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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

Automotive IndustryOral Questions

3 p.m.

Independent

Bill Casey Independent Cumberland—Colchester—Musquodoboit Valley, NS

Mr. Speaker, for the auto industry bailout to succeed, car dealers, truck dealers and recreational vehicle dealers must have access to wholesale and retail financing, but a lot of the companies traditionally involved in this are backing out, or withdrawing or limiting their participation.

Is there a plan by the government to provide wholesale and retail financing for the dealers, the retail industry that will deliver and sell the cars, trucks and recreation vehicles that will be helped with the auto bailout?

Automotive IndustryOral Questions

3 p.m.

Parry Sound—Muskoka Ontario

Conservative

Tony Clement ConservativeMinister of Industry

Absolutely, Mr. Speaker. Certainly we announced in budget 2009 that we would be increasing the credit facilities to ensure that asset-backed securities were taken off the books of some of the captive credit banks so that they could then re-lend.

We have also worked with the banks. The banks are increasing credit availability in this area. Of course, we are the government that announced that in fact warranties for GM and Chrysler products would be honoured in this period of uncertainty. I think we are there for consumers across the country.

Presence in the GalleryOral Questions

3 p.m.

Liberal

The Speaker Liberal Peter Milliken

I wish to draw to the attention of hon. members the presence in the gallery of the Hon. Shawn Skinner, Minister of Innovation, Trade and Rural Development for Newfoundland and Labrador.

Presence in the GalleryOral Questions

3 p.m.

Some hon. members

Hear, hear!

3 p.m.

Liberal

The Speaker Liberal Peter Milliken

Order, please. I have the honour to inform the House that a communication has been received as follows:

Rideau Hall

Ottawa

April 22, 2009

Mr. Speaker,

I have the honour to inform you that the Honourable Thomas Cromwell, Puisne Judge of the Supreme Court of Canada, in his capacity as Deputy of the Governor General, signified royal assent by written declaration to the bill listed in the schedule to this letter on the 22nd day of April, 2009, at 4:55 p.m.

Yours sincerely,

Dorothy Grandmaitre

for Sheila-Marie Cook

The schedule indicates that royal assent was given to Bill C-17, An Act to recognize Beechwood Cemetery as the national cemetery of Canada.

Canada-Peru Free Trade Agreement Implementation ActGovernment Orders

3:05 p.m.

Liberal

The Speaker Liberal Peter Milliken

It being 3:05 p.m., the House will now proceed to the taking of the deferred recorded division on the motion at the second reading stage of Bill C-24.

Call in the members.

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

Vote #52

Canada-Peru Free Trade Agreement Implementation ActGovernment Orders

3:10 p.m.

Liberal

The Speaker Liberal Peter Milliken

I declare the motion carried. Accordingly, the bill stands referred to the Standing Committee on International Trade.

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

Business of the HouseGovernment Orders

3:10 p.m.

Liberal

Marcel Proulx Liberal Hull—Aylmer, QC

Mr. Speaker, my question is for the Parliamentary Secretary to the Leader of the Government in the House of Commons. What is the government's business plan for the next two weeks? Does he have any supply days to designate?

Business of the HouseGovernment Orders

3:10 p.m.

Regina—Lumsden—Lake Centre Saskatchewan

Conservative

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

Mr. Speaker, we will continue with the debate today on an opposition motion. Tomorrow we will begin, and there is an understanding that we will conclude, debate on third reading stage of Bill C-14, the bill to address organized crime. Following Bill C-14, we will continue debate on the report stage amendments to Bill C-11, the human pathogens and toxins bill.

If time permits, we may begin debate on the second reading stage of Bill C-6 dealing with consumer product safety.

Next week, we have opposition days scheduled for Monday, April 27 and Tuesday, April 28. On Wednesday we will return to government legislation with the continuation of business from this week. We will also give consideration to any bills that are reported back from committee or sent to us from the Senate.

Pursuant to a special order and because of the Liberal convention, the House will not sit on Friday, May 1. Mr. Speaker, as you know, it is a long-standing tradition to give up a sitting day to allow a political party to attend a convention and we are very pleased to continue on with that tradition.

