Finance Committee on Oct. 7th, 2009

[Gaston Lafleur]

I would like to thank you for your question, Mr. Laforest.

The Australian experience is an example. We are not necessarily suggesting that it be systematically applied here, but it does give you a chance to see a concept that was applied, that has been in action for a few years, and that has proven its worth. It will be up to the committee to make recommendations about how to proceed. This is an urgent matter, particularly with the debit card issue. My colleague can give you a letter she received. We found out that a Visa debit card was about to be launched in the fall, so it could happen in the coming weeks. Obviously, that would create a problem with the Interac system, which is working very well and very effectively. Two players are about to enter the market, but they are not necessarily bound by the same rules, restrictions and framework.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Right now, Interac charges a fee for every transaction, a flat fee. According to your information, are Visa and MasterCard planning to do the same and charge flat fees, or will they opt for percentage fees or something like that?

[Gaston Lafleur]

Visa and MasterCard plan to use fixed rates and ad valorem rates based on the value of the transaction. There is mixed information about fees involved in getting their program up and running. But it is clear that the ad valorem concept will be used with the Visa and MasterCard debit cards.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

It lends a lot of weight to your argument when you say that competition will not result in lower charges, but in higher ones.

[Gaston Lafleur]

I was not the one who said that. It was the Standing Senate Committee on National Finance. I agree with the Senate committee's conclusions.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Dechert, please.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you.

Good morning, ladies and gentlemen. I would like to thank you for your presentations.

It's good to be here in this historic city.

My first question is for Mr. Lafleur, from the Conseil québécois. With respect to the credit card fees, we had some presentations to this committee earlier in the year from various parties. One of the comments that the merchants have made to us is that by contract, credit card companies often restrict the merchants from offering a cash discount price and prevent them from declining to accept certain types of credit cards that attract higher fees. Is that something your members have told you about?

[Gaston Lafleur]

Yes, contracts between merchants, retailers and credit card companies—organizations like Visa and MasterCard—include restrictions and prohibitions against promoting or supporting the use of one credit card over another. What you said is correct.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Merci. It's interesting.

As you know, the government recently announced new regulations for credit card fee disclosure, consumer disclosure rules. Are those helpful? Is the government going in the right direction there?

[Gaston Lafleur]

That might be a step forward for consumers, but it does not address the problem that retailers are dealing with. In our case, there are no provisions or guidelines to make the system more transparent. We really have no way of knowing fee increases for particular cards. Nor do we have the option of recommending that consumers use one card versus another. At some point, we might also see priority routing, which applies to debit cards and systematically routes the payment method on the debit card, Visa or MasterCard and does not allow the retailer to choose. Taken together, these factors make it impossible to manage these significant costs in the neighbourhood of $4 billion.

Last year, retail sales were around $425 billion. Take off $100 billion for cars. So on less than $300 billion—we know that retail sales have dropped 5% so far this year—merchants are paying over $4 billion in card fees. The consumer is the one who foots the bill in the end.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Merci.

Should the credit card companies be required to disclose the merchant costs of the various kinds of credit cards to cardholders so that consumers can make a different choice? Should they understand what fees the merchants are required to pay?

[Gaston Lafleur]

I think that retailers should have the right to make information about fees public. People need to know what the fees are and have enough information to manage things properly. These are major costs. This is not just about consumer choice, about figuring out which card to use. Retailers need to be able to properly manage the available methods of payment. That is key. We want transparency for consumers, but if we do not have the information, the problem will persist. We have to be involved in the information process too.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Okay, merci.

My second question is for Monsieur Patry.

I take your point regarding accessibility to EI, but I didn't hear you mention anything about skills training and education for unemployed workers. As you know, our government has brought in an unprecedented amount of additional funding for skills training this year—over $2 billion for training of older workers. Is that the sort of thing we should be doing? Is that enough, or should we be doing more? What would you say about skills training for workers?

[Pierre Patry]

That is a complex question. I think that it is good to help all workers, including older workers, especially during periods of recession. People have to have access to money so that they can retrain and get back into the job market. These are steps in the right direction. The Government of Quebec is also doing a lot to help unemployed workers get back into the job market.

The problem older workers are facing, particularly those over the age of 55 with relatively little education, is that it is a bit misleading to think that if we give them the training they need, they will be able to find new jobs. In many cases, there are underlying problems, such as language and literacy issues. Because of these problems, people have a hard time getting training. It is a good idea to provide training to these people, but we also need income support programs so that some of them, those that cannot be trained, can have a decent income until they reach retirement. That is what we tried to emphasize in our submission.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

As you know, this year we have rules that allow older workers to access up to two years of EI benefits if they are taking skills retraining. Is that sufficient, or is there more that you think should be done in that regard?

[Pierre Patry]

I think that some good measures have been put forward in terms of training, and the Government of Quebec has implemented complementary measures. However, we have to think of the people who cannot get training. We have to make sure that they have a decent income to make it to retirement. There was also the work-sharing program under employment insurance. About 25% of the unions belonging to the Fédération de la métallurgie are in that situation. These are good measures. They enable people to keep their jobs and collect employment insurance. However, much more needs to be done for those who lose their jobs and cannot find work because they do not have the necessary skills.

A while ago, studies showed that it would cost $175 million nationwide. It might cost a bit more now, but this is not an exorbitant amount in the context of the entire Canadian budget.

[The Chair, Conservative, James Rajotte]

I'm sorry, we're out of time, Mr. Dechert, but we will have another round.

