Debates of Oct. 24th, 2006

Criminal Code

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I know my colleague works very hard, particularly with respect to people.

We are talking about these payday loan places. This is obviously a sector of the economy that has a propensity to prey upon those in our society who do not have the means and the wherewithal to have bank accounts or enough money.

I have a question for her. When her government was in office, we raised a number of times, from this corner of the House, the problems of, particularly in rural communities, the number of bank branches that were shutting down across this country. It was just an absolutely massive number of communities. I think of one in my region, Stewart, B.C., now a booming mining town, which has lost all its bank branches.

The Bank Act is controlled by the federal government. It was meant to be there to regulate banking. It is such an important part of our economy. It is an important part of Canadians' lives.

I am wondering if there are any measures her government ever took to curb the loss of banking establishments in rural Canada. If not, what recommendations could she make in conjunction to the legislation that we are dealing with right now to offer some sort of sense of hope to the communities like Stewart, B.C.? These communities are somehow lost in the shuffle of where banks and these payday loan institutions are making their decisions, which is at the bottom of the deck, and very rarely with any respect to the rural communities that some of us represent.

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I remember being the chair of the finance committee when we were talking about bank amalgamations. This matter came up at that time during the course of those discussions. As the member well knows, this is not directly relevant to this discussion on the payday loan bill.

However, the Bank Act itself has the sets of notice provisions. I know that they were followed in each and every case where banks made that business decision to cut. We, in all parties, were concerned and made our representations. I know in my own city I made my representations when a bank and a trust company merged together.

However, we do have to understand that the banking industry is a regulated industry and that there was no branch closing that was not done properly by regulation. Nobody got to shortcut any provisions in the Bank Act. In fact, many worked very hard to give the protections as best they could to all the employees in the areas.

Having said that, I do want to comment on the availability of the small time situation on a payday loan. We should not be confusing a small amount of loan, which would be done in a banking institution, with a payday loan. There is a difference. It is a small sum. There is no security given.

I am told the average payday loan is around $280 for a period of 10 days. It is an advance of cash against the customer's next payday. It is not a form of revolving credit. That is not what this is supposed to be. In fact, those things are among the practices, those roll-overs, that we are seeking to get rid of by instituting some of the protection that is in this current bill.

It is more designed for that one time unanticipated expense where somebody just needs help to get over a short trying period. It is not a payday loan, a long term credit project, nor is it a title loan; by that I mean a loan secured by a title to a property or an asset, such as a motor vehicle.

I am told that payday loan customers are Canadians with near median household incomes and the statistics provided by the Canadian Payday Loan Association puts 53% being women and 47% being men.

It is important to say that to qualify for a payday loan a customer has to be employed and have a chequing account. So it is not really preying at a level that I see a lot of concern.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, I want to thank the member for her comments. I really appreciated a new insight into this industry and the kinds of things she had mentioned. Could the member comment a little more on the provincial side of it because we need to be partners and leaders in terms of ensuring that this bill does get through?

I thank members opposite very much for supporting this bill. It is a very important one. Perhaps the member opposite could also give some more insight into which provinces have regulated payday loans and also comment on what could be done to get the provinces on board to regulate this kind of thing in their home provinces.

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I think it will be for each jurisdiction to determine if it wishes to make it. I do not really see the position of the federal government to be one of intruding and demanding that we make it. In fact that would be ultra vires, out of the jurisdiction of this level of government and it is important that we stay in our area.

The whole intent of this legislation is to allow a carve-out and let someone in. I am aware of governments that are interested. I believe that the Manitoba government has tabled but has not yet proceeded with its legislation. I understand that as of May 3 last year, British Columbia's solicitor general had publicly called on us as the federal government to provide him with the ability to properly regulate payday lenders. On May 29 the Alberta solicitor general asked for the authority to regulate the payday loan industry in Alberta. This past summer, on July 13, Nova Scotia's minister of service said in the legislature that Nova Scotia plans to introduce legislation on payday loans. There are some. I know Ontario had been more reticent at this stage.

There are some who would say that this is a downloading to the provinces. I think there are options here and I view it this way. It is similar to when we were developing the best legislation in consultation with first nations. The way we got five bills through in a minority government was to make sure that on a lot of the first nations governance legislation, regarding economic issues in particular, there was wide consultation. Not only was it done in consultation with the first nations, but often the consultation was first nations led. Here we have a comparable situation where someone is coming forward.

