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House of Commons Hansard #68 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was opposition.

Topics

Criminal CodeGovernment Orders

4:35 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Mr. Speaker, I thank my hon. colleague from Winnipeg for all the work he has done over the years on this issue.

As banks continue to show record profits, and good for them for being able to do that, there also seems to be a breaking of their responsibility and the contract--a compact, in fact--with the people of Canada, which the governments that occupy this place are meant to represent and uphold. Banking institutions are given a certain oligopoly and in bearing that responsibility they bring banking services to Canadians.

Earlier in the debate, I pointed out a small community in my riding, Stewart, B.C., which over the years has contributed hundreds of millions of dollars to the Canadian coffers, both provincially and federally, and yet cannot maintain a branch service, because the banks can make money in the community but not enough.

What responsibility do banks actually have to Canadians? Do they need to be reminded of that responsibility to bring those services to communities by the people elected by Canadians, not by the banks?

Criminal CodeGovernment Orders

4:35 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, my colleague from Skeena--Bulkley Valley has made a valid point. Banks were given the exclusive monopoly on certain very lucrative financial transactions in exchange for providing basic services to Canadians, whether they live in the inner city of Winnipeg or the remote northern region of British Columbia.

I know that ministers responsible for financial institutions should have been seized of this issue in recent years because this duty very conveniently seems to have been collectively forgotten by the banks. That is what has left the people of the inner city of Winnipeg vulnerable to these rip-off payday loan outfits.

If I could correct my colleague from Edmonton, these institutions are not charging just $1.50 to cash a cheque; sometimes it is 3%, 4% and 5% of the amount of the cheque. I am not saying this is so in every case, but we know of examples where it is that high. That is an absolute rip-off. Nothing is supposed to be charged for cashing a government cheque, period. It is supposed to be a service available to Canadians. If a customer establishes a relationship with a bank and needs an extra $100 one week, he or she could do an overdraft and the service charge would be 1% or 2%.

Criminal CodeGovernment Orders

4:35 p.m.

Lotbinière—Chutes-de-la-Chaudière Québec

Conservative

Jacques Gourde ConservativeParliamentary Secretary to the Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board

Mr. Speaker, it is my pleasure to rise today to speak in support of a significant piece of legislation, Bill C-26, An Act to amend the Criminal Code (criminal interest rate), introduced on October 6 by my colleague, the Minister of Justice.

This bill amends the Criminal Code to allow for the regulation of the payday lending industry by the provinces and territories. This is a major change which is well received. For years, the payday lending industry was able to operate unnoticed in Canada.

This bill will subject this prosperous sector to regulation and offer greater protection to millions of Canadians and their families who have come to depend on this kind of service. According to the leading industry lobby, namely the Canadian Payday Loan Association, this sector services nearly two million Canadians a year. This is a pretty large number, hence the importance of ensuring that Canadians are well protected against harmful practices in that industry.

The passing of Bill C-26 would first amend the Criminal Code by adding a new provision, namely subsection 347.1, which would exempt payday lenders from the provisions on criminal interest rates where provincial and territorial legislative measures protect consumers in this regard. It would then add a definition of “payday loan”. Finally it would require the provinces to set a limit on the total cost of this type of loan in their legislative measures.

Before examining the content of these amendments, I shall provide a few clarifications on two points. First some background on the payday loan industry in Canada, including its effects on communities across the country, and, second, its debatable practices, which motivated us to take action and propose the amendments before us today.

When they know more about this industry, I am convinced that all the members will agree that the measures put forward in Bill C-26 are pragmatic, balanced and necessary.

The payday loan industry is relatively new in Canada. These convenient establishments with catchy names began to appear here about 1994. The industry began in the West, but today it has spread throughout Canada. In fact there are about 1,350 of these establishments in all Canadian provinces and cities, except in Quebec, and they continue to increase in number. Some 2 million Canadians use these services, borrowing close to $1.7 billion a year. This is an astounding amount when we know that all this activity takes place in an market that is basically unregulated.

