Debates of April 30th, 2015

Pipeline Safety Act

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, in my capacity as the critic for natural resources, I am pleased to rise in the House at third reading to debate Bill C-46.

This bill moved to report stage very quickly, because clearly, the parties did not really have a chance to properly present their case, especially the independent members in the House.

At the Standing Committee on Natural Resources, the Conservatives imposed a motion similar to the ones it imposed on all committees, since it has a majority on all committees of the House of Commons, whereby, and I am paraphrasing, when the committee clerk receives an order of reference from the House in relation to a bill, the clerk must write to each member who is not a member of a caucus represented on the committee to invite the member to send a letter to the chair of the committee, in both official languages, stating any proposed amendments to the bill subject to the order of reference. During the clause-by-clause, the chair of the committee will allow a member who proposed an amendment to make brief comments in support of it, although the member cannot join in the debate or vote.

That is how the committees always operate, and the Standing Committee on Natural Resources is no exception.

We essentially believe that these manoeuvres violate the rights of independent parliamentarians or members who belong to a parliamentary group and who are nonetheless elected just like any other member.

The big book of procedure tells us that it is the House, and only the House, that designates members and associate members of these committees as well as the members that represent the House on joint committees.

The Chair has already established that that is a fundamental right of the House. As for the committees, they have no power in that regard, especially since the rules specifically state that an MP who is not a committee member may not vote or move motions.

Report stage was usually the opportunity for these members to have their amendments heard, to debate them and to participate in the vote. Instead, practically everything is now managed, debated and voted in committee, sometimes even in camera.

This is a very important change in the functioning of the House and it greatly affects the rights of members and their ability to properly carry out their duties of representing their constituents and holding the government to account.

However, despite everything, I must highlight the work done by my colleague, the member for Saanich—Gulf Islands, who had two amendments passed despite this unfair and undemocratic government tactic.

Bill C-46 establishes a liability regime for federally regulated pipelines in Canada, and although this regime leaves many questions unanswered, the existing legislation does not provide for much of a regime.

The NDP proposed some 20 amendments at report stage, many of which were virtually the same as those proposed by my colleague from Saanich—Gulf Islands. That is why I am pleased that these requests were heard. We must understand that she was not able to propose her amendments at report stage. She was asked to present her amendments in committee, which is what generally happens. She came to do so and she got just one minute for each of her amendments.

This is a systematic problem at committee stage. Committees should be a place for debate, so that we can identify the strengths and, especially, the flaws of each bill. However, this Conservative government's method is something completely new to Parliament, and it is undermining our ability to properly debate bills.

In the case of the amendments that passed, the government tried to make first nations members believe that the addition of a definition about them to the bill was a show of good faith and openness on its part.

Like other levels of government, aboriginal governing bodies will be able to sue companies connected to pipelines for recovery of reasonable costs incurred in managing a spill on their land.

I think this is a major collective victory. It shows not only that aboriginals are full-fledged nations, but also that there is a will to treat them as such. As I said, the parties were on the same wavelength and proposed many similar amendments that targeted the same flaws in Bill C-46.

In short, Bill C-46 is a first step toward integrating a real polluter-pays principle into federal pipeline regulations.

However, entrenching that in law is not the end of it. We also have to make sure that the provisions of the law respect its principles.

The NDP voted in favour of the principle underlying Bill C-46 because that step forward was better than the status quo.

I must nevertheless point out that at least one witness gave very engaging testimony during the committee's study of Bill C-46. Ian Miron of Ecojustice described this bill as a step forward, just as we have done. He also said that it was more of a “polluter might pay” principle than a polluter pays principle. The reason is that Bill C-46 is highly discretionary. It makes a number of tools available to the National Energy Board and the government, but they have complete discretion when it comes to using those tools. The lack of absolute regulations, if I can put it that way, means that this legislation does not fully respect the polluter pays principle. It means that the principle will apply if the National Energy Board and the government want it to.

These regulations and this liability regime will now be governed by the National Energy Board, which has an especially important role to play given that Canadians' trust and their sense of safety with respect to infrastructure and the regulations in place will depend on how well the board fulfills its mandate.

The report published in 2013 following a comprehensive study by the Standing Senate Committee on Energy, the Environment and Natural Resources clearly states that those two concepts go hand in hand:

If an accident occurs, there must be trust that the “polluter pays” principle, a principle applied to all modes of transport, is backed by concrete action. Social license is earned when citizens have trust in emergency and spill response capabilities, based on clear plans for well-organized recovery and rehabilitation of the environment, as well as a means for compensating for damages.

Even the president and CEO of the Canadian Energy Pipeline Association at the time, Brenda Kenny, suggested in the study that, “it is not enough in today’s climate to obtain a regulatory license or permit in order to proceed with energy projects”.

This illustrates how important it is for businesses and the industry to have public confidence. This was corroborated by the testimony in committee of a representative of Canada's Building Trades Unions, who said he agrees with the polluter pays principle, which indicates to us that the unions and workers truly understand that environmental protection and robust protection, prevention and accountability standards are ironically the things that are going to help them keep their jobs.

