House of Commons Hansard #135 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was americans.

Topics

6:55 p.m.

NDP

Glenn Thibeault Sudbury, ON

Mr. Speaker, late last year I asked this government when it would end credit card gouging. Families and small businesses across this country are still waiting for that answer. Last year this government rolled out its voluntary code of conduct for the credit and debit card industry. This code is little more than window dressing for Canadian consumers.

Who is benefiting from the voluntary code of conduct? Let us have a look.

For the full year of 2010, MasterCard reported a net income of $1.85 billion, compared with $1.46 billion in 2009.

National Bank kicked off the fourth quarter in December of 2010 with an earnings bonanza by reporting a profit of $287 million for the three months ending October 2010, compared with $241 million in the same quarter last year.

Scotiabank reported an increase of 21% in earnings over the same quarter last year, and its most profitable year ever. The fourth quarter saw the Bank of Nova Scotia earn $1.1 billion, and the annual profit total was $4.24 billion for all of 2010.

RBC did better than Scotia's record year, recording $5.2 billion in net income for the year, an increase of 35% from a year ago. The fourth quarter saw RBC earn over $1 billion in the latest three-month period.

Canada's fourth-biggest bank, the Bank of Montreal, reported last, and had a fourth quarter profit of $739 million, up 14% from last year. BMO's annual profit for 2010 was $2.8 billion, which was over $1 billion more than last year, or 57% higher than the 2009 annual profit.

Total profits for the big six banks in 2010 equalled $20.4 billion, smashing last year's record of $14.66 billion. That is $6 billion more in profits than last year.

Who is paying the price for this government's failed code? It is consumers and small businesses.

While the Conservative government feels it necessary to give corporations billions in tax cuts, it does not think that small businesses and retailers should be relieved of over $5 billion in mandatory credit card fees. That $5 billion represents the cost borne by small businesses for accepting credit cards and tracking transactions.

The big issue for retailers is the influx of premium cards--for instance, those that offer generous air miles. Consumers are lured to these cards because they offer a chance to collect points faster and reap rewards such as free flights, electronics and jewellery. The use of premium cards has risen dramatically since they first hit the market in 2008. That high-end plastic, such as Visa Infinite or World Elite MasterCard, costs more for retailers to process than other standard, gold or platinum cards.

Consumers do not know that their demand for freebies from the credit card companies is actually squeezing the profits of these small businesses because it is the merchants who really foot this bill.

Ordinarily, the cost per transaction ranges from 1% to 3% of every sale, whether the customer pays cash or pulls out a card. Premium cards require much more than that. Considering the razor-thin margins a competitive market demands, $5 billion is a lot.

How is the government's inaction on credit card gouging affecting Canadians?

Family debt is on the rise. The debt carried by the average Canadian household has hit $100,000, up about 78% from two decades ago. The debt-to-income ratio stands at a record 150%, meaning for every $1,000 in after-tax income, Canadian families owe an average of $1,500.

In summary, Canadian families cannot wait much longer. How indebted do families need to become before this government takes action to address the credit card gouging issue?

7 p.m.

Saint Boniface
Manitoba

Conservative

Shelly Glover Parliamentary Secretary to the Minister of Finance

Mr. Speaker, unlike the NDP, our Conservative government stands up for small businesses by lowering their tax bills and helping protect them from big credit and debit card companies.

In recent years, we all heard concerns from small businesses about the practices of card issuers in relation to interchange fees and business practices. These concerns focused on what they viewed as a lack of choice and significant costs which small businesses were faced with when dealing with issuers. As these costs could be passed on to consumers and families, this became an issue of importance to all Canadians.

Troubled by the concerns of small business, our government quickly began to address the situation in an effective and balanced manner. This included consulting with small businesses, consumer advocacy groups, retailers, the financial service industry, and other public interest groups.

This led to the introduction of a voluntary code of conduct to govern the credit and debit card industry in May 2010. This code was quickly and formally adopted by all payment card networks, major credit and debit card issuers, and payment processors in Canada. The landmark code represents the first time in Canadian history that a government has moved to protect small businesses and merchants dealing with card issuers.

The code has worked to encourage choice and competition by giving small businesses the freedom to choose which card networks they use, by helping them control their costs, and allowing them to pass savings on to their customers and much more. For instance, listen to what the Canadian Federation of Independent Business said in an opinion piece written only a few weeks ago. It stated:

Since its adoption this past summer, the code has served merchants extremely well. In fact, it has helped ensure that problems with the launch of a new Visa debit product were quickly addressed...the code has done an excellent job in ensuring some fair ground rules and maintaining Canada's low-cost debit system--

Our Conservative government went further, though. We introduced and passed legislation giving the Financial Consumer Agency of Canada the power to monitor compliance with the code. To further underline our commitment, we also passed legislation giving the government the power to regulate the conduct of the credit and debit card networks, if necessary.

We have been clear with credit and debit companies. We will regulate if the code is not respected.

Unfortunately and shockingly, the NDP voted against the code of conduct in Parliament. I ask NDP members, why did they not help small businesses before when they had the chance? Why did they vote against the code and against supporting small businesses?

7:05 p.m.

NDP

Glenn Thibeault Sudbury, ON

Mr. Speaker, what the hon. member is overlooking is that there have already been breaches of the voluntary code of conduct. Yes, there was some reaction, but consumers are still having to pay the brunt of this bill. When small businesses have to start increasing their costs of a product because Visa and MasterCard have decided to increase their use of premium cards, which actually cost businesses more, we all pay.

A voluntary code of conduct does not have enough teeth right now to ensure that the large multinational banks, Visa and MasterCard, are there to protect the interests of small businesses. The voluntary code of conduct does not go far enough. We have already seen on numerous occasions that there have been breaches.

If this is what is happening now, what is going to happen in the future? The government has not corrected this and the voluntary code is not working.

7:05 p.m.

Conservative

Shelly Glover Saint Boniface, MB

Mr. Speaker, it is nice to see that NDP members have come to the game, finally.

The member mentioned that there have been breaches, but he voted against even having a code of conduct. Unlike the NDP who stood and voted against that code, our Conservative government believes that small businesses deserve to be protected from unfair business practices. That is why we introduced the code.

While the NDP fought it, the code has been applauded by small businesses and other retailers. In the words of the Canadian Federation of Independent Grocers:

The Code of Conduct is a very positive step and we are very pleased to note...independent retail grocers...have been heard and responded to, by the government.

Rest assured, our government is constantly monitoring compliance with the code. Any possible violation will be investigated and we are ready to take further action, if needed, including making the code involuntary, if necessary.

The NDP still has not explained why on earth it voted against this measure to protect our small businesses.

7:05 p.m.

Conservative

The Deputy Speaker Andrew Scheer

A motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 7:09 p.m.)