These figures show that the payday loan industry meets a real demand by Canadians. According to some, this industry has no place in Canada. On the other hand, it obviously plays an important role in the lives of many Canadians. There are several reasons to explain why our fellow citizens turn to the services of a payday lender. Convenience is one of them, since many of these businesses stay open late and on weekends. Also, some people think that the popularity of this sector may be attributed to the fact that the country’s large financial institutions have closed their smaller branches, leaving a void among services providing quick and easy withdrawal of funds in many communities. There is also the fact that this service is relatively anonymous and emergencies can occur, with immediate financial consequences.

In any case, this industry seems to have its place in our communities. So it is important that we provide adequate protection from certain abusive commercial practices to the Canadians who use payday loan services, especially the most vulnerable people in our society.

The government takes its responsibility for improving the lives of Canadians and their families very seriously and is taking a number of important measures to do just that. Whether it be by strengthening the Criminal Code to make our streets and communities safer or by reducing taxes for our fellow citizens, we are committed to taking effective action such as what we are proposing in Bill C-26.

We will continue to do this to ensure that Canadians have the best possible quality of life.

The measures proposed in Bill C-26 are a careful and effective way of improving consumer protection and meeting the need that has been expressed by various people, including the provinces and territories, for effective regulation of this industry. There are three good reasons for doing this.

Payday loans are very expensive. In some cases, the annual cost of a loan from a payday lender can be very high, because of the interest, which is charged at a rate that is sometimes several thousand or more. It also seems that the contract clauses are not clearly disclosed by these lenders.

Aggressive collection methods also create problems, as does the speed with which the amount of these debts can grow out of control when they are renewed. In some cases, payday lenders even penalize a borrower who pays the loan before the due date, by charging fees.

For all these reasons, it should be very clear to all members that there is strong justification for taking action. The changes proposed in Bill C-26 will ensure that the practices of this industry are effectively regulated.

When we looked for the most appropriate way of dealing with this pressing public policy issue, we also worked very closely with our colleagues in the provinces and territories. We gradually realized that section 347 of the Criminal Code was going to be the linchpin of the new rules.

Under section 347, everyone who enters into an agreement or arrangement to receive interest at an annual rate that exceeds 60%, which is a criminal rate of interest, is guilty of an offence.

People who are convicted of that offence are liable to imprisonment for up to five years.

When section 347 of the Criminal Code was first enacted, its purpose was not to protect consumers. Rather, its aim was to give the police another weapon for fighting organized crime, and more specifically loan-sharking. Whatever the intent of Parliament was at that time, this section applies to loan agreements entered into in Canada, including payday loans.

I would note, however, that the government does not believe that section 347 of the Criminal Code is the most appropriate and effective instrument for protecting consumers from the unethical and unscrupulous practices that have been observed in some segments of the payday loan industry.

We are not the only ones who think that way. Many administrations and several groups in civil society have told us that section 347 is not suited to consumer protection. What is more, these same administrations have told us that the application of section 347 to payday loans presented an obstacle to the adoption of effective provincial regulations. As a consequence, the proposed amendments respond to the needs of the provinces and territories, who are the best placed to provide the required protection to consumers by exempting cases where provinces choose to intervene from the application of section 347.

However, section 347 continues to apply in those cases where the provinces do not intervene. We consider this to be an appropriate solution that enables the provinces and territories that are prepared to regulate the industry to do so.

I would also like to point out that Bill C-26 will not apply to financial institutions that are regulated by the federal government, such as banks. Under the Constitution of Canada, banks fall under federal jurisdiction and their operation is subject to a number of federal laws.

By and large, the proposed amendments would exempt payday lenders from the application of section 347 of the Criminal Code in very specific and well defined cases. That exemption would be provided under a new section, section 347.1 of the Criminal Code.

According to a study, the amount generally loaned in the case of a payday loan is never very high—less than $300—and the duration of the loan is generally short—about 10 days. To be eligible, the borrower must prove that he or she has a bank account and provide a post-dated cheque or pre-authorized debit. The borrower must also provide proof of a source of income.

