Debates of April 23rd, 2009

Opposition Motion--Finance

[Malcolm Allen, NDP, Welland, ON]

Mr. Speaker, I remember the onion skin paper. In some stores in small towns in Ontario, especially where I come from, we still see that onion skin paper.

There was a list of defaulted cards at one time and there was a fee. I suggest that the fee the credit card companies charge small businesses is overblown. If we let them creep into the debit card market, that fee will go even higher. Owners of small businesses in my riding tell me not to let this happen. They tell me that we need to talk to the credit card companies to ensure the fees are kept down, and we need to continue do that.

My hon. colleague is also right about the fact that at one time if people paid $10 or $20 in cash, they would receive a discount. Back then they were asked by the retailer if they wanted to pay cash or use credit. It was a phrase often heard at retailers and a discount was given for cash because retailers knew the cost to them.

That really is the hook. Not only have consumers been hooked, but so have businesses, to the point where people really do not want to deal with cash or cheque. They want to deal with plastic because it is easier to do transactions that way, yet we do not see a reduction in the cost to us because of the ease of the transaction.

It is all done electronically. As my colleague said, the onion skin paper is not seen any more except in a few places that I happen to visit. It is amazing technology. People can go here or there and yet they do not get the benefit of the reduced cost that the big financial institutions receive. That is a shame and it should be reversed.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, the member talked about the unemployment rate in his community.

As the consumer protection advocate for our party, people across the country have contacted me with their concerns about credit cards. One thing I have heard loud and clear is the fact that unemployed individuals use their credit cards, as I would say taking from Peter to give to Paul, while they wait for EI or for something else so they can ensure they put food on their table.

Could my colleague explain to me the impact this has on his constituents who need to use credit cards? What financial implication does this have on their families when the interest rates are skyrocketing?

[Malcolm Allen, NDP, Welland, ON]

Mr. Speaker, in a nutshell, we are seeing increasing poverty in my community. Poverty in my region is higher than the average in Ontario, and it is going up not down.

With the crisis before us, we know the poverty rate will simply go higher. The type of debt load that those folks have to carry just means they will be in poverty that much sooner, that much longer, which will be that much more of a hardship for them.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the opportunity to provide the response on behalf of the government to today's motion.

I have to express disappointment at some blatant errors in the wording of the motion. Specifically the text mentions that Canada should adopt legislation similar to the credit card accountability, responsibility and disclosure act of 2009, introduced by the Obama administration in the United States. The NDP's push for Canada, which has the strongest banking system in the world, to junk its banking system model for that of another country is odd at best.

I suggest the NDP listen to the words of Paul Volcker, chairman of President Obama's economic recovery advisory board. He envisions a U.S. banking system that, “Looks more like the Canadian system than it does like the American system”. Better yet, I suggest the NDP listen to the words of President Obama, who stated:

—one of the things that I think has been striking about Canada is that in the midst of this enormous economic crisis...Canada has shown itself to be a pretty good manager of the financial system in the economy in ways that we haven't always been here in the United States. And I think that's important for us to take note of...

I would like the House to note that the credit card accountability, responsibility and disclosure act of 2009 was not introduced by the Obama administration. This is not some point of debate; it is a fact. It is a fact that is pretty easy to verify. Those at home watching and are near a computer should take a minute to Google it. They will find the act was introduced by the senator from Connecticut, Christopher Dodd. Mr. Dodd is not a member of President Obama's administration.

I also did a little research, and by “little”, I mean about five minutes, which the member for Sudbury could have and should have done. I quickly discovered that Senator Dodd first introduced the bill in the 108th Congress on July 22, 2004. I believe he has reintroduced it every congress since. I do not have to Google to remember that it was not the Obama administration that was in power back then, but rather it was the Bush administration.

How and why is the member for Sudbury claiming a proposal that a Connecticut senator first introduced in 2004 during the Bush administration can now be called an initiative of President Obama's administration? It was not and it cannot be. It was just some sloppy research that is unbecoming of Parliament.

In essence, what we are debating today is basically an American senator's private member's bill. The senator informs us:

This bill has the support of a wide array of consumer advocates and labor organizations, including...Connecticut Public Interest Research Group, the Connecticut Association for Human Services...the National Council of LaRaza, the Service Employees International Union, and the U.S. Public Interest Research Group.

Indeed, Senator Dodd is pretty adamant that this bill, “Is what the American people and the people of Connecticut are demanding”.

I bet people are wondering what all that has to do with Canada. Luckily for the Parliament of Canada and the people of Canada, according to the logic behind today's NDP motion, all of Senator Dodd's colleagues in the Senate who he mentioned, along with those American-based consumer advocates and labour organizations as well and the people of Connecticut, were kind enough to consider the impact and the effects the bill would have on Canada. This would be funny if it were not actually being debated in this Parliament in Canada.

Clearly, I suggest for the member for Sudbury that Senator Dodd and company did not talk to Canadians about his bill, and that means this bill was not designed for Canada's superior financial system.

Some will suggest that does not matter, that it is the broad intent of the proposals in the bill that matter. I respectfully disagree. I think it does matter. Canadians did not send us to Parliament to merely copy and paste legislation from another country, as much of a great neighbour as that country may be. Canadians want their elected representatives and their federal government to develop legislation that takes into account their needs.

