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.

Criminal Code

[Tony Martin, NDP, Sault Ste. Marie, ON]

Mr. Speaker, could the member be a bit more specific? I still do not understand how this is an encroachment into provincial jurisdiction when, in fact, it is turning over responsibility for this very important piece of work to provincial jurisdiction.

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

Mr. Speaker, if I understand the question correctly, the member is saying he does not understand the meaning of encroachment.

I have been speaking for the past 10 minutes. My colleague from Laval spoke for 10 minutes before that. So for a good 20 minutes he has heard what we mean by provincial jurisdiction. In addition, the Constitution provides for the distribution of powers. On this matter, for example, it is pretty straightforward. It comes under provincial jurisdiction and so the federal has no business sticking its nose in. No further explanation is needed, I believe.

Obviously, that does not mean that the federal government must not examine this situation, but it should perhaps occupy itself with what concerns it. We were talking about poverty earlier. In 2000, child poverty was supposed to be eradicated in Canada. It was an election promise for 2000. Here we are in 2007, and the rate of poverty among children is higher than it was before the famous promise was made. This is an area of federal jurisdiction. The federal government could therefore attend to that.

This particular matter concerns the provinces. Our legislation in Quebec, for example, is such that this type of business hardly exists at all. So we do not need the federal government telling us what to do and how to do it and that certain conditions would determine whether it could be done. That does not work in Quebec.

[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.

[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, my hon. colleague's question raises a large issue. We know there are uneven applications across the country. It sometimes brings us back to the whole role of federal-provincial relations because we do need certain national standards. I would be very much in favour of national standards in terms of our Criminal Code provision for the usurious rates that we see with payday lending.

However, what we see on the ground is we have dropped the ball at the federal level. We are not in the same position as the provinces in terms of applying it. I would like one national standard to ensure that everyone is protected in the same way.

However, in terms of being realistic, at this point we have to look to the provinces to move forward. Will there be a gap? Definitely, big gaps remain. However, I feel we have one national gap right now, so the bill will be a step forward to address some of those gaps.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I listened carefully to the presentation by my colleague from Timmins—James Bay. I especially noted his comments regarding the position taken by my party, the Bloc Québécois. I am concerned and at the same time disappointed by his lack of understanding of the political situation in Canada. Canada is not a unitary state; it is a confederation comprised of ten provincial and two territorial governments, if my memory serves me well.

With regard to jurisdiction in matters of justice, the Government of Quebec already has a law that established an office of consumer protection, the OPC. This law is more than sufficient to meet the requirements of the bill, requirements that will be applied throughout Canada.

Consequently, the present Quebec government, a government that believes in Confederation, also supports the position that its jurisdiction be fully respected with regard to the OPC and that it sees no point in a central government imposing a similar law, one that is less rigorous than its own. At present the ceiling for interest rates in Quebec is 35%, whereas with the current bill they could jump to 60%.

I would like to know what the member thinks of this position on respecting each jurisdiction. The Bloc Québécois is only defending respect for jurisdictions and is quite favourable to all comments and clarifications made by the bill. However, it must vote against the bill since this sector is already regulated by the Government of Quebec.

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

Mr. Speaker, I thank my colleague for his explanation of the Bloc's position, but I return to the original conundrum we are facing here. We are talking about a bill that would change the code so that the provinces would be able to step into a breach on which the federal government has simply not acted.

The fact that Quebec is already there really is of no bearing. Why would Quebec say it would be completely intolerable if we changed the code so other provinces could now step up? I find that argument absurd. We are not taking powers away from Quebec at all. In fact, we are saying at the federal level that we are willing to evolve so that all provinces are allowed to start to regulate.

The argument goes back to the philosophical argument unfortunately, which is it seems that any time the Bloc or the PQ have taken a position, they have said they would block anything that would bring positive change in the rest of the country. I find that an abominable position.

We are here to represent the interests of the entire country. I am not just here to represent the people of Timmins--James Bay, but to make policy that affects people across Canada. When I speak as a member of Parliament about issues in the Maritimes, I am speaking because I am here to represent the best interests of everyone across this country.

I point back to the motion that the NDP brought forward on a pesticide ban, which would have ensured that children across this country were protected. The Bloc Québécois said that Quebec already had that in place so the Bloc members would absolutely oppose any efforts by the House to bring in pesticide protection for children in the rest of the country. I find it an abominable position.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I support the bill because we need more transparency in the financial system. We need to make it very clear to the man on the street exactly what he is getting into, whether it is banks or payday loan institutions, and what it is going to cost. We need to protect Canadians from usury.

My question for the member is similar to the question asked by my colleague. Section 347 in the code limits interest rates to 60%, so why is that not working? Why do we not enforce that? If it is not working, why do we not fix it so it will work so all Canadians have that 60% protection at least?

We say the provinces would be exempt from section 347 if they regulate, but the bill does not give them any limits. This is problematic. We are giving them an exemption from the 60% rate and they could regulate at 1,000% or whatever. Where is the protection for lower income people whom we all want to protect?

I want to make one correction to the comments made by my Bloc colleague. There are three territories, not two: Nunavut, Yukon and Northwest Territories.

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

Mr. Speaker, I guess the question I would have to ask him would be why we are having to move on this bill now. It is because the previous government did not make any efforts to regulate the payday loan lenders.

We pushed the previous government to take action. If the provisions exist at the federal level for them to act, they could have acted. They should have acted. Why did they not act? They were not interested in acting.

I believe at this point what we are looking at is finding a way to make action possible. It seems that the recommendations coming forward from provinces like Manitoba would change the provisions in the Criminal Code so that a province could step into the gap left at the federal level. The New Democratic Party supports that.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, I thank my hon. colleague for Timmins—James Bay for his eloquent presentation on the bill. I share with him the real concern about growing poverty in our country. That is why I introduced a private member's bill to increase the federal minimum wage to $10 an hour. We actually have no minimum wage in Canada at this point in time.

It seems bitterly ironic that the people who are at the very lowest end of the economic spectrum, the absolute poorest people in our society, are the ones who end up paying the shockingly exorbitant interest rates from the payday loan companies. The status quo is simply untenable. It is forcing people further and further into a downward spiral of poverty.

I am very familiar with this issue from an urban setting. Even in a place with lots of transit, people have trouble getting to a bank to do their financial transactions. In a riding as remote as the hon. member's, and especially with the large numbers of first nations people, could he talk a little more about some of the examples of people who confront this lack of banking resources in their community?

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

Mr. Speaker, the reality is there are many young working people and young first nations people who have no experience at banking. Their only knowledge of banking is the loan shark they have to see once a month to cash their cheques. Without a culture of banking and savings they are doomed from the get-go.

The issue we are seeing in the north that compounds it is the fact that as the banks move out of areas, especially isolated rural regions, it is affecting seniors also. Seniors lack the ability to travel, especially on the winter roads, for example, between Elk Lake and Kirkland Lake in January, and people have to make do. We see a lot of use of the ATM. The ATM has become the bank for most people and they are paying $2 and $1.75 every time they go to access their money. This is not something they are doing frivolously; they do it because there are no services for them. There are people who do not have banking services. People are having to use the ATM.

I want to reiterate there are young people and families who are getting caught up because they are getting free VISA cards from the banks. They are being told they have credit and to go out and buy. They get themselves caught in a cycle of debt because the free credit card they get is the only ability they have to actually have money in their hands.

[The Deputy Speaker, Bill Blaikie]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker, Bill Blaikie]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.