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House of Commons Hansard #103 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was loan.

Topics

Questions Passed as Orders for ReturnsRoutine Proceedings

4:40 p.m.

Conservative

David Anderson Conservative Cypress Hills—Grasslands, SK

Mr. Speaker, I ask that all remaining questions be allowed to stand.

Questions Passed as Orders for ReturnsRoutine Proceedings

4:40 p.m.

Liberal

The Speaker Liberal Peter Milliken

Is that agreed?

Questions Passed as Orders for ReturnsRoutine Proceedings

4:40 p.m.

Some hon. members

Agreed.

Citizenship and ImmigrationRequest for Emergency DebateRoutine Proceedings

4:40 p.m.

Liberal

The Speaker Liberal Peter Milliken

The Chair has received a request for an emergency debate from the hon. member for Burnaby—Douglas. I will hear his submissions on this matter now.

Citizenship and ImmigrationRequest for Emergency DebateRoutine Proceedings

4:40 p.m.

NDP

Bill Siksay NDP Burnaby—Douglas, BC

Mr. Speaker, I am requesting an emergency debate on the hunger strike that is currently happening at the Kingston Immigration Holding Centre where Mohammad Mahjoub, Mahmoud Jaballah and Hassan Almrei are on a hunger strike regarding the conditions of their detention at the holding centre. We need an emergency debate on this issue because I think the situation is a serious one. Their health condition is deteriorating day by day.

Medical evidence shows that serious health issues can be possible after a hunger strike of only 10 days and that after 49 days there is a significant risk of renal failure, heart failure, heart arrhythmia, severe hypotension and hypertension.

Mr. Speaker, you might also recall some of the famous hunger strikes of the early 1980s and especially those at the Maze prison in Belfast. Those hunger strikers actually passed away after hunger strikes of 45 to 61 days. We are certainly within a period of parameter where there is very serious concern about the health of the hunger strikers in Kingston.

Mr. Mahjoub is on day 74 of his hunger strike and Mr. Jaballah and Mr. Almrei are on day 63, putting them well beyond the parameters noted above.

There has been no resolution to the grievances raised by the men at Kingston and no ombudsperson is available to them. Unlike other prisoners in the Canadian penitentiary system who have access to an ombudsperson and unlike other prisoners in our provincial system who have access to provincial ombudspeople for their grievances in the prison system, the men being held at the Kingston Immigration Holding Centre have no access to an independent grievance procedure or ombudsperson.

I also believe these men now risk dying in custody because of these very serious health issues that they face, given the length of their hunger strike and given the fact that there has been no movement to resolve the issues that they have been raising. Furthermore, I am concerned that they have never been charged or convicted of any crime and have no idea of the evidence against them.

Given the length of time that these hunger strikes have gone on and the serious consequences that stem from a hunger strike, when push comes to shove I think the House needs to put some attention toward this matter given that these men are being held in a federal facility at the Kingston Immigration Holding Centre.

Speaker's RulingRequest for Emergency DebateRoutine Proceedings

4:40 p.m.

Liberal

The Speaker Liberal Peter Milliken

The Chair wishes to thank the hon. member for Burnaby—Douglas for his very able submissions on this subject. Clearly the matter he raises is one of importance. It is a question of whether it constitutes an emergency within the meaning of the Standing Orders of the House.

I am not satisfied that at this time he has made a case that would justify setting a time for an emergency debate. Accordingly, I am declining his request at this time.

I appreciate the fact that in question period today he raised this issue. It became evident in the course of the debate that both he and the minister had visited the facility recently and are therefore cognizant of what is going on and have recognized the importance of the events that are unfolding at that centre at Millhaven Penitentiary.

I thank him for his submissions but I am declining the request for an emergency debate at this time.

The House resumed consideration of the motion that Bill C-26, An Act to amend the Criminal Code (criminal interest rate), be read the third time and passed.

Criminal CodeGovernment Orders

4:45 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Mr. Speaker, this is a day to celebrate. We have reached the end of a long hard process to get some justice in the area of fringe financial services. Today, we are debating the final stage of a bill that will bring us closer to moment when payday lenders are regulated across the country.

Getting here was no easy feat, but it happened after a great deal of work on the part of members of the House. It happened after enormous pressure from community groups across the country. It happened because we found a way to cooperate when push came to shove. I think that tells Canadians everything they need to know on how to make Parliament work, especially in a minority situation.

Here we are today with Bill C-26, at its final stage, that will give provinces a mechanism, a means by which they can regulate payday lenders without leaving it up to a system that has largely failed Canadians over the last decade or more.

With the bill, we have an ability to set aside the Criminal Code pertaining to what is an acceptable rate of interest, that being 60%, so provinces can put in place a regulatory framework to put an end to usurious rates and to lending practices that take advantage of the most vulnerable in our society.

This has come after considerable debate in the House and at the industry committee. General approval and support for the idea has come from all sides, except for the Bloc. Most of us are still trying to figure out the position of the Bloc on this important issue. We know the province of Quebec has a system that works, a system that deals with this matter on the basis of consumer protection. Members of the Bloc feel that the province of Quebec has dealt with the problem of those who prey on individuals through payday lending operations.

Therefore, the question for the House has to be this. Why can we not simply agree among ourselves to get this passed so that all provinces can have some way to protect consumers in the most expeditious way possible? To this day, we are still trying to understand why the Bloc chose to use some methods at committee and in the House to hold up the bill when, at the outset, there was almost unanimous support to have the bill, which is a one paragraph, proceed through all stages as quickly as possible so provinces, waiting with legislation, could do so.

In terms of the Quebec situation, we cannot figure out the reasons for the obstruction from the Bloc members, especially in the context of the Quebec media. Just in the last week or so, when my leader and our caucus spoke out vehemently against the use by banks of what we would consider exorbitant fees at ATM machines, the Quebec media responded and said that it was a silly issue. Le Droit suggested that there were things far worse than ATMs. I will read from Le Droit of January 30 of this year. It says:

Come to think of it, there are things worse than the fees charged for using ATMs...