With all due respect to the Connecticut Public Interest Research Group and the Connecticut Association for Human Services, relying on consultations done with the groups that operate in different counties does not and cannot accurately reflect the needs of Canadians.

The motion is especially jarring because it essentially discounts and ignores committee hearings that are taking place or are about to take place in Canada's House of Commons and in the Senate and the recommendations or suggestions that those hearings could provide and replaces these with a made in Connecticut proposal. I would suggest that it is ill-advised to buy legislation off the shelf.

However, what can one reasonably expect from the NDP? When it comes to reflecting the needs of Canadian consumers and investors, the NDP members have gone beyond simply failing. They have been missing in action. They clearly have not been doing their homework. They have developed a pattern of voting against every major initiative that this government has brought forward to protect consumers, improve financial literacy or to help investors.

The most obvious example is today's motion, which claims the NDP wants legislation introduced to allow the government to protect credit card consumers. In fact, we already did that and the NDP voted against it.

Specifically, our economic action plan announced that our Conservative government would enact regulations to strengthen the disclosure requirements for federally regulated financial institutions that issued credit cards. This would allow consumers to benefit from clearer and simpler summary information on credit card application forms and contracts and from clearer and more timely advance notice of changes in rates and fees.

Catherine Swift, president of Canadian Federation of Independent Business, appearing before a Senate committee, lent her voice in support of such a change, explaining:

Who reads fine print? My son recently had a card. He hates it when I look into anything because it drives him mad, but I found out that he was paying 25-per-cent interest. I told him to cut the card up immediately....

That is one reason why we saw recommendations in the federal budget for consumers to be better educated on financial matters, and for more proactive dissemination of this kind of information. When consumers receive a long document with small print accompanying their credit card, I would argue not many people are looking out for their own interests. They end up paying a lot more money than they need to.

We are not done, though. We will also enhance consumer protection by limiting business practices that do not benefit consumers. For example, we will require a minimum grace period on new purchases made with a credit card and move to improve the debt collection practices of federally regulated financial institutions.

As I mentioned, the changes that were proposed in the budget were significant. They were developed in Canada in response to needs and concerns of our Canadian market and applauded by public interest groups based in Canada, groups like the Public Interest Advocacy Centre, which noted “reaction to the fact the government is moving in this direction is a positive one”.

Again, did NDP members support any of these measures to protect consumers? No, they voted against them, a vote of opposition that they have yet to explain to Canadians. However, it does not stop there.

The pattern of opposition continues and extends to improving financial literacy to ensure Canadians have the knowledge to make informed financial decisions. Financial literacy, the ability to understand personal and broad financial matters, to apply that knowledge and assume responsibility for one's financial decisions, is becoming an increasingly vital life skill for Canadians.

We had recognized from the start of our government, and we have been actively supporting initiatives to improve it since.

Starting in budget 2007 and carrying on into budget 2008, our Conservative government made investments in new funding into the Financial Consumer Agency of Canada. I encourage all Canadians to visit its website at www.fcac.gc.ca. This is very important in helping to improve financial literacy in Canada, but both times the NDP voted against that funding. The pattern continues.

In budget 2009 we made a decision to build on those previously mentioned investments by committing to an independent task force to work towards a national strategy on financial literacy. The task force will include representatives of business, education, volunteer organizations and academics and will be supported by a federal secretariat. I note for the member for Sudbury that this initiative, along with our government's broad efforts to improve financial literacy, was in fact praised by a member of the Obama administration.

Let me quote John Hope Bryant, vice-chair of President Barack Obama's advisory council on financial literacy, who said:

[The Prime Minister's] government has taken some important steps in this direction [of improving financial literacy].

In 2007, his government mandated that the Financial Consumer Agency of Canada begin addressing financial literacy matters. Funding was provided in the subsequent federal budgets.

However, in fiscal 2009, the Canadian government['s]...commitment to form an independent, multi-sector task force to develop a national strategy on financial literacy is the first step in a process that could help Canadians make better financial decisions.

He continued further:

It could also help Canadians better weather the economic storms that will inevitably blow through the global economy from time to time.

Again, despite the obvious benefits of such an initiative, the NDP voted against it. This appears more like the anti-consumer protection agenda of the NDP.

We see this also in the lack of support of a new national regulator to support consumers or investors of securities. This is an issue that many people often do not understand at first glance, but as it is explained they quickly understand why improving Canada's securities framework is so vital.

We are an investing country, plain and simple. Canadians own RRSPs, equities, mutual funds and other investments. These nest eggs represent Canadians' financial future. However, investors in Canada are not protected to the degree that they deserve. Canada is the only industrialized country without a national securities regulator. Instead we have a patchwork of 13 separate securities acts and regulators, with no coordinated enforcement to maximize investor protection.

In the words of the National Union of Public and General Employees, an organization often aligned with the NDP:

Canada is practically the only advanced country without a national securities regulator. Instead, the regulation of corporate fraud and insider trading is left to ineffective provincial securities commissions, each seeming to vie with the others for the title of the weakest sheriff in town.

Another prominent organization that often sides with the NDP, the Canadian Union of Public Employees, has also declared that “Canada's securities...regulators have a dismal record...Canadians have been embarrassed...that regulation and enforcement of securities crime in Canada is so weak”.

No wonder people like Erin Weir, the United Steelworkers economist, has noted that he is “quite supportive of a national securities regulator...I do think it would be good to have”.