I would also be remiss if I did not mention the advocacy of the Canadian Payday Loan Association, which is an umbrella group of about 850 of the currently 1,300-plus payday loan lenders. This group is striving to clean up the industry and in fact operates inside a voluntary code of ethics. The group wants this legislation. In fact it is pushing for it. Representatives of the group came to see me last spring and I said they would have to push the Minister of Justice.

We were prepared to move forward. We had done the consultations and here we are, some months later in the fall. The Minister of Justice, in April last year, said in talking with the Canadian press that he planned to take action to attempt to regulate the payday loan industry.

I will say that when legislation like this comes forward, it cannot just be worked through one department. We have had the cooperation of industry officials inside Industry Canada. They have been working at it with the original umbrella organization since the year 2000. Finance officials have to be involved. When legislation is worked through the appropriate channels and it makes good common sense, it is important to move on it.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, the purpose of Bill C-26 is to provide for stricter regulation of the payday lending industry, which could also be called the wage advances industry. In Canada, the industry began to take root in the 1990s. Its growth has not been uniform, however, since it falls under the jurisdiction of Quebec and the provinces over local commerce and civil rights and is thus subject to the rules governing contracts and consumer protection in each jurisdiction. Accordingly, while the federal government believes that this industry now has over 1,300 points of sale, they are unevenly distributed and there are not very many in Quebec.

Several payday lending companies have joined together to form the Payday Loan Association of Canada. That association represents 22 companies that operate a total of 850 points of sale for financial services across Canada, but none in Quebec.

What is a payday loan? To the Payday Loan Association of Canada, a payday loan is an unsecured small-sum short term loan typically for a few hundred dollars. The average payday loan is around $280 for a period of 10 days. We can see that payday loans are really meant for low income earners, and this is why, at this point, I want to talk about poverty.

When someone needs to borrow at a high rate from this payday lending industry in order to make it to the end of the month or the end of the week, the reason is that the person is poor in Canada. The most recent Statistics Canada figures, from the year 2000, tell us that there are 1.3 million more poor households in Canada than there were 25 years ago. So the poverty rate among the working population, among people who earn low wages and who will have to do business with this payday lending industry, has gone up.

Poverty is rising among the working population. There are poor families, and poor children, in Canada. The most alarming increase in the poverty rate for families has occurred in young families where the head of household is between 25 and 34 years old. We also see that in 1997, 56% of families headed by a single mother were living in poverty, and they accounted for 43% of poor children.

What we are seeing is rising poverty. We are going to try to deal with it by legislating, and this may be legitimate, but the fact remains that what we have seen during that time is that single-parent families, aboriginal people, people with disabilities, members of visible minorities and people with little education are the poorest people in our society. At the same time, the government is cutting funds for literacy training, social housing, the status of women—all measures that are genuinely going to help people deal with what lies at the heart of the problem. It seems to me that we cannot legislate to deal with only one aspect of the situation.

Obviously, the Criminal Code did not include a definition of payday loan. Nonetheless, it is important that we find a way of solving the problems of poverty in a more comprehensive manner, not going at them piecemeal with a bill like this. According to the federal government, a payday loan is defined as:

—a short-term loan for a relatively small amount, to be repaid at the time of the borrower's next payday.

The Financial Consumer Agency of Canada, which falls under the responsibility of the Department of Finance, indicates that it is possible to borrow via a payday loan. This is limited to 30%. I see this amount of 30% on a paycheque after the various deductions and income tax. It is often said that a family should not spend more than 30% of its income on accommodation. This leads to a very problematic situation in which payday lenders will ask their clients to give them a post-dated cheque or pre-authorized withdrawal directly from a bank account, and will add various fixed service charges as well as interest.

This seems to be a downward spiral that is difficult to stop for these less fortunate families, who, I would remind the House, are becoming even more impoverished. Certainly, more prosperous people do not resort to these lending agencies. They are more likely to go to their bank or credit union, as is the case in Quebec.

