Mr. Speaker, I rise today to speak to the motion from the member for Davenport seeking a ban on pay-to-pay fees charged by Canadian banks.
I want to start by examining the issue of pay to pay and how it relates to existing consumer protection measures in the financial sector. Then I would like to use the rest of my time to discuss a more meaningful way to bring fairness to the middle class and those Canadians working hard to join the middle class.
I believe that the underlying issue of today's motion is one of fairness. The motion before us calls for “a mandatory financial code of conduct to protect consumers”. While the text of the motion does not explicitly lay out an objective, I believe that its main objective really is fairness, which is something any reasonable person in this House can support.
It is an issue that speaks to our founding principles, peace, order and good government, and is a recognition that we need strong consumer protection measures so that Canadians are treated fairly when they make a purchase or enter into an agreement.
There is an inherent imbalance between large institutions and large businesses and individual consumers with respect to information and power. Most individuals need the protection of strong laws and consumer protection measures to help even the scales.
Canadians are justifiably proud of our banks. We have some of the largest and most successful banks in the world. Our resilient banking system did not just happen by accident. It was shaped, largely, by reforms in the 1990s, directed, in fact, by the strong governments of Paul Martin and Jean Chrétien, when globally, the banking systems were being deregulated in Europe, the U.K., and the U.S. Canada did not follow suit at that time and did not follow the global trend of deregulation. Canadians and our banking system are better off for it.
However, every system needs balance. A strong banking system must be complemented by strong consumer protection measures that ensure fairness for Canadians.
In today's economy, access to basic banking services is essential for consumers. We are moving towards a cashless society. It is becoming nearly impossible to carry on today without a bank account. Even the federal government is pushing Canadians towards an increasingly cashless society and electronic transactions. The government is in the midst of phasing out, for instance, its use of printed cheques. As of next April, Canadians will be required to accept all payments from the federal government by direct deposit. This will include tax refunds and federal child benefits as well as CPP, OAS, and EI payments.
The government has said that it will only issue cheques under exceptional circumstances. For example, it will continue to issue cheques to people who live in remote communities where they do not have access to a financial institution. For everyone else, it is clear that the government sees bank accounts as a prerequisite to receiving financial support.
Liberals believe that the government ought to show more compassion, understanding, and flexibility in allowing more Canadians to continue receiving cheques. For instance, we can look at situations with many of the elderly, who may be less disposed to using electronic banking, or low-income Canadians, who may not have ongoing and reliable access to high-speed Internet or who cannot afford those connections on an ongoing basis.
We recognize how essential it has become for Canadians to have access to basic banking services, particularly, as I mentioned, for low-income Canadians, who cannot afford to see their meagre earnings eaten up by large fees. That is why, in 2001, the Liberal government brought in legislation to guarantee access to basic banking services for all Canadians, including low-income Canadians. It is why the Liberal government banned the banks from placing a hold on government cheques valued at $1,500 or less. It is why a Liberal government brought in rules requiring each of the largest banks to offer a standard low-fee bank account. These accounts include between eight and 12 transactions per month as well as a free debit card, free deposits, and free monthly statements.
At the same time, a Liberal government established the Financial Consumer Agency of Canada to monitor the financial services industry, educate consumers, and enforce new, stronger consumer protection measures. These reforms were introduced by a Liberal government. They were an important step forward, but a lot has happened over the last decade. Technology has changed everywhere. Smart phones are now everywhere. More Canadians are doing their shopping and banking online, and a growing number of companies in telecommunications, broadcasting, and the banking sector are pressuring Canadians to pay their bills online as a way to cut costs.
In the past few years, we have seen a proliferation of pay-to-pay fees. Let us be clear about what that term actually means. “Pay to pay” is widely understood to mean the practice of charging customers an additional fee for mailing them a paper invoice or statement, in a lot of cases. It does not mean an end to all transaction fees for payments.
Last year, the Public Interest Advocacy Centre estimated that Canadian consumers were paying between $495 million and $735 million per year to receive paper bills for telco and banking services combined. Of that total, $180 million was for the banking sector. PIAC also conducted a survey that found that a third of Canadians were uncomfortable receiving bills or statements online, for a variety of reasons. I mentioned seniors, particularly, who may be averse to that.