They understand that an improved, national regulator would strengthen both regulatory and criminal enforcement by focusing accountability, improving allocation of resources, and ensuring consistent sanctions and enforcement priorities.

No wonder the IMF declared:

Canada is currently the only G7 country without a common securities regulator, and Canada's investors deserve better.

Our Conservative government agrees with that, that Canada deserves better, and has been aggressively working on establishing that national securities regulator.

Where does the NDP stand? We guessed it. The NDP members continue in their pattern of voting against protecting consumers. What is worse, they seemingly have blinders on. They have demanded in a House of Commons vote that our government immediately abandon even considering the idea.

The NDP finance critic, the member for Outremont, ignoring the pleas of the labour organizations that I just spoke of, claimed Canada's patchwork system was “working fine”.

Let us review today's motion that is before us.

The NDP wants to abandon Canada's banking model, ignore Canadian parliamentary committees currently undertaking studies on this issue, and adopt a Connecticut senator's private member bill from 2004 that they incorrectly believe was introduced by President Obama. All the while, the NDP continues to oppose every single initiative we have introduced to protect consumers and investors and to improve financial literacy.

I will let that record speak for itself and finish by quoting my dear colleague on the finance committee, the esteemed Liberal finance critic from Markham—Unionville, who said:

The fundamental point about the NDP is that those members do not understand economics. They never understood economics and they never will understand economics. In effect, the NDP is mired in a time warp in the 1960s...It has no vision...and no clue...which is why that party will remain a marginal protest party...The vast majority of Canadians want nothing to do with a party of economic Luddites, which is why that party is marginal, why it will remain marginal and why it is not taken seriously by the people of Canada.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I am glad I can put two words together after those last few comments. I also want to thank the hon. member for giving me some research tips on how he found out about this bill. It is also talking about what we can do in Canada for Canadian consumers. I am going to offer some research tips to my hon. colleague.

Instead of googling, I suggest he maybe take a walk down Wellington Street to the Rideau Centre and talk to consumers who are paying with their credit cards and then realizing that they are being gouged with a 25% interest rate when they have to pay their bill. How about taking some research down to the local food bank and seeing families that are having to use the food bank because they are unemployed? Right now, their credit cards are maxed out as well because they do not have EI coming in. We talked about EI problems here earlier. That is some of the research I would like to see the hon. member doing as well.

In terms of being specific, I wonder why the hon. member has targeted consumers as being at fault for using a credit card and having to pay a high interest rate, that they should know better. Increasing the font from 12 to 14 is not giving anyone any more information. Maybe he can explain why his government seems to think it is consumers, not credit card companies, who are at fault for skyrocketing interest rates.

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, earlier today I asked the hon. member for Sudbury if I heard him correctly when he suggested that interest was charged on credit cards even if the payment was submitted on time. Again he is assuming that all Canadians default on their credit cards. That is not a fact. The majority of Canadians pay their credit cards off on time.

However, our concern, as I referred to in my speech, is that we need to improve financial literacy in this country so that all Canadians understand that when they accept a credit card, there is a responsibility that comes with that card, as there is with anything. I am not sure whose fault it is, but we as legislators need to make sure we provide that education for Canadians so they understand that they do not have to possess a credit card that carries a balance at the end of the month.

If they are credit-worthy customers, they can go to their bank and get a line of credit. There is a charge because that is a service provided by our financial institutions.

One still needs a credit card to book a hotel room and flights. We understand that credit cards have become a piece of our lifestyle, but we do not have to pay interest on them.

There is some responsibility that comes with accepting a card. I agree with the hon. member that there needs to be more understanding. There needs to be more clarity, and that is exactly what we put in budget 2009: the ability for the Minister of Finance to increase financial literacy and make sure we have plain and simple information that goes out with that card so that people understand what their liabilities are and what the value of having that card is.

That is what we need to do. We do not need to overregulate Canadians to take away an option for access to financing and credit if individuals wish to use that. In this time of recession, we need to make sure that we provide every way we can to make sure that Canadians can continue to receive the financing they need to run their daily lives.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the parliamentary secretary certainly is correct in terms of public education, but that education, in my view, should also include information about how serious this problem has become. People are hurting. An hon. member earlier referred to the hook to draw people into this game and to suggest that a minimum payment is okay, not realizing that there is interest that the next month becomes compound interest, et cetera.

The parliamentary secretary, to get to the point of the question, is assuring Canadians that there are provisions in the budget so that the finance minister has the tools to do certain things. However, we have not heard or seen anything yet. Maybe the parliamentary secretary could assure Canadians that the government is in fact going to take action on this and do all the things he said would be done, before the end of the year.

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, that is a good question. We have been working very seriously at this. We are putting in place, soon to roll out, the panel we were referring to that will provide advice not from Connecticut, not from the Obama administration or some other administration, advice for Canadians on how we need to improve literacy and awareness of the responsibilities that come with possessing a credit card.

I need to raise another topic that I did not have time to address in my speech: the fact that, before the budget, we went out and communicated with Canadians and asked them their opinions and what they needed in the budget. We heard back from one opposition party, but unfortunately, from the Liberal Party and the NDP we received no suggestions.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, I would like to thank the parliamentary secretary for his very insightful speech. I have some questions.

Education is very important. Constituents in my riding of Kildonan—St. Paul have complained about the use of credit cards. People were surprised, because they did not have the education. Could the parliamentary secretary please expand on some of the financial products that consumers will be made aware of in a very clean, concise manner, and the roles and responsibilities of the Financial Consumer Agency of Canada and the impact that will have on consumers' daily lives?

