they can be brought back to the court for a new sentencing hearing. At the new hearing, dangerous offenders will have to satisfy the court once again that they can still be managed under the lesser sentence. If not, the indeterminate sentence must be imposed.

The government believes that the impact of these new reforms will be significant. Because of the clarification to the sentencing provisions, fewer offenders will escape the dangerous offender designation. In addition, for the few offenders who are declared to be dangerous offenders, but given a long term offender sentence, they will know that if they do not abide by the term of their supervision orders once released, they will be returned to court for a new sentencing hearing and an indeterminate sentence will be the likely outcome.

It will not take a second sexual assault or a second violent offence to bring the offender back for a new dangerous offender sentence. This new provision would be available, for example, even if the violation were simply that the offender failed to return to his residence before curfew or consumed alcohol or drugs in violation of a long term offender supervision order.

Our government remains committed to ensuring that all Canadians live in safe and secure communities. The tackling violent crime act will protect Canadians. It is fulfilling our commitments to Canadians. The government is committed to taking action, acting on behalf of the safety of all Canadians. I urge all members to support the tackling violent crime act.

Business of the House

[Peter Van Loan, Conservative, York—Simcoe, ON]

I would not do that.

Tomorrow is an allotted day.

Next week is constituent consultation week, when the House will be adjourned to allow members to return to their ridings and meet with constituents to share with them the activities of Parliament since the last constituency break.

For the interest of members, I will quickly review our plan for the context of our overall legislative agenda.

As he requested, this is currently strengthening the economy week, where a number of financial bills moved forward. The budget bill was sent to committee and, hopefully, it will be reported back tomorrow, or soon, so we can deal with it at third reading when the House returns after the break.

Bill C-40, an act to amend the Excise Tax Act, was read a third time and sent to the Senate. Bill C-53, an act to implement the convention on the settlement of investment disputes, Bill C-33, the sales tax bill and Bill C-47, the Olympics symbol bill were all sent to committee and we all would like to see those back in the House for report stage and third reading.

In an earlier week, Bill C-36, the bill that makes changes to the Canada pension plan and the Old Age Security Act, was made into law after receiving royal assent.

Strengthening accountability through democratic reform week was a success with the consideration of Bill C-43, Senate consultation. We had three new democratic reform bills introduced that week: Bill C-55, to expand voting opportunities; Bill C-56, an act to amend the Constitution Act, democratic representation; and Bill C-54, a bill that would bring accountability with respect to loans. We hope to continue debate on that particular bill later today.

Bill C-16, fixed dates for elections, was given royal assent and is now law, which I think is the cause of the commotion now in all the committees where Liberals are using procedural tactics. Now they feel they can do it with a free hand.

Two other democratic reform bills are in the Senate, Bill C-31, voter integrity, and Bill S-4, Senate tenure. I really would like to have the term limits bill from the Senate for an upcoming democratic reform week if the opposition House leader can persuade his colleagues in the Senate to finally deal with that bill after 352 days. We may get 352 seconds in a filibuster, but they have had 352 days so far. They have been stalling for a year.

During the consultation week, I will be interested in hearing what our constituents think of the plight of Bill S-4 and the irony of those unaccountable senators delaying it.

We dedicated a good deal of our time focusing on making our streets and communities safer by cracking down on crime. Now that we have had the help of the NDP, we restored the meaningful aspects that the Liberals gutted in committee to Bill C-10, the bill to introduce mandatory penalties for violent and gun crimes. We are continuing to debate that bill today at third reading.

Bill C-48, the bill dealing with the United Nations convention on corruption, was adopted at all stages.

Bill C-26, the bill to amend the Criminal Code with respect to interest rates, was given royal assent.

Bill C-22, the age of protection, was given final reading and sent to the Senate, although it did spend close to, if not in excess of, 200 days in committee where the Liberals were obstructing and delaying its passage.

We made progress on Bill C-27, the dangerous offenders legislation. We would like to see that back in the House.

Bill C-9, An Act to amend the Criminal Code (conditional sentence of imprisonment) and a host of other justice bills are working their way through the system.

Members can advise their constituents that when we return, we will be reviving two themes, back by popular demand. Beginning May 28, we will begin again with strengthening accountability through democratic reform with: Bill C-54, political loans; Bill C-55, additional opportunities for voting; and Bill C-56, democratic representation.

Up next is a second go-round on strengthening the economy week with Bill C-52, the budget implementation bill, which will be called as soon as it is reported back from committee.

In the near future, we will have the improvement of aboriginal people quality of life week with Bill C-44. This bill will grant first nations residing on Indian reserves access to the Canadian charter of human rights. They have been denied this right for 30 years. Unfortunately, Bill C-44 is being delayed by the opposition. This is another bill being delayed by the opposition in committee.

After Bill C-44, I intend to debate Bill C-51. The agreement establishes the use and ownership of land and resources and will foster economic development. This bill illustrates Canada's commitment to the North and to settling land claims.

I wish all members a productive constituent consultation week and look forward to more progress on the government's legislative agenda when the House returns on May 28.

[The Acting Speaker, Conservative, Andrew Scheer]

I have the honour to inform the House that a communication has been received as follows:

Rideau Hall

Ottawa

May 3, 2007

Mr. Speaker:

I have the honour to inform you that the Right Honourable Michaëlle Jean, Governor General of Canada, signified royal assent by written declaration to the bills listed in the schedule to this letter on the 3rd day of May, 2007, at 10:30 a.m.

Yours sincerely,

Sheila-Marie Cook

Secretary to the Governor General

The schedule indicates the bills assented to were Bill C-26, An Act to amend the Criminal Code (criminal interest rate)--Chapter 9, Bill C-16, An Act to amend the Canada Elections Act--Chapter 10, and Bill C-36, An Act to amend the Canada Pension Plan and the Old Age Security Act--Chapter 11.

[Marlene Jennings, Liberal, Notre-Dame-de-Grâce—Lachine, QC]

Thank you so much for being here today, Minister, and thank you for your presentation.

As you know from the speeches the Liberals made at second reading of this bill, Bill C-22, and from our Liberal justice strategy, which we announced in October 2006, Bill C-22 is in fact one of the bills the Liberal Party and the Liberal caucus supports. And back in 2006 we offered to fast-track it for the government, to work with the government to see that it was fast-tracked.

I'm pleased to hear in your response to my colleague Brian Murphy that you're delighted that the Liberals are supporting C-22 and that you want to see it come into effect and be enacted as quickly as possible.

So you have obviously been made cognizant of the Liberal opposition day motion, which will be debated tomorrow as part of the supply day for opposition, which makes an offer, for the third time, to this Conservative government that we are prepared to work with the government to have Bill C-18, An Act to amend certain Acts in relation to DNA identification; Bill C-22, An Act to amend the Criminal Code (age of protection) and to make consequential amendments to the Criminal Records Act—on which you're appearing before us right now—Bill C-23, An Act to amend the Criminal Code (criminal procedure, language of the accused, sentencing and other amendments); and Bill C-35, An Act to amend the Criminal Code (reverse onus in bail hearings for firearm-related offences) deemed to have been considered by the House of Commons at all stages.

Should the government agree to vote in that way, this bill, C-22, Bill C-18, Bill C-23, and Bill C-35 will have been deemed to have gone through the House of Commons at all stages.

So I would hope that, given your delight in hearing that we're prepared to support Bill C-22.... You're not learning of this for the first time, because that was announced back in October 2006. The offer was made back then. Unfortunately, the government only took us up on three bills: C-9, conditional sentencing; Bill C-19, street racing; and Bill C-26, payday loans. But Bills C-18, C-22, and C-23 were part of that offer. You and your government, in its wisdom, decided not to take us up on it in October. The offer was again made when we came back after the Christmas break. The government decided not to take us up on it.

We're now making it for a third time, this time in writing, as part of an actual motion on which you and your colleagues will be called on to vote. I'm hopeful, and I'm asking if you will be prepared to recommend to your Prime Minister, to your colleagues, that they vote in favour of the Liberal opposition day motion, which would deem Bills C-18, DNA identification; C-22, age of protection; C-23, criminal procedures; and C-35, reverse onus for bail hearings, to have been considered by the House at all stages and adopted.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Thank you, Mr. Chairman. I appreciate that.

I did make quite an extensive presentation the last time we had this, so I don't want to make too long a presentation. Obviously I accept the amendments.

I do want to say something about the process.

I don't come from a criminal law background. I come from more of an industry, science, and technology background. It's interesting that Mr. Bartlett was before our committee recently on Bill C-26; he has expertise in a lot of areas.

I actually think this process has been quite healthy. It started when I read an article in Macleans magazine about our current Privacy Commissioner's phone records being accessed. I approached the legislative office and said I wanted to do a private member's bill on this issue. I was drawn for the first time and submitted the bill.

I had some very helpful suggestions at second reading from members of this committee from all parties. They said they liked the intent of the bill and that it addressed part of the identity theft problem, but that they would like these sections to be clarified. I think Mr. Murphy raised the issue of definition of information at that time, and why I had chosen PIPEDA. I think Mr. Moore as well raised a lot of questions about the Criminal Code sections.

Obviously, what the government has suggested is taking the Competition Act amendments not as amendments but as policy statements and putting them to the committee reviewing PIPEDA legislation; I've accepted that. The amendments they've suggested today, in my own view, have improved the bill and have accomplished the intent of what I set out to do in the beginning.

I think it's been a healthy process overall, and I appreciate this committee's work on it. I think it's been excellent from all parties' points of view. I should also recognize Monsieur Ménard and Mr. Comartin for their speeches in the House of Commons; I think they were very good as well. I appreciate that, and I also appreciate the officials' being here and being so responsive.

With that, Mr. Chairman, I am open for any questions members may have.

The House resumed consideration of the motion that Bill C-26, An Act to amend the Criminal Code (criminal interest rate), be read the third time and passed.

Criminal Code

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, I listened with rapt attention as the chronicled the history of pecuniary matters in parts of Canada. He speaks warmly of the work of Moses Coady in my part of the country. I share with him the deep anxiety we have in parts of maritime Canada that banks in regions of our country seem to be leaving and people are without that service, but back to the bill.

I would like the hon. member to comment on this. It amazes me that the Criminal Code has not been effective all these years in its pursuit of unjust, unfair and criminal loans. As a parliamentarian of some breadth of experience, could he comment as to why he thinks this has happened?

I would also like his comments on the intended application of Bill C-26, which I support fully, as I have stated before. For example, the Mike Harris government would have completely ignored anything touching capitalist and pecuniary interests such as the payday lenders. What does he see in the application of this from province to province, being an effective and fair federal law? What suggestions does he have?

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, I am pleased today to rise to speak to Bill C-26, a bill which has been very much pushed by the New Democrats for some time in order to deal with the fact that more and more of our working families and individuals are falling through the cracks because they are not able to access proper banking services and they are being left in the hands of the ATMs, the free mail-out credit cards and the payday loan companies.

In the previous Parliament the member for Winnipeg North had written to the finance minister, who is now the House leader for the Liberal Party, and asked him to work with us and the provinces who were sending a clear message that we did need to make the provisions to set aside parts of the Criminal Code so the provinces could start to set some standards in dealing with the usurious rates we are seeing in the payday lending schemes.

I am pleased now to have this issue back before Parliament. It speaks to the nature of Parliament that we actually are moving for it, except of course for our friends in the Bloc because whatever the political I Ching or the shaking of the bones in their separatist camp, it has made them come out on this bill in whichever way they have. I am still trying to read their tea leaves and I still cannot quite figure out where they are coming from. But that is not really a change in course, that seems to be standard depending on whatever bill comes before the House. I am glad however that at least the majority of the House is taking this issue very seriously.

I would like to point out for the interest of members of the House and anyone back home the long history of banking in my family. I know I might not look like I come from banking stock, but I have a great long history in banking. In fact, both sides of my family were bankers.

When the mines first started to open up in the Porcupine region, the miners were immigrant families and they did not have access to credit. When a miner was injured, he did not have worker's compensation in those days and many people lost their homes. They would have to go to the company stores to get bread. The idea came to the miners to form their own system of credit.

The very first credit union I am aware of in the Timmins region was the Worker's Co-op. It was started by Charley Haapanen, a very good northern Finlander who thought we should bring the miners together. So it was the Finns, the Ukrainians and the Scots who came together and formed the Worker's Co-op. The Worker's Co-op gave credit to people who would not be able to get credit otherwise.

Over time there were political fights within the Worker's Co-op. Some people in the community thought it was becoming a little too red and definitely that was not Liberal red, so they formed another co-op which was the Consumer's Co-op which was a little bit more pink, which is not necessarily the pink we are identifying today. There was the Consumer's Co-op and the Worker's Co-op.

Charlie Angus, my grandfather, believed that the only credit union was the Worker's Co-op and we bought all our shares in it because he felt that was what served the working people of the north. My mother's father, Joe MacNeil, was a gold miner from Cape Breton and broke his back in the Macintyre Mine. He became the credit manager at the Consumer's Co-op. As a child I was at the Consumer's Co-op many times and like its counterpart it provided credit to families who would otherwise not have credit.

While other children on Sunday afternoons and on rainy days were playing Monopoly and trying to gather up as much property as possible, our family was learning the good principles of working together in the consumer credit union game. We were raised at a very young age to believe in the principles of the credit union. It is an interesting angle when we are looking at what we are dealing with today.

I should mention that the other credit union that grew out of the area in the north was the caisse populaire in the francophone communities. The caisse populaire remains in my region one of the central bulwarks for credit, for family finance. It plays a role in our community that is unlike anything done by the banks.

I am raising these examples because when I travel across my vast riding in the north I see that the banks are leaving. They are pulling up stakes. They are leaving and shutting down in communities where they made money year after year. We see them pulling out of Elk Lake, Larder Lake, Virginiatown, Cobalt.

The first bank in Cobalt was the Bank of Commerce. It was a tent in the centre of town. It was there at the beginning of the mining rush, but it is gone now, even though many families still rely on banking services. What do they have when there is no banking service in the town? An ATM at the corner store is their banking service now.

Also, families that cannot get banking services are being mailed credit cards, with a free limit, from these hucksters. We also see payday lenders moving into some of the urban areas now because the banks have pulled out. The banks make $19 billion a year in profit. They have decided that it is not worth serving average working people. We are talking about an issue of fairness. People who want to have credit and have a savings account have been denied access.

I have a number of examples of how this is done. If people are not exposed to how the banking system runs today, they may not be aware of how people fall through the cracks.

I know a student who tried to open an account the other day. The bank wanted two pieces of picture ID and an ID card with an address. She is a student who recently moved to this town. She brought a signed copy of her rental agreement as proof of where she lived. She had two pieces of photo ID, including a passport, but her photo ID did not have her address on it. The bank would not accept her as a client. Where is she supposed to go? As she was being denied service, an immigrant man beside her was also trying to get an account for his family and the bank was not interested in him.

What happens is students have to cash their cheques, so they end up going to the Money Mart. That is simply unacceptable.

Now the banks, with their $19 billion of profit and their increasingly lousy service to average Canadians, want to expand services, such as insurance, in areas where they have traditionally have had no business. One morning last week in Timmins I met with a financial advocates group. These individual brokers provide good service. They have small businesses and have provided service for years. Now the banks want to come in and compete against them.

We know what this will be like. The banks will lower their rates to put them out of business. Then they will jack the rates up once they have no competition. The banks should be focusing on their fundamental job, which is providing credit in communities such as mine in northern Ontario and in places such as Winnipeg. The member for Winnipeg North talked about how the banks pulled out all together. The banks should leave insurance to the independent insurance brokers.

We need to speak about a number of issues in terms of fairness and the ability of people to access credit. We need to look at this proliferation of payday lending schemes that are catching the people who are falling through the cracks because the banks have walked away on their obligation. The banks should address the need for credit by families. People who are falling through the cracks are now having to go to the payday lenders and are paying exorbitant rates. This is creating a cycle of poverty.

We want to deal with helping people get out of poverty. We want to help the working poor. We are speaking about people who want to have a bit of savings and some stability. The last place these people need to be going to are the payday loan companies. Yet in some places that is the only form of financial enterprise that exists. They exist because they are allowed to get away with charging outrageous levels of interest, and the hands of the provinces are tied. We now have before us the opportunity to finally regulate these players and ensure that the area of fairness is addressed.

Banks are private businesses and they are allowed to pull out of communities. We have to start looking at this issue. We have to look at ATM fees and the unfair practices of the banks. We also have to look at the need to encourage our credit unions.

My colleague from Sault Ste. Marie pointed out that just as the credit unions came into the north back in the days when the banks refused to provide credit to working families, we have a role today to ensure that we get the small inner city credit unions up and running. Credit unions are moving into some of the communities I know of where the banks have pulled out. That will provide some measure of stability for families.

However, the larger issue is we have to ensure that when people want to cash cheques, they have access to financial services and if they have to cash cheques, they are not charged exorbitant rates and become trapped into the cycle of poverty.

The New Democratic Party is very supportive of the bill. As I said at the outset, the NDP finds it cynically amusing that the Bloc has taken the stance that the federal government, through this bill, will devolve powers to the provinces and somehow, once again, that is an insult to Quebec. That is an absurd argument.

I wonder if my colleagues from the Bloc might change the argument and say that from now on they will only support bills that centralize power in Ottawa and that they will oppose any bill that devolves power to the provinces. Perhaps the real argument is that they will oppose any bill that devolves powers to the provinces unless Quebec has already thought of it. We saw this before when the Bloc opposed a bill in the House to protect children across Canada against pesticides because Quebec already had a bill, so the rest of the country was on its own.

Bloc members say that they have already looked after the payday loan sharks, that people are sitting pretty in Quebec and the rest of Canadians are on their own. They say that if the federal government changes the act in order for the provinces to regulate it, they will oppose it. It is an extremely cynical position and I am very sorry to hear it. Unfortunately, it is typical of the kind of arguments we have heard from the party across, at least since I have been in Parliament. I know the arguments go back a long way.

However, I am very pleased that we have an overall consensus on the need to move forward on the bill right now. It speaks to a notion of fairness. It speaks to the need to ensure that we have some measures in place so our working poor and our young students, who are coming into the workforce, have some protection. The issue before us is that people are being preyed upon because there is no regulatory climate for these payday loan schemes.

I will give another example of how this affects people. I worked with some young first nations people, who needed to cash cheques. They have no banking services on the reserve. They found it very difficult to get banking services when they went into major towns. When payday came, they all went to payday loan companies. That was the only banking service they knew.

Once again, we are talking about breaking the cycle of poverty, of giving people a leg up. A very important and fundamental principle of giving people a leg up is by giving them credit.

A great example of this is the whole history of the co-op credit union movement that came out of Antigonish, Nova Scotia, with Father Moses Coady and Father Jimmy Tompkins. The priests who started to work on the Antigonish movement brought that principle to the third world.

Father Harvey Steel, who was a Scarboro Foreign Mission priest, was very active in bringing the notion of co-op credit to the third world. It was a way of getting people out of poverty. When I interviewed him before he died, he said that in the Dominican Republic, giving people access to credit, allowing them to control credit and to get micro loans was a fundamental in order to give these people a chance to have a decent society.

This is a similar principle. Whether it is in the Dominican Republic, in a reserve in northern Ontario or in inner city Winnipeg or Toronto, people want to be participants of an economy. They want to have access to credit.

To reiterate my point, right now banks are walking away on their traditional role of providing credit, loans and financial services to average people, so these people are falling through the cracks. The banks would prefer to start moving into jurisdictions that they have no business moving into. New Democrats are very opposed to allowing the banks to move in and act against other business sectors, such as on insurance, because they are not providing their fundamental obligation.

What do we need to do? We need to do two things. First, we need to set this provision before us so the provinces can begin to move to regulate the payday loan scheme. This will some measure of fairness on the ground for families and individuals to utilize these services. Second, we need to find ways of encouraging the access to credit, whether it is in rural regions or inner city regions.

I go back to the fundamental argument I made at the beginning, which is the notion of the credit union. The credit union has proven itself over the last century. It is a way of giving people access, some control and some empowerment, whether it was the old workers co-op back in the days of the boarding houses, the mines and the porcupine in Larder Lake and Kirkland Lake or whether it is in my region today where the caisse populaire is stepping in to offer cultural programming, support for regional economic development and ensuring that its members have access to fair loans in a timely manner.

When I first moved back to northern Ontario, I was in a financially risky situation. I was a young worker with a young family and did not have any kind of credit history. It was the caisse populaire that gave us credit and allowed us to get that foot up. I will always remember that because we were in some pretty dicey financial situations then. I see young families today who are in that situation. The caisse populaire allowed us that first step up and it was a very important step. If there had not been those services and the only option had been the payday loans, I do not know what we would have done at that point.

I will be more than willing to entertain questions and comments at this time.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Speaker, I will not question the statistics on poverty or the increase in poverty that the hon. member was just mentioning. I agree that indeed, there is increasing poverty and that is unfortunate. I too have mentioned the data from Statistics Canada on this.

I hear this question from the NDP often. They ask Quebec, which already has a law or legislation that is better than or equivalent to what is in the rest of Canada, why it refuses to allow the same type of legislation to apply elsewhere in Canada. We are not refusing to allow other places in Canada to legislate in order to counter, or at least limit, the actions of these businesses. What we are saying is that Bill C-26 is an encroachment into provincial jurisdiction.

I do not think this a concern for the NDP. It has always introduced centralist measures. That is the NDP's choice and its right. If people want to elect those members to defend that in Ottawa, that is one thing, but often those members will say that such and such measure needs to be imposed on the provinces because that is what should be done.

In Quebec, we do not operate that way. That would not be accepted and we would not be here in this House if ever we dared operate that way.

Every province is free to legislate on this and so they should. However, it is not up to the federal government to dictate what to do and impose its veto, or to put conditions on this jurisdiction since it belongs to the provinces. That is the problem.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Speaker, I must thank my colleague from Laval who has just spoken with such eloquence that it will be difficult for me to follow her example during the next 10 minutes. She has very well described the debate and exposed the problem with Bill C-26, while defending the interests of Quebec, of Quebeckers, and of those unfortunate Canadians who are obliged to rely on these kinds of payday loans across the country, but not so much in Quebec. I will have an opportunity to explain that during my remarks.

I am pleased to be able to speak to Bill C-26 for the purpose of condemning it. This bill amends the Criminal Code with respect to a criminal interest rate and seeks to regulate the payday loan industry.

While on the surface it may appear praiseworthy, the bill contains what is known as a hidden defect. I imagine that among the 308 members of this House, there are some who know people who have bought a house and discovered after several weeks or months that the vendor had hidden, knowingly or otherwise, some defect in the house. In the end, those people realize that they should not have paid so much for their home. That is what is known as a hidden defect.

It is the same thing with this bill. Upon initial examination, it appears to be good. However, we notice that there is a serious problem that, in my opinion, has unfortunately been seen over and over, ever since the Bloc Québécois has been here in this House, and which probably also existed before our arrival. Mr. Speaker, during your time in office, I imagine that you have heard these arguments all day long throughout the parliamentary session. Once again, it is an invasion by the government into the jurisdictions of Quebec and the provinces. There is the problem. There is the hidden defect in Bill C-26.

Obviously, for political reasons, they will say that we are in favour of this kind of industry and that we do not want to help unfortunate people to escape from this trap, and so forth. Let it be clearly understood that we recognize the need to attack this new form of exploitation of the most vulnerable workers. We do not dispute that goal; far from it. However, why should the federal government control what Quebec already does well and, in fact, does better than what the provisions of this bill would bring about?

That is the problem. As my colleague from Laval said earlier, the Prime Minister, because of his veto, can decide to impose whatever he wants in this regard on Quebec and the provinces. Obviously, this is a serious problem.

As I said, there is nothing inherently wrong with wanting to regulate the payday loans industry more closely; it is a good thing. However, the way in which it is being done is still problematic in our view. It must be pointed out that the provisions in the Criminal Code and the Interest Act do not at present specifically regulate this new form of loan, which actually came into being in the 1990s. This is quite a recent practice. It is therefore reasonable for this Parliament to want to put some thought into the question. This is a fact of life—these payday loans we are all talking about—that is affecting growing numbers of western countries, including Canada.

Today—and this was undoubtedly less common in the past—a person can have a regular job, a wage, but still be living in poverty. This is a fact of life today, even in 2007. People have to use the services of these companies, whose practices may be questionable, including the high cost of loans, unfair collection practices and high interest rates. This what a person has to deal with when they do business with this kind of company. When someone starts to use the services of this kind of business, they are often taking the first step in the vicious cycle of poverty. It is not just an individual who suffers as a result; an entire family may suffer from this situation.

In my opinion and the opinion of the Bloc Québécois, the government should put some thought into this phenomenon rather than infringing on the jurisdictions of Quebec and the provinces. A few days ago, my colleague from Trois-Rivières said that she had looked into this matter. She also gave an excellent speech on Bill C-26 right here in this House. She cited statistics released by Statistics Canada, from which we learned that there are in Canada, at present, 1.3 million more poor households than there were 25 years ago. The government has failed to stem this epidemic of poverty, if you will forgive the expression; the opposite has occurred. The fact that there are growing numbers of poor people is one of the consequences of the proliferation of this kind of business. In Canada, 1,300 of these companies have been identified. There are very few in Quebec.

That is why we have to make a distinction, with what is happening in Quebec at present and the reason why we do not want the federal government to stick its nose into what is happening in Quebec. Quebec has succeeded in stemming the problem of the proliferation of these businesses.

There is also the Canadian Payday Loan Association, with 22 member companies that currently manage 850 service outlets throughout most of Canada. At present, there are none in Quebec.

In the past there has been this sort of company in Quebec, as elsewhere. There used to be even more of them in Quebec. That is why at some point the police, with the help of the Office de la protection du consommateur du Québec, decided to look into it. It was a chance to clean up these companies, especially those involved in loansharking, and they disappeared. That does not mean that pawnbrokers do not exist. Unfortunately, again because of poverty, people are forced to take their precious belongings—a television set, a sound system or even their children’s sports equipment—so that they can get a bit of money to buy groceries some weeks. It is easy to imagine what happens because of the high interest rates if the money is not paid back. People unfortunately lose their valuable item.

This still exists and it is too bad. We should look into it and also make sure that these people are not involved in usury.

Quebec has already put in place some tools to oversee and regulate this sort of industry by means of its Consumer Protection Act. Under this law, the interest rate must be indicated in loan contracts, and all charges are included in the annual rate. Charges for opening a file, for forms and so on cannot be added on. Jurisprudence has also established that annual rates of interest above 35% are excessive. I would remind the House that the current Criminal Code sets this rate at 60%. In Quebec, it is set at 35%.

The first thing Bill C-26 does is enshrine the definition of payday loan in the Criminal Code. The exemption mechanism—and that is where the problem lies—is twofold in design. First a province must be designated by the federal government in order to be exempt from the application of section 347 of the Criminal Code and section 2 of the Interest Act so that they do not apply to its payday loan industry. To be designated, the province must apply and meet certain conditions, those infamous conditions. Such designation may also be withdrawn unilaterally when the conditions are no longer met to the liking of the federal government. Another example of Ottawa knows best. This is the precisely where the problem with this bill lies. The member for Sault Ste. Marie said earlier he did not see any problems with this bill, but this is where there is encroachment on the provinces’ areas of jurisdiction.

I would like to remind the members that the Bloc Québécois is defending the Government of Quebec's position. Quebec's government believes that by making an exemption subject to compliance with the conditions, the federal government is clearly encroaching on a provincial area of jurisdiction. As I said earlier, Quebec is already regulating this industry without having to report to the federal government. I would like to remind the members that Quebec's maximum interest rate is 35%, not 60% as set out in the Criminal Code.

We are against Bill C-26. That said, we are not against it because we support payday lending, a business that, unfortunately, is proliferating almost everywhere in Canada but less so in Quebec. That is not the case at all. We are against it, but we believe that Quebec has the right to regulate the commercial practices of businesses within its jurisdiction, and that the federal government should not veto this in order to apply the legislation.

The federal government certainly has the power to set the maximum legal interest rate. However, it does not have the jurisdiction to regulate industries' business practices.

In closing, thanks to its Consumer Protection Act, Quebec already regulates this industry and prohibits unreasonable practices. That is why we find that Bill C-26 offers nothing new or good for Quebec, which is already equipped to deal with this situation. We do not need the federal government's veto or its encroachment on another area of jurisdiction. Enough is enough.

[Nicole Demers, Bloc, Laval, QC]

Mr. Speaker, I am pleased to rise today in this House to debate Bill C-26.

I will be sharing my time with the member for Richmond—Arthabaska, my worthy and eminent colleague, who always comes to the defence of the farmers. He does so in this House and outside it as well, in the ridings and throughout the regions.

I rise in this House to debate Bill C-26 because we in the Bloc Québécois support neither the bill nor the principle of it. I know of no industry that would ask government to legislate a restriction on its profits. My colleague alleged that the industry needed regulation. Regulation of the consumer industry is a provincial and territorial and local business matter. It does not come under federal government jurisdiction.

The aim of the bill, as I read and understand it and as I examine it like my Bloc colleagues, is to amend the Criminal Code, which already contains provisions to restrict the charging of usurious interest rates. Businesses operating in this type of industry want rates higher than those currently in effect under the Criminal Code.

I am not here to protect people represented by other MPs or the people of Canada. MPs will decide what legislation is needed to support their fellow citizens and protect them as required. We must not forget that 547,000 Canadians work for minimum wage and it is primarily they who need payday loans and make use of this industry.

The industry is well entrenched throughout Canada, except in Quebec. Why? Because in Quebec the government has passed legislation in this regard. Rates of interest have been set below the usurious rates charged elsewhere in Canada, well below the figure of 60%. We must keep this in mind.

Quebec passed this legislation because it is entitled to do so under its authority to legislate to protect its citizens, so that all consumers are well protected against an industry that is abusing its power and making money at the expense of the poor.

That is how I see it. It is an industry that makes money at the expense of the poor and, at present, it is primarily the industry that is pressuring the government to reconsider this legislation. That is wrong. Members have to realize that we must not give in to lobbying by the industry and that we must respect those who elected us to this House. We must provide the best framework for our citizens. Once again, this the is a provincial responsibility.

Furthermore, if we accept this bill as it is now written, we will be opening the door to a great danger. The bill states that the federal government would have the right of oversight and veto regarding provincial and territorial legislation. Imagine that the Prime Minister in this House decides to examine Quebec's legislation. We decided that an interest rate of 60% was too high and the Prime Minister could say that he does not agree. Would all Quebeckers have to pay what the rest of Canadians have decided to pay? That is not right. We have established rules to protect our citizens. That is precisely why it is important that we not adopt this bill. It meddles directly in areas of provincial and territorial jurisdiction.

Since the government was elected, the Prime Minister has been making very public speeches claiming he wants to limit encroachment on provincial and territorial jurisdiction. Yet this bill does just the opposite, giving the federal government even more powers than before. Does that make sense? I am asking you, Mr. Speaker. I realize you cannot answer me, but I know that you have been thinking about this and coming to the conclusion that what the government is doing does not make sense.

I hope my colleagues will also give this some thought and come to the same conclusion that when we legislate, when we decide to bring in a new law, that law has to represent as many people as possible, the interests of as many citizens as possible, the interests of citizens who do not have a voice.

That is why we are here. We are not here to represent industry, though we often do so when it is in our best interest. We defend industry when our citizens have jobs they want to keep and when they have the right to work.

Our first duty is to the citizens who elected us as members of Parliament. We must remember that as we discuss this bill in the House. We have discussed it over the past few days. I hope my colleagues will remember that.

I hope they will remember that the people who use this kind of service are society's poorest—the ones earning minimum wage. If we give people the opportunity to borrow money from these places, they will sink deeper and deeper into a cycle of debt from which they will have a very hard time escaping. We must remember that.

Payday lending is short term lending involving unsecured loans for small sums of money—a few hundred dollars for a couple of weeks.

Lenders require that the borrower provide a cheque so that they can get their money as soon as the borrower is paid. Earlier, the claim was made that people earning minimum wage do not have access to banks. But if they are able to write a cheque to pay a loan, then they must have a bank account. We therefore need to work with the banks to make sure these people have access to loans at much lower, much more reasonable rates. Interest rates on personal loans, consumer loans, currently range from 6% to 7%, nowhere near the usurious rates payday lenders charge.

Even the Consumers' Association of Canada is very concerned. Yet the background information on this bill says that it is at the request of the Consumers' Association of Canada and the people who use this type of company that the government is introducing legislation to amend the Criminal Code on criminal interest rates. This legislation has served Canada well to date, but Quebec has more restrictive legislation.

All consumers will lose because of this legislation. The Consumers' Association of Canada understood this. And if the Consumers' Association of Canada understood this, why are we having so much trouble understanding it? If an association that represents so many people properly, effectively and professionally understood it, why are the members who are here to represent their constituents' interests having so much trouble understanding it? The association even believes that the industry is calling for this amendment for its own benefit.

Consumer protection is within the jurisdiction of the Government of Quebec and the provinces. That is why I would ask all my colleagues in this House to think carefully before giving in to pressure from payday loan companies. I would ask them to think about all their constituents who could become trapped in this cycle of debt. We must be very careful. This bill is not what it purports to be. This bill will not help the public. It will help the payday loan companies.

