September 11, 1950

LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

It is almost impossible to

do that in the case of indirect controls. You put them in, but you cannot measure their effect. You know that they have some effect, but it is not like giving an order to a man not to go down the street. You block the street, and he cannot go down. In the case of fiscal measures, and in the case of measures such as this, it is agreed that they are effective, but it is not possible to measure in advance just what the effect will be. This afternoon I gave some figures showing the shrinkage in instalment sales between 1941 and 1945, but even that of itself does not conclusively prove that that represented an absolute reduction in sales. There may have been other factors entering into it. There may have been Changes in prices or a greater amount of cash available; all that sort of thing. All that one can say is that all persons who are familiar with these things, economists and the like who are qualified to judge, do agree that measures of this kind have a definite anti-inflationary effect. It is really not possible to give any accurate figure as to just what the extent of that is.

Topic:   S82 HOUSE OF COMMONS
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Greenwood):

There is just one other question. It has been brought to my attention that there are approximately 90,000 houses under construction. Most of them are going to be occupied, probably by young people setting up in life. It was probably advisable that stoves were omitted from the list of taxable articles the minister mentioned last Thursday. It is pointed out to me that it would be highly desirable that the effect of leaving them tax free should not be negatived by too stiff regulation of instalment buying. These are the very people who will need to buy these articles on instalments, and I think it would be undesirable that stoves should go only to people who can pay in cash.

Topic:   S82 HOUSE OF COMMONS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abboit:

I agree that the regulations should be framed in such a way as to make necessary articles of that kind available to the people who need a reasonable amount of credit to pay for them. The purpose of this measure during the war, and now, was to see that there is a reasonable down payment and a reasonable period within which the future earnings may be mortgaged.

Topic:   S82 HOUSE OF COMMONS
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. Adamson:

Did the regulations that the minister mentioned, concerning automobiles during the war, and so on, result in many complaints from people?

Topic:   S82 HOUSE OF COMMONS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abboit:

No; this was about the only control I think that we did not have any real difficulty in administering. We did not get any real volume of complaints from anyone. The merchants who had to sell the goods

seemed to be satisfied. The finance companies who were discounting the paper seemed to be reasonably well satisfied, and we did not get any kicks from the consumers. I think it is fair to say that this was one of the control measures that caused us almost no trouble.

Topic:   S82 HOUSE OF COMMONS
Permalink
PC

Gordon Graydon

Progressive Conservative

Mr. Graydon:

As a matter of satisfying my own curiosity with respect to automobiles financed, has the minister any figures to show just what the average amount of the down payment on automobiles is in Canada?

Topic:   S82 HOUSE OF COMMONS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abboit:

I am informed that we have not that information available, but that is one of the things we have asked and we should get it in this survey to which I referred a few minutes ago.

Topic:   S82 HOUSE OF COMMONS
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Argue:

I have some figures here which are taken from the dominion bureau of statistics daily bulletin of September 5. In the first seven months of this year there were 267,000 new motor sales valued at $518 million. Of that amount 78,000 were financed for $108 million. In other words, only 20 per cent of the total value of all new motor sales in the first seven months of this year were financed. Of the ones that were financed, just looking at it quickly, I would say about three-quarters of the value of those automobiles was financed-in other words, about $1,500 per automobile. The total financing of all automobiles was only 20 per cent.

I should like to bring those figures to the minister's attention to substantiate what I tried to say on second reading of the bill and that is that even if this legislation is made retroactive in regard to automobiles, all you are doing, unless I misread the statistics, is working on the 20 per cent that are bought on the instalment basis. Of course, these are people who have not the full purchase price, and for that reason I hope the minister is very careful in the way he deals with this legislation.

Topic:   S82 HOUSE OF COMMONS
Permalink

Section agreed to. On section 2-Definitions.


PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

In section 2 there are four definitions or what purport to be four definitions. They concern the expressions "charge account", "consumer goods", "conditional sale contract", and "sold at retail". Of those four expressions three are given a definition in this section. However, "consumer goods" is not given any definition in the section. It is simply provided in section 2 (b) that "consumer goods" means "any goods or class of goods declared by the governor in council to be consumer goods for the purposes of this act". The minister has given some indication of the difficulties with which he is faced

in trying to draft legislation that will make it clear to what classes of goods the act will apply. Nevertheless I think he will agree that this lack of definition is most unsatisfactory; and the committee is entitled to as clear a statement as the minister can possibly give as to the kind of goods to which it is to apply. For example, questions have been asked about some classes of building materials, quite apart from installation in homes; and anything that is chattel property as distinguished from real property appears to be within the possible scope of this provision.