In this busy world, I find that people need three or four seconds of education on some things because they are so busy running from place to place with all their roles and responsibilities as family members. This is extremely important. The financial literacy aspect of making sure constituents are aware of the financial products and what they are getting themselves into when they get a credit card is of paramount importance.

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, I would like to take one moment to congratulate the hon. member for Kildonan—St. Paul for the hard work she has done on human trafficking and the passage of that private member's bill yesterday. We applaud the hon. member.

Let me refer to a couple of the items that were in budget 2009 specifically to do with consumer protection. As part of this process, we are planning on improving the disclosure requirements for credit cards, and limiting business practices that are not beneficial to consumers. Rather than going through this long-drawn-out motion from Connecticut today, we have actually stepped forward with what we feel is a much stronger, less regulatory and onerous process than what the NDP would suggest.

With regard to limiting business practices to only those that are good for consumers, we have already put in place the necessary legislation.

If I could speak very quickly to the Financial Consumer Agency of Canada, it is an unknown agency to most of us. It is very beneficial and I would encourage all Canadians to go to the website. There is great information there with which people can help protect themselves.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I would like to share my time with my colleague, the hon. member for Nipissing—Timiskaming.

I noticed that my colleague, the parliamentary secretary, quoted some rather negative words from me on the NDP about Luddites or never knowing economics. I guess I cannot deny having said them but they sounded a little bit harsh. I am sure I had equally harsh words for the Conservatives.

However, I should at least clarify to the House that if I said those words about the NDP not understanding economics or being Luddites, those words were not intended to be directed to the provincial wing of the New Democratic Party, but solely to the federal wing, because the fact of the matter is that over the past decades, the NDP provincially has gained power and some provincial NDP governments have been very good. In fact, they have been rather like Liberal governments. We think of Gary Doer and Roy Romanow, excellent leaders with excellent economic policies.

Therefore, the ignorance on economics and the Luddite nature of thinking is limited to the federal branch of the party, and partly that is because the party has never had power. It is kind of circular. They have never had power so they are Luddites, and they are Luddites so they will never have power.

That being said, I would indicate that notwithstanding my comments toward the NDP, which were meant in a good spirit, the Liberal Party will nevertheless be voting in favour of the NDP motion.

It is not as if we agree with every word. In fact, much of it is misguided and much of it seems to rest on the false assumption that Canada is the same as the United States and that every problem in the United States, especially now that President Obama is in charge, is exactly the same and has the same solution in Canada. I can tell members that, as one who has worked in the banking sector for a little while, the Canadian banking system is radically different from the U.S. banking system, so solutions that are appropriate for the U.S. are not necessarily appropriate at all for Canada.

I suppose that is a quibble because we do think there are major issues and the NDP is raising some of these issues in its motion. There are issues surrounding credit cards, on interest rates, on information disclosure and on fees. We believe there needs to be greater clarity for consumers, more proactive disclosure, and greater protection for Canadians. Some of the issues are clearly important and we do think that some actions are needed.

That is why the Liberal Party has assumed the lead role with respect to inquiries before parliamentary committees, that is, not only the Senate committee but also the House of Commons standing committees on Finance and on Industry, Science and Technology. We will therefore hear the witnesses, examine testimony and reach our conclusions from those procedures. We shall see what the witnesses have to say.

However, we do know at this point that there are many complaints out there about the credit card system. We think a number of those are likely to be justified, so we in the Liberal Party have been pushing for the issue to be heard before parliamentary committees in both the Senate and the House. We will be listening to those witnesses with interest and based on that information draw our own conclusions.

Let me say a few words about why the American system is different from the Canadian system and why the measures that may be appropriate for the United States may not be appropriate for Canada. Canada has been characterized by our national banking system for many decades, whereas the United States has been characterized by a more dispersed banking system. Study after study has shown that credit card spreads and other spreads are indeed higher in the United States. Delinquency rates are higher in the United States.

Canada has not had the same kind of subprime mortgage crisis. It has to some degree, but not nearly to the same degree as in the United States. In particular, our banks did not extend credit and get into complicated or risky derivatives, subprime mortgages to nearly the same degree as was the case in the United States, so it is largely for those reasons that our banking system has not been hit with insolvency and loan losses in the trillions of dollars, which we in this country have not seen.

I should also point out that the Conservatives cannot claim credit for the solidity of the Canadian banking system. I would argue that part of the explanation was the decision of the Chrétien government not permit mergers. Another part of the explanation is that we have had stronger regulation over many decades than was the case in the United States. So for all of those reasons we are fortunate to have a solid banking system in this country which, while certainly not universally loved, has performed much better than in the United States.

I say that to provide a little bit of perspective, but at the same time we are supporting the motion. We believe there are significant problems in the credit card sector that have to been addressed and that is what we Liberals are doing along with other parties. In committees we will be hearing witnesses, examining possible abuses, examining the possible need for greater clarity for consumers, greater protection for Canadians and proactive disclosure.

While we do not support every item in this NDP motion, we can support the spirit of it for the reasons I have given and for that reason the Liberal Party will be supporting the motion.

[Malcolm Allen, NDP, Welland, ON]

Mr. Speaker, I thank my hon. colleague for his comments this morning and indeed deciding to become a Luddite since he has decided to support this motion. Perhaps there is a pair of Birkenstocks somewhere for him if we can find it.