The article goes on to say:

If he had really wanted to do something for the poor in Canada, the member for Toronto—Danforth would have targeted the some 1,300 financial service outlets such as Money Mart—the payday lenders—that lend small amounts of money to some two million Canadians annually, at such high rates that they are currently being sued in a class action in Ontario.

We have taken both issues very seriously. Obviously we feel there is a real need, and Canadians agree, to put some limits on the fees that banks can charge for accessing one's own money. We have spoken out about the exorbitant fees that Canadians are charged and we have asked the government to consider putting a lid on those charges or, in fact, to eliminate the charges we face to access our own money.

At the same, we have been fighting for years on the question of money marts, rent to owns, payday lenders and all fringe financial institutions. This has been a driving force of members in my caucus over the last four or five years.

I can go back to when we first started raising this years ago. We put forward motion after motion, asking the government to start to take action against payday lenders and those who preyed on people when they were most vulnerable. We worked long and hard to try to get the former government to recognize the need to take action.

I wrote to then minister of finance, now the House leader for the Liberal Party, to ask him to do what Manitoba and other provinces wanted, which was to have provisions to set aside the Criminal Code so provinces could finally take action to put a lid on these usurious fees and to try to deal with the vulnerabilities that people faced as a result of this explosion of alternative financial centres or alternative fringe financial centres in the absence of bank presence. We did not get very far with the previous government.

When the new government came in, we began the process all over again. It took a considerable period of time, but we finally are at the point where we have cooperated, one another in the House. We have developed legislation that would allow the job to be done. Is that not what matters? In the end it is not the politics and the games about how one can hold up the House for other purposes and who initiated what and how it came to be. It is about trying to get something done for Canadians.

This is an example of where the House is making a very significant initiative on the part of Canadians, many of whom are forced to deal with payday lenders and other fringe financial services.

I do not need to go over the statistics, we have had many of these during these debates. We know that just in a decade we have gone from zero payday lenders to over 1,300. We know the stories of people who have lost their life savings. They were in this vicious cycle of going to payday lenders, being taken advantage of and being trapped for the rest of their lives. Story after story portrays this tangled web of payday loans.

I will read one example that came from a number of years ago, back in 2004. It was reported by the Toronto Star. The article begins by saying, “Quick cash, creeping risk 'Pride was what I left behind'”. It says:

Kim Elliott's Friday payday loan ritual that began as soon as her 12-year-old son was off to school.

First stop was the bank to withdraw $700 from the freshly deposited $900 paycheque from her job as a front desk manager at a Windsor hotel.

A short drive away, $650 went to pay off a loan at Stop 'N' Cash, a payday lending store that offers high-interest, short-term loans. As soon as the teller had the cash in her hands, Elliott took out another loan, this time to pay off the interest on a loan at Cash Money, another payday loan store. The transaction was the same there—pay down, loan again, drive to the next lender.

Three hours and three to our loans later, the paycheque was gone. Elliott would then take out about $350 in her final loan of the day, this one to have money to get through the next two weeks.

Does that not say why this day is so important and why Bill C-26 has to be passed as quickly as possible?

It is especially relevant in areas where the banks have abandoned entire communities. Whether one is looking at the question of ATMs or the issue of money marts and payday lenders, the root of the problem is the same: big banks have abandoned communities.

For the purpose of the House's understanding of the issue, I will once again describe what happened in Winnipeg North, my constituency. In the old Winnipeg north end, over a period of half a dozen years, all bank branches closed their doors and left that entire community without access to bank branches.

Yes, there are outlying branches, but we are talking about a community that has a high proportion of senior citizens, a very high level of low income earners, many people with disabilities, people who do not have access to cars or family members to drive them or access to computers and sometimes even telephones to do their banking. What do they do? In the case of trying to get cash, they have to go to a private white label ATM machine and they get charged up to $6 to access maybe $20 or $30, whatever they can afford to take out of their accounts.

People in organizations, like the Bankers Association, and perhaps even some members in this place have suggested that the NDP is ridiculous for raising the question of ATMs and fees. When there is a situation like that, we are not talking about convenience. We are not talking about affluent people who should know better in terms of how much money they take out at one time. We are talking about people who do not have any other choice.

The same holds true when it comes to fringe financial services. The same holds true when it comes to payday lenders. When the banks left, they created prime conditions for money marts, rent to owns and payday lenders. Every aspect of the fringe financial service popped up. It took up the space and filled the vacuum.

People went to those places because they did not have any other choice. There was no place to do their banking. There was no place to access some short term cash without going to a place that charged exorbitant interest rates and all kinds of fees and additional arrangements on top of the 60% interest rate that is criminal.

Something had to be done. We needed a way to get this into the hands of consumer protection departments at the provincial level so regulatory schemes could be put in place to arrive at what would be a reasonable interest rate for these kinds of lending situations. That is exactly what this legislation aims to do and what provinces like Manitoba, which has been the pioneer in this field, aim to do. It is about putting in place a mechanism so one can assess what makes sense in terms of an interest rate.

No one is saying that we cannot look at this in terms of risk and not charge interest. We are talking about short term loans where there is some risk, so there has to be an interest rate structure that is reasonable and allows for people not to lose the shirts off their backs.

However, in that context, why should we allow people to charge a 1000% or $2000% interest rate? Is there not a limit? Is there not something government can do? Is this not the best way to do it, given the fact that we could not over the last number of years get the provinces to agree on one standard? We could not get the federal government to pull those ministers from the provincial and territorial governments together to arrive at one standard. It dragged on for too long, to the point where the provincial NDP government in Manitoba finally brought in legislation of its own that then began this ripple effect where other provinces followed suit.