Questions on the Order Paper--Speaker's RulingPoints of OrderGovernment Orders

3:15 p.m.

Liberal

The Speaker Liberal Peter Milliken

Yesterday, the Deputy Chair of Committees of the Whole, Ms. Savoie, heard a point of order raised by the hon. member for Avalon in relation to an answer he received to a written question. I have reviewed the member's intervention and I find that I concur in the view expressed by the Acting Speaker that this is a question of debate and not a matter of order.

Decorum in the House—Speaker's RulingPoints of OrderGovernment Orders

3:15 p.m.

Liberal

The Speaker Liberal Peter Milliken

With regard to the point of order of the Bloc Québécois concerning the alleged gesture made yesterday by the member for Essex during a vote, I have reviewed the video tape and found nothing. Consequently, given that the member provided an explanation, I consider the matter closed.

However, I would like to remind members of the importance of serious and dignified behaviour at all times, but especially at the time of a recorded division.

I wish to inform the House that because of the deferred recorded division government orders will be extended by eight minutes.

The House resumed consideration of the motion

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:15 p.m.

Liberal

The Speaker Liberal Peter Milliken

Before the question period, the hon. member for Vancouver Centre had the floor and there are seven minutes remaining in the time allotted for her remarks. I therefore call upon the hon. member for Vancouver Centre.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:15 p.m.

Liberal

Hedy Fry Liberal Vancouver Centre, BC

Mr. Speaker, before question period, I talked about supporting the intent of this motion but felt that some of the ways of implementing the objective in the motion were impractical, one of which, as I mentioned, has to do with the United States legislation, which does not pertain to Canada as we have different legislation.

I also went on to point out that we had gone a long way when the Liberal government was here in 2001. We secured financial institutions, looked at regulations and set up the credit card database in which we have a large amount of data that has prevented us from going the way that the United States and other countries did. It was because we had secured our financial institutions.

The motion also talks about the aggressive targeting mechanisms used by credit card companies to ensure young people have credit cards. They offer them low interest rates to hook them in and then, when they get these young people in, they raise the interest rates, which is why so many people are now indebted.

As I said earlier on, we talk about the indebtedness of people and we need to do something about it. This is one of the reasons the Liberals took a leadership role in the Senate. We wanted the Senate banking committee to look at some of these issues and to aggressively look at solutions. The problem is real. The debt of most Canadians at this time, especially consumers, is huge. In my riding of Vancouver Centre, the cost of homes and everything else is so high. We have young couples in their thirties who are university educated. Some have MBAs and some are lawyers. Together, these couples are making a reasonable income but they cannot afford to buy a home. They have stretched themselves to the extent that they can but when one of them loses a job in this climate, they are within two pay cheques of bankruptcy. We need to be concerned about these people who also have large credit card debts that they need to pay.

Many of my colleagues have made the point that many retailers right now are in a credit crunch. This is all a vicious cycle. We know that when people are indebted they are not spending. They are hoarding and saving. They are indebted to credit cards companies. They have reached their maximum limits and therefore cannot go outand buy. The retail sector is suffering because of the inability of consumers to spend money on anything that is not basic. Shops, retailers and small businesses are hurting a great deal by this recession. They have their own credit crunch to deal with.

On top of that, the credit card companies are charging the retailers 11% and 12% interest rates, which does not allow the retailers to make a profit. Many of them are trying to bring about sales so they can encourage people to buy but they cannot do that and stay in business if they do not make a profit. They now have a choice. They either go out of business or they bring down their funds. However, if they do not make a profit, they will go out of business at the end of the day.

The financial institutions, which govern much of the credit card debts and the interest rates charged by credit card companies, need to show a sense of responsibility by making the credit card companies understand that by charging high interest rates and changing interest rates without enough notice to people who cannot afford to pay off their full balance, which will only increase now when people are counting their pennies and can only afford to pay the minimum amount, they are creating a huge problem. People's indebtedness will hurt this economy and any economic stimulus package or any development that we try to make to turn the corner.

This is a vicious cycle that we see happening, one that is creating a worsening situation all the time.

