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House of Commons Hansard #44 of the 40th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was cards.

Topics

Questions on the Order PaperRoutine Proceedings

10:20 a.m.

Regina—Lumsden—Lake Centre Saskatchewan

Conservative

Tom Lukiwski ConservativeParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, the following questions will be answered today: Nos. 35 and 74.

Question No. 35Questions on the Order PaperRoutine Proceedings

10:20 a.m.

NDP

Chris Charlton NDP Hamilton Mountain, ON

With respect to the City of Hamilton's legal action against the government over the environmental assessment of the Red Hill Creek Expressway: (a) what is the amount of money spent by the government on this action to date; (b) what is the current status of the legal action; and (c) which documents filed with the court from either party can be accessed by the public and made available?

Question No. 35Questions on the Order PaperRoutine Proceedings

10:20 a.m.

Calgary Centre-North Alberta

Conservative

Jim Prentice ConservativeMinister of the Environment

Mr. Speaker, the Canadian Environmental Assessment Agency has provided the following response:

a) The cost of the work done by the Department of Justice on this litigation up to the end of December 2008 is about $690 300. Other departments do not track their time so it is not possible to estimate the cost incurred by other federal departments involved in the litigation. However, the vast majority of the cost incurred by the federal government is link to the work undertaken by the Department of Justice.

b) The current status of the court case and any documents filed by either party are publicly available from the Ontario Superior Court of Justice.

c) At this point in the process, none of the parties has commenced documentary disclosure.

Question No. 74Questions on the Order PaperRoutine Proceedings

10:20 a.m.

Liberal

Sukh Dhaliwal Liberal Newton—North Delta, BC

With regard to Western Economic Diversification Canada client relations: (a) does the department work from a project based or client based approach for project management related to grants and contributions; and (b) what risk management framework and client relationship management system does the department use, more specifically what are the processes implemented to better serve its clients?

Question No. 74Questions on the Order PaperRoutine Proceedings

10:20 a.m.

Blackstrap Saskatchewan

Conservative

Lynne Yelich ConservativeMinister of State (Western Economic Diversification)

Mr. Speaker, Western Economic Diversification Canada, WD, works to improve the long-term economic competitiveness of the west and the quality of life of its citizens by investing in a wide range of initiatives designed to facilitate innovation, promote a competitive and expanded business sector, and support community economic development. The central vehicle to deliver on this mandate is grants and contributions’ funding which WD manages using a project-based approach.

In managing projects, WD maintains a well-established risk management framework designed to ensure risks are identified, assessed and mitigated throughout the project development process. The system examines criteria such as materiality, profile, visibility, or reputation, project complexity, threats to and impacts of a project not delivering on results, and financial management. Risk assessments are conducted in the course of performing due diligence on projects, and are an integral part of the overall WD funding process.

While the management of grants and contributions at WD are project centered, WD strives to ensure that the delivery of programming is client focused and regionally oriented. To this end, WD has established programs and initiatives specifically tailored with defined objectives, such as the entrepreneurs with disabilities program, the francophone economic development organizations, and the mountain pine beetle community economic development initiative. Business services and programs are, for the most part, delivered by third parties such as the community futures corporations or the women’s enterprise initiative. WD closely monitors third parties delivering services to ensure minimum performance standards are achieved annually.

WD measures client satisfaction on a regular basis through program evaluations, stakeholder consultations, and client satisfaction surveys. The results of stakeholder and client feedback are publicly available on the department’s website at www.wd.gc.ca.

Questions Passed as Orders for ReturnsRoutine Proceedings

10:20 a.m.

Regina—Lumsden—Lake Centre Saskatchewan

Conservative

Tom Lukiwski ConservativeParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, if Questions Nos. 73, 80 and 81 could be made orders for returns, these returns would be tabled immediately.

Question No. 73Questions Passed as Orders for ReturnsRoutine Proceedings

10:20 a.m.

Liberal

Sukh Dhaliwal Liberal Newton—North Delta, BC

With regard to Western Economic Diversification Canada, what are, in detail, all the projects funded or currently funded which are targeted for Vancouver's Downtown Eastside, from February 2006 up to now?

(Return tabled)

Question No. 80Questions Passed as Orders for ReturnsRoutine Proceedings

10:20 a.m.

NDP

Jean Crowder NDP Nanaimo—Cowichan, BC

With regards to requests received by the government to consult with First Nations on projects, programs, policies or plans that impact either inherent Aboriginal rights or treaty rights: (a) since 2005, how many requests has the government received; (b) what was the date of each request; (c) what was the government's response to each of those requests; and (d) what was the date of each response?

