Mr. Speaker, I am thankful for the opportunity to rise to speak to this motion today.
I guess it will not be totally surprising to indicate that I will not be supporting this motion, and I do not believe that most of my colleagues will either. It is not necessarily because of the arguments put forward by the member for Sudbury, but because I think that separating the banks from everything else is not realistic. We have to look at our ATM and ABM network as an integrated network of not only banks but also the private providers that we often see out there.
On that basis, there are a couple of things at stake, such as convenience and the competition issues. However, I think there would be unintended consequences of merely trying to throw a fixed fee on this network.
I would also say that I believe our government is going about this correctly in regulating in a smart way via the information that is out there for our consumers to make wise and informed financial decisions. Number one is the regulatory approach that we are taking, but I also want to talk for a few minutes about our comprehensive financial consumer code, which we are out consulting about right now.
Over the past number of years it has been interesting to watch the proliferation of technologies. Banking has changed significantly. I remember not so many years ago, a few decades ago, that some of our farmers and other people would leave their house in the morning with a pocket full of cash and then come back at the end of the day and check the amount in the other pocket. They would know whether they had made a profit that day if there were more money in that pocket. Also, back in the days when my father was in the provincial legislature in New Brunswick, I remember that he always carried cash and hardly ever did anything on a credit card or anything of that nature. He always had cash.
To me, when we look at the proliferation of technologies, I think we have definitely made things much more convenient as time has gone by. We can see that with the number of transactions and the data from the Canadian Bankers Association on those transactions. When we look at cash withdrawals from 2005 to 2012, they have gone down, and so have deposits and bill payments. As we go to electronic commerce and online banking, we are starting to see those changes.
I agree with some of the points made earlier in that there are some cases where a business only takes cash, and in those cases we certainly need it. However, when we look at these types of things, we can look at being a futurist as well.
It seems to me that at some point in time we will live in an era where we might have a chip, perhaps in our rear end or somewhere else, potentially. As we go through a store, it would be scanned and the money would be transferred. If there would be a charge for that, then the NDP would be really bummed, I can imagine.
That is just speculation, but I would love to be a bit of a futurist to know where this will go. From the strides we have made in the past number of decades, we can certainly anticipate that we will very much be a non-cash society, and probably very quickly.
When we look at the economics of the ATM, regulating a fixed fee such as this is misguided, because we forget about the convenience aspect of ATMs. Here, one of the points made by my hon. colleague across the way was about his store not having an ATM and there being no bank ATM in his community. In my community there is no bank ATM either. I live on the outskirts of Fredericton where there is no bank ATM. However, there is an ATM at my local convenience store and the surcharge is $2.25 to use it. I asked how much the ATM was used, and the answer was “significantly”. It is used a lot, which is somewhat surprising, but in some ways it is not.
As I said before, what people fail to take into account is the cost. In each of these cases, there is a cost to purchasing the machine, and this particular person is sharing in that cost. There are a lot of private white label ATMs. Space in a store costs money, as does the communications and encryption that goes along with these types of transactions. There is a cost to the physical security required, although there may be a bit of control when the machine is located inside as opposed to outside a store. Signage, advertising, fraud and upgrades also cost money. In most cases vendors in convenience stores, at least in this person's case, actually guarantee the float for the ATM as well, so there is an opportunity cost with respect to the vendor's own money being used to ensure that the machine is stocked with cash.
From that standpoint, if there were no surcharge in place, there would be no ATM at that location. Would the bank put in an ATM at that location? Around the outskirts of towns in my riding, some Irving convenience stores have a bank ATM because there is volume and when a store gets volume, transaction costs can be kept down.
I would argue that capping would affect the integration of these ATMs. If banks eventually cannot service some of these lower volume areas, they are going to get out of that business. They would sell those ATMs, which would go to a private operator, and the resulting surcharges could be anything, even extensive.