Bill C-26 describes a payday loan as follows:

An advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a line of credit or a credit card

This definition is important because it clearly describes the kind of agreement behind payday loans. The proposed changes have a very specific purpose. We want to ensure that provinces and territories are able to regulate payday loans in their jurisdictions. We also want to ensure that only payday loan agreements are covered. We are doing this because the public policy issues raised by other kinds of credit are very different. I think that the definition provided in Bill C-26 describes payday loans very well.

Bill C-26 also specifies that only certain types of payday loans will be exempted from the application of section 347 of the Criminal Code. The loan cannot be for more than $1,500 and for any longer than 62 days. These limits reflect the maximum limits on payday loans described earlier.

The bill does not propose any regulations per se, not does it set a national limit on payday loan interest rates. What it does instead, in creating an exemption to the application of section 347, is to meet the needs of the provinces, who want to see the obstacles to the regulation of this industry removed. This is important because it is the provinces and territories that are best placed to regulate the payday loan industry.

The ultimate purpose of the proposed changes is the effective regulation of the industry. The best way to achieve this goal is to give the provinces and territories the flexibility they need to set limits on the cost of loans. Thanks to this approach, the regulations that are adopted will be well suited to the specific situations facing the different provinces and territories.

This bill also provides that section 347 will continue to apply in those provinces and territories that elect not to pass legislation governing the payday loan industry.

If a province or territory has made the decision that payday lenders operating within that province or territory are to be exempt from the application of section 347 of the Criminal Code, it will have to apply to be designated for that purpose by the federal government. In order to be exempted, it will have to show that it has adopted legislative measures that protect anyone who wants to take out a payday loan. What those consumer protection measures are will be left virtually entirely to the discretion of the provinces and territories.

This is a valid approach in that it recognizes the nature of the situation in each jurisdiction, including, specifically, the way that the industry operates there, and also the existing provincial consumer protection legislation adopted under the powers assigned to the provinces by the Constitution in relation to property and civil rights.

Bill C-26 requires, however, that the province provide for limits on the total cost of payday loans in its legislative measures. I believe that this approach reflects three fundamental factors.

First, the provinces and territories are capable of controlling the cost of loans within their jurisdictions. Second, this guarantees that there will be a limit on the cost of borrowing. And third, as we saw earlier, it offers a flexible solution that can be adapted to the characteristics of each province and territory.

The Governor in Council will make the necessary assessment before granting a province or territory the designation applied for. The province will apply to the federal Minister of Justice, stating the legislative measures it has taken to control the cost of loans. Then, on the recommendation of the federal Minister of Industry, the Minister of Justice will ask the Governor in Council to grant the designation applied for. The province will then be given the power to exempt a payday lender, by licence or otherwise, from the application of section 347.

All in all, I believe that Bill C-26 is very important. It offers Canadians greater protection by allowing the provinces and territories to regulate an industry that is in great need of oversight. It sets very clear limits. It defines payday loans and sets a limit of $1,500 for loans that may be made under these rules. It invites the provinces to adopt legislative measures to regulate payday loan agreements, and in particular the total cost of the loans.

Bill C-26 is further proof of the government’s commitment to working with the provinces and territories on matters of common interest. The amendments proposed will have an important and real effect on the Canadians who have come to depend on this service. I hope that all members will join me in ensuring the speedy passage of this bill.

Criminal CodeGovernment Orders

4:55 p.m.

Bloc

Serge Cardin Bloc Sherbrooke, QC

Mr. Speaker, since for all intents and purposes we are discussing micro-credit, I would like to point out that the member for Winnipeg Centre and the member for Skeena—Bulkley Valley made special mention of the social responsibilities that banks should have. I remember introducing a bill, on another occasion, that would have allowed banks to play a social role by helping the most disadvantaged and the poorest who have to pay administrative fees. Often bank services are not accessible to these individuals.

I would just like to make an important point. The member for Edmonton—Sherwood Park mentioned that the member for Winnipeg Centre was too kind to the poor and that we have to follow the lead of the government in terms of Bill C-26. I would like to point out that, this year, Mr. Muhammad Yunus received the Nobel Peace Price. He is an economist who established a micro-credit system, with 1,200 micro-credit offices, which today has created jobs for 12,000 individuals. These are small repayable loans made at rates that are probably much lower than 60%.It gives credence to the statement that, and I quote, “Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty”.