(Return tabled)

Question No. 81Questions Passed as Orders for ReturnsRoutine Proceedings

10:20 a.m.

NDP

Jean Crowder NDP Nanaimo—Cowichan, BC

With regards to on-reserve school projects, for each year between 1999 and 2009: (a) what projects have finished construction and were ready for occupation; (b) in what federal riding were each school built; and (c) for any of these schools, was there a press release sent out by the government to announce its construction or its opening and, if so, what were the dates of those press releases?

(Return tabled)

Questions Passed as Orders for ReturnsRoutine Proceedings

10:20 a.m.

Conservative

Tom Lukiwski Conservative Regina—Lumsden—Lake Centre, SK

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

Questions Passed as Orders for ReturnsRoutine Proceedings

10:20 a.m.

Conservative

The Deputy Speaker Conservative Andrew Scheer

Is that agreed?

Questions Passed as Orders for ReturnsRoutine Proceedings

10:20 a.m.

Some hon. members

Agreed.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

April 23rd, 2009 / 10:20 a.m.

NDP

Glenn Thibeault NDP Sudbury, ON

moved:

That, in the opinion of the House, the government should take action to protect consumers who are particularly vulnerable in tough economic times; and therefore, this House calls on the government to introduce, within 6 months, comprehensive legislation, similar to the Credit Card Accountability Responsibility and Disclosure Act of 2009 introduced by the Obama Administration in the United States, that would: (a) protect consumers from “any time, any reason” interest rate increases and account changes; (b) prohibit unfair application of card payments; (c) protect cardholders who pay on time; (d) limit abusive fees and penalties; (e) prohibit issuers from using a consumer’s card history with another creditor to raise interest rates (“universal default” ban); (f) prohibit issuers from charging interest on debt that has already been repaid; (g) ensure that cardholders are informed of the terms of their account; and (h) protect young consumers from aggressive credit card solicitations.

Mr. Speaker, I will be splitting my time with the hon. member for Welland.

It is with great enthusiasm that I present this motion to the House for debate. The motion is a call for the introduction of a credit card accountability, responsibility and disclosure act.

The motion calls for immediate government action to protect consumers already hit by this recession from sky-rocketing credit card interest rates and fees.

The motion would introduce legislation similar to Obama's credit card accountability, responsibility and disclosure act 2009.

The New Democrats want the government to take action to protect consumers and small businesses from these confusing, misleading and predatory practices. New Democrats have always stood up for middle class families and small businesses, both groups who are suffering most in this economic downturn and with the current credit card practices.

The motion lays out an eight point plan that would protect consumers from the gouging they have endured over the last little while.

The first point of this proposal is the protection of cardholders from any time, any reason interest rate increases or account changes. The Canadian Community Reinvestment Coalition has repeatedly called on credit card companies to demonstrate that rate hikes are justified. In the Canadian regulatory framework no such requirement is in place.

We are not advocating that banks make public proprietary information that is part of a competitive marketplace, but we want a regulatory framework with teeth that can ensure effective protection through a process of independent auditing against arbitrary gouging.

Another point of the motion is to prohibit unfair application of card payments. Credit card issuers frequently offer short-term, lower rates to entice consumers to transfer credit from a competitor to credit cards they have issued. In the short-term this represents a savings. The problem is in the fine print and the short-term rates disappear quickly.

Further, as purchases are made customers will find that rates are applied differently within their account. Currently, the customer cannot choose to pay down credit with the highest rate. We are calling on the government to protect consumers by ensuring they have the choice that best suits them.

Credit cardholders who pay on time need to be protected. I have been hearing from people all across Canada who are outraged that even when they have a spotless credit history, they are getting hit with big rate increases.

A man from Victoria, B.C., has been a credit cardholder with a certain bank for over 20 years. Earlier this year he received a letter from his bank outlining important changes to his account. In the letter it stated that as of a little over a month later his interest would increase. This man was quite confused and rightly upset by this as he felt like he was being punished with an increase in the interest rate when he had done nothing wrong and there was nothing wrong with his credit. In fact, it was excellent.

This man, like hundreds of other Canadians, had done nothing to breach his agreement with his credit card company but was still being hit with a higher rate. The motion also calls on the government to limit abusive fees and penalties charged by credit card companies.

