Finance Committee on May 12th, 2009

[The Co-Chair, Conservative, Michael Chong]

Good afternoon.

Welcome to the joint meeting of the Standing Committee on Industry, Science and Technology and the Standing Committee on Finance. This is meeting number 16 of both respective committees, I believe. Pursuant to Standing Order 108(2), we are engaging in a study of the credit card interchange fees and the debit payment system in Canada.

I'd like to welcome all of the committee members who are here today. I'd also like to welcome our witnesses, who represent a number of organizations. These are the Canadian Restaurant and Foodservices Association, the Québec Hotel Association, the Retail Council of Canada, the Canadian Council of Grocery Distributors, Coalition québécoise sur les hausses de frais de transaction de carte de crédit et de débit, and finally, the Canadian Federation of Independent Business.

Before we go to the witnesses for their opening remarks, I believe there is a motion that Mr. Rota, on behalf of the industry committee, and Mr. Wallace, on behalf of the finance committee, will move with respect to the joint hearings this committee will hold over the next number of weeks. This motion was agreed to by all four parties in our subcommittee on agenda and procedure. It concerns dilatory motions.

Mr. Rota, would you care to read the motion into the record?

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Mr. Chairman, I move that notwithstanding any routine motion or Standing Order, at joint meetings of the Standing Committee on Finance and the Standing Committee on Industry, Science and Technology, the chair shall not receive any substantive motions or dilatory motions.

[The Co-Chair, Conservative, Michael Chong]

Is there any discussion on this motion?

(Motion agreed to)

Thank you very much.

Without further ado, we'll begin with Madame Brisebois from the Retail Council of Canada.

I understand, Madame Brisebois, that you will be dividing your time among the various organizations you have appeared with. Subsequent to that, we will hear from the Canadian Federation of Independent Business. After that, we'll then open the floor to members for questions and comments.

Madame Brisebois.

[Diane Brisebois, President and Chief Executive Officer, Retail Council of Canada]

Thank you.

First, on behalf of the witnesses here today, we want to thank the joint committee for holding these hearings and for tackling this thorny issue.

The importance of these hearings cannot be overstated. They provide the opportunity to shine a light on the seemingly never-ending proliferation of higher fees and new charges from the credit card companies. These fees should be a major concern to the government because they hit at businesses and consumers alike. Following our testimony and that of other witnesses, we hope the committee will recognize the need for government to act.

In order to provide more time for questions, and since members of the coalition share the same concerns, with members representing more than 250,000 businesses from coast to coast, the following organizations have agreed to make a joint presentation: the Retail Council of Canada, the Canadian Council of Grocery Distributors, the Canadian Restaurant and Foodservices Association, Conseil québécois du commerce de détail, Association des détaillants en alimentation du Québec, and Association des hôteliers du Québec.

We're pleased to say that we have two witnesses with us representing business. They are Mrs. Brenda O'Reilly from Newfoundland, as an independent restauranteur, and Monsieur Louis-Robert Handfield, as an executive in the hotel business, who will also be on hand to answer questions.

The Stop! Sticking It To Us coalition came together in 2008, the vast majority of our members being small independent businesses in retail, hospitality, food services, restaurants, and other service sectors. They are extremely concerned with the rapidly rising credit card merchant fees and impending new debit card schemes that will be introduced by Visa and MasterCard. At the heart of the issue is Visa and MasterCard's duopoly, representing 94% of the credit card market in Canada, thus having the market power to force increasingly high fees for their services, as seen in recent months. Both merchants and consumers are paying the price.

Make no mistake about it, even credit card company executives view merchant fees as a cash cow, as you will see on slide 4. Allow me to quote the former vice-president and assistant general counsel for Visa International and Visa U.S.A.:

[Issuers] began to view the interchange reimbursement fee not as a revenue reallocation mechanism to ensure success of the system, but as a demand-driven pricing scheme to collect as much revenue from merchants as the market would bear.

[Gaston Lafleur, Spokesperson and President of the Conseil québécois du commerce de détail, Coalition québécoise sur les hausses de frais de transaction de carte de crédit et de débit]

The credit card companies will probably tell you that consumers don't pay the interchange. In fact, I would like to remind the committee that a representative of the Mouvement Desjardins, which is both issuer and acquirer, told the Senate Committee on Banking and Commerce, and I quote: “Consumers always end up on the hook for all costs associated with the payment service.”