For a culture of safety to take hold, there needs to be interaction between common values and beliefs on one hand, and the structures and oversight mechanisms of an organization on the other hand, with the aim of producing standards of behaviour. Unfortunately, we are way off the mark. With its bills and regulations, the government has done nothing but cause the public to lose confidence not only in the industry, but also in the key regulators. If the oil companies want public approval for the pipelines, then Canadians need assurance that these projects are sustainable and that approval processes are open, rigorous and fair. That is clearly still not the case, and this bill will not change much, unfortunately.

In fact, only 27% of Canadians believe that the Government of Canada can respond effectively to an oil spill at sea, and only 32% share the same view for spills on land. The English Bay oil spill in Vancouver in early April should serve as an example of the government's readiness to respond. Civil society groups and environmentalists have been saying for years that Canada is not prepared for a major oil spill. The 2010 Kalamazoo spill in Michigan was a turning point for the oil sector. New standards were established and discoveries were made about how oil from the oil sands behaves, which requires new standards for research, prevention and response.

The problem is that instead of working with the utmost transparency, the board encourages corporations to be secretive. According to the 2013 Senate report:

By regulation, every pipeline company is required to submit Emergency Response Plans (ERPs) on a facility-by-facility basis and the ERPs must be approved by the NEB. These plans require companies to assess the risk of a spill and outline the details of a response. They must be up-to-date with corresponding emergency manuals and must be reviewed regularly. On June 26, 2013, the federal government announced that it would require ERPs to be more accessible to the...

[The Acting Speaker, Conservative, Barry Devolin]

Order.

The member for Rimouski-Neigette—Témiscouata—Les Basques will have nine minutes when the House resumes consideration of this bill.

It being 5:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

Small and Medium-sized Businesses

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

moved:

That, in the opinion of the House, small- and medium-sized business owners are the driving force of job creation in Canada, and Canadian retailers and merchants pay credit card merchant fees that are among the highest in the world, and therefore the government should take immediate steps to make the cost of living more affordable for the middle class by: (a) lowering costs for businesses and consumers by reducing transaction fees charged to merchants; and (b) allowing merchants to disclose to the consumer the transaction costs relating to the payment method chosen at the point of sale.

Mr. Speaker, this motion has to do with credit card fees. Unfortunately, Canada has the highest fees in the world. Countries around the world have made attempts to address this problem.

More and more Canadians are making payments with credit cards, which really end up being payment cards in many cases. The problem is that the fees can vary considerably and that some new credit cards being issued—loyalty cards in particular—offer travel points.

However, credit card companies do not pay for these plane tickets. They send the bill to merchants, which means that some credit cards carry fees of 4% or higher. The problem is that many small businesses have a profit margin that varies between 2.25% and 2.75%, especially in the retail food sector. This means that when a customer pays with this new credit card, the small business owner actually loses money.

The goal is to limit this type of abuse, but it is important to do so without destroying a payment system that must be preserved. Canada needs to be able to use credit cards in small businesses. However, small businesses want to remain profitable, which is only natural. The problem is that credit cards often do not let them do that, particularly the new credit cards with really high rates, which are becoming more popular.

I am sure, Mr. Speaker, that you would not mind taking a little trip down south for two weeks in the dead of winter. If you have a credit card that offers that sort of opportunity, you would be quite happy to use it. The problem is that small businesses are the ones that are paying for the plane tickets. When small business have to pay fees of 4% while their profit margin is only 2.5%, it is clear that they are headed for bankruptcy.

Small business owners have it tough these days. They are asking us to do the same thing that is being done in many other countries. As far as I know, Australia's Conservative government would certainly never be accused of having socialist sympathies. Similarly, in England, under Mr. Cameron's government, these rates were greatly limited to 0.5% and they have even been limited to 0.3% elsewhere in Europe. That is one-eighth of what is charged in Canada. It is a discrepancy that ranges between 300% and 800%. As for the infamous credit cards with a rate of 4% or higher, they turn out to be 12 times more expensive. This nonsense has to stop. People cannot pay such high credit card fees.

Let us also note that credit card terminals alone often cost $30 a month. That is an added cost.

What we are proposing is that we work together to figure out a rate that allows small businesses to survive while maintaining a payment system that works. This is not a threat to credit card companies, as we know from precedents set in Europe, Australia and England.

Even the U.S. Senate, which had the same problem, wanted to see if regulating credit card fees had had a negative impact on the economies of those countries. It concluded that there was no negative impact and that credit card companies are still doing very well in those countries.

People still use credit cards; in fact, they are using them more than ever.

However, small businesses do not want to pay 4% to 4.25% for the so-called privilege credit cards. That is unreasonable. By comparison, a debit card costs five cents to use whether the transaction is for $3, $4 or $3,000. The fee is not a percentage. It is a fixed amount. Considering that 1.5% of $1,000 is $15, that shows how much more one costs than the other. This is not a new problem. Many businesses have been asking for this for many years.

The 90,000 small and medium-sized businesses that belong to the Small Business Matters Coalition would like to have a chance to breathe one of these days, as would members of the Canadian Convenience Stores Association, the Association des marchands dépanneurs et épiciers du Québec, the Retail Council of Canada and Restaurants Canada. All of these people have been telling us that they can no longer survive. People in my riding tell me that the fees cost them $15,000 to $25,000 for a small business with six or seven employees. They say it is not working anymore. Small and medium-sized businesses have no choice but to refuse credit card payments. That is how serious the problem is.