If people need payday loans and, if for all intents and purposes, micro-credit were available for relatively short periods, would it not be important enough to warrant establishing this system within the banks? They could be asked to play a social role and to loan small amounts. We know quite well that, more and more, banks—all banks—make profits in the order of hundreds of millions of dollars, profits often in excess of one billion per year.

Ordinary banks have a social responsibility. I ask the member: would it not be better to ensure that banks fulfill their social responsibilities rather than protecting a loan system which, for all intents and purposes, is usurious?

Criminal CodeGovernment Orders

4:55 p.m.

Conservative

Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC

Mr. Speaker, I think that new legislation will provide us with a tool to give the provinces and territories a way to regulate and perhaps help the micro-credit sector we are discussing. Canadians must need these kinds of loans. Payday lenders have monopolized this part of the market, a market that is not currently regulated.

It is really important to regulate this industry to protect millions of Canadians. That is why I support this bill.

Criminal CodeGovernment Orders

4:55 p.m.

Liberal

Brian Murphy Liberal Moncton—Riverview—Dieppe, NB

Mr. Speaker, does the member realize that if this bill is passed, there will be many differences between the provinces?

Does the member think that the Quebec model is a good one?

Perhaps he is aware that the Quebec model limits interest rates to 35%, while the Criminal Code limits rates to 60%.

Does he think this is a good model for all of the provinces?

Criminal CodeGovernment Orders

5 p.m.

Conservative

Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC

Mr. Speaker, the tool we will be providing to the provinces and territories will enable them to set their own maximum rates.

We have a very good system in Quebec, and credit unions are firmly established in both rural and urban communities.

We do not have this problem in Quebec, and I think that is because the banking and credit union services provided by Desjardins are closer to the people. I hope that banking services that meet the people's credit needs will develop in other provinces.

Criminal CodeGovernment Orders

5 p.m.

Bloc

Paule Brunelle Bloc Trois-Rivières, QC

Mr. Speaker, as far as this Quebec model is concerned, I would like my colleague to know that in Quebec, payday lenders were abolished through the Consumer Protection Act, which has very strict obligations for lenders of every kind.

The annual borrowing rate has to be indicated on the loan agreement. All fees are calculated in the annual rates. There is no possibility of adding other fees such as record creation fees, form processing fees and so on. The law says that an annual interest rate greater than 35% is abusive.

Why present this bill that interferes in provincial jurisdictions?

Every province could adopt its own consumer protection act and thereby regulate this loan industry, which often includes some very abusive lenders.

Criminal CodeGovernment Orders

5 p.m.

Conservative

Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC

Mr. Speaker, again, in my opinion this legislation will allow territories and provinces to legislate and help this industry that has been around since 1994.

Criminal CodeGovernment Orders

5 p.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, I will go back to the question the hon. member for Trois-Rivières asked because her question was not fully answered.

In Quebec, we have a financial system that was implemented by institutions and designed with a view to protecting consumers through a consumer protection network. We are here in this House in the process of developing a new system that may interfere with the one already in place for protecting the most vulnerable from these types of loans.

As my colleague was saying, we are talking about loans with a 60% interest rate. In my opinion, a 60% interest rate is excessive. It practically amounts to usury and exploitation.

I do not understand the need to introduce a bill that interferes in a provincial jurisdiction. The addition of this measure will encourage financial institutions to further exploit the least fortunate in our society, when in Quebec and in other provinces, we already have legislation to protect the most vulnerable and the least fortunate in our society who often use this type of loan. I would like the hon. member to respond.

Why introduce a bill that will harm the most vulnerable in our society?

Criminal CodeGovernment Orders

5 p.m.

Conservative

Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC

Mr. Speaker, I am pleased to respond to my colleague's question.

The payday loan system was not regulated. We have a duty to introduce this bill in order to help millions of Canadians.

Criminal CodeGovernment Orders

5 p.m.

Bloc

Serge Cardin Bloc Sherbrooke, QC

Mr. Speaker, when I requested the floor to ask the hon. member a question earlier, it was to remind him that the bill should help not just the provinces and territories, but also the least fortunate in our society.