Credit card companies gouge consumers with many unreasonable fees and interest. They can charge over limit fees over and over again during one billing cycle. Also, we have examples of credit card companies enticing customers with an introductory 1.9% interest rate which can jump to almost 25% in two months should cardholders be even a day late on their payment.

We also want to prohibit card issuers from using a consumer's card history with one creditor to allow for interest rate hikes on another. Credit card companies can increase interest rates and terms for reasons unrelated to a card holder's behaviour on that card.

For example, if my neighbour pays his gas bill late, his credit card company can raise the interest rate on his credit card. Even if he is a day late, it could result in an interest rate hike without the card holder knowing.

How can these billion dollar companies justify hiking interest rates on a cardholder who is one or two days late on a payment by an additional 6% in some cases? I have heard of cases that hiked these rates even more.

If I get my credit card bill this month, and let us say this bill is about $1,000 and I pay $800 toward this bill, the next month the interest I am paying will be calculate on the $1,000, not the $200 remaining. Only in June would I pay interest on that $200 as long as I did not put more expenses on the card.

Our motion calls on the government to prohibit issuers from charging interest on debt that is already paid. This is unfair and gouges consumers even further.

This motion also calls for ensuring cardholders are informed of the terms of their account. Most consumers are unaware that these new premium cards that are being sent to them, unsolicited in many instances I might add, are reducing the already small margins of profits made by local and small businesses. With charges of up to 4% on the total price of the sale instead of a flat transaction cost, businesses on the brink are being pushed closer and closer to the edge.

Our motion would ensure that cardholders are informed of the terms of their account and that it costs merchants more when using premium cards.

This motion also calls for the protection of young consumers from aggressive credit card solicitation.

I have too many examples of students who work part-time jobs and are juggling minimum wage jobs who are being aggressively pursued by credit card companies to sign up for credit cards. These students need protection from the predatory practices of credit card companies that run aggressive mailing and marketing campaigns on their campuses.

Right now the average Canadian student debt among those who borrow and graduate from a four year program is already $22,700. Credit card debt will only further burden these students.

Canada is not the only country focusing its attention on this issue. Renewed effort by governments in the United States and recent action in the European Union illustrate a global push to hold credit card companies to account for their fee practices. It is time our government focuses its attention on this matter as well.

In a poll conducted by the Canadian Federation of Independent Business, one in five consumers reported receiving unsolicited premium cards which come with higher interest rates. The majority of those who receive these high interest cards were the poor, elderly and least educated.

We cannot count on credit card companies to police themselves or to be concerned about the most vulnerable. That is our job. It is time government stepped in to help families in these tough times, which is why I am pleased to table this motion today in the House.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:30 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I am pretty sure that today hon. members will be able to share their concerns about what is happening in the credit card industry.

With regard to the motion before us, I wonder if the member could advise the House of the parallels between what is being proposed in the motion and the Obama actions taken. As well, could he assure the House that under point a) in the motion where it refers to “protect consumers from 'any time, any reason' interest rate increases and account changes”, it is presumed that these account changes would in fact be abusive or unfair changes as opposed to any changes? I would only assume that such legislation prescribing that there be no account changes would be counterproductive.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:30 a.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Mr. Speaker, unfortunately I have a faulty headpiece at the moment and I did not hear the question in its entirety. I am going to switch the headpiece and hopefully the member can ask the question again, if the Speaker would allow that.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:30 a.m.

Conservative

The Deputy Speaker Conservative Andrew Scheer

Nobody else is standing up, so briefly.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:30 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, briefly, there are two points.

One is with regard to the provisions in the Obama changes in the United States, and whether they are fully reflected in the motion before us.

Second is with regard to item (a) in the motion, which reads, “protect consumers from 'any time, any reason' interest rate increases and account changes”. It would appear that the intent of the motion could be interpreted that there be no changes permitted, whereas I would think the intent probably was that there be no account changes which would be adverse to the consumer.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:30 a.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Mr. Speaker, it is a great question and I am glad I was finally able to hear it.

Regarding the Obama administration's Credit Card Accountability Responsibility and Disclosure Act, we are reflecting very similar plans that we want here in Canada. We want to see how we can protect our consumers.

What we are talking about in item (a) is protecting consumers from any time or any reason interest rate hikes or account changes. We have seen many examples, and I mentioned a few of them. We have seen letters from individuals right across the country who are saying that they signed up for a credit card at an 18% interest rate and all of a sudden they were told that the account changed and they would be paying a 26% interest rate.

