Mr. Adrien Lambert (Bellechasse):

Mr. Speaker, first I would like to commend whole-heartedly the mover of the motion which is now before us, as it is a very important motion dealing with procedure in this House. It aims at determining the best way to proceed to administer this country as well as possible. I listened with great interest to the mover's words and I am convinced that they will pave the way for a review of the Standing Orders of the House.

Like hon. members who spoke before me, I believe we should be able to go through more legislation in a shorter time therefore I am not opposed to-and I have even said before that I would support-a modification of Standing Orders to cut the time limits for speeches. I agree with the mover that the modern languages we know lend themselves to a more succinct expression. All we have to do is investigate the matter deeply; in this way we would enact legislation which would be clearer and the voters would have a better opportunity to judge the efficiency of Parliament.

Another point which has caught my attention and about which I have already personally introduced motions to try to

646

November 1, 1976

Changes in Standing Orders

correct situations I sometimes consider as something farcical, dealt with Standing Order 43. We have witnessed one of those situations last week when a very important motion was introduced which seemed to meet with general acceptance in the House. But unfortunately the Chair, with much hesitancy, did not accept the fact that there was unanimous consent. I have discussed this fact with Mr. Speaker who told me that a "no" had been heard. Everybody from every corner of the House was wondering whether someone had actually said "no".

The mover of the motion said earlier that on the unanimous consent requirement, the Standing Orders should be amended so that it would take five members to have a motion rejected when unanimous consent is required. And I would add that those five members should be identified and their names printed in Hansard. Some Canadians and people specially interested in the work of the House have asked me time and again how is it that when someone moves a motion one member alone can stand up against 200 others and we do not know who he is or what is his name? 1 think that if we would bring forward such an amendment to the rules, it would be a significant improvement.

We are now talking about televising the debates. Obviously it is a matter of a very high importance. It might prove very effective to shed more light on the Canadian Parliament but it could give rise to some disadvantages like those mentioned earlier by the hon. member for Winnipeg North Centre (Mr. Knowles) when he spoke of seats which are so often empty and of the numerous questions that Canadians would ask themselves when viewing that on the screen.

Mr. Speaker, this leads me to make a suggestion about how to attain this goal and I think we are capable of doing it. Given the considerable number of House committees and since their work terminates in this very place, we can conclude that they play a leading role.

Well, I feel that days should be designated for committees to sit, and others for the House to sit, but on one condition: that hon. members must be very punctual, both in committees and in the House. However, hon. members should not think: This is not the week when my committee is sitting, or neither the committee nor the House is sitting on Monday, Tuesday and Friday of this week, which means that there will be only two working days this week. I think this would be an abuse of our Standing Orders I agree that more hon. members should be freed from their personal duties to devote more time to the good operation of Parliament and the good administration of our country.

I hope therefore that the Committee on Procedure and Organization has already looked into this, but it should intensify its study and not let this issue drag on. If this is something which will be good in two or five years, it ought to be good also this year, and it should be possible to adopt this regulation without delay.

Before the proceedings of the House can be televised, I have a suggestion to make. I think it could interest the public. Each day the House is sitting-10.30 p. m. would probably be the best time-one member of each party who took part in the

debate, as the one on Bill C-16, would be requested to go on the air to inform the Canadian people about the position of his or her party. Thus the public would be informed of the legislator's intent, without the help of the commentators who are well intentioned but who do not always respect the legislator's true intent.

If a member is requested to go on television each evening at 10.30 or 10.45 p.m. to repeat before the whole Canadian population what he said on such or such bill and why he said so, he will think twice in the House because he will have to "report immediately, on the same day, what he said and what was his position on a very important matter. All issues are important, but more so Bill C-16 because it concerns all comsumers.

I make that suggestion and trust that, in the not too distant future, a way will be found to give the people more information. I have always noticed, Mr. Speaker, that a well informed people is a people who cooperates and is easier to govern.

For many years I worked for a municipality. Though the law did not oblige me to do so, through news releases I informed the public of the decisions made by the members of the council, so that they might know about the administration. In the light of that experience, I found out that we could get far more cooperation. The work of the mayor, the councillors and the secretary treasurer was made that much easier. People did not disturb them uselessly because they had received the news releases.

T should like to deal very briefly with the calendar of the business lined up for a given session. On that motion last week, everyone seemed to agree that the government should have to draw up the work program for the various sessions. This is the second session of this Parliament. When the session opens, we should be advised of its duration, keeping in mind, as much as possible, the breaks for Christmas, for Easter, and for the summer holiday at the end of the school year, to allow parliamentarians to have some family life while the children are on holidays. Parliamentarians should also have some holidays, and know ahead of time when these will come. It is always annoying not to know what is coming up.

