Mr. Speaker, I am pleased to have an opportunity to join the debate that has been put forward by the official opposition today.
I think a more useful debate that we could have had today is around the issue of the security breach and what exactly has been going on in our country. That would have been much more in keeping with our role here. As much as I support focusing on the consumer agenda, I do believe that our role as federal legislators is to focus on the bigger issues that affect all of Canada, like the security breach, which I am sure we will be hearing more about later today.
I am pleased to speak to the motion put forward by the member for Sudbury, calling on the government to include measures in the 2014 budget that would reduce ATM fees. The wording of the motion before the House is more nebulous than the party's position, which is to bring in a cap on ATM fees of 50¢ per transaction. That position is a change from his party's previous position, which was to outlaw bank ATM fees altogether.
I find it interesting that my colleague from Sudbury put forward a motion that is less precise than his party's position. Quite possibly he will want to speak to that to clarify the difference between the two positions. It is this lack of precision in the motion that leaves a lot to interpretation.
I will conclude my remarks today with an argument for a narrow interpretation of this motion.
First, I want to talk about prevalence and the cost of ATM services in Canada. I would also like to discuss the government's agreement with the banks for low-cost bank accounts and how these agreements relate to this motion we are dealing with today.
The market for ATMs in Canada is a big market. Prior to 1996, there was a clear lack of competition in Canada's marketplace for ATMs. In the early 1990s, the Competition Bureau investigated members of the Interac Association for anti-competitive behaviour. This investigation led to the Competition Tribunal issuing a consent order in 1996, which opened up the market for white label ATMs. That consent order also required Interac to permit surcharging for the use of its network.
Today, Canada has the second-highest number of ATMs per capita in the world, after South Korea. In 2012, there were more than 60,000 ATMs across Canada, and a third of those ATMs were owned by chartered banks.
While the number of bank-owned ATMs has risen steadily in the past 10 years, the use of ATMs is actually declining, as Canadians are clearly moving toward a cashless society. The number of deposits and withdrawals at ATMs has dropped almost 20% since 2005. Meanwhile, some ATM fees have gone up considerably. The Financial Consumer Agency of Canada monitors ATM fees in Canada, and according to the numbers provided by the agency, these fees can vary widely, depending on which ATM is being used.
For example, if someone uses an ATM that belongs to the financial institution where one has an account, using that ATM can cost anywhere from between $1, $2, or nothing at all. However, if someone uses an ATM that belongs to a financial institution where one is not a customer, then that transaction can cost anywhere between $1 and $6. If someone uses a white label ATM, which is an ATM owned by a private operator, one can pay up to $8 for that transaction.
Many Canadians, when they first started using those machines, did not realize the difference between Toronto Dominion Bank's machines and the Bank of Nova Scotia's machines. Then when the white label ATM was introduced, people had no idea of what they were being charged until they had made a few transaction. It was significant.
As Liberals, we recognize that affordable access to basic banking services is essential for all Canadians. We believe that the government has a legitimate role to play in establishing rules—and we did just that previously—that ensure Canadians can access a reasonable level of financial services at a reasonable cost. That is why, under the previous Liberal government, then finance minister Paul Martin introduced a framework to reform Canada's financial services sector.
As part of the many reforms that were made at the time, legislation was also passed that guaranteed access to basic banking services for all Canadians, including low-income Canadians. The reforms also established rules prohibiting banks from placing a hold on government cheques of $1,500 or less. They required signed agreements with banks to provide consumers with low-cost bank accounts at a cost of less than $4 per month, the affordable banking accounts. We also established the Financial Consumer Agency of Canada to monitor the banking sector, enforce these agreements, and help protect consumers.
Under the federal government's agreements with banks, the low-cost accounts include a free debit card, a free monthly statement, free deposits, and between 8 to 12 transactions each month, including ATM transactions, at no extra charge. That was the last time that significant reforms were seriously looked at, and those changes were brought in to protect consumers, especially low-income seniors. All of this was done at a cost of no more than $4 or less a month. These agreements are monitored and enforced by the Financial Consumer Agency of Canada and have the exact same effect as regulations. If the banks were to fail to live up to these agreements, the federal government could easily turn these agreements into binding regulations because of the legislation passed by our previous Liberal government.