To come back to what I said in a previous question, this is oddly similar to micro-credit and, in my opinion, it is the financial institutions—which make outrageous profits—who should take responsibility.

Criminal CodeGovernment Orders

5:05 p.m.

Conservative

Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC

Mr. Speaker, I think that our bill will solve the payday lending problem.

Criminal CodeGovernment Orders

5:05 p.m.

Liberal

Brian Murphy Liberal Moncton—Riverview—Dieppe, NB

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-26, an act to amend the Criminal Code with regard to criminal interest rates.

This bill is in fact designed to regulate the payday lending industry. This will be done by limiting the interest rates lenders can charge Canadians.

I am quite pleased as well to see that the minority government is taking advantage of the hard work done by previous Liberal ministers of industry and justice. In introducing this bill, it surely gives a sign that what we were doing before was just fine.

It is flattering to see Canada's new government actually putting forward many bills that were in the past proposed by Liberals. Despite what my colleagues on the other side of the House may be saying, they are acting as if what was done before was going in the right direction.

It was the previous Liberal government that worked with our provincial and territorial colleagues to build the consensus necessary for the legislation that we are discussing today. Currently, section 347 of the Criminal Code of Canada makes it an offence to enter into an agreement or arrangement to receive interest at a criminal rate or to receive a payment that is at a criminal rate.

It is interesting to note that section 347 was introduced initially to deal with the practice of loansharking and its links to organized crime. It was not always the written signed agreement under the shiny lights on the main streets of our cities that these arrangements were entered into, but often in the back alleys and through very informal discussions.

Although section 347 has been interpreted as applying to most lending arrangements in Canada, including payday lending, it was not intended to be consumer protection legislation or a consumer protection tool for economic price regulation when it was first introduced. It would seem that section 347 was attempting to capture criminals who looked like criminals and not criminals who look like storefront entries as many of the payday lending institutions of today's currency do.

In fairness, the Canadian Payday Loan Association itself, unlike the characterization of the member for Winnipeg Centre that would have us believe is made up totally of criminals, is in fact proposing this legislation which will be of benefit to consumers and the people we represent.

However, let us look at the scourge of the bad payday lending experience and what it has visited upon our citizens. In British Columbia a judge ruled in a class action that a payday loan company charged criminal interest rates when it included its late fees and processing fees as interest. That is what the court ruled. The ruling is expected to influence the outcome of many decisions. It is an instance of where the judiciary has stepped in to characterize as interest what may be seen as fees and thereby impinging some payday loan arrangements.

Last year in Ottawa, a small claims court judge ruled that two payday loan companies suing clients for unpaid debts, this is ironic, were themselves avoiding the law and breaking the law. The facts as they came out were that a loan of $280 rose with interest and penalties to $551 per month. That is an annualized interest rate of more than 2,000% and these people had the temerity to bring it to court to get their money.

The judge could not rule that it was in violation of the law because that was not the dispute in front of the court, but it shows the boldness and frankly, the arrogance of some payday lenders in charging that amount of interest and standing by it as if it were not more than 60% which is clearly set out in the Criminal Code.

Bill C-26 would not put an end to payday loans. The industry could easily continue to operate, but it is going to operate with controls. It is important to note that the legislation does not apply to loans over a certain amount, $1,500 and over a certain length, 62 days. This act does not replace the Criminal Code.

I think a principal theme of our discussions today on this bill must address the paucity in the Criminal Code itself to deal with the crime. So anything that is over 62 days that is over 60% ought to be prosecuted.

In studying the bill, we have learned that there are very few prosecutions. It is time for the government to take this information, as if it did not know it before, and tell the administration of justice officials, both federally and provincially, that we have a section called 347 and it should be enforced. If it is true, but we do not know because we have not had a full hearing on section 347, that only a prosecution or two have been made under this section in the last few years, something has to be done about that. The bill will not cure any of the in excess of 60% in loans that are longer and larger in duration than what it attempts to cover. However, it is a start, it is good legislation and we should support it.