At Christmas time, we wonder whether the House will adjourn on December 20, 22, 23, 24 or 25; nobody knows and everybody is nervous; our wives are nervous and our children say: Daddy will not be here. This situation becomes depressing and if we are unable to adjust ourselves and work as everybody else, we do not prove to be very intelligent.

We should also insist so that this change be final. When I know beforehand how many days I have to do a given work, I take the necessary arrangements to be able to complete that work. I am convinced that our proposals, whatever they may be, would match those of the government so that our legislation is not passed in a hurry but rather in an intelligent manner, in order to give our country a healthy administration but within a specific time limit. We might get used to work in such a spirit and I am convinced we would manage to do

November 1, 1976

something wonderful. We would really safeguard the function of this institution which is called Parliament, the highest authority in this country. At the same time, we would show the people that we are serious, aware of our responsibilities, and we would show them an example of good management rather than looking like people who are hesitating, who do not know where they are heading to.

These are, Mr. Speaker, the few comments I wanted to make and before concluding my remarks, I would like to say the following: In the House, some ideas are communicated through members of Parliament who represent many people. One day I heard the right hon. Prime Minister (Mr. Trudeau) say something which I liked and I enjoy repeating it to the people. He said it during the debate on an election funds bill. At that time, of course, everybody thought the same thing: what difference could it make, how could we help make electoral funds more democratic? And the Prime Minister said that all political parties have the same obligation to communicate the views of the people they represent.

Even though everybody does not share the government's view, whether they are Liberal or Progressive Conservative, people with different opinions are nevertheless as good Canadians as others; but they do not share the same view. At that time, it was said that the people are entitled to be well represented and to have their views communicated to the House. We tried to make electoral funds more democratic to give equal opportunity to all these opinions. This is democracy. This is how I understand it and I am pleased that this is the way it was accepted.

If it has been possible to reform that matter, it should also be possible to do so in the area of procedure, a reform that would receive the approval of all members and of those who will follow us. Such a reform would allow the House to be more efficient, to pass better legislation, because there would be improved drafting; instead of being tiring for members, it would take the best of them and give them the opportunity to do something better. I apologize for taking more than five minutes, but in any event I assure you that if the House does modify its Standing Orders, regardless of the time limits for speeches, I shall abide by it.

Mr. Howard Johnston (Okanagan-Kootenay):

Mr. Speaker, I can appreciate the need for rule changes in this parliament. To some degree I can accept a call for greater efficiency, although a chill goes up and down my spine whenever I hear that word used in relation to the democratic process. Democracy is notoriously inefficient, but it is far better than some of the alternatives we have seen in the world which could lay a great claim to efficiency.

While I could support many aspects of the motion put forward by the hon. member for Halifax-East Hants (Mr. McCleave), I do not at all see that we should confuse the issue of reforming the rules of this House with the far different idea of broadcasting or televising directly the proceedings of this Chamber. I do not at all mind destroying the unanimous

Changes in Standing Orders

agreement to which the hon. member for Winnipeg North Centre (Mr. Knowles) so fondly referred.

I do not at all mind being flatly contradictory to many of the remarks made by the hon. member for Eglinton (Mr. Sharp), who I know has been attached to the dream of televising this Chamber for a long, long time. Since he has been relieved of higher responsibilities it seems that he is about to devote himself to a drive to achieve that particular aim. Throughout all the speeches, particularly those of the hon. member for Eglinton and the hon. member for Winnipeg North Centre, we find this absolutely naive faith in the powers of television somehow to improve the functioning of this Chamber. I cannot understand how people as sophisticated as these two hon. members in so many fields of endeavour can remain so totally innocent of the effect television has on the institutions it touches. I am altogether unable to comprehend that.

One would assume that the world has been improved in every way in the years since television became widespread in North America, but we can look around us and see what seems to be the opposite. Sport is not better because it is televised. The Olympics, in a sense, are not better events because they are televised. All kind of things creep into the sports world because of television.

Crime is rampant in North America. One could assume that if television could improve a situation then by televising police stories and so on we would have developed a more peaceful and pleasant society. But that is not the case, Mr. Speaker. Yet we are asked to believe that somehow televising this institution would have a salutary effect, not only on it, but that democracy would be enhanced in this land. I would say that is utter illusion; worse, it is folly, and beyond that it is dangerous to democracy itself.