Now we know that typical of the Conservative government is a promise that it will do something about it. The Minister of Finance said that he would go off and deal with the credit card companies and get them to do these things voluntarily. However, when they told him to take a hike, nothing happened. We continue to see promises made in stimulus packages, in budgets, in all of these declarations by a government that never actually come to fruition. Nothing happens. Talk is cheap.

We, on this side of the House, knowing that we did not want to play politics with a difficult fiscal climate in this country, cut the government some slack. We said that we would support its package but that we put it on probation.

Time after time, we hear the verbiage that we are working on it and that we do care, but nothing happens. We have put the government on probation because at some point in time we need to find out whether it is just talk. We need to see the money flowing. We need to see the work being done to get the credit card companies to look at the problems. We need to see that the promises to spend money in certain places comes to fruition. We need all this shovel-ready stuff to occur. We need long term investments.

Those are some of the things that we are looking to the government to actually make good on and we are keeping our eye on the government on that basis. However, at the same time, we do not wish to be irresponsible. We know we are in a difficult time but we need to see something happening.

The motion brought forward by the NDP basically says that we need to do something. We have taken the bit in our teeth and have taken the initiative. We have started to do the work at the Senate by pushing this very aggressively in the Senate. We need some studies and we need some information. When I say studies, I do not mean studies in the manner in which the government speaks of studies, which is some kind of two year plan to do something that never comes to fruition. We mean that we need to get some data quickly. Time is moving and we need to get this thing sorted out now.

Good intentions are fine, and I hesitate to say this because it is very well-intentioned, but we know that the NDP have a tendency not to implement their good intentions and come up with some way-out ways to do this. However, we do agree with this motion because it is a good motion. The objectives and the intent are great. We have taken the initiative to do some work to ensure we have the right and most effective solutions to this problem.

I support the motion from that perspective.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:20 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, a Senate initiative is going on. In the budget, the government promised that a task would be coming soon. A motion is before the House that calls for introducing legislation within six months, which will take some time thereafter.

My concern is that the problem is a today problem and we need a comprehensive approach to dealing with the identified problem. One of those problems, to which I think the member alluded, is the need to get the banks on-side now. I do not think we need to wait until we study something and get more information. We can start now, if there is a political will within Parliament, to step forward, to get those consultations with the banks going and to deliver a solution that will save these people who are going to lose everything. Many people will lose everything within a matter of weeks and months.

There is a need for short term action, as well as medium and longer term action, but there is nothing on the table now to deal with the short term. I really think Parliament must indicate its concern about consumer debt problems.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:25 p.m.

Liberal

Hedy Fry Liberal Vancouver Centre, BC

Mr. Speaker, I could not agree more with my colleague. I would refer to the fact that we have students who have huge debtloads. We have students who have now taken out credit cards because of aggressive marketing. The interest rates are going up. When they cannot pay even the minimum payment, they are suddenly being assessed huge fees.

I raised the issue of young couples who are literally two paycheques away from bankruptcy if one of them loses his or her job. I am talking about people who are university and college graduates. I am talking about lawyers and young MBAs. They are in a difficult position.

People in my province cannot buy a 1,000 square foot condominium for under $600,000. Some people do buy them because they need a place to live but if they lose their home because they cannot pay the mortgage, then they must look for rental accommodations. However, there are no rentals in my city.

I am not exaggerating when I say that we will be seeing people, maybe within two months, who will be out on the street because they are bankrupt. There is data to support this increasing risk to middle income families, what we used to call good, solid, middle income families, that may lose absolutely everything in this recession.

Studying things alone, as the government is doing, hoping that the banks will come on-side, is not good enough. That is why we support the intent of this motion. We have work going on in the Senate to make it happen quickly.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:25 p.m.

NDP

Olivia Chow NDP Trinity—Spadina, ON

Madam Speaker, former Liberal MP, Don Boudria, said that the government seeing fit not to act on a cap was consistent. It has consistently defended the interests of big business. He said that there needed to be an interest rate cap. He was commenting on a study that was done by the standing committee on credit card cost.

When was that study was done? In March 1990 and it recommended that the financial institution not be allowed to go higher than eight percentage points above the bank rate, but no action was taken between 1993 and 2006.