When we talk about people in those terms, sometimes we should take great pride in that because when the other parties were musing about banking deregulation, which they seem to have forgotten in the midst of all this uncertainty, when the banks were talking about it, there were some parties in the House, certainly not New Democrats, who were really musing about letting that happen because that is where international commerce was headed and maybe we should look at deregulating the banks and letting them merge and letting American banks come into this country. New Democrats led the way and said that is not a good idea and we should not deregulate the banks. History has proven us to be correct.

Now, of course, the Liberals and Conservatives want to share in that joy. If we were to allow that to happen, we would be in a much greater disaster than we are today when it comes to the financial situation. Credit card fees would probably be that much higher and defaults even greater. If the member could comment on that, I would appreciate it.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, allowing that to happen reminds me of what Mr. Chrétien used to say, “If my grandmother was a bus”. We can have all sorts of hypotheticals.

I guess the NDP would like to claim credit for turning down the bank mergers, but I would like to remind the hon. member that it was not an NDP government at the time in Ottawa but it was a Liberal government under Jean Chrétien that turned down the bank mergers.

I do not mind doing a bit of a mea culpa because 10 years ago I worked for one of those wannabe merged banks. I remember the attitude at the time. We wanted to kick butt. We wanted to grow up to be like City Bank, and we have seen what happened to City Bank.

The Liberal government did the right thing. It was not an NDP government that said no to bank mergers. It was a Liberal government that retained a solid regulation and resisted the trends that we saw south of the border for increasing deregulation of the whole financial system. It was for those reasons. The member can thank a previous Liberal government for the Canadian banking system remaining sound.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, I would like to thank the hon. member for Markham—Unionville for his excellent analysis. I am glad we are not in the same position as the United States.

Within this economic environment, could the crisis have been avoided? For example, people access credit because they do not have jobs. Could the government that inherited the best economic record from the Liberals, an unprecedented surplus of $13 billion, that inherited the lowest unemployment rate and the envy of the G8, have done better in protecting the jobs of today and creating jobs of tomorrow by investing in innovation and by ensuring that we protected jobs in the auto, forestry and manufacturing sectors? The government has closed the barn door after the horse has left.

I would like to have the member's analysis of how this could have been avoided because people only access credit cards and get into trouble when they do not have jobs.

Before the member answers, there are students from Woodbine Junior High School who have come to watch the debate.

[John McCallum, Liberal, Markham—Unionville, ON]

Maybe that is unparliamentary.

[The Deputy Speaker, Conservative, Andrew Scheer]

It is unparliamentary, but it may not have been intentional.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I thank my colleague for what is truly an excellent question. It is the best question I have heard in a long time.

I might begin by giving the House some hot news. Just minutes ago the Governor of the Bank of Canada said, “--the global recession has intensified...since the Bank's January Monetary Policy Report Update”. I further quote, “--the recession in Canada will be deeper than anticipated--”.

My answer to the member's question is, yes of course, the Conservative government could have done more. My time is limited but I will give the member just one example.

Back in November of last year, when virtually all the industrial countries had already taken action to stimulate the economy and pumped billions into the economy, what did the Conservative government do? It came up with an economic update with negative fiscal stimulus, cuts in government spending, and other unrelated activities like attacking women's pay equity. The delay--

[The Deputy Speaker, Conservative, Andrew Scheer]

Resuming debate. The hon. member for Nipissing—Timiskaming.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Mr. Speaker, I am pleased to participate in this debate.

The NDP motion which we are discussing today calls on the Canadian government to establish comprehensive legislation similar to the Credit Card Accountability Responsibility and Disclosure Act of 2009 which was recently introduced by the Obama administration in the United States, although the parliamentary secretary claimed differently. He claimed that it was the Bush administration that introduced it. Only a Conservative would stand up and defend Mr. Bush, but that is his prerogative to do that. I just find that very interesting.

While I agree wholeheartedly with the need to protect Canadian consumers, particularly those who are most vulnerable in tough economic times, we must assess whether or not Canadians face the same threat that Americans do before determining whether or not to apply an American solution here in Canada. In other words, we cannot assume that what works south of the border will work here. While it would be foolish to object to protecting Canadian consumers from sudden interest rate increases and account changes, abusive fees and penalties and aggressive solicitation, it is yet unclear as to whether or not Canadians actually encounter exactly the same problems to the extent that American citizens do.

This is why we as Liberals have taken leadership on the issue by initiating three separate studies in order to make that determination. A study by the Senate committee on banking, trade and commerce is currently under way, and separate reviews by the finance and industry committees are set to begin in May. Each of these is designed to examine different elements of the credit card and debit card industries to determine what measures may be necessary in order to further protect Canadian consumers and merchants.

By taking a more broad-based approach, one that includes protecting merchants as well as consumers, the idea is that we as Canadian lawmakers would be much better suited to address the issues that currently face Canadians rather than simply applying a cookie cutter approach that worked in the United States. I might add that this legislation, although it looks very good, is unproven in the United States.

Here in Canada, for instance, consumer interest rates, late payment penalties and repayment terms are determined by banks and not the credit card companies themselves. As such, if we focus exclusively on the credit card companies and neglect the study of the banking institutions that actually establish the terms of the credit card account, then we would be doing a huge disservice to the Canadian public.