We want to ensure there are no account changes and no interest rate hikes that these the companies could do for any reason. I do agree with the hon. member.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:35 a.m.

Macleod Alberta

Conservative

Ted Menzies ConservativeParliamentary Secretary to the Minister of Finance

Mr. Speaker, I listened very intently to the speech of my hon. colleague from Sudbury.

There was one thing that I would like to clarify. At the very beginning of his speech, he referred to the fact that members of the NDP have stood up for Canadians. We put provisions in budget 2009 that actually pre-empted a lot of what is suggested in this motion that this government should do. I cannot help but wonder why on earth his entire party voted against that. To their credit, the Liberals understood the value that was in our economic action plan and supported it. That is going forward. The money is going out for infrastructure.

There is one comment that I would like to ask the hon. member to clarify. He suggested that there is interest charged on credit cards even when they are paid off on time. I do not think that is an accurate reflection, but maybe I did not hear accurately what the hon. member said.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:35 a.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Mr. Speaker, first, what was in the budget was just more information about what is on the back of a credit card bill. There was no true legislation to protect consumers and that is why we are debating this motion today.

In relation to the parliamentary secretary's question, I was using the example of my own credit card bill. If I had a credit card bill of $1,000 and I paid $800 of that, $200 would be remaining. I would have to pay the interest on the $1,000, not on the $200. We want to see limits that prohibit that type of gouging.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:35 a.m.

NDP

Malcolm Allen NDP Welland, ON

Mr. Speaker, I would like to thank my hon. colleague from Sudbury for his leadership on this issue. He has been front and centre on this issue for quite some time. If my memory serves me correctly, he has asked quite a number of questions of the Minister of Finance about this very issue and the minister's response has been that he would write a letter. The Conservatives' action plan probably contains a copy of that letter. Clearly we want to see action on this critical issue of credit cards and the usurious fees and interest rates that Canadians are suffering under, not just this year when there is a huge economic downturn in the economy, but in the years leading up to it.

Credit card interest rates pushing 20% are painful at the best of times, but they are simply outrageous when people are losing their jobs and facing real hardship. People in my riding of Welland are being hard hit by this recession. Soaring interest rate charges are trapping more and more families into a cycle of poverty. In times like these, hard-working families can quickly find themselves running credit card balances just to make ends meet. Unfair interest rates can blow that balance into a major financial burden that is extremely difficult for families to crawl back from, especially when people are losing their jobs or having the door to employment insurance slammed shut by the government's refusal to make the changes necessary for them to access the money they paid into that insurance program which was originally set up for that exact purpose.

Today Canadian households owe a staggering $300 billion on credit cards and other high interest debts. That kind of debt can entrap the most hard-working families. One alarming result is that the average savings rate has dropped from 20% in the mid-1980s to barely 2% today. That is not nearly enough to retire on. The NDP is committed to renewing our call to cap credit card rates at five points over the prime rate in good times and indeed in bad. That is fair and affordable for the average family.

As has been touched upon, in the U.S. the new Obama administration has announced plans to protect consumers from unfair credit card practices. It is time for the Conservative government to be committed to protecting Canadians also.

I say that in the context of my region, which has the second highest unemployment rate in this country. Folks are using their credit cards to buy food. Quite a number of years ago we could not use a credit card at the grocery store. In fact, the best we could do was write a cheque, but in this day and age of plastic, most places do not want a cheque; they want a credit card. Folks are actually going to grocery stores to buy the essentials and necessities of life and they are using a credit card that they know has a balance with an interest rate that is simply driving them further and further into debt. They end up potentially being trapped in a cycle of poverty.

When I think about that, I have never used a credit card in the grocery store, but I have used it numerous times at major retailers. I have had that credit card for some 20 years. Like many other Canadians, I received a notification out of the blue that told me my credit card interest rate was going to be increased by 2.5%. There was no reason given. It was not that I had not paid my bill on time, or was late, or carried a balance forward for too many months. In fact, I do not carry a balance on that card and never have. Before that, I had been told by that company that I was one of its preferred customers because indeed I paid my bill on time. Now I am about to be penalized because I pay on time. It seems that when it comes to credit cards, we get penalized when we do not pay on time and we get penalized if we do pay on time.