Quebec has its Consumer Protection Act. Payday lenders were once numerous in Quebec but the consumer protection bureau decided to intervene. After that, the combined efforts of the police and the consumer protection bureau all but eliminated that industry within our territory. Furthermore, the Consumer Protection Act contains strict provisions to regulate the entire lending industry.

Thus, we see that opinions are divided on Bill C-26. The Quebec government shares the Bloc Québécois' concerns because we see that, under this bill, any provinces can be granted an exemption by the federal government under certain conditions.

We feel that by placing conditions on exemptions, the federal government is interfering in one of Quebec's areas of jurisdiction. Indeed, Quebec is already regulating this industry, without having to account to the federal government. The maximum interest rate is set at 35% in Quebec, which is far less than the 60% in the Criminal Code. In addition, with its designation provision, the federal government is reserving the right to veto the measures taken by the province that requests the exemption. Although the mechanism for granting the designation is still unclear, it appears that ultimately, the Prime Minister will determine whether or not to grant the designation. Such a veto, in an area under Quebec's and the provinces' jurisdiction, seems inappropriate to us.

I will remind my colleagues in this House that Quebec does not always welcome vetoes.

The Bloc Québécois is therefore opposed to the principle of Bill C-26. However, the Bloc Québécois feels that although the federal government has the authority to include in the Criminal Code a maximum interest rate beyond which it becomes illegal to lend money, it does not have the authority to regulate industry trade practices.

The federal government does not need to decide to implement a licensing system or judge the merits of how Quebec and the provinces regulate the practices of this sector.

In our opinion, Quebec is free to regulate the trade practices of the companies under its jurisdiction, and the federal government does not need to impose a veto for the legislation to apply. Despite the Conservatives openness and respect during the election campaign, the fact is that the Harper government is carrying on the federal tradition of interfering in the jurisdictions of—

[The Acting Speaker, Conservative, Royal Galipeau]

The hon. member just mentioned another hon. member by name. She has enough experience in the House to know that this is not done, and I would appreciate it if she did not do it again.

The hon. member for Sherbrooke has the floor.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, I would like to congratulate my hon. colleague on her speech on Bill C-26.

In listening to her, I put myself in the shoes of citizens listening to the explanations here in the House of Commons. Unfortunately, I think that the 10 minutes given to my hon. colleague were not enough for her to delve further and provide more specific information about this bill and the reasons why the Bloc Québécois is opposed to it.

I would therefore like to ask her to be more specific for the benefit of citizens. Does this bill set a maximum interest rate for borrowers? I would also like her to tell us whether this rate is still usurious or not.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, the bill sets the interest rate at 60%. To me, that seems usurious.

As I said, the Office de la protection du consommateur limits the rate to 35% in Quebec. Even that strikes us as too much.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, I believe the hon. member has some incorrect information on this. The present Criminal Code provides a maximum limit in the 60% range as the amount of interest that can be charged. The amounts of the loans are very small and these companies have to cover their administrative costs, registration and so on, but even charging $10 for one month on a loan of $200 is way over that limit. This bill would permit the provinces to regulate that and ensure there was no abuse of it. However, it still would allow these businesses, which do perform a valuable service, to carry on with their business.

Many firms do this. I received a little thing in the mail a couple of days ago from a retailer I will not identify, indicating that there would be no interest until next year. However, written in small letters underneath, it said a $15 service charge would apply. If we compute that as a rate of interest, it increases it considerably, although it is not called interest. This also needs to be regulated.

I gently correct the member to ensure that what she is talking about vis-à-vis this bill is accurate.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, I thank the hon. member for his remarks.

In our respective provinces, companies clearly sell furniture by saying there will be no interest for one year. However, something else is going on. It is very easy for businesses to increase the price of something and then give us the impression that they are giving us some kind of discount.

That being said, it is not that we are opposed to an interest rate limit at the outer edges of what working people can afford when they have to deal with payday lenders. What we oppose is the federal government administering this program. In our view, this is a provincial jurisdiction. Quebec is already handling it very well, together with the Office de la protection du consommateur.

Our position is always the same. The government that is closest to the people is the one that is best able to understand the situation, set standards, and exercise its constitutional jurisdiction.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, before putting my question to the member of the Bloc Québécois, I would like to draw the attention of the House to what the Conservative member said.