Could the member opposite tell us why the Liberals, when in power, did absolutely nothing to cap credit card interest rates?

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:25 p.m.

Liberal

Hedy Fry Liberal Vancouver Centre, BC

Madam Speaker, that is such a broad statement that it is funny. In fact, Canada has done extremely well in the world. We are solid. Our banks have not had the fate of the banks in every other G8 country in the world. Canada was solid and it was because a Liberal government moved in 2001 to put in the structures that regulate banking institutions and make them accountable. That is why today everyone is boasting about Canada's solid economy. However, that is not going to remain for long. The hon. member already mentioned that and, in fact, there is need for quick action.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:25 p.m.

NDP

Olivia Chow NDP Trinity—Spadina, ON

Madam Speaker, I will be sharing my time with the member for Burnaby—Douglas.

We have had 20 years of studies. In 1990 the New Democrats said that the credit card companies were ripping off regular Canadians, consumers and small businesses. A study done by the standing committee in 1990 recommended that we cap the interest rates to 8% above prime. No action has been taken all these years.

The credit card companies are continuing to rip off young and old Canadians and businesses, big and small. There are 11 ways they do it.

Rip-off one is the interest rate offered by bank issued credit cards goes to about 19.9%, almost 20%, even though the Bank of Canada interest rate is extremely low. The interest rate is going down, yet the credit card rates are going up. The interest rate offered by retailer-issued credit cards is even worse. If people go to the Government of Canada website and choose a credit card, they will see the interest rates offered by these companies range from 24% to 28.8%, almost 29% interest.

Rip-off two is the consumer pays interest not on the current balance, but on the previous month's balance. For example, people who owe $1,000 and pay off $800 of that might think they will pay interest on the remaining $200. That is not the case. They pay the interest on the entire $1,000. I cannot believe our country allows this kind of ripoff? It is not a person's current balance; it is what the person owed last month.

Rip-off three is this. Recently Canadian Tire Corporation notified many of its cardholders that the annual interest rate on late payment fees would rise to 19.5%. Some cardholders know about this, but others do not. It does not even tell people what its interest rate is. It just jacks it up.

Rip-off four is the credit card companies send people a contract to sign. In the contract, in really small, fine print, probably 5 point, 6 point print, is language that is very difficult to understand. Sometimes they do not even tell people, so the customers really do not understand the implications.

Rip-off five is credit card company representatives go to universities and entice young people by showing them big ads and getting them to pick these credit cards. Then they are living off debt. The reason why a lot of young students end up having many credit cards is because they have huge student debts, on average about $30,000 per student. Then they get hooked on these credit cards by aggressive marketing targeted toward them.

Rip-off six is credit card companies also go after the seniors. They send them cards for which they never asked. Recent pollings show that one in five Canadians receive cards without asking for them. First, the credit card companies offer short-term lower rates to hook them in. Then they change the rates without telling them. They apply it to different accounts. It looks like there is a saving in the beginning, but then the longer term, or in the fine print in the signed contract, which seniors cannot read, when the first purchase is made, they find that the rates are applied differently within their accounts.

Rip-off seven is even cardholders who pay on time are subjected to penalties, rising interest rates, annual monthly service charges. Even if they do everything they are asked to do, the companies still go after them.

Rip-off eight is the overseas transactions. People might not know that when they go across the border to buy something in Buffalo, for example, a 2.5% charge on top of the 19% or the 28% charged is applied.

Rip-off nine is the interchange fees to merchants. Many small businesses are saying this is grossly unfair. Credit companies charge up to 4% on the total price of the sales rather than a flat transaction fee. Again, that is completely unfair.

Rip-off 10 is the increased annual fees while the service decreases. When the service goes down, the annual fees go up.

Rip-off 11 is the penalties for exceeding the credit limit. There is a charge on that also.

It is no wonder that last year eight out of ten Canadians, or 84%, reported having some kind of debt. They say they are worried that they are unable to deal with unexpected events. Household debt is at an all-time high, reaching one trillion dollars two years ago. Last year there was a record debt load averaging $80,000 per household, including mortgage debt. Canadians, especially middle-income, have racked up a huge amount of debt. It has doubled since about 1990. What are the consequences? Bankruptcies are now rising 14.9% year over year.