Not only do we risk losing SMEs, but the entire credit card system as a payment method could be in jeopardy.

In a 2013 ruling, the Competition Tribunal called on the government to take action, because it found that there was a non-competitive situation. The government responded by saying that it hoped that credit card companies would limit the rate to 1.5%, but on a voluntary basis. Even that percentage is 500% higher than in Europe. I do not want to hear anyone say that in Europe countries are too consumer friendly and they want to destroy private enterprise. A 500% disparity is huge, and that is on a voluntary basis. That pertains only to standard credit cards.

If you have to deal with a premium credit card, this becomes totally unmanageable. However, those kinds of cards are becoming increasingly popular. Everyone loves to travel and book flights using a credit card, except that the plane ticket does nothing for the merchant. When he goes to the bank to ask for a loan guarantee to pay for new inventory, he is told that his operating costs are too high. He can only reduce wages so much.

One merchant I know, Mr. Bélisle, who owns a pub called Bière au menu in Bois-des-Filion, told me that he cannot automatically pass the cost on to consumers because he cannot sell hamburgers for $25. There comes a point when the cost simply cannot be passed on to consumers, because they just will not buy a $25 hamburger. His problem is that he also owns a sausage shop. He said that at that business, he does not even accept credit cards. There is also Mr. Gaudreau from Laval, who told me that he thought he could start a small business with three or four employees, but with the extra costs of 1.6% for Visa, 2.6% for AMEX and 1.55% for Mastercard, he could not do it.

His profit margin is about 2%. Three-quarters of his profit will basically go to a company that will do nothing for him. It will not do any marketing or advertising, and it will not attract customers. For this business owner it is simply a bill he must pay, and for that reason he is asking for regulations.

For our part, we are going to get together to analyze the situation and what happens in other countries. We are going to drastically reduce the interest rate, although we will exercise caution.

We are not going to jeopardize the credit card system. It will continue to exist. As demonstrated by the U.S. Senate, regulations will not destroy this payment method. We will keep it. When we sit around the table to establish the interest rate, the credit card companies will be there as well and they will have to justify what they charge.

It goes without saying that some payment methods, like high interest rate cards, will disappear. We cannot ask a business owner to go bankrupt because he sells things to people with specific credit cards.

Transparency is another important aspect. When we get a bill, the taxes, the GST and the QST, are listed on it. What people are asking for is that the cost of the credit card also be included on the bill. There is currently a clause in the contract we sign to use a credit card that prohibits that very thing. Transparency is not allowed.

If we have the right to review the GST and QST amounts, then I think people should also have the right to review what it costs them to use a credit card. This is especially important because some of the costs have gone down in the past few years. For better or worse, the sales tax has been reduced.

The problem is that these tax cuts were clawed back because credit card margins went up. They increased from 1.5% to 4% and any economic benefit that consumers might have derived from the tax cuts voted in by this government was absorbed by the credit card companies. This needs to stop.

For retailers alone, the credit card fees amount to more than $850 million, and that is just for the retail sales sector. Obviously this has to stop sooner or later. Enough is enough.

As I said earlier, and it bears repeating, we have to be competitive internationally. If the tourists who travel through Europe pay less there for goods and services than they would pay in Canada, then there is a good chance that we are losing business. We must remain competitive, and a 500% difference is obviously unreasonable.

I am therefore pleased to say that this resolution is supported by the small business community, a very important community in Canada that accounts for 40% of our GDP.

One day we will have to think of them and return the favour.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, I think the member is confusing the interchange fee with the merchant rate. I think he is lumping them both together.

The interchange fee is the amount that is carved off from the transaction to make the credit card system work. The merchant fee is typically about 1.5%. Our government has negotiated with financial institutions and credit card companies on the merchant rate to come up with a voluntary code of conduct, which the credit card companies have agreed to.

I would like to pose the following questions.

The member spoke about Europe, that we should adopt more of a European model. Since he did not mention any countries in particular, let us assume he is talking about Greece. Would the member propose that we adopt a Greek model to follow in terms of credit card and credit and financial institutions?

If we look back at the Regina Manifesto, when the CCF was founded, it called for the nationalization of banks. In 1962, when the NDP was founded, it also called for the nationalization of banks. Is the NDP now calling for the nationalization of banks? How would he enforce this proposed scheme that he has cooked up?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Speaker, first of all, the European regulations do not pertain to just one country. They affect all of Europe. That law was introduced Europe-wide. Every member of the European Union is affected by it.

Second, what my colleague is forgetting and what is very important is that credit card companies do business with banks, but banks do not own credit cards. The member might be confused about that.

The nationalization of banks is an old ghost from the 60s. It would cost Canada hundreds of billions of dollars or more. Ironically, these banks often own pension funds, including the Canada pension plan and the Quebec pension plan.