The member was talking about 60% interest. If someone borrows $200 at 60% interest—interest rates are always calculated on an annual basis—that amounts to $120. If we divide that by 12, it is $10. For a loan of $200, an individual would pay $10 dollars interest per month. That does not seem exorbitant, but when you make the calculation the rate of interest is 60%. Unfortunately for those lenders, it is possible that $10 per month may not cover the administration costs.

That means that, strictly in terms of the profitability of such a service to the public—if it can be called that—the rate of interest would have to be even more exorbitant.

Therefore, I ask my colleague whether, given the conditions relating to the operation of such a business, we should not simply forget all that and create a bank for small loans and in doing so introduce regulations that better protect consumers?

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, I agree.

If a family with a very low income needs to borrow a sum as small as $280, it is certain that an additional $10 will perhaps make the difference and enable the family, at the end of the month, to have had the food that they needed. It is not unusual to see this in the poorest families.

The fact that there is a need for companies like these should lead us to ask why there are still poor children and poor families in Canada, when we have been promised so often that there would be no more. I believe that more and more people are being locked into poverty, in a spiral from which they can never escape. They are never able to pay all those charges.

This bill also makes me think that these companies could also profit from people who are compulsive gamblers, for example. Will those people go to these companies and become caught up in the spiral? We must be very careful and try to understand why these companies exist and how we could try to improve the economic situation of families in Canada.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, if I can add clarification to what the two members have just said, first, I understand it is the intention in the bill that provincial jurisdiction will be given. In other words, the in the case of Quebec, it will continue. In the case of other provinces, they regulate this industry on behalf of their own residents. I think there should be no objection from the members of the Bloc on this issue.

Second, I think it is fair to say that these people, instead of having a bank account, will go to one of these short term financial institutions and they will be willing to pay $10 if they can get their short term loan and pay it back.

I happened to just do the math because I had not done it before. If we pay a $10 charge on a $200 loan for 30 days and if we call it interest, it works out very close to 60%. The question is this. Is it really fair to call that interest? As in all cases, there is an administrative component to this that must be covered. If these firms were not permitted to charge that $10 fee, then they would be unable to provide the service and those who want that service would then be deprived of it.

The objective of the bill is to allow those firms to conduct their business on behalf of those who demand that service.

[The Acting Speaker, Conservative, Royal Galipeau]

The time allotted for questions has now expired, but I will give the hon. member one more minute to answer.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, I can obviously not be in total agreement with my hon. colleague.

Instead of allowing these industries to exist, their relevancy ought to be assessed. Where I come from, we would call it cashing in on other people's misfortune. I would not be very proud of managing a business like that.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I was happy when I learned I could enter into the debate on Bill C-26, the Criminal Code amendments regarding payday loans. From experience, the payday loan industry is like a scourge on the inner city of Winnipeg, on the riding I represent. I cannot find the words to speak strongly enough about how critical I am of this exploitative criminal industry. I can say the word “criminal” I think without insulting anyone or without pushing things over the line.

This very bill has been put in effect because the government knows full well what has happened, up until the implementation of the bill, meets the definition of criminal in terms of these so-called payday loans.

In the past in other speeches I have shared the unfortunate and harsh reality that my riding is the poorest riding in Canada. Whether it is measured by average family income or incidence of poverty, Winnipeg Centre is the poorest riding in the country. I bet dollars to doughnuts it has the highest concentration of these exploitative payday loan outfits because they prey on the misery of the poor. They exist solely to take advantage of low income people, desperate people. These people go from the day's drudgery to the evening's despair. They cannot make the end of the week on their meagre earnings, whether it is their paycheque or their social assistance cheque. Because of that, they wind up the victims of these payday loan outfits.

My colleague from London—Fanshawe has raised the point with us as well that every street corner we look at has a payday loan outfit. Every little strip mall that has a vacancy in our ridings is occupied immediately by another one of these payday loan outfits, be it Paymax, The Cash Store or Money Mart. All these reputable sounding names disguise the fact that they rip people off in epic proportions and in complete violation of section 347 of the Criminal Code. For the benefit of Canadians, this section states very clearly that to charge interest at a rate greater than 60% per annum is not allowed.