As we speak today, the Manitoba NDP government and the New Brunswick government have legislation ready to go the minute Bill C-26 is receives royal assent. They are waiting desperately for immediate action by the House. I hope we can get there very quickly, finish this debate, have the vote, get it to the Senate and get it back here, with royal assent.

In the face of banks leaving communities like Winnipeg North, the community had to take charge of the situation. People in Manitoba and in my own community of Winnipeg North finally said that they had been hurt by the banks too many times. They could not seem to hold the banks to account. They could not make the banks come to them with their statements before they shut the doors. They could not seem to convince the banks that there was some merit in having access to personalized banking services in every community across the country.

After 10 bank closures and after trying everything possible, people in the community basically said that they were going to take matters into their own hands and work with the folks who really care about the community to make a difference. That is what happened. It was not necessarily with great help from government, although there was some financial support of course. It was not with the help of any of the banks, although the last bank to close its doors in Winnipeg did give some money for a pilot project to study an alternative financial community services arrangement. That bank did give its building to the community for $1. That has made a difference and we thank the CIBC for that, but the CIBC left a whole community. It abandoned a whole area. Small businesses, local community activists, organizations, many seniors and hard-working families were suddenly left without anything. I think the CIBC actually owed it to the community to do that.

I hope other banks who abandon us will look at that as an example of their responsibilities. I hope they will consider doing so before we have to go to the next step which is to try to bring in what is so workable in the United States, a community reinvestment act which forces banks to carry out their responsibilities to the community and to give something back for the loyalty of consumers over those years. Rather than go that route, I hope banks will start to realize that they have a responsibility to Canadians, to the consumers and clients who built up those banks over the years and made such huge profits for them that the banks owe something to those communities.

Today we have a chance to make up for the downfall, for the failings of a banking system that has ignored consumer concerns. Today we have an opportunity to protect consumers from exorbitant interest rates. Today we have a chance to say to communities that we believe that a community needs to have a say in its own destiny.

The whole origin of the project in Bill C-26 came not from government, although the Manitoba NDP government was vital and central to the whole evolution of this wonderful legislation, but it came from the community. It came from organizations that felt the impact of the banks abandoning them. It came from community activists and research groups who well documented every step of the way what was happening to our community. It is only right that we pay tribute to those studies which documented this problem.

I refer to the work of Jerry Buckland, who is with the Winnipeg Inner-City Research Alliance, and to Nancy Barbour, who came out of the community and worked on this research, who has since passed away, and to whom we owe a great debt of gratitude. They did the study, “The Rise of Fringe Financial Services in Winnipeg's North End”. They put together detailed studies on fringe banking in Winnipeg's North End. Going back to September 2005 there is the paper, “There Are No Banks Here” regarding financial and insurance exclusion in Winnipeg's north end.

The situation in Winnipeg's north end is not peculiar. Many older neighbourhoods, inner city communities and rural communities have gone through the same phenomenon where banks have abandoned the communities and gone to where they say it is more profitable. The banks have left people at the whim of payday lenders and to pay exorbitant fees at ATM machines.

Today we are taking a step to correct this. Today we are actually making a difference in terms of the lives of Canadians. I urge all members of Parliament from all sides and all walks of life to support this bill. Let us get it through the House as quickly as possible so that it can receive royal assent. Let us put into place legislation that makes a real difference for ordinary families.

Criminal CodeGovernment Orders

5:05 p.m.

Bloc

Yvon Lévesque Bloc Abitibi—Baie-James—Nunavik—Eeyou, QC

Mr. Speaker, with all due respect to the hon. member for Winnipeg North, I wish to remind her that she is well aware of what is preventing Bloc Québécois members from supporting this bill. It is because the Quebec legislation is far better.

I remind hon. members that it is now my turn to speak and they should listen.

I also want to stress the centralizing attitude of both the New Democratic Party and the Conservative Party of Canada. I understand her decision to belong to a national party that feels compelled to support each province, even though it may be against its voters' best interests. The Bloc Québécois has the advantage of representing only the interests of Quebec.

So, the bill now before us goes against the interests of Quebec.

The hon. member talked about petty politics. She should look at herself, instead of accusing Bloc Québécois members of engaging in partisan rhetoric.

We had a fine example last weekend. Indeed, we saw two government ministers go so low as to betray their voters by signing a contract that deprives Quebec of huge revenues and that is evidence of yielding to Canada. Such is the vision of major national parties. This is why the Bloc Québécois will never support a bill that will downgrade what already exists in Quebec.

Remember during the election campaign, when the Conservatives were going on about being open and respectful. Today, we can only conclude that the Harper government is pursuing the federal objective of infringing on—

Criminal CodeGovernment Orders

5:05 p.m.

Conservative

The Acting Speaker Conservative Royal Galipeau

Order, please. The hon. member for Abitibi—Baie-James—Nunavik—Eeyou knows that other hon. members cannot be referred to by their surnames or given names, just by their title or the name of their riding.

So a word to the wise.

Criminal CodeGovernment Orders

5:05 p.m.

Bloc

Yvon Lévesque Bloc Abitibi—Baie-James—Nunavik—Eeyou, QC

Mr. Speaker, I just referred to the government by the name of its leader, but I meant the Conservative government, if you prefer that view of things.

So it arrogated unto itself the override power in section 347, which has now led to the Bloc Québécois opposing this bill.

Criminal CodeGovernment Orders

5:05 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Mr. Speaker, I simply cannot understand the position taken by the Bloc member here in the House of Commons. It is a fact that this bill does not change a thing in the province of Quebec. If Quebec has effective laws for dealing with money mart-type problems, that is well and good. That is very good for Quebeckers. There is a problem, though, in the rest of Canada. It does not have a bill of this kind or a way of protecting the victims of payday lenders and money marts.