How can I say this? Why nationalize something that already belongs to us?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I will not necessarily question that logic at this point, but what I would say is that, whether it is interchange, merchants' fees, or rates, at the end of the day what we really need to look at is the fact that Canada's economic reality and potential of growth into the future is going to be tied in to small businesses.

Whether it is the tourism industry or the manufacturing industry, there are so many industries that are very dependent on consumer spending. These small businesses do not have the option, per se, to opt out of having those consumer-friendly purchasing machines. It is not really an option for them.

It is important for us to recognize that the government does have a role to play. My question for the member is related to that. Given the importance of our small businesses to our nation—and we see that in the form of the motion, which I applaud—would he not agree it is imperative that we come to grips and deal with this issue, the sooner the better?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Speaker, 40% of the GDP generated by our country depends on small and medium-sized businesses, businesses with fewer than 100 employees. With regard to the retail sector, credit card fees, commonly referred to as credit card processing fees, vary between 1.5% and 4%. We need to act quickly to remedy that.

Other countries have done so without destroying this payment system, which must be preserved. Obviously, I am surprised that the Conservatives did not introduce this bill themselves.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, I appreciate this opportunity to discuss Motion No. 574, a motion which focuses on lower costs for businesses and consumers by reducing transaction fees.

Let me reassure the hon. member that under the leadership of the Prime Minister, our government is standing up for consumers and saving Canadians money.

We know that Canadian families work hard to make ends meet and every dollar certainly does count. While companies will look out for their bottom line, our government is looking out for all Canadians. When Canadians make decisions about how to spend their money, they must be assured of a voice, a choice and fair treatment.

In the October 2013 Speech from the Throne, our government committed to take additional action to protect Canadian consumers. We understand that Canadians are tired of hidden fees. That is why we have secured voluntary commitments from Canada's eight major banks to enhance low-cost bank accounts and offer no-cost accounts. Banks also committed to provide free monthly printed credit card statements. We have also worked with the provinces to maintain the integrity of the framework for payday lending-type products and to support provincial efforts to regulate appropriately all payday lending-type high interest rate products.

However, our initiatives go beyond lawmaking and regulation, and include public outreach and education.

In April 2014, we announced the appointment of Jane Rooney as Canada's first ever Financial Literacy Leader. Her mandate is to collaborate and coordinate activities with stakeholders to contribute to and support initiatives that strengthen the financial literacy of all Canadians. This initiative will allow our government to broaden its efforts to help Canadians make more informed choices for themselves and for their families.

Accordingly, our government believes that the best consumer protection framework is one in which there is competition, fees are disclosed and consumers can exercise choice.

For example, we have introduced regulations relating to credit agreements, including lines of credit and credit cards, which came into force in 2010. These regulations limit business practices that are not beneficial to consumers. They require the provision of clear and timely information to Canadians about credit products with a particular emphasis on credit cards. Specifically, our government has taken steps to update the existing financial consumer protection framework with several key measures. These include, for example, mandating an effective minimum 21-day interest-free grace period on all new credit card purchases when a customer pays the outstanding balance in full, and introducing a fee summary box.

In November 2014, the Minister of Finance welcomed proposals submitted by Visa and MasterCard to reduce their credit card fees for merchants, which should ultimately result in lower prices for consumers.

Specifically, the proposals from Visa and MasterCard will: voluntarily reduce their respective credit card fees for consumer cards to an average effective rate of 1.5% for a period of five years; ensure that all merchants receive a reduction in credit card fees; provide a greater reduction for small and medium-size enterprises and charities which have the least amount of bargaining power; and require annual verification by an independent third party to ensure compliance.

Last month, our government announced the enhanced code of conduct for the debit and credit card industry. These new changes will make the code even stronger by addressing unfair business practices and improving transparency for merchants and consumers, including new provisions that apply specifically to mobile payments.

The revised code contains several enhancements to address unfair business practices and improve transparency for merchants and consumers, including: extending the application of the code to mobile payments, including new consumer protections for mobile payment users; measures to facilitate the pass-through of credit card fee reductions to merchants; a new complaints handling process available to merchants with code-related complaints; enhanced disclosure requirements that will require plain language disclosure of key contract terms and conditions and merchant fees in information summary boxes on merchant contracts; providing greater flexibility for merchants to exit their contracts without penalty and limiting the automatic renewal of contracts; new branding requirements for premium credit cards to make these cards more easily identifiable to merchants at the point-of-sale; and new disclosure requirements for credit card issuers to inform consumers that apply for premium credit cards that use of these cards may result in higher merchant fees.

Most elements of the code will come into force within nine months of the date on which the networks adopt the code. Some elements, such as the measures to facilitate the passthrough of interchange rate reductions to merchants and the new rights for merchants regarding acceptance of contactless payments, took effect in April.

There will be a slightly longer implementation period for the new enhanced disclosure requirements on account of the significant systems changes that acquirers will need to make.

Let me assure the hon. member that the updates to the code were developed in close consultation with a broad range of stakeholders, including members representing the credit and debit card networks, small business retailers and consumers. Bilateral consultations were also conducted with acquirers and small merchant associations. In fact, the Canadian Federation of Independent Business said at the time that the code “has served merchants extremely well.... [It] has done an excellent job in ensuring some fair ground rules and maintaining Canada’s low-cost debit system.”