Mr. Mulcair.

[Thomas Mulcair, NDP, Outremont, QC]

Thank you, Mr. Chair.

I would like to welcome the people who are here with us today and thank them for coming. Their presentations covered a broad range of issues that will no doubt be the subject of debate and decisions during the next budget process. Some things will not be easy, and your presentations will guide our thinking and our deliberations.

I would like to thank Mr. Gilbert in particular for his reminder. I think that your sector is the one that should be best informed. You will have to be very vigilant during the next budget.

Mr. Patry, thank you for your presentation. In the CSN's comments, at the bottom of page 3, you mention the failure of talks between members of the joint Liberal-Conservative committee. You said that that was insufficient.

Not much has been said yet about the bill before us now, and I would like to discuss it. Your analysis is impeccable. When you talked about the number of people not covered, there could be no doubt. With respect to the bill specifically, I would like to know if the CSN has conducted an analysis. As you know, the NDP has said that we want to make Parliament work. We now have $935 million, according to the government anyway, that could help as many as 190,000 unemployed workers and their families. We will do a thorough audit of those numbers, of course. Two of our economic advisors from the union community say that the numbers are accurate. However, we would like to know whether the CSN has audited them too.

[Pierre Patry]

Not to my knowledge. I will refrain from commenting on partisan games played by political parties about what should be done, what should be supported, whether the government should continue its work, and so on. It is true that employment insurance measures have been passed, such as the five additional weeks at the end of the benefit period. Clearly, that will help some people. That is not insignificant. Still, 50% of people do not have access to employment insurance when they lose their jobs. Even if the benefit period is extended a little or other measures are implemented to improve the system, people excluded from employment insurance will find themselves living in poverty. There are no insignificant measures, but what we want is a full-scale reform so that situations like this do not happen again.

[Thomas Mulcair, NDP, Outremont, QC]

I would like to point out that my colleague from Acadie—Bathurst, Yvon Godin, introduced a bill for a standard 360-hour threshold. The private member's bill is making its way through the process. Right now, the bill with the best chance of passing is this one. I have a suggestion. Maybe you could ask your economists to look into it. We will actually be inviting you to comment specifically on this issue soon, and we will need your perspective.

I agreed with what Ms. Vézina said about communicating vessels when she described the connection between cuts to employment insurance and the number of people in poverty. This is not just about the fact that $57 billion was stolen from the employment insurance fund. A lot of people say that that money was put into the general revenue fund, so it stayed within government. But that false. A $60 billion space was freed up to give tax breaks to the richest companies, and the cuts were supported by both the Conservatives and the Liberals. By definition, a company that does not make a profit has nothing to gain from tax breaks because it does not pay income tax. However, it still contributes to the employment insurance fund. Even if it loses money, it still contributes for all of its employees. That money is supposed to be for a specific purpose. Someone said theft, and that is exactly what it was.

Mr. Dowie and Ms. Meikle, I would like to talk about the general role of universities and the role of McGill University in Quebec. You have already received your first two Nobel prizes of the week, the Nobel prize for medicine on Monday and the Nobel for physics yesterday. Now it is Wednesday. This has been a good week for McGill. I have not seen today's results yet because I was not on line.

Can you tell me a bit about McGill's role as a Quebec institution?

[Victoria Meikle]

Thank you, Mr. Mulcair.

Given its unique situation and its history, McGill University can play a unique role. It situation is unique because the main language of instruction is English and it is located within a francophone community in North America, where the dominant language is English. It was founded 190 years ago. The university has earned an international reputation that enables it to build bridges between Quebec and Canada on the one hand, and Quebec and other countries on the other. These bridges are built through research collaboration and student exchanges and can promote inter-sectoral collaboration, which is the subject of our third recommendation. My colleague spoke about it briefly.

[Thomas Mulcair, NDP, Outremont, QC]

Thank you very much.

We must never forget that it is not only a major university recognized as Canada's finest, but also a major university that helps Quebec connect to the rest of the world. We do not think of that often enough.

[Vaughan Dowie]

I would add that about 20% of our students are from outside Canada, 25% from Canadian provinces other than Quebec, and about 55% from Quebec. It is a meeting place, a crossroads for Canada and the world.

[Thomas Mulcair, NDP, Outremont, QC]

That is an excellent way of putting it. Thank you very much.

Mr. Lafleur, I am glad to see you again. What Mr. Dechert said was interesting. Obviously, there are some things we can work on. In addition to employment insurance, we agree on the credit card issue.

I have to say that what you said will probably keep me up tonight because you raised the possibility that the federal government could play a role in managing waste materials. Knowing that this is the same organization that gave us a list—one with important and commendable public safety goals—known as the gun registry, which cost $1 billion, if you really want to keep people awake at night, just raise the spectre of the federal government taking care of garbage. People will really be worried.

All the same, I will stick to the two specific issues you raised. You are a lawyer and I am a lawyer, so we will not get into a long constitutional debate about jurisdictional powers. I will just ask you a specific question.

You mentioned about paint and oil. In Quebec, the Société de gestion des huiles usagées du Québec, SOGHU, deals with oil. For paint, there is a 50¢ fee per four-litre can. This is in line with two sustainable development principles: internalizing costs and product life cycle. These two sustainable development principles appear in Quebec law, which is considered to be the best in the world with respect to sustainable development.

I would like to close by asking you, what are the problems with this? Tell me one concrete problem related to managing these products. I have never heard of any, and I was involved in it for many years.