This bill is therefore an opportunity for all us to make a difference everywhere in Canada. This is not a jurisdictional problem. Nothing in this bill affects the ability of the Bloc members or the PQ or anyone else in Quebec to determine their future. This is really a bill that addresses the problems of people who have been victimized by money marts and payday lenders. That is all.

Why does the Bloc want to turn every bill into a jurisdictional debate, even when that is not the case?

Our support for this bill does not mean that we support the Conservative government in general, but we will work together with anyone in the House to make changes that are important for people everywhere in Canada. That is all.

The Bloc’s position simply does not make sense. I want to go back to the article written by Pierre Jury in Le Droit:

If he had really wanted to do something for poor people in this country—

I imagine that that is what the Bloc members in the House really want. They want to work on solving the problems of poor people. Consequently, as other people in Quebec say, if we are interested in changing the conditions that cause poverty in Canada, we must deal with the financial service operators that victimize people. They are like vultures. They are going to set ultra-high interest rates that push people into poverty.

Criminal CodeGovernment Orders

5:10 p.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, I listened to the member from the NDP and, as my colleague from the Bloc mentioned, with proposed clause 347 in the bill, the federal government could encroach on Quebec's jurisdiction. It could interfere with what we do. In Quebec, we have the Office de la protection du consommateur and it set the maximum interest rate at 35%.

What I do not understand in the position of my colleague from the NDP is that she compares that kind of loans to loans from automatic teller machines and to other kind of loans and she purports to defend the interests of the poorest in our society. However, the bill talks about interest rates of 60% over two weeks. That means that the person who borrows money could be charged up to 60% interest after two weeks and that would be legal according to the bill. Are you really asking for that? I cannot believe it. How can you say that and still claim that you defend the poorest in our society? Are there no other solutions?

Criminal CodeGovernment Orders

5:10 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Mr. Speaker, I realize that the members from the Bloc do not understand the bill. The member said that we are in favour of the 60% interest rate mentioned in the bill. That is not the case. The situation is quite the opposite. We reject the idea that we should simply talk about a 60%interest rate.

We have said the opposite. We have said it does not work in the rest of Canada. Maybe there is a good system in Quebec, but it does not work in the rest of Canada because all of these payday lenders have managed to put together all kinds of other fees, so that 300%, 400% or 1,000% interest ends up being paid. There is no way around it because of the way this area is regulated.

This is not about kow-towing to the federal government. We are simply saying that we would like the federal government and the provinces, not Quebec because it has its own system, to agree that they will put aside the criminal rate of interest, which is 60%, when a province has a better system to manage this area.

It is as simple as that. That is the way things are. That is all. The issue is not one of restrictions, it is not about the weakness of provinces like Manitoba. The issue is an issue of fairness for all people throughout Canada.

Criminal CodeGovernment Orders

5:15 p.m.

Liberal

Charles Hubbard Liberal Miramichi, NB

Mr. Speaker, with your permission and the consent of the House, I would like to share my time with the hon. member for Etobicoke North.

As I listen to the debate between the two parties, and we think of the bill, Bill C-26 is a very small bill. Most of the sections in it deal with the concept that the bill will only be effective in terms of trying to regulate the industry if the provinces request assistance. It is not something that is going to be driven by the federal government, but rather it is in response to concerns that the provinces have had that they are not able to regulate the same day or payday loan activity.

We have to assume that there are people out there who want to borrow money for a short period of time. This morning I was checking with one of those groups and I found that it seemed so simple. If one wants to borrow $500, the indication was that one would pay only 16¢ per day for each $100 borrowed, but there is also a $10 fee in order to register with the company.

It sounds like a very small amount of money to pay back, borrowing $500 for 10 days, but when we consider it in terms of the Criminal Code, that interest rate without the fee would be nearly 60%. I am concerned that if I were working for one of those companies today, listening to the debate in the House, it must be rather a slimy feeling they have about our attitudes about the type of activity that they have in those communities.

They are all pointed out as being terrible organizations and we see them as being people who are trying to rip off the poor. In fact, many of them do rip off the poor. I asked the parliamentary secretary this morning, in terms of the other fees that are associated with payday loans because those loans are often given to people who are very short of money, who do not have friends and who have no opportunity to borrow from a bank or from another financial institution.

I dealt with a case in my own riding on Friday of a person who applied for EI. He had been out of work. It took him a few days to get his record of employment from his employer and then he put his request in to draw his EI. After waiting nearly 30 days, his claim had still not been processed. I am glad to say we found out today that his claim has been processed, but an individual who has been without a paycheque for nearly five weeks is in need of money. He said that he had no money because he had medical needs in terms of prescriptions and on Friday afternoon he was very desperate. I would think that he might be a person who would go to a same day lender to get a short term loan until his first EI cheque arrived.

Other people in the country might be working for an employer and would have to wait two or three weeks to get their paycheques. If they could borrow the $500 and get it at a reasonable rate, then it would be a service that our banks and other financial institutions often do not offer.

We know that the sad cases that we hear of usually deal with other penalties that are associated with the initial loans. We know that the costs that they put in, in terms of administrative fees, in terms of whether or not one is able to pay the loan after the 10 or 14 days are up, cause heavy penalties that are built into the amount of money that has to be paid when the loan is up.

We find, as some speakers have indicated, that in many cases companies that are involved in these franchises are able to rollover those loans, to keep the person in a rut until that loan has become so great that it is almost impossible to pay back.

We are talking today about some form of consumer protection. We are trying to avoid the idea of predatory lenders. We have the old system of pawn shops. We have various other financial agencies that cost 30% to get money from them. We have credit cards which sometimes run as high as 28% and we try to regulate those in terms of our various regulations, policies and laws.