The coalition obviously isn't opposed to payment by credit card. This payment method is practical, secure and particularly valued by consumers. As businesses living from customer service, merchants must accept the payment methods that consumers choose. Merchants also understand that no service is free.

However, looking at the table that we are presenting to you, Table 6, you see that a very small portion of the fees paid by merchants go to processing of the transaction itself, only 13%.

[Diane Brisebois]

Economics 101 tells us that competition leads to price reduction, but this isn't the case in the credit card market. The credit card companies have no direct relationship with either consumers or merchants. Instead, they compete only for the business of financial institutions, which they do by offering high returns to issuers using other people's money. This is a complete reversal of the normal effects of competition. The harder they compete, the higher the fees.

The best way to look at how Visa and MasterCard set their interchange fees is to think of it not as competition but as an auction, paid with money extracted from merchants and, ultimately, consumers. The quote on slide 9 from Dr. Philip Lowe, Assistant Governor of the Reserve Bank of Australia, says it all:

[C]ompetition between these schemes creates upward--not downward--pressure on these fees. A scheme with a higher interchange fee paid to issuers is able to pay larger subsidies to cardholders.

There is no better way to explain why the market has been flooded with premium cards that carry higher interchange fees.

Over the past 18 months, merchants in this captive environment have seen double-digit increases, as seen on slide 9. By way of example, one of our discount retailers, which sells some basic grocery items and a mix of other necessities, has experienced fee increases in excess of 30%. These increases are coming at the worst economic moment, when retailers are lowering their margins and cutting their costs just to survive.

Think about it. In a tough economy, most businesses sharpen their pencils, cut costs, and cut prices in order to boost sales. Similarly, governments are acting to provide stimulus, such as Ottawa's two GST reductions and interest rate cuts by the Bank of Canada. Only the commercial banks and the credit card companies are going the other way, actually raising fees and adding new charges in the midst of a recession. And who pays? Obviously it isn't the banks and the credit card companies. They are the beneficiaries. The people who pay are the businesses and consumers who are actually making the sales and purchases.

[Brenda O'Reilly, Chairman of the Board of Directors, Canadian Restaurant and Foodservices Association]

The proliferation of premium card fees is the biggest contributor to these increases. Starting last fall, both Visa and MasterCard introduced new premium cards with more rewards points for cardholders at no additional cost. What every restaurant operator knows is there's no such thing as a free lunch. Merchants are stuck footing the bill for these perks. For my businesses, these premium cards are 12% to 30% more expensive to accept than the standard card. Because the fees paid to banks are so much higher, issuing banks are actively marking them and even automatically switching consumers to them. Because the perks are so generous, cardholders are using them.

If these increased premium card costs were offset by these cardholders purchasing more, as suggested by the card companies, that would be one thing, but this is not the case. In fact, credit card usage is actually down over the same period. What we are doing is paying for higher fees and less business.

Slide 11 puts into context the size of the bite that these fees take, especially the newly introduced fees. The situation is particularly dire in the restaurant industry. Restaurants are extremely competitive, with very thin margins.

In Newfoundland, where I operate my restaurant businesses, the situation is the toughest in the country, with an average profit margin of 2.1%. For that return, we invest capital, pay rent and utilities, employ staff, buy from our fishermen and our farmers, and promote and advertise. That 2.1% return for the industry is lower than the 2.2% merchant discount rate charged to us as on some credit card transactions.

Don't get me wrong. We're not asking the credit card companies to take a haircut because the times are difficult. What we're here fighting for is an end to the gouging of fees by this credit card duopoly. What choice do we have in accepting these higher fee cards? In a word, none.

Through our merchant agreements we are required by Visa and MasterCard to follow the “honour all cards” rule, to take all their credit card offerings. It is hard to refuse a legitimate payment method chosen by the consumer, especially since that consumer is probably unaware of the detrimental impact on the merchant and the inevitable boomerang effect in higher consumer prices.

Even if merchants were allowed to decline such higher-fee cards, it would be next to impossible for one of our thousands of food service workers to identify them from among 200-plus credit card products, and it would be very difficult for employees to explain to the consumer why their particular card is not accepted.

[Danielle Chayer, Vice-President and Chief Executive officer, Québec Hotel Association]

I'm not going to top what my colleague from the Canadian Restaurant and Foodservices Association just said about small profit margins; however, I believe that the members of the joint committee, mainly those from the Industry Committee, can understand how tough times are in our sector.