It means, however, that the provinces and territories have to get their acts together. I am very hopeful that the new federal government has kept good relations with all the provincial counterparts and has, like we did before, an easy discourse of opinion on how to best influence reasonable rates, like the province of Quebec has administered for some time under its consumer protection legislation.

Several provinces, including New Brunswick, have already announced their intention to regulate payday lending once this bill is passed.

I know that the new Liberal government in New Brunswick will address that situation as soon as this is done.

I know T.J. Burke, the new attorney general for the province of New Brunswick. He is the first aboriginal attorney general in Canada, and he is an excellent law official. Once this legislation passes, I know he will be looking to the models across the country, specifically the model in Quebec, which seems to give to our citizens the best consumer protection.

Payday lending is a growing industry in Canada. Virtually non-existent in 1994, the industry is believed to have grown to more than 1,300 outlets in just 10 years. That is why perhaps this law is just coming to us now. We probably all saw the industry grow, but empirically did not know that 1,300 outlets existed across Canada. Nor would we know, if we are not users of the services, what horror they are inflicting on our citizens.

The number of payday loan outlets now outrank the number of offices of the Royal Bank of Canada. Therefore, it is important to underline that this is not just a Main Street, Stellarton, one-off issue. The bill is dealing with a Canadian issue.

Only 850 or so of these institutions are represented by the Payday Loan Association. They have been very forthcoming in lobbying for a bill to protect consumers. I would suggest to go halfway to also ensure that they have an existence after the passage of the legislation.

One thing we may consider, as the bill travels along the process to committee, whether we will strengthen the legislation and attempt to affect and to curb the impact of usury on our citizens.

I cannot say this strongly enough. While VISA cards regularly get 28%, the province of Quebec has chosen 35% as a ceiling interest rate. I cannot say strongly enough how we, as parliamentarians, in the moral persuasive stance that we have with provinces and territories, might suggest that the Quebec model is a good model for the citizens who we share as electors.

The significant growth of this sector is actually hiding the dire situation facing many Canadians.

A few years ago, holding a full time job was enough to support one's family. Unfortunately, that is not necessarily the case anymore. Times have changed. Many Canadians work full time, and some even work more than one job, but that is still not enough to support their families financially. There lies the real tragedy.

We are doing just a bit to help the working poor in this situation.

As a former member of an Open Hands Food Bank organization in Moncton, New Brunswick, food banks are no longer visited by the very poor and destitute only. They are often visited by the working poor, people who work as a couple with minimum wage jobs, people who need to have two minimum wage jobs, people who have children or people who have a letdown in hours at the video store, one of their minimum wage jobs. This means they are forced to go to the food bank or, as I say, le vrai drame, to the Money Mart, to get a loan at a high interest rate to pay the rent, to have groceries and to ensure their children can go to school.

Does it make sense to borrow money from someone who is going to charge an outrageous interest rate? Of course not. The fact is, however, an increasing number of Canadians have no choice. They have generally been turned down for loans at the chartered banks and other financial institutions. Although many of them have full time jobs and a steady source of revenue, many have no choice but to go for the short term, high interest rate loans to survive between pay cheques.

The real tragedy is that in 2006 working hard and having a job might not be enough to support one's family. I find it troubling that more and more Canadians cannot meet their everyday living costs. In recent years many social groups have pointed out that the number of citizens living under the poverty line is growing and that having a full time job does not necessarily protect one from poverty in today's world. This is very unfortunate, something that is compounded by the fact that if a person goes in to borrow $280, that somehow turns into a $551 per month payment. We are doing something, but very little to help that problem.

While we say the bill is good, what about the social safety net that the new government is putting out for the people who are left to have 60% interest loans, from the legal Money Marts, for 62 days for amounts under $1,500?

Let us not over blow what step this small bill is toward the journey of helping us help the working poor. If we combine the statistics of the working poor, the increased usage of our social service agencies, with the major cuts that the Conservative government announced three weeks ago, it is now clear the new government does not care about those most in need, the poorest citizens and the minorities throughout our country.

Let us face it, the Conservatives are leaving the most vulnerable behind. A true national child care program, aboriginal health initiatives, literacy funding, homelessness, affordable housing initiatives, these were all mechanisms to help low income families, they very people who are most victimized by the ravages of the Payday Loan Association members.

