Debates of Nov. 6th, 2006

Criminal Code

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I listened attentively to the remarks of my colleague from the Conservative party. First, I want to tell him that the Bloc Québécois will oppose the bill, not because we are against the principle, but because the Government of Quebec has already legislated in this field through the Office of Consumer Protection since this falls within its responsibility.

All types of lenders are subject to strict obligations. For the information of my fellow citizens who are now listening to our debates, the Office of Consumer Protection sets the annual interest rate that must be stated in loan contracts. All fees are calculated in the annual rate and it is thus not possible to add fees for opening a file or for forms. Finally, the jurisprudence has established that an annual interest rate above 35% is excessive. Therefore, Quebec consumers are already well protected by the Office of Consumer Protection set up by the Government of Quebec.

This is a flagrant example of duplication by another level of government, the federal government, that now wants to regulate everything that is already regulated within the province of Quebec, and surely in other provinces that are now considering the subject or that do not regulate it because they do not consider it necessary. It is the responsibility of the provinces to regulate all business practices related to loans.

This is really an example of duplication on the part of a government that promised during the election campaign to respect the jurisdiction of the provinces and to consider the effectiveness of its legislation. In fact, what it is doing is adding a bill that affects provincial jurisdictions.

I would like to know how he feels about what I am saying.

Does he agree that the government is encroaching on the jurisdiction of the provinces and is thinking for them?

Does he believe that the provinces are not intelligent enough to legislate in these areas?

If they have already legislated in this field, does he agree with the fact that they are being exempted from this bill? Other parliamentary procedures will therefore be necessary. That is what constantly involves additional cost, and that is why the public is complaining so much about paying high taxes to all levels of government.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I do not think the hon. member actually understands what the bill is proposing. He has gone on at length talking about how the government of Quebec has already put regulations in place and how this would be seen as a duplicate.

In actual fact, the Criminal Code of Canada applies to all of Canada. Bill C-26 seeks to amend the Criminal Code of Canada and not interfere in any way, shape or form with provincial jurisdiction.

As a matter of fact, the bill is actually meant to exclude certain aspects pertaining to Canadian payday loans from provincial jurisdiction. In that way, provinces such as Quebec and the western provinces, including Alberta, which is the province I am from, have the ability to protect their consumers in a way that they see fit.

I actually do not understand the nature of the question. It seems a little bit hypocritical, when the member from the Bloc Québécois, who obviously wants this consumer protection and the individual ability of Quebec to regulate this particular industry. He is opposing this bill. He is essentially saying, and is pitting Quebec against the rest of Canada, that if it is good for Quebec then Quebec can have the regulations. If he is opposing it, he is basically denying the ability of these regulations for the other provinces, such as Manitoba, which is already able and willing to proceed.

I reject the premise of his question. This is not a duplication at all. The Criminal Code is being amended here and it applies across Canada. It will actually create an exemption which will allow provincial jurisdictions, such as the provinces of Quebec and Alberta and any of the other provinces or territories in the country, to proceed in a way that they see fit to protect their consumers where the payday loan associations and payday loan institutions are concerned.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I am pleased to speak to Bill C-26 before the House today and to give the unequivocal support of the New Democratic Party for passage of this legislative proposal. In fact, it would be our wish, given the succinct nature of this legislation, to have it approved on short notice at all stages, dealt with on an expedited basis, and prompt action taken in an area that is long overdue.

I want to begin by thanking the Conservative Minister of Justice for actually listening to the concerns of people all across Canada and especially provinces which were ready to act. In particular, I want to highlight the work of the Manitoba NDP government which has long been a champion of action in this area of unregulated payday lending and has led the country with a progressive legislative approach. That legislative approach, however, requires the federal government initiative to set aside the Criminal Code.

As members will now know, the Criminal Code sets an interest rate of 60% as the limit of interest that can be charged on a payday loan. We know from the past decade, that has seen an exponential rise in payday lending all over this country, that this approach does not work. In fact, I would like members to think hard and tell me if they know of any cases where this 60% criminal rate of interest was used in terms of actually charging a payday lender who has taken advantage of an individual in this country.

I can think of one. There was a recent case in Manitoba where charges were laid and a trial is ongoing. There has been one charge, one action after a decade of payday lenders and other fringe financial services flooding our marketplace. That is not a record of which to be proud. It speaks very much to a problem in our whole legislative system. It speaks to an issue that has not been dealt with and it needs a new approach.