What I can say is that the hotel sector is probably the one most dependent on payment by credit card, which is increasingly the operating method. Credit cards are mandatory for reserving rooms at hotels, and 95% of reservations are made by telephone or over the Internet. The balance of a stay is paid by credit card in 85% of cases, followed by debit cards and cash.

Visa and MasterCard believe that controlling 94% of the market isn't a problem since there is enough competition from other forms of payment such as debit, cash and cheques. Well, I can tell you that there is no such competition in our sector: credit cards are an integral part of the way we operate. That moreover is the case around the world. The hotel business can't survive without them.

The Quebec Hotel Association would like to tell you about the consequences of increased fees charged to merchants by Visa and MasterCard in our sector. I would like to draw your attention to one example, on page 14, of a rate structure that we have to deal with. This is a structure for one company. There's a different one for the other one. We went from a single fixed rate to an average of six variable rates depending on the type of card used, that is individual consumer, corporate, worldwide or premium, and the type of transaction, standard or electronic.

A number of our clients use a company or worldwide card, which involves higher fees. The majority of transactions are billed at the standard transaction rate, that is the highest rate, because the hotelier doesn't have the client's credit card in hand at the time of the reservation, which is done, once again, by telephone or over the Internet. The card is processed by a management system of the property. In our sector, this is a very common operating method that makes it possible to inform various services at the hotel which client has arrived. The system ensures high-quality client service.

At the end of the day, the various rates thus do not allow the hotelier to determine the amount to be allocated to the payment of transaction fees, since there is no tool for determining what type of transaction card was used. These various rates represent an average increase of 11.5% to 17%, as shown on page 15. For a single hotel, these fee increases represent additional costs varying between $11,000 and $55,000 a year. Hoteliers currently pay these fees out of their profits, and increasingly out of reserve budgets. These fees cannot be indefinitely absorbed by the hotel; they will be passed on to consumers, whether or not they are the holder of a costly card.

Apart from the increase imposed on the client, we feel that the entire operational system in a business environment and key sector of the tourist industry is being affected and taken hostage. The hotel industry would like to live without it.

[David Wilkes, Senior Vice-President, Trade and Business Development, Canadian Council of Grocery Distributors]

So what is the solution? The coalition believes that transaction costs charged to retailers, whether on credit or debit, should reflect the true cost of processing, as is the case in Australia. Reasonable costs should be allowed, of course, plus a fair return on investment for card companies. But interchange fees should be capped at that level.

How does it work in Australia? The details are provided in our submission, but the highlights are as follows. The entire fee-setting process of the card organization is transparent to all stakeholders. A common benchmark has been established on allowable costs. The result in Australia is that interchange is capped at 0.5% or 50 basis points, producing a merchant discount rate of less than 1%.

We do refer extensively to the Australian model, but as you can see on slide 18, Australia is not the only country to act. The European Union has also moved to a cost-plus model on cross-border transactions. In fact, multiple jurisdictions are working to address the problem. The world is moving on this.

The coalition understands that Canada is unique and that considerable analysis is needed to produce a regime that is appropriate for Canadian circumstances. However, it is urgent that Canada get on with the task, and we urge the committee to recommend that the government develop a system of oversight to ensure fair pricing and competitive behaviour by the two card companies.

The Minister of Finance has the power to designate, and therefore regulate, payment systems in the country. The options on how to do that are detailed in our submission.

[Gaston Lafleur]

Now let's talk about debit cards.

The debit card electronic payment system is one of the most successful globally. It is very popular with merchants and consumers. In can represent 60% of transactions for some food retailers.

Interac is a non-profit association that reflects current processing costs. The system costs the retailer only a few pennies per transaction and enables consumers to access their funds quickly, safely and at low cost.

Visa and MasterCard recently announced that they are entering the debit market starting this year. It must be understood that Visa and MasterCard currently operate outside Canada's legislative framework for debit cards and outside the control of the Canadian Payments Association. So we are currently in a unique and critical situation for the future and for the development of financial services provided to merchants and consumers both in Quebec and Canada.

Visa and MasterCard say that their entry into the debit market will benefit consumers and merchants since it will provide more competition. In fact, this will be a reproduction of the alleged competition that currently exists in the credit card market in Canada, which is a simple bidding for business by the issuers of cards and credit card companies. This situation will invariably result in increased costs paid by merchants.