We should be a bit careful when we say that we want to have a fixed fee like this because there could be dire consequences. It was not too many years ago that the only choice that people had in some small rural communities and other places was to physically go to a bank. That bank would be open probably from 9 to 4, not some of the business hours banks have today. They would actually have to go and wait in line and take out who knows how much cash. However, that being said, there is an opportunity cost for those people from convenience stations. They can go to a place very close by and not burn gas to go maybe 30 or 40 miles at $1.25 or $1.30 a litre. They are better off than they would have been had they gone to a bank in the community.
Therefore, let us be careful and ensure that we do not do something with unintended consequences, which I believe would mean that we would maybe have fewer ATMs.
In the late 1990s, the U.S. had a big debate about this. It was proven that as surcharges went up, the ATM network actually expanded. More ATMs went into places like convenience stores, and private operators were doing that. This is one of the items they ran into.
Without an adequate return, these surcharges would discourage the deployment of ATMs to our rural areas as an example, and that would mean less choice. That would mean there will be slower growth, a limited number of the access points, and in effect, maybe some of the ATMs will be sold to non-owners.
The second point I would like to make is about regulating in a smart way and doing it from an information standpoint. The point was made that if people want to take out their own money, then it should be free. If a person takes cash out of an ATM in a convenience store and it is not a bank ATM, that person must realize that the money is coming out of his or her account but is not his or her cash. As I previously pointed out, the cash belongs to the vendor who loaded up the machine, so there is a cost to that transaction. It is not as simple as saying that is double-dipping.
With respect to the regulatory side, we have had some success over the past little while on this. I would like to comment on a couple of things that have happened in the dialogue with the banks. We have actively engaged the banking industry on the issue of ATM fees and have stressed the importance of consumer choice. One of the comments made before was about seniors, the disabled, and students. The banks have reacted to that and have responded by expanding some of their ATM networks near colleges and universities to help students avoid fees. The banks have also started unveiling low-fee accounts for seniors and students and are improving access for the disabled.
That is not all. The Financial Consumer Agency of Canada has provided consumers with information on banking costs, such as ATM fees. The more information that is out there, the more informative it will be for the actual consumer, because there are cases when consumers actually back away because they are provided that transaction fee. When they actually see it and are asked if they want to go ahead with the transaction, many people decide not to.
From a regulatory standpoint, that is why we have taken those numerous steps. For instance, recently the Minister of Finance announced new prepaid products regulations. A comment was made earlier about prepaid cards.
I would also like to comment on the work actually being done, as we announced in economic action 2013, on the comprehensive financial consumer code. The main goals are to better protect consumers of financial products and to ensure that they have the necessary tools to make proper financial decisions. The tools must be adaptable to suit the needs of consumers today.
As I pointed out, there has been light years of change since even a few decades ago. I remember when people taking a trip would actually go to the bank and get travellers' cheques and sign all the cheques and take them with them. I am not as young as I look. We would take all these travellers' cheques or take out big wads of cash. At the end of the day, these debit cards have provided us with a much more secure environment, so there is an opportunity cost as well.
However, we also want to provide an exclusive and comprehensive consumer protection regime. That is why this consultation we are doing with the public will be important as we develop similar products and services to replace a fairly wide and broad mix of legislation and regulations. The consultation process is on the way. That will be a better way for us to address some of the impacts we might run into.
It is important that we look at these ATMs and ABMs not just on the bank side but as a network. As I pointed out, the integration of these services is very much in play. In our rural areas, there is an impact from these private producers.
In conclusion, I would point out a couple of things. One is the regulatory side. The government is tackling this with the right approach. We are trying to keep taxes down for families so that they have more money in their pockets. That is a responsible approach.
I also think it is important for us to ensure that when we regulate, we regulate in a smart manner and not in a way that will hurt competition. Maybe we need to look at ways to provide more competition in the market and more ATMs as opposed to putting a cap on fees, which could lead to unintended consequences for consumers.
I will close on that, and I am open to questions from the opposition.