The desired approach would be to have a national solution. I would much prefer to have one set of standards for this whole country, so that there is a rule that all payday lenders must abide by wherever they live, whatever province they reside in, and that we avoid any possibility of these outfits closing down a shop in one province and moving to another to take advantage of more lax rules or a more lucrative environment.

I would prefer to have seen the provinces and the federal government get together and come up with one plan, but they tried for years and they could not do it. Numerous discussions were held at the federal-provincial level among consumer affairs ministers and officials. Numerous forums were held, dialogues and discussions took place, but there was no solution and no one united position that came out of that prolonged set of discussions. All the while payday lenders and other fringe financial institutions have been popping up everywhere in this country. In the last decade, we have gone from zero to 1,350 such outfits in our society today.

I speak from direct political experience coming from a constituency like Winnipeg North which has, in the space of 10 years, lost all of its banks. The north end of Winnipeg, which covers a significant area from the tracks in the south end to Inkster Boulevard in the north end, from Red River in the east to McPhillips Street on the west, has a huge area of residential neighbourhoods with small, large and medium size businesses. However, there are no bank branches left in that entire area. They have been dropping one by one over the last decade.

What has happened in the interim? What has happened as a result of that kind of negligence on the part of the banks, their decision to abandon an older community like Winnipeg North? I am sure it is not unlike many other communities in this country: inner city, north end, and older neighbourhoods that are not quite as lucrative for banks as suburban outlying areas. They pick up and leave without accountability and consequences, leaving people abandoned, high and dry, and without access to banking services.

In the case of Winnipeg North, we are talking about a community that has a very high proportion of senior citizens, numerous high-rises and senior citizens apartments and, as well, on average, an income distribution that is at the low end. We are talking about people more likely living in poverty or eking out an existence on a day-to-day basis more so than in other parts of the country. It is an area that has a significant number of people with disabilities, a high number of people who made the transition from living on reserve to an urban environment. And there are no banks. There is nowhere for people to do banking; nowhere to cash a cheque without being ripped off; nowhere to set up a banking account, a savings account; and nowhere to learn how to budget and how to plan for their families. All the banks have left.

At this point, if it is all right with you, Mr. Speaker, I would like to split my time with the member for Surrey North.

[The Deputy Speaker, NDP, Bill Blaikie]

Given the lateness of the request, I would have to seek the unanimous consent of the House. Is there unanimous consent for the hon. member to split her time with the hon. member for Surrey North?

[Some hon. members]

Agreed.

[The Deputy Speaker, NDP, Bill Blaikie]

The member does have two minutes and 34 seconds left in her 10 minutes.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, payday lenders and other financial institutions have risen up in a community like Winnipeg North to fill the gap. This is an area that is not regulated. Consumers are left in a very vulnerable position, without regulations, without accountability, and many in fact are being ripped off.

I am not here to suggest that all payday lenders are bad, are vultures, or are trying to take advantage of ordinary folks, but I am saying that there are some. It is an area that has to be regulated, given the numbers in the field today, and given the fact that so many people rely on them.

I do not need to go into the horror stories, members know them. We know about individuals paying something like 1,000% or more interest for a short term loan, getting into a cycle of indebtedness and not being able to get out of it, and losing their homes and not being able to provide for themselves and their families.

So, it is an issue that has to be dealt with. The only way that we can deal with it is to set aside the Criminal Code, so that provinces like Manitoba, which has a very sophisticated regulatory scheme, are able to exercise their powers and provide some governance in an area that has been largely neglected. That is what this bill simply sets out to do. It sets aside the Criminal Code for those provinces that have demonstrated they have a regulatory scheme ready to kick in and deal with the problems at hand.

It is not something that takes away powers from the provinces. It does not give new powers to the federal government. It does not touch this whole issue of federal-provincial relations. It is not an issue for Quebec because it has put in place its own regulatory provisions around lowering the criminal rate of interest from 50% to 35%. That means it is dealing with this issue in its own way.