It is also worth noting that the proposals in the NDP motion which we are currently debating may not adequately address other concerns. For example, a recent poll commissioned by the Canadian Federation of Independent Business revealed that over the past 12 months, no fewer than 22% of Canadian credit cardholders have received additional cards from companies such as Visa and MasterCard with features such as travel points and extra insurance.

Getting all this and not really asking for it really is a problem. People are being given stuff which they sometimes take. They think it is a great idea and they run with it. They think that because they got it, they deserved it. It really does impose a burden on people who would not otherwise have applied for it, or have done their homework and thought that they really could not afford it but they took it anyway. That is really where one of the issues lies. It is one of the problems.

There is also mounting evidence that the so-called premium credit cards are now being directed toward low-income, elderly and otherwise vulnerable Canadians. For many consumers, they often do not know that they are being charged higher rates until they actually receive their bills.

The concerns in the United States may not be the same as the ones here. When we talk about our banking system, we do have a nice solid banking system that works. We were not plagued by the subprime problem, as was mentioned earlier. Those are issues that all have to be taken into consideration when we are looking at the legislation.

The legislation is appropriate and it may work, but it may have to be modified in order to adapt to Canadian realities. I mention this because while the motion we are currently debating stipulates consumers should be informed of the terms of their accounts, there is nothing in it that would prevent credit card companies from offering cards and upgrades to those people without being asked. I mentioned this earlier.

While there may be some people who feel that regulation in the electronic payment industry could be harmful to Canadians, and that is always something that is out there, I believe the only way to determine this for sure is to take a comprehensive approach to the issue, rather than trying to implement a one-size-fits-all solution.

The NDP motion proposes that the U.S. legislation be applied in Canada. Canada's financial system is much stronger, as I mentioned earlier, than the United States' financial system. It is important to recognize that the problems consumers face with credit cards in the U.S. do not necessarily apply to all Canadians.

One of the problems I also see here is that, before the Prime Minister was in politics, he was opposed to what we had done with the banks. He wanted them to be able to do as they pleased. Now he boasts that we have a banking system here that is far better than anywhere else in the world. This leads me to wonder whether one can have confidence in a prime minister who changes his mind according to his circumstances, especially when something so fundamental is at stake. Before he entered politics, he wanted to take away all regulation of the banking system, and now he is congratulating himself on this system.

So what are we to think of this Prime Minister? Is he serious? Does he say things just to get votes? These are questions Canadians need to ask themselves. Who will protect us from the credit companies or banks? Who will protect them as well? If they had gone in a certain direction, there would have been problems. We have to think of what this Prime Minister believes, and what the Minister of Finance believes.

My Liberal colleagues and I believe there are significant issues that need to be examined with respect to credit cards, such as interest rates, disclosure of information and fees for consumers and retailers.

While the Conservative Party's 2008 election platform pledged to protect consumers with stronger competition laws, it contained no mention of credit cards or their fees.

In the 2009 budget, the government pledged, without giving details, that it would move to limit “business practices that are not beneficial to consumers”, noting that one measure would be to require minimum grace interest-free periods on new purchases.

More recently, the finance minister announced the creation of an advisory committee on finance to “ensure the availability of financing to Canadian businesses and consumers to support the economy and encourage growth”. While the finance minister points to this work as an advisory board in response to questions about credit card rates and fees, it is unclear how the committee's mandate relates to specific issues like interest rates and interest rate increases, payment fees, account transparency and other issues listed in today's motion by the NDP.

My Liberal colleagues and I will continue to pursue the tough questions regarding credit card companies and financial institutions to ensure that Canadian consumers are well-informed and are being treated fairly.

I want to touch on one area that is very important, and that is the interchange fees that are charged to merchants. Fees can vary from one card to another. I think of a small merchant sitting there waiting for business. When there is a sales transaction and a card is used, he does not have the right to turn it down, yet those interchange fees are going to be charged to him. If one card charges 2% and another charges 6% or even more, it is very difficult for that small merchant to plan what his profits are going to be. I am not talking about just protecting the merchant here. That merchant provides jobs. Jobs are what we need in this economy. If we are not protecting that merchant from charges that he is not aware of, then we are killing jobs. This is something the government has to understand.

In order to ensure that consumers are protected, I strongly believe that more information is needed. Once these studies are completed, I think we can take a look at it and ensure that we have everything we need to help the average Canadian.

In the meantime, we will be supporting the NDP motion put forward by the hon. member for Sudbury, because we believe in protecting Canadians as much as possible. Each Canadian deserves to be protected when it comes to finance, safety or any other issue that we have rights to.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, there is one thing I would like to try to clarify. There has been a lot of talk about how this is an American bill, a private member's bill from the United States. First, as the parliamentary secretary was outlining, it is a private member's bill which does not exist in the United States. That needs to be clarified.

In relation to the speech from my hon. colleague from North Bay, let me read part of the motion:

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--

This is not the same act that everyone was talking about earlier. It says “similar to”.

Why do the Liberals not think it is important to have a Canadian version of something that has potential to protect consumers? I would like to hear the member's comments on that.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Mr. Speaker, that is a very good question that deserved to be asked.

Within the next six months is a perfect time and it does work out. What I do not like is using a cookie cutter approach, taking something from the United States and implementing it in Canada. I want to make sure that was clear. Obviously, this would not be doing that. It would be taking the consultation that is being done in the finance and industry committees, as well as in the Senate, and making sure we conduct a thorough study. By knowing what is going on, we can better put together legislation that would protect Canadians while understanding what is true to us.