All the measures I suggested have been cut and cramped in the recent Conservative announcements, such as national child care, teaching children how to succeed in life, literacy, teaching children and adults that they can read and they can get better jobs, tackling the homeless initiative, which was once made a very national and prominent program under the former member for Moncton—Riverview—Dieppe, the hon. Claudette Bradshaw, are all gone as priorities in the government.

Although the government will do some lip service to the Payday Loan Association, mainly because it is a good lobby and it might get some credit for helping the working poor, it is really saying it will not go that far and reinstitute programs, which were of national importance for eradicating the spectre of cyclical use of social services and organizations, such as payday loan institutions.

The same low income family that works hard to survive but cannot afford to put money aside for rainy days is forced to live from paycheque to paycheque. Exactly the same people are being denied loans from banks and they end up at the payday loan services, probably just before or after they go to the food banks. Before having to do this, they probably had time in their day to get some literacy training, or they may have been able to access some child care initiatives. However, they are not going to be any better off with the Conservative government as the years go by.

The real point is that this is a good step in a long road. The Conservative government must understand it entails much more than just initializing a law that was started by a former government, which is a needle in a haystack with respect to the battle against poverty, especially among the working poor.

This bill will ensure that those who turn to payday lenders do not fall victim to questionable practices, criminal interest rates and unfair collection techniques. More importantly, it will help make sure that they are not sucked into the vicious circle of debt and outstanding loans.

Bill C-26 is a positive, necessary step in the right direction and it battles loansharking, but it does not do enough at this point. The House should encourage all provinces and territories to look at the model is the model of Quebec. I hope this will happen at the committee stage.

As we move along the legislative process, we find that many of our models for a just and fair society have come from the province of Quebec. Programs like the national child care program and the legislation for consumer protection are best modelled in Quebec. In our discussion we should encourage the provinces to follow those examples.

The finance minister for the province of Manitoba is in the process of deciding how to deal with the brief put forward by the Payday Loan Association. The president of the Payday Loan Association says that Manitoba's proposed law is in line with the code of best business practices adhered to by its members. It operates 800 of the 1,350 payday loan offices in the country.

What is not known is the fee cap the province would set. The finance minister, Mr. Selinger, is proposing to make fees and rates on payday loans subject to public review by the local public utilities board. If the Quebec model is not the model provinces choose to follow, by having consumer protection legislation govern the scheme, then the model of having the public utilities board review rates of interest that can be charged by payday loan associations, which survive this document, would be very preferable.

We seem, as the federal sphere, to have gone away from consulting and advising the provinces with respect to best practices, and not necessarily mandated practices. By this I mean giving them a cheque and telling them they must do this or they must do that. Rather do it in a true constitutional sense, as partners that share the same citizens, the people who vote for them vote for us, and suggest they look at the models, which include the Quebec consumer protection legislation and the suggestion of the very wise finance minister in Manitoba of public utility board regulating interest rates.

The public utility boards across the country are made up, by and large, of non-partisan people interested in consumer protection in the areas of energy and transportation. In this case, Manitoba would invade the field by suggesting interest rates on short term loans would be properly in the public domain of the public utilities board. In many provinces public insurance is dealt with at a provincial level and the rates of insurance are decided by a public utilities board.

Again, this is a very good step. It follows on Liberal legislation, which was being thought of before the government fell. It is enough at this point to say we support it. However, at committee perhaps suggestions as to the how, not the why, the bill will play out across the country can be discussed along with our desire as parliamentarians to ensure the bill is implemented in as even a fashion across the country as possible.

In closing, I thank the citizens ofMoncton—Riverview—Dieppe for giving me their input on this most egregious example of lending at usurious rates. I assure them, in supporting the bill, that it is not a cure, not the be-all and end-all. It is a tiny step on the long road to helping the working poor in our country.

Criminal CodeGovernment Orders

5:25 p.m.

Conservative

Ken Epp Conservative Edmonton—Sherwood Park, AB

Mr. Speaker, I think we are losing sight of something that is important here and that is the magnitude of the problem.