That provision was put there for a reason. Some of us would argue that 60% per annum is too much, that there is no justification for charging this kind of interest rate. I think the interest rate charged on my Visa is criminal, but it is legal. Visa, at 18%, may make us angry, but these guys, who set up shop to deliberately undermine the law by charging rates of interest that are easily within the realm of criminality, should be condemned, not accommodated by the bill. I call them bloodsuckers and leaches. I call them a scourge on the inner city of Winnipeg for cheating and deliberately exploiting poor people by design.

Let us look at who is doing this and how much money they are making. Where else can people get 1,000% return on their investment? A person would be pretty happy in today's stock market to be making 8%, 10% or 12% interest. In the good old days some IPO in the high tech sector could make 20% per annum interest.

These outfits are making 1,000%, 2,000%, 5,000%, 10,000% interest per annum. One example, investigated by the attorney general of Manitoba, found one cash store was making 10,000% interest, if all the surcharges and service charges are called part of the interest. For the purposes of the law, all those charges end up with net effect of interest at 10,000%.

The industry is completely unregulated. No wonder it attracts people such as the mob, the Hell's Angels and terrorist groups. Where else can they get that kind of money?

These innocuous looking, nice, clean little stores, which are popping up in every strip mall across the country, are not only sucking the lifeblood out of my inner city riding of Winnipeg Centre, but they are starving people and they are involved in clearly illegal activity. They are not only charging usurious illegal rates of interest, but charging people to cash government cheques.

Many members in the House would be shocked to learn that no one is allowed to charge for cashing a government cheque. People do not know their banking rights and that is where the blame has to come down.

We would not be having this debate today or the epidemic of rip-offs going on in our ridings if the banks were doing their job of providing basic financial services to Canadians as per their charters. If the banks had not abandoned the inner cities of Winnipeg, Vancouver, Toronto, Sault Ste. Marie and London, if they had not bailed out on this nuisance financial services industry that they do not want any more, poor people would not need to go to these rip-off outfits.

Fifteen branches of the five charter banks in my riding have left since I have been a member of Parliament. I know that 13 or 14 have left the riding of Winnipeg North, represented by my NDP colleague who is not here today. That is almost 30 branches of inner city ridings.

I am sorry, I will not point out whether my colleague is here or not today. I am actually delivering this speech on behalf of my colleague, the finance critic for the NDP, so people can draw their own conclusions as to whether she is here or not.

The fact is that roughly 30 branches of chartered banks have left, a flight of capital, leaving no financial services in their wake. People do not know that the charter banks have obligations. The charter banks of Canada were given the exclusive rights and privileges to certain very lucrative financial transactions, such as credit card statements, cheque cashing, et cetera, in exchange for providing basic service to Canadians, even when sometimes it is not the most profitable thing in the world to give ma and pa their little mortgage in downtown Winnipeg, even when it is not that profitable to allow people to open bank accounts to cash cheques even when they only have $100.

However, the banks have an obligation and a duty. If the charter banks are not willing to live up to their end of the bargain, we should tear up their charter, throw the industry wide open to foreign banks and see how they like it then. That is what they have done in some other countries when the charter banks got too big for their britches. We would not have this problem in the inner city of Winnipeg and other major Canadian cities if the banks were doing their job by providing basic financial services.

As such, the people who I know, the low income people in the inner city of Winnipeg, have no alternative, nowhere else to go to cash their cheques. They actually sport their Money Mart card, which is, frankly, a licence to be robbed, as one of their main pieces of identification. I have used the phrase before that villainy wears many masks, none so treacherous as the mask of virtue.

These Money Mart stores are trying to portray themselves as providing a necessary service. They set up brightly lit, friendly looking stores, are courteous to the low income people who walk in and they issue important looking cards that are not even credit cards but just ID cards for the Money Marts. People carry them around with some pride because the banks will not talk to them, aside from the fact banks are nowhere to be found. People do not have bank accounts but they do have Money Mart cards.

I have never been able to calculate the amount of money that gets sucked out of my riding every month by these thieves. I will call them thieves, at least until such time as the Criminal Code is changed to where we allow greater than 60% interest to be charged. They are involved in illegal activity and we are accommodating them with this bill. Instead of correcting the problem, the bill actually says that we will not stop this runaway roller coaster so we had better change the law to make it legal.