The House resumed from February 5 consideration of the motion that Bill C-26, An Act to amend the Criminal Code (criminal interest rate), be read the third time and passed.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the government has again seen fit to reintroduce another bill, which was introduced by the previous government, on payday loans. I believe we will find there is some extensive support for this because of the implication it has to ordinary Canadians.

A payday loan is a short term loan for a relatively small amount of money to be repaid at the time of the borrower's next payday. In order to qualify for a payday loan, the borrower must have a steady source of income, usually from employment but also from pensions or other sources, and a bank account. The lender will typically lend up to a specific percentage of the net pay for a period of up to 14 days, ending on the next pay day.

The borrower provides the lender a cheque, postdated to the borrower's next expected income payment date, for the total amount of principal, plus interest and other fees. Members have indicated that when we take the fees, interest and insurance, the cumulative cost is in effect an interest rate of as much as 60%, which by any criteria is usury and inappropriate.

One might ask who would want to pay these exorbitant rates of interest. This is the crux of the reason why I wanted to speak on the bill. It is again a demonstration that there are people out there who, in the absence of the protection of the laws of Canada, will be taken advantage of by people who see these little pockets of opportunities to take money away them simply because they are torn between needing cash today to buy food or to pay the balance of their rent, and the only opportunity they have is to go to payday lending institutions.

This is a problem because people who are in those situations find themselves without any credit rating. This means they have no line of credit and no opportunity to borrow from a bank. They probably have a bad credit rating for that matter. In addition, they would not have a credit card. Although credit card interest rates are very high, they are not 60%.

One might ask why they would borrow a net paycheque from someone at those rates when they could simply draw on a credit card. That is not even an option. We are talking about vulnerable Canadians who are faced with the only opportunity to get the cash they need to take care of the basic necessities of life such as food, clothing and shelter. The only opportunity for them is to go to the payday loan industry. The bill has to deal with that. It is the reason why the bill was brought forward in the last Parliament. I am pleased that we have had an opportunity to bring it forward in this Parliament and I hope to see it passed very quickly.

Provincial and territorial governments, as well as consumer advocacy groups, have raised concerns. The government should take solace in the fact that this is a matter which has been seen at all levels of government and society. They have raised concerns over incidents of questionable practices within the industry. It calls for the question about why the industry has not been totally regulated. That is another issue totally. The concerns involve the high cost of borrowing, insufficient disclosure of the contractual terms, unfair collection practices and the spiraling debt loads resulting from rolling over loans.

When people are prepared to charge usurious rates of up to 60%, when they want their money, they will go after people in a very draconian fashion. This all of a sudden becomes a risk to the safety and security of the people involved. Sometimes things happen, people start to go downhill and they cannot stop. They have exhausted every opportunity. They may have stumbled across this so-called payday loan opportunity, but they still cannot get out of it. What is the recourse to them? There is none. They go to jail, I suppose, if that is possible. However, in terms of the collection practices, even on ordinary consumer debt, we have seen badgering, threatening and all kinds of terrible things. One can imagine what happens out there.

There is no question that something has to be done. We get this situation where usurious people will tend to say that if they cannot pay now, they will roll it over and double the rate. All of a sudden, people are getting pennies on the dollar from moneys that they acquired through their employment.

The approach of the bill is to deal through the Criminal Code. Section 347 of the Criminal Code of Canada makes it an offence to enter into an agreement or arrangement to receive interest at a criminal rate. It is defined as exceeding 60% per year. When I looked through the speaking notes provided by the research staff of the Library of Parliament, I noted the definition of interest. I thought it was worthwhile mentioning because we are talking about the rate of interest.

Bill C-26 defines interest in the same way it is defined in subsection 347(2) of the Criminal Code. The existing definition of interest is, however, problematic in a sense that payday lenders have tried to avoid the provisions of section 347 by disguising interest as various fees and charges. Not only is there a prescribed interest rate on the loan, there are also fees for processing and other charges for things like insurance. Payday loan associations want to be sure that if they never collect, they will be able to recoup some of the money through the insurance, which is paid by the person who takes the loan in the first place.

In one business model, payday lenders incurred the operating costs associated with providing payday loans and charged customers a fixed fee and insurance type premium on each loan transaction. The premium was designed to cover the cost of providing the loan as well as the risk of loan default as assumed by the insurance company that may be owed by the payday lender.

If the insurance charges argument were to be accepted before a Canadian court, it is unclear whether the exemption proposed under Bill C-26 would apply. This could result in problematic jurisdictional challenges of provincially imposed limits on the cost of borrowing. Regrettably, it appears there still may be some difficulty from a jurisdictional standpoint to address some of the issues here.

As I indicated, the interest rate is covered under section 347 of the Criminal Code. It was not intended to be a consumer protection tool for economic price regulation. Despite its intended purpose, section 347 has been interpreted as applying to most lending arrangements in Canada, including payday lending.

The penalties under section 347 are significant: a maximum penalty of five years imprisonment on indictment, or a maximum penalty of six months imprisonment; and/or a fine not exceeding $25,000 on summary conviction.

With respect to the proposed amendments in Bill C-26, the payday lending industry can continue to operate but with controls. This is not to put them out of business, but there will be some controls should Bill C-26 be passed and given royal assent.

The proposed amendments will exempt payday lenders, which operate in provinces and territories and have measures in place to protect borrowers, from the application of section 347 of the Criminal Code of Canada. Second, they will require the jurisdictions that regulate the industry to place a limit on the cost to consumers of payday borrowing.

Some of the detractors of the legislation will say that the federal government has basically said that it does not want to deal with this and that it will instead pass the problem on to the provinces. That is not exactly the intent of the proposed bill. Making the amendment to the Criminal Code will allow everything else to continue to operate but carves this out. For those provincial jurisdictions that already have laws in place, those laws can stay in place without being affected by the bill. All it will take under the bill is for the government to designate those provinces in which the particular provisions of Bill C-26 will be applicable. Those that do not have the designation will continue to utilize their own laws. It does work.

The amendments would not apply to federally regulated financial institutions such as banks. They are intended to facilitate the provincial regulation of an industry that is not currently regulated.

Banks and other federal financial institutions are already subject to legislation, including the Bank Act, the Trust and Loan Companies Act, the Cooperative Credit Associations Act and the Insurance Companies Act.

As can be seen, there is an attempt here to deal with it and I must admit, in looking at some of the debate which took place in the first session of the 38th Parliament, I did see some argument that there still were some concerns.

We are debating this bill at second reading and we could bring forward some of those concerns in an attempt to promote questions and to raise issues at committee. On the termination of the debate at second reading we will vote on the basic principles of the bill. The committee that deals with the bill is where we will have the opportunity to hear from representatives of the payday loan industry and all the stakeholders. I am sure there will be some case studies. People have found themselves in a situation where usurious rates have been charged.

Very briefly I want to go over a couple of the clauses. Clause 1 updates the wording of section 347 of the Criminal Code with respect to the fine not exceeding $25,000 and changes “notwithstanding” to “despite”.

Clause 2 amends the Criminal Code by adding subsection 347.1(1) which retains the definition of interest found in subsection 347(2) and adds the definition of a payday loan. It is important to have that in there. The definition is:

“payday loan” means an advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a line of credit or a credit card.

Clause 2 of the bill introduces new subsection 347.1(2) which exempts a person who makes a payday loan from criminal prosecution in the following circumstances; first, that the loan is for $1,500 or less and the term of the agreement is for 62 days or less; second, that the person is licensed by the province to enter into the agreement ; and third, that the province has been designated by the governor in council under new subsection 347.1(3). Subsection 347.1(2) does not apply to regulated financial institutions such as banks.

Subsection 347.1(3) states that the provisions outlined will apply to provinces that are designated by the governor in council at the request of the province. This is an opt in by the province.

The only area I would like to comment on has to do with the payday loan industry. The growth of this industry has focused attention on the industry and its practice of charging relatively high rates of interest. The industry really has brought it on itself. The critics have called for prosecution of the payday lenders under the Criminal Code provisions, even if such action reduces the profitability of the industry or results in its abolition.

Proponents of the industry point to the growth of payday loan companies as evidence that the industry is fulfilling an otherwise unmet need for short term credit and/or convenience. I am not sure that the case studies of individuals will show that there is a high demand in the marketplace for this service by people who just need a little short term credit. Anybody who is prepared to pay effectively a 60% interest rate on a cash advance clearly has no credit and no options. This is a serious problem which I believe is already creating great harm in communities across the country.

Proponents have argued that instead of an outright ban on payday loans the federal government should allow the provinces to regulate the industry in the interests of restricting some of the more abusive industry practices, such as insufficient disclosure of contractual terms, aggressive and unfair collection practices, and the rolling over of loans. The payday loan industry itself has proposed self-regulation as a means of addressing some of the concerns associated with the lending practices.

There is obviously room for discussion. Even the industry itself is a proponent of self-regulation, but for this issue, the more the public learns about the usurious practices and the lack of protection for people who are vulnerable and put under duress to pay usurious rates, the more I think Parliament and the Government of Canada must take action.

Some commentators have suggested that the federal government is merely transferring the problem to the provinces, which may or may not adequately regulate this industry, but already there are provinces that do so. Transferring the responsibility to the provinces may also lead to a patchwork of different laws and regulations and a lack of uniformity and enforcement, some suggest. It is true that the provinces are the masters of their own legislation and also in terms of the mode in which they operate.

They also take into account the fact that there are credit organizations that do provide the same or similar products but do not charge usurious rates. This allows the flexibility that may be necessary so that it does not deal with businesses that are operated in a fair manner.

Some commentators have advocated reforms to section 347 of the Criminal Code beyond those provided by Bill C-26. The Supreme Court of Canada stated that section 347 “is a deeply problematic law”. In addition, there is concern that the provisions set out in Bill C-26 could cause legal uncertainty in relation to negotiating larger scale financial transactions such as bridge loans and convertible debentures.

Clearly this is not as straightforward as might first be thought. Members will be aware of that. I think it is going to be important for our members on committee to seek appropriate witnesses to make sure that we have the facts and that we do in fact, as we pray at the start of every day in the House, make good laws and wise decisions.

Finally, a number of other stakeholders have made recommendations that they believe would reduce the need for payday loan companies, including: first, government led education programs designed to promote financial literacy; second, the promotion of competition from traditional banks and other financial institutions in order to better control costs in the alternative consumer credit market; third, reforms to make the process of bank closure in low income and rural neighbourhoods more onerous; and finally, government aid for the establishment of community banking operations in low income neighbourhoods.

It is clear that there is a problem out there in terms of the usurious rates being charged on payday loans. It is also very clear that there are many stakeholders, including community groups and organizations and all levels of government, that have expressed a concern and support for changes to be made. I believe that we will find solid support for Bill C-26 to bring forward some constructive ways in which we can address the problem. In referring this matter to the justice committee, I suspect that we may even have some excellent witnesses there to provide some of the answers to the concerns raised with regard to potential jurisdictional or legal problems as prosecutions may come forward.

In summary, I support Bill C-26. I am pleased that the current government saw fit to bring forward a good Liberal bill from the last Parliament.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in the debate on Bill C-26. It is an act to amend the Criminal Code (criminal interest rate). We refer to it as the payday loans.

I want to give a little background, which I found very interesting. The payday lending industry is a growth industry in Canada. It was virtually non-existent until 1994. The payday lending industry is believed to have grown to more than 1,300 outlets. Canada's new government, the so-called—

[Guy André, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, it is a pleasure to speak on Bill C-26, An Act to amend the Criminal Code (criminal interest rate), following the remarks of my colleague, the hon. member for Shefford.

According to the government, the purpose of Bill C-26, which we are debating today at third reading, is to respond to the concerns of some provinces and territories as well as several consumer advocacy associations which believe that it is urgent and necessary to regulate more strictly payday lending, which is a growing industry in some provinces.

While it may seem simple and even generous, this bill is, as the hon. member for Shefford aptly explained, yet another attempt at interfering in jurisdictions that belong to Quebec and the provinces. The Conservative members across the way are shaking their heads saying no. They should read the bill.

Even if the government's intent was to supervise better at the federal level to prevent interference in provincial jurisdictions, it is once again interfering in an area that we, in Quebec, are managing superbly.

Members will understand that the Bloc Québécois will oppose this bill which opens the door to a federal veto on tools currently used in Quebec to regulate such activities through the Consumer Protection Act, among others. I do hope that government members from Quebec are familiar with that piece of legislation. Have they forgotten about it since coming to this place, the House of Commons? I am not sure, but I think so.

As I said, the government described this bill as a response to many concerns raised about the payday lending industry. Granted, this is am industry that has been accused of all sorts of questionable practices, including high lending rates on future pay, insufficient disclosure on contractual terms, if any, and all too often unfair debt collection practices.

Before getting into the details of our reasons for opposing this bill, I would like to say a few words about these increasingly popular payday loans.

This is a disturbing phenomenon because it reflects a troublesome reality, the increasing presence of poverty. The people who borrow from these payday lenders often find themselves short of money. At present, the Criminal Code sets limits on payday lenders. Interest rates may be as high as 60%. I am sure that no member of this House would borrow a portion of his or her salary at such a high interest rate. The target is people without resources. That is why such activities are governed in Quebec by the consumer protection act, and the interest rate can be no higher than 35%, while here 60% is mentioned. I think 35% interest is already high.

In Quebec, payday loans are becoming less and less common. Mechanisms have been put in place; support groups for the poor have been created. There are even some CLSCs that loan money to clients with temporary needs, such as food for a week. All sorts of social measures, such as food banks, have been set up to help these people, all so they will not have to take out loans they cannot pay back. When someone borrows a portion of their salary at that kind of interest, for two or three weeks, they repeat the same scenario and keep getting deeper into debt. It affects quality of life for the borrowers and their families.

According to the Canadian Payday Loan Association, payday loans are unsecured small-sum short-term loans typically for a few hundred dollars. As we know, they are usually for two weeks. Payday loans are specifically designed to help customers with one-time, unanticipated expenses. The average payday loan is around $280 for a period of 10 days.

We can see that these loans are for small amounts to meet what are supposed to be one-time needs but are often related to rent, accommodation and housing. Payday loans are really designed for the low income earners in our society.

As I have said, I am sure that government officials, our ministers, members of Parliament and other members of society do not take out payday loans. We are talking about the poorest people in our society here today. I heard what my NDP colleague said, that we were doing this to help the least fortunate. It is incredible!

This Conservative government tends to minimize and sometimes even ignore the problems associated with poverty. We saw this recently, when the government cut funding for literacy programs and Status of Women Canada programs. My colleague and I recently toured New Brunswick and Newfoundland. People were offended at the cuts to programs that contribute to our social fabric. Once again, the government is introducing a bill to squeeze these people further.

Payday loans, also called wage advances, are a very expensive way for consumers to meet a temporary need for credit. This type of loan is expensive, because lenders charge numerous, often excessive administrative fees, not to mention high interest rates.

In return for making the loan, payday lenders will require a post-dated cheque or a preauthorized debit for the loan amount and will charge applicable fees as well as interest. With the addition of the various fees, the amount to be repaid is greater than the amount of the initial loan.

This puts the squeeze on borrowers. Here in the House of Commons, we are trying to help people in provinces where payday loans are not regulated at present. I understand that, but I do not believe that a measure such as this is the best way to help people in need. It is important to remember that these are the people this bill targets.

As you know, we are opposed to this new bill. It contains two main measures. First, it adds a definition of a payday loan to the Criminal Code. Second, it amends section 347.1 of the Criminal Code to allow exemptions from that section.

There are two parts to the new exemption mechanism. The first part specifies that section 347 of the Criminal Code and section 2 of the Interest Act no longer apply to the payday loan industry of a province when the amount of money advanced is $1,500 or less and the term of the loan is 62 days or less, and the lending company is licensed under the laws of a province to provide such loans.

The second part—and this is where we have a problem—involves a political decision by the federal government.

The federal government exempts from the application of section 347 of the Criminal Code and section 2 of the Interest Act provinces designated by the federal government for passing legislation that the federal government considers to be consistent with its objectives for regulating this industry.

In conclusion, why should Quebec submit to the rules established by the federal government in order not to be subject to criminal interest rates, when Quebec already has consumer protection legislation that properly regulates this activity, which is in fact all but non-existent in Quebec? The members from Quebec now in this House know this. We believe that 60% is an almost criminal rate of interest. In our view, it is usurious.

I have explained in my speech that we have found other ways of helping those in need.

The Bloc Québécois therefore opposes, in principle, the bill—

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, I will share my time with the member for Berthier—Maskinongé. First, I am very pleased to speak to Bill C-26. I totally disagree with my colleagues' assertions, as do all Bloc Québécois members. Bill C-26 is a underhanded means to help people who have difficulty getting a loan to get money from payday lenders. These payday lenders have put pressure on the government to legalize their existence with a clause in the law, clause 347, which allows them to demand up to 60% in interest, and this can be verified. Indeed, it is the interest rate that appears in section 347 of the Criminal Code.

However, the major problem in this issue is the fact that the federal government is once again intruding into Quebec's areas of jurisdiction. In Quebec, there is already an act that deals with these loans, and the entire loan is at a maximum interest rate of 35%. Thus, any other loan with an interest rate of more than 35% is loansharking. The best way to gouge people is to lend them money at an interest rate of 60%.

Which group will take over the payday loan market? I believe it will not be the merchant who owns the corner store or the butcher down the street. The member was talking earlier about organized crime. This is the best way to launder money. It is obvious that these people will take the legal road to do something that is illegal. If the House of Commons is not aware of this, it will open the door to these people, who will be able to demand interest rates of up to 60%.

In addition, I sit on the Standing Committee on Industry, Science and Technology, where Bill C-26 was debated. How long was the debate? An hour. Why? Because the people in the other political parties agreed that it is a great bill. We are therefore going to pass it without wondering what people in Quebec or other provinces think, whether or not they think it is good or whether it encroaches on provincial jurisdictions. I should even mention that, in committee, we asked whether any of the provinces were opposed to this bill. To our great surprise, none were.

During that same meeting, we received a communiqué from Quebec saying that Quebec disagreed with Bill C-26.

Why should Quebeckers, who already have legislation covering these sorts of loans that caps interest rates at 35%, have to ask the federal government for an exemption from the bill?

Why should we let the government interfere in our jurisdictions?

If the rest of Canada thinks this is fine and dandy and wants to endorse this system, it can do so. But Quebec's position is that this is not how it is going to be and that we will fight tooth and nail to make sure this system is not put in place.

On both sides of the House, Conservative and Liberal defenders of the bill are saying that they represent Quebeckers. What they are really saying is that they are not listening and that they have bills and will adopt them at everyone's expense.

They are saying in the House and in the newspapers that they represent Quebec's interests and are going to stand up for Quebec. I cannot say what I am thinking, because I would be reprimanded, but I can say that that is not true.

There are members opposite who say: “This is good, we are able to make progress for Quebec”. I think they are wrong. They do not know what they are talking about and they will say just about anything.

What is more, this bill addresses people who earn a salary, including seniors. Why? Because they receive an income every month and are able to certify to payday lenders that they have a salary. They can borrow against their income. How far will we go with these measures to give them a chance to spend their money? If a problem arises, these people have to turn to payday lenders to borrow money. As I was saying earlier when I asked the Liberal member, is there a problem? Are our seniors not being paid enough money? They built our country, Quebec especially. Are we going to abandon them like this? If they need $100 to fix their broken washing machine, will they have to turn to payday lenders? There were no payday lenders before. Why would we need them now? To give others a chance to become wealthy and launder money? I do not believe this is a good solution.

Furthermore, the designation process—and this is the problem—requires that the province write the federal Minister of Justice to inform him that it has a law and is seeking a designation. If, on the recommendation of the federal Minister of Industry, the Minister of Justice feels that the province meets the requirements, the Governor in Council will receive recommendation to grant the exemption. This process should be relatively simple.

Why should get on our knees to ask the federal government for permission to be exempt? We have nothing to ask of it. We have our own laws. We are capable of respecting them and enforcing them. We do not need anyone to be a big brother and tell us what to do.

I strongly believe that this bill is not appropriate in that legislation is generally left to the discretion of the provinces. It is as simple as that.

When we talk about legislative measures, especially measures on consumer protection that generally cover payday loans, I do not think that consumers would agree with the way the government wants to encourage them to consume even more and have the opportunity to get money easily. It is easy to get money from payday lenders.

Much worse could be said. Michael Jenkin, director general of the office of consumer affairs and co-chair of Industry Canada's federal-provincial-territorial consumer measures committee, said, “I have a few words, just for a moment, on payday lending. It's a form of short-term lending through which the consumer typically borrows several hundred dollars for 10 days to two weeks. The borrowing costs are very high, as you probably know. They are usually in the range of, for example, $40 to $75 for a $300 loan for two weeks...”

He told us the costs were very high. Imagine paying $40 to $75 interest on a $300 loan for two weeks. It is not usurious, but it sure is close. It is not far off. I can see the Quebec members nodding off on the other side of the House. They should listen more rather than think about their next snooze. That way, they might understand this a little better.

That is not all. In 2004, the federal, provincial and territorial ministers responsible for consumer affairs expressed concern about the abusive practices and high costs consumers encounter in this parallel market, such as with payday lending. One study showed that payday loans were far too expensive and that the interest rates were too high. That was in 2004. It is now 2007. Now, a bill has been introduced to confirm that everything is just fine.

I would like to conclude by saying that we will vote against this bill. We in Quebec will take care of this responsibility ourselves.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I thank the member for Shefford for his question.

Bill C-26 addresses a subject that we have discussed today: the very high interest rates charged.

Frankly, I am not sure if these payday loan organizations will accept pension cheques. Perhaps they do.

I think there are two different issues. If pensioners have problems getting from payday to payday and a pension is their only source of income, increasing their pension will not expose them to further difficulties. It will keep them away from the payday loan organizations. I do not see the two as running contrary to each other.

I think if we were to do something with seniors that could help them with their pensions, it could keep them away from payday loan organizations. In fact, I suspect many seniors are not aware of the proliferation of payday loan organizations. Some may be, but some may have difficulty finding their way to the payday loan organizations and dealing with some of the complexities. I am not sure that they are big customers, but I am only saying that. I do not have any research or information to support that.

I do not think that what I am suggesting here with respect to old age security and what Bill C-26 does conflict with one another in any way shape or form.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am very pleased to speak to Bill C-26, An Act to amend the Criminal Code (criminal interest rate).

The purpose of this bill is to amend the Criminal Code to exempt payday lenders doing business in provinces and territories that have legislative measures in place that protect borrowers from section 347 of the Criminal Code of Canada, and to require that the competent authorities set limits on what the consumer is charged for a payday loan.

It was our Liberal government that put the wheels in motion for this bill by starting consultations with the provinces and territories and other stakeholders to deal with this very important issue.

If we look at it, we have these payday loan operations that fill a certain market niche, but unfortunately they really gouge consumers and some of the interest rates, as many have cited in the chamber today, can reach 1,200% per annum, whereas the Criminal Code in section 347 makes it a criminal offence to charge more than 60% interest per annum.

Some might ask, if the Criminal Code already says that, why would the police not arrest people or the crown prosecutors prosecute people who are charging clearly more than this?

That is a good question and one that I have wondered about myself. I think we really need to look at the origin of section 347 of the Criminal Code which was designed primarily to deal with what we now call loan sharks. Loan sharking is an activity carried out mostly by the underworld or by organized crime, where people who are in a desperate need of a loan would go to a criminal like this and be prepared to pay a very large amount to get a loan because perhaps they had to pay back another debt, a drug debt, a gambling debt or whatever it might be. Therefore, it became known and is known today as loan sharking and that was really the origin of this provision in the Criminal Code.

The reality is that there are many Canadians who really need the benefit of these payday loan operations because between paydays they find themselves stretched for whatever reason and they need to obtain a loan from one of these particular operations.

A payday loan is a short-term loan for a relatively small sum of money provided by a non-traditional lender. Statistics from the Canadian payday loan industry suggest that the average payday loan is valued at $280 and is extended for a period of 10 days. In order to qualify for a loan, the borrower generally must have identification, a personal chequing account, and a pay stub or alternative proof of a regular income. Payday lenders typically extend credit based on a percentage of the borrower's net pay until his or her next payday, generally within two weeks or less. The borrower provides the payday lender with a post-dated cheque, or authorizes a direct withdrawal, for the value of the loan plus any interest or fees charged.

There we have it: small loans of very short duration that help people meet their needs from payday to payday. By decriminalizing it, so to speak, which is the effect of Bill C-26, the provinces and territories will agree to regulate these same-day loan enterprises, which is part and parcel of this particular bill. The provinces and territories will regulate the interest rates charged on these payday loans. I think most Canadians would agree that 1200% per annum is exorbitant and unjustified. It puts people deeper into debt instead of helping them find their way out of a position like that.

It also begs the question of why it is that people cannot live between paydays. There are many reasons. We hear a lot about poverty in Canada, of course, and we have done many things to try to alleviate poverty, one of which was to have a strong economy. Certainly our Liberal government cut taxes for low income and medium income Canadians.

The Liberals also introduced a number of programs like the national child benefit, which is an example that I would like to highlight. We brought in the federal child tax credit, but unfortunately, the province of Ontario, where my constituency is located, has clawed back the federal child tax credit 100%. From the point of view of the recipient, that makes it neutral. The benefit that we tried to convey was clawed back by the government in Ontario. That was done by the Harris Conservative government. The Liberal government ran on a platform to take back the clawback, but it has not done that. That affects many groups in the province and certainly does not help families and the working poor. We should begin to address it.

I have been talking about working families in the low to medium end of the income spectrum and I am sure we can find individuals like that who need loans to get them from one payday to the next; it might be monthly or, depending on how they are paid, bi-weekly. They may need to make a large capital acquisition. Maybe their stove has crashed. Maybe they have other urgent expenses. They need help from payday to payday with a loan so they go to one of these payday loan companies. We have seen these companies grow in large numbers and in size and scope across Canada.

Another group I would like to touch on is seniors. In my riding of Etobicoke North, I encounter many seniors. Many of them are living on fixed incomes with old age security and the Canada pension plan. Some might benefit from a company pension as well. I think these people are facing rather unique cost pressures. Old age security is indexed every year, but it is indexed to the general cost of living.

I have done some research on this. I am going to be coming to Parliament with an initiative in the not too distant future. What has been found is that the cost of living index that is presented to seniors is not the same as the cost of living index or the cost pressures facing Canadians in general. We can see a number of reasons for that. We could look at property taxes, rents, insurance rates, energy costs and food costs. These are cost pressures that seniors face. If one is on a fixed income, this can create quite a problem.

Our Liberal government brought in the guaranteed income supplement and made some one-time changes to it. This is another area that we should look at. I believe that we may need to develop a particular cost of living index for seniors, one that reflects the basket of goods and services they must deal with.

Given that, we should also look at perhaps a one-time change in the old age security and then index it to this new index. I appreciate that this would cost the federal treasury some money. I do not mean to minimize that, but I think it is an area we need to look at. Our seniors built this country and we need to respect that. We need to help them deal with the cost pressures they face and the standard of living they are entitled to.

I will be supporting Bill C-26.

[Charles Hubbard, Liberal, Miramichi, NB]

Mr. Speaker, with your permission and the consent of the House, I would like to share my time with the hon. member for Etobicoke North.

As I listen to the debate between the two parties, and we think of the bill, Bill C-26 is a very small bill. Most of the sections in it deal with the concept that the bill will only be effective in terms of trying to regulate the industry if the provinces request assistance. It is not something that is going to be driven by the federal government, but rather it is in response to concerns that the provinces have had that they are not able to regulate the same day or payday loan activity.

We have to assume that there are people out there who want to borrow money for a short period of time. This morning I was checking with one of those groups and I found that it seemed so simple. If one wants to borrow $500, the indication was that one would pay only 16¢ per day for each $100 borrowed, but there is also a $10 fee in order to register with the company.

It sounds like a very small amount of money to pay back, borrowing $500 for 10 days, but when we consider it in terms of the Criminal Code, that interest rate without the fee would be nearly 60%. I am concerned that if I were working for one of those companies today, listening to the debate in the House, it must be rather a slimy feeling they have about our attitudes about the type of activity that they have in those communities.

They are all pointed out as being terrible organizations and we see them as being people who are trying to rip off the poor. In fact, many of them do rip off the poor. I asked the parliamentary secretary this morning, in terms of the other fees that are associated with payday loans because those loans are often given to people who are very short of money, who do not have friends and who have no opportunity to borrow from a bank or from another financial institution.

I dealt with a case in my own riding on Friday of a person who applied for EI. He had been out of work. It took him a few days to get his record of employment from his employer and then he put his request in to draw his EI. After waiting nearly 30 days, his claim had still not been processed. I am glad to say we found out today that his claim has been processed, but an individual who has been without a paycheque for nearly five weeks is in need of money. He said that he had no money because he had medical needs in terms of prescriptions and on Friday afternoon he was very desperate. I would think that he might be a person who would go to a same day lender to get a short term loan until his first EI cheque arrived.

Other people in the country might be working for an employer and would have to wait two or three weeks to get their paycheques. If they could borrow the $500 and get it at a reasonable rate, then it would be a service that our banks and other financial institutions often do not offer.

We know that the sad cases that we hear of usually deal with other penalties that are associated with the initial loans. We know that the costs that they put in, in terms of administrative fees, in terms of whether or not one is able to pay the loan after the 10 or 14 days are up, cause heavy penalties that are built into the amount of money that has to be paid when the loan is up.

We find, as some speakers have indicated, that in many cases companies that are involved in these franchises are able to rollover those loans, to keep the person in a rut until that loan has become so great that it is almost impossible to pay back.

We are talking today about some form of consumer protection. We are trying to avoid the idea of predatory lenders. We have the old system of pawn shops. We have various other financial agencies that cost 30% to get money from them. We have credit cards which sometimes run as high as 28% and we try to regulate those in terms of our various regulations, policies and laws.

This particular bill, Bill C-26, goes to section 347 of the Criminal Code and with it we are placing those organizations not in terms of the financial arrangements that our country has within our finance but more importantly, within the Criminal Code. We are dealing with it in terms of people who would be assessed very heavy penalties, in fact penalties that would put them in the criminal group.

Why do we have it? We as Liberals want to say that we have this on the fast track. We have indicated to the Minister of Justice that there are six bills that he has before the House that we want to be sure that they proceed quickly.

I felt badly today that in terms of some time that we took after question period we dealt with a very difficult case of justice. Wilbert Coffin was a person from Quebec, a riding in fact just north of my own, and to think that we had to debate that issue and bring it in at the same time as we are bringing in another type of criminal activity which is actually causing people to pay too much interest and to cause them financial hardship.

I want to assure the House that as Liberals we strongly support the bill. We want to see that the provinces have the opportunity to bring in legislation that will enable them to effectively regulate not only the same day loans or the payday loans but hopefully to regulate a lot of those activities within our provinces and within our country that cause so much hardship to the people who are less able to afford it.

Being poor is a terrible thing in this country. I know as a party and as the House we all want to work to see that we can end poverty, but we also know that many people are poor on a weekly basis in terms of having some particular problem which causes them to get a same day loan.

As a party we support this venture. We want to see the bill become law as quickly as possible. I can assure you, Mr. Speaker, that our members on this side of the House will support the effort of the Minister of Justice and the minority Conservative government as they proceed with this piece of legislation.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, this is a day to celebrate. We have reached the end of a long hard process to get some justice in the area of fringe financial services. Today, we are debating the final stage of a bill that will bring us closer to moment when payday lenders are regulated across the country.

Getting here was no easy feat, but it happened after a great deal of work on the part of members of the House. It happened after enormous pressure from community groups across the country. It happened because we found a way to cooperate when push came to shove. I think that tells Canadians everything they need to know on how to make Parliament work, especially in a minority situation.

Here we are today with Bill C-26, at its final stage, that will give provinces a mechanism, a means by which they can regulate payday lenders without leaving it up to a system that has largely failed Canadians over the last decade or more.

With the bill, we have an ability to set aside the Criminal Code pertaining to what is an acceptable rate of interest, that being 60%, so provinces can put in place a regulatory framework to put an end to usurious rates and to lending practices that take advantage of the most vulnerable in our society.

This has come after considerable debate in the House and at the industry committee. General approval and support for the idea has come from all sides, except for the Bloc. Most of us are still trying to figure out the position of the Bloc on this important issue. We know the province of Quebec has a system that works, a system that deals with this matter on the basis of consumer protection. Members of the Bloc feel that the province of Quebec has dealt with the problem of those who prey on individuals through payday lending operations.

Therefore, the question for the House has to be this. Why can we not simply agree among ourselves to get this passed so that all provinces can have some way to protect consumers in the most expeditious way possible? To this day, we are still trying to understand why the Bloc chose to use some methods at committee and in the House to hold up the bill when, at the outset, there was almost unanimous support to have the bill, which is a one paragraph, proceed through all stages as quickly as possible so provinces, waiting with legislation, could do so.