In addition, Visa and MasterCard intend to offer benefits to buyers so that their debit products have priority routing at the point of sale. This will be accompanied by aggressive distribution of these new cards by the issuers.

[Justin Taylor, Vice-President, Labour and Taxation, Canadian Restaurant and Foodservices Association]

We need only look to the U.S. to see how the two card companies suppressed efficient debit card services similar to Interac. Fees have since skyrocketed, and now include both flat fees and ad valorem percentage rates. We ask the committee to consider the following: why should the debit fees bear any relation to the size of transaction at the point of sale? The money is transferred from the customer's account to the issuer in real time.

It's clearly not a loan or a credit advance. How can Visa and MasterCard justify charging an ad valorem percentage fee? The answer is simple: because they can. They're unregulated. It's odd that Canada would contemplate going over to an unregulated U.S.-style system here, since those who are familiar with the U.S. system have expressed admiration for the Interac system we have in Canada.

Diane will talk about the solutions.

[Diane Brisebois]

If allowed to operate in Canada, these companies should operate under Canadian rules, such as those that exist for Interac through the Canadian Payments Association. Once again, the fee should be related to actual processing cost, plus a reasonable return on investment. There should be no room whatsoever for an ad valorem percentage charge.

In short, we need a system that provides a secure, successful, and affordable debit card system, a Canadian system. On Interac, we're aware of changes sought to their consent order, and we appreciate that some changes may be appropriate. We are concerned, however, that Interac might eventually desire interchange or a substantial increase in order to compete with Visa and MasterCard. So we continue to support a flat fee structure that reflects the actual transaction cost, oversight, transparency, and accountability. This recommendation applies to all debit schemes in Canada.

[David Wilkes]

The coalition has proposed practical solutions that reflect the uniqueness of our market. They can be implemented to better serve and protect hundreds of thousands of businesses and Canadian consumers from coast to coast. There is often an attitude of resignation about rising fees and charges from banks and credit card companies. There are so many of them that there's no way for consumers or businesses to fight back. Actually, though, there is a way to fight back, and we look to these committee hearings as a vital first step in this regard.

In closing, our coalition members are humbled to be here. Indeed, we wrestled long and hard with this issue before seeking the government's involvement. First, we sought out commercial solutions. As associations, we have engaged directly with credit card companies to raise our concerns, but to no avail. Asking for regulation is not what we normally do, but in this case we are left with no other option. In our opinion, one role of government is to recognize when markets are not functioning properly and take appropriate steps to correct this malfunction. Now is the time to act, and we urge you to do so.

Thank you for this opportunity. We look forward to your questions.

[The Co-Chair, Conservative, Michael Chong]

Thank you very much for your opening remarks. Merci beaucoup pour votre témoignage.

We will now hear from the Canadian Federation of Independent Business.

[Catherine Swift, President and Chief Executive Officer, Canadian Federation of Independent Business]

Thank you very much, Mr. Chair.

My name is Catherine Swift. I'm president of the Canadian Federation of Independent Business, and I'm joined by Corinne Pohlmann, our vice-president of national affairs.

Because a lot of issues have already been mentioned that I would certainly agree with, I'm going to skip to page 5 of our presentation, our slide deck. We actually have two pieces of information we handed out. One was the slide deck and the other was one page of suggested questions we would hope you would consider asking to some of your other witnesses in this proceeding, because there has been a lot of confusion, obfuscation, misinformation, and lack of information on this entire issue. It's a complicated issue; it's not something you're going to get easily. I know, personally, I still continue to learn something new every day that I didn't know the day before.

To briefly summarize what CFIB has done, we basically started hearing exactly the same complaints last year about skyrocketing charges to businesses to process credit card transactions. We started to look into it, did some surveying among our members, and distributed so-called action alerts—a copy of which is included on page 5—to gauge the level of interest among our memberships. We've collected over 14,000, and we still get 1,000 a week, so obviously this is a very hot issue. The timing isn't great either, obviously, but I would say this would be a hot issue at any time. The fact that we don't have the strongest economy right now simply makes it that much hotter.