In yesterday's press, Bank of Canada Governor Mr. Carney talked about where he thought he would see the Bank of Canada interest rate in the foreseeable future. I believe that the inter-bank rate is less than 1.5%, and the prime rate is somewhere around 4.5% depending on whether one is a preferred customer. Yet we see credit card rates at all-time highs of 19.5% to 20%. We understand there has to be a spread between the prime rate and the retail rate, but clearly when there is a spread close to 15% or 16% and in some cases 19% or 20% for a retail credit card, that really is usury. It used to be in this country that those types of rates could not be charged, that it would be loansharking.

It seems to me that if we do not rein them in, we may want to call credit cards something else. They should be called debt cards, because that is what they trap folks in. They trap them into a cycle of debt. It is not about extending credit to people; it is about hooking them.

The credit card companies, through the banks and the other major financial institutions, have done a great job of ensuring that people get a card. The hon. member for Sudbury talked about how they trap young people. I have kids who are young adults now. They have grown up and have gone to university. They got their first credit card in the mail, unsolicited, just as they were about to leave high school. The cards showed up at our address, one after the other, for the three of them. I have twins who were born only three minutes apart. They got their cards on the same day. They did not ask for one. The cards did not come from the financial institution where they had their meagre savings accounts. It was not even their financial institution that sent them the credit cards thinking they might like to have a credit card. It was an altogether different institution that did not know them, but knew they were young people. The note that came with the cards indicated that as they head off to post-secondary education they may need a credit card. I would say that they did not need a credit card. What they needed was a good summer job to pay for that education.

Clearly, these companies have hooked young people, and they have hooked old people, in the sense of mature people like me, into using credit cards for their everyday existence. People are building up balances on their cards which at one time would be unthinkable. At one time, most folks had meagre amounts owing on their credit cards. Purchases were for $50, $60 and $70 at a time. Now they are in the hundreds of dollars. This convenience card, as it started out to be, is now portrayed as a need, that we need to have one in our lives because if we did not have one, we would not be able to do the things we should be doing and purchasing the things that we need to have in the lives we lead in this society. Financial institutions have been given that ability to continue to hook consumers, to have them believe that the cards are absolutely are essential.

For a long time my mother never had a credit card. She was in her fifties before she had one because she did not think she needed one. She thought she should just pay cash. She came from an era in which people paid cash for everything. She actually went to a store where she was encouraged not to pay with cash, but to pay with a credit card. When she said she did not have one, the store said it could get one for her, and the cycle begins.

In my estimation, there is not a real need to see that cycle continue in that form. We need to ensure that we limit the ability of the financial institutions to dangle that bait of convenience that really becomes the trap of high interest rates, and poverty for some, and a debt load that is now unmanageable for a great many Canadians across the country.

I am sure the banks are going to argue that these are really tough times and there are a lot of folks defaulting on the balances of their credit cards. Of course they are. If the banks had not driven the interest rate up to 19.5%, but had kept it at a reasonable rate, which would be somewhere around 9% to 10%, in fact people may have been able to handle the debt load, and perhaps eventually paid it off. What is going to happen is that debt is certainly going to accumulate.

As my colleague mentioned, yes, interest is paid on the $1,000 even if a payment of $800 has been made. It is in the fine print, and I defy anyone to try to read that fine print without a magnifying glass. Mr. Speaker, I know I am not supposed to demonstrate, but they are my glasses, and what I do with mine is that I actually move the bad lens over the good eye so that I actually can read that fine print because it is that difficult, even for me.

Ultimately this is about the protection of consumers who are saying to us that they are stuck, that they need our help. They have tried to negotiate. They have tried to argue. They have tried to get out from underneath the interest rate trap they are in with the credit card companies and financial institutions and the institutions will not let them out. We need to help those Canadians. I sincerely hope the members of this House will support this motion and make sure that Canadians, consumers, families, young people across this country, can get out from underneath the trap of credit card debt.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

10:45 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, the issue of the spread in rates between what is charged by credit card companies and what the other traditional rates would be has been mentioned a couple of times now.

The member may very well remember that when a credit card was used many years ago, the merchant pulled out a pad of onion skin paper and flipped through the many columns of defaulted cards, and the costs had to be borne. The member would probably concede that there are some mitigating explanations.

I want to ask a question about one other feature of credit cards. If we are to address consumer spending and fairness, the member knows that credit card companies do not permit merchants to give cash discounts. In my view that is part of the problem, as the member said, of hooking people to credit card usage. There appears to be some latitude here.

People want to spend what they can afford to spend. To get a discount on the price for a cash payment would also be an interesting proposition to look at to amend the regime under which credit cards operate.