At least we are ceding the jurisdiction to the provinces so they can hopefully put in place some enabling legislation to control and contain the extent of the problem because the extent of the problem is horrific. These outfits are sprouting up like poisonous mushrooms on every street corner, if I can be forgiven for extending that analogy, because their corporate greed is responsible for a sum total of human misery on the streets of the inner city of Winnipeg that I do not think we can measure.

The very fact that people cannot make ends meet on their meagre paycheques and are forced to obtain one of these payday loans already means they are in some form of financial crisis. It is not the people we see on the TV ads, well dressed, middle class people driving their cars up to the Money Mart because they are $100 short on this month's paycheque.

The way these outfits are structured, people's problems are compounded. Their misery is only starting with the first loan because if they are a day late on that loan, they offer a rollover loan at an even higher rate of interest and more service charges. These companies suck people in and roll the money over until people have reached a level of debt that they can never get out of.

Here are other things that these outfits do. It is common practice to have people voluntarily sign a permit so their future wages can be garnished, never mind going through the courts. If somebody owes a great deal of money, sometimes companies need to apply to the courts to garnish someone's wages. However, payday companies make people sign this away at the front end.

These companies will make people put up property, if they have it, as collateral even for a couple of hundred dollar loan, which seems ridiculous, except that they know how fast a $200 loan spirals out of control to where all of a sudden it is not so ridiculous to have a house as collateral for that loan because the loan is not $200 for very long. Cars and boats are not unusual personal guarantees. Sometimes people need to sign away their right to any kind of arbitration or to the services of a credit manager.

These companies have not only figured out how to charge 1,000% or 2,000% interest, they have figured out ways to preclude the ordinary rights that people might have if they run into credit difficulty to get out from under it. In other words, they own people. Loansharking seems kind compared to these payday loans. I kind of pine for the days when it was just Luigi the leg-breaker who would take care of things. These guys are far more sinister, far more organized, far more corrupt and far more criminal. The leg-breaking that used to go on if people borrowed money at the pool hall, we would probably look forward to that compared to the hold that these companies have.

It is criminal behaviour. It is organized crime. There are chains of these companies, in effect, breaking the law systematically, the very definition of organized crime. Our reaction as a government, unfortunately, is to accommodate them and to pass legislation to allow these companies to charge more than 60% per annum. It does not say that they can charge 2,000% or 10,000% per annum as in the most extreme case that we have come across, but to accommodate them in any way is offensive to the sensibilities of any decent Canadian.

It should make us angry. It should make Canadians angry that the best thing we can think of to do when faced with this organized wholesale criminal activity is to accommodate them when we should be looking at our financial institutions to look at the root cause of the problem, which is abandonment by the charter banks.

The charter banks have packed up their tent and left, not because these branches in the inner city were not profitable, but because they were not profitable enough. Because their branch in the suburbs made more money than the branch in the inner city, they put an addition on the branch in the suburb and told their customers in the inner city to take a bus out to that branch. They closed 15 branches in my riding alone in the inner city of Winnipeg.

It is abandonment. It is a vote of non-confidence. It would not bother me if these were independent private businesses because it is their right to pack up and leave. However, these are charter banks. They exist and enjoy their exclusive monopolies at the pleasure of the House of Commons and the Government of Canada. Has nobody tried to remind the financial institutions of their obligations in recent years? They are making record profits quarter after quarter. They cannot count their money. They are like Scrooge McDuck sitting on piles of money that they cannot even imagine their good fortune and yet they are derelict of their duties and leaving the people I represent vulnerable to rip-offs like the payday loan industry.

The payday loan industry even has an association now, which is how they are striving for legitimacy. Can anyone guess who the executive director of the Payday Loan Association of Canada is?

[An hon. member]

It's not a New Democrat, is it?

[Pat Martin, NDP, Winnipeg Centre, MB]

No it ain't no New Democrat. It is a former Liberal cabinet minister from Hamilton, I believe by the name of Stan Keyes. Stan Keyes has now seen fit to represent these guys. I do not know what could possibly be his thought process to think that would be okay. Even his wife gave him heck. In this newspaper article it says that when he first told his wife that he was serious about taking on the job as the head of the Payday Loan Association of Canada, his wife asked him if he really wanted to do that. She wanted to know what he was doing to his reputation as a respectable stand up guy, working for those shysters.