The member opposite talked about usurious interest rates and the member for Winnipeg Centre before him talked about the way credit card companies are ripping us off.

Let us take an interest rate of 18%, which is the rate of a typical credit card. I would like to ask the member this. Let us say he was walking down the street and a stranger approached and said, “Will you lend me $100 and a month from now I will give you $101.50, if I happen to show up, with no security?” Would he lend the stranger the money? I suspect he would not. Yet to charge $1.50 on a $100 loan for one month is 18% per annum.

I think we need to get away from the idea that the fee charged is a straight interest charge. We know that many short term loans go into default, so the money is gone. These companies do not get the $101.50. They do not get the original $100 back. It is gone. For them to charge a little more because of the risk of the situation I do not think is terribly unreasonable.

Furthermore, to charge $2 for a $100 loan for a month hardly covers the cost of the employees and certainly not the cost of the store for which they have to pay rent, utilities, taxes and so on. They are going to charge maybe $2 or $3 for a $100 loan for a month. That is a service they are providing. If we take that away, then our poor people have nothing.

I have other questions, Mr. Speaker, but just from your posture of sitting on the edge of the chair I know I have to shut down for now.

Criminal CodeGovernment Orders

5:25 p.m.

Liberal

Brian Murphy Liberal Moncton—Riverview—Dieppe, NB

Mr. Speaker, very briefly, I would not dare to guess what the hon. member's community is like, but I suggest that it is fairly similar to mine. In my community, the owner and operator of the Money Mart is not the chamber of commerce president. He is not the Rotarian president. He is not a person in society who symbolizes best business practices.

In short, it is a very risky business in terms of loaning money. That is why loan sharks are in it. They like risk but they also have enforcement, and I see no difference between the example of Louie G., posited by my friend from Winnipeg Centre, who would break a leg, I suppose, if a loan were not repaid, and the owner of the payday loan business, who would basically bankrupt a person into not being able to afford the necessities of life.

Criminal CodeGovernment Orders

5:25 p.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, I think that the remarks of the member opposite are somewhat out of sync with my beliefs.

The question we have to ask ourselves is: why do people borrow money at rates as high as 60%? Often, these are disadvantaged people faced with a lack of money, services and community support.

After slashing the literacy program for women and Aboriginal people, why do the Conservatives continue to take advantage of the most disadvantaged with their devastating policies?

Criminal CodeGovernment Orders

5:30 p.m.

Liberal

Brian Murphy Liberal Moncton—Riverview—Dieppe, NB

Mr. Speaker, I completely agree with the question.

Once again, I support the province of Quebec's model. Thirty-five percent is plenty. Sixty percent is in the Criminal Code. Personally, I find that interest rate incredible and criminal. It applies in Canada. For the fourth time, it is better in Quebec.

The House resumed from October 19 consideration of the motion.

Opposition Motion--Economic and Fiscal PositionBusiness of SupplyGovernment Orders

5:30 p.m.

Conservative

The Acting Speaker Conservative Andrew Scheer

It being 5:30 p.m., pursuant to order made on Thursday, October 19 the House will now proceed to the taking of the deferred recorded division on the motion of the member for Markham—Unionville relating to the business of supply.

Call in the members.

(The House divided on the motion, which was negatived on the following division:)

Vote #46

Business of SupplyGovernment Orders

6:05 p.m.

Liberal

The Speaker Liberal Peter Milliken

I declare the motion lost.

The House resumed from October 23 consideration of the motion.

Canadian HeritageCommittees of the HouseRoutine Proceedings

6:05 p.m.

Liberal

The Speaker Liberal Peter Milliken

The House will now proceed to the taking of the deferred recorded division on the motion to concur in the seventh report of the Standing Committee on Canadian Heritage in the name of the hon. member for Saint-Lambert.

Canadian HeritageCommittees of the HouseRoutine Proceedings

6:05 p.m.

Conservative

Jay Hill Conservative Prince George—Peace River, BC

Mr. Speaker, I think if you were to seek it you would find unanimous consent to apply the vote just taken on the previous motion to the motion presently before the House, with Conservative members voting no.