This particular bill, Bill C-26, goes to section 347 of the Criminal Code and with it we are placing those organizations not in terms of the financial arrangements that our country has within our finance but more importantly, within the Criminal Code. We are dealing with it in terms of people who would be assessed very heavy penalties, in fact penalties that would put them in the criminal group.

Why do we have it? We as Liberals want to say that we have this on the fast track. We have indicated to the Minister of Justice that there are six bills that he has before the House that we want to be sure that they proceed quickly.

I felt badly today that in terms of some time that we took after question period we dealt with a very difficult case of justice. Wilbert Coffin was a person from Quebec, a riding in fact just north of my own, and to think that we had to debate that issue and bring it in at the same time as we are bringing in another type of criminal activity which is actually causing people to pay too much interest and to cause them financial hardship.

I want to assure the House that as Liberals we strongly support the bill. We want to see that the provinces have the opportunity to bring in legislation that will enable them to effectively regulate not only the same day loans or the payday loans but hopefully to regulate a lot of those activities within our provinces and within our country that cause so much hardship to the people who are less able to afford it.

Being poor is a terrible thing in this country. I know as a party and as the House we all want to work to see that we can end poverty, but we also know that many people are poor on a weekly basis in terms of having some particular problem which causes them to get a same day loan.

As a party we support this venture. We want to see the bill become law as quickly as possible. I can assure you, Mr. Speaker, that our members on this side of the House will support the effort of the Minister of Justice and the minority Conservative government as they proceed with this piece of legislation.

Criminal CodeGovernment Orders

5:20 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Mr. Speaker, I am very pleased to speak to Bill C-26, An Act to amend the Criminal Code (criminal interest rate).

The purpose of this bill is to amend the Criminal Code to exempt payday lenders doing business in provinces and territories that have legislative measures in place that protect borrowers from section 347 of the Criminal Code of Canada, and to require that the competent authorities set limits on what the consumer is charged for a payday loan.

It was our Liberal government that put the wheels in motion for this bill by starting consultations with the provinces and territories and other stakeholders to deal with this very important issue.

If we look at it, we have these payday loan operations that fill a certain market niche, but unfortunately they really gouge consumers and some of the interest rates, as many have cited in the chamber today, can reach 1,200% per annum, whereas the Criminal Code in section 347 makes it a criminal offence to charge more than 60% interest per annum.

Some might ask, if the Criminal Code already says that, why would the police not arrest people or the crown prosecutors prosecute people who are charging clearly more than this?

That is a good question and one that I have wondered about myself. I think we really need to look at the origin of section 347 of the Criminal Code which was designed primarily to deal with what we now call loan sharks. Loan sharking is an activity carried out mostly by the underworld or by organized crime, where people who are in a desperate need of a loan would go to a criminal like this and be prepared to pay a very large amount to get a loan because perhaps they had to pay back another debt, a drug debt, a gambling debt or whatever it might be. Therefore, it became known and is known today as loan sharking and that was really the origin of this provision in the Criminal Code.

The reality is that there are many Canadians who really need the benefit of these payday loan operations because between paydays they find themselves stretched for whatever reason and they need to obtain a loan from one of these particular operations.

A payday loan is a short-term loan for a relatively small sum of money provided by a non-traditional lender. Statistics from the Canadian payday loan industry suggest that the average payday loan is valued at $280 and is extended for a period of 10 days. In order to qualify for a loan, the borrower generally must have identification, a personal chequing account, and a pay stub or alternative proof of a regular income. Payday lenders typically extend credit based on a percentage of the borrower's net pay until his or her next payday, generally within two weeks or less. The borrower provides the payday lender with a post-dated cheque, or authorizes a direct withdrawal, for the value of the loan plus any interest or fees charged.

There we have it: small loans of very short duration that help people meet their needs from payday to payday. By decriminalizing it, so to speak, which is the effect of Bill C-26, the provinces and territories will agree to regulate these same-day loan enterprises, which is part and parcel of this particular bill. The provinces and territories will regulate the interest rates charged on these payday loans. I think most Canadians would agree that 1200% per annum is exorbitant and unjustified. It puts people deeper into debt instead of helping them find their way out of a position like that.

It also begs the question of why it is that people cannot live between paydays. There are many reasons. We hear a lot about poverty in Canada, of course, and we have done many things to try to alleviate poverty, one of which was to have a strong economy. Certainly our Liberal government cut taxes for low income and medium income Canadians.

The Liberals also introduced a number of programs like the national child benefit, which is an example that I would like to highlight. We brought in the federal child tax credit, but unfortunately, the province of Ontario, where my constituency is located, has clawed back the federal child tax credit 100%. From the point of view of the recipient, that makes it neutral. The benefit that we tried to convey was clawed back by the government in Ontario. That was done by the Harris Conservative government. The Liberal government ran on a platform to take back the clawback, but it has not done that. That affects many groups in the province and certainly does not help families and the working poor. We should begin to address it.

I have been talking about working families in the low to medium end of the income spectrum and I am sure we can find individuals like that who need loans to get them from one payday to the next; it might be monthly or, depending on how they are paid, bi-weekly. They may need to make a large capital acquisition. Maybe their stove has crashed. Maybe they have other urgent expenses. They need help from payday to payday with a loan so they go to one of these payday loan companies. We have seen these companies grow in large numbers and in size and scope across Canada.

Another group I would like to touch on is seniors. In my riding of Etobicoke North, I encounter many seniors. Many of them are living on fixed incomes with old age security and the Canada pension plan. Some might benefit from a company pension as well. I think these people are facing rather unique cost pressures. Old age security is indexed every year, but it is indexed to the general cost of living.

I have done some research on this. I am going to be coming to Parliament with an initiative in the not too distant future. What has been found is that the cost of living index that is presented to seniors is not the same as the cost of living index or the cost pressures facing Canadians in general. We can see a number of reasons for that. We could look at property taxes, rents, insurance rates, energy costs and food costs. These are cost pressures that seniors face. If one is on a fixed income, this can create quite a problem.