All too often what happens is we as Canadians get information or stuff thrown at us that was developed in different countries and we try to modify it. The fear I had and one of the things I wanted to make clear is that we not bring something forward that was developed elsewhere and put it in place here. It is something we have to develop as Canadians. We can use the foreign one as a model and ensure that we study and understand it and know what is working and what is not working.

One point I wanted to make is that down in the United States this is not a proven model. To say we will implement it is not the right thing to do. The hon. member was correct. What we need to do is take a solid look at what we have in Canada, put it together and make sure it reflects the reality of Canadians.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, I would like to thank my hon. colleague for his thorough analysis.

We heard the member for Markham—Unionville quote the Governor of the Bank of Canada. With the deepening economic crisis and Canadians going through the recession, how would this help the people who need access to credit, for example, who need to put a roof over their heads or need money for food? How do we find relief for these people? I am sure we have all heard complaints from constituents who have lost their jobs that they do not have any money. How does this help protect those who are vulnerable?

The government has spoken about the economic stimulus and that it will create jobs, but not a single job has been created. People need money and jobs. How does the hon. member think this will help the vulnerable?

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Mr. Speaker, one of the main areas we are looking at as far as helping where the economy is concerned is small merchants who really do not know what interchange fees they are going to pay from day to day or from card to card. We need to make sure that the merchants are healthy. Merchants employ people. When people have jobs, they can purchase goods, feed their families, earn a living. That is what we want in Canada. We want people to be able to pay their bills and do it independently.

On the other hand, the member talked about the most vulnerable. One of the areas I think is most important is not to allow credit card companies to prey on vulnerable people by sending them cards they do not qualify for, sending them items they have not asked for or raising limits without having alerted them or asked their permission to raise them. People will often get letters from credit card companies congratulating them because their limit has been raised by $1,000 or whatever. If people have not asked for it, should it actually be extended? That is the type of question we should be asking.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, I will be splitting my time with the member for Saint-Bruno—Saint-Hubert.

Obviously, a lot of people are worried about credit card usage fees imposed on consumers. I said “obviously” because right now, two committees, the Standing Committee on Finance and the Standing Committee on Industry, Science and Technology, are considering the matter and will be reviewing these issues very soon.

Also, witnesses are appearing before the Senate to air various points of view on a problem that consumers and merchants have known about for a long time, a problem that has gotten worse lately.

The New Democratic Party's motion talks about consumer protection, but the motion moved in the Standing Committee on Finance also mentions merchants, who are also important players, subject to a rather complex process for credit card usage. In a way, sudden fee increases hurt them too.

If this hurts merchants, in the end, consumers will wind up paying for it. That is why we agree that this motion should call on the federal government to adopt measures to better protect consumers, but we must not forget that merchants are part of the process too.

There is a lot we do not know. People do not know everything, and banks do not tell us everything about the credit card acquisition process and related regulations. It is complicated, and that is why people tend not to read all of the fine print in the contracts they sign.

Under the current system, an individual can acquire a credit card and use it to pay a merchant. The merchant then has to deal with a credit card company, such as VISA, as well as with what is known as an acquirer, which provides a data transaction system. Credit card issuers, often banks, are also involved.

Popular imagery always focuses on the huge profits that the banks have been making for years, but I think it is important to again point out the full context and consider the fact that a great deal of information and education must be provided about the credit card system, in order to fully understand who is making profits, how companies are able to increase them and why they do so.

We in the Bloc Québécois believe that the federal government must act. We therefore support the principle of this motion, so that in committee we may examine more closely the various issues we are dealing with today. However, although we support the principle, the federal government must definitely be extremely careful about respecting provincial jurisdictions and Quebec's jurisdictions if it takes any legislative action.

For example, since 1971, Quebec has had the Consumer Protection Act, which already provides a framework for the contractual agreements between credit card companies and consumers. If this motion passes and the federal government decides to go ahead with legislation, it will be important to respect Quebec's expertise and competence in this area. Furthermore, several incidents since 1971 have helped the Quebec government develop its competence in this area, which has even been recognized in a Supreme Court of Canada decision.

To analyze the overall situation, it must be seen in a very broad context. The current economic and financial crisis clearly shows that debt is a major problem in Quebec and in Canada. This situation is even worse for our neighbours to the south. Credit that was granted with very little background checking is what caused such massive debt and the current global crisis. This is prompting parliamentarians to have a look at the situation and think about what we can do to protect consumers and merchants.

We had some proof of that yesterday when the Bank of Canada once again reduced its key interest rate to 0.25%, which is an unprecedented low. For a long time, the spread between the Bank of Canada's prime rate and the rate financial institutions charge their clients who use credit cards has been far too great. Bank rates hover around 18% or 19%, or even 20%, when we now have a key interest rate of 0.25%. This is a disturbing problem that we must examine carefully.

Why are we allowing banks to continue to rake in such huge profits at a time when consumers are increasingly vulnerable? The marketing techniques used by banks—a Liberal member was just talking about premium credit cards—have once again compounded the problem of the appeal for certain consumers. In fact, many consumers consider the use of a credit card issued by a bank and associated with a given product a way of profiting from their purchases.