Consumers will also benefit from a new requirement that credit card issuers disclose to consumers who apply for premium credit cards that use of these cards will result in higher merchant fees. This will help to empower consumers in selecting their payment method by disclosing the actual cost to merchants of accepting payments with a premium credit card.

This of course is not new. Throughout our time in office, our government has been focused on helping Canadian consumers identify and take advantage of the best possible financial products and services for their needs.

As we announced in economic action plan 2013, we are working to develop a comprehensive financial consumer code to better protect consumers of financial products and ensure that they have the necessary tools to make responsible financial decisions. Such measures empower and protect Canadian consumers and they increase their financial literacy by providing them with the right information at the right time so they can make financial decisions that best suit their needs.

As our actions have clearly demonstrated, our government clearly understands the importance of monitoring the credit card and debit card industry in Canada. In this regard, the motion's recommendations are well intentioned, but not required.

I therefore urge hon. members to vote against the motion and instead support our government's ongoing measures to protect businesses and consumers in a competitive marketplace.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I am pleased to be able to take a few minutes tonight to comment on Motion No. 574. I would like to read the motion for anyone who happens to be following the discussion:

That, in the opinion of the House, small- and medium-sized business owners are the driving force of job creation in Canada, and Canadian retailers and merchants pay credit card merchant fees that are among the highest in the world, and therefore the government should take immediate steps to make the cost of living more affordable for the middle class by: (a) lowering costs for businesses and consumers by reducing transaction fees charged to merchants; and (b) allowing merchants to disclose to the consumer the transaction costs relating to the payment method chosen at the point of sale.

I also want to speak about the need for measures like this, the need to support more small and medium-sized businesses, and the consumers and the communities who rely on them.

To thousands of Canadians, the need to support small and medium-sized businesses is obvious. I only wish the Conservative government was of the same mind.

Small businesses account for about 30% of Canada's GDP, while medium-sized businesses account for an additional 9%. Combined, small and medium-sized business owners account for 50% of all net job creation. With numbers like these, one is left to wonder why budget 2015/17 is silent on these issues. Budget 2015/17 fails to offer even a glimpse of a plan for job growth and it ignores the fact that unemployment is still higher than it was before the recession began, all of this while remaining oblivious to the government's rhetoric on its so-called red tape reduction. As with all things Conservative, taxpayer-funded ads always trump real action.

In contrast, Liberals know a strong economy ensures that every Canadian has a real and fair chance at success. That means growing incomes and real job opportunities by supporting and promoting the success of small and medium-sized businesses. Protecting and promoting the interests and advancement of small and medium-sized businesses and consumers has long been a cornerstone objective of the Liberal Party of Canada and the Liberal caucus.

While this specific motion is sponsored by an NDP MP, the Liberal caucus has a history of working to lower the fees and interest rates paid by small and medium-sized businesses and their customers, and we are glad to have NDP support as we move toward this goal.

As just one example, in 2009, worries over merchant fees and billing practices prompted members of the Liberal caucus to call for more protection than would be provided by any voluntary or industry-imposed code of conduct. The Liberal caucus sought regulatory and legislative interventions similar, but far more comprehensive and in focus, to Motion No. 574.

Our plan included measures to end double-cycle billing, to allow consumers to opt out of credit card contracts if interest rates are increased by providers, and a full range of measures aimed at helping small and medium-sized businesses provide goods and services to consumers at a fair and reasonable price. However, the Conservatives refused to be swayed.

A voluntary code, authored by the Conservatives, was an inadequate attempt to ease concerns sparked by the entry of Visa and MasterCard into the debit and credit market. The Liberal caucus rightly feared that without enforcement tools, any code of conduct for debit and credit card companies would miss the mark.

The fact is small and medium-sized businesses exist at the bottom of the financial food chain. This means their ability to effectively negotiate terms and arrangements with banks and other lenders is very limited.

I believed then and I believe now that we need balanced but serious measures to deal with these issues on behalf of small and medium-sized businesses, not voluntary measures.

Now, to some, particularly those sitting on the other side of the room, these matters should be sorted out by the markets. Proponents of an unregulated market often suggest that government intervention will ultimately hurt consumers. They often cite Australia's credit card fees, card benefit reductions, and the introduction of surcharging as consequences of interchange fee regulation.

This narrow thinking has long been a cornerstone, of course, of Conservative fiscal philosophy, despite pleas to the contrary as well as evidence to the contrary from the small business community. This hands-off approach to the problems faced by small and medium-sized businesses is plain wrong, and it allows large lenders to run the table on small businesses.

Let us look at real-world evidence. As recently as yesterday, national media reports verified that starting on June 1, Canada's major banks are introducing new or higher fees for a variety of accounts and transactions, including debit purchases, mortgage and loan payments, and children's accounts.

These changes are hitting everyone, from children trying to save for their future education to seniors and small business owners trying to manage their already limited resources. The market is regulating the price of these things, but not to the benefit of small and medium-sized businesses and those who rely on them.