If he is trying to reinvent himself after 20 years of political life, he is choosing a funny way of doing it by working for the most reprehensible, morally and ethically bankrupt organization in the country.

[An hon. member]

The Liberal Party of Canada.

[Pat Martin, NDP, Winnipeg Centre, MB]

No, not the Liberal Party of Canada. He has moved from the Liberal Party of Canada to the head of the Canadian Payday Loan Association. I do not know what the connection is but maybe this explains why, after years of complaining to the Liberal government that these rip-offs were running roughshod over the law and exploiting the people I represent, it chose to do absolutely nothing year after year.

I went directly to ministers of industry on this very issue looking for satisfaction on this. In fact, I pigeonholed one minister in Manitoba when she was visiting my province. We had our minister of consumer and corporate affairs and we had the federal minister of industry there. I told them both that it was an emergency, a crisis, and that they had to do something. That was years ago, probably 2002 or 2003, and nothing was done.

The Province of Manitoba has been trying to pass its own legislation to stop these guys but it does not have the jurisdiction to do so. It is a federal matter. Now we have the federal government at least paying deference to the extent of the problem and introducing legislation that hopefully we can segue into some satisfaction for the people I represent, although it will still be up to individual provinces to say how tough each one chooses to get.

However, I am here to say that the payday loan industry is out of control. They are a bunch of crooks. They are a bunch of gangsters painted up as honourable citizens but there is nothing honourable about their industry. They are cheats and they are cheating Canadians as we speak.

The sheer number of them shows us how profitable this is, but, as I said in my opening remarks, where else can people get 1,000% interest? Where else can people get that rate of return? No one can make that kind of investment. I do not think that much money is made selling coke, and I mean cocaine not Coca-Cola. I do not think anyone makes that much money dealing dope. It is irresistible. I do not think anyone can make that much money in prostitution or any of the other traditional rackets. This is a racket to end all rackets and we are actually accommodating them and finding a way to make it legal.

I am surprised the Canada Pension Plan Investment Board is not investing in payday loans. They do not have any ethical investment standards whatsoever. They have no ethical screen. In fact, I think we could argue that the Canada pension plan is obligated to invest in the payday loan industry because its very founding trust document says that the only consideration shall be the maximum rate of return. There are no ethical standards: child labour, polluting the St. Clair River, it does not matter. Our pension plan has to invest in them.

I understand I am running short of time, but I raise that as an aside. I do not want our Canada Pension Plan Investment Board to invest in payday loans. I want to stamp payday loan companies out of existence. They should be squashed like a grape under the heel of Parliament for the offence that they have committed against the Canadian people. They do not deserve to breathe the same air as the good people of Winnipeg Centre. They do not deserve to occupy store space. They do not deserve to put up billboards and buy advertising space. They should be run out of business. They should be tarred and feathered and run out of town on a rail. That would be the only suitable way to treat the payday loan industry.

[The Acting Speaker, Conservative, Royal Galipeau]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Skeena—Bulkley Valley, Government Programs; the hon. member for Saint-Bruno—Saint-Hubert, Bankruptcies.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, the member may want to rethink the use of the name Luigi in his speech, fraught with sensibilities, as the stereotypical lender. I know the member has more respect for the many multicultural Canadians to probably do that.

However, the pith of his statement, in my mind, goes to an abdication of Parliament in not having laws to protect its citizens and in the completely antiquated state of our Criminal Code.

The member will know that a colleague of his, the justice critic from the New Democratic Party, stands with many Liberals in requesting that the Criminal Code, in its entirety, be renewed and revised.

As the member has been a parliamentarian for some time, he would know that section 347 of the Criminal Code of Canada, which has been on the books for some time, does cover square on all fours with the crimes that are associated with 2,000% interest administered by some of the payday loan companies. How is it that it has escaped Parliament all these years and escaped the Criminal Code for protection of our citizens, and what would he suggest in terms of revamping the Criminal Code in specifics and in generalities?