Our Liberal government brought in the guaranteed income supplement and made some one-time changes to it. This is another area that we should look at. I believe that we may need to develop a particular cost of living index for seniors, one that reflects the basket of goods and services they must deal with.

Given that, we should also look at perhaps a one-time change in the old age security and then index it to this new index. I appreciate that this would cost the federal treasury some money. I do not mean to minimize that, but I think it is an area we need to look at. Our seniors built this country and we need to respect that. We need to help them deal with the cost pressures they face and the standard of living they are entitled to.

I will be supporting Bill C-26.

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5:30 p.m.

Bloc

Robert Vincent Bloc Shefford, QC

Mr. Speaker, the member said that the amount of the old age pension would probably have to be increased. If a certain income level is needed to obtain payday loans and people can at the same time borrow money on their pension cheques, that is going to have perverse effects. What it means is that people who need money will be spending their cheques even before they receive them.

Are we going to go against the welfare of senior citizens in order to solve the payday lender problem? Will the member find an unequivocal way of getting the old age pension raised? I would like to hear what he has to say on that subject.

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5:30 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Mr. Speaker, I thank the member for Shefford for his question.

Bill C-26 addresses a subject that we have discussed today: the very high interest rates charged.

Frankly, I am not sure if these payday loan organizations will accept pension cheques. Perhaps they do.

I think there are two different issues. If pensioners have problems getting from payday to payday and a pension is their only source of income, increasing their pension will not expose them to further difficulties. It will keep them away from the payday loan organizations. I do not see the two as running contrary to each other.

I think if we were to do something with seniors that could help them with their pensions, it could keep them away from payday loan organizations. In fact, I suspect many seniors are not aware of the proliferation of payday loan organizations. Some may be, but some may have difficulty finding their way to the payday loan organizations and dealing with some of the complexities. I am not sure that they are big customers, but I am only saying that. I do not have any research or information to support that.

I do not think that what I am suggesting here with respect to old age security and what Bill C-26 does conflict with one another in any way shape or form.

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5:35 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, my colleague's concern for pensioners tweaked my interest. I think he will agree with me that one of the root causes for the proliferation of these payday loans is that there have been so many bank closures, at least especially in the inner city in the riding I represent. As the banks closed, that void was filled with these fringe banking outfits that actually charge to cash cheques. I did not know this until recently, but it is against the law to charge to cash a government cheque. Some of these places charge 3%, 4% or 5% to cash even government pension cheques.

As for my question, I wonder if my colleague is aware that the plight of pensioners who rely solely on OAS-GIS has actually gotten worse. In the last federal budget, the government decreased the basic personal exemption from $9,039 to $8,639, I believe, so it was decreased by $400. That means $400 more that a senior is paying taxes on. Even at the lowest rate of taxation, which I believe is 15.5%, seniors are now paying taxes on $400 more than they ever used to before.

I did some quick math, and my colleague is probably better at math than I am, but that is $60 or $61 a year, which only looks like $5 a month, except that because this came into effect on July 1, the government doubled it for the remaining six months to spread it out over the whole year, so it is a cut in pay of $10 a month. When a lot of seniors voted for the Tories to form the government, I do not think they knew they would get their pay cut by ten bucks a month for that six month period and five bucks a month thereafter. Was my colleague aware of that? Does he run into that issue in his own riding?

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5:35 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Mr. Speaker, to make room for the cut in the GST reduction, the Conservative government in its last budget increased personal income taxes and the basic rate to 15.5%. That would affect many seniors. I am not sure if that deals with the specific point the member was making, and I have not heard that specifically, but clearly the government is not quite so caring of low and middle income Canadians. A GST cut of 1%, and now I presume in the next budget it will be another 1%, will not really benefit the poor and the medium income families.

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5:35 p.m.

Bloc

Robert Vincent Bloc Shefford, QC

Mr. Speaker, I will share my time with the member for Berthier—Maskinongé. First, I am very pleased to speak to Bill C-26. I totally disagree with my colleagues' assertions, as do all Bloc Québécois members. Bill C-26 is a underhanded means to help people who have difficulty getting a loan to get money from payday lenders. These payday lenders have put pressure on the government to legalize their existence with a clause in the law, clause 347, which allows them to demand up to 60% in interest, and this can be verified. Indeed, it is the interest rate that appears in section 347 of the Criminal Code.

However, the major problem in this issue is the fact that the federal government is once again intruding into Quebec's areas of jurisdiction. In Quebec, there is already an act that deals with these loans, and the entire loan is at a maximum interest rate of 35%. Thus, any other loan with an interest rate of more than 35% is loansharking. The best way to gouge people is to lend them money at an interest rate of 60%.

Which group will take over the payday loan market? I believe it will not be the merchant who owns the corner store or the butcher down the street. The member was talking earlier about organized crime. This is the best way to launder money. It is obvious that these people will take the legal road to do something that is illegal. If the House of Commons is not aware of this, it will open the door to these people, who will be able to demand interest rates of up to 60%.

In addition, I sit on the Standing Committee on Industry, Science and Technology, where Bill C-26 was debated. How long was the debate? An hour. Why? Because the people in the other political parties agreed that it is a great bill. We are therefore going to pass it without wondering what people in Quebec or other provinces think, whether or not they think it is good or whether it encroaches on provincial jurisdictions. I should even mention that, in committee, we asked whether any of the provinces were opposed to this bill. To our great surprise, none were.

During that same meeting, we received a communiqué from Quebec saying that Quebec disagreed with Bill C-26.

Why should Quebeckers, who already have legislation covering these sorts of loans that caps interest rates at 35%, have to ask the federal government for an exemption from the bill?

Why should we let the government interfere in our jurisdictions?