In terms of the Quebec situation, we cannot figure out the reasons for the obstruction from the Bloc members, especially in the context of the Quebec media. Just in the last week or so, when my leader and our caucus spoke out vehemently against the use by banks of what we would consider exorbitant fees at ATM machines, the Quebec media responded and said that it was a silly issue. Le Droit suggested that there were things far worse than ATMs. I will read from Le Droit of January 30 of this year. It says:

Come to think of it, there are things worse than the fees charged for using ATMs...

The article goes on to say:

If he had really wanted to do something for the poor in Canada, the member for Toronto—Danforth would have targeted the some 1,300 financial service outlets such as Money Mart—the payday lenders—that lend small amounts of money to some two million Canadians annually, at such high rates that they are currently being sued in a class action in Ontario.

We have taken both issues very seriously. Obviously we feel there is a real need, and Canadians agree, to put some limits on the fees that banks can charge for accessing one's own money. We have spoken out about the exorbitant fees that Canadians are charged and we have asked the government to consider putting a lid on those charges or, in fact, to eliminate the charges we face to access our own money.

At the same, we have been fighting for years on the question of money marts, rent to owns, payday lenders and all fringe financial institutions. This has been a driving force of members in my caucus over the last four or five years.

I can go back to when we first started raising this years ago. We put forward motion after motion, asking the government to start to take action against payday lenders and those who preyed on people when they were most vulnerable. We worked long and hard to try to get the former government to recognize the need to take action.

I wrote to then minister of finance, now the House leader for the Liberal Party, to ask him to do what Manitoba and other provinces wanted, which was to have provisions to set aside the Criminal Code so provinces could finally take action to put a lid on these usurious fees and to try to deal with the vulnerabilities that people faced as a result of this explosion of alternative financial centres or alternative fringe financial centres in the absence of bank presence. We did not get very far with the previous government.

When the new government came in, we began the process all over again. It took a considerable period of time, but we finally are at the point where we have cooperated, one another in the House. We have developed legislation that would allow the job to be done. Is that not what matters? In the end it is not the politics and the games about how one can hold up the House for other purposes and who initiated what and how it came to be. It is about trying to get something done for Canadians.

This is an example of where the House is making a very significant initiative on the part of Canadians, many of whom are forced to deal with payday lenders and other fringe financial services.

I do not need to go over the statistics, we have had many of these during these debates. We know that just in a decade we have gone from zero payday lenders to over 1,300. We know the stories of people who have lost their life savings. They were in this vicious cycle of going to payday lenders, being taken advantage of and being trapped for the rest of their lives. Story after story portrays this tangled web of payday loans.

I will read one example that came from a number of years ago, back in 2004. It was reported by the Toronto Star. The article begins by saying, “Quick cash, creeping risk 'Pride was what I left behind'”. It says:

Kim Elliott's Friday payday loan ritual that began as soon as her 12-year-old son was off to school.

First stop was the bank to withdraw $700 from the freshly deposited $900 paycheque from her job as a front desk manager at a Windsor hotel.

A short drive away, $650 went to pay off a loan at Stop 'N' Cash, a payday lending store that offers high-interest, short-term loans. As soon as the teller had the cash in her hands, Elliott took out another loan, this time to pay off the interest on a loan at Cash Money, another payday loan store. The transaction was the same there—pay down, loan again, drive to the next lender.

Three hours and three to our loans later, the paycheque was gone. Elliott would then take out about $350 in her final loan of the day, this one to have money to get through the next two weeks.

Does that not say why this day is so important and why Bill C-26 has to be passed as quickly as possible?

It is especially relevant in areas where the banks have abandoned entire communities. Whether one is looking at the question of ATMs or the issue of money marts and payday lenders, the root of the problem is the same: big banks have abandoned communities.

For the purpose of the House's understanding of the issue, I will once again describe what happened in Winnipeg North, my constituency. In the old Winnipeg north end, over a period of half a dozen years, all bank branches closed their doors and left that entire community without access to bank branches.

Yes, there are outlying branches, but we are talking about a community that has a high proportion of senior citizens, a very high level of low income earners, many people with disabilities, people who do not have access to cars or family members to drive them or access to computers and sometimes even telephones to do their banking. What do they do? In the case of trying to get cash, they have to go to a private white label ATM machine and they get charged up to $6 to access maybe $20 or $30, whatever they can afford to take out of their accounts.

People in organizations, like the Bankers Association, and perhaps even some members in this place have suggested that the NDP is ridiculous for raising the question of ATMs and fees. When there is a situation like that, we are not talking about convenience. We are not talking about affluent people who should know better in terms of how much money they take out at one time. We are talking about people who do not have any other choice.

The same holds true when it comes to fringe financial services. The same holds true when it comes to payday lenders. When the banks left, they created prime conditions for money marts, rent to owns and payday lenders. Every aspect of the fringe financial service popped up. It took up the space and filled the vacuum.

People went to those places because they did not have any other choice. There was no place to do their banking. There was no place to access some short term cash without going to a place that charged exorbitant interest rates and all kinds of fees and additional arrangements on top of the 60% interest rate that is criminal.

Something had to be done. We needed a way to get this into the hands of consumer protection departments at the provincial level so regulatory schemes could be put in place to arrive at what would be a reasonable interest rate for these kinds of lending situations. That is exactly what this legislation aims to do and what provinces like Manitoba, which has been the pioneer in this field, aim to do. It is about putting in place a mechanism so one can assess what makes sense in terms of an interest rate.

No one is saying that we cannot look at this in terms of risk and not charge interest. We are talking about short term loans where there is some risk, so there has to be an interest rate structure that is reasonable and allows for people not to lose the shirts off their backs.

However, in that context, why should we allow people to charge a 1000% or $2000% interest rate? Is there not a limit? Is there not something government can do? Is this not the best way to do it, given the fact that we could not over the last number of years get the provinces to agree on one standard? We could not get the federal government to pull those ministers from the provincial and territorial governments together to arrive at one standard. It dragged on for too long, to the point where the provincial NDP government in Manitoba finally brought in legislation of its own that then began this ripple effect where other provinces followed suit.

As we speak today, the Manitoba NDP government and the New Brunswick government have legislation ready to go the minute Bill C-26 is receives royal assent. They are waiting desperately for immediate action by the House. I hope we can get there very quickly, finish this debate, have the vote, get it to the Senate and get it back here, with royal assent.

In the face of banks leaving communities like Winnipeg North, the community had to take charge of the situation. People in Manitoba and in my own community of Winnipeg North finally said that they had been hurt by the banks too many times. They could not seem to hold the banks to account. They could not make the banks come to them with their statements before they shut the doors. They could not seem to convince the banks that there was some merit in having access to personalized banking services in every community across the country.

After 10 bank closures and after trying everything possible, people in the community basically said that they were going to take matters into their own hands and work with the folks who really care about the community to make a difference. That is what happened. It was not necessarily with great help from government, although there was some financial support of course. It was not with the help of any of the banks, although the last bank to close its doors in Winnipeg did give some money for a pilot project to study an alternative financial community services arrangement. That bank did give its building to the community for $1. That has made a difference and we thank the CIBC for that, but the CIBC left a whole community. It abandoned a whole area. Small businesses, local community activists, organizations, many seniors and hard-working families were suddenly left without anything. I think the CIBC actually owed it to the community to do that.

I hope other banks who abandon us will look at that as an example of their responsibilities. I hope they will consider doing so before we have to go to the next step which is to try to bring in what is so workable in the United States, a community reinvestment act which forces banks to carry out their responsibilities to the community and to give something back for the loyalty of consumers over those years. Rather than go that route, I hope banks will start to realize that they have a responsibility to Canadians, to the consumers and clients who built up those banks over the years and made such huge profits for them that the banks owe something to those communities.

Today we have a chance to make up for the downfall, for the failings of a banking system that has ignored consumer concerns. Today we have an opportunity to protect consumers from exorbitant interest rates. Today we have a chance to say to communities that we believe that a community needs to have a say in its own destiny.

The whole origin of the project in Bill C-26 came not from government, although the Manitoba NDP government was vital and central to the whole evolution of this wonderful legislation, but it came from the community. It came from organizations that felt the impact of the banks abandoning them. It came from community activists and research groups who well documented every step of the way what was happening to our community. It is only right that we pay tribute to those studies which documented this problem.

I refer to the work of Jerry Buckland, who is with the Winnipeg Inner-City Research Alliance, and to Nancy Barbour, who came out of the community and worked on this research, who has since passed away, and to whom we owe a great debt of gratitude. They did the study, “The Rise of Fringe Financial Services in Winnipeg's North End”. They put together detailed studies on fringe banking in Winnipeg's North End. Going back to September 2005 there is the paper, “There Are No Banks Here” regarding financial and insurance exclusion in Winnipeg's north end.

The situation in Winnipeg's north end is not peculiar. Many older neighbourhoods, inner city communities and rural communities have gone through the same phenomenon where banks have abandoned the communities and gone to where they say it is more profitable. The banks have left people at the whim of payday lenders and to pay exorbitant fees at ATM machines.

Today we are taking a step to correct this. Today we are actually making a difference in terms of the lives of Canadians. I urge all members of Parliament from all sides and all walks of life to support this bill. Let us get it through the House as quickly as possible so that it can receive royal assent. Let us put into place legislation that makes a real difference for ordinary families.

The House resumed consideration of the motion that Bill C-26, An Act to amend the Criminal Code (criminal interest rate), be read the third time and passed.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, today I rise to speak to Bill C-26. After examining this bill in the parliamentary committee, I thought that it would be very favourably received since the Government of Quebec has had legislation for the last two decades that manages the payday loans issue through the Office de la protection du consommateur.

Quebeckers who are listening to the debate today must be wondering why this question has still not been resolved. They must be asking themselves, "Is there not legislation under which this issue could be dealt with?" The answer is no. In the rest of Canada, that is not the case.

I saw this in committee. The representatives of the three federalist parties joined together and systematically, and very firmly, opposed a slight amendment being made to provide that in the event that a province—such as Quebec—already had a law that addressed this issue adequately, no in-depth study would be done. The jurisdiction of the province would be respected. The provincial authorities have decided that this is the right approach. At that point, notice would simply be taken that the law and the mechanics were already in place. That is the law that would prevail.

The payday loans question is important because it often affects people with very low incomes or people who suddenly need financial loans. In the rest of Canada, a flourishing industry has developed that engages in all sorts of conduct. Some work according to all the rules, others less so. I perfectly understand that there would be a desire to deal with this issue. The Bloc has never objected to this kind of legislation being applied in the provinces where there is not already legislation in this area and where the provinces decide to apply it.

Our opposition to the bill arises out of the fact that there is already a law in Quebec. My colleague said earlier that he had a problem with the Bloc's approach and that he needed proof. This is not the Bloc's approach; it is Quebec's approach.

The present federalist liberal government in Quebec City is of the same view as the Bloc on this point. We have checked with the office of the minister. The office of the minister wanted Quebec to be able to say, by giving notice to the federal government, “We already have legislation that deals with the question of payday loans, and accordingly it is that legislation that will apply in Quebec.”

In actual fact, though, this is not the answer we received. The provincial government will have to submit its legislation to the federal government. There will be studies of the appropriateness of the bill and how we are dealing with this problem. Then it will be referred to the Governor in Council. It is quite a production.

Although this is a provincial jurisdiction, that is to say, an area that is Quebec’s responsibility, and although Quebec has had 20 years of experience and there are no problems with the application of the law, we still have to go and seek the blessing of our big brother in Ottawa.

It is totally incomprehensible that a Conservative government like this one, which claimed that it would show more respect for areas of provincial jurisdiction, would act in this way. There is even talk of a bill to provide a framework for the federal government’s spending power.

They say that Quebec is a nation. The Prime Minister himself introduced a motion in the House to this effect. But at the first opportunity, when they finally have a chance to show they are going to do things differently, the bulldozer is there ready to go. The steamroller is right there. They are going to standardize everything all across Canada.

The provinces will all be required to justify their legislation. Even 20 years of experience in this area does not matter. According to the federal government, that is not how these issues can be resolved.

It is important to know that under the practices developed in Quebec over the years, the maximum currently acceptable rate is 35%. That is very different from what is seen in the rest of Canada. Thanks to the Office de la protection du consommateur, the various roles are well defined and understood. We do not have any problems with this industry. To the extent that it exists, particular practices have been accepted and excesses are prohibited. Quebeckers are legally entitled to a maximum rate of about 35%.

People who want to make a pile of money in a hurry on the backs of those who are not very well off financially by providing these kinds of services have less incentive to try to do so.

The Criminal Code refers to a rate of 60%. Now, the government wants each province to pass legislation in this area if it sees fit, whereas Quebec has already done so.

The bill states that the federal government will designate provinces. It is therefore giving itself the right to veto the measures taken by a province that requests an exemption. A province cannot just send a letter to say that it already has legislation in place. A province that has legislation like what Quebec has had for 20 years must come, hat in hand, and ask for an exemption from a government that has been unable to solve this problem for 25 years. It is like saying, “We have a law. Will you let us enforce it?” This is typical of the federal government, especially senior bureaucrats, who want to have “One Canada, One Nation“ here in Ottawa.

The reality is quite a different matter. Obviously, jurisdictional legislation will not change the world, but this is an example of a situation where, in a year when the federal government recognized Quebec as a nation, it is also telling Quebec: “You are a nation, but when it comes to payday loans, we do not recognize what you are doing and we want the right to give our OK”. This is the federal government's double standard.

In its policy statements and in its day-to-day behaviour, the government is taking the old approach that Quebeckers have often criticized. We hope that payday loans can continue to be dealt with the way they have been by the Government of Quebec and that the federal government will end up giving its blessing very quickly. The fact remains that this is written in law. This is something that is inconsistent with sharing jurisdictions and does not respect the expertise developed over the years.

There is no doubt that in the rest of Canada it is important to have a way to deal with this situation. We know this by the letters received from people who tell us about what is going on in the rest of Canada. There truly are behaviours that need to be brought into line. There needs to be a framework. Quebec has had this framework for 20 years now. If the provinces want to see how it works, they can contact the Government of Quebec to see the method that was developed. If they want to use it, all the better. If they decide to do something else, that is their choice. There is no problem. We will respect their jurisdictions.

The position the Bloc Québécois is defending today is not one of “sovereignists”, it is the position of the Government of Quebec, the current federalist government and the previous governments of Quebec. It is governments and people who have witnessed the role of the Office de la protection du consommateur. These are people who represented very different opinions on a national level, people such as Ms. Bacon, who is in the other place, and Ms. Payette, who was a Quebec minister for the Parti Québécois. She brought about some significant changes in our society and continues to do so today through her writings. These were people with very different opinions, but they had a frame of reference at the Office de la protection du consommateur, which is an example and a very interesting model. Today, Quebec is getting a rather discouraging message from the federal government.

I was even more surprised by the attitude in committee. Tomorrow in the Committee on Industry, a report will be tabled on the manufacturing sector and, without revealing the content of the report, it will be quite unequivocal about the action that should be taken in this sector.

Now, when a question of jurisdiction arises and a tiny change is needed in our legislation to ensure that Quebec's areas of jurisdiction are being respected, the three federalist parties rise to say: “No, we cannot spend time on a small amendment. There is no satisfying Quebec on this. Quebec must conform to the same requirements as the others”. This is an example of what we have seen in the past, and there are many such examples. We did not think we would see it again here today in a bill such as the one now before us.

With respect to the payday loan industry, we are told that it arose in Canada mainly in the early 1990s. I believe the Office de la protection du consommateur was already regulating the loan sector to some extent. This is likely why Quebec did not experience any serious abuses in this industry.

Jurisdiction is shared to a certain degree, since Quebec and the provinces have responsibility for local trade and commerce and civil law. There is also shared jurisdiction over contracts and consumer protection.

The federal government estimates that this industry now comprises more than 1,300 points of sale. Their distribution is very uneven and Quebec has very few such businesses. In practice, anyone in Quebec who is listening to this debate likely believes that this issue has already been resolved and must be wondering why a new bill has been introduced on this topic. I would like to explain to them that the industry grew at very different rates in Quebec and in Canada.

Little is heard about this issue in Quebec, because it has been resolved for several years now, in fact, for decades. The new situation in the rest of Canada must be corrected. We agree with the substance of this bill. However, when it comes to respecting jurisdictions, the bill does not in any way meet Quebec's requirements.

When I was working in committee on this issue, thanks to the marvels of modern communication technology, I received notices from the Government of Quebec, calling for a debate to pass the proposed amendment.

Meanwhile, members of the various parties said that it was not an important issue. The deputy minister of the department, the senior public servant, had just told us that this would not have any implications for Quebec and that it was wrong to believe that federal approval would be required. Just then, I received a cabinet memo from the Quebec Minister of Justice on my Blackberry stating the exact opposite.

Such a striking example shows us that there are still too many things to be changed in this system for there to be true respect. If there is no respect for our jurisdiction in matters such as this one, which is very important, imagine what will happen with even more significant issues.

Individuals are forced to borrow money against their wages and have to deal with people who charge ridiculous rates. There must be oversight in this area.

On this matter I agree with my Liberal colleague from Prince Edward Island who spoke earlier. We must also examine the overall implications and what must be done. It is not true that the issue will be resolved by a mere rap on the knuckles of those who do wrong. An enforcement component must be put in place. However, there is also the question of the environment in which people work, as well as what is required of banking institutions.

My NDP colleague was saying that the banks have not done their job. I think there is some truth to that. In Quebec, we have the Desjardins movement. In recent years, profitability has been a major consideration, but it has nonetheless developed a means of helping individuals who are having a little more difficulty. This has prevented an unhealthy industry from emerging.

In my riding, credit unions have a special committee that looks at such issues when it is urgent. This has led to a more humane approach to these situations. This is what will have to be put in place by the provinces that need to develop legislation. With the bill before us, they will require federal government approval when they table their legislation. Perhaps this does not bother the other provinces and they agree with this way of doing things.

The government should have respected the fact that each province moves at its own pace. If the government truly respected jurisdiction in this matter, this bill would have contained an amendment making it possible for us to adopt it immediately. I sent amendments to each member of the committee. Making them would have indicated a change in attitude on the government's part toward recognizing Quebec's expertise in this matter, which is not currently the case. At the same time, the legislation would have been adopted faster so that the situation could be addressed appropriately in all Canadian provinces.

In light of these factors, I believe you will understand why the Bloc Québécois cannot vote for this bill in its current form: it does not respect Quebec's jurisdiction. There is still time for the federal government to amend the bill. We can easily reach a compromise. I would ask the government to check its source within the Quebec government because that government's position on this issue is the same as the Bloc Québécois'. The bill would be much more acceptable if it were amended to take into account Quebec's expertise and to respect its jurisdiction. It that were to happen, we would have the opportunity to adopt a functional bill as soon as possible, one that respects provincial jurisdiction and Quebec's jurisdiction in this matter and that recognizes the expertise we have developed.

Today, a quick look at every province reveals that there is one province where payday lending is not a problem: Quebec. The other provinces have a serious problem. That is clear from the members' eagerness to pass this bill even if it means encroaching on Quebec's jurisdiction in committee.

Today's debate in this House will make the public aware of this situation. Quebec is being treated like a child with respect to this practice. Quebec has the expertise, the jurisdiction and the power to implement its legislation, but the federal government is imposing its own way of dealing with the payday loan issue.

I hope that the members of this House will pay attention to what we are saying. I will be available to answer any questions and address any comments from colleagues who are not members of the committee but who would like to have a say in this matter.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I am pleased to speak to Bill C-26, an act to amend the Criminal Code (criminal interest rate).

The bill was reported back to the House from committee on December 13. It very seldom happens that a bill is reported back without amendments. That shows what can happen when there is strong cooperation between the parties. Actually this is one of six bills the official opposition has called upon the government to work with all parties to pass as soon as possible.

We believe with just a little more cooperation, especially from the government, that in addition to Bill C-26, the following bills could be reported back to the House: Bill C-9, which would restrict the use of conditional sentences; Bill C-18, which would strengthen the DNA data bank; Bill C-19, which would amend the Criminal Code on street racing; Bill C-23, which would amend the Criminal Code and criminal procedure in languages of the accused and sentencing, in other words, update Canada's Criminal Code; and Bill C-22, which would amend the Criminal Code with respect to age of protection, with the importance of protecting children. We believe with a little more cooperation from the government, we could in fact be getting those six bills approved in the House.

In summary, Bill C-26 amends the Criminal Code of Canada to exempt payday lenders who operate in provinces and territories having measures in place to protect borrowers from the application of section 347 of the Criminal Code of Canada, and require jurisdictions that regulate the industry to place limits on the cost to consumers of payday borrowing.

To a great extent a lot of work was done on this bill by previous ministers of industry and justice. A lot of work has gone on with the provinces and territories to get the kind of collaboration needed to put forward this bill in the House of Commons. I congratulate all the folks, including members of the government, who were involved in those discussions to get us where we are at today.

There is certainly a need to ensure consumers that usury interest rates are not allowed in this country. There is no question that there is a lot of authority in the Criminal Code of Canada under section 347 to lay criminal charges for usurious interest rates. Section 347 makes it a criminal offence to charge more than 60% per annum.

As we all know, some payday loan companies have charged far in excess of that rate. In fact, we have heard of outrageous interest charges, when compounded and fees are added, in excess of 1,200% per annum, yet no charges under section 347 to payday loan companies have been made.

Yes, the concern is there, but the payday loan business is a little more complicated jurisdictionally, and I would say on an individual need basis, more than meets the eye. Jurisdictionally payday loan operations are considered to be commercial businesses. They are not banks, although I think many people believe they are. As commercial businesses, to a great extent they fall under provincial jurisdiction.

My colleague, the MP for Scarborough—Rouge River, explained it. I want to quote from his remarks in the House because he gave best explanation on this point:

We are going to keep a Criminal Code provision, but we are going to allow an exemption for a lawful business that lends money using this payday loan mechanism. The exemption will be based on the premise that a province or a territory is regulating the commercial operation.

He went on to say:

Placing this amendment with section 347, will allow the provinces to assume their proper jurisdiction in the regulation of the commercial affairs of their citizens. However, at the same time, we maintain the criminal prohibition with the 60% per annum cap where there is no provincial regulation. We are assuming that a province will provide a form of regulation that will essentially keep the same level of protection the consumers have had up to now.

It is important to mention that because it explains the jurisdictional problem and the difference between the commercialization as a business.

Therefore, the bill does cover off the jurisdictional question under clause 2 by the person being licensed by the province to enter into the agreement, and second, the province has been designated by the governor in council or cabinet under the proposed new section 347.1.3.

On an individual need basis, it is obvious from the demand for transactions, estimated to be $1.3 billion or more, and in fact the parliamentary secretary said it is as high as $2 billion now, and also the increase of payday loan companies that are estimated to be over 1,300. It is obvious from these shocking figures that individual Canadians have an urgent need for short term cash for whatever reason.

Yes, I recognize the amounts are in the low hundreds of dollars, but the cost, as others have said before me, are very high.

Mr. Jenkin with the Department of Industry, who was a witness before committee, indicated:

It's a form of short-term lending through which the consumer typically borrows several hundred dollars for 10 days to two weeks. The borrowing costs are very high, as you probably know. They are usually in the range of, for example, $40 to $75 for a $300 loan for two weeks or less.

I must emphasize that while I support the bill as a way to improve the situation for people who are in need of immediate cash, I still am worried about the impact of the financial strain on individuals. There is no question in my mind that the individuals who are basically forced to use these services are the ones who can least afford to pay these high fees. Maybe they need the dollars to provide food, buy groceries for the family. Maybe they need the dollars for a medical bill or maybe they even need the dollars to pay the minimum payment on a high interest bearing credit card.

Whatever the reason, there is clearly a problem out there that needs to be addressed beyond this bill. I certainly would advise the government and others that we really need to be doing as a country, both at the provincial and federal level, some research into the social or economic reason why people think they are forced to go to these services for those kinds of money. They are the people who can least afford it and I believe that needs to be looks into and addressed.

The bottom line is that we are in favour of this bill. We do believe it is a step in the right direction However, there are other underlying causes that we need to recognize are out there in a social and economic sense and issues that really affect people in their daily lives that forces them to use these services. That is the worrisome point.

The bill is good but I believe the House and the government need to look at the underlying causes of the need to use these services more so.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, my riding is another one with a very long name that describes the whole of the area where the people I represent in this House make their homes.

I listened with interest to the remarks of my colleague. I know that the work has been done by the Standing Committee on Industry and not the Standing Committee on Justice. Perhaps he is not aware of how these things were done, but I would still like to ask him a question.

In Quebec, as opposed to what has happened in the rest of Canada, the matter of payday loans was dealt with in the 1990s—if not, indeed, the 1980s—with the creation of the Office de la protection du consommateur. In Quebec, the maximum rate of interest that can be charged is 35%. When this bill was tabled, we expected, therefore, that the federal government would say that any provinces that already has similar legislation, with adequate protection, has only to declare that and it will be automatically designated. That would have made it possible to adopt the bill very quickly in one day of parliamentary debate. However, in committee we encountered fierce opposition—not just mild opposition—from representatives of the other three parties because they absolutely insist that the federal government must have the right to give its blessing to the provincial legislation.

I would like to ask my colleague, instead of demanding that there be a designation made by the governor in council, and in the final analysis, the Prime Minister, would it not have been more reasonable to decide whether Quebec's act is acceptable on the basis of the provisions in Bill C-26?

Would it not have been possible to accept an amendment that was suggested not only by the separatists in Bloc Québécois but also by the Government of Quebec, which represents all Quebeckers and which has administered the current act for 25 years?

Could the Conservatives not have shown that much flexibility when they are so fond of proclaiming that they respect provincial jurisdiction? In this case, they show no sign of that respect.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Mr. Speaker, I rise today to speak in favour of the legislation before us, Bill C-26, An Act to amend the Criminal Code (criminal interest rate).

The legislation seeks to amend section 347 of the Criminal Code of Canada, which criminalized the charging of usurious interest rates. Section 347 limits interest charges on loans to 60% per annum.

When it was enacted, section 347 contemplated larger long term loans. As such, this section of the Criminal Code requires the interest on a loan to be calculated annually, even if the loan is for a short term, such as only five days. Therefore, the interest is calculated by compounding daily over 365 days, even if the loan is only held for a few days. One hundred dollars lent for five days at a cost of $1 therefore amounts to 107% annual interest. This would be the equivalent of requiring hotels to post their annual room rates at $55,000 per year, rather than $150 per night. Similarly, this would be the same as requiring a car rental agency to post its rates at $13,000 a year rather than $35 per day. We use many such short terms devices in our daily lives and we calculate the services using short term pricing, not annual rate, a meal in a restaurant or a tax trip across town.

Payday loans are also a short term product, so annualized rates are the wrong measure of the products cost.

What is a payday loan? This is defined as an advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature, but not for any guarantee suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, line of credit or a credit card.

In order to qualify for a payday loan, the borrower generally must have identification, a personal chequing account and a pay stub or other proof of a regular income. Payday lenders typically extend credit based on a percentage of the borrowers net pay until his or her next payday. The borrower provides the lender with a post-dated cheque or authorized direct withdrawal for the value of the loan, plus any interest or fees charged.

Who uses payday loans? In early 2005 the Consumer Agency of Canada placed questions on the Canadian Ipsos Reid Express, a national omnibus poll of Canadian adults, about Canadians experiences with and motivations for using cheque cashing and payday loan services. The survey found that approximately 7% of survey respondents had used a cheque cashing or payday loan company. Cheque cashing was the most frequently used service at 57%, followed by payday loans at 25% and tax refund anticipation loans at 5%.

Certain respondents were more likely to have used these services, including men, those between the ages of 18 and 34, urban residents, residents of British Columbia, Alberta, Saskatchewan and Manitoba, those with household incomes less than $30,000 and those with some post-secondary education. Some of the reasons cited included that it was faster, it was more efficient and they needed the money more immediately, that the hours were more convenient, that they were open later than other financial institutions and that they had previous credit card problems, no credit card or no chequing account.

Although I personally never needed to use a payday loan, I can imagine how the service could be very helpful. There are so many scenarios that would require such instantaneous access to cash such as car repairs on a long distance trip, provision of a rental deposit to secure that just right apartment, a sudden illness or death of a family member that requires an unexpected trip to another province.

For those who are living through the challenge of a previous bankruptcy, life is a cash only society, with no access to credit cards to help bridge the wait between paydays. Clearly, payday loans are a required services for many Canadians, but they need to be regulated to ensure that consumers are protected.

The Canadian Payday Loan Association indicates that the payday loan industry first emerged in Canada in the mid-1990s. As of 2004 there were nearly 1,200 outlets, and as the parliamentary secretary advised, there are more than 1,300 right now. In my riding of Thunder Bay--Rainy River, I have recently witnessed the opening of nearly half a dozen payday loan businesses where just 10 years ago there were virtually none.

Why are amendments needed?

As stated earlier, section 347 makes it a criminal offence to charge more than 60% per annum. Section 347 was initially introduced to combat the practice of loan sharking and its links to organized crime. It was not intended to be a consumer protection tool for economic price regulations.

If the rate of interest on a payday loan transaction is calculated according to the definitions and methods specified in the Criminal Code, some payday loan companies appear to be charging in excess of 1,200% per annum. However, it is clear that interest rates on such short term loans should not be calculated the same as those on long term loans. It is also clear at the same time that there is increased demand for payday loan services.

The problem arises because of shared federal-provincial jurisdiction. Financial institutions are regulated either federally or provincially and territorially, depending upon which order of government incorporated them. The federal government has jurisdiction over interest rates, but the day to day regulation and licensing of payday lenders most likely falls under provincial jurisdiction as part of the provinces' power over property and civil rights.

Because of this confusion in jurisdiction, payday lenders have been left essentially unregulated. Provinces are unable to regulate the price of a loan, since any attempt to do so would conflict with section 347 and could therefore be challenged. However, section 347 has not been used in a criminal context to curtail the activities of payday lenders because the consent of a provincial attorney general is required to prosecute an offence.

Provincial governments are wary to prosecute a payday lender for fear that the lack of a payday loan company alternative would result in consumers using illegal alternatives such as loan sharks. The payday lending sector is one of the only segments of Canada's financial services sector that remains unregulated.

All other countries that have experienced rapid growth in the industry, including the United Kingdom, Australia and the United States, have rules in place to protect consumers. The United States, for example, has 22,000 retail store outlets. Forty states have put in place consumer protection rules. To date, no fewer than five provinces have openly called upon the federal government to change section 347 so that they can move ahead with provincial regulation of the industry.

If the payday loan industry is not regulated, its future may ultimately be determined by a number of class action lawsuits that are currently proceeding through Canadian courts. These lawsuits claim that consumers were charged fees in excess of the Criminal Code rate and seek to recover hundreds of millions of dollars worth of interest. Should these class action lawsuits succeed, they could potentially bankrupt the payday loan industry.

There have been significant federal-provincial-territorial consultations regarding regulation of the payday loan industry. Through this consultative process, they have all agreed that section 347 is an inappropriate control for payday loans and that it should be amended to enable provincial regulation of the industry.

In October 2005 the Liberal federal minister of justice acknowledged that section 347 does not make sense and should not apply to payday loan companies. The minister sought and obtained cabinet approval to amend section 347 accordingly.

I am very pleased to see that that Conservative government has chosen to follow through with the introduction of this legislation, which was developed through the hard work of the former Liberal ministers of justice and industry. The dropping of the writ and subsequent election are its own story.

What has been changed with Bill C-26?

The bill adds a definition of payday loan. This is an important addition because it provides a clear definition of a second kind of loan where previously there was no differentiation and all loans were treated equally.

Clause 2 introduces new subsection 347.1(2) which exempts a person who makes a payday loan from criminal prosecution, if the loan is for $1,500 or less and the term of the agreement--

[Rob Moore, Conservative, Fundy Royal, NB]

Mr. Speaker, section 347 of the Criminal Code, which prohibits interest of over 60%, was originally brought forward to address the type of loansharking the hon. member has referenced, the serious cases that we perhaps have seen in the movies. People do not imagine, in many cases, the thousands and, indeed, millions of transactions that take place in Canada with some of the payday lending institutions.

As I mentioned, the payday lending branch is a relatively new phenomenon in Canada. It has developed since those provisions in the Criminal Code were made to combat loansharking.

We feel that section 347, while appropriate to deal with loansharking, those type of serious underworld activities, as the member references, is not the best tool to regulate the payday lending industry as it has developed. We feel the group in the best position to regulate this industry is the provinces. We have talked a bit about Manitoba. I mentioned Nova Scotia. We talked about Quebec.

It could be that each province will take a somewhat different approach to regulate payday lending within its jurisdiction. We recognize the different approaches that provinces wish to take. By passing Bill C-26, at their request, we are enabling them to take that approach. It should be mentioned that if a province chooses not to move in this direction and regulate that area of law, then section 347 of the Criminal Code continues to apply to all transactions.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, coming from the province of Manitoba, we are anxiously awaiting Bill C-26 to pass. We see it as the enabling legislation so we can start to rein in this burgeoning industry, the payday lenders that are sprouting up like mushrooms in the inner city riding that I represent. They are an absolute scourge on the poor.