The Financial Consumer Agency of Canada looked into the issue of bank fees and whether the sector has the best interests of consumers in mind. While the report avoided any solid conclusions, it did find that the average monthly fee on chequing accounts increased by 13.6% between 2005 and 2013. More troubling still, during the same period, it was found that there was a 46% increase in so-called variable fees, that is, one-off transactions that are not covered by the regular monthly banking plans. All this happened while the banking sector was enjoying record profits.

Of course, these examples are consumer based, and Motion No. 574 primarily focuses on the business end of the discussion, but there are clearly crossover implications.

My husband and I owned and operated a small business for many years, so I know very well what it is like to worry about making payroll or settling accounts or simply running out of money at the end of the month.

Higher bank fees, whether merchant fees or any other form of variable cost, hit small businesses right in the wallet and hinder their prospects of success. I am tired of throwing small business owners to the whims of the market. It is time to reset the balance and give those who are really driving the economy a chance at success.

[Rathika Sitsabaiesan, NDP, Scarborough—Rouge River, ON]

Mr. Speaker, I rise today in proud support of Motion No. 574, introduced by my New Democrat colleague, the member of Parliament for Marc-Aurèle-Fortin.

Across Canada and in Scarborough—Rouge River, small and medium-sized businesses employ the vast majority of residents and are important job creators. They are the engines that drive the economic development and vitality of our communities. They have been asking the government to reduce the merchant fees charged by credit card companies for years, and I am proud that the official opposition, the New Democrats, are actually hearing their call.

Small and medium-sized enterprises have a large impact on the Canadian economy. Data from Industry Canada's 2013 key small business statistics show that together, small and medium-sized businesses represent 99.8% of Canada's employer businesses. They employ over 80% of the people working in the private sector in Canada.

These companies are faced with rising costs and razor-thin margins. Therefore, the fact that Canadian small and medium-sized businesses pay some of the highest transaction fees in the world is both unfair and unsustainable. These businesses need our support.

We are speaking of merchant fees. What are they, one might ask? Every time a customer makes a credit card purchase, the merchant must pay the credit card company a premium on that purchase. The interchange fee comprises the majority of the fee or the charge the merchant pays to the credit card company. The Retail Council of Canada estimates that interchange fees averaged 1.7% in 2014 for MasterCard and 1.61% for Visa.

We can look at some of the sister countries we compare our country to, such as Australia. The interchange fees there have been capped at 0.5%, and in Europe, many of the countries' interchange fees will be capped at 0.3% as of September 2015. That is a significant difference.

Furthermore, under the terms of their service agreements with credit card companies, merchants are not allowed to pass these fees on to their customers, as this would increase the price overall of the merchandise.

In 2012, retailers paid $832 million in credit card fees. Eventually, as the retailers' costs remain high in a highly competitive industry and demand continues for lower prices, these costs will inevitably be passed on to consumers, whether intentional or not.

Hence, consumers should know about these fees. Therefore, New Democrats want more transparency from the credit card companies. We are asking them to always disclose to the customer the transaction cost related to the payment method chosen.

The government has been consistently supporting its friends. We know who they are: their wealthy insider friends. Small businesses have watched their tax rate drop 1% since the Conservatives took office, from 12% to 11%. While they worked so hard and created the jobs in our communities, they saw corporate income tax rates drop seven percentage points, from 22% all the way down to 15%, which included a now defunct surtax, over that same period. Following an NDP proposal, the recent budget proposes to drop the small business tax rate by 2% by 2019, but we will have to see if that actually happens and if the changes materialize.

We want to extend a helping hand to small businesses, the real job creators in Canada, and stimulate investment and innovation in manufacturing.

This is not a new issue. Since 2008, several retail associations, such as the Canadian Federation of Independent Business, the Retail Council of Canada, and the Small Business Matters Coalition, have lobbied against these exorbitant merchant fees. In fact, in July 2013, the Competition Tribunal said that the conditions imposed on Canadian businesses by Visa and MasterCard were anti-competitive and that the fees they charged were excessive. The tribunal called on the government to regulate the industry. Clearly, the Conservative government has not regulated the industry effectively, since the credit card merchant fees in Canada remain among the highest in the world.

The government's form of regulation was that in November 2014, MasterCard and Visa submitted a voluntary proposal to the federal finance minister to reduce their interchange fees to an average rate of 1.5% for five years, as of April 2015. That is the government's way of taking action: just accepting the credit card company's voluntary proposal and calling it a day. Remember that in Australia, the interchange fees are capped at 0.5%, and in Europe, they will be capped at 0.3% later this year.

Instead of taking on the task of regulating the industry, the Minister of Finance issued a news release stating:

As a result of the voluntary proposals, there is no need for the Government to regulate the interchange rates set by the credit card networks That is not really government action.

The minister did indicate that the government could take action if MasterCard and Visa did not comply with their public commitments. However, the Minister of Finance did not ensure that the credit card companies needed to make the merchant fees significantly lower.

When the announcement was made by the credit card companies, Yves Servais from the Association des marchands dépanneurs et épiciers du Québec said, “We are skeptical about the voluntary agreement between the government and Visa and MasterCard. There is no information on how to ensure compliance with the agreement, and no government agency has been mandated to handle the follow-up and annual evaluation.”

The fact that the fee reduction is not significant enough and the fact that there is no one charged with enforcing this reduction are both big problems.