If the rest of Canada thinks this is fine and dandy and wants to endorse this system, it can do so. But Quebec's position is that this is not how it is going to be and that we will fight tooth and nail to make sure this system is not put in place.

On both sides of the House, Conservative and Liberal defenders of the bill are saying that they represent Quebeckers. What they are really saying is that they are not listening and that they have bills and will adopt them at everyone's expense.

They are saying in the House and in the newspapers that they represent Quebec's interests and are going to stand up for Quebec. I cannot say what I am thinking, because I would be reprimanded, but I can say that that is not true.

There are members opposite who say: “This is good, we are able to make progress for Quebec”. I think they are wrong. They do not know what they are talking about and they will say just about anything.

What is more, this bill addresses people who earn a salary, including seniors. Why? Because they receive an income every month and are able to certify to payday lenders that they have a salary. They can borrow against their income. How far will we go with these measures to give them a chance to spend their money? If a problem arises, these people have to turn to payday lenders to borrow money. As I was saying earlier when I asked the Liberal member, is there a problem? Are our seniors not being paid enough money? They built our country, Quebec especially. Are we going to abandon them like this? If they need $100 to fix their broken washing machine, will they have to turn to payday lenders? There were no payday lenders before. Why would we need them now? To give others a chance to become wealthy and launder money? I do not believe this is a good solution.

Furthermore, the designation process—and this is the problem—requires that the province write the federal Minister of Justice to inform him that it has a law and is seeking a designation. If, on the recommendation of the federal Minister of Industry, the Minister of Justice feels that the province meets the requirements, the Governor in Council will receive recommendation to grant the exemption. This process should be relatively simple.

Why should get on our knees to ask the federal government for permission to be exempt? We have nothing to ask of it. We have our own laws. We are capable of respecting them and enforcing them. We do not need anyone to be a big brother and tell us what to do.

I strongly believe that this bill is not appropriate in that legislation is generally left to the discretion of the provinces. It is as simple as that.

When we talk about legislative measures, especially measures on consumer protection that generally cover payday loans, I do not think that consumers would agree with the way the government wants to encourage them to consume even more and have the opportunity to get money easily. It is easy to get money from payday lenders.

Much worse could be said. Michael Jenkin, director general of the office of consumer affairs and co-chair of Industry Canada's federal-provincial-territorial consumer measures committee, said, “I have a few words, just for a moment, on payday lending. It's a form of short-term lending through which the consumer typically borrows several hundred dollars for 10 days to two weeks. The borrowing costs are very high, as you probably know. They are usually in the range of, for example, $40 to $75 for a $300 loan for two weeks...”

He told us the costs were very high. Imagine paying $40 to $75 interest on a $300 loan for two weeks. It is not usurious, but it sure is close. It is not far off. I can see the Quebec members nodding off on the other side of the House. They should listen more rather than think about their next snooze. That way, they might understand this a little better.

That is not all. In 2004, the federal, provincial and territorial ministers responsible for consumer affairs expressed concern about the abusive practices and high costs consumers encounter in this parallel market, such as with payday lending. One study showed that payday loans were far too expensive and that the interest rates were too high. That was in 2004. It is now 2007. Now, a bill has been introduced to confirm that everything is just fine.

I would like to conclude by saying that we will vote against this bill. We in Quebec will take care of this responsibility ourselves.

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5:45 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, I am one member of Parliament opposite who was not sleeping. I was listening very carefully and with great interest because I am trying, for the life of me, to understand why the Bloc is so opposed to this bill when the rest of the country needs it so very much.

My colleague said there is no room for it, there is no need for it, speaking about this bill. In actual fact, this bill is the legislation which would allow my province of Manitoba to do something about the thieves, the criminals, who are ripping off the people in my riding.

A lot of the payday loan industry are charging rates of interest that are illegal, that are criminal. They are gouging them and they are sucking the life right out of the inner city of Winnipeg; however, the federal government has jurisdiction over this. This bill would give the jurisdiction to the provinces, so that my province of Manitoba could do something about these, as I say, blood-sucking leeches who are profiting from human misery, from low income people.

I should tell my colleague that these payday loan outfits are charging as much as 10,000% interest. Not even a cocaine dealer, not even the Hells Angels, gets 10,000% interest. But in actual fact, we now know some of the payday loan industry is in fact run by organized crime because where else could one get that kind of money? So, we went to the federal government and said to cede this federal jurisdiction to the provinces so that we can clean up this mess within our own jurisdiction.

I thought that was exactly what the Bloc Québécois wanted, for the federal government to give jurisdiction to the provinces. In every speech I have ever heard from my colleagues from the Bloc, they have demanded for the federal government to get out of their business and for them to have jurisdiction over their own issues. In this case, I agree with them. We should pass this bill, so that the provinces could solve their own problems within their jurisdiction.

This reminds me, in a way, of the ban on pesticides. The NDP tried to get pesticides banned in Canada. Most members of the House of Commons agreed. The Bloc voted against it, and the bill was defeated, because Quebec has already banned pesticides. Well, just because Quebec has already solved its problem, please do not stand in the way of the rest of us who are trying to solve the same problem in the rest of Canada.

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5:50 p.m.

Bloc

Robert Vincent Bloc Shefford, QC

Mr. Speaker, as we all know, the Constitution grants provincial and territorial governments jurisdiction in matters of consumer protection, by virtue of their powers in the area of property and civil law. If a province does not yet have such legislation, its leaders have the option of creating it. If they have not done so and wait for Canada's big brothers to enact legislation—whether they agree with it or not—section 347 of the Criminal Code imposes an interest rate of 60%.

While criminal organizations, as we just heard, demand 10,000% interest, the rate would be set at only 60%. If the rate of 60% suits Albertans, that is fine. In Quebec, however, we already have legislation that covers payday lenders, and the interest rate is set at 35%. Any loan that has an interest rate higher than 35% is considered loansharking.