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague for pointing out that it would be wrong to point out any particular ethnic group or type of people when we are criticizing what I call loansharking and leg-breaking, et cetera. It certainly was not my intention, but under section 347 of the Criminal Code dealing with usury, which is what the term is when a rate of interest is charged which is higher than that allowed by law, there has been only one charge in recent years. It was the province of Manitoba that levied the charge against the company and it is still tied up in endless appeals.

We are concerned that there has been a lack of enforcement, which should not be a matter for politics or the political realm, but for some reason, I suppose, there has been no confidence that we can make these charges stick. Without legislation that accurately reflects the reality of what is going on in the marketplace, and without a modern, efficient language, we are not going to be able to make those charges stick.

My colleague's point is well taken. We need to modernize the Criminal Code so that it at least bears some resemblance to what is actually going on out there in modern-day Canada.

This is a fairly recent innovation and it takes evil people to exploit it. I do not know how they devise these schemes, but bad people stumble across these opportunities and exploit them. They research them. They do not just look for loopholes. They look for poorly enforced clauses of the Criminal Code. That is what has happened. It is against the law to charge 2,000% interest, but these people had the temerity to try. When they did not get busted, more people were motivated to try, and then more and more. Word spread like wildfire.

If one is of the human nature of that sort, who would willingly exploit people and capitalize on human misery, this is a golden opportunity. If one is that kind of person and is that low as a human being, the Government of Canada and our criminal justice system apparently are not going to interfere, because we have appealed to the government. We have tried. We have begged. We brought it to the highest level and nobody seemed willing to interfere with what these guys were up to.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Again, Mr. Speaker, I have a comment more than a question. This member has his heart in the right place, I think. He is out there fighting for the little guy and so am I. There may be a little difference between him and me, though.

I remember many years ago when I had an NDP friend that I worked with. We had a debate on how to help poor people. During that debate, out of the blue I asked him how much he had given to charity in the last year. He said, “Nothing. It's not my responsibility”. But he believed strongly in the government covering everything. I said, “I guess there's the difference, because I give a lot of money to charity and to individuals I see in need because I believe in that”.

I have a friend right now in the city of Edmonton, with whom I am working and who is in a bad financial situation. He recently got a cheque. It was not a large cheque. He needed to cash it and I asked him why he did not have a bank account. I told him that he could open a bank account, that the bank would open one for him and I would go with him and help him and he could cash that cheque for nothing. He said, “No. I can't be bothered”.

Should we pass a law that forces these people to have a bank account? I do not know if we should. Perhaps we should.

At any rate, he asked me to please stop and he went into one of those instant loan places to cash his cheque. I think they charged him $2 to cash a $200 cheque. There was no interest involved because he did not take out a loan. He had a cheque. It was a $2 charge to cash the cheque. If I go to a bank, I also am charged to cash a cheque because the bank is giving me a service.

I would like to urge the member to stop and think about it. Perhaps these small financial institutions that cater to the small user are providing a valuable service to those people for what is a reasonable absolute charge, but if we compute it into an interest rate it becomes usurious, which is of course the issue in the Criminal Code.

These people are not criminals. They are providing a low level service for a relatively low amount of fees, but when we convert it to an interest rate, which is unjustified in this place, then I think we can get very confused on the issue. I appreciate the heart this member has, but I would urge him to reconsider his vitriolic attack on these people.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I will not even bother commenting on getting into a comparison of who donates more money to charity. It is not worthy of this place.

I will come back to the idea about banks not living up to their duty and obligation to provide basic general services to all Canadians as an aspect of their being granted a charter, as are chartered banks. A lot of people do not know their banking rights. Low income people often do not.

A bank cannot turn down people who want to open a bank account even if they do not have a single dollar. Even if they do not have any money but just want to open a bank account to establish a relationship with that bank for future cheque cashing, for instance, a bank cannot turn them away as long as they have a piece of ID.

Maybe people do not know their banking rights. There has been very little effort on the part of banking institutions to make sure people know their rights, because these are considered nuisance services. An individual might be charged $1.50 in service charges, but probably that does not even pay for the administration costs.

People should know their banking rights. The Government of Canada has a role to play in reminding banks that they have this duty and an obligation, not just in the inner city of Winnipeg but in Plum Coulee, Manitoba, or in some small towns that are losing their bank branches too.