We also did some surveying among our members as well as some public opinion polling to see how the general public felt about this. On the credit card side, first, one issue was the rapidly increasing cost. The 30% figure that was mentioned earlier was one we heard very frequently within a very short period of time. The second one is the confusion and the lack of transparency, the proliferation of different kinds of cards, meaning a different percentage charge to the merchant. There is no way anybody can keep track of that, so you can get your bill at the end of the month and get a rude surprise. You can't run a business that way.

On the next page is a very brief summary of our survey results. It's not only the retail sector. Obviously, they're big users, but we have detailed here that every single sector of the economy is a significant user of credit cards. Here you can see all the groups—natural resources, retail, hospitality, and some of the groups you've already heard from. This is a very pervasive part of our financial payment network. You may have even heard recently that some universities have stopped accepting credit cards for transactions because they can't afford the drastic increase in fees. That's an unfortunate recent example of some institutions that aren't accepting them.

On the next page, we asked our business members which cards they do accept. Not surprisingly, the overwhelming dominance of Visa and MasterCard is very clear there. We don't have a competitive market. We know that, but that item puts some numbers on it.

The next slide is on which of the companies—the acquirers or the processors—you use for credit card processing. I might note that CFIB actually has an arrangement with Chase Paymentech, so I don't think this would represent the market writ large, but at least it gives you an idea of which of the processing companies our membership is using.

Skipping to the next slide, this is from one of our surveys of our members. We wanted to understand how difficult they believed understanding credit card fees was. As you can see, almost a quarter felt it was very difficult; another 46%, somewhat difficult; less than a third didn't find it difficult. So obviously, two thirds of the membership here are having trouble figuring out their credit card fees.

The next slide, page 10, refers to the same survey. In the federal budget earlier this year, the federal government included a proposal to improve the way banks and other financial institutions informed consumers on credit cards. We asked our members whether they thought this should be expanded to include how things are conducted with merchants. Obviously, overwhelmingly, they said yes.

The next slide is our public opinion poll. This was done of the general public. We simply asked if they would support or oppose tighter rules for the credit card industry. Again, the general public is also realizing that there's an issue here that needs to be addressed.

I'm going to speak to the recommendations very briefly because we want to leave a lot of time for questions. The first category, and you can read the bullet points underneath, shows clearly that we need enhanced oversight scrutiny of credit and the debit card industry, and we've suggested a number of ways how that could be accomplished.

The transparency and accountability is another area that's been mentioned previously, and we absolutely back that up. We have some specifics as to how we think that could be achieved.

Allowing merchants and consumers choice is another one. Merchants typically are forced to take all credit cards. They can't say they will accept this one, but they'd really rather not accept that one because it just doesn't work for their business. These contracts they sign require them to accept all cards. Again, there are some other specifics there.

Finally, the last set of recommendations refers to the debit card system. I will just support what has been said previously. We do not want to go to the U.S. model, where fees have increased astronomically. A debit transaction is not a credit transaction. There's no justification for having a percentage value of the transaction. We have a flat fee system here in Canada now that's worked extremely well. We should debate what system we want to have going forward. Do we want to continue the current system or do something different? But do not permit this percentage as a value of the transaction.

We've done a lot of work, actually, with some U.S. business associations, and it was very interesting. One comment they made to us was to not let Visa and MasterCard into debit. We were quite intrigued and even surprised by the very categorical nature of that statement.

We are very happy that your committee has opted to look into this important issue. It may be overdue, but because of a lot of things that are happening in the economy now, it really warrants a focus on it.

I'd mention too that we strongly recommend you call the individual banks before you. Having just the CBA, the Canadian Bankers Association, isn't sufficient. We think there are big players in this. They all have different strategies. We would really encourage you to do that to really get a good handle on the entire picture.

Thank you very much, and we welcome your questions.

[The Co-Chair, Conservative, Michael Chong]

Thank you very much, Madam Swift.

Thank you to all the witnesses for your opening remarks.

Just so all members of the committee and the witnesses understand, Mr. Rajotte is chair of the finance committee and I'm chair of the industry committee. We're holding these joint meetings. So that members of this committee understand how we will conduct ourselves here at these meetings, I'll chair this meeting and Mr. Rajotte will chair this Thursday's meeting. We'll alternate between the two of us so that we can have some clarity and efficiency here.

We'll have about two hours for questions and comments from members of this committee to the witnesses.

We use both official languages.

If you need translation, the earpieces are available to you. I believe English is on channel one, French is on channel two, and the floor feed is on channel three.