The NDP has proposed the creation of an ombudsman responsible for working with private sector partners to reduce credit card fees. Clearly, the government is not paying attention, and small businesses deserve to have a person committed to working with them.

This is an important middle-class issue. Too many Canadian families are struggling and cannot continue to pay higher fees on all of the merchandise they are purchasing.

The Conservatives have abandoned small businesses in favour of more profitable and prosperous corporations, like the credit card companies, who they support.

Gary Sands, chair of the Small Business Matters Coalition, wrote to the government in November 2014 saying:

Members of the Small Business Matters Coalition, representing thousands of businesses across Canada, urge the Government of Canada to reduce credit card swipe fees and to bring fairness and transparency to the Canadian Payments Industry.

In turn, our members pledge that the reduction in credit card fees will be to the benefit of consumers and communities across Canada, through improved competitiveness, increased investment, job creation and reduced consumer prices.

Are those not all things that we do want to see in this country?

Nevertheless, the Retail Council of Canada is committed to continue to press for deeper cuts to bring interchange in line with the fees charged elsewhere. The NDP has joined this commitment, and we will continue until we have a more fair and just system that respects the economic engines of our communities, the small and medium-sized businesses.

When credit card interchange regulations were introduced in Australia in November 2003, both Visa and MasterCard predicted that the card payment system in Australia would suffer badly from this reform. MasterCard stated that the setting of interchange fees is such a delicate balance that to interfere with it could lead to a death spiral process.

However, evidence shows that, contrary to these predictions, credit card usage has continued to increase strongly since Australia's reforms of credit interchange. Card issuer profitability has not been harmed by the reforms. Issuers have reduced costs and increased efficiency. The Reserve Bank of Australia has concluded that the lower costs for merchants are flowing through into lower prices for the consumer due to the competitive environment in which most merchants operate.

What the Australian experience demonstrates to us is that, despite significant reductions in the interchange fees, credit card usage has continued its strong growth. Card payment systems can operate healthily and grow strongly despite regulated reductions in interchange income for issuers.

At a time when Canadian small businesses are facing increasing pressures from the weak Canadian dollar, rising inflation, and other increasing costs, it is integral that the government acts to support small and medium enterprises.

I strongly support Motion No. 574, and I am pleased to stand with the official opposition New Democrats in support of small and medium-sized businesses in Canada.

[Andrew Saxton, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, it is my pleasure to be here tonight to have the opportunity to showcase our government's work to reduce credit card acceptance fees and ensure that consumers and businesses are treated fairly.

I also find myself speaking to another mind-boggling motion where the NDP has no ground to stand on when it comes to supporting small business and consumers. After all, it voted against every single one of our consumer protection measures.

Our government understands it is no secret that small businesses are the lifeblood of the Canadian economy. However, what separates us from the opposition parties is that we have taken clear action to support them, rather than rhetoric and deathbed conversions. Small businesses account for over 90% of all businesses in Canada and employ half of the working men and women in the Canadian private sector. Our government believes that small businesses should spend their time growing their businesses and creating jobs, not choking on high taxes and red tape.

What does the member opposite propose? He proposes that we lower costs for businesses and consumers by reducing transaction fees charged to merchants and allow merchants to disclose to the consumer the transaction costs relating to the payment method chosen at the point of sale. I was surprised to hear that the NDP even recognizes the importance of small and medium-sized businesses at all. As for the middle class, with a clear plan to raise taxes on the middle class, I find it hard to believe they want to help the middle-class Canadian.

Allow me to talk about our record on supporting small business. We have already cut taxes significantly for small businesses and their owners. We cut the small business tax rate to 11% in 2008. In economic action plan 2015 we have gone further by proposing a new plan to reduce small business taxes to 9% by 2019. That is the largest small business tax cut in 25 years. We increased the lifetime capital gains exemption on qualified small business shares to $750,000 from $500,000 in 2007. In economic action plan 2015 we further enhanced the exemption for farmers and fishers to $1 million, recognizing the importance of these assets for the retirement plans of Canadians.

We also reduced small businesses' El premiums by introducing the small business job credit. This credit is expected to save small businesses more than $550 million over 2015-16. It is estimated that this measure will reduce taxes for small businesses and their owners by $2.7 billion over the 2015-16 to 2019-20 period. Almost 700,000 small businesses from coast to coast to coast will benefit from this rate reduction. It will enable them to retain more earnings that can be used to reinvest and create jobs.

When it comes to promoting job creation and economic growth, our government continues to make responsive and responsible decisions. We are also continuously cutting red tape and reducing the tax compliance requirements faced by businesses.

The NDP and the member voted against all of our past measures to support small businesses and they will continue to do so in the future.

Allow me to move on to merchant fees and credit and debit card use. Our government is implementing policies focused on raising Canada's economic potential and creating stable, well-paying jobs. However, we cannot rest on our laurels. These are uncertain economic times at home and abroad. Small businesses are stretching dollars as far as they can go. They need more support so our economy can continue to grow. That is why our government took timely action to address credit card fees. Every time a merchant accepts a credit card payment, the merchant pays fees and like any other cost, fees mean higher prices for consumers.