We have already enacted legislation in Quebec to deal with this type of loan. What we object to is that we have to ask for an exemption in order not to be subject to this legislation. The province must prove that it already has legislation, which must be sent to the governor in council, and the governor in council or Prime Minister must decide if the province should be subject to this legislation, and must ensure that the province's legislation conforms.

Clearly, Quebec already has such legislation and does not need anyone to tell it how to manage that legislation.

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5:50 p.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, it is a pleasure to speak on Bill C-26, An Act to amend the Criminal Code (criminal interest rate), following the remarks of my colleague, the hon. member for Shefford.

According to the government, the purpose of Bill C-26, which we are debating today at third reading, is to respond to the concerns of some provinces and territories as well as several consumer advocacy associations which believe that it is urgent and necessary to regulate more strictly payday lending, which is a growing industry in some provinces.

While it may seem simple and even generous, this bill is, as the hon. member for Shefford aptly explained, yet another attempt at interfering in jurisdictions that belong to Quebec and the provinces. The Conservative members across the way are shaking their heads saying no. They should read the bill.

Even if the government's intent was to supervise better at the federal level to prevent interference in provincial jurisdictions, it is once again interfering in an area that we, in Quebec, are managing superbly.

Members will understand that the Bloc Québécois will oppose this bill which opens the door to a federal veto on tools currently used in Quebec to regulate such activities through the Consumer Protection Act, among others. I do hope that government members from Quebec are familiar with that piece of legislation. Have they forgotten about it since coming to this place, the House of Commons? I am not sure, but I think so.

As I said, the government described this bill as a response to many concerns raised about the payday lending industry. Granted, this is am industry that has been accused of all sorts of questionable practices, including high lending rates on future pay, insufficient disclosure on contractual terms, if any, and all too often unfair debt collection practices.

Before getting into the details of our reasons for opposing this bill, I would like to say a few words about these increasingly popular payday loans.

This is a disturbing phenomenon because it reflects a troublesome reality, the increasing presence of poverty. The people who borrow from these payday lenders often find themselves short of money. At present, the Criminal Code sets limits on payday lenders. Interest rates may be as high as 60%. I am sure that no member of this House would borrow a portion of his or her salary at such a high interest rate. The target is people without resources. That is why such activities are governed in Quebec by the consumer protection act, and the interest rate can be no higher than 35%, while here 60% is mentioned. I think 35% interest is already high.

In Quebec, payday loans are becoming less and less common. Mechanisms have been put in place; support groups for the poor have been created. There are even some CLSCs that loan money to clients with temporary needs, such as food for a week. All sorts of social measures, such as food banks, have been set up to help these people, all so they will not have to take out loans they cannot pay back. When someone borrows a portion of their salary at that kind of interest, for two or three weeks, they repeat the same scenario and keep getting deeper into debt. It affects quality of life for the borrowers and their families.

According to the Canadian Payday Loan Association, payday loans are unsecured small-sum short-term loans typically for a few hundred dollars. As we know, they are usually for two weeks. Payday loans are specifically designed to help customers with one-time, unanticipated expenses. The average payday loan is around $280 for a period of 10 days.

We can see that these loans are for small amounts to meet what are supposed to be one-time needs but are often related to rent, accommodation and housing. Payday loans are really designed for the low income earners in our society.

As I have said, I am sure that government officials, our ministers, members of Parliament and other members of society do not take out payday loans. We are talking about the poorest people in our society here today. I heard what my NDP colleague said, that we were doing this to help the least fortunate. It is incredible!

This Conservative government tends to minimize and sometimes even ignore the problems associated with poverty. We saw this recently, when the government cut funding for literacy programs and Status of Women Canada programs. My colleague and I recently toured New Brunswick and Newfoundland. People were offended at the cuts to programs that contribute to our social fabric. Once again, the government is introducing a bill to squeeze these people further.

Payday loans, also called wage advances, are a very expensive way for consumers to meet a temporary need for credit. This type of loan is expensive, because lenders charge numerous, often excessive administrative fees, not to mention high interest rates.

In return for making the loan, payday lenders will require a post-dated cheque or a preauthorized debit for the loan amount and will charge applicable fees as well as interest. With the addition of the various fees, the amount to be repaid is greater than the amount of the initial loan.

This puts the squeeze on borrowers. Here in the House of Commons, we are trying to help people in provinces where payday loans are not regulated at present. I understand that, but I do not believe that a measure such as this is the best way to help people in need. It is important to remember that these are the people this bill targets.

As you know, we are opposed to this new bill. It contains two main measures. First, it adds a definition of a payday loan to the Criminal Code. Second, it amends section 347.1 of the Criminal Code to allow exemptions from that section.

There are two parts to the new exemption mechanism. The first part specifies that section 347 of the Criminal Code and section 2 of the Interest Act no longer apply to the payday loan industry of a province when the amount of money advanced is $1,500 or less and the term of the loan is 62 days or less, and the lending company is licensed under the laws of a province to provide such loans.

The second part—and this is where we have a problem—involves a political decision by the federal government.

The federal government exempts from the application of section 347 of the Criminal Code and section 2 of the Interest Act provinces designated by the federal government for passing legislation that the federal government considers to be consistent with its objectives for regulating this industry.

In conclusion, why should Quebec submit to the rules established by the federal government in order not to be subject to criminal interest rates, when Quebec already has consumer protection legislation that properly regulates this activity, which is in fact all but non-existent in Quebec? The members from Quebec now in this House know this. We believe that 60% is an almost criminal rate of interest. In our view, it is usurious.

I have explained in my speech that we have found other ways of helping those in need.

The Bloc Québécois therefore opposes, in principle, the bill—

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6 p.m.

Conservative

The Acting Speaker Conservative Royal Galipeau

Order.

For questions and comments, the hon. member for Yukon.