We are saying that the rest of the country needs to have a mechanism for doing so. It is impossible under the current provisions. So, we look forward to supporting this bill on an urgent basis and getting it up and running, so that Canadians have some protection in this important area of payday lending and other financial institutions.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I listened to my colleague with great interest. There are payday lenders In several communities in my constituency. They provide a greater access when banking hours are sometimes restrictive and when people can not otherwise get their cheques cashed. I can just imagine the horror of having a paycheque in one's hand, having a young family to feed, but not having access to the bank to deposit the cheque or not having a debit card.

However, I am also concerned. When people are in a vulnerable situation like that, they can be taken advantage of, and that is an unfortunate thing. I really appreciate hearing the hon. member say that she and her party fully intend to support these changes. I am glad for that.

Could she elaborate on some of the clauses in Bill C-25, which I just spoke to a few minutes earlier? One area that is of particular concern to me is the ability of payday lenders to rollover, which means that if there is a loan that is not paid back in time, the payday lending organization, because it is unregulated, may charge a second set of fees over and above the additional interest rate. We know the interest rate charged on these is fairly minimal. It is the fees and everything that gets added onto these payday loans that make them quite expensive.

Would she support legislation that would take care of this rollover problem in her province?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, first, the Conservative member makes an important point about the use of these payday lenders on a more frequent basis, not simply because banks have up and left the town, but because sometimes the hours, terms and conditions for doing banking are not conducive for ready access. In fact in parts of Winnipeg many individuals cannot access a bank because they do not have the right ID or cannot fit into the schedule of the bank.

The member is right. There are other reasons why payday lenders have grown in this period of time and why we need to have regulations in place.

With respect to the question of provincial legislation, I think the Manitoba bill provides a model for the country. I know six other provinces are looking at this as a model. It is a bill that prohibits rollovers. This is the first important principle that is enunciated in Bill C-25, introduced by the finance minister, Greg Selinger.

It also ensures that payday loan companies must operate within a comprehensive regulatory framework. It does this by amending the Consumer Protection Act and by working through the Public Utilities Board as a regulatory body to ensure that all rates are set according to a set of principles in an open, upfront basis, with a publicly administered board, so there can be no questions about how the rates are applied and what penalties are at play.

I could go on at length, but I would recommend Bill C-25 as a blueprint for going forward. The Manitoba government is ready to have it proceed to the final stages in the Manitoba legislature, as soon as there is some guarantee from this place that the Criminal Code provisions have been set aside so the regulatory framework can get up and running.

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, the member has talked about Manitoba and the ability of moving forward with its consumer protection act.

What we really have is a payday lending institution that is just completely unregulated. We have certainly heard from members here today about the difficulties this can create. I certainly agree with my hon. colleague on some of the issues that we face, not only in the major centres but in smaller communities too, where the lack of access to banking and banking facilities becomes a bit difficult.

Has the member thought at all about what happens if provinces or territories choose not to regulate? Does the member have any ideas of how that would pan out with one province moving forward with regulations and, for example, the neighbouring province not?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, the issue of payday lenders is a problem in all communities across the country, whether they are urban communities or rural communities. I appreciate the perspective that the member has brought to this debate.

I believe that once this legislation is up and running, it will not be very long before all provinces are onboard. In addition to Manitoba, B.C., Alberta, Saskatchewan, Nova Scotia and New Brunswick have expressed an interest in regulating payday lenders. We are over halfway there. If other provinces see what a plus it is to move in this direction, they will soon be onboard.

However, the member has identified a problem which we will have to address when the bill goes to committee. We will have to ensure that there is no way operators can move shop to a province and cause some people to be vulnerable in one part of the country and not another and to cause a lack of national approach overall. It is a good point and it is an issue with which we have to deal. It can be dealt with in the framework of this legislation.

[Penny Priddy, NDP, Surrey North, BC]

Mr. Speaker, I thank the member for sharing her time with me.

I rise to support this legislation. If there were some way that my words would make it go faster or expedite it, I would happy to use whatever words those would be. I think it will move quickly because everyone understands what this means to the people in their communities. Even as we stand here today talking about it, there are people who are losing their homes and assets because they have found themselves in this irreversible cycle of interaction with payday loan companies and they cannot get out of it.

We perhaps would not necessarily expect, particularly in these economic times, many people to be in the situation where if they had an emergency before their next paycheque, they would not be able to manage it. This is not about people who fit a model where people understand why those people go to a payday loan company. Many people live from paycheque to paycheque. It could be a dental emergency for a child, or expensive medication, or a repair to a house, which they did not expect, and all of sudden they are stuck.