It is not any wonder that they are burgeoning and popping up in virtually every vacancy and every strip mall one can imagine. They are not just charging 60%, or 100%, or 1000% interest, some are charging 10,000% interest, according to independent studies done by the University of Winnipeg. Even the old leg-breaking loan sharks could not make money like that. There is no single thing one could do in the country to make 10,000% interest. I am told that selling cocaine does not get one 10,000% interest.

We are anxiously awaiting the implementation of the bill.

However, why were they not prosecuting these people all along? Why did successive governments ignore the fact that these guys were charging usurious rates, clearly against the Criminal Code of Canada and clearly undermining the financial stability of the inner city of Winnipeg and other cities. What possible reason could they have for not busting these guys? Why were these underworld figures, who run these payday lending outfits, not locked up before we had to even take this measure to provide a regulatory framework?

[Rob Moore, Conservative, Fundy Royal, NB]

Mr. Speaker, I listened with interest to the hon. member's question. My speech basically refutes everything the hon. member just said. I said very clearly that not all provinces would wish to or need to do this. For example, in Quebec lending at more than 35% is prohibited, so there is no need for an exemption in that province. In other cases the designation will be required.

As the hon. member correctly pointed out, this means that Quebec has essentially banned the practice of payday lending and payday lending institutions by implementing a 35% cap on the maximum amount of interest that can be meted out in a loan agreement. The other provinces are calling for us to pave the way by amending the Criminal Code, which prohibits an amount that would equal over 60% and makes it a criminal offence to charge interest at a rate over that amount. I mentioned that in my speech. The provinces do not feel comfortable bringing in their own legislative frameworks to accommodate their consumers until we at the federal level pull away from that area of jurisdiction.

Quite to the contrary, we are actually recognizing the competence and the jurisdiction of each province to put in place its own framework. Quebec has done so. Manitoba and Nova Scotia have also done so. The approach that Manitoba and Nova Scotia wish to take requires Bill C-26 to pass. This would allow provinces to legislate in this area to protect their own consumers.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, Bill C-26 is a blatant example of the Conservatives saying one thing, but doing something else. They claim to want to use a different approach with the provinces and to respect their jurisdictions, but in this case Quebec has had its own Consumer Protection Act for years, to deal with payday loans.

In fact, this industry barely exists in Quebec, because we have eliminated excessive rates. The annual interest rate must be indicated on loan contracts, and the courts have established that an annual interest rate above 35% is excessive. In other words, we already have the tools to legislate this area.

I realize that the other provinces want some legislation, but this is a matter of regulating commercial practices and comes under provincial jurisdiction.

Why did the federal government not simply say that, where relevant legislation exists, such legislation will apply?

The Consumer Protection Act has been in effect for over two decades and it is working very well in Quebec. In committee, we suggested that this be indicated in the legislation, but that proposal was rejected by the other three parties, which completely ignored the fact that Quebec's experience in this regard is conclusive.

Why does the federal government not accept that we simply indicate this in the act, instead of having the Prime Minister give his blessing and the governor in council decide whether or not the Quebec legislation is acceptable?

The government could simply have said that, if a province already has an act, that legislation will continue to apply, and where new legislation is passed, such legislation will have been determined by the provinces.

How do we explain this discrepancy between the Conservatives' rhetoric and the respect for provincial jurisdictions? In the case of payday loans, Quebec has long had in place a tool that is recognized as adequate and acceptable.

The Conservative government has decided to adopt the same attitude as its predecessor and as federal governments in general. This means that the federal government will impose the same measure across the country, without taking into consideration the initiatives implemented by various provinces.

Why does the Conservative government not show good faith for once and accept such an amendment, so that we have an act that will adequately serve Canada, while respecting the practice that has been in use for decades in Quebec?

[Rob Moore, Conservative, Fundy Royal, NB]

Mr. Speaker, that is a good question. Earlier in my speech I mentioned the total annual cost of borrowing, including all fees, some of which I named, and the interest that is charged. Worked out annually it could be over 100%, 200%, 300% or even 1000%. It is in fact the fees that are adding to the overall cost of borrowing, as well as the interest.

What is important to note is that Nova Scotia and Manitoba have taken up the call to protect their consumers in their respective provinces. They have put in place a framework that will put a maximum in place in regard to protection for consumers so that there can be a better understanding of the relationship that the consumer is entering into with a payday lending institution.

But in order for them to feel comfortable in enacting that legislation, in making that legislation the law, they first require the passage of this bill, Bill C-26, which would amend the Criminal Code and in fact would pave the way for the provinces to bring in their own frameworks, frameworks that are appropriate for each province.

[Rob Moore, Conservative, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

Mr. Speaker, today it is my pleasure to rise in support of Bill C-26, An Act to amend the Criminal Code (criminal interest rate). The bill has come to be described as the payday lending bill because the amendments that it proposes are targeted at the payday lending industry, an industry which has quickly established itself in Canada but which to date has operated in an essentially unregulated environment.

Bill C-26 proposes amendments to the Criminal Code which will assist in remedying this. The bill is about greater consumer protection for the estimated two million Canadians and their families who use the services of payday lenders on an annual basis. The bill reflects the government's continuing commitment and dedication to improving the lives of all Canadians.

I am proud to speak in strong support of Bill C-26 and I urge all hon. members to join with me to ensure its quick passage into law.

The payday lending industry is flourishing in Canada. The industry first originated in the United States before moving north to Canada in the mid-nineties. Since that time the industry has grown rapidly with an estimated 1,300 payday lending outlets operating across Canada. The industry's principal lobby group, the Canadian Payday Loan Association, notes that there are approximately two million payday loan transactions annually in Canada.

A report prepared by the Public Interest Advocacy Centre in 2002 estimated that between 1 million and 1.4 million Canadians used the service of payday lenders, so the numbers appear to be going up. We also know that nearly $2 billion is borrowed through payday loan centres on an annual basis. These numbers frankly are astounding. Yet, what is most surprising is that the rapid growth of this industry has occurred in the absence of any industry specific regulatory framework. The absence of this framework has left consumers vulnerable to questionable business practices.

Some might ask why would any person choose to use the services of a payday loan centre if doing so puts the individual at risk of some unscrupulous lenders. The reasons are many. Some consumers use the services of the industry because it is a relatively easy, fast and anonymous way to borrow money. Others have suggested that the reason is that payday lenders offer convenience, including the extended hours of operation and the prevalence of such centres in communities across Canada.

This, combined with the fact that many small towns and cities across Canada are losing their local banking branches, makes the payday loan store an attractive way to access one's money. However, it is those consumers who have come to rely upon payday loans in order to pay their bills, to have enough money to put food on the table, and get by from paycheque to paycheque, who are the most vulnerable to abuse.

It is precisely these facts which place already vulnerable consumers into an even more vulnerable position as they may be willing to accept the terms of a loan without question or out of sheer necessity. That is why it is imperative that we move quickly and ensure that Bill C-26 becomes law.

A payday loan has really become a catchy moniker for what is otherwise a short term loan, often for a small amount, secured against proof of one's income. Most often it is demonstrated through proof of employment and hence the term payday loan. This need not be the case however. Other examples include pension income.

A typical payday loan is usually in the range of $300 and lasts for about 10 days. To qualify, in addition to demonstrating an income source, the consumer must have a bank account and provide a post-dated cheque for the amount of money borrowed, plus the associated fees and interest owed on the loan. These fees can include application fees, brokerage fees, administration fees or processing fees and so on.

We all know that payday lending is a very expensive way to borrow money. In some cases estimates for the interest rates charged when calculated on an annual basis reach into the thousands and even tens of thousands of per cent. With rates like that it is no wonder that the profits for payday lending companies continue to go up and the industry continues to thrive.

For better or for worse the reality for the payday lending industry in Canada appears to be right, but the reality for some of its consumers is less so. When consumers have difficulty paying back the loan, lenders may let one short term loan rollover into the next and so on. Debt load goes up, and the already struggling consumers find themselves in a position where the debt load is spiralling out of control.

When they are unable to pay back their loan, there have been concerns expressed with respect to the debt collection practices employed by certain segments of the industry. Oftentimes the borrower may have been unaware of the many terms and conditions associated with the lending agreement, those aspects of the loan that one could expect to find buried among the fine print.

This is confirmed by the Public Interest Advocacy Centre in a report entitled “Fringe Lending and Alternative Banking: the Consumer Experience”, which notes that most consumers of alternative financial services such as payday lending are unaware of the cost of the services they use.

This government believes that consumers should be afforded effective consumer protection from this industry. That is why Bill C-26 is so important.

Many, including the provinces and territories as well as consumer advocacy groups, have said that section 347 of the Criminal Code remains a barrier to the effective regulation of the payday lending industry in Canada. The provinces and territories have said that they will not take steps to regulate the payday lending industry when section 347 makes such activity technically illegal.

Section 347 is the usury provision. It creates two specific offences: one, to enter into an agreement or arrangement to receive interest at an annual rate exceeding 60%; and two, to receive payment or partial payment of interest exceeding 60%.

While these provisions were enacted to combat the practice of loansharking, the reality is that they also apply to most lending arrangements in Canada, including payday lending. Bill C-26 therefore proposes to amend section 347 of the Criminal Code and thereby clear the way for the provinces and territories and provide the flexibility they need to regulate the payday lending industry.

The amendments proposed by Bill C-26 are not long and they are not complicated. Essentially they carve out a limited exemption from the applicability of section 347 for payday lenders in prescribed circumstances. By proceeding in this fashion and crafting a narrow exception rather than repealing section 347 in its entirety, Bill C-26 ensures that all Canadians will be afforded protection from the exploitative practices of loansharking while at the same time responding to the needs of the provinces and territories in relation to the payday lending industry.

The proposed exemption scheme would be established under a new section, proposed section 347.1. This new section prescribes the exact circumstances that would need to exist in order for a payday loan to be exempt from section 347.

First, Bill C-26 proposes to define a payday loan for the purposes of the exemption. This definition is important because it ensures that only a clearly defined class of lending arrangements will be eligible for being exempt. As such, “payday loan” is defined to mean as follows:

--an advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a line of credit or a credit card.

In my opinion this definition is appropriate. It appropriately captures the typical payday loan scenario that I described earlier and provides the precision necessary to specify which loans will be captured by the exemption and which ones, where the policy considerations are different, will not be eligible.

Bill C-26 proposes three requirements that must be present before a payday loan will be exempt from section 347. First is that the loan amount not exceed $1,500 and be for a term that is less than 62 days. As such, not all payday loans will be eligible for exemption, only those that fall within these further restrictions. These limits appropriately reflect the fact that payday loans are generally for a small sum over a short period of time.

Second, the payday lender must be licensed or otherwise authorized by the province in which it operates to enter into a payday lending arrangement. This is the crucial component of the amendments proposed by Bill C-26, because this requirement will ensure that for an exemption to apply there must first be laws in place to govern payday lending in the province in question. Ultimately, it will be up to the provinces and territories to decide whether and, in virtually all respects, the extent to which they will legislate.

The only requirement that Bill C-26 requires in relation to the provincial legislative framework for the exemption to apply is that there be a prescribed limit on the total cost of borrowing. This makes sense. This requirement will ensure consumers know exactly how much they are paying for accessing a payday loan.

Finally, Bill C-26 provides that if a province or territory wishes to regulate the payday lending industry in a manner which would exempt payday lenders from section 347 of the Criminal Code, then they will also be required to be designated by the federal government.

Not all provinces will wish to or need to do this. For example, in Quebec lending at more than 35% is prohibited, so there is no need for an exemption in that province. In other cases, the designation will be required.

Seeking this designation is very straightforward. For such a designation, a province would write to the federal Minister of Justice and indicate that it has legislative means in place that provide consumer protection measures for those who seek payday loans, including, as noted already, a limit on the total cost to consumers for payday borrowing.

Upon the province's indication that requirements for an exemption have been met, and upon the recommendation of the federal Minister of Industry, the Minister of Justice would then recommend to the governor in council that the exemption be made.

Importantly, this designation can be rescinded at any point at the federal level in those instances where the province no longer meets the requirements for the designation or where the rescission has been requested by the province. This is a pragmatic and sensible approach in a country as vast and diverse as ours. The decision on how to regulate the payday lending industry will be entirely up to the provinces.

Indeed, consumer protection measures fall within the constitutional competence of the provinces and territories. The provinces already have consumer protection legislation designed to address the specific concerns and realities of their jurisdictions and they are the best place to identify the components that are necessary to ensure effective consumer protection within their own jurisdiction.

The approach provided for in Bill C-26 complements this existing provincial legislative framework. I support this approach. It makes sense and will facilitate greater regulation of the payday lending industry across Canada.

Contrary to what some might say, Bill C-26 is neither encroaching upon provincial jurisdiction in relation to consumer protection measures nor necessitating that provincial governments seek a federal blessing or stamp of approval for its consumer protection measures.

In fact, Bill C-26 does quite the opposite. Bill C-26 would amend the Criminal Code to provide the provinces and territories with the flexibility they need, and indeed, the flexibility they have requested, to enact consumer protection measures within their jurisdiction to better regulate the payday lending industry.

As I mentioned, many jurisdictions have indicated that section 347 of the Criminal Code hampers their ability to enact consumer protection legislation within their own jurisdiction. By removing this barrier, Bill C-26 will facilitate greater regulation at the provincial level and meet the needs of consumers and the groups who have advocated on their behalf.

These proposed amendments are long overdue. As I noted earlier, the payday lending industry originated in the United States before spreading north into western Canada in the mid-1990s. In the United States, many state legislatures have taken the necessary steps to regulate this industry in order to protect their consumers from unscrupulous business practices.

To name only a few, California, Vermont, Michigan, Mississippi, New York and Virginia all have legislation in place to regulate the payday lending industry. While the exact content of the legislation varies from place to place, common features of payday lending legislation in the United States include limits on the amount of money that can be borrowed as well as the cost associated with the loan.

We see the same thing happening right here in Canada. Already, Manitoba and Nova Scotia have enacted legislation in their provinces to provide greater consumer protection for those who use the services of payday lenders. In Manitoba, for example, the Consumer Protection Amendment Act received royal assent on December 7 of last year. In Nova Scotia, the Consumer Protection Act was amended and received royal assent on November 23 of last year.

Both of these pieces of legislation are specifically designed to regulate the payday lending industry in those provinces. They include requirements for lenders and set out rights for the borrower, and both provide that a maximum will be set on the amount that can be charged for a payday loan. Both of these pieces of legislation are not yet in force and are in fact awaiting the passage of Bill C-26 before taking effect.

The governments of Manitoba and Nova Scotia are watching the progress of Bill C-26 because its passage will ultimately mean greater protection and greater regulation for the industry, which of course will be of benefit to consumers in those provinces. Other provinces have indicated they will follow suit.

With the passage of Bill C-26, the provinces and territories will have greater flexibility in addressing the payday lending industry within their own jurisdictions. The approach we are taking is the right one.

In closing, the protection of Canadian consumers is something on which we can all agree, and I believe that Bill C-26 will provide for this. I urge all hon. members to join me in supporting its quick passage into law.

[Rob Nicholson, Conservative, Minister of Justice and Attorney General of Canada]

moved that Bill C-26, An Act to amend the Criminal Code (criminal interest rate), be read the third time and passed.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I appreciate the fine words of welcome from the opposition House leader.

Today, of course, we will be continuing with the opposition motion. Tomorrow we will continue debate on the report stage amendments to Bill C-31, the election integrity act amendments with which we are all familiar.

For Monday and Tuesday, we are intending to call Bill C-26 on payday loans, which is at third reading, Bill C-32 on impaired driving, Bill C-11, the transport act, and Bill C-33, the technical income tax bill.

On Wednesday we hope to begin debate on the third reading stage of Bill C-31, followed by Bill C-44 relating to human rights.

Thursday, February 8 shall be an allotted day. Next Friday we would like to begin debate on the anti-terrorism motion that would extend the application of certain sections of the Anti-Terrorism Act that are due to expire.

Finally, as members know, democratic reform is a priority for Canada's new government, and given that the Liberal leader has publicly expressed his support for term limits for senators, could the official opposition inform the House as to when it can expect the unelected, unaccountable Liberal senators who are delaying and obstructing that bill to give us a chance to consider it here in the House of Commons?

The House proceeded to the consideration of Bill C-26, An Act to amend the Criminal Code (criminal interest rate), as reported (without amendment) from the committee.

Industry, Science and Technology

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the fourth report of the Standing Committee on Industry, Science and Technology regarding its order of reference of Monday, November 6, 2006, Bill C-26, An Act to amend the Criminal Code (criminal interest rate).

The committee has considered Bill C-26 and reports the bill without amendment.

Merry Christmas, Mr. Speaker.

[The Chair, Conservative, James Rajotte]

Okay. We're finished with Bill C-26.

Do you have a point of order, Monsieur Crête?

[The Chair, Conservative, James Rajotte]

We will move immediately to clause-by-clause of Bill C-26. We will just wait for a legislative clerk to come forward.

(On clause 1)

We will start debate on clause 1 of the bill. No debate?

[Robert Vincent, Bloc, Shefford, QC]

I will take a few moments to make a 60-second digression.

I simply want to point out that the party I represent, the Bloc Québécois, is here to uphold democracy. Today, democracy was dealt a blow because on a committee each member has the right to receive the witnesses he or she wants to hear from.

As well, how is it possible to adopt a bill after such a quick study, without calling any witnesses to explain their point of view?

In any case, it was already clear from the start that Quebec does not agree with the process outlined in Bill C-26. However, you want engage us in this debate only to tell us that, although we have been democratically elected, democracy ends when the chair says so. I don't agree with that.

That's all I wanted to say.

[The Chair, Conservative, James Rajotte]

No. It's my understanding, and perhaps the clerk can clarify the rule, that the committee is not actually adjourned until there is a motion to adjourn, because we're on the subject of Bill C-26.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In my opinion, if my subamendment were adopted, we could then receive all the relevant witnesses. Afterward, we could proceed with the question. Let me read out for you the letter from the Consumers Council of Canada. Please excuse my English.

It is dated Monday, December 11, 2006, regarding BillC-26, An Act to amend the Criminal Code (criminal interest rate)., and is addressed to the chair and members of the Standing Committee on Industry, Science and Technology. It says:

The Consumers Council of Canada wishes to make known to the Committee that it has serious concerns with the proposed amendment to the Criminal Code. The Consumers Council of Canada believes that it is in the best interests of Canadian consumers to have the federal government establish the rates of interest charged on convenience loans, commonly referred to as payday loans. Should the proposed amendment be passed, provinces will establish different levels of charges permitted for such convenience loans. Indeed, some provinces will not seek federal permission to establish rates and therefore continue the practice of permitting criminal rates of interest being charged. This would not be in the best interests of consumers and is contrary to all the harmonization reports currently underway. The Consumers Council of Canada also believes that it would be in the best interest of consumers to have banks and credit unions develop convenience loan products. We urge you to consider the best interests of consumers in amending the Criminal Code.

I wanted to state that the Consumers Council of Canada could be invited as a witness. We could also invite banks, credit unions, and savings and credit cooperatives. After all, they are relevant stakeholders in the banking business. As regards the letter from the Quebec government, it is not an official opinion and I cannot share it with you word for word. However, I am convinced that the Quebec government minister will be in touch with the Minister of Industry Canada or the Minister of Justice, to make his opinion heard.

I will not read the entire opinion, but I can assure you that it exists. You will have to trust me on this point. Broadly speaking, they say that they have no reservations about the substance of this issue, but they do want to ensure that Quebec's prerogatives and legislation are respected. I think that the administrative designation procedure should be withdrawn, which would ensure that Quebec's jurisdiction over consumer protection is respected. To me, this letter confirms how important it would be to invite these people as witnesses.

This is why my subamendment mentions the possibility of inviting all relevant witnesses. There are others. I mentioned the Consumers Council of Canada, but we could also have the Union des consommateurs. It could be useful to hear the opinions of those who proposed this system, those who met us and who insisted that legislation be adopted regarding these things. Perhaps we could also invite citizens who are grappling with this situation and see whether some of them want to tell us how they are coping with it and how they feel about the possibility that the maximum rate could be 35% in Quebec and some other rate somewhere else.

To me, the essential part is that we have before us a bill that deserves to be passed. I hope it will be passed as soon as possible, if it respects Quebec jurisdiction. Up to now, from what I have heard, that does not seem to be the case. This is why I would like to invite witnesses. We could also invite neutral experts on the Constitution and a legal expert to find out whether the proposed amendments deserve consideration.

I think that we have what we need to perform a good study of the entire bill. My subamendment seeks to enhance the motion. It says that we should vote as soon as possible once we have all the needed information. Well, as far as I am concerned, we do not have the required information at this time. This is why I hope to propose this subamendment. I do not know whether Mr. McTeague will contest the validity of his own motion. He might well decide that it goes against the Standing Orders and want to put a different one forward.

Besides all the parliamentary procedure issues, it would be important for the members of this committee to understand that the Quebec government has a responsibility with regard to this issue that it has jurisdiction over this issue and that the Quebec government is not satisfied with the way the bill is drafted.

I am not dissatisfied with this just because I am a separatist; not only are Quebec federalists dissatisfied as well, but so is the Quebec government, the government that the people of Quebec elected. Now the Quebec government is saying, through its Department of Justice, that it is opposed to adopting this bill as it is currently drafted.

[The Chair, Conservative, James Rajotte]

The motion is that we move to clause-by-clause consideration of Bill C-26, and the amendment by Mr. Carrie is that we move immediately.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I therefore move that this committee move to clause-by-clause consideration of Bill C-26 as amended.

[William Bartlett, Senior Counsel, Criminal Law Policy Section, Department of Justice]

Thank you, Mr. Chairman and members of the committee, for the opportunity to appear before you to speak on C-26, An Act to amend the Criminal Code (criminal interest rate). We refer to it as the payday lending bill. That's what it deals with.

My apologies to the committee; I will be making my remarks in English.

As my colleague from Department of Industry has provided an overview of the payday lending industry and the policy discussions that inform the development of the bill, I will simply make some remarks about the structure of the bill itself and some of the legal framework into which it fits.

The amendments in the bill are really quite straightforward. They simply create an exemption scheme from the applicability of section 347 of the Criminal Code, which otherwise imposes a maximum interest rate on any kind of loan arrangement anywhere in Canada. It's called the criminal interest rate provision. It will allow this exemption to apply in those provinces and territories that choose to regulate the payday lending industry and seek a designation from the federal government in order to do so.

The bill amends the Criminal Code by defining payday loans for the purposes of the exemption schemes. I'll read the definition. It's not a simple definition, because it's not that simple and straightforward to simply say what a payday loan is, although generally we know it when we see it. It reads as follows:

“payday loan” means an advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a line of credit or a credit card.

We define it primarily by a couple of simple indicia--a post-dated cheque or a similar payment--and then by what it's not. The rest of the definition is contained in another section in which we prescribe the limits on the kinds of loans that can be subject to the exemption.

The definition ensures that only this very narrowly defined class of lending arrangements known as payday lending will qualify and therefore be eligible. For example, lending arrangements by way of credit cards or lines of credit would not be included in the definition of payday loans.

The heart of the proposed amendments is in subsections 347.1(2) to 347.1(4), which set out the exemption scheme. These provisions specify which payday loan agreements are eligible to be exempt from the application of section 347.

Subsection 347.1(2) specifies the conditions that must be in place for such an exemption to apply. First we defined the payday loan, and this is really the rest of the definition of a payday loan for the purposes of this exemption provision: “the amount of money advanced under the agreement is $1,500 or less and the term of the agreement is 62 days or less”.

This, of course, is the typical payday loan scenario described by my colleague from the Department of Industry--that is, a short-term loan for a small amount. Indeed, these are really the top-end figures, if you will, and the average amount, as I understand it, is closer to, say, $300 for 10 days. They are quite small amounts for relatively short periods of time, so $1,500 for 62 days would really specify top-end limits to a payday loan that could be subject to an exemption.

Second, the payday lender “is licensed or otherwise specifically authorized under the laws of a province to enter into the agreement”. It's the province that will do the regulating from top to bottom of the payday lenders who will be subject to the exemption. This necessarily implies that the province has in place consumer protection measures that govern payday loans. The nature of such measures, however, is generally left to the province to determine. There are only a very few requirements for there to be legislation in place, and a requirement for a specification of an upper limit for the cost of borrowing, which can actually be charged.

The third requirement for the exemption to apply is that the province must be designated by the Governor in Council. This is simply a process to ensure that the province that has enacted the legislation, or already had legislation in place, if that is the case, has advised the Governor in Council that the legislation is there and that they wish to have their province be availed of that exemption. Then the exemption is put in place.

The obtaining of the designation is fairly straightforward. It is set out in subsection 347.1(3). A designation will be provided once a provincial Lieutenant Governor in Council--the provincial cabinet--requests it and in so doing indicates that the province has consumer protection measures in place to protect recipients of payday loans.

That is simply a general description of the fact that in the province there must be consumer protection measures in place that apply to these payday loans.

The only particular requirement is that the measures must include a limit on the total cost of borrowing for a payday loan. This will then replace the 60% limit that's otherwise specified under section 347. This guarantees a cap on the total cost of borrowing and provides the provinces and territories some flexibility to assess what the cap should be.

The designation process would amount to the province writing to the federal Minister of Justice to indicate that it has the legislation measures and is seeking the designation. If, on the recommendation of the federal Minister of Industry, the Minister of Justice is satisfied the province meets the requirements, the recommendation would be made to the Governor in Council. It should be a fairly simple process.

In addition, in subsection 347.1(4) there is a process for revoking it. I don't really anticipate that this is going to be necessary for provinces once they decide they're going to be in the business of regulating payday loans and probably aren't going to get out, but in case they did, it could be in two instances: either the province simply requests it, or the consumer protection measure is no longer in place--the legislation has been repealed.

As you are aware, the Constitution of Canada provides the provinces and territories with competence over consumer protection through their authority over property and civil rights. They are the level of government with the appropriate mechanisms in place to provide consumer protection of this kind; in fact, consumer protection measures do already exist across the country, and in some cases there are some measures that do apply to some of the elements of payday lending--although not in the comprehensive way that my colleague has spoken of--that have now been enacted in at least two provinces.

Bill C-26 won't either dictate to or fetter the province's ability to enact appropriate consumer protection measures. It deals simply with the applicability of section 347 to these specified payday loan agreements and provides an exemption that otherwise is prohibited by section 347. This is pursuant to the federal government's constitutional competence over criminal law.

That's the basis upon which section 347 was enacted. Should a province or territory wish to exempt their loans, they need only have the legislation in place and seek an exemption in order to do so.

Mr. Chairman, the bill is necessary to provide the flexibility to the provinces to regulate payday loans. Otherwise, section 347 puts in place a prohibition against their operating at anything over 60%, as my colleague has described. It's in the nature of these short-term, small-amount loans. The definition of interest under section 347 is very broad and covers all of the interest and associated charges involved--not just the interest, but all of the associated charges--and specifies it on an effective annual rate of interest, which is a compound rate of interest. None of the payday lending operations can operate or do operate within that 60% limit.

This is simply opening the door to the provinces to be able to regulate them, allow them to exist, and provide appropriate limits on the cost of borrowing, and also to put in place other regulatory rules to ensure that the consumers of these loans are adequately protected.

Thank you, Mr. Chairman.

[Michael Jenkin, Director General, Office of Consumer Affairs and Co-chair, Federal, Provincial and Territorial Consumer Measures Committee, Department of Industry]

Thank you, Mr. Chair.

I want to thank the committee for allowing me to speak today on this very important consumer issue of payday lending. I'd like to introduce my colleague David Clarke, who has been the senior policy officer on this issue for the past number of years. He is an active member of the federal, provincial, and territorial working group of committees that continues to study the payday lending issue.

I'll be pleased to answer questions you may have today concerning the background to this file, particularly on any federal, provincial, or territorial dimensions or consumer protection issues.

I have a few words, just for a moment, on payday lending. It's a form of short-term lending through which the consumer typically borrows several hundred dollars for 10 days to two weeks. The borrowing costs are very high, as you probably know. They are usually in the range of, for example, $40 to $75 for a $300 loan for two weeks or less.

The concerns expressed about this type of borrowing in the general community have included its very high costs, obviously; the lending practices associated with it, such as inadequate disclosure of costs and terms; and rolling over of loans--that is, the sequential structuring of loans one after the other, and the accumulation of interest and principal costs therein. You very quickly spiral your costs.

The industry, which originated in the United States some time ago, is a relatively recent phenomenon in Canada. It emerged in western Canada in the mid-1990s and rapidly spread eastward over a very few years. It is now a major presence in many urban areas in the country. There are approximately 1,300 retail outlets, and the number is growing. Estimates place annual lending at $1.3 billion or more per year.

Payday lending and other fringe financial services are known collectively as the alternative consumer credit market by the consumer measures committee. They were first identified as a federal-provincial-territorial issue by British Columbia in the late 1990s. In 1998, at the request of some western provinces, the federal-provincial-territorial committee of justice ministers considered the alternative consumer credit market, which by the way includes cheque cashing, chattel mortgages, and pawnbroking. The justice ministers referred the issue to federal, provincial, and territorial consumer ministers, who in turn asked the consumer measures committee of officials to look into the matter on their behalf.

Since the year 2000, CMC officials have been pursuing a detailed program of work, most of which can be found on the CMC website: www.cmcweb.ca. The work has included research by officials and others, for instance Professor Iain Ramsay of Osgoode Hall Law School; a survey of practices employed within the industry; and a roundtable meeting early on in Victoria, with governments, industry, consumer and academic representatives.

In 2001, federal and provincial consumer ministers used that work as the basis for their decision to direct officials to develop options for future action in such areas as best practice guidelines for the industry, consumer education and awareness, and regulatory mechanisms.

In 2003, a national public consultation was held on the legal framework and consumer protection issues for the alternative consumer credit market.

In 2004, FPT Consumer Ministers expressed their concern about the abusive practices and excessive costs encountered by consumers in the alternative market, for example payday loans, cheque cashing, rent-to-own. With an emphasis on payday loans, they asked officials to undertake work related to a consumer protection framework, including measures to address the issue of rollovers of loans, concurrent loans from multiple lenders and the habitual use of payday loans, industry best practices, and consumer education on the true cost of these loans.

In 2004 and 2005, a second national public consultation was held specifically on regulating payday lenders. Subsequently, provincial and territorial senior officials and several ministers formally sought federal legislative action to facilitate regulation of this sector. As you know, in the fall of this year Bill C-26 was introduced in Parliament.

To date, Mr. Chairman, two provinces, Manitoba and Nova Scotia, have passed legislation in anticipation of the possible passage of Bill C-26. There are numerous indications in the media that several other jurisdictions intend to proceed with some form of regulation as well.

A considerable amount of work over a long period of time has brought the federal-provincial discussions on payday lending to this point. I would be pleased to answer any questions you may have in that regard.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

I know some members are still making their way from the House, as we did have two votes right after question period, but we should get started. We have only two hours today. We have until 5:30.

This is the 38th meeting of the Standing Committee on Industry, Science and Technology. We are being televised today. It is pursuant to the order of reference of Monday, November 6, 2006. We are studying Bill C-26, An Act to amend the Criminal Code (criminal interest rate).

We have with us today witnesses from the Department of Industry and the Department of Justice. The entire committee would like to welcome, first of all, from the Department of Industry, Mr. Michael Jenkin. Mr. Jenkin is director general of the office of consumer affairs and co-chair of the federal, provincial, and territorial consumer measures committee. Welcome, Mr. Jenkin.

We also welcome Mr. David Clarke, senior analyst in consumer policy in the office of consumer affairs.

From the Department of Justice we have with us Mr. Matthew Taylor, counsel, criminal law policy section. Welcome. We also have Mr. William C. Bartlett, senior counsel, criminal law policy section. Welcome, gentlemen, to the committee.

The committee allows for 10-minute opening statements. Mr. Jenkin, we'll let you start off any time.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair. I know we don't have a lot of time here. I do have one quick question, and then I thought I'd share the rest of my time with Mr. Arthur, if he would like that.

My question is about the payday loan legislation, Bill C-26. There seems to be some confusion out there, so I was wondering if you could explain why provinces and territories are best suited to regulate the payday loans. Also, what happens if provinces choose not to regulate the payday loans in their jurisdictions?

Criminal Code

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I am pleased to speak to Bill C-26 before the House today and to give the unequivocal support of the New Democratic Party for passage of this legislative proposal. In fact, it would be our wish, given the succinct nature of this legislation, to have it approved on short notice at all stages, dealt with on an expedited basis, and prompt action taken in an area that is long overdue.

I want to begin by thanking the Conservative Minister of Justice for actually listening to the concerns of people all across Canada and especially provinces which were ready to act. In particular, I want to highlight the work of the Manitoba NDP government which has long been a champion of action in this area of unregulated payday lending and has led the country with a progressive legislative approach. That legislative approach, however, requires the federal government initiative to set aside the Criminal Code.