Many Canadians are worried about falling victim to online scams and identity theft. Earlier this year, thousands of employees at the Canada Revenue Agency were unable to identify a fake email phishing scam that was sent to them as part of a test. It is understandable that cautious Canadians would take extra steps to avoid the possibility of being scammed.
Another reason some Canadians insist on paper billing is because they simply do not have a choice. They do not have high-speed Internet at home. This is a significant barrier to low-income Canadians. According to Stats Canada's latest Canadian Internet use survey, only 58% of households in the lowest-income quartile have Internet at home. That compares to an access rate of 98% and 94% in the first and second income quartiles. Not surprisingly, the PIAC survey found that low-income Canadians are more likely to pay their bills in person or by mail rather than online, and they are not alone.
Canadians living in rural and remote communities are less likely to have reliable high-speed Internet at home. Seniors are less likely to use the Internet regularly, making them more likely to end up paying extra fees for paper billing.
It seems unfair to punish Canadians with extra fees because they are poor, they are low-income, or they live in an area where they cannot get high-speed Internet. It seems to me that we are disadvantaging those who are already disadvantaged.
PIAC estimated that Canadians without Internet access spend between $77 million and $102 million per year on paper billing. Pay-to-pay fees were virtually unheard of before 2010, but between 2010 and 2014, a system came into place that forced some of these most vulnerable Canadians to pay extra fees just to find out how much they owed for banking and telco services, which are considered essential in the modern world.
In the last few months, new consumer protection measures have come into place. Bill C-43 introduced measures to end pay-to-pay fees in the broadcasting and telco sectors. It prohibited service providers from charging customers who receive paper bills for wireless, Internet, telephone, and television services. Liberals voted in favour of these measures during clause-by-clause consideration of the bill.
There have also been new measures to limit bank fees. The government has built on the reforms Liberals introduced in 2001 and expanded low-fee and no-fee bank accounts. Students, low-income seniors, and Canadians with disabilities are entitled to basic banking services with no fees. With low-fee and no-fee accounts, many Canadians can avoid pay-to-pay fees at their banks.
However, according to the banks around 15% of Canadians pay fees for mailed bank statements. Apparently, the banks are willing to waive these fees for customers who face economic hardship or who do not have Internet access, but there is more that can be done to avoid pay-to-pay fees across the federally regulated financial sector.
Of course, the devil is in the detail. Closing the door on pay-to-pay fees would not mean a thing if it leads to similar fees popping up elsewhere. The government must be clear in how it defines the term pay-to-pay. Does it refer to invoices for accounts where the customer owes money, such as credit cards and mortgages? Does the government have a broader interpretation that would include statements for all financial accounts at the bank, including investment accounts, or is the government's interpretation even broader still? It seems that a small number of people are trying to morph the term into something far more comprehensive, covering almost any financial transaction fee on any payment. Therefore, we need some level of clarity around that. No one likes bank fees, but banning transaction fees in a modern world of e-commerce has to be done discerningly.
It is really important to recognize that there are many meaningful ways we can bring fairness back to Canadian families who are struggling. Today's motion reflects one way. The Liberal plan for fairness is another way to help struggling middle-class Canadian families and those Canadians working hard to join the middle class.
The Liberals have put forward a plan to stand up for Canadian middle-class families. We recognize that too many Canadian families are struggling just to make ends meet. They are struggling under the crushing weight of record levels of personal debt, $1.66 for every $1.00 of disposable income. Canadians have been taking on more debt as the job quality in Canada has deteriorated. In fact, according to CIBC Economics we have the worst job quality in Canada that we have had in 25 years. We have seen full-time jobs with benefits being replaced by part-time work.
Too many middle-class Canadians have not had a real pay raise in a long time and too many young Canadians have yet to really start their careers. They face a labour market that still has 160,000 fewer jobs for young Canadians today than back in 2008. Young Canadians face a growing pressure to take unpaid work, just for the work experience. We have all heard of recent graduates who are stuck in a cycle going from unpaid internship to unpaid internship, while their parents are struggling to help pay the bills. That is another reason why more and more Canadians are going deeper into debt, the direct financial subsidization of young Canadians who have good educations but cannot find good work to support themselves.