No one says there should not be payday loan companies. As the member has said, as did other members, I know there are times when those companies can provide assistance to people who otherwise cannot get it. However, if they are already in difficulty, they do not need assistance to become bankrupt. They do not need to lose all those things they were trying to keep because of that one financial outlay and the truly criminal rates that many payday loan companies charge.

We have many payday loan companies in the community in which I live. I am sure some are operating honourably. I have had payday loan companies say to me that they want to have regulations. They know the reputation of other kinds of payday loan companies is spilling over on to everyone.

This legislation shows that we can look at something and find a way, if we wish to, to respond to these issues without a big broad sweeping brush. As the member who spoke before me said, Manitoba is ready to bring in legislation. Quebec already has legislation and other provinces are looking at it, although as I look at these provinces, some may be looking at it more closely than others. I am not sure, but they are certainly working on legislation.

I think it shows that we can find a way, that this is not the heavy hand of the federal government saying to the provinces that it does not care what good things they have done, that those things are gone and that it will now go in and tell them. We recognize the good work the provinces have done. We also recognize that we cannot exploit the most vulnerable people.

The research and polling I have seen says that there certainly is a percentage of people who use a payday loan company once or twice in an emergency and do not go back, so they are fine. However, some people get caught in that cycle because of the interest rate, and they will never, ever be able to get out of it until they have lost all of their assets. We see people across this country who are in that situation.

I would like to believe that voluntary regulation works in anything, but my experience is that voluntary regulation does not work in very much. I know that the payday loan companies have introduced a set of voluntary guidelines, but we still see the abuse going on. No matter what the issue, I have yet to see voluntary guidelines that have been picked up by everybody. We have to provide a better solution for people in Canada, better than having the good people following voluntary regulations while the others do not.

We could recognize Manitoba's regulations or Quebec's, but having this piece of legislation in place across the country means that we would not have hundreds of companies suddenly packing up and moving to the province where they can make the most money because there is no regulation there. That is the last thing we want.

We have seen this with other businesses. They just move to where they can make the most money with the least restrictions. We cannot have that either, because it means that people in one province become even more vulnerable than other people have been across the country. This legislation ensures that companies are not able to do this. We have had court cases brought before the court by individuals or groups of customers, but they still do not provide safety for everyone in Canada.

The other issue this raises for me is that there are several places in Canada that do not have banking services. Some have been mentioned. Some are very small communities where the banks have closed up and moved out of Dodge, but there are also very poor urban areas where banking facilities are not available. In the downtown east side of Vancouver, with one exception brought in by some colleagues, there was no place for people to bank. People cashed their cheques somehow. They carried the money around and were very much at risk. There was no kind of banking service available. While I agree that it is primarily in small communities that banks leave, there are very poor parts of urban areas where banks do not exist and people do not have the services or the resources.

Nor do many people have information about payday loan companies, so the companies do not get caught. I do not know if any of their rates can be called reasonable, but if they know what a reasonable or a more common rate would be, they do not get caught. But when we go to a payday loan company because we have an emergency, we are desperate. Most people do not do this because they choose to. They do it because they are desperate. People do not have time to sit back, research, read some pamphlets or talk to someone about it. They use payday loan companies because they have an emergency situation. They are very vulnerable.

One point raised in a question from a colleague from the Conservative Party was about what would happen if a province chooses not to be involved. I think there are some issues that people can work out at committee, but given the circumstances in which people live in the country, given the incredible exploitation, given that people have lost their homes and do not have a place to live or resources for their children, I would hope that the bill would proceed expediently through committee so that Canadians will be protected as soon as possible.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I listened carefully to the presentation by the hon. member from the NDP and the presentation by her colleague a little earlier.

They understand that Quebec already has legislation that protects against usurious loans, which is very good. Nonetheless, the bill also has conditions for every province wanting to be exempt from section 347. The federal big brother will impose its conditions on provinces wanting to be exempt from the application of the legislation. This is yet another encroachment by the federal government into provincial jurisdiction, which clearly states that the framework of commercial practices is a provincial responsibility.