However, we know very well, with regard to the matter of credit cards, that banks issue them in the hope that the holders will not pay the full balance of their purchases within one month. That is where the banks make their huge profits. Consumers are not very well educated about that. There is also a lack of knowledge about the fees charged to merchants who, quite often, do not understand what they are being charged and why their fees increase.

Therefore, the Bloc Québécois supports this motion in principle but the government will have to exercise caution before going any further and be truly cognizant of the fact that there are other competent authorities in this matter, such as the provinces.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, I would like to start by saying that the NDP motion is a good initiative. It is good that we in this House are finally agreeing to debate the day-to-day problems people in our ridings are experiencing because of the economic crisis. Our constituents are being hard hit by this economic crisis, especially since they have been grappling with these problems for some time. Since the Conservatives came to power, many people in the manufacturing and forestry industries in Quebec have been laid off, and communities are reeling from those layoffs. People are getting poorer, and unemployment is on the rise. Obviously, this is having an enormous impact on household debt, especially for young couples.

I would like to talk about the NDP motion before I speak about the economic crisis and the solutions proposed by the Bloc Québécois. This is a well-meaning motion, and I would just like to remind this House what it is calling for:

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:

Seven paragraphs follow, outlining the proposed measures. I will read the first one, which is important:

(a) protect consumers from “any time, any reason” interest rate increases and account changes;

This paragraph is very interesting, but it is the only one that does not encroach on the jurisdictions of the provinces, especially Quebec. Since 1971, Quebec has had a Consumer Protection Act that governs contractual agreements between credit card issuers and consumers. It is immensely important to respect Quebec's expertise and jurisdiction. As my colleague from Saint-Maurice—Champlain explained so well, Quebec's jurisdiction in this area may have been challenged, but it cannot change.

The other measures proposed in the motion introduced by the NDP member for Sudbury on this opposition day read as follows:

(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—;

(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;

(h) protect young consumers from aggressive credit card solicitations.

All of this falls under Quebec's jurisdiction.

It is true that debt is a major problem in this country. It is also true that the difference between the Bank of Canada's key lending rate and credit card interest rates has been growing. I will talk more about that later because that gap is widening: 0.25% and 25% is scandalous. It is true that the big banks and financial institutions are the ones benefiting. We are eager to see their quarterly statements. Not all of the items in the motion fall under federal jurisdiction, as I pointed out earlier. However, I would like to see the federal government take action within its jurisdiction in this matter.

For example, item (a) would be a good place to start. The federal government could consider linking credit interest rates to the Bank of Canada's key lending rate with reference to the criminal rate under section 347 of the Criminal Code, thereby doing a better job of synchronizing the cost of credit and the key lending rate. There are several ways to go about doing this.

One way is to determine in advance the difference between the Bank of Canada's key interest rate and what a credit card company can charge and express that difference as a percentage, a multiplier or a number. For example, there could be a maximum difference of 5% or two to three times the base rate. Currently, at 25%, the credit card interest rate is 100 times the Bank of Canada rate of 0.25%, which makes no sense. The current economic crisis is to blame for this situation, and we have to do something about it. In this Parliament, we can correct this situation.

This is a provincial jurisdiction. Quebec's Consumer Protection Act contains strict requirements governing all kinds of credit card contracts. For example, credit card issuers must send consumers an account statement that includes information such as the account balance, the date, the description and value of each transaction, the date and amount of each payment and the credit charges. This extremely precise and detailed information lets consumers make informed decisions.

Section 128 of the Consumer Protection Act states that “Where the merchant has indicated to the consumer the amount up to which variable credit is extended to him, the merchant shall not increase such amount unless the consumer expressly applies therefor.” In addition, consumers must be given 30 days' advance notice of all changes.

Credit cards are very expensive at present, especially when issuers charge between 18% and 29.9% interest. I will not name these companies, because it is easy to find this information on the Internet. A rate of 29.9% is really excessive and outrageous, when the Bank of Canada rate is just 0.25%. This has to change. Of course, the credit card companies say that their rates are so high because their risks are high, but perhaps they should reduce their risks by tightening the requirements for extending credit.

This is not the first time the Bloc Québécois has been highly sensitive to the economic situation and its impact on consumers and citizens. In fact, the Bloc has brought forward a number of measures in that regard. One of the more recent ones was the action plan put forward on November 24. In this time of economic crisis, people really need help. This Parliament must adopt measures to help unemployed workers. In the November 24 action plan, the Bloc Québécois proposed realistic, specific and comprehensive measures.

A few years ago, my hon. colleague from Hochelaga introduced a bill in this House to prohibit banks from discriminating on the basis of social condition. That was another example of action taken by the Bloc Québécois. In addition, two months ago, my hon. colleague from Saint-Maurice—Champlain moved the following motion in committee:

That the Finance Committee conduct a study of the various debit and credit card transaction fees imposed on merchants as well as the standard and transactional practices that justify them and report its observations and recommendations to the House.

Credit card companies are still at issue, because they want to increase to 2% the fees they charge retailers when consumers use their credit cards. This is a terrible hidden fee for consumers. My hon. colleague from Saint-Maurice—Champlain wants the Standing Committee on Finance to take a very serious look at this matter. We hear a great deal of complaints from retailers.

I also moved a motion two years ago and four years ago, and I will move it again in this House. The motion would regulate bank fees.

I hope I have convinced my colleagues across the floor to vote in favour of this motion.