The motion of the New Democrats says that we want to protect consumers from interest rate increases and account changes. We want to prohibit unfair application of card payments. We want to protect cardholders who pay on time. We want to limit abusive fees and penalties. We want to prohibit issuers from using a consumer's card history with another creditor to raise interest rates. We want to prohibit issuers from charging interest on debt that has already been repaid. We want to ensure that cardholders are informed of the terms of the account. We want to protect young consumers from aggressive credit card solicitations.

This is the kind of common sense approach that the New Democrats call on the government to introduce within six months, comprehensive legislation, no more talk, no more studies. Let us ensure that we implement a credit card accountability, responsibility and disclosure act, similar to what the Obama administration is doing.

The Liberals have talked and talked and studied. There is another study in the Senate. What do the Conservatives do? They just talk to the banks and do nothing. It is time to take action to protect consumers and limit credit card interest rates.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:35 p.m.

Conservative

James Rajotte Conservative Edmonton—Leduc, AB

Madam Speaker, I have a couple of questions for clarification.

First, I have read the motion of the NDP. Does the NDP still support what is known as the four-party credit card model? Would members have any amendments to that model or do they support the existing model with respect to credit cards in the Canada?

Second, the NDP members reference an initiative by the Obama administration. It is my understanding the bill was introduced in the Senate by Senator Dodd. Is that not in fact the case and, if so, what other particular initiative is the member referring to when she talks about an initiative by the Obama administration with respect to credit cards?

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:40 p.m.

NDP

Olivia Chow NDP Trinity—Spadina, ON

Madam Speaker, we know that the existing methods of regulating, or not regulating, credit card companies is just not working.

The parliamentary secretary today in the House of Commons talked about some of the measures that the Conservative government is putting in its budget. What does it actually do? It tells us how we are being ripped off. It tells us that if we want a credit card, we can put in some numbers and it will tell us which credit card we can use, but all of them charge huge interest rates.

The existing disclosure methodology really does not work. The key thing is regulations, which is why we are looking at the model that New Democrats are putting forward. Yes, it was introduced in the United States Senate. What we must do is take all the studies that have been done since 1990, cap the interest rate, and amend the Bank Act.

Just making it voluntary and having some lunches with bank presidents will not work. It did not work for the ATM fees; it will not work for credit card fees either.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:40 p.m.

NDP

Bill Siksay NDP Burnaby—Douglas, BC

Madam Speaker, I want to thank my colleague for her intervention in this debate this afternoon.

I want to pick up on one point, even though it is not directly related to consumer credit card interest charges. She mentioned the interchange fees that are charged to retailers for using a credit card service in their businesses and how these fees constantly go up.

One of the small business people in my riding wrote to me and said that last year it went up four times as he was trying to do business. He said that when those kinds of fee increases happen, he has no choice but to pass those on to the folks who do business in his store. It gets passed on directly to consumers, so consumers get hit again by this hidden fee that is charged by banks and credit card companies to the retailers.

I wonder if the member has heard from retailers in her riding who face a similar problem and have spoken to her about how this hurts both the retail sector and consumers in Canada.

Opposition Motion--FinanceBusiness of SupplyGovernment Orders

3:40 p.m.

NDP

Olivia Chow NDP Trinity—Spadina, ON

Madam Speaker, the vice-president of the Retail Council of Canada came to a forum that I held when we were consulting about the budget, and many small businesses have written to my constituency office saying these fees are extremely unfair. These fees have gone up and up, many times in the last year.

Collectively they have put together a big campaign called “Stop Sticking It To Us”. People can visit www.StopStickingItToUs.com. The Retail Council of Canada is pushing the Canadian government to amend the Bank Act so that we can take the kinds of actions that are desperately needed here in Canada to protect consumers, protect small businesses, and protect retailers.

The Retail Council of Canada is not alone. The Canadian Federation of Independent Business also said its members are confronted with uncontrollable cost increases from credit card companies. The Canadian Council of Grocery Distributors, too, is saying it needs real leadership from the Canadian government.