As members will now know, the Criminal Code sets an interest rate of 60% as the limit of interest that can be charged on a payday loan. We know from the past decade, that has seen an exponential rise in payday lending all over this country, that this approach does not work. In fact, I would like members to think hard and tell me if they know of any cases where this 60% criminal rate of interest was used in terms of actually charging a payday lender who has taken advantage of an individual in this country.

I can think of one. There was a recent case in Manitoba where charges were laid and a trial is ongoing. There has been one charge, one action after a decade of payday lenders and other fringe financial services flooding our marketplace. That is not a record of which to be proud. It speaks very much to a problem in our whole legislative system. It speaks to an issue that has not been dealt with and it needs a new approach.

The desired approach would be to have a national solution. I would much prefer to have one set of standards for this whole country, so that there is a rule that all payday lenders must abide by wherever they live, whatever province they reside in, and that we avoid any possibility of these outfits closing down a shop in one province and moving to another to take advantage of more lax rules or a more lucrative environment.

I would prefer to have seen the provinces and the federal government get together and come up with one plan, but they tried for years and they could not do it. Numerous discussions were held at the federal-provincial level among consumer affairs ministers and officials. Numerous forums were held, dialogues and discussions took place, but there was no solution and no one united position that came out of that prolonged set of discussions. All the while payday lenders and other fringe financial institutions have been popping up everywhere in this country. In the last decade, we have gone from zero to 1,350 such outfits in our society today.

I speak from direct political experience coming from a constituency like Winnipeg North which has, in the space of 10 years, lost all of its banks. The north end of Winnipeg, which covers a significant area from the tracks in the south end to Inkster Boulevard in the north end, from Red River in the east to McPhillips Street on the west, has a huge area of residential neighbourhoods with small, large and medium size businesses. However, there are no bank branches left in that entire area. They have been dropping one by one over the last decade.

What has happened in the interim? What has happened as a result of that kind of negligence on the part of the banks, their decision to abandon an older community like Winnipeg North? I am sure it is not unlike many other communities in this country: inner city, north end, and older neighbourhoods that are not quite as lucrative for banks as suburban outlying areas. They pick up and leave without accountability and consequences, leaving people abandoned, high and dry, and without access to banking services.

In the case of Winnipeg North, we are talking about a community that has a very high proportion of senior citizens, numerous high-rises and senior citizens apartments and, as well, on average, an income distribution that is at the low end. We are talking about people more likely living in poverty or eking out an existence on a day-to-day basis more so than in other parts of the country. It is an area that has a significant number of people with disabilities, a high number of people who made the transition from living on reserve to an urban environment. And there are no banks. There is nowhere for people to do banking; nowhere to cash a cheque without being ripped off; nowhere to set up a banking account, a savings account; and nowhere to learn how to budget and how to plan for their families. All the banks have left.

At this point, if it is all right with you, Mr. Speaker, I would like to split my time with the member for Surrey North.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I do not think the hon. member actually understands what the bill is proposing. He has gone on at length talking about how the government of Quebec has already put regulations in place and how this would be seen as a duplicate.

In actual fact, the Criminal Code of Canada applies to all of Canada. Bill C-26 seeks to amend the Criminal Code of Canada and not interfere in any way, shape or form with provincial jurisdiction.

As a matter of fact, the bill is actually meant to exclude certain aspects pertaining to Canadian payday loans from provincial jurisdiction. In that way, provinces such as Quebec and the western provinces, including Alberta, which is the province I am from, have the ability to protect their consumers in a way that they see fit.

I actually do not understand the nature of the question. It seems a little bit hypocritical, when the member from the Bloc Québécois, who obviously wants this consumer protection and the individual ability of Quebec to regulate this particular industry. He is opposing this bill. He is essentially saying, and is pitting Quebec against the rest of Canada, that if it is good for Quebec then Quebec can have the regulations. If he is opposing it, he is basically denying the ability of these regulations for the other provinces, such as Manitoba, which is already able and willing to proceed.

I reject the premise of his question. This is not a duplication at all. The Criminal Code is being amended here and it applies across Canada. It will actually create an exemption which will allow provincial jurisdictions, such as the provinces of Quebec and Alberta and any of the other provinces or territories in the country, to proceed in a way that they see fit to protect their consumers where the payday loan associations and payday loan institutions are concerned.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I am pleased to have this opportunity today to speak in favour of Bill C-26, An Act to amend the Criminal Code regarding criminal interest rates.

What is a payday loan, one might ask. The Library of Parliament explains it this way.

A payday loan is a short-term loan for a relatively small sum of money, provided by a non-traditional lender. Statistics from the Canadian payday loan industry suggest that the average payday loan is valued at $280 and is extended for a period of 10 days.

In order to qualify for a payday loan, the borrower generally must have identification, a personal chequing account, and a pay stub or alternative proof of a regular income. Payday lenders typically extend credit based on a percentage of the borrower’s net pay until his/her next payday (generally within two weeks or less). The borrower provides the payday lender with a post-dated cheque, or authorizes a direct withdrawal, for the value of the loan plus any interest or fees charged.

Some payday lenders will cash the borrower’s post-dated cheque or process the direct withdrawal on the due date of the loan. Others will require that the borrower repay the loan in cash on or before the due date, and may charge an additional fee if the loan is not repaid and they must cash the cheque or process the direct withdrawal subsequent to the loan due date. If there are insufficient funds in the borrower’s account, the borrower may also be required to pay a return fee to the payday lender and/or a non-sufficient funds...fee to his/her bank or credit union. In this instance, the borrower may have the option of “rolling over” the loan — that is, taking out another payday loan to pay off the original loan — for an additional fee.

Mr. Speaker, I invite you to read the library's excellent paper on payday loans from which I have just quoted.

With an estimated 1,350 storefront locations and representing annual revenues of approximately $1.7 billion, payday lending is one of the fastest growing industries in Canada. This industry appears to be filling a gap that exists in the availability of credit from the chartered banks and other traditional lending institutions.

There may be different reasons for this gap. Perhaps it is because such institutions are not willing to offer the type of short term unsecured credit that payday lenders do, or simply because local bank branches have been closed in many population centres, thereby making access to credit for many customers very difficult.

The payday lending industry may also be succeeding because of the relative convenience of their operations and the relatively anonymous nature of the commercial transaction.

The payday lending industry has been operating for just over 10 years now without any effective regulation, resulting in some payday lending companies charging outrageous and often crippling fees that trap many an unwary customer. In light of these questionable business practices, which may also include ineffective disclosure of contractual terms and aggressive debt collection practices, many have been right to criticize the current situation, including provincial and territorial governments, consumer groups and the payday lending industry itself.

For example, consumer groups have argued that consumers who would not otherwise have access to this type of short term credit, sometimes feel they have no alternative but to accept the terms and conditions of the payday lender. This can lead to their becoming vulnerable to unfair practices. Consumer groups want to see this issue brought under control.

On the other hand, lenders who have offered loans on reasonable terms and follow a voluntary code of conduct fear that their conduct is being questioned and thus seek regulations in order to give their industry both legitimacy and long term viability in Canada.

The provinces and territories have expressed concern as well. They, too, wish to ensure that Canadians who live in their communities are protected from unscrupulous practices and have noted that section 347 of the Criminal Code, the criminal interest rate provision, stands in the way of them effectively regulating this industry.

The government has heard the criticism and the concerns that have fueled the calls for legislative reform and Bill C-26 is a reflection of our resolve to address them. Our government has been working closely with our provincial and territorial colleagues to examine options for the most effective response to this pressing issue. Indeed, the situation has been the subject of discussion and examination by federal, provincial and territorial ministers responsible for justice and consumer affairs.

Bill C-26 is the result of that collaboration. I believe it would mean enhanced protection for those Canadians who have come to use the services of the payday lending industry.

Who uses payday loans and why? Again I want to go back to the excellent Library of Parliament paper that I quoted from earlier. The library researchers found:

In early 2005, the Financial Consumer Agency of Canada placed questions on the Canadian Ipsos-Reid Express...— a national omnibus poll of Canadian adults—about Canadians’ experiences with, and motivations for, using cheque-cashing and payday loan services. The survey found that approximately 7% of survey respondents had used a cheque-cashing or payday loan company. Cheque cashing was the most frequently used service (57%), followed by payday loans (25%) and tax refund anticipation loans (5%). Certain respondents were more likely to have used these services, including: men; those between the ages of 18 and 34 years; urban residents; residents of British Columbia, Alberta, Saskatchewan and Manitoba; those with household incomes less than $30,000 per year; and those with some post-secondary education

Those are causes for concern. The ongoing and expanding presence of payday loan companies suggest that some Canadians are willing to pay usurious rates of interest in excess of that permitted under the Criminal Code for their payday loans. This situation raises important questions about whether and how issues in the payday loan industry should be addressed, by whom and with what consequences for the industry and its customers.

The drafters of Bill C-26 must have also read the library paper because they found that section 347 of the Criminal Code, often seen as a de facto regulatory provision to limit the maximum lending rates for commercial and consumer loans, had to be considered in any discussion of payday lending. Indeed, section 347 is at the heart of the amendments proposed in Bill C-26.

I will come back to the substance of the proposed amendments a bit later but first I will explain the origins of the section and why, in my opinion, it is not an appropriate tool to use in regulating consumer lending.

Section 347 was not enacted to regulate commercial or consumer lending per se. The policy goal of the section was instead to enhance the ability of our police forces to target the harmful activities of organized crime syndicates. More specifically, the goal was to address the loansharking activities of these syndicates and the related practices of threats and violence that are often used when collecting payments. The adoption of a specific interest rate limit in the Criminal Code immediately next to the provision for extortion was to facilitate proof of extorted loans. This was clearly not about regulating legitimate lending activities.

Section 347 provides serious criminal penalties for entering into an agreement or receiving payments where the interest charged exceeds the defined criminal rate of 60%. When charges proceed under indictment, the offender is liable for a term of imprisonment of up to five years and, when they proceed summarily, for a fine of up to $25,000 and a term of imprisonment of up to six months.

This government does not believe that section 347 is the most appropriate way to regulate the payday lending industry and provide consumer protection. Bill C-26 would address the concerns noted by the provinces and territories by creating a narrowly defined exemption from section 347 of the Criminal Code to facilitate provincial and territorial regulation of payday loan agreements. In instances where a jurisdiction has chosen not to enact consumer protection legislation directed at payday lending, section 347 would continue to apply.

The exception created by Bill C-26 removes the application of section 347 of the Criminal Code, as well as section 2 of the Interest Act where a payday loan agreement is for an amount that does not exceed $1,500 and runs for a maximum term of 62 days and where the province in which the lender operates has been designated as having in place an appropriate regulatory scheme which must include limits on the total cost of borrowing.

It is clear that the exception only applies where the province in which the lender operates has made the appropriate amendments to its legislative scheme that governs consumer protection matters. The province would also have to request the federal cabinet for the necessary designation which allows for the exemption in respect of section 347. The criminal interest rate from section 347 would continue to apply in any province or territory which chooses not to implement qualifying regulations for payday lending agreements.

In Manitoba, bill 25, the consumer protection amendment act regarding payday loans, is now ready for a third reading and provides a good example of the type of complementary consumer protection legislation at the provincial level that would properly leverage the exception.

Manitoba's bill 25 establishes a licensing and inspection scheme for payday lenders, defines limits on certain loan agreement terms and parameters, sets out a lender's information disclosure obligations and defines a borrower's right in terms of cancellation and redress. This cooperative framework of a narrow Criminal Code exception, coupled with suitable provincial regulations specifically addressing the payday lending industry, should meet the goals and objectives of consumers and their advocacy groups, as well as those of legitimate payday lending companies and their industry associations.

In closing, this government believes strongly in protecting consumers from the unscrupulous practices of unregulated payday lenders. Bill C-26 is an important and necessary first step in establishing a fair and equitable regime under which to regulate the activities of payday lending institutions, giving consumers the best possible protection in accessing this type of credit.

I urge all hon. members to join me in support of Bill C-26 and ensuring its speedy passage.

[Deepak Obhrai, Conservative, Parliamentary Secretary to the Minister of Foreign Affairs]

Mr. Speaker, it is my pleasure to rise today to speak in support of an important bill, Bill C-26, An Act to amend the Criminal Code , which was tabled on October 26 by my colleague the hon. Minister of Justice .

The bill would make changes to the Criminal Code to enable the regulation of the payday lending industry by provinces and territories. This is an important and welcome change.

For years, the payday lending industry has operated in Canada under the radar. The bill would bring this burgeoning industry within the scope of regulations, and in so doing, provide greater protection to millions of Canadians and their families who have come to rely upon the services of the industry.

Indeed, according to the industry's principal lobbying and advocacy organization, the Canadian Payday Loan Association, the industry provides services to nearly two million Canadians each year. This is a substantial figure and demonstrates the importance of ensuring that Canadians are protected against harmful practices in the industry.

Bill C-26 would accomplish the following. It would amend the Criminal Code by adding a new provision, section 347.1, which would provide an exemption scheme for payday lenders from the criminal interest rate where a provincial, territorial consumer protection scheme is in place. It would define payday loans as part of the provincial legislative schemes that are established. It would require the provinces to set a cap on the total cost of borrowing for a payday loan.

Before moving to the discussion of the substance in these amendments, it is important to appreciate two things, first, the history of the payday lending industry in Canada, including the impact it is having on communities across our country; and second, an overview of the questionable practices which have served as a clarion call to action and which forms a basis as to why these specific amendments are proposed.

After learning more about this industry, I believe that all hon. members will agree that the amendments proposed by Bill C-26 are pragmatic, measured and necessary.

The payday lending industry in Canada is relatively new. Storefront operations with catchy names and flashy advertising began popping up in communities throughout Canada around 1994. The payday lending industry began its operations in western Canada. Today, however, the industry is truly national without outlets stretching from coast to coast. In fact, there are an estimated 1,350 payday lending outfits currently operating in every province and city in Canada, except Quebec, and the number continues to rise.

The two million Canadians who use the services of a payday loan company are borrowing nearly $1.7 billion each year. This is simply a staggering amount when one considers that all of this has occurred in an essentially unregulated market. These numbers illustrate that the payday lending companies are clearly responding to a demand from Canadians for their services.

It is true that there are some who would argue that the payday lending industry should not exist at all in Canada. On the other hand, it is clear that the industry is playing an important role for many Canadians on a daily basis.

There are many reasons why Canadians may come to use the service of their neighbourhood payday lending outlet. It may be for convenience, as many of the stores keep late hours and are open on the weekends. Others have suggested that the reason is due to the fact that many of the major financial institutions in Canada have closed the smaller branches, thereby leaving a void in many communities for fast, convenient locations to access cash. It may be due to the relatively anonymous nature of the service or unforeseen emergencies which come with immediate financial consequences. Regardless of the reason, the industry appears to be filling a niche in Canadian communities.

Given this fact, it is important to ensure that those Canadians who do use the service of a payday lender are provided with necessary protection from exploitive business practices, particularly so among the most vulnerable members of our community.

The government takes its responsibilities to improve the lives of Canadians and their families very seriously, and we are taking many important steps in this regard.

Whether it is through strengthening the Criminal Code to ensure that our streets and communities are safer or lowering taxes to help everyday Canadians, we have committed to make a difference. We will continue to take measures such as those proposed in Bill C-26 to ensure that Canadians can have the very best quality of life.

The proposed amendments contained in Bill C-26 are a thoughtful and effective way to provide for enhanced consumer protection. They respond to the needs expressed by many including the provinces and territories for effective regulation.

There are good reasons to ensure that this industry is regulated. Payday lending is a very expensive way to borrow. In some cases, the costs of borrowing money from a payday lender can range in the 1,000% when annualized. Concerns have been expressed in relation to insufficient disclosure on contractual terms by the lender. In addition, there is a concern with the aggressive debt collection practices and the relatively quick way in which these debts can spiral out of control,as a result of rolling over loans. In some cases payday lenders will even charge an early repayment fee to those who would choose to repay their loan ahead of time.

For all of these reasons it would be abundantly clear to all hon. members that there is a significant need for action in this area. The changes proposed in Bill C-26 will help ensure that action will indeed be taken to provide for the regulation of this industry.

In exploring the most appropriate response to this pressing public policy issue, we worked closely with our provincial and territorial colleagues. Through this work, it became increasingly clear that section 347 of the Criminal Code was a key factor in establishing a new regulatory regime.

Section 347 of the Criminal Code provides for an offence for entering into an agreement or arrangement to receive interest at an annual rate of more than 60%. Effectively, this creates the offence of charging interest at a criminal rate. Those who are convicted of this offence can face sentences of up to five years imprisonment.

When section 347 of the Criminal Code was first introduced, it was not intended to serve as a consumer protection measure. Instead, it was meant to provide law enforcement with an additional tool in the fight against organized crime and specifically the practice of loan sharking. Regardless of its original intent, it is applicable to lending arrangements in Canada including payday lending.

Let me be clear though, section 347 of the Criminal Code is not in this government's view the most appropriate or effective way to protect consumers from the unethical and unscrupulous practices which have been connected with segments of the payday lending industry. We are not alone in this assessment. We have heard from many jurisdictions as well as members of civil society who have indicated that section 347 is not a suitable mechanism for consumer protection.

Moreover, these same jurisdictions have noted that in their view the application of section 347 to payday lending companies acts as an obstacle to effective provincial regulations. And so, with these proposed changes we are responding to the needs of the provinces and territories who are much better placed to provide for the necessary consumer protection measures.

We are removing the applicability of section 347 in those instances where provinces choose to act. In instances where the provinces do not act, section 347 will continue to apply. We believe that this is an appropriate solution which will enable those provinces and territories that are ready to regulate the industry to do so.

It is important to briefly point out that Bill C-26 will not apply to federally regulated financial institutions such as banks. Banks are a matter of federal responsibility under Canada's Constitution and there are numerous federal pieces of legislation which regulate these institutions.

In general terms, the amendments would provide an exemption from section 347 of the Criminal Code for payday lenders under very specific and circumscribed instances. These exemptions would be set out under a proposed new section, section 347.1 of the Criminal Code.

The type of loan provided in a typical payday loan situation is generally a small amount, under $300, according to one study, and the usual terms are short, about 10 days. To qualify, a borrower must establish that he or she has a bank account and provide a post-dated cheque or pre-authorized debit. The borrower must also establish an income source.

Bill C-26 appropriately captures this common understanding of payday lending. It would define a payday loan as:

an advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security or property and not through a margin loan, pawnbroking, a line of credit or a credit card.

This definition is important, as it clearly sets out the particular type of lending arrangement that will constitute a payday loan.

Our policy objective behind the proposed amendments is targeted. We want to be able to ensure that provinces and territories are able to regulate the practice of payday lending that occurs in their jurisdictions.

We also want to ensure that only those arrangements which are truly payday loans are captured. This is so because the policy considerations in relationship to other forms of credit are quite different. I believe the definition found in Bill C-26 accurately captures the practice of payday lending.

In addition, Bill C-26 would specify that only certain types of payday loans would be eligible for exemption from section 347 of the Criminal Code. Notably, the loan would not exceed $1,500 and its term would not exceed 62 days. These limits correspond with the upper limits of payday lending described above.

Bill C-26 is not proposing regulation per se, nor is it proposing to set a national limit on the amount of interest that can be charged for payday loans. Rather, in creating an exemption from section 347 of the Criminal Code, Bill C-26 is responding to provincial concerns over the need to remove impediments to the regulation of the industry. This is important because the payday lending industry is most appropriately regulated at the provincial and the territorial level.

The ultimate goal of the proposed change is effective regulation. This can best be achieved by providing the provinces and territories with the flexibility they require to be able to set limits on the cost of borrowing. This approach ensures that the regulation is done in a manner which best reflects the local realities of the jurisdiction. At the same time, it recognizes that should a province or territory choose not to legislate for the purpose of regulating the payday lending industry, section 347 will continue to apply.

If a province or territory has made the determination that it will seek an exemption from section 347 of the Criminal Code for payday lenders operating within its jurisdiction, it will need to obtain a designation from the federal government. In order to succeed, it will need to establish that it has legislative measures in place which afford protection to those who seek payday loans. Those consumer protection measures will be left almost entirely up to the province or territory.

This approach is justifiable, as it recognizes the individual realities of each jurisdiction, including, for example, the practices of the industry in that province, as well as already existing consumer protection legislation enacted under the provincial constitutional authority over property and civil rights.

Bill C-26 would, however, require that as part of its legislation the province or territory must include a limit on the total cost of borrowing. In my opinion, this addresses three fundamentally important considerations: first, it recognizes that the provinces and territories can control the cost of borrowing in their jurisdiction; second, it guarantees that there will be a clearly defined cap on the cost of borrowing; and finally, as has been noted before, it provides a flexible solution to the individual circumstances of each province and territory.

The assessment of whether to issue a designation to a province or territory will be made by the governor in council. The province would write to the federal Minister of Justice detailing the cost control measures set out in the legislative scheme. The Minister of Justice would then, on the recommendation of the federal Minister of Industry, ask the governor in council to grant the designation.

Upon the governor in council doing so, the province would then be eligible to exempt, via licence or other legislative means, a payday lender in its jurisdiction from the application of section 347.

In short, I believe that Bill C-26 is an extremely important bill. It will provide greater protection to Canadians by enabling the provinces and territories to regulate an industry that is in desperate need of regulation.

Bill C-26 sets clear limits. It defines payday loans and limits the maximum one can lend under the exemption scheme to $1,500. It requires provinces to legislate measures to govern payday lending agreements, including limits on the cost of borrowing.

Bill C-26 demonstrates this government's commitment to working collaboratively with provinces and territories on a matter of common concern. The impact of these proposed changes will make a real and significant difference to those Canadians who have come to rely on this service.

I hope that all hon. members will join with me and support the quick passage of this bill into law.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the parliamentary secretary for his question. The federal government already has provisions available in the Criminal Code. For example, we could quite easily lower the criminal interest rate from 60% to 35%, as is already the case in Quebec jurisprudence. This would be within the authority of the federal government. However, regulating the business practices of such sectors as the payday loan industry does not fall under federal jurisdiction. In addition, we find it unacceptable to use Section 347 of the Criminal Code and Section 2 of the Interest Act in order to meddle in regulating business practices.

My suggestion to him is to work on reducing the criminal interest rate. I know that my colleague responsible for this matter will have the opportunity also to make other changes in committee. Without trying to prejudge the outcome, perhaps we will be able to agree on a suitable mechanism that will provide Quebec with complete jurisdiction and that will satisfy the concerns of the provinces and the territories. Perhaps there will be a provision that will exempt Quebec outright from the application of Bill C-26.

I am convinced that my colleague from Hochelaga has all the imagination and creativity required to suggest solutions to the government.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am pleased to take part in this debate on Bill C-26, an act to amend the Criminal code (criminal interest rate), proposed by the Minister of Justice. This bill, which may appear minor and generous, is in fact a good illustration—despite the promises made by the Conservative Party during the election—of the fact that they are once again taking a back-door approach to a very important matter, trying to have veto power over decisions that come under provincial jurisdiction, particularly Quebec.

Although the bill appears very generous on the surface, that is, a way to fight a new form of financial exploitation of the most vulnerable employees, it is nonetheless understandable that the Bloc Québécois opposes this bill due to a number of points that are not clear enough and, as I mentioned, that leave the door open to federal government veto powers over how things are done in Quebec, which already monitors similar activities, for instance, under the consumer protection act.

I will remind the House of some of the content of Bill C-26. Its objective, as stated earlier by my colleague, is to meet the demands of certain provincial and territorial governments, and consumer advocacy groups that feel that greater regulation is needed in the payday loan industry. Provisions already exist in the Criminal Code and the Interest Act, however they do not specifically target this new form of loan, which has developed over the past 15 years or so.

Bill C-26 is the response to those demands, because the payday loan industry is largely unregulated. Furthermore, some very dubious practices employed by such companies have been identified, for example, very high rates for loans against future salary, contractual terms and conditions that are insufficient, unclear, or often absent or completely set aside in contracts between lenders and borrowers, as well as unfair collection practices.

In a moment, I will return to the definition of a payday loan.

Obviously, as I said, this is something that affects a certain number of low-income working men and women and illustrates some hard facts. I would note in passing that it is interesting to see that the Conservative government, which in fact tends to minimize the problems associated with poverty in many regards, has been obliged to recognize those facts by the back door, once again. The fact is that right now, in Canada, as is the case in a number of western countries, it must be noted, a person can work, earn a wage, have a full-time job, and be living in poverty. People can then find it necessary, before the end of the two-week pay period, to take on this kind of debt in order to be able to make ends meet temporarily and to get the money that is necessary to meet their basic needs.

This bill is therefore recognition of the fact that, right now, the face of poverty is quite different from what it might have been in the 30 years after the Second World War, when a full-time job, for an employee on a payroll, was normally a guarantee that while the person might not live in the lap of luxury, he or she would be able to make ends meet and not have to take on these new kinds of debt. This is something new, in that in Canada the industry mainly began to develop in the 1990s, but we must recognize that its growth was by no means uniform.

What we see is that as a result of existing laws governing local commerce, because we have civil law and rules governing contracts, in particular those in the Consumer Protection Act, even though there may be 1,300 outlets identified by the federal government throughout Canada, there are very few in Quebec. An association has even been created: the Canadian Payday Loan Association. It represents 22 companies that operate 850 financial services outlets all across Canada, but none in Quebec.

This certainly tells us something, because with the tools that the Government of Quebec already has available, we have been able to oversee and regulate this industry to the point that people who wanted to use this niche to get rich quick did not think it wise to set up shop in Quebec and went elsewhere in Canada to do it. Obviously, that does not mean that we do not need to be vigilant and constantly careful to modernize, improve and update consumer protection legislation in Quebec.

What is a payday loan? The Canadian Payday Loan Association defines it as follows:

Payday loans are unsecured small-sum short-term loans typically for a few hundred dollars. The average payday loan is around $280 for a period of 10 days.

To date, as I said, the Criminal Code has not provided a definition of payday loan, so one of the primary objectives of Bill C-26 is to define what it is.

Here is how the government defines a payday loan:

A payday loan is a short-term loan for a relatively small amount, to be repaid at the time of the borrower's next payday. In order to qualify for a payday loan, the borrower must have a steady source of income, usually from employment, but also from pensions or other sources, and a bank account. The lender will typically lend up to a specified percentage of the net pay, for a period of 1 to 14 days, ending on the payday. The borrower provides the lender a cheque, post-dated to the borrower's next expected income payment date, for the total amount of principal, plus interest and other fees.

A payday loan is therefore a loan against future pay. This may give the people who are watching a better understanding of the new reality that is payday loans. Payday loans are also called payday advances. These advances come with all sorts of administrative fees, which are sometimes abusive, and interest rates that, if not usurious, are very high.

Payday loans are therefore an extremely expensive way for consumers to meet their temporary credit needs. The Financial Consumer Agency of Canada, which reports to the Department of Finance, says that the amount of a payday loan is usually limited to 30% of the net amount of the borrower's next pay cheque, that is, the final amount after the various deductions, including income tax.

The agency gives the following example: a person with net pay of $1,000 every two weeks could usually obtain a payday loan of roughly $300.

As mentioned in the definition I gave previously, to ensure that the loan will be repaid, payday lenders ask their clients to provide a post-dated cheque or authorize a direct withdrawal from their bank account for the amount of the loan, plus applicable fees and interest charges. As I said, there are numerous fees. The interest charged on the principal adds considerably to the amount to be repaid.

This is a new situation that corresponds to the reality that I was describing earlier whereby it is now possible to have a job and live in poverty. Bill C-26 seems to be a response to a growing and worrisome social problem. At first glance this might seem to be an interesting initiative by the federal government.

I will describe the initiative of Bill C-26. This bill essentially contains two measures. First, it enshrines in the Criminal Code the definition of a payday loan and it also adds section 347.1 to the Criminal Code, establishing a mechanism for exemption at the same time.

I will reread the new definition of a payday loan:

An advancement of money in exchange for a post-dated cheque, a preauthorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a line of credit or a credit card.

The first measure of the bill is to enshrine this definition in the Criminal Code. And the exemption mechanism has two parts.

The first part is to specify that section 347 of the Criminal Code and section 2 of the Interest Act no longer apply to the payday loan industry of a province when the amount of money advanced is $1,500 or less and the term of the loan is 62 days or less and the lending company is licensed or otherwise specifically authorized under the laws of a province to provide such loans.

It is therefore the responsibility of the province to regulate this aspect of the industry. The other aspect is that any loan less than $1,500 with a term of less than 62 days falls under the Criminal Code.

The second part—and this is where we have a problem—involves a political act by the federal government. We could describe it that way since it exempts from the application of section 347 of the Criminal Code and section 2 of the Interest Act provinces designated by the federal government for passing legislation that the federal government considers to be consistent with its objectives for regulating this industry.

The provinces have to apply for such designation, but must also have passed legislative measures that protect payday loan recipients and set a ceiling on the total cost of the loans.

Unfortunately, there are limits to that designation since it can be unilaterally withdrawn when, in the eyes of the federal government, the province concerned no longer meets the conditions, and therein lies the problem; for example, when legislative measures are no longer in force or do not meet the expectations of the federal government.

Clearly, section 347.1 would permit the payday loan industry within a given province, to be exempted from a criminal interest rate if the province in question makes a request to the federal government and if it complies with a number of conditions established by Ottawa.

It is important to make it clear that these amendments will not apply to financial institutions regulated at the federal level, such as banks. That is understandable because we are not talking about the same industry.

As I have said, that creates very real difficulties for us because, in our view, very clearly, the federal government is giving itself the power to be in a position to say yes or no to legislation, to authorize or not authorize an exemption from section 347 of the Criminal Code and section 2 of the Interest Act.

I remind members that in Quebec there is a Consumer Protection Act that already includes nearly all of these aspects and as a result of that, as I mentioned at the beginning of my remarks, this industry is less common, or at least less flourishing, in Quebec than in other parts of Canada.

We know that payday lenders were once more numerous in Quebec and the Office of Consumer Protection decided to step in. The joint action of the police and the Office of Consumer Protection has meant that this industry is nearly non-existent in Quebec because the Consumer Protection Act contains strict obligations governing all types of lending. Whether it is a payday loan, a pawnbroker or others, the annual interest rate must be stated on loan contracts. In addition, all fees must be included in the interest rate. It is not possible to add fees for opening a file, for forms, for closing a file or other fees.

Finally—and I believe it is extremely important—case law has established that an annual interest rate of over 35% is unconscionable, while under the Criminal Code the rate called “criminal” is set at 60%.

It is very evident in regard to Bill C-26 that Quebec has no need for this legislation. The Government of Quebec is concerned, as is the Bloc Québécois, about the effects that the passage of Bill C-26 could have.

I remind the House of the Government of Quebec’s position.

The Government of Quebec believes that the federal government is imposing on compliance exemptions conditions that infringe on the jurisdictions of the provinces and Quebec.

The proof, as I said, is that Quebec already has rules governing the practices of this industry without being accountable for them to the federal government. Why would we start now being accountable to the federal government when we have managed very well so far to limit the growth of this industry, which often, unfortunately, takes advantage of vulnerable working people who are in temporary financial difficulty?

I repeat: the maximum interest rate in Quebec is set at 35%. This is substantially less than the 60% in the Criminal Code.

The designation feature is another point of considerable concern to the Government of Quebec. Through it, the federal government retains veto rights over measures taken by those provinces that request an exemption. That is true of the other provinces and of Quebec as well. All the successive governments of Quebec have been extremely sensitive about federal infringements on areas of jurisdiction that belong to Quebec and the provinces.

Although the mechanism for designating a province is still rather murky—I suppose we will have a chance to clarify this in committee—it seems that ultimately the Prime Minister will determine whether or not he wants to designate a province depending on what he thinks of its legislation. This kind of veto in an area of jurisdiction that belongs to Quebec and the provinces is totally inappropriate and unacceptable as far as we are concerned.

In short, the Bloc Québécois is opposed in principle to Bill C-26. The Bloc realizes that certain provinces and territories wish to manage the payday loan industry themselves. It feels, however, that the federal government, even if it has the authority to set the maximum lending rate beyond which a loan becomes illegal, does not have the jurisdiction required to regulate the commercial practices of industries. Quebec, for instance, with its consumer protection act, already supervises this industry and prohibits unreasonable practices. This is why the Bloc Québécois is criticizing the conditions imposed by Bill C-26 on the provinces—Quebec in particular—that wished to be exempted from section 347 of the Criminal Code.

The government has no business to decide on the implementation of a licensing system or on the merits of supervision of practices in this area of activity by Quebec. This is also true for the other provinces. In the opinion of the Bloc Québécois, the Government of Quebec and all Quebec stakeholders in this file, Quebec is free to supervise the commercial practices of businesses under its jurisdiction. The government has no business using its veto so that the legislation can apply or not through this non-application mechanism, which I have already talked about.

In conclusion, in spite of the open-minded and respectful discourse of the Conservatives during the election campaign, we must conclude that the Conservative government is demonstrating the same determination to encroach on the jurisdictions of the provinces and Quebec as the former government, but packaging things differently.