The problem is that this becomes a bad habit of the federal government, even though Quebec can be exempt from the application of the legislation. The idea is that if Canadian unity is to be maintained, the jurisdictions of each entity must be respected. It is through such respect that Canadian unity should be achieved and not by continuing to interfere in provincial jurisdictions.

[Penny Priddy, NDP, Surrey North, BC]

Mr. Speaker, I heard a statement. I am not sure I heard a question. I think people have recognized that Quebec has its own legislation and it does work. I do not believe that this is an attempt to override the legislation being brought forth by Manitoba or the legislation of Quebec. If the member believes that to be the case, then I would hope that those questions could be raised and debated at committee. I do not see this as an attempt to override the legislation that Quebec already has in place.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Mr. Speaker, I listened with interest to some of the observations of the New Democrat members, especially the member from Winnipeg, about the bank hours, and probably the hours of the credit unions too. She talked about that creating problems of accessibility for a lot of people who then become trapped into dealing with these groups that are on the outside or the periphery of the issue of banking and availability of financial services.

I am curious. There is some speculation that Wal-Mart may be moving into Canada and providing banking services through its outlets. Knowing Wal-Mart's hours, those stores would likely be open as many hours as they can, seven days a week and in the evenings and so on. I think the Wal-Mart corporate philosophy is to increase the standard of living for people by reducing the cost of living to people. Arguably, Wal-Mart does that.

I know this is perhaps only a bit germane to the discussion about the legislation, but what are the member's views about Wal-Mart moving into this area? Would Wal-Mart be part of the solution to reducing some of the problems and some of the vulnerability of low income people who cannot access banks and credit unions? Might this be a positive?

[Penny Priddy, NDP, Surrey North, BC]

Mr. Speaker, I must say that I would need to have a very careful look at what Wal-Mart would intend to do in terms of bringing banking within their scope of business.

The member is correct when he says that Wal-Mart has extended hours, but Wal-Marts are not likely to find themselves in the same areas as those places that are under-serviced, such as the downtown east side of Vancouver or small rural areas that do need extended banking hours and are not likely to be within driving distance, walking distance or bus distance, if there is a bus, of a large anchor store such as Wal-Mart.

I do support anything within reason that would bring extended hours to people. Maybe there is a message for another kind of banking as well. The bank that eventually developed in the downtown east side of Vancouver offered a great deal more flexibility to its members than regular banking hours do. It recognized that the people who used that bank either did not work regular hours or did not have regular hours and were able to come in at times that other people could not. I think there would be an interest in anything that would provide more flexibility for banking. I must admit that I would want to see more carefully what Wal-Mart would intend to do with its banking, but we do see this within Safeway.

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

Mr. Speaker, I would like to ask the member for her observations on a few points.

Despite the Criminal Code of Canada making loans with excess interest rates illegal, and given that there have been so few prosecutions in the area such that this law has become necessary to fill the gap, why does my colleague think there was such a paucity of prosecutions? What could we have done about this? What should we do about it? As she knows, there is a limit to this payday loan exception.

Why are 850 of 1,300 payday loan sites supporting the bill? Does it make the member a little nervous? Is it perhaps it is a bit like the wolf setting the terms for the sheepdog's tenure on the sheep pasture?

[Penny Priddy, NDP, Surrey North, BC]

Mr. Speaker, one of the reasons why we have seen a very small number of cases go forward is that we have to look at the people who have been exploited. These are not people who are likely to get a class action suit together and take it to court. These are people who do not have the resources to do that. They may not have the knowledge about how to do that. Almost unanimously, the most vulnerable people are not the people who are going to take a court case forward.

Am I worried about the people who want regulations? No, I am not. I will be watching very carefully, though, to make sure that those regulations are followed. I will take them at their word that they want those regulations and that they will follow them.

[The Deputy Speaker, NDP, Bill Blaikie]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker, NDP, Bill Blaikie]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[An hon. member]

On division.

[The Deputy Speaker, NDP, Bill Blaikie]

The motion is carried. Accordingly, the bill stands referred to the Standing Committee on Industry, Science and Technology.

(Motion agreed to, bill read the second time and referred to a committee)

The House resumed from November 1, consideration of the motion that Bill C-6, An Act to amend the Aeronautics Act and to make consequential amendments to other Acts, be read the second time and referred to a committee.