Topic:   S82 HOUSE OF COMMONS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

My hon. friend has raised a good point and one to which we have given a good deal of thought. The reason for putting this definition in this way which, as he pointed out, is really hardly a definition, is that we wanted to maintain in this act a real degree of flexibility. As the committee will recall, in the order during the war subsection 2 provided that this order applies to all goods now in use except, and then we had a long list of exceptions. It will be found that the extent to which the order applied was fairly wide.

As I said in my general statement a little while ago, here we really feel that we need to have a bit more information as to the extent to which this order needs to be used before we draft the regulations. We have therefore taken in the act the discretion to the governor in council to determine what will come within the general description of consumer goods. I think it is fair to say that the governor in council will and should be bound by that general description. But admittedly it lacks precision. The order in council which will have to be passed pursuant to this paragraph (b) would have to specify what those goods are; and under a subsequent section would have to be published in the Canada Gazette, be tabled in the house, and so on, so that it would be available in the same way as the order of the wartime prices and trade board was available during the war. But at this time I repeat that we feel that it is desirable to maintain a real degree of flexibility in the legislation itself. That is the reason that the definition is in the terms in which it is framed and is not in effect a definition in the strict sense of the term.

Topic:   S82 HOUSE OF COMMONS
Permalink
PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

As the minister has indicated, the principle of this bill has commended itself to the house. Nevertheless, I think one is bound to point out that the provisions of legislation of this kind are not those that parliament should be called upon to enact. If this bill becomes law, there will not be any opportunity for parliament to review the extent to which the provisions of the act may be applied to all manner of goods and classes of goods within the next two

Consumer Credit Act

years. We are simply handing every possible class of goods and all chattel property over into the keeping of the governor in council, having regard to the application of this act'. There are no limitations in the act at all. For my part I view with misgiving legislation as wide and unrestricted in its terms as that.

Topic:   S82 HOUSE OF COMMONS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I can see my hon. friend's point. I must confess this, and it is the voice of experience speaking. I believe that it is difficult if not impossible to carry out control measures of this kind without conferring a wide measure of discretion upon the executive. From my point of view that is one of the objectionable features of control measures. I do not like them as such. I do not believe in them as such, except under special circumstances. But when you are obliged to have them, I suggest that one of the penalties

if it is a penalty; and I know perhaps my hon. friends in the C.C.F. party would not agree that there was any particular objection to that-or one of the features of that is that you must give a substantial measure of discretion to the executive and to the people whom the executive appoints to administer them, in order to make them bearable as far as the public are concerned. You must have that degree of flexibility in there, and you cannot spell it out too definitely. You are likely to be tied up unless you keep parliament continuously in session so that you can make amendments from day to day. That is one of the features that I found inevitable in these controls.

Topic:   S82 HOUSE OF COMMONS
Permalink
IND

John Lambert Gibson

Independent

Mr. Gibson:

From time to time since the session started the government has indicated that it might be advantageous to restrict capital investment in industry in Canada. I wonder if the minister has given any thought to the possible licence that might be given in that field in order that it might not just be a straight retail proposition that we are considering restricting.

Topic:   S82 HOUSE OF COMMONS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

This bill, of course, does not relate to that type of control, and I do not know that I am anxious to get led into a discussion of discretionary controls at this time. Certainly experience again showed during the war that in the case of these capital controls -that is, the control of building products- the only way they can be made effective is by giving to some minister or to some official the right to issue a permit to build such and such a thing.

That is an extremely difficult control to administer. I know that my colleague, the Minister of Trade and Commerce, is often accused of wishing to arrogate to himself great powers. But I know that he just shudders at the thought of being

Topic:   S82 HOUSE OF COMMONS
Permalink

S90 HOUSE OF COMMONS


Consumer Credit Act asked to differentiate between people and to say who will build a store here, who will build a store there or who will build a factory here and who will build one there. That is therefore one of the most difficult types of control and one which might perhaps lead to greater discrimination than almost any other. That is why I for one like these indirect means of control, because they act impersonally; they have their effect impersonally. There may be some injustice as a result of their application, but they do not depend upon the whims of any individual or of any controller. That is why I am one of those who want to use the indirect method as long as it can be reasonably effective. As I said in my budget speech the other night, if you get into total war of course you may have to come to more direct measures and the people will probably accept them. But that is one reason why, up to the present time at any rate, the government has felt that the field of direct control in the capital investment sphere is one that we should not attempt. Section agreed to. On section 3-Regulations.


PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

There are three provisions in clause 3, subsection 1, each of which has a different purpose. In his statement this afternoon the minister indicated that the bill was designed to apply to three things. The first was instalment buying, the second was charge accounts, and the third was a matter that I shall mention in a moment. These provisions in paragraphs (a), (b) and (c) of section 3, subsection 1, seem to be intended to deal with these three matters that the minister spoke of this afternoon. I would point out that paragraphs (a) and (c) touch on matters that seem to be related to each other; but paragraph (b) touches on a matter which does not seem to be related to paragraphs (a) and (c). Paragraph (a) relates to the payment for consumer goods sold at retail under a conditional sale contract or any goods sold at retail under a charge account. Paragraph (c) relates to the repayment of loans, the proceeds of which are used to pay for consumer goods purchased by the borrower at retail. I mention, Mr. Chairman, that those two paragraphs seem to have this in common: It is the purpose of the loan which is the governing factor, not the security. But when we come to paragraph (b), we find that it deals with the repayment of loans wholly or partially secured on consumer goods purchased by the borrower at retail. That provision, it seems to me, makes not the purpose of the loan but the security the leading test. Having

regard to that fact, I wonder if the minister considers paragraph (b) of section 3, subsection 1, to be strictly necessary? In his remarks this afternoon I noted that he said this, and I take it that this particular remark applied to or foreshadowed section 3 (1) (b). He said: "It is necessary to take powers to regulate the repayment of loans which are made to finance the purchase of consumer goods. Such loans have the same effect as instalment credit, and must be treated in the same manner." He did not expand on that thought. It strikes me, Mr. Chairman, that there is a difference as between 3 (1) (b) on the one hand and 3 (1) (a) and 3 (1) (c) on the other.

Topic:   S90 HOUSE OF COMMONS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

My hon. friend is quite right. The purpose of 3 (1) (b) is this. Where loans are secured on consumer goods which are purchased at retail by an individual 3 (1) (b) creates the presumption that the loan has been taken for the purpose of purchasing the goods; and as was done during the war, the regulations will provide that the provisions of the act will not apply to a loan made foy a borrower. I am reading from the old order. "The provisions of this bill"-that was the wartime order-"shall not apply to a loan made to a borrower who signs a statement that the proceeds of the loan are not intended to be used and will not be used in whole or in part toward the purchase of goods, or to replace money used for the purchase of goods, and no person shall make a false statement to this effect." If consumer goods are purchased by a borrower at retail and1 are then used as security for a loan a presumption is created as a result of this section that the loan has 'been obtained for the purpose of making the purchase in whole or in part; unless the borrower takes an affidavit, makes a declaration to the lender, that that is not the case, that the loan is not for the purpose of purchasing the goods

and that was followed all during the war. In the personal loan department of banks the borrowers were required to make a declaration that the loans which they were making were not for the purpose of purchasing goods on terms contrary to the provisions of the consumer credit order. Admittedly there would be opportunities for evasion in that case, and a hundred per cent enforcement would not toe possible. But proceeding on the presumption that I believe to be the case, namely, that the vast majority of people are honest, and will not make false declarations, I am told that the operation and enforcement were reasonably satisfactory.

Then paragraph (c) of course relates directly to a loan, the proceeds of which are used to pay for consumer goods purchased

by the borrower at retail. It is clear in its terms, and the point which my hon. friend has quite properly raised is, what is the distinction between (to) and (c)? And that is what I have endeavoured to explain.

I have an amendment to this section which I shall have to ask one of my colleagues to move. In drafting it and attempting to make it restrictive we referred to the repayment of loans, but did not indicate that the restriction should apply as well to the loan itself, and therefore my amendment would add as the concluding words of 3 (1):

And with respect to the amount of loans referred to in paragraphs (b) and (c).

Topic:   S90 HOUSE OF COMMONS
Permalink
LIB

James Joseph McCann (Minister of Mines and Technical Surveys; Minister of National Revenue)

Liberal

Mr. McCann:

I so move.

Topic:   S90 HOUSE OF COMMONS
Permalink

September 11, 1950