Evidence of meeting #143 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cards.
A recording is available from Parliament.
Liberal
NDP
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
Thank you for the good questions, Mr. Garon.
It's interesting. We talk about labelling on cigarettes and other things, but my credit card has an inducement to use it more for getting points. There is advertising on my credit card to do that. One of the recommendations I am thinking about is a warning label on credit cards that reminds us about debt, or something like that—some message you can pull out for financial literacy, because, really, it has shifted to trying to induce us. I really appreciated Mr. Garon's questioning. I'm interested in that Australian study, too.
Ms. Lang, maybe it's because I'm left-handed—so I see things differently and have to operate in this world differently than most people do—but it seems—
Mr. Badawey is making fun of me, which is fine.
NDP
Brian Masse NDP Windsor West, ON
There's a notion about credit cards causing bankruptcy. When I talk to small retailers and other people, they don't view the credit card as having caused the bankruptcy. However, it's part of their bankruptcy. They got into debt, their business model wasn't working, they extended themselves too much or, sadly, like you noted, they got sick or lost a job. They don't view the credit card as the reason why they're in debt. However, you mentioned these are 87% to 89% of bankruptcy costs.
What do you think about that perspective, in the sense that it may not be the thing that triggers it, but it's the cumulative part later on that is noted as part of the bankruptcy? That seems like a high number. If everybody going bankrupt has a credit card, it seems to me that's part of the problem. It's not the solution to the equation for the person.
Superintendent, Office of the Superintendent of Bankruptcy
First, let me reiterate the idea that the “causes of bankruptcy” field in our data is not a perfect field. It's an open text. It's a self-reflection.
Secondly, I almost think 86% is low. I don't know many people over the age of 18 who don't have credit cards these days.
It's difficult for me to answer whether it's a cause. It is often there, but it's difficult to say that it's surprising.
Brian Masse NDP Windsor West, ON
Does your data say what types of credit cards people have, and the interest rates? Is that part of the problem we're...? One of the reasons I brought this up in the committee is that you have grocery stores and furniture stores now with 30% credit cards. The lack of competition in the sector has been noted here. A lot of them are at 20%, and so on and so forth.
Do you have any data on what cards and percentages of interest rate bankrupt people are paying?
Superintendent, Office of the Superintendent of Bankruptcy
The creditor field is also an open-text field. We would have to search by creditor name.
What is reported to my office is the total amount of debt owing, not the breakdown of the interest on principal and any additional fees. I'm not sure if that's something licensed insolvency trustees get with the proofs of claim that have to be submitted. They may get some, but not all. It could be somewhat inconsistent in terms of reporting.
NDP
Brian Masse NDP Windsor West, ON
It's odd that we can't seem to get a lot of that information, as well as the net income the companies are making. Meanwhile, the difference between a 10%-compounded interest rate and 20% is quite significant. It's almost shocking to me that nobody gathers any of that data, even in the field of bankruptcy, because there could be solutions for that.
I'll now move over to our other guests here. I only have a few more minutes to go in this one.
Buy now, pay later really is the definition of a credit card. What would you say to the credit card industry that argues, “Well, we already have that. That's already us. Why not let these others into the same market? Wouldn't that be limiting competition?” I agree, by the way. Nobody should have to use...hoping for funds later on to pay for basic necessities and groceries. That's why we're doing a lot of this.
What would you say to that argument? Is buy now, pay later the definition of a credit card?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
First of all, that's a great question.
I commend this committee for doing the work you guys are doing, because I think the problem is only going to get worse for a couple of reasons.
One, we just surveyed Canadians about how they pay for food these days. If you look at some of the stats in the last year, 35% of millennials had to borrow money to pay for food. It's 35% for generation X and 46% for generation Z.
The other issue, of course, is—
NDP
Brian Masse NDP Windsor West, ON
Could you answer the question? I'm sorry. That is interesting, but I'm running out of time, and I have one other question for you.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Essentially, the issue around....
I'm sorry.
NDP
Brian Masse NDP Windsor West, ON
It's on buy now, pay later and the argument that could be used against new fields entering into that. That is actually a credit card.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
It is, yes. Absolutely.
NDP
Brian Masse NDP Windsor West, ON
Maybe we should be restricting credit card uses for certain types of groceries, or something like that, or identifying those purchases, because people are using a credit card because they can't...or don't have to pay for it until their next paycheque comes in.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
My advice would be to make sure they are aware of the risks of using a credit card when paying for food.
NDP
Brian Masse NDP Windsor West, ON
I know I'm almost out of time here, but what would you feel about a policy that limited interest on credit cards and lenders when people use them for groceries? It would be a tiering of that. I mean, there's a big difference between using my credit card to pay for a baseball game, football game, or something like that, but if you're using a credit card for milk, bread, rice.... What about restricting buy now, pay later fees and margins on that from the credit card agencies and others?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
In my view, food is different, and therefore, some of the policies should be different as well.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Yes, that would be yes.
NDP
Brian Masse NDP Windsor West, ON
Okay, thank you.
I appreciate the extra time, and thank you for that.
Liberal
The Chair Liberal Joël Lightbound
Thank you, Mr. Masse.
Mr. Patzer, the floor is yours for about five minutes.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Thank you, Chair.
There was a comment you made about age demographics and who is borrowing money to pay for food. Do you want to quickly expand on that? Would you have a report that you could table with us on that?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Yes. This report was made public three weeks ago. It's called the “Canadian Food Sentiment Index”. It goes over many different things. We assess values, beliefs, behaviour and debt, as well.
Conservative
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Yes. It's on our website, so we can send it to you.