Mr. Speaker, late last year I asked this government when it would end credit card gouging. Families and small businesses across this country are still waiting for that answer. Last year this government rolled out its voluntary code of conduct for the credit and debit card industry. This code is little more than window dressing for Canadian consumers.
Who is benefiting from the voluntary code of conduct? Let us have a look.
For the full year of 2010, MasterCard reported a net income of $1.85 billion, compared with $1.46 billion in 2009.
National Bank kicked off the fourth quarter in December of 2010 with an earnings bonanza by reporting a profit of $287 million for the three months ending October 2010, compared with $241 million in the same quarter last year.
Scotiabank reported an increase of 21% in earnings over the same quarter last year, and its most profitable year ever. The fourth quarter saw the Bank of Nova Scotia earn $1.1 billion, and the annual profit total was $4.24 billion for all of 2010.
RBC did better than Scotia's record year, recording $5.2 billion in net income for the year, an increase of 35% from a year ago. The fourth quarter saw RBC earn over $1 billion in the latest three-month period.
Canada's fourth-biggest bank, the Bank of Montreal, reported last, and had a fourth quarter profit of $739 million, up 14% from last year. BMO's annual profit for 2010 was $2.8 billion, which was over $1 billion more than last year, or 57% higher than the 2009 annual profit.
Total profits for the big six banks in 2010 equalled $20.4 billion, smashing last year's record of $14.66 billion. That is $6 billion more in profits than last year.
Who is paying the price for this government's failed code? It is consumers and small businesses.
While the Conservative government feels it necessary to give corporations billions in tax cuts, it does not think that small businesses and retailers should be relieved of over $5 billion in mandatory credit card fees. That $5 billion represents the cost borne by small businesses for accepting credit cards and tracking transactions.
The big issue for retailers is the influx of premium cards--for instance, those that offer generous air miles. Consumers are lured to these cards because they offer a chance to collect points faster and reap rewards such as free flights, electronics and jewellery. The use of premium cards has risen dramatically since they first hit the market in 2008. That high-end plastic, such as Visa Infinite or World Elite MasterCard, costs more for retailers to process than other standard, gold or platinum cards.
Consumers do not know that their demand for freebies from the credit card companies is actually squeezing the profits of these small businesses because it is the merchants who really foot this bill.
Ordinarily, the cost per transaction ranges from 1% to 3% of every sale, whether the customer pays cash or pulls out a card. Premium cards require much more than that. Considering the razor-thin margins a competitive market demands, $5 billion is a lot.
How is the government's inaction on credit card gouging affecting Canadians?
Family debt is on the rise. The debt carried by the average Canadian household has hit $100,000, up about 78% from two decades ago. The debt-to-income ratio stands at a record 150%, meaning for every $1,000 in after-tax income, Canadian families owe an average of $1,500.
In summary, Canadian families cannot wait much longer. How indebted do families need to become before this government takes action to address the credit card gouging issue?