Many middle-class parents are delaying their retirement in order to help adult children who simply have not been able to achieve financial self-sufficiency. It is no longer unusual to hear of young Canadians still living with their parents into their late 20s or beyond. Meanwhile, income inequality has grown, and growing income inequality does not just go against our sense of fairness, it is also bad for economic growth. We have learned that from the IMF, among others.
A Liberal government would make the tax system fairer and cut the middle-class tax rate by 7%. That is a $3-billion tax cut for those who need it the most. We could afford to do this by asking the wealthiest Canadians to pay a little more so the middle class can pay less. We would introduce a new tax bracket for the top 1% on incomes over $200,000.
We would also cancel the Conservatives' $2-billion income splitting scheme that the C.D. Howe Institute has actually told us will only benefit 15% of Canada's richest families. Income splitting provides $2,000 more to those who do not need the help. It does nothing to help single parents or low-income families. In fact, according to the C.D. Howe Institute, 85% of Canadian households, those who need the help the most, will not get a dime from income splitting.
According to the Parliamentary Budget Officer, higher income families are not only more likely to qualify for benefits under income splitting, the average benefit actually rises with family income. The Conservatives are providing the most help to precisely those who need it the least. We do not think it is fair to ask struggling Canadians to pay for a $2,000 tax break for the Prime Minister's family or, in fact, for the family of the leader of the Liberal Party of Canada.
Income splitting is not just unfair, it also needlessly complicates our tax system and is bad for growth. It is complicated that we need to follow an 85-step process just to apply. Even the tax experts within the Department of Finance who wrote the rules got it wrong the first three times it came to Parliament. It is also bad for growth. The PBO has shown that income splitting will actually weaken our economy rather than strengthen it. He estimates that it would cost the equivalent of 7,000 full-time jobs.
The Liberal plan would do more to grow the economy and help families with the high cost of raising kids. A Liberal government would provide one bigger tax-free monthly cheque to Canadian families with children. Under our plan, every family earning less than $150,000 per year would receive more monthly benefits.
With the Liberal plan's new Canada child benefit, a typical two-parent family with two children earning $90,000 per year would get $490 tax-free every month. Under the Conservatives, the same family today only receives $275 after tax.
When we compare the two plans, the Liberal plan would provide an extra $2,500 per year tax free over what Canadians are now getting under the Conservative government. Therefore, that family making $90,000 a year with two children would be $2,500 better off every single year.
With the Liberal plan, a typical single-parent family earning $30,000 a year with one child would get an extra $533 tax free every month. That is significantly more generous than the $440 that family gets under the Conservatives currently.
A Canadian family making $45,000 per year with two children would receive an extra $4,000 per year after taxes under the Liberal plan for fairness than they are receiving right now under the Conservatives.
It boils down to choices, and Canadians have two fundamentally different choices now. The Conservatives are offering tax breaks for the wealthy, and the Liberals are offering a plan to help the Canadian middle class with a middle-class tax cut and a new, fairer, more generous and simpler Liberal Canada child benefit.
Liberals believe in a country that works for everyone. We will put more money in the pockets of Canada's middle-class families and those Canadians who are working hard to join the middle class.
In conclusion, today's motion focuses on small fees that are an irritant to Canadians. It is a step that we expect all parties can support. However, a Liberal government would go further by tackling the bigger issues facing Canadians.
We would provide real, meaningful help to Canadian families who are struggling and a middle-class tax cut that would put more money back in the pockets of the Canadian families who need the help the most. A Liberal Canada child benefit would help vulnerable Canadian families, low- and middle-income families with children who need the help the most.
We can afford to do that and still balance budgets, because we are prepared to make a choice by asking wealthier Canadian families to pay more. It is fair and it is also good for jobs and growth, because when we cut taxes on the middle-income and lower-income Canadians, it is more stimulative to the Canadian economy.
We will be presenting more plans for jobs and growth in the future and fairness for Canadian middle-class families. We are looking forward as a government moving forward to really helping those families after the next election.