It is still that same reflex of believing that the federal government knows better what the solutions are to certain real problems and that it must supervise the provinces to make sure they are on the right track. This paternalistic attitude—which characterized the Liberal reign from 1993 to the last election—is the government’s trademark. This is very clear in the example of Bill C-26 and in other files.

I will establish a parallel with the Kyoto protocol. The Minister of the Environment took the liberty of judging the validity of the plan put in place by the Government of Quebec. This plan could perhaps stand to be improved, but it is in stark contrast to the denial of global warming by the Conservative government. We took the liberty of saying, in a play on words, that this plan did not contain any mandatory regulations or conditions, which is true.

When the other provinces, in particular the western provinces, have met the targets that Quebec has already met, then we can have a serious discussion of the whys and wherefores of the Quebec act. Until we have evidence to the contrary, Quebeckers, the National Assembly and even the Liberal government of Quebec are in a better position to know what Quebeckers need in terms of the environment and of payday loan regulations.

[Colin Carrie, Conservative, Parliamentary Secretary to the Minister of Industry]

Mr. Speaker, today we are debating Bill C-26, An Act to amend the Criminal Code (criminal interest rate). Canada's new government has brought forward this legislation for one basic reason, to protect Canadian consumers. Bill C-26 will provide much needed flexibility to the provinces and territories in the area of consumer protection, flexibility to enable them to address various problems posed by the alternative consumer credit market, specifically the practice known as payday lending.

I would like to compliment my colleague, the hon. Minister of Justice, on his excellent work on this important issue. Let me state that the consultations carried out over several years by a group of senior federal, provincial and territorial consumer protection officials, known as the consumer measures committee, which led to the development of this bill were instrumental in its creation.

It is not easy being a consumer in today's exceedingly complex, fast moving marketplace. Canada's marketplace has been transformed in recent years by the staggering proliferation in the number of consumer goods and services that are on the market. New technologies, the growth of services and open markets bring both benefits and potential hazards to consumers. The payday lending industry is a good illustration of just how rapidly things are moving on the consumer scene.

Only a few years ago payday loans were virtually unheard of in Canada, yet now street corner loan offices are open in most provinces, in rural communities and in our downtown cores. This burgeoning alternative credit scene certainly does pose significant consumer issues. This is why many non-governmental consumer watchdogs, from the Public Interest Advocacy Centre to Service d'aide au consommateur, and many others as well have addressed this very important issue.

Last year Industry Canada's Office of Consumer Affairs established an extremely informative and timely document which I highly recommend as reading to my hon. colleagues. The “Consumer Trends Report” highlights the rapid and fundamental changes that have transpired in the consumer marketplace over the last 20 years. While many of these changes have been very beneficial, new challenges have also arisen. In many ways consumers today need more expertise because products and services are changing more rapidly and in more fundamental ways than ever before.

In the opinion of many experts it has become more difficult for consumers to determine value and weigh risk in the marketplace and their marketplace transactions. At the same time consumers themselves have also undergone many important social, economic and demographic transformations that can make certain groups particularly vulnerable in this marketplace.

In fact, the payday lending issue we are considering today is a very good example of the way in which the consumer environment is changing rapidly with the potential to have negative effects on consumers. As the “Consumer Trends Report”, the CTR, notes, the alternative financing services can be some of the most expensive ways for consumers to borrow, ranging from using payday loans and pawnbrokers to shopping at rent to own operations.

According to the CTR, when stated on an annual basis, the rate of interest paid on a typical payday loan ranges between 390% and 650%. On the other hand, there is genuine consumer demand for this product as seen by the increase in the number of outlets. The CTR states, “a prominent provider of the payday loan and cheque cashing services indicated that its number of franchised and corporate branches increased from 100 in 1994 to 200 in 2000, and was approaching 300 in 2003”. This is Money Mart. According to the media, the industry which lends about $2 billion each year services about two million Canadians annually.

What we have with payday lending is a relatively new product of some financial complexity that Canadian consumers are using in considerable numbers. However, it is also a product that can sometimes be sold in ways that can present hidden pitfalls and can have serious consequences for consumers.

In 2002, a report released by the Public Interest Advocacy Centre, PIAC, with funding from Industry Canada entitled, “Fringe Lending and 'Alternative' Banking: the Consumer Experience” stated that a cursory examination of the fee structures and practices of some payday lenders suggests that they expend little effort to assist the financial literacy of payday loan customers and probably contribute to customer confusion.

Many payday lenders offer no explanation for the fees they charge to their customers and often use ambiguous terms such as verification fee or finance charge among others. Without proper disclosure and explanation of fees, customers could be making financial decisions based on misunderstood and unclear information.

Research conducted by the Public Interest Advocacy Centre, the PIAC in 2002 shows that a relatively high number of payday loan customers either did not know the cost of their loan or underestimated the cost.

The timeframe of a payday loan is very short and the cost can be very high. Many borrowers have found that they are unable to pay off the loan in full at the time it comes due. Borrowers could however pay a fee for an extension on the original loan called a rollover. By doing this they could enter into a cycle of renewals including possible increased fees, interest or NSF charges added on without reduction of the principal of their loan. This situation may be financially devastating for a borrower but profitable for the lending company.

The legislation before us today is a very good fit with Canada's consumer protection framework. It is built upon the concept of ensuring that the jurisdiction most able to protect consumers in a particular issue have the legal capacity to do so. It would exempt payday lenders from the current provisions of section 347 of the Criminal Code which sets the criminal rate of interest in Canada, but only if those lenders operate in a province or territory that regulates the payday loan sector and if the province or territory sets limits to the cost of borrowing for consumers.

Each province and territory will have the freedom and flexibility to address its own market conditions and to best respond to the interests of its own customers. Bill C-26 typifies an effective and flexible approach to consumer protection. It is based on cooperation with the provinces and territories along with other governmental departments and non-governmental organizations. Bills C-26 helps Canada's markets work well for consumers, for growth and for our economy.

The legislation before us will bring payday lending in from the somewhat sometimes shady world of unregulated financial activity, so that consumers can operate with more confidence and assurance. The process of obtaining a payday loan will become more transparent and more straightforward for consumers. The provinces and the territories are best placed to regulate the payday loan industry. Bill C-26 will give them the power and flexibility to do so.

The bill's approach is typical of the innovative ways that we must approach consumer issues in the contemporary marketplace. All partners, including the federal government, the provinces and territories, non-governmental organizations and educational institutions, must work together to support consumer efforts and make wise choices in markets in Canada and the world.

Bill C-26 is further evidence that Canada's new government fully recognizes the importance of Canadian consumers and is committed to fostering their ability to function in fair and efficient markets.

The House resumed from October 24, consideration of the motion that Bill C-26, An Act to amend the Criminal Code (criminal interest rate), be read the second time and referred to a committee.

Business of the House

[Rob Nicholson, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, today we will continue with the NDP opposition motion.

Tomorrow we should conclude debate on third reading of Bill C-9, an act to amend the Criminal Code (conditional sentence of imprisonment).

Next week we will begin the report stage of Bill C-16, fixed dates for elections, followed by Bill C-26, payday loans, Bill C-6, an act to amend the Aeronautics Act and to make consequential amendments to other acts, Bill C-17, an act to amend the Judges Act and certain other acts in relation to courts and then Bill C-27, dangerous offenders.

I will continue to consult with the House leaders of other political parties with respect to Bill C-31, the voter integrity bill, and we may be able to proceed with that next week as well.

Criminal Code

[Stephen Owen, Liberal, Vancouver Quadra, BC]

Mr. Speaker, I will begin today by talking a bit about the theory of criminal justice and how we get tough on crime, which is the slogan often used by those across the way.

We cannot get tough on crime without being smart on crime and that means not just descending into slogans, such as “getting tough on crime”, “war on crime” and “three strikes you're out”. We know where that rhetoric comes from and we know that it is based on false analysis. It is based on ideology and sloganism, not on criminological research, social research or demographics which all gives serious concern to knee-jerk, superficial stoking of the fears in society about a situation that may not exist. That is done for purposes that are ideological and polemical and they carry a real danger of being self-fulfilling.

I would like to take a few minutes to speak about how being tough on crime means being smart on crime first.

Let us just take the 12 bills dealing with criminal justice that are before this House and the one that is before the other place. The official opposition has offered this week to cooperate and fast track eight out of the eleven of those bills, and I will speak to the other two in a moment, but that is in no way doing anything but making this place work with sensible dialogue and debate over how to, without holding up any of these bills, ensure they are not more dangerous than what we are to believe they are to protect us against.

We have offered to fast track Bill C-9, the conditional sentencing bill. It has had serious debate and an appropriate amendment was moved by opposition parties so it can now go ahead. We will give it all the speed it needs.

We will fast track Bill C-18, the DNA identification act; Bill C-19, street racing; Bill C-23, criminal procedure improvements; and Bill C-26, payday loans. I would pause to say that five out of the six bills that I have just mentioned were actually initiated under the previous Liberal government. They will go forward with our support and with sensible amendments where necessary. We will fast track two other bills.

We opposed the judicial salaries bill because we opposed the suggestion by the government that it disregard the Judicial Compensation and Benefits Commission which recommended appropriate increases for judges' salaries over the last four year period. While we opposed that, we allowed it to pass on division so there would be no slowing up of that process.

The 13th bill is Bill S-3, the military sex offender act, which is now before the other place. We will be supporting that bill and are willing to fast track it in every way we can.

In the context of discussing the dangerous offender legislation, it is important to underline the cooperation that is going on in the House to identify what is important, to carry on work that was done by the previous government and to get some of these things moved ahead.

However, Bill C-27 is of a different order. The dangerous offender legislation before us has some major flaws that I will speak about but I would first say that we need a reality check. Let us take a reality check first on the criminal conviction statistics in Canada which have been steadily coming down over the last 10 to 15 years. That is what the research tells us. The demographics themselves in society are leading through analysis to that decline in the crime rate. While we may raise the fears of the public to justify simplistic solutions through sloganeering and superficial claims to put fear in the hearts of Canadians, the crime rate comes down.

Let us take another reality check on the situation in the U.S. where these slogans come from and much of this legislation seems to be patterned after. The United States has the highest crime rates and incarceration rates. It also has the most dangerous communities and the most expensive criminal justice system.

If we are to follow any model in the world when we amend our criminal justice statutes, we certainly do not want to follow the so-called war on crime in the United States.

Let me pause to mention that the state of California spends more on criminal justice and corrections than it spends on education. That should be very edifying to all of us.

Let me give another example about the folly of pretending that just by putting people in jail on very restrictive terms without any adjustment for the context of a particular case can be more dangerous for society. Most convicted people, dangerous or not, will get out. We have the Bernardos and some of the most horrid criminals in our country's history who will be behind bars, blessedly, forever, but most criminals will get out.

Let us think of those people who go into a prison situation, which members opposite would like to see everyone go into. It is a bit of an irony to consider that prison life, if that is what we can call it, prison for life, is the place in society which should be the most protected but is in fact the place where one is most likely to be assaulted, raped, infected and injected, and these people will come out.

Therefore, we need to take particular care for the correctional services, the proper services within them and who we put behind bars and for how long.

Let me speak about the fact that 25% of the prison population in this country is made up of aboriginal people. This is a stunning statistic of despair. Can this be the result of a fair criminal justice system or is this a result of despair in aboriginal communities? Is it part of the despair of our prevention system and our criminal justice system of preventative crime? Is it a matter of racism in society? What is happening?

These are the underpinning questions that we must be asking ourselves in the House as we respond to the reality of the criminal justice system. This is 1% of the population and 25% of the prison population.

Let us ensure that when people do come out of prison, if they are going to be spending time there, that they have been rehabilitated and they are safe to society because the vast majority will come out.

We will not ensure that the context of the situation is properly taken into account in peculiar circumstances unless police officers, prosecutors, judges, correctional officers and parole officers have the discretion to identify where the dangers are and where someone may have a better response to a criminal justice sanction than simply putting someone in jail for an indefinite period.

Turning to Bill C-27, the dangerous offender legislation, the member opposite has mentioned that there is dangerous offender legislation on the books now and it is operating. It operates as a companion with long term offender legislation which can kick in. Prosecutors have the discretion to bring forward at sentencing applications before a judge for a long term offender or a dangerous offender designation. That works. It has been covered by the Supreme Court of Canada in the Lyons and Johnson cases in 1997 and 2002. It has been found to be constitutionally appropriate. I would suggest that it is working because it allows for all the proper discretions to be exercised.

The problem with what is being suggested in Bill C-27, and it has been referred to by numerous members of the House, is the reverse onus provision at sentencing after a third conviction of a certain type of very serious crime.

We have heard some people say that this offends the presumption of innocence, which is an historical criminal law principle in our legal system. However, the trouble is not with the presumption of innocence, which is subsection 11(d) of the charter. The question is about the reverse onus of the burden. This is not a conviction matter. It is not a presumption of innocence because the person has already been convicted for the third time.

What we are talking about is whether fundamental justice, in reversing the onus on such an extraordinary punishment, can meet the tests under section 7 of the charter for fundamental justice. There is strong authority that this simply cannot be done. This does not meet the tests of fundamental justice. It involves, for instance, the convicted person proving a negative into the future. Yes, it is on the balance of probabilities and, yes, as the member opposite said, there is judicial discretion to determine whether that onus is met or not, but there is still a reverse onus and, in many cases, it is an impossible burden to attempt to prove a negative into the future.

It is also a problem because it offends section 7 as being against the principles of fundamental justice and it is a problem under section 1 as to whether this is a justifiable limit on the rights under the charter. Is it a substantive need? Is it a rational connection? Is there minimal impairment? I would say that under all those cases this reverse onus does not meet the test. This is highly constitutionally suspect. Why, when we have a provision that is working well, would we want to throw ourselves into very likely years of constitutional charter litigation when we have charter compliant provisions now for dangerous and long term offenders?

We also have a problem that this will not be enforceable. This is ultra vires of the federal government to tell the provincial governments, which are responsible for the administration of criminal justice, who they should prosecute and what sentences they should ask for. That simply cannot be supported in our constitutional division of powers and, therefore, it is inappropriate for the government to put this forward.

There are also dangerous unintended consequences that could come to the fore here. We have long delays in our criminal justice system today. A report in the paper last week showed that in the province of Ontario 100,000 charges have gone beyond the nine months before they actually go to trial. This is bouncing very perilously close up against the Supreme Court of Canada Askov decision where all members will remember with regret that 30,000 criminal cases were dismissed because it took too long for people to get to trial.

If people are facing this so-called simplistic, superficial three strikes and they are out law, which has been so disastrously unsuccessful and dangerous in the United States, they will insist on going to trial more often. There will be less guilty pleas which will cause further delays in the courts and perhaps more cases will be thrown out because of charter violations.

The one side of it is that there will be more trials, longer delays and more costs to the prison system. I have not even begun to talk about the hundreds of millions of dollars in capital costs that will be required to build the prisons that will hold these long term offenders.

Costs will be going up, delays will be longer and cases will be thrown out for charter violations because of delay. The other dynamic that may happen and where prosecutors, with long dockets and not wanting to have further delays in trials, may charge people with lesser offences than would otherwise justify a conviction for a more serious case that may give them a longer prison term, or the convicted person may plea bargain to a lesser offence.

Both of those dynamics are more likely to put dangerous people on the streets and put in danger the men and women the member opposite was just speaking about. We have to be very careful when we tinker with these laws, especially if we are doing it superficially and against the evidence of criminologists and social scientists as to what is effective and what is not.

Let us turn for a moment to what being tough on crime by being smart on crime really means. It means a national crime prevention strategy, such as the one the previous government put into place across this country over a period of 13 years, funded in a very targeted way, to help kids have things to do after school. If I may indulge myself in a short phrase, it is about shooting hoops, not drugs. There are sports programs across this country in the evening and even far into the night where kids who otherwise would have been getting in trouble are involved in healthy activity.

We have to watch for issues of poverty and cultural exclusion.

We have to look at the issue of legal aid, which is in underfunded disrepair across this country, thus involving people in perhaps building up criminal records when they should have been having trials and pleading not guilty. They are pleading guilty because they cannot defend themselves in the courts without assistance.

We have to look at issues of homelessness. We have to look at issues of mental illness. The Kirby-Keon Senate report was an extraordinary statement of sound thinking about how to deal with those with mental illnesses, who unfortunately fall into the ranks of the homeless as well as the ranks of the criminal justice system, which is the worst place for them to be. We have to rethink this and meet our social contract around the concept of deinstitutionalization, whereby governments emptied the mental hospitals but then did not provide services in the community to support people.

We have to look at drug courts. They are operating in Toronto and Vancouver and in numerous American states. That is one example of where the American criminal justice system has actually been a stunning success at diverting people out of the criminal system if they will go into detox and treatment.

We have to look at issues of harm reduction. Drugs, addiction and substance abuse are great parts of the despair that leads people into the criminal justice system. Harm reduction, of course, involves needle exchanges and safe injection sites, which the government has failed to guarantee would be extended in Vancouver, when it has been an example for literally the world to consider the effectiveness of harm reduction in that situation, to help motivate people into detox.

We need shelters for them. We need transitional housing. We need skills training. We need affordable housing. We need jobs. In fact, the social enterprise initiatives of the last Liberal government, which were ready to go across this country, certainly in my province of British Columbia, were cancelled by the current government in its last budget. Those are the things that can assist people to not fall into crime and into despair, which leads them to become dangerous for other members of society.

What are we going to do instead? We are going to dismantle the gun registry. It is amazing that any thought could be given to that at this stage after the tragedy at Dawson College in Montreal.

We have a Prime Minister who will not go to an international AIDS conference in Toronto. We have a Prime Minister who did not go to a world conference on harm reduction in Vancouver last April.

We are simply looking in the wrong direction. We have to be tough on crime, I agree with all members opposite, but we are going to be tough on crime by being smart on crime and not by being simply superficial and using slogans.

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I am pleased to rise today to speak to Bill C-22. I am also very aware that all the justice critics need to be in committee for clause by clause of another justice bill right after this, so I am going to truncate my remarks to help get all the right people in the room who need to be there shortly after question period.

I will say at the outset that our party will support the bill. In doing so, we are following up on work that has gone on over a number of years. The Speech from the Throne of October 5, 2004 committed the government to cracking down on child pornography. Similarly, in the previous Speech from the Throne, the former Liberal government committed to reinstating former Bill C-20, An Act to amend the Criminal Code (protection of children and other vulnerable persons) and the Canada Evidence Act.

The bill was reinstated on February 12, 2004 as Bill C-12. It was awaiting second reading in the Senate at the time of that Parliament's dissolution for a federal election. In June 2004 the then prime minister reiterated support for reintroduction of the package as the first legislative item in the new Parliament. I know that the former minister of justice, the hon. member for Mount Royal, introduced in the former Parliament Bill C-2, An Act to amend the Criminal Code (protection of children and other vulnerable persons) and the Canada Evidence Act. It received third reading on June 9, 2005, royal assent on July 20, 2005, and came into force in its entirety less than a year ago, on January 2, 2006. Bill C-2, then, is built on reforms previously proposed in the former Bill C-12 and proposed reforms in five key areas.

I might reiterate, too, that former Bill C-12, by a procedural motion, a hoist motion, from the then opposition Conservative Party, was prevented from going forward a couple of years earlier.

Be that as it may, when I hear the Minister of Justice incorrectly saying that nothing was done, I have to put on the record that we did strengthen prohibitions against child pornography.

We broadened the definition of child pornography to include audio formats as well as written material “that has, as its predominant characteristic, the description of prohibited sexual activity” with children “where that description is provided for a sexual purpose“. We prohibited advertising child pornography, increasing the maximum sentences and making a number of offences have more bite.

We wanted to protect young persons against sexual exploitation. One of the things that I like in Bill C-22 is that the government has not disposed of that section that was so important, the section that talked about the exploitation of children. It had prohibited sexual activity with young persons between 14 and 18. Under Bill C-2, a court would be directed to “infer that a relationship is exploitative of the young person based on its nature and circumstances, including the age of the young person, any difference of age, the evolution of the relationship, and the degree of control or influence exercised over the young person”.

Consistent with the existing criminal law treatment of sexual assault, that bill focused on the offending conduct of the accused rather than just on the young person's consent to that conduct. That was always the concern, that it was not just an age number, because the age of 14 has been in the Criminal Code and utilized since the late 1800s. It was the “exploitative” nature, and I am pleased that the bill keeps this, because that helps in our being able to come forward with our consent today.

We did increase the penalties for offences against children.

We facilitated testimony not only for child victims and witnesses under 18 years but for other vulnerable victims and witnesses. This is procedural, to help stop re-victimization in the court process.

We created a new voyeurism offence. Today we have those cameras that take pictures; that is why we needed this.

In 2002 we also created the offence of Internet luring under section 172.1 of the Criminal Code. That prohibited the use of a computer system, including the Internet, to communicate with a young person for the purpose of committing a sexual assault against that person. It can and is being successfully charged, irrespective of whether a sexual assault actually took place. The fact of the offending conduct of trying to lure a child via a computer system is what we were getting at and it is there.

Also, just a few weeks back, a private member's bill on increasing sentences passed in the House.

Today's Bill C-22 is an improvement over former private members' bills, no matter how good the intention was. The fact is that now this bill has the five year close in age exception and that will go a long way, I think, in helping us to accept this bill and give our consent to it.

In fact, in our Liberal justice plan announced last week, this was one of the bills that we said would be put forward and given consent by our party, along with the other bills of conditional sentencing and imprisonment, as amended in committee, such as: Bill C-9; Bill C-18, an act to amend certain Acts in relation to DNA identification; Bill C-19, an act to amend the Criminal Code (street racing) and to make a consequential amendment to the Corrections and Conditional Release Act; Bill C-23, an act to amend the Criminal Code (criminal procedure, language of the accused, sentencing and other amendments); and Bill C-26, an act to amend the Criminal Code (criminal interest rate), which was debated in the House last week under the topic of payday loans.

We on this side will add Bill C-22 to that list of bills. There are about 11 government justice bills. This one makes six that the Liberals are prepared to move forward in the Liberal justice plan, although we do not think that these bills are universally perfect. But we could find flaws with all pieces of legislation in the House. There are sections in this bill to do with unconstitutional areas of the Criminal Code, which we could have fixed. The justice minister has chosen not to do that, but at this stage I think the protection of children should be our utmost priority.

Listening in the chamber today was one of the good police officers who has to work in this area. He was kind enough to give some Liberal members a briefing. Unfortunately, his colleague from the federal police services was not allowed to do that, for reasons unknown.

On this side of the House, we as the official opposition are prepared to support this bill. I am prepared now to move on and give my time so that critics from the other parties can all be present in the justice committee for voting measures later this afternoon on another piece of legislation. There is unequivocal support here for Bill C-22.

Business of the House

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, in light of what the government House leader said just a few moments ago, I wonder if you could see if there is unanimous consent in the House at this moment for the following motion: That Bill C-9 be deemed to have been concurred in at report stage, read a third time and passed; that Bills C-18, C-19 and C-23 be deemed to have been reported from committee, without amendments, concurred in at the report stage, read a third time and passed; and that Bills,C-22 and C-26 be deemed to have been read a second time, referred to and reported from committee without amendments, concurred in at report stage, read a third time and passed.

Criminal Code

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-26, an act to amend the Criminal Code with regard to criminal interest rates.

This bill is in fact designed to regulate the payday lending industry. This will be done by limiting the interest rates lenders can charge Canadians.

I am quite pleased as well to see that the minority government is taking advantage of the hard work done by previous Liberal ministers of industry and justice. In introducing this bill, it surely gives a sign that what we were doing before was just fine.

It is flattering to see Canada's new government actually putting forward many bills that were in the past proposed by Liberals. Despite what my colleagues on the other side of the House may be saying, they are acting as if what was done before was going in the right direction.

It was the previous Liberal government that worked with our provincial and territorial colleagues to build the consensus necessary for the legislation that we are discussing today. Currently, section 347 of the Criminal Code of Canada makes it an offence to enter into an agreement or arrangement to receive interest at a criminal rate or to receive a payment that is at a criminal rate.

It is interesting to note that section 347 was introduced initially to deal with the practice of loansharking and its links to organized crime. It was not always the written signed agreement under the shiny lights on the main streets of our cities that these arrangements were entered into, but often in the back alleys and through very informal discussions.

Although section 347 has been interpreted as applying to most lending arrangements in Canada, including payday lending, it was not intended to be consumer protection legislation or a consumer protection tool for economic price regulation when it was first introduced. It would seem that section 347 was attempting to capture criminals who looked like criminals and not criminals who look like storefront entries as many of the payday lending institutions of today's currency do.

In fairness, the Canadian Payday Loan Association itself, unlike the characterization of the member for Winnipeg Centre that would have us believe is made up totally of criminals, is in fact proposing this legislation which will be of benefit to consumers and the people we represent.

However, let us look at the scourge of the bad payday lending experience and what it has visited upon our citizens. In British Columbia a judge ruled in a class action that a payday loan company charged criminal interest rates when it included its late fees and processing fees as interest. That is what the court ruled. The ruling is expected to influence the outcome of many decisions. It is an instance of where the judiciary has stepped in to characterize as interest what may be seen as fees and thereby impinging some payday loan arrangements.

Last year in Ottawa, a small claims court judge ruled that two payday loan companies suing clients for unpaid debts, this is ironic, were themselves avoiding the law and breaking the law. The facts as they came out were that a loan of $280 rose with interest and penalties to $551 per month. That is an annualized interest rate of more than 2,000% and these people had the temerity to bring it to court to get their money.

The judge could not rule that it was in violation of the law because that was not the dispute in front of the court, but it shows the boldness and frankly, the arrogance of some payday lenders in charging that amount of interest and standing by it as if it were not more than 60% which is clearly set out in the Criminal Code.

Bill C-26 would not put an end to payday loans. The industry could easily continue to operate, but it is going to operate with controls. It is important to note that the legislation does not apply to loans over a certain amount, $1,500 and over a certain length, 62 days. This act does not replace the Criminal Code.

I think a principal theme of our discussions today on this bill must address the paucity in the Criminal Code itself to deal with the crime. So anything that is over 62 days that is over 60% ought to be prosecuted.

In studying the bill, we have learned that there are very few prosecutions. It is time for the government to take this information, as if it did not know it before, and tell the administration of justice officials, both federally and provincially, that we have a section called 347 and it should be enforced. If it is true, but we do not know because we have not had a full hearing on section 347, that only a prosecution or two have been made under this section in the last few years, something has to be done about that. The bill will not cure any of the in excess of 60% in loans that are longer and larger in duration than what it attempts to cover. However, it is a start, it is good legislation and we should support it.

It means, however, that the provinces and territories have to get their acts together. I am very hopeful that the new federal government has kept good relations with all the provincial counterparts and has, like we did before, an easy discourse of opinion on how to best influence reasonable rates, like the province of Quebec has administered for some time under its consumer protection legislation.

Several provinces, including New Brunswick, have already announced their intention to regulate payday lending once this bill is passed.

I know that the new Liberal government in New Brunswick will address that situation as soon as this is done.

I know T.J. Burke, the new attorney general for the province of New Brunswick. He is the first aboriginal attorney general in Canada, and he is an excellent law official. Once this legislation passes, I know he will be looking to the models across the country, specifically the model in Quebec, which seems to give to our citizens the best consumer protection.

Payday lending is a growing industry in Canada. Virtually non-existent in 1994, the industry is believed to have grown to more than 1,300 outlets in just 10 years. That is why perhaps this law is just coming to us now. We probably all saw the industry grow, but empirically did not know that 1,300 outlets existed across Canada. Nor would we know, if we are not users of the services, what horror they are inflicting on our citizens.

The number of payday loan outlets now outrank the number of offices of the Royal Bank of Canada. Therefore, it is important to underline that this is not just a Main Street, Stellarton, one-off issue. The bill is dealing with a Canadian issue.

Only 850 or so of these institutions are represented by the Payday Loan Association. They have been very forthcoming in lobbying for a bill to protect consumers. I would suggest to go halfway to also ensure that they have an existence after the passage of the legislation.

One thing we may consider, as the bill travels along the process to committee, whether we will strengthen the legislation and attempt to affect and to curb the impact of usury on our citizens.

I cannot say this strongly enough. While VISA cards regularly get 28%, the province of Quebec has chosen 35% as a ceiling interest rate. I cannot say strongly enough how we, as parliamentarians, in the moral persuasive stance that we have with provinces and territories, might suggest that the Quebec model is a good model for the citizens who we share as electors.

The significant growth of this sector is actually hiding the dire situation facing many Canadians.

A few years ago, holding a full time job was enough to support one's family. Unfortunately, that is not necessarily the case anymore. Times have changed. Many Canadians work full time, and some even work more than one job, but that is still not enough to support their families financially. There lies the real tragedy.

We are doing just a bit to help the working poor in this situation.

As a former member of an Open Hands Food Bank organization in Moncton, New Brunswick, food banks are no longer visited by the very poor and destitute only. They are often visited by the working poor, people who work as a couple with minimum wage jobs, people who need to have two minimum wage jobs, people who have children or people who have a letdown in hours at the video store, one of their minimum wage jobs. This means they are forced to go to the food bank or, as I say, le vrai drame, to the Money Mart, to get a loan at a high interest rate to pay the rent, to have groceries and to ensure their children can go to school.

Does it make sense to borrow money from someone who is going to charge an outrageous interest rate? Of course not. The fact is, however, an increasing number of Canadians have no choice. They have generally been turned down for loans at the chartered banks and other financial institutions. Although many of them have full time jobs and a steady source of revenue, many have no choice but to go for the short term, high interest rate loans to survive between pay cheques.

The real tragedy is that in 2006 working hard and having a job might not be enough to support one's family. I find it troubling that more and more Canadians cannot meet their everyday living costs. In recent years many social groups have pointed out that the number of citizens living under the poverty line is growing and that having a full time job does not necessarily protect one from poverty in today's world. This is very unfortunate, something that is compounded by the fact that if a person goes in to borrow $280, that somehow turns into a $551 per month payment. We are doing something, but very little to help that problem.

While we say the bill is good, what about the social safety net that the new government is putting out for the people who are left to have 60% interest loans, from the legal Money Marts, for 62 days for amounts under $1,500?

Let us not over blow what step this small bill is toward the journey of helping us help the working poor. If we combine the statistics of the working poor, the increased usage of our social service agencies, with the major cuts that the Conservative government announced three weeks ago, it is now clear the new government does not care about those most in need, the poorest citizens and the minorities throughout our country.

Let us face it, the Conservatives are leaving the most vulnerable behind. A true national child care program, aboriginal health initiatives, literacy funding, homelessness, affordable housing initiatives, these were all mechanisms to help low income families, they very people who are most victimized by the ravages of the Payday Loan Association members.

All the measures I suggested have been cut and cramped in the recent Conservative announcements, such as national child care, teaching children how to succeed in life, literacy, teaching children and adults that they can read and they can get better jobs, tackling the homeless initiative, which was once made a very national and prominent program under the former member for Moncton—Riverview—Dieppe, the hon. Claudette Bradshaw, are all gone as priorities in the government.

Although the government will do some lip service to the Payday Loan Association, mainly because it is a good lobby and it might get some credit for helping the working poor, it is really saying it will not go that far and reinstitute programs, which were of national importance for eradicating the spectre of cyclical use of social services and organizations, such as payday loan institutions.

The same low income family that works hard to survive but cannot afford to put money aside for rainy days is forced to live from paycheque to paycheque. Exactly the same people are being denied loans from banks and they end up at the payday loan services, probably just before or after they go to the food banks. Before having to do this, they probably had time in their day to get some literacy training, or they may have been able to access some child care initiatives. However, they are not going to be any better off with the Conservative government as the years go by.

The real point is that this is a good step in a long road. The Conservative government must understand it entails much more than just initializing a law that was started by a former government, which is a needle in a haystack with respect to the battle against poverty, especially among the working poor.

This bill will ensure that those who turn to payday lenders do not fall victim to questionable practices, criminal interest rates and unfair collection techniques. More importantly, it will help make sure that they are not sucked into the vicious circle of debt and outstanding loans.

Bill C-26 is a positive, necessary step in the right direction and it battles loansharking, but it does not do enough at this point. The House should encourage all provinces and territories to look at the model is the model of Quebec. I hope this will happen at the committee stage.

As we move along the legislative process, we find that many of our models for a just and fair society have come from the province of Quebec. Programs like the national child care program and the legislation for consumer protection are best modelled in Quebec. In our discussion we should encourage the provinces to follow those examples.

The finance minister for the province of Manitoba is in the process of deciding how to deal with the brief put forward by the Payday Loan Association. The president of the Payday Loan Association says that Manitoba's proposed law is in line with the code of best business practices adhered to by its members. It operates 800 of the 1,350 payday loan offices in the country.

What is not known is the fee cap the province would set. The finance minister, Mr. Selinger, is proposing to make fees and rates on payday loans subject to public review by the local public utilities board. If the Quebec model is not the model provinces choose to follow, by having consumer protection legislation govern the scheme, then the model of having the public utilities board review rates of interest that can be charged by payday loan associations, which survive this document, would be very preferable.