As I said, under these agreements, most Canadians can avoid high ATM fees by using low-cost bank accounts. In fact, I know many Canadians who do not pay any ATM fees whatsoever, thanks to the work done by the previous Liberal government. Instead of paying high fees, they plan ahead; only use ATMs that belong to their financial institutions; use the cash-back service at participating retailers, of which there are many; and stay within the monthly limit of transactions that are covered by their low-cost accounts. I understand that the banks are committed to expanding the number of transactions included in low-cost accounts, and those discussions are ongoing. That is something that I believe all of us would support.
Poor implementation of this motion, though, could put these low-cost accounts at serious risk, or it could result in the imposition of higher fees on services that are not directly covered by legislation. A limit on ATM fees that effectively acts as both a price ceiling and a price floor could also mean that Canadians who do not pay any ATM fees now would then have to pay 50¢ per transaction. If this were to happen, there are Canadians who would be worse off.
A limit on ATM fees could also result in closing down ATM operators who provide a legitimate service to Canadians. After all, there are Canadians who are willing to pay a premium for this convenience. Some people prefer to use the white label ATMs in their buildings rather than go across the street or down the block to a bank-owned ATM. There is a white label ATM in this building, and there are times, where for convenience or time, I am sure many of my colleagues have used that ATM, even if they dislike the $6.50 or $4.50 they are charged. However, because of convenience and time, they end up using it. They are willing to spend a few dollars per transaction for that convenience.
Where Canadians have a choice of which ATM to use and avoid ATM fees altogether, is it appropriate for the government to get further involved, to reduce consumer choice and legislate ATMs out of business? Does the NDP also believe that government should outlaw convenience stores that charge more for milk than the grocery store down the road? At what point do we decide that we are interfering too much? I cannot believe that New Democrats would want that, of course, and I am sure they would not, but to do so would be a ridiculous infringement in the marketplace.
Canadians should have the choice to pay a premium for convenience. That said, there are some Canadians who live in communities, especially rural communities, without bank-owned ATMs. Not everyone has the option of planning ahead to avoid ATM fees. Instead, some Canadians only have access to higher-cost white label ATMs. These Canadians can face unfair ATM fees as a result of an uncompetitive marketplace. In rural communities where they do not have the option, the question should be, should it not be required that the major banks ensure there is a proper ATM machine, or that they look at what is being charged at white label ATM machines?
While some Canadians do face high ATM fees, I would urge the government to be careful in how it would go about limiting these fees. The government should be careful to avoid unintended consequences, such as raising the price for Canadians who currently do not pay ATM fees, eliminating a legitimate business model that provides Canadians with a convenient service, or reducing access to ATMs in communities that are already underserviced.
Let us go back to the wording of the motion. It states:
That, in the opinion of the House, Canadian consumers face unfair Automated Teller Machine (ATM) fees as a result of an uncompetitive marketplace and that the House call on the government to take action in Budget 2014 to protect consumers by limiting ATM fees.
If we ask ourselves whether all Canadian consumers face unfair ATM fees as a result of an uncompetitive marketplace, the answer clearly has to be no. Canada has the second most ATMs per capita in the world. In Canadian cities, there is no shortage of ATMs to choose from. As I said earlier, if a person lives in a community with bank-owned ATMs, one can plan ahead and avoid the ATM fees altogether.
However, if a person lives in a rural community that only has high-cost white label ATMs, there is an argument to be made that the marketplace in that community is not competitive. If the only ATM a person has access to charges $8 per transaction, he or she is clearly facing unfair ATM fees, which is what I believe my colleague was trying to profile today.
To make it clear: there are cases where I believe this motion should apply and cases where it should not. For example, if people are at a bar or an adult establishment that has a high-cost white label ATM and they do not want to walk across the street or down the block to their bank's ATM, then I do not believe this motion should apply to them. I do not believe that in such cases the government should step in and act as a nanny state to save people from themselves. They should be free to spend their own money how they see fit. However, if they are in a rural or remote community and their only option is an ATM charging $8 per transaction, there is room for the government to step in and take some action.
Because of the nebulous wording of this motion, I believe the government should take a very narrow interpretation of it. The government should not regulate ATMs out of business. It should not reduce consumer choice and eliminate options of convenience. However, in cases where Canadians have no other option but to pay excessive fees at white label ATMs in order to withdraw cash from their accounts, there is room for the government to take action.
Clearly, the intent of this motion is to give people who require white label ATMs a better option than being hit with fees of $8 per transaction. The very people who are getting hit the most with these $8 transactions are the very people who can least pay them. I believe the intent of the motion is to make sure we are putting options out for people who are not able to pay $8 every time they need to withdraw $50 from their bank account.
There should be a better option. If we were to look very carefully in to regulating this, it might be the way to go.