We'll begin with Mr. McTeague.

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

Chair, thank you very much, and thanks to all committee members and to witnesses. It's a very important day. I want to first of all acknowledge and thank the efforts of my colleague, Anthony Rota, and our party, for moving the motion in the industry committee and the complementary motions that have taken place in other committees. I think we all take this issue very seriously. We're now starting to get it, albeit for some of you, and those you represent, perhaps this has been a very painful ordeal.

I'd like to begin by trying get a better understanding more specifically, not for this committee, but for those who are watching this, those who have an interest in seeing Parliament unfold.

I want to hear from your perspectives, each and every one of you, specific details, ideas as to how your members have been affected. I appreciate the coalition of the CFIB coming forward. I want to hear what this has done for ordinary business in Canada and whether or not you perceive this to be a distortion that is impairing the proper and efficient running of our marketplace.

I'll start with you, Ms. Swift, if I could.

[Catherine Swift]

Obviously, a rapid and unexpected cost increase at any time is not a happy scenario. We had business members actually send us their monthly invoices that showed these 25% to 30% increases from one month to the next, thousands and thousands of dollars in any given month, naturally depending on the nature of that particular business and what it used credit cards for.

I think the equally important point was the confusion. You can't run a business when you don't even know one of your key costs on an ongoing basis. You're accepting cards and you don't even know what you're paying for, and then you get a bill at the end of the month and get a rude awakening. Those are the two bottom line factors. There's no consultation. We know consumers are getting these cards unrequested in the mail. I got one. I'm sure a lot of you have got them. I thought gee, has my card expired? Because I had no idea just looking at it that it was a different type of card.

Something else that you might not be aware of, or maybe you are, is that the credit card companies tell us they're sending out these premium cards to high spenders. I got one in the mail the other day that was unaddressed ad mail. In other words, they had no idea; it was to the householder, basically. They had no data on my spending. I actually don't happen to be a big credit card user. So please don't buy that argument, that it's a very small slice of the market. They're being sent out willy-nilly. That's why you need the individual banks before you too, because they all have individual strategies.

[Diane Brisebois]

Let me add to this.

This in fact that would be an appropriate question to ask Visa and MasterCard. We certainly hope the committee will not accept the answer they usually give, which is that they don't share that kind of market information. Everyone knows the acquirers do.

The point I'm making is that a year and a half ago the premium card market represented 2% of the entire credit card market in Canada. Those were high spenders. Since then, Visa and MasterCard have changed the rules around who qualifies, but they told all industry associations that this was going to be a minor change and in fact people getting premium cards are high spenders. They're not just fun loyalty cards. They told us very clearly that you needed to qualify. To qualify does not mean that during a recession you go from 2% of Canadians who can qualify for a premium card to 35% of Canadians qualifying for a premium card.

What's fascinating is that we have a member like Giant Tiger, which caters to low-income Canadians, appear before the Senate banking committee, and they saw the use of premium cards go from 0% in March 2008 to 35% in March 2009. The point here is that it has a huge impact on business. Certainly there would be great examples.

I would encourage Brenda to talk about the impact it's had on her business in Newfoundland.

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

By all means, Brenda, go ahead.

[Brenda O'Reilly]

I have a couple of businesses in St. John's, in Ms. Coady's riding. This past summer I opened a new business, a microbrewery, restaurant, and pub. When I did my business plan, of course, I based it on the credit card rate being what I had negotiated with the Canadian Restaurant and Foodservices Association, and it was 1.57% at the time. The base rate has since gone to 1.64% for Visa and 1.71% for MasterCard. Since I opened, 71% of my sales--I've given Siobhan a copy and I know that James' office has a copy of my sales--have been from Visa and MasterCard. I can't afford not to accept these cards, as I'd like to. I don't accept American Express because the rate is so high, but of course I can't stop accepting other credits cards or I wouldn't have any customers. My blended rate ended up being 2.21%, which is not what we negotiated and certainly not what I budgeted for.

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

You weren't given notice of that change, were you?

[Brenda O'Reilly]

No.

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

What effect will that have on your bottom line as far as employing other individuals is concerned? What will it do in terms of other competitors in the region?

[David Wilkes]

Labour and labour cost is an issue as well. For me that worked out this year to be $6,250, which equals 30 hours of work a week for an individual.