We seem, as the federal sphere, to have gone away from consulting and advising the provinces with respect to best practices, and not necessarily mandated practices. By this I mean giving them a cheque and telling them they must do this or they must do that. Rather do it in a true constitutional sense, as partners that share the same citizens, the people who vote for them vote for us, and suggest they look at the models, which include the Quebec consumer protection legislation and the suggestion of the very wise finance minister in Manitoba of public utility board regulating interest rates.

The public utility boards across the country are made up, by and large, of non-partisan people interested in consumer protection in the areas of energy and transportation. In this case, Manitoba would invade the field by suggesting interest rates on short term loans would be properly in the public domain of the public utilities board. In many provinces public insurance is dealt with at a provincial level and the rates of insurance are decided by a public utilities board.

Again, this is a very good step. It follows on Liberal legislation, which was being thought of before the government fell. It is enough at this point to say we support it. However, at committee perhaps suggestions as to the how, not the why, the bill will play out across the country can be discussed along with our desire as parliamentarians to ensure the bill is implemented in as even a fashion across the country as possible.

In closing, I thank the citizens ofMoncton—Riverview—Dieppe for giving me their input on this most egregious example of lending at usurious rates. I assure them, in supporting the bill, that it is not a cure, not the be-all and end-all. It is a tiny step on the long road to helping the working poor in our country.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, since for all intents and purposes we are discussing micro-credit, I would like to point out that the member for Winnipeg Centre and the member for Skeena—Bulkley Valley made special mention of the social responsibilities that banks should have. I remember introducing a bill, on another occasion, that would have allowed banks to play a social role by helping the most disadvantaged and the poorest who have to pay administrative fees. Often bank services are not accessible to these individuals.

I would just like to make an important point. The member for Edmonton—Sherwood Park mentioned that the member for Winnipeg Centre was too kind to the poor and that we have to follow the lead of the government in terms of Bill C-26. I would like to point out that, this year, Mr. Muhammad Yunus received the Nobel Peace Price. He is an economist who established a micro-credit system, with 1,200 micro-credit offices, which today has created jobs for 12,000 individuals. These are small repayable loans made at rates that are probably much lower than 60%.It gives credence to the statement that, and I quote, “Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty”.

If people need payday loans and, if for all intents and purposes, micro-credit were available for relatively short periods, would it not be important enough to warrant establishing this system within the banks? They could be asked to play a social role and to loan small amounts. We know quite well that, more and more, banks—all banks—make profits in the order of hundreds of millions of dollars, profits often in excess of one billion per year.

Ordinary banks have a social responsibility. I ask the member: would it not be better to ensure that banks fulfill their social responsibilities rather than protecting a loan system which, for all intents and purposes, is usurious?

[Jacques Gourde, Conservative, Parliamentary Secretary to the Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board]

Mr. Speaker, it is my pleasure to rise today to speak in support of a significant piece of legislation, Bill C-26, An Act to amend the Criminal Code (criminal interest rate), introduced on October 6 by my colleague, the Minister of Justice.

This bill amends the Criminal Code to allow for the regulation of the payday lending industry by the provinces and territories. This is a major change which is well received. For years, the payday lending industry was able to operate unnoticed in Canada.

This bill will subject this prosperous sector to regulation and offer greater protection to millions of Canadians and their families who have come to depend on this kind of service. According to the leading industry lobby, namely the Canadian Payday Loan Association, this sector services nearly two million Canadians a year. This is a pretty large number, hence the importance of ensuring that Canadians are well protected against harmful practices in that industry.

The passing of Bill C-26 would first amend the Criminal Code by adding a new provision, namely subsection 347.1, which would exempt payday lenders from the provisions on criminal interest rates where provincial and territorial legislative measures protect consumers in this regard. It would then add a definition of “payday loan”. Finally it would require the provinces to set a limit on the total cost of this type of loan in their legislative measures.

Before examining the content of these amendments, I shall provide a few clarifications on two points. First some background on the payday loan industry in Canada, including its effects on communities across the country, and, second, its debatable practices, which motivated us to take action and propose the amendments before us today.

When they know more about this industry, I am convinced that all the members will agree that the measures put forward in Bill C-26 are pragmatic, balanced and necessary.

The payday loan industry is relatively new in Canada. These convenient establishments with catchy names began to appear here about 1994. The industry began in the West, but today it has spread throughout Canada. In fact there are about 1,350 of these establishments in all Canadian provinces and cities, except in Quebec, and they continue to increase in number. Some 2 million Canadians use these services, borrowing close to $1.7 billion a year. This is an astounding amount when we know that all this activity takes place in an market that is basically unregulated.

These figures show that the payday loan industry meets a real demand by Canadians. According to some, this industry has no place in Canada. On the other hand, it obviously plays an important role in the lives of many Canadians. There are several reasons to explain why our fellow citizens turn to the services of a payday lender. Convenience is one of them, since many of these businesses stay open late and on weekends. Also, some people think that the popularity of this sector may be attributed to the fact that the country’s large financial institutions have closed their smaller branches, leaving a void among services providing quick and easy withdrawal of funds in many communities. There is also the fact that this service is relatively anonymous and emergencies can occur, with immediate financial consequences.

In any case, this industry seems to have its place in our communities. So it is important that we provide adequate protection from certain abusive commercial practices to the Canadians who use payday loan services, especially the most vulnerable people in our society.

The government takes its responsibility for improving the lives of Canadians and their families very seriously and is taking a number of important measures to do just that. Whether it be by strengthening the Criminal Code to make our streets and communities safer or by reducing taxes for our fellow citizens, we are committed to taking effective action such as what we are proposing in Bill C-26.

We will continue to do this to ensure that Canadians have the best possible quality of life.

The measures proposed in Bill C-26 are a careful and effective way of improving consumer protection and meeting the need that has been expressed by various people, including the provinces and territories, for effective regulation of this industry. There are three good reasons for doing this.

Payday loans are very expensive. In some cases, the annual cost of a loan from a payday lender can be very high, because of the interest, which is charged at a rate that is sometimes several thousand or more. It also seems that the contract clauses are not clearly disclosed by these lenders.

Aggressive collection methods also create problems, as does the speed with which the amount of these debts can grow out of control when they are renewed. In some cases, payday lenders even penalize a borrower who pays the loan before the due date, by charging fees.

For all these reasons, it should be very clear to all members that there is strong justification for taking action. The changes proposed in Bill C-26 will ensure that the practices of this industry are effectively regulated.

When we looked for the most appropriate way of dealing with this pressing public policy issue, we also worked very closely with our colleagues in the provinces and territories. We gradually realized that section 347 of the Criminal Code was going to be the linchpin of the new rules.

Under section 347, everyone who enters into an agreement or arrangement to receive interest at an annual rate that exceeds 60%, which is a criminal rate of interest, is guilty of an offence.

People who are convicted of that offence are liable to imprisonment for up to five years.

When section 347 of the Criminal Code was first enacted, its purpose was not to protect consumers. Rather, its aim was to give the police another weapon for fighting organized crime, and more specifically loan-sharking. Whatever the intent of Parliament was at that time, this section applies to loan agreements entered into in Canada, including payday loans.

I would note, however, that the government does not believe that section 347 of the Criminal Code is the most appropriate and effective instrument for protecting consumers from the unethical and unscrupulous practices that have been observed in some segments of the payday loan industry.

We are not the only ones who think that way. Many administrations and several groups in civil society have told us that section 347 is not suited to consumer protection. What is more, these same administrations have told us that the application of section 347 to payday loans presented an obstacle to the adoption of effective provincial regulations. As a consequence, the proposed amendments respond to the needs of the provinces and territories, who are the best placed to provide the required protection to consumers by exempting cases where provinces choose to intervene from the application of section 347.

However, section 347 continues to apply in those cases where the provinces do not intervene. We consider this to be an appropriate solution that enables the provinces and territories that are prepared to regulate the industry to do so.

I would also like to point out that Bill C-26 will not apply to financial institutions that are regulated by the federal government, such as banks. Under the Constitution of Canada, banks fall under federal jurisdiction and their operation is subject to a number of federal laws.

By and large, the proposed amendments would exempt payday lenders from the application of section 347 of the Criminal Code in very specific and well defined cases. That exemption would be provided under a new section, section 347.1 of the Criminal Code.

According to a study, the amount generally loaned in the case of a payday loan is never very high—less than $300—and the duration of the loan is generally short—about 10 days. To be eligible, the borrower must prove that he or she has a bank account and provide a post-dated cheque or pre-authorized debit. The borrower must also provide proof of a source of income.

Bill C-26 describes a payday loan as follows:

An advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a line of credit or a credit card

This definition is important because it clearly describes the kind of agreement behind payday loans. The proposed changes have a very specific purpose. We want to ensure that provinces and territories are able to regulate payday loans in their jurisdictions. We also want to ensure that only payday loan agreements are covered. We are doing this because the public policy issues raised by other kinds of credit are very different. I think that the definition provided in Bill C-26 describes payday loans very well.

Bill C-26 also specifies that only certain types of payday loans will be exempted from the application of section 347 of the Criminal Code. The loan cannot be for more than $1,500 and for any longer than 62 days. These limits reflect the maximum limits on payday loans described earlier.

The bill does not propose any regulations per se, not does it set a national limit on payday loan interest rates. What it does instead, in creating an exemption to the application of section 347, is to meet the needs of the provinces, who want to see the obstacles to the regulation of this industry removed. This is important because it is the provinces and territories that are best placed to regulate the payday loan industry.

The ultimate purpose of the proposed changes is the effective regulation of the industry. The best way to achieve this goal is to give the provinces and territories the flexibility they need to set limits on the cost of loans. Thanks to this approach, the regulations that are adopted will be well suited to the specific situations facing the different provinces and territories.

This bill also provides that section 347 will continue to apply in those provinces and territories that elect not to pass legislation governing the payday loan industry.

If a province or territory has made the decision that payday lenders operating within that province or territory are to be exempt from the application of section 347 of the Criminal Code, it will have to apply to be designated for that purpose by the federal government. In order to be exempted, it will have to show that it has adopted legislative measures that protect anyone who wants to take out a payday loan. What those consumer protection measures are will be left virtually entirely to the discretion of the provinces and territories.

This is a valid approach in that it recognizes the nature of the situation in each jurisdiction, including, specifically, the way that the industry operates there, and also the existing provincial consumer protection legislation adopted under the powers assigned to the provinces by the Constitution in relation to property and civil rights.

Bill C-26 requires, however, that the province provide for limits on the total cost of payday loans in its legislative measures. I believe that this approach reflects three fundamental factors.

First, the provinces and territories are capable of controlling the cost of loans within their jurisdictions. Second, this guarantees that there will be a limit on the cost of borrowing. And third, as we saw earlier, it offers a flexible solution that can be adapted to the characteristics of each province and territory.

The Governor in Council will make the necessary assessment before granting a province or territory the designation applied for. The province will apply to the federal Minister of Justice, stating the legislative measures it has taken to control the cost of loans. Then, on the recommendation of the federal Minister of Industry, the Minister of Justice will ask the Governor in Council to grant the designation applied for. The province will then be given the power to exempt a payday lender, by licence or otherwise, from the application of section 347.

All in all, I believe that Bill C-26 is very important. It offers Canadians greater protection by allowing the provinces and territories to regulate an industry that is in great need of oversight. It sets very clear limits. It defines payday loans and sets a limit of $1,500 for loans that may be made under these rules. It invites the provinces to adopt legislative measures to regulate payday loan agreements, and in particular the total cost of the loans.

Bill C-26 is further proof of the government’s commitment to working with the provinces and territories on matters of common interest. The amendments proposed will have an important and real effect on the Canadians who have come to depend on this service. I hope that all members will join me in ensuring the speedy passage of this bill.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I was happy when I learned I could enter into the debate on Bill C-26, the Criminal Code amendments regarding payday loans. From experience, the payday loan industry is like a scourge on the inner city of Winnipeg, on the riding I represent. I cannot find the words to speak strongly enough about how critical I am of this exploitative criminal industry. I can say the word “criminal” I think without insulting anyone or without pushing things over the line.

This very bill has been put in effect because the government knows full well what has happened, up until the implementation of the bill, meets the definition of criminal in terms of these so-called payday loans.

In the past in other speeches I have shared the unfortunate and harsh reality that my riding is the poorest riding in Canada. Whether it is measured by average family income or incidence of poverty, Winnipeg Centre is the poorest riding in the country. I bet dollars to doughnuts it has the highest concentration of these exploitative payday loan outfits because they prey on the misery of the poor. They exist solely to take advantage of low income people, desperate people. These people go from the day's drudgery to the evening's despair. They cannot make the end of the week on their meagre earnings, whether it is their paycheque or their social assistance cheque. Because of that, they wind up the victims of these payday loan outfits.

My colleague from London—Fanshawe has raised the point with us as well that every street corner we look at has a payday loan outfit. Every little strip mall that has a vacancy in our ridings is occupied immediately by another one of these payday loan outfits, be it Paymax, The Cash Store or Money Mart. All these reputable sounding names disguise the fact that they rip people off in epic proportions and in complete violation of section 347 of the Criminal Code. For the benefit of Canadians, this section states very clearly that to charge interest at a rate greater than 60% per annum is not allowed.

That provision was put there for a reason. Some of us would argue that 60% per annum is too much, that there is no justification for charging this kind of interest rate. I think the interest rate charged on my Visa is criminal, but it is legal. Visa, at 18%, may make us angry, but these guys, who set up shop to deliberately undermine the law by charging rates of interest that are easily within the realm of criminality, should be condemned, not accommodated by the bill. I call them bloodsuckers and leaches. I call them a scourge on the inner city of Winnipeg for cheating and deliberately exploiting poor people by design.

Let us look at who is doing this and how much money they are making. Where else can people get 1,000% return on their investment? A person would be pretty happy in today's stock market to be making 8%, 10% or 12% interest. In the good old days some IPO in the high tech sector could make 20% per annum interest.

These outfits are making 1,000%, 2,000%, 5,000%, 10,000% interest per annum. One example, investigated by the attorney general of Manitoba, found one cash store was making 10,000% interest, if all the surcharges and service charges are called part of the interest. For the purposes of the law, all those charges end up with net effect of interest at 10,000%.

The industry is completely unregulated. No wonder it attracts people such as the mob, the Hell's Angels and terrorist groups. Where else can they get that kind of money?

These innocuous looking, nice, clean little stores, which are popping up in every strip mall across the country, are not only sucking the lifeblood out of my inner city riding of Winnipeg Centre, but they are starving people and they are involved in clearly illegal activity. They are not only charging usurious illegal rates of interest, but charging people to cash government cheques.

Many members in the House would be shocked to learn that no one is allowed to charge for cashing a government cheque. People do not know their banking rights and that is where the blame has to come down.

We would not be having this debate today or the epidemic of rip-offs going on in our ridings if the banks were doing their job of providing basic financial services to Canadians as per their charters. If the banks had not abandoned the inner cities of Winnipeg, Vancouver, Toronto, Sault Ste. Marie and London, if they had not bailed out on this nuisance financial services industry that they do not want any more, poor people would not need to go to these rip-off outfits.

Fifteen branches of the five charter banks in my riding have left since I have been a member of Parliament. I know that 13 or 14 have left the riding of Winnipeg North, represented by my NDP colleague who is not here today. That is almost 30 branches of inner city ridings.

I am sorry, I will not point out whether my colleague is here or not today. I am actually delivering this speech on behalf of my colleague, the finance critic for the NDP, so people can draw their own conclusions as to whether she is here or not.

The fact is that roughly 30 branches of chartered banks have left, a flight of capital, leaving no financial services in their wake. People do not know that the charter banks have obligations. The charter banks of Canada were given the exclusive rights and privileges to certain very lucrative financial transactions, such as credit card statements, cheque cashing, et cetera, in exchange for providing basic service to Canadians, even when sometimes it is not the most profitable thing in the world to give ma and pa their little mortgage in downtown Winnipeg, even when it is not that profitable to allow people to open bank accounts to cash cheques even when they only have $100.

However, the banks have an obligation and a duty. If the charter banks are not willing to live up to their end of the bargain, we should tear up their charter, throw the industry wide open to foreign banks and see how they like it then. That is what they have done in some other countries when the charter banks got too big for their britches. We would not have this problem in the inner city of Winnipeg and other major Canadian cities if the banks were doing their job by providing basic financial services.

As such, the people who I know, the low income people in the inner city of Winnipeg, have no alternative, nowhere else to go to cash their cheques. They actually sport their Money Mart card, which is, frankly, a licence to be robbed, as one of their main pieces of identification. I have used the phrase before that villainy wears many masks, none so treacherous as the mask of virtue.

These Money Mart stores are trying to portray themselves as providing a necessary service. They set up brightly lit, friendly looking stores, are courteous to the low income people who walk in and they issue important looking cards that are not even credit cards but just ID cards for the Money Marts. People carry them around with some pride because the banks will not talk to them, aside from the fact banks are nowhere to be found. People do not have bank accounts but they do have Money Mart cards.

I have never been able to calculate the amount of money that gets sucked out of my riding every month by these thieves. I will call them thieves, at least until such time as the Criminal Code is changed to where we allow greater than 60% interest to be charged. They are involved in illegal activity and we are accommodating them with this bill. Instead of correcting the problem, the bill actually says that we will not stop this runaway roller coaster so we had better change the law to make it legal.

At least we are ceding the jurisdiction to the provinces so they can hopefully put in place some enabling legislation to control and contain the extent of the problem because the extent of the problem is horrific. These outfits are sprouting up like poisonous mushrooms on every street corner, if I can be forgiven for extending that analogy, because their corporate greed is responsible for a sum total of human misery on the streets of the inner city of Winnipeg that I do not think we can measure.

The very fact that people cannot make ends meet on their meagre paycheques and are forced to obtain one of these payday loans already means they are in some form of financial crisis. It is not the people we see on the TV ads, well dressed, middle class people driving their cars up to the Money Mart because they are $100 short on this month's paycheque.

The way these outfits are structured, people's problems are compounded. Their misery is only starting with the first loan because if they are a day late on that loan, they offer a rollover loan at an even higher rate of interest and more service charges. These companies suck people in and roll the money over until people have reached a level of debt that they can never get out of.

Here are other things that these outfits do. It is common practice to have people voluntarily sign a permit so their future wages can be garnished, never mind going through the courts. If somebody owes a great deal of money, sometimes companies need to apply to the courts to garnish someone's wages. However, payday companies make people sign this away at the front end.

These companies will make people put up property, if they have it, as collateral even for a couple of hundred dollar loan, which seems ridiculous, except that they know how fast a $200 loan spirals out of control to where all of a sudden it is not so ridiculous to have a house as collateral for that loan because the loan is not $200 for very long. Cars and boats are not unusual personal guarantees. Sometimes people need to sign away their right to any kind of arbitration or to the services of a credit manager.

These companies have not only figured out how to charge 1,000% or 2,000% interest, they have figured out ways to preclude the ordinary rights that people might have if they run into credit difficulty to get out from under it. In other words, they own people. Loansharking seems kind compared to these payday loans. I kind of pine for the days when it was just Luigi the leg-breaker who would take care of things. These guys are far more sinister, far more organized, far more corrupt and far more criminal. The leg-breaking that used to go on if people borrowed money at the pool hall, we would probably look forward to that compared to the hold that these companies have.

It is criminal behaviour. It is organized crime. There are chains of these companies, in effect, breaking the law systematically, the very definition of organized crime. Our reaction as a government, unfortunately, is to accommodate them and to pass legislation to allow these companies to charge more than 60% per annum. It does not say that they can charge 2,000% or 10,000% per annum as in the most extreme case that we have come across, but to accommodate them in any way is offensive to the sensibilities of any decent Canadian.

It should make us angry. It should make Canadians angry that the best thing we can think of to do when faced with this organized wholesale criminal activity is to accommodate them when we should be looking at our financial institutions to look at the root cause of the problem, which is abandonment by the charter banks.

The charter banks have packed up their tent and left, not because these branches in the inner city were not profitable, but because they were not profitable enough. Because their branch in the suburbs made more money than the branch in the inner city, they put an addition on the branch in the suburb and told their customers in the inner city to take a bus out to that branch. They closed 15 branches in my riding alone in the inner city of Winnipeg.

It is abandonment. It is a vote of non-confidence. It would not bother me if these were independent private businesses because it is their right to pack up and leave. However, these are charter banks. They exist and enjoy their exclusive monopolies at the pleasure of the House of Commons and the Government of Canada. Has nobody tried to remind the financial institutions of their obligations in recent years? They are making record profits quarter after quarter. They cannot count their money. They are like Scrooge McDuck sitting on piles of money that they cannot even imagine their good fortune and yet they are derelict of their duties and leaving the people I represent vulnerable to rip-offs like the payday loan industry.

The payday loan industry even has an association now, which is how they are striving for legitimacy. Can anyone guess who the executive director of the Payday Loan Association of Canada is?

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, I would like to congratulate my hon. colleague on her speech on Bill C-26.

In listening to her, I put myself in the shoes of citizens listening to the explanations here in the House of Commons. Unfortunately, I think that the 10 minutes given to my hon. colleague were not enough for her to delve further and provide more specific information about this bill and the reasons why the Bloc Québécois is opposed to it.

I would therefore like to ask her to be more specific for the benefit of citizens. Does this bill set a maximum interest rate for borrowers? I would also like her to tell us whether this rate is still usurious or not.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, the purpose of Bill C-26 is to provide for stricter regulation of the payday lending industry, which could also be called the wage advances industry. In Canada, the industry began to take root in the 1990s. Its growth has not been uniform, however, since it falls under the jurisdiction of Quebec and the provinces over local commerce and civil rights and is thus subject to the rules governing contracts and consumer protection in each jurisdiction. Accordingly, while the federal government believes that this industry now has over 1,300 points of sale, they are unevenly distributed and there are not very many in Quebec.

Several payday lending companies have joined together to form the Payday Loan Association of Canada. That association represents 22 companies that operate a total of 850 points of sale for financial services across Canada, but none in Quebec.

What is a payday loan? To the Payday Loan Association of Canada, a payday loan is an unsecured small-sum short term loan typically for a few hundred dollars. The average payday loan is around $280 for a period of 10 days. We can see that payday loans are really meant for low income earners, and this is why, at this point, I want to talk about poverty.

When someone needs to borrow at a high rate from this payday lending industry in order to make it to the end of the month or the end of the week, the reason is that the person is poor in Canada. The most recent Statistics Canada figures, from the year 2000, tell us that there are 1.3 million more poor households in Canada than there were 25 years ago. So the poverty rate among the working population, among people who earn low wages and who will have to do business with this payday lending industry, has gone up.

Poverty is rising among the working population. There are poor families, and poor children, in Canada. The most alarming increase in the poverty rate for families has occurred in young families where the head of household is between 25 and 34 years old. We also see that in 1997, 56% of families headed by a single mother were living in poverty, and they accounted for 43% of poor children.

What we are seeing is rising poverty. We are going to try to deal with it by legislating, and this may be legitimate, but the fact remains that what we have seen during that time is that single-parent families, aboriginal people, people with disabilities, members of visible minorities and people with little education are the poorest people in our society. At the same time, the government is cutting funds for literacy training, social housing, the status of women—all measures that are genuinely going to help people deal with what lies at the heart of the problem. It seems to me that we cannot legislate to deal with only one aspect of the situation.

Obviously, the Criminal Code did not include a definition of payday loan. Nonetheless, it is important that we find a way of solving the problems of poverty in a more comprehensive manner, not going at them piecemeal with a bill like this. According to the federal government, a payday loan is defined as:

—a short-term loan for a relatively small amount, to be repaid at the time of the borrower's next payday.

The Financial Consumer Agency of Canada, which falls under the responsibility of the Department of Finance, indicates that it is possible to borrow via a payday loan. This is limited to 30%. I see this amount of 30% on a paycheque after the various deductions and income tax. It is often said that a family should not spend more than 30% of its income on accommodation. This leads to a very problematic situation in which payday lenders will ask their clients to give them a post-dated cheque or pre-authorized withdrawal directly from a bank account, and will add various fixed service charges as well as interest.

This seems to be a downward spiral that is difficult to stop for these less fortunate families, who, I would remind the House, are becoming even more impoverished. Certainly, more prosperous people do not resort to these lending agencies. They are more likely to go to their bank or credit union, as is the case in Quebec.

Quebec has its Consumer Protection Act. Payday lenders were once numerous in Quebec but the consumer protection bureau decided to intervene. After that, the combined efforts of the police and the consumer protection bureau all but eliminated that industry within our territory. Furthermore, the Consumer Protection Act contains strict provisions to regulate the entire lending industry.

Thus, we see that opinions are divided on Bill C-26. The Quebec government shares the Bloc Québécois' concerns because we see that, under this bill, any provinces can be granted an exemption by the federal government under certain conditions.

We feel that by placing conditions on exemptions, the federal government is interfering in one of Quebec's areas of jurisdiction. Indeed, Quebec is already regulating this industry, without having to account to the federal government. The maximum interest rate is set at 35% in Quebec, which is far less than the 60% in the Criminal Code. In addition, with its designation provision, the federal government is reserving the right to veto the measures taken by the province that requests the exemption. Although the mechanism for granting the designation is still unclear, it appears that ultimately, the Prime Minister will determine whether or not to grant the designation. Such a veto, in an area under Quebec's and the provinces' jurisdiction, seems inappropriate to us.

I will remind my colleagues in this House that Quebec does not always welcome vetoes.

The Bloc Québécois is therefore opposed to the principle of Bill C-26. However, the Bloc Québécois feels that although the federal government has the authority to include in the Criminal Code a maximum interest rate beyond which it becomes illegal to lend money, it does not have the authority to regulate industry trade practices.

The federal government does not need to decide to implement a licensing system or judge the merits of how Quebec and the provinces regulate the practices of this sector.

In our opinion, Quebec is free to regulate the trade practices of the companies under its jurisdiction, and the federal government does not need to impose a veto for the legislation to apply. Despite the Conservatives openness and respect during the election campaign, the fact is that the Harper government is carrying on the federal tradition of interfering in the jurisdictions of—

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, before the Minister of Justice attends committee, I will let him know that my party will be very happy to support this legislation in large part because when we were in government, the consultations started in 2000 with respect to this type of legislation. In fact, we were very close to bringing in legislation when the government was defeated last year.

Good consultation creates good legislation. Broad-based consultation creates good legislation. I think that is a lesson we can learn. If we do wide consultation, not only inside the minister's department but with stakeholders and people affected, we come up with a proper piece of legislation that is capable of moving through this House rapidly.

This is important and a lesson to be learned. Well defined and well consulted legislation makes efficient use of parliamentary time.

I will briefly go over some of the history. The payday loan industry, as we have heard, is a growing industry in this country. Over the last decade it has been estimated that there are more than 1,300 outlets and every year nearly 2 million Canadians utilize some aspect of the industry.

Unfortunately, along with this growth, a smaller portion of people did some practices that included some very costly practices to people who needed these services. In fact, they created things that would have been in contravention of the criminal interest rate, section 347 of the Criminal Code.

Over the course of the dialogue between the Department of Justice, Industry Canada and the Department of Finance, people came to understand that section 347 of the Criminal Code had really been instituted for the criminal organization loansharking type of activity.

The Canadian Payday Loan Association and payday loan groupings try to have a code of ethics and conduct. Even though they are not yet regulated, and hopefully will soon be regulated, in those provinces and territories, they will have to go through the scheme that is in this proposed piece of legislation, Bill C-26. We have some that are working to provide a service in a more ethical manner. Then we have some that obviously work outside the law to create as much money for themselves at the expense of people who are badly needing interim financing.

As the minister pointed out, this is not an attempt to in any way deal with the financial sector. We have the Bank Act and financial services, even though sometimes they would be dealing with less than $1,500 loan situations. We are talking about the payday loan which tends to be an unsecured loan situation for a very short period of time. As the minister has said, it is less than 62 days and the monetary limit is $1,500 or less.

We have here a sensible, working, viable scheme that will exempt those provinces that decide that it is beneficial in their jurisdiction to work with the industry to regulate and come up with some protections and regulations. Those who wish to operate in that area can do so in a manner that will be better protective of the public. That usually is a consumer protection jurisdiction of the provincial or territorial governments and not usually at this level.

That is why we had to move out of that jurisdiction and carve out an exemption in this bill to allow the provinces to do that. Some of the provinces, notably Manitoba, British Columbia, Nova Scotia and Alberta have indicated interest in doing this. Some other provinces may not be as interested. They will still be living under the Criminal Code jurisdiction and will have to enforce that situation in those jurisdictions.

It has taken a few years to get the bill ready. We are in a situation, at least in my party, to say that we do not see impediments, that this does not force any jurisdictions into making a change. It is actually more permissive. It allows them to step in and put legislation forward where they believe it is in the best interests of the people residing in their jurisdictions.

Some provinces, notably Quebec, have already operated in a different manner and the flexibility under the act is there. As noted, the designation of the province will be required under subsection 3 of the bill. In subsection 2 we have the monetary and statutory dates limitation and the licensing authorizations under the laws of the provinces. There has to be an agreement and then the province moves into the designation that is seen in subsection 3.

There is also a provision for revocation under subsection 4 that should not have to be used, but could be used if necessary and that shows some foresight. Again, interest has been defined, payday loan has been defined, and criminal interest rate is already in section 347, which has a maximum rate already.

This is progressive in that it allows jurisdictions that wish it to regulate the industry and to place limits on the costs to consumers of payday borrowing. I believe it would even have been a better ministerial speech had the minister acknowledged the work that predated his government's ascension into power as a minority government. Be that as it may, I listened to the speech by the Minister of Justice and he covered all the bases that needed to be covered in a way with which I would agree.

Having said that, this is legislation that can move forward quickly in the House. I want to reiterate that where my party sees that we can advance pieces of legislation that have been brought forward and we can support, we will do so, but where there are hastily put together, non-consultative pieces of legislation, we have to do different things in different circumstances.

With that I will end my brief comments here today and allow other parties who wish to comment in the House.

[Doug Kelsey, President and Chief Executive Director, West Coast Express]

Thank you for allowing us the opportunity to appear jointly before you today.

With me is Mr. Gary McNeil, executive director of GO Transit in Toronto; and Mr. Raynald Bélanger, the vice-president of commuter trains for Agence métropolitaine de transport. I am Doug Kelsey, president and chief executive officer of West Coast Express and SkyTrain in Vancouver. Together we represent Canada's three largest commuter rail operations.

To provide you with some background, our combined operations carry more than 125 million rides per year and represent more than $4 billion in combined public assets. The areas we represent serve approximately 30% of Canada's population. Canada's commuter rail authorities wish to make Canada's communities more livable.

As part of that, we believe we are an essential part of the solution to gridlock, greenhouse gases, and smog in Canada's urban centres. But to do more as governmental service providers, and to do more to help Canada meet its environmental goals, we require a long-term policy solution based on the principles of better and fairer urban corridor access and services for Canada's urban passenger rail authorities, at competitive rates, and based on reasonable contributions above the host railway's cost structure.

Our decision to make a joint submission to you today is the direct result of our shared interests, challenges, and points of view, as well as our dedication to serve the same ridership base as yours--the taxpaying public.

In our past submissions to the Canadian Transportation Act review commission and to this committee, we outlined the benefits of urban commuter rail service and voiced our concerns on a number of serious issues affecting our operations. We are very pleased to see that these concerns have been reflected in Bill C-11, particularly the ability to gain access to the lines of federally regulated railways by means of the dispute resolution mechanism under proposed section 152.1 of the bill. Second is the ability to have the agency determine the amount to be paid to the host railway for such access under proposed section 152.2 of the bill, should commercial negotiations not prevail successfully. There's also the ability of urban transit authorities such as AMT, GO, and West Coast Express to purchase a railway line or corridor offered for sale at net salvage value under proposed section 145.

Under access for commuter rail organizations, proposed section 152.1 addresses a major concern experienced by commuter rail authorities--our inability to gain access to the lines of federally regulated railways under the Canadian Transportation Act as it now stands. Shippers who may feel they have inadequate service have recourse under the servicer provisions of the Canadian Transportation Act. Commuter rail authorities do not have that same protection because we don't currently have the right to access. Under the proposed section 152.1, if the service being provided to a commuter rail operator is inadequate due to the inability to gain access to the federally regulated railways line, that operator may apply to the agency for specific relief.

It's unfortunate that the environment in which commuter rail service providers operate can be highly impacted by host railways. We can face unreasonably high rates, restrictive covenant provisions, and in some cases controls over the actual service specifications of our rail operations, while at the same time not being properly credited for the extensive taxpayer-funded capital that commuter rail operations provide to the host railways.

These significant contributions benefit both the railways' asset bases and the movement of freight traffic. This has been an ongoing concern recognized recently by the government in two bills that have unfortunately died on the order paper, Bill C-26, and Bill C-44. The concerns have a long history.

Some of you actually may recall that an attempt to provide commuter rail operators with some legislative protection failed some 20 years ago, back in 1986, when Bill C-97 also died on the order table. It is our hope that the outcome will be different this time around and that we will be provided with the protection necessary to allow for future access, for future expansion, and for the viability of commuter rail operations in the metropolitan communities and regions that we serve. Without these protections, our ability to support the livability and mobility of our national and regional goals will be severely limited.