Last fall, we accepted voluntary commitments by Visa Canada and MasterCard Canada to cut credit card fees by close to 10%. Specifically, the proposals from Visa and MasterCard will voluntarily reduce their respective credit card fees for consumer cards to an average effective rate of 1.5% for a period of five years. They will ensure that all merchants receive a reduction in credit card fees. They will provide a greater reduction for small and medium-sized enterprises and charities, which have the least amount of bargaining power. They will require annual verification by an independent third party to ensure compliance. More importantly, Visa and MasterCard already started to implement the reductions in April 2015.

The purpose of these voluntary commitments is simple. It is to reduce the cost of credit card acceptance for merchants in order to keep prices low for consumers. I am not sure if the member opposite missed this, but this agreement will help consumers and merchants alike.

Let me reassure the hon. member that if the reductions in interchange fees are not passed along to merchants or the overall cost of accepting credit cards increases at any time during the period covered by these commitments due to actions by Visa or MasterCard, the government reserves the right to rescind its acceptance of the voluntary commitments.

Now let me turn our attention to the enhanced code of conduct for the debit and credit card industry that was announced last month. It aims to promote fairness in the credit card markets and addresses the issues that businesses told us about. We worked hard to fix the problems. Merchants will now have a new, more user-friendly complaints process for code-related complaints. We are improving disclosure requirements within contracts so that information summary boxes outlining terms and conditions and merchant fees are in plain language. Businesses will have more flexibility to exit their contracts without penalty. As well, the code will now apply to mobile payments.

This stronger code also offers new protection for consumers. Credit card issuers will have to inform consumers that using premium cards may mean higher fees. There will be new branding requirements for premium cards to make them easily identifiable. We are introducing new protections with mobile devices so that consumers have choice, not the big banks and credit card networks.

Taking together all that we have done since 2006, and what is to come, I can say with confidence that protecting consumers and supporting small business remain a central focus of our government, and small businesses have noticed. I will name a few.

The Canadian Federation of Independent Business stated:

—the Code of Conduct for the Credit and Debit Card Industry...has served merchants extremely well....[It] has done an excellent job in ensuring some fair ground rules and maintaining Canada’s low-cost debit system.

The president of the Retail Council of Canada stated, “I am delighted that merchants will have full choice in which networks and payment methods to accept”.

Members do not have to take my word for it. Given all of the aforementioned consideration, we do not need to make amendments to the motion. Nor is it a necessary one. It is only our government that has a real track record for supporting the middle class, small businesses and Canadian consumers. For that reason, I encourage all members to vote against the motion.

[Djaouida Sellah, NDP, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, I am honoured to speak today. My colleague from Marc-Aurèle-Fortin moved a motion today that makes a lot of sense. This motion would support our small and medium-sized businesses and our local economies. That is why I ask all my colleagues to support this motion and set partisanship aside.

Canada has a vibrant entrepreneurial culture, and instead of promoting this culture, the government has raised taxes for small and medium-sized businesses since it came to power. The Canadian Convenience Stores Association acknowledges that the credit card swipe fees charged to Canadian retailers are among the highest in the world, ranging from 1.5% to 4% of the purchase price. In 2012, retailers paid $832 million in credit card fees. That is a huge amount.

Overall, 98% of all Canadian businesses are small and medium-sized businesses with fewer than 100 employees. They are the backbone of our country’s economy. They created 70% of all new private sector jobs between 2002 and 2012. In spite of these compelling figures, nothing is being done to help them. As these businesses struggle with increasing expenses and very slim margins, many of them will have to shut down if they do not get the support they need during difficult times.

The NDP wants to help small and medium-sized businesses, which are Canada's real job creators. We want to invest in innovation and the manufacturing sector, which has lost 400,000 jobs since the Conservatives came to power. The Conservative strategy—letting credit card companies do as they please—is not working.

In July 2013, Canada's Competition Tribunal stated that the conditions imposed on Canadian businesses by Visa and MasterCard were anti-competitive and that the fees they charged were too high. The tribunal asked the government to fix these problems. The government merely reviewed its voluntary code of conduct—yes, voluntary—and did nothing else.

This Conservative government is abandoning small businesses in favour of more profitable and prosperous companies. In its 2015 budget, the government promises to reduce the small business tax rate, but that tax cut, like most of the measures in this budget, will not take effect until 2016.

The NDP wants concrete, effective measures. Promises that will not be kept until 2016 do not belong in a 2015 budget. The member for Saint-Lambert's Motion No. 585 will force the Conservatives to vote on this issue.

Ever since the Conservatives came to power, they have constantly been giving tax breaks worth tens of billions of dollars to large corporations. They can always find money to give tax breaks to wealthy corporations, but when it comes time to support small businesses that create jobs, they say there is no money.

I am confident that Canadians will remember this over the summer. They are fed up with this government favouring wealthy families and large corporations. They are tired of having a government that does not listen to them.

[The Acting Speaker, Conservative, Barry Devolin]

The time provided for the consideration of private members' business has now expired, and the order is dropped to the bottom of the order of precedence on the order paper.

It being 6:30 p.m., the House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 6:30 p.m.)