Madam Speaker, I want to thank the member for London—Fanshawe for sharing her time with me. I would especially like to thank the member for Sudbury for bringing forward this very important motion.
A number of other members today have talked about the various elements of the motion. I will not read the whole motion, but I do want to touch on a couple of points in the motion. It says, “That, in the opinion of the House, the government should take action to protect consumers who are particularly vulnerable in tough economic times”. It goes on to lay out a number of specific actions that we request the government to take, such as “protect consumers from 'any time, any reason' interest rate increases and account changes; prohibit unfair application of card payments; protect cardholders who pay on time; limit abusive fees and penalties”, and so on.
I am sure that people are wondering why this issue has come up at this particular time. We know that credit card companies in many cases have charged exorbitant rates over a number of years. They have gotten away with it. They are largely unregulated. Why are we raising this issue now? Let me tell people why we are raising it now.
In my community of Nanaimo—Cowichan and many communities across this country, workers are losing their jobs. Communities that have been used to good paying jobs, that have been used to some economic stability, are losing their viability. It seems that every time we think the worst of the news has surfaced, we hear another bad news story.
Yesterday, I had a call from a constituent who works at the Crofton mill. The mill has downsized to a mere fraction of the jobs that it has had in the community for a number of years. The mill in Crofton is particularly important because it contributes substantially to the North Cowichan municipal tax base. The worker was so concerned not only about his own livelihood, but about what was happening in his community that he took the time to call me. He asked me if I knew the latest thing that will impact on the forestry sector in British Columbia and the rest of Canada. I want to refer to a story which appeared in the April 16 issue of the Victoria Times Colonist. The headline reads, “U.S. federal handout threatens pulp sector; Tax credit to decrease fossil fuels in production has serious loophole”. The article states:
The Canadian pulp and paper industry says it is facing mill closures and the loss of its global markets over a massive United States green energy subsidy that could provide a $6-billion taxpayer handout to American kraft pulp producers.
The subsidy -- a tax credit for mixing alternative fuels with fossil fuel -- can cut as much as 60 per cent off the cost of chemical pulp in the United States. It has opened up a competitive gap no producer in the northern hemisphere can match.
Canadian industry leaders say the sheer size of the subsidy threatens to disrupt the already over-supplied global pulp and paper economy, pushing pulp producing countries like Canada out of business.
We are talking about the effect on Canada of something that has happened in the United States. The United States has already had a serious impact on jobs and businesses in Canada, and now we have the latest piece of bad news, the possibility that Canadian producers will be forced out of business because of a loophole in an American tax law.
It makes it even more important to talk about what I would call credit card abuse by the companies, the issuers of these credit cards. When families are reeling, wondering if they can pay their rent or mortgage and feed their children, we must take every measure possible to make sure that working and middle class Canadian families have every single protection that is possible from their government. It is the duty and the role of government to make sure that its citizens are not being taken advantage of by companies that simply have no conscience. They are prepared to do whatever it takes to make a profit, no matter what the impact is on families, on men, women and young people.
We are talking about young people who are receiving unsolicited credit cards, young people who are just starting out in life, young people who perhaps want to save money to buy a car or make a down payment on a house. They are receiving unsolicited credit cards. There are pages and pages of fine print attached to those credit cards covering all the rules and regulations. The young people use those credit cards and then find out that they are being whacked with an unsubstantiated interest rate.
Some reform is happening in the United States. Senator Dodd said:
Economic recovery will only come when we put an end to the abusive practices that continue to drive so many Americans deeper and deeper into debt. It is the right thing to do for our families, and the right thing to do for our economy.
If it is the right thing to do for the families and the economy in the United States, why is it not the right thing to do for our families and our economy in Canada? It only seems to make sense. Surely if the administration in the United States can find it in its powers to regulate an industry that is, as it says, conducting abusive practices, surely we can do that for our families here in Canada.
I want to highlight a couple of the items that the United States is talking about, and the same practices are followed here in Canada. This is from a document called “Confusing, Misleading and Predatory Credit Card Practices”. I probably do not need to say a whole lot more, but here are some of the items:
PROBLEM: CONFUSING TERMS AND CONDITIONS. Credit card disclosures used to be one page; now they are often 30 pages, and written in a way that most people can’t understand.
PROBLEM: EXORBITANT FEES AND INTEREST. 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. They can charge a fee to pay depending on the payment method. And they can even charge interest on fees and not just the outstanding balance.
PROBLEM: “ANY TIME, ANY REASON” RATE INCREASES.
We have had many examples of that in Canada. People think they are paying one rate and they get a notice that the rate is going up, if they have read the fine print.
PROBLEM: YOUTH MARKETING.
I have already touched on the youth marketing problem. There is an aggressive campaign on college campuses for young people to access these credit cards. That simply is not an ethical practice. If we want to talk about fairness in advertising, we need to make sure that people understand what it is they are getting into when they sign up for a particular credit card. They need to understand what they are getting into when credit card companies can arbitrarily change the rates.
The group Stop Sticking It To Us says to stand up to big credit card companies. In case people do not know some of the hidden credit card fees, its website has a section titled “Just the Facts”. I will not read the whole section, but there are a couple of things that people might be interested in:
At a time when the world's economy is so uncertain, Canadians want to know their elected representatives care about protecting their wallets.
New Democrats certainly do care about protecting their wallets, which is why we put this motion forward today.
Last year Big Credit Card companies raked in $4.5-billion in hidden credit card fees; fees Canadians all pay at the checkout to cover lavish incentive programs and expensive benefits for corporate and premium credit cards, even if they don't have one.
Every time one of our constituents uses a Visa or MasterCard to pay at a local shop, restaurant or gas station, they not only pay for the goods and services, they also pay a hidden interchange fee to the big credit card companies and to the banks that issue the cards. I am going to touch upon those interchange fees in a moment.
The fees retailers, restaurants, charities and others pay to the Big Credit Card companies are among the highest in the world averaging 2 per cent. In Australia they are 0.5 per cent. In the U.K. they're 0.79 per cent.
The interchange fees are the fees that Visa and MasterCard collect from merchants every time a credit card or debit card is used to pay for a purchase. The merchant often will not know what fee is attached to the particular card a customer uses in the merchant's shop.
Madam Speaker, I do not know about your community, but in my community, many of the small retailers are struggling. As jobs are lost in the forestry sector, as jobs are lost in manufacturing, as jobs are lost in shipbuilding, many people are struggling. For those retailers, literally every dollar and cent counts, and now they are faced with these credit card fees over which they have absolutely no control.
Canadians need to pay close attention to what is happening with the credit card giants. In a story in the CanWest news on April 22, the credit card companies now want to get in the debit card market. We know that is just another way for them to take advantage of retailers and consumers.