In the past, the railways have advocated setting costs for arrangements with commuter rail operators based on “supply-demand” pricing for commercial negotiations. This approach can have an adverse effect for industry, because there's often no other competition or, in most cases, what is termed no effective competition or true comparatives for similar types of service.

Commuter rail is a unique service, with supply driven by corridor, not price. The current rate structure offered to commuter rail operators reflects a clear example of pricing in an environment of no competition. The economies, in some instances, are so unfortunately unfavourable that, despite public demand for services, expansion may be financially prohibitive where the commercial negotiating environment allows for no equality or checks and balances that ensure a level playing field for establishing rates and services.

However, proposed section 152.2 of the bill would prevent such high rates from being charged. Specifically, proposed subsection 152.2(2) lays out a number of factors that should be considered by the agency in determining a rate for the use of railways, land, equipment, facilities, or services. Of particular assistance to commuter rail operators is proposed paragraph 152.2(2)(b), which stipulates that a railway company's cost of capital is to be determined by a rate that is set by the agency and applied to the important net book value of the assets to be used by the public passenger service provider, minus any amount paid by the commuter rail operator in respect of those assets.

The net book value of the asset is the original cost of the asset to the railway, less depreciation. This method of determination of the cost of capital reflects the real cost that the railway incurred to purchase the asset that is being used by the commuter rail operator.

It is only reasonable and fair that the prices being charged for such use reflect the actual cost paid for the asset. Higher costs incurred by the railway to replace assets can be passed on to the commuter rail operators once the asset has been purchased. The cost of upgrades is also a factor for consideration by the agency in proposed paragraph 152.2(2)(c). Hence, there is no need to use another valuation method such as what is referred to as replacement value. Being charged excessive prices for access to operating services and infrastructure places an excessive cost burden on the Canadian commuter rail industry and the taxpayers we all serve. We are confident that proposed changes to the act will address many of our concerns in relation to service and pricing in the future.

In terms of rail line transfer and discontinuance, clause 39 of Bill C-11 proposes a change to section 145 of the act by including urban transit authorities in the list of entities to whom a rail line must be offered for sale at net salvage in the process to abandon a line. This change reflects the real possibility that a commuter rail service may be provided on a line that a railway company wants to abandon because the line is no longer used for freight traffic. Allowing an urban transit authority to purchase the line for net salvage value reflects the fact that commuter rail service is a beneficial public transportation service. It also reflects the reality, faced by many urban transit authorities, of tight operating budgets within which to provide the services we do provide.

In conclusion, we point out that the provisions of Bill C-11, when enacted, will not cause moneys to be spent from the federal treasury. The provisions of the bill contemplate the payment of fairer rates by commuter rail operators and reasonable contributions over the railway's costs. The only change to the system is that commuter rail authorities will have the right of access, a right that will level the playing field and create much-needed opportunities for commuter rail to benefit the livability of our urban centres, the economy and the environment, all for the greater good of the taxpayer and the numerous federal ministries that will benefit from the passage of this bill.

Mr. Chair, I thank you again for allowing us the opportunity to appear jointly before you today. This will conclude our formal remarks, and we'd be pleased to answer any questions that you may have.

[Vic Toews, Conservative, Minister of Justice and Attorney General of Canada]

moved that Bill C-26, An Act to amend the Criminal Code (criminal interest rate), be read the second time and referred to a committee.

Mr. Speaker, it is with pleasure that I speak today in strong support of Bill C-26, An Act to amend the Criminal Code, dealing with the criminal interest rate.

In its essence, the bill is about providing greater protection to Canadians. It is about enabling the regulation of an industry which, for better or for worse, has come to occupy a very real place in Canadian cities and towns.

Payday lending and the payday lending industry has, in the span of approximately 12 years, mushroomed in Canada to become an industry which is estimated to provide short term loan services to about two million people in Canada each year. It has a volume loan of approximately $1.7 billion annually. I was pleased to table this bill on October 6, 2006, as I believe it would enable more effective protection of Canadians everywhere.

Before discussing the substance of Bill C-26, I wish to point out that these amendments are the result of a collaborative dialogue between the territorial, provincial and federal governments. In this respect, I wish to acknowledge with thanks my colleague, the Minister of Industry, for it was the discussions among federal and provincial ministers responsible for consumer affairs who helped to ensure that these proposed amendments would meet the needs of those provincial jurisdictions which choose to regulate the industry.

It is important to situate this bill within its proper context. Doing so will enable us all to better appreciate its significance and the very important and practical consequences it would have in ensuring that everyday Canadians who use the services of the payday lending industry have enhanced protection against questionable business practices.

As I said moments ago, the payday lending industry is a relatively new one in Canada. Despite this, payday lending has, nevertheless, become a familiar fixture throughout Canada occupying prominent places on our streets in our communities. Indeed, just a few blocks away from this place, if one were to take a stroll in either direction, east down Rideau Street or south down Bank Street, the prevalence of payday lending outlets are readily noticeable. This is no different for communities throughout Canada.

The payday lending industry is believed to have first appeared in Canada around 1994. Beginning in the western provinces, the industry has since spread across the country from west to east. Whether we are talking about Prince Albert, Saskatchewan; Pembroke, Ontario; or Charlottetown, P.E.I.; the payday lending industry is there. In fact, the industry is currently operating in every province and territory in Canada except in the province of Quebec. In the case of Quebec, the inability of the payday lending industry to operate is a result of that province's decision not to issue licences to businesses that would charge more than 35% annual interest. This has effectively prevented the operation of the payday lending industry in that province.

Despite the absence in Quebec, it is estimated that there are approximately 1,350 outlets in the rest of Canada. It is clear, therefore, that the industry is well established. It is equally clear that it is time for effective government regulation of this rapidly growing industry.

We believe it is important to ensure that those Canadians who do use the services of a payday lender are provided the necessary protection from exploitative business practices, particularly so among the most vulnerable members of our community. The amendments proposed by Bill C-26 would allow for this.

It is important to be clear about what we are talking about when we speak of payday lending and the payday lending industry. The concept of a payday loan has really become shorthand for what is essentially a short term loan for a small amount. Generally, loans of this nature are in the range of $300 and extend for a period of about 10 days. The reasons that individuals choose to use the service of a payday lending industry are varied. Some use it for convenience while others use it out of necessity.

To date, loans of this nature have been provided by alternative retail lenders in Canada. Associated with this service, these alternative lenders will generally charge a range of administrative and processing fees as well as the interest associated with the borrowing of the moneys.

Qualification for these loans is generally straightforward. The borrower must first demonstrate proof of a steady income. Most obviously this is established through proof of employment, although employment is not necessarily required. Other sources of income can suffice in certain circumstances, including, for example, pension income. The borrower must have a bank account and must also provide a post-dated cheque or pre-authorized debit to the lender for the amount of the loan plus the associated fees and interest. Repayment of the loan is often due on the date of the borrower's next payday.

So in some respects, applying for and paying back a payday loan generally resembles other types of consumer lending. While the service provided is of a similar nature to other lending instruments, the specific form it takes is quite different.

For quite some time now, the payday lending industry has been the source of significant concern. Most notably, concerns have focused on the very high cost of borrowing, which in some cases can range in the thousands of per cent on an annual basis. Other concerns include the insufficient disclosure of contractual terms, aggressive and unfair debt collection practices, and the fact that these loans can quickly spiral out of control as a result of rolling over loans.

In light of these very real concerns, it is time for action.

This government has made a commitment to improve the lives of Canadian families. Bill C-26 reflects this commitment. Bill C-26 would amend the Criminal Code to enable provincial and territorial regulation of the payday lending industry. Currently, section 347 of the Criminal Code provides for an offence of entering into an agreement or arrangement to receive interest at an annual rate of more than 60%. Effectively, this creates the offence of charging interest at a criminal rate.

Section 347 was added to our Criminal Code in 1980. The principal policy rationale driving the inclusion of this provision was to address the practice of loansharking and that activity's role in relation to organized criminal behaviour. This was and remains a laudable goal. Organized crime poses a real threat to the safety and security of our communities. It did in 1980 and it continues to do so today.

Our government continues to take steps to better respond to the threats posed to our citizens and communities by organized crime. These include key legislative reforms in the area of gun crime as well as committing $200 million to strengthening the ability of the RCMP to combat organized crime. We will continue to strengthen our responses in this area, ensuring safer streets and communities for Canadians.

While section 347 may have been meant to address organized crime, the reality is that the provision has been interpreted as applying to most lending arrangements in Canada, including payday lending. Despite this fact, it is important to point out that section 347 is not a consumer protection tool.

The amendments proposed by Bill C-26 would clear the way for the provinces and the territories to create the tools they need to regulate the payday lending industry. In essence, the amendments would provide an exemption from section 347 of the Criminal Code for payday lenders under very specific and circumscribed instances. This exemption would be set out under proposed new section 347.1 of the Criminal Code.

How would this exemption scheme operate in practice? I am glad you asked that question, Mr. Speaker. First, the proposed amendments would define payday loan for the purpose of the exemption. A payday loan would be defined to mean:

an advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a line of credit or a credit card.

While this definition may seem like a mouthful, it is an extremely important aspect of the proposed amendments. Laws and legal systems are meant to provide a certain degree of precision, clearly defining the limits of the behaviour which they purport to regulate.

By defining a payday loan in this fashion, the proposed amendments provide the precision necessary to ensure that the exemption will not capture other types of lending arrangements where the policy considerations at play are very different. These amendments are targeted in scope.

We have heard the concerns expressed by our provincial and territorial colleagues in relation to the regulation of the payday lending industry and we have demonstrated our commitment through Bill C-26 to working with them to ensure that Canadians are provided increased consumer protection measures.

The amendments would further prescribe the types of payday loan arrangements that would be subject to an exemption by providing two additional requirements. First, the amount of money advanced under the agreement cannot be more than $1,500. Second, the loan agreement cannot be for more than 62 days. These are measured and well-considered limitations. They appropriately reflect what we know to be the typical payday lending situation, that is, a short term loan for a relatively small amount.

The proposed amendments specify additional requirements before providing for the exemption from section 347 of the Criminal Code. First, the payday lender must be licensed or otherwise specifically authorized under the laws of the province or territory in which the lender is operating. This presupposes the existence of a provincial or territorial consumer protection scheme. Importantly, the provincial scheme will have to include, for the exemption to apply, a limit on the total cost of borrowing under the payday lending agreement.

Should a province or territory wish to develop such consumer protection measures to address the payday lending industry within their jurisdiction, they will further need to seek a designation from the governor in council in order to provide an exemption from the application of section 347.

In practical terms this would mean that a province or territory which seeks an exemption under section 347 would write the federal minister of justice requesting that a designation for the exemption be issued. The request would need to detail how the province complies with the requirements proposed by these amendments, namely, that the province has legislative measures providing for a consumer protection scheme in place, which includes limits on the total cost of payday borrowing.

Assuming this is the case and acting on the recommendation of the federal Minister of Industry, the Minister of Justice would then ask the governor in council to grant or not grant the exemption. At any time, the province, through its lieutenant governor in council, can request that the designation be revoked. Similarly, the governor in council can revoke the designation if the legislation which establishes the consumer protection scheme established by the province is no longer in force.

This is a sensible and effective solution to a pressing concern in Canada. Bill C-26 facilitates the development of a consumer protection scheme in what has been a largely unregulated area. In so doing, the amendments recognize the constitutional authority over business practices possessed by the provinces and territories through their responsibility over property and civil rights. These amendments acknowledge that the provinces and territories are the most suitably placed level of government to implement a protection regime for consumers which responds to the needs and local circumstances that may exist in different jurisdictions across the country.

Let me pause to point out that the proposed amendments would not apply to federally regulated financial institutions such as banks. Banks and other financial institutions in Canada are already subject to federal legislation. The amendments are specifically targeted at a currently unregulated industry. We know that there is provincial and territorial support for these changes to the Criminal Code to occur. This is because many jurisdictions have indicated that the application of section 347 has been a barrier to their being able to move forward and effectively regulate the payday lending industry.

These amendments would address provincial concerns. For example, in my home province, the government has already tabled legislation to regulate the payday lending industry. Other provinces have expressed an interest in taking similar steps. In the case where provinces choose not to regulate the payday lending industry, the Criminal Code will continue to apply.

Some may argue that the payday lending industry has no place in Canadian society. They may argue that the payday lending industry exploits the situation of already vulnerable Canadians and that facilitating the regulation of this industry will only exacerbate the situation of vulnerable Canadians.

The fact remains, however, that the payday lending industry is a part of our society, and a growing one at that, and we must take the necessary steps to bring it within the purview of regulation. Doing so will ensure that Canadian consumers have more effective protection against questionable business practices.

The amendments contained in Bill C-26 provide the provinces and territories the tools they need to respond to the problem in a manner that is appropriate to the realities facing their respective jurisdictions. I am confident that this is a sound approach to a pressing issue and one which I urge hon. members on both sides of the House to support.

Canadian Heritage

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I want to thank the member for Bonavista—Gander—Grand Falls—Windsor and the member for Saint-Lambert for the information they are providing us today.

I was a volunteer member on the Workers Arts and Heritage Centre in Hamilton. I was really struck when I heard government members talking today about the fact that money was available, but people were not sophisticated enough to access it. It strikes me that it would be the government's responsibility to help people who are not sophisticated and need access to their government and government programs.

I was extremely disappointed to hear a government member today comparing Bill C-25, Bill C-26 and Bill C-27. These are very serious pieces of legislation. The member was saying this should be minimized debate. It sounds to me as though the government started searching for programs it wanted to cut and unfortunately it chose this one.

[Jim Abbott, Conservative, Parliamentary Secretary to the Minister of Canadian Heritage]

Mr. Speaker, I was wondering if the member might want to comment on the fact that our colleague from the Standing Committee on Canadian Heritage, the member for Saint-Lambert, has brought forward his concurrence motion at this particular time.

I have the highest respect for the member for Saint-Lambert and for his dedication to this question. Considering the fact that the Minister of Canadian Heritage and I on her behalf have made it perfectly clear that we are working toward a new museums policy, I am wondering about the timing of this debate. Today we were supposed to be debating Bill C-25 from the Minister of Finance, a bill regarding the proceeds of crime and money laundering, an important issue, Bill C-26 from the Minister of Justice, an act to amend the Criminal Code (criminal interest rate), and Bill C-27 from the Minister of Justice, an act to amend the Criminal Code (dangerous offenders and recognizance to keep the peace).

We are trying to make Canada a safer place. I am wondering if the member for Peace River would agree with me on the timing of this debate. While I respect the member's intent of trying to keep the pressure on the government, nonetheless, we have to make sure that we are keeping Canada safe, not the issue that the member has brought forward with this motion.

[Jean-Pierre Bazinet, President, Chutes-la-Chaudière East Sector, City of Lévis]

Since my knowledge of English is limited, I will speak to you in French.

To the Chair of the Standing Committee on Transport, first we want to thank the members of the committee for allowing us to speak about our experience with noise generated by the Joffre switching yard in Charny. Our comments will pertain to an aspect of rail transportation which bears witness to the problems associated with the co-existence of rail traffic and daily life in an urban environment.

You have received our brief. I want to read you a summary that will be provided to you, if you so wish.

My name is Jean-Pierre Bazinet and I am a municipal councillor for the City of Levis. I am also president, Chutes-la-Chaudière East Sector, which includes the neighbourhood of Charny, Breakeyville, Saint-Jean-Chrysostome and Saint-Romuald.

I am accompanied today by Mr. Alain Lemaire, who is the municipal councillor for Charny and former mayor of the City of Charny, now part of an agglomeration. I am also accompanied by Mr. Alain Blanchette who is chief of staff of the mayor of the City of Levis, Ms. Danielle Roy-Marinelli. Finally Mr. Michel Hallé, a lawyer and legal advisor at the Direction des affaires juridiques for the City of Levis, is also here with me.

First, that current City of Levis is the result of the merger of 10 former municipalities which became neighbourhoods of that city on January 1^st, 2002. This city is home to some 127,000 people, making it the eighth largest city in Quebec.

The history of the railway and Levis heritage are intertwined. The railway was an important leader for economic development throughout the ages, and its rich tradition has grown over the years. Currently we want to maintain rail operations within our area, but in a more harmonious way.

Our brief deals with the following aspects: noise generated by the Joffre switching yard and its effects on public health; Bill C-11 and its amendments; finally suggested additions to the Bill.

As part of its activities, Canadian National operates a switching yard within the boundaries of Charny and Saint-Jean-Chrysostome. Given the elevated noise levels generated by switching operations conducted by Canadian National, numerous complaints have been laid by residents of the three former neighbourhoods that existed prior to the merger in 2000, as well as by residents of the other neighbourhoods that I mentioned earlier.

These residents believe that the noise pollution caused by CN's operations, particularly in the evening and at night, is affecting their health and impedes their peaceful enjoyment of their property. This situation came about in 1998 — and that date is important. Previously, the switching yard and the residents lived in harmony. The new situation coincided with the privatization of the company, which streamlined its operations not only in Quebec, but throughout Canada.

In that respect, the problems experienced by the residents of Charny are similar to those encountered in other cities in Canada. The preceding testimonies are compelling.

When CN failed to take action, a large number of affected residents signed a petition that was presented to the council of the former City of Charny in 2000. The municipality also received letters from home owners describing the situation as unacceptable and intolerable.

The former City of Charny decided to support the citizens' committee opposed to the noise from the Joffre switching yard in Charny. It hired an engineering firm Dessau-Soprin to conduct a noise study to measure the effect of CN's operations. The study, tabled in February 2000, copies of which I have, showed that the impulse noise mainly comes from such activities as switching of cars, acceleration and deceleration of locomotives, hooking together of cars, breaking of trains, train whistles, train movement, loaders, tow trucks and other vehicles and back-up beepers.

In 2001, the Public Health Department of the Chaudière-Appalaches Health and Social Services Board conducted an analysis of the situation and produced a report entitled “Assessment of the public health risk associated with environmental noise produced by operations at CN's Joffre switching yard in Charny.”

The study concludes, and I quote:

Based on the available noise measurements the literature review and the specific context, we find that the environmental noise to which many of the people living in the residential area adjacent to CN's Joffre switching yard adversely affects their quality of life and potentially their health. Such noise levels are therefore a nuisance to the peace, comfort and well-being of the residents near the Joffre switching yard in Charny. From a public health stand point, these noise levels are likely to have an adverse affect on health by disturbing sleep, which in turn has a number of side effects. These noise levels are in our view incompatible with residential zoning unless special measures are taken to reduce the noise.

Around the same time, the residents of the City of Oakville, Ontario, filed a complaint with the Canadian Transportation Agency under the Canada Transportation Act. In its decision, the agency determined that CN was not doing as little damage as possible in the exercise of its powers. Accordingly, the agency ordered CN to take certain measures, among them preparing a long-noise reduction plan satisfactory to the agency.

This decision was a source of tremendous hope for the residents of Oakville and Charny. In response to the decision, CN decided to challenge the Agency's jurisdiction in the Federal Court of Appeal. In a ruling handed down on December, 2000, the court found that the Canadian Transportation Agency did not have jurisdiction under the Canada Transportation Act to deal with complaints about noise, smoke and vibration from duly authorized railway operations.

In the wake of the decisions in the Oakville matter, the Canadian Transportation Agency decided to offer a mediation service in a bid to resolve disputes similar to those in Oakville and Charny. In March 2001, the former City of Charny and the citizens' committee submitted a request for mediation to the Canadian Transportation Agency. CN agreed to mediation. Unfortunately, after several meeting between the parties, we concluded that the mediation was not going to work. Bound by an undertaking to preserve the confidentiality of the discussions, we are unable to provide further details. We can say, however, that the City of Lévis which succeeded the former City of Charny on January 1^st, 2002, made every effort to find a solution acceptable to its residents and even delegated to the mediation meetings three elected representatives, including two members of the executive committee at the time.

Section 29 of Bill C-11 introduces four new sections dealing specifically with the noise caused by operation of a railway. We are especially pleased that Parliament decided to fill a major void in the process of resolving disputes between the community and the railway company by giving the Canadian Transportation Agency clear authority to make orders to rectify a noise problem.

The new section 95.3 restores the monitoring authority the agency lost as a result of the Federal Court of Appeal decision in the Oakville case. This section restores to Canadians a mechanism for control that they had lost for more than six years, and which was causing problems. This would make it possible to turn to a tribunal with jurisdiction in order to condemn situations affecting public health.

Without making any assumptions about the agency's future work, we hope that the attitude the agency showed in the Oakville case will govern its orders. We believe that the wording used in Bill C-26 in 2003 requiring railway companies to make the least possible noise was better than the wording used in the current bill. We believe that the current wording waters down the obligation of railway companies to operate their facilities in a way that respects their neighbours. On the contrary, we want section 29 to be reinforced by adding a clause stating that railway companies are not to harm public health in the course of their operations. We are concerned that the obligation of railway companies to refrain from making unreasonable noise is subject to operational requirements.

Operational requirements should not be allowed to preclude that obligation. It should therefore be made clear that what must be taken into account is the company's essential operational requirements not just any requirements. For example, operational profitability should not be used to relieve a railway company of its obligation to refrain from making noise.

Section 7 of Bill C-11establishes the framework for the mediation process the Canadian Transportation Agency has been using for several years. As a result of our experience in this area, we are very hopeful that the prescribed 60-day mediation period will be reduced to 30 days as proposed in Bill C-26. We believe that 30 days is enough time to try to voluntarily resolve a dispute provided the parties make the necessary effort. More than 18 months should not be allowed to pass between a request for mediation and an outcome as was the case in Charny.

In addition to expressing support for the amendments as indicated above, we would like to take this opportunity to suggest that Bill C-11 be amended to give the Canadian Transportation Agency jurisdiction over the use of train whistles. More specifically, we believe it would be appropriate for every request to prohibit the use of train whistles within municipal boundaries to be reviewed by the CTA in cases where the municipality, the railway company and Transport Canada cannot agree on the requirements for no-whistle regulations.

Furthermore, we support the request from the Union des municipalités du Québec made by its President Jean Perrault in his letter of July 6th, 2006, to the Honourable Lawrence Cannon, Minister of Transport of Canada, to establish tangible measures for ensuring the rigorous application of Rule 103(c) of the Canadian Rail Operating Rules, which states that “no part of a train or engine may be allowed to stand on any part of a public crossing at grade for a longer period than five minutes”, and to permit the application of Rule 103(c) of the Canada Rail Operating Rules to moving trains. In fact, vehicle and pedestrian traffic blocking a crossing for more than five minutes can lead to public safety problems, especially where the blockage prevents safety services such as firefighters police and ambulance vehicles from providing the required services.

The problem of noise, caused by railway operations is a fundamental priority for the City of Lévis. This situation is causing problems for more than 10,000 people in our area. A great deal of effort has been made in the past to restore the peace and quiet the neighbourhood so amply deserves. Unfortunately, our efforts have been in vain. That is why we support the federal government's desire to give Canadians a forum in which to assert their rights. However, we believe that the wording of section 29 of Bill C-11must be amended to ensure that the objective of the legislation is met.

Mr. Chairman and members of the committee, I want to thank you for your attention.

[François Picard, Second Vice-President of the Executive Committee, City of Quebec]

I am accompanied by Mr. André Demers, alderman for the Sainte-Foy sector, where there is a marshalling yard. Mr. Demers is also President of the Commission aménagement du territoire et transports.

I am also accompanied by Mr. Marc des Rivières, who is a professional director and expert on transportation for the City of Quebec.

First, the City of Quebec would like to thank the members of the House of Commons Standing Committee on Transport for the opportunity to present his comments on Bill C-11.

Thank you for listening to us. And of course, my presentation will be in French.

I will begin by talking about noise generated by railway operations, by addressing the legal framework as well as the overall approach that the City of Quebec is proposing. If time allows, although you already have our brief in hand, we will also discuss other nuisances or issues that could be improved in the bill.

First, I will talk about the legal framework with regard to noise generated by railway operations. In the short-term, the City of Quebec recommends that amendments be made to Bill C-11 as follows.

First, we recommend the reintroduction of the wording proposed in the former Bill C-26 so that railway companies are required to produce the least possible noise, replacing the wording of Bill C-11 which states the obligation "not to make unreasonable noise".

In other words, like the mayor of a municipality in British Columbia who spoke before us, we believe that the expression "unreasonable noise" is too vague and leads instead to confrontation with the railway companies. Consequently, we propose amending the wording which, although it is only two words, has vast implications for the City of Quebec.

Second, we recommend adding, in the new section 95.1 under Bill C-11, the following: "that noise levels caused by the railway operations shall not harm public safety or cause negative effects such as disrupted sleep for persons living in residential areas adjacent to switching yards or along railway lines".

Third, we recommend subjecting railway companies under federal jurisdiction to provincial and municipal laws and regulatory provisions concerning public nuisances and nocturnal noise in order to preserve the quality of life of populations living near railway facilities.

Another approach would be to reduce railway noise at the source. Even if the wording that companies make the least possible noise is reintroduced, we could require the companies to reduce noise sources by doing research and development on new technologies that would allow them to directly reduce the amount of noise caused by the cars.

Those are our recommendations with regard to the legal framework.

With regard to adopting a more comprehensive approach, the city proposes as part of a long-term strategy the adoption of a national railway noise reduction policy setting orientations, objectives and the most appropriate action strategies. This policy could be developed by Environment Canada, jointly with Health Canada, since it is part of a public health and noise pollution approach.

We could develop noise maps of areas where residents are subjected to excessive noise levels in order to gradually eliminate black spots. We could also give priority to reviewing the sites causing the greatest harm during the night, when thresholds exceed fixed limits.

We could also give priority to at-source noise reduction measures—such as those I mentioned earlier—by taking into account the three types of noise: rolling noise, locomotive and auxiliary equipment noise and switching noise.

Furthermore, various specific measures, some of which are presented in section 1.6.1, to reduce railway noise gradually through retrofits and better maintenance of rolling stock and railway lines, subject to available funds, could be taken.

A number of European countries have adopted regulations relating to decibel levels. It starts at 55 decibels, which corresponds with normal annoyance caused by noise, and goes up to 65 decibels which, according to the OECD, corresponds to constrained behaviour patterns, symptomatic of serious damage caused by noise. If you wish to take the idea of "least possible noise", you could adopt a targeted strategy in the hope that the noise from switching yards or trains will not exceed 55 to 65 decibels, during the day, when noise could reach as high as 65 decibels, or at night, when noise levels should not exceed 55 decibels.

So, a number of European countries have adopted similar regulations, which exceed what you are proposing, but which could prove interesting in the long-term, particularly if we opt for a comprehensive approach and a national railway noise reduction policy.

Other measures in our brief address other nuisances. Railway companies must be required to comply with local legislation and regulations on environmental protection and the protection of public health and safety, particularly with regard to odours and unhealthy conditions.

We propose that the bill require railway companies to put a communications plan in place aimed at resident populations concerning railway operations involving the transportation of hazardous goods.

With regard to, in particular, the obstruction of public crossings, there must be concrete measures requiring the strict application of paragraph 103(c) of the Canadian Railway Operation Regulations, so that no switching done at crossings can block road and pedestrian traffic for more than the five-minute maximum prescribed by those regulations.

Obviously, the City of Quebec is faced with one last nuisance related to train whistling. Section 11 of the Railway-Highway Crossing at Grade Regulations needs to be reviewed in terms of the allocation of cost for the construction and maintenance of new grade crossings, so that the benefits associated with railway facilities in urban areas can be equally shared by the railway company and the local government.

Currently, the municipality pays 100 per cent of the cost of changes made to grade crossings. We believe that at least 50 per cent of the cost of changes to grade crossings should be paid by the railway companies.

I have used my seven minutes. We are prepared to answer any questions you may have. Once again, I want to thank you for having taken the time to listen to us.

Business of the House

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, today we will continue the debate on an opposition motion which gives the government an opportunity to talk about keeping its promise to review our programs to ensure every taxpayer dollar spent is well spent and by reducing the debt by $13.2 billion.

Tomorrow we will begin debate on Bill C-25 , proceeds of crime, followed by Bill C-26, payday lending.

Next week, we will continue with the business from Friday with the addition of Bill C-27, dangerous offenders, Bill S-2, hazardous materials, Bill C-6 aeronautics, and Bill C-28, a second act to implement certain provisions of the budget tabled in Parliament on May 2, 2006.

With respect to my hon. colleague's question on supply day, just like a child waiting for Christmas, he will have to wait a little bit longer. We will get back to him next week.

[Christian Jobin]

The Chaudière-Appalaches Regional Health and Social Services Board conducted a study on the Charny yard and noise zones at night. The noise is so intense that people cannot sleep. They wake up in the middle of the night. People have reported high stress levels. Amongst other things, there are reports of children who are not doing as well in school and senior whose stress levels have gone up, and who even have developed more serious illnesses due to stress. Some of my friends who live near the yard sleep in their basements at night and have to use ear plugs.

Bill C-11 will give the transportation agency the power to issue orders, but is the word “unreasonable ” strong enough to address all the situations I have just described? CN, CP and all the other railway companies will repeat what they did in 1999 when they took their case before the Federal Court in Ontario to challenge the very severe ruling the CTA had made against CN. That is what I fear.

[Christian Jobin]

I know full well that the Union des municipalités du Québec tabled a brief on Bill C-26 and that it said the same thing we are saying today. The brief asks that the CTA regain the power to issue orders. Bill C-26 referred to making “the less amount of noise possible”. For us, this wording is much stronger than the word “unreasonable”. We would like to re-emphasize the fact that quantitative rules, in terms of decibels, should be included to protect people's quality of life.

The Canadian Federation of Municipalities has also spoken on the issue. It would like the Canadian government to amend the Canada Transportation Act so that the CTA regains the power to issue orders. Indeed, negotiations held in Canada within the framework of a mediation process failed because CN and CP withdrew.

[Christian Jobin]

Since I have worked on bills C-26 and C-44, since CN went all the way to the Supreme Court to challenge the ruling of the Canadian Transportation Agency in 1999, and since I was involved in mediation which, after 18 months, bore no fruit, I can tell you that there still is not a level-playing field between citizens and the railway companies. The companies just don't want to make the appropriate changes. That is why we want this bill to be amended. I'm not saying it is specifically to protect citizens against the companies, but rather to protect them against the abuse of power which those companies exercise. I think that today they are not acting as good citizens and that is unfortunate.

Everyone knows that CN helped develop Canada. When the railway was built, CN contributed to the growth of Canada's major cities. We are in favour of the development of the railway sector, but we want there to be a harmonious relationship between citizens and this sector, as is the case in some European countries. That is why we are asking for wording referring to the health of people to be included in the bill, along with quantitative standards referring to the allowable noise level during the day and at night.

We agree with Mr. Ménard that the word “unreasonable” is too weak. This would allow the railway companies to claim, in the name of financial or operational criteria, that they cannot correct the situation. These standards exist in Europe. As for a national rail-noise-reduction policy, we would like it to be permanent and that it allow for remedial measures over time.

CN, as well as Canada, have grown over time, but the two events did not happen in a harmonious manner. The parties did not agree, and that's why we are here today. We have to deal with the fact that railways generate noise, but ignore municipal and provincial regulations.

If a citizen made the type of noise during one night which CN generates throughout the year, he or she would be immediately thrown in jail. What we want is to level the playing field. The changes we are asking for may seem radical, but for a long time, since 1998, we are in the same boat as the citizens. And that is why we are making this request.

[Christian Jobin]

I remind you that Bill C-26 provided for 30 days.

[Christian Jobin]

We feel that the word “unreasonable” is too weak. Bill C-26 was stronger because it said “the least noise possible”, which is much stronger than “unreasonable”, as far as semantics is concerned.

Why do we wish, as Mr. Gantous was saying, to incorporate health concepts that comply with the rules of the World Health Organization? We feel that the bill should include specific enough criteria so that the Canadian Transportation Agency would unequivocally have the power to implement the legislation, so that the railways could not invoke the excuse of operational requirements and could not very easily disobey the rules.

Unreasonable noise is a quantitative concept.. What we would like to see, is that the control factors be qualitative, or conversely, that we at least be able to record the noise, quantify it and say it exceeds the allowable daytime or night time decibel level. The railway company that goes beyond the limit would be obliged to find solutions and to report to the Canadian Transportation Agency within 30 days of the violation. That would be legislation with teeth.

The railway company can find solutions. We must not be afraid. In Europe, this is how it currently works. If there is anywhere that the railway sector is developed, it is in Europe. While we were dismantling our railways, Europe continued to develop its passenger and road transportation infrastructure.

Europe has much more stringent standards in this area than we do. European tracks are very smooth, whereas ours are still unequal, which produces shaking and noise. We suggest the creation of a railway noise reduction policy including mandatory annual outcomes drafted together with stakeholders from the railway companies, in order to find solutions and to ensure the harmonious coexistence of all stakeholders.

Criminal Code

[Vic Toews, Conservative, Minister of Justice and Attorney General of Canada]

moved for leave to introduce Bill C-26, An Act to amend the Criminal Code (criminal interest rate).

(Motions deemed adopted, bill read the first time and printed)