One of the things at stake is the representative nature of our democratic system. I know there are people who hark back to dream of direct democracy and feel that somehow democracy which started in some small city state in Greece, where everyone could be present, was the epitome of democratic government and that everything we have had subsequently, because of larger areas and greater populations, has been a poor substitute. I do not believe that, Mr. Speaker. I believe the representative system of democracy that has been developed, particularly through the British tradition of a constitutional monarchy, is the best guarantee of democracy that the world has ever seen. This would be endangered by televising this Chamber, and it would be altered by televising this Chamber in a way that the hon. member for Eglinton and the hon. member for Winnipeg North Centre cannot predict.

I would remind the hon. member for Winnipeg North Centre and the hon. member for Halifax-East Hants of a television panel on which 1 sat some eight years ago when I was first a member of this House. This was broadcast over an Ottawa station. I would ask them to cast their minds back to it. One thing it showed was that you could not predict in advance just how television is going to work.

80001-421/2

November 1, 1976

Changes in Standing Orders

I am not the only person who suggests this. People who know the medium well, such as Malcolm Muggeridge, that long time television personality, agree. Tie has said that the media enormously distort life.

Elear, hear!

Mr. Johnston:

He says that people are given a surface picture which they come to believe-the legend made visible, the word become television. He contends that it promotes complete conformism, and that words like "population explosion" are bandied about as if they meant something.

Blaik Kirby, writing in the Globe and Mail and speaking of Muggeridge's series "A Third Testament", said something that could be applied to this subject when he said that nothing can be done really well on television that is not properly adapted to the visual medium, and that mere illustrations and background music do not make a program.

Hear, hear!

Mr. Johnston:

I hope those hon. members who are applauding will really let that sink in because I am afraid it is only on the surface as yet. We come here to debate and to legislate; that is the onus on us as representatives no matter how far we have come. Once we begin televising this institution the demand will change, however, and it will not be for better debate and certainly not for better legislation, but for better television.

As one listens to hon. members one would think it was not this country that produced the prophetic figure of Marshall McLuhan who said, and was so much misunderstood, "The medium is the message". It is the medium itself that intervenes, alters, and ultimately destroys. We must approach it with extreme caution.

I find nothing in the remarks of hon. members to suggest that we have reached the point of control over that technology where we can safely televise this institution without endangering democracy itself.

Mr. John M. Reid (Kenora-Rainy River):

Mr. Speaker, I just want to say in the few moments left that the House of Commons has reached a point in its development in Canada where it will have to make some difficult choices in the direction it wants to take. The hon. member who has just taken his place said that the media distorts. I would submit that any medium of communication distorts. The dilemma facing us in the House of Commons is that we exist in a vast chamber very seldom heavily populated, and our words of wisdom are filtered out through the medium of print.

If we look at statistics of how people obtain their news in our society, unfortunately for those in the written press who sit up and smile down at us, it is television from which most people obtain their understanding of the world. What do we do as politicians who seek to communicate with as many people as we can? We sit here and say that that medium which is declining in influence, the written press, is the medium we

choose to communicate with the Canadian people. That is obviously a foolish proposition.

The idea of having television in the House of Commons is to try to reach the community we seek to represent in a way which is important and meaningful. I recall in the good old days when all we had were our lungs to reach an audience, and great speakers were developed with tremendous voices that could carry over thousands of acres. But radio came along and a different kind of voice was required. The great orator of the nineteenth century disappeared and a new kind of voice, such as that developed by the hon. member for Assiniboia (Mr. Goodale), emerged.

The Acting Speaker (Mr. Ethier):

Order, please. The hour appointed for consideration of private members' business having expired, I do now leave the chair until eight o'clock p.m.

At six o'clock the House took recess.

Mr. Grafftey:

Mr. Speaker, before being interrupted at five o'clock I had been talking about the aims of the bill. I asked, will it protect Canadian borrowers from loan sharking and all forms of excessive interest? We hope that the bill will prove a step forward in this regard. As the minister said, information received from our police authorities shows that loan sharking at present is a $3 billion annual industry which feeds on the abject misery of low income earners especially. I know we shall want to examine critically those aspects of the bill in committee, to make sure that we are making progress in this field.

I repeat that I do not lay all the blame for what has happened on the minister's shoulders; yet we, on my side of the House, feel that the delay in introducing this kind of legislation is somewhat, although not totally, responsible for the amount of loan sharking which has grown up in this country

November 1, 1976

over the years. We do not say that loan sharking does not take place in other countries, in the western hemisphere especially. The point is that we are concerned about what happens in this country.

Some talk of usury, as it was called in biblical times; some call it loan sharking; others, the charging of excessive rates of interest. Whatever one may call it, the point is that the rectifying of such problems should be one of the central thrusts of this legislation. Having said that 1 add that we, on my side of the House, are not convinced that the measures as outlined in this bill will by themselves rectify the problem of loan sharking.

The minister has already outlined some of the approaches he will take vis-a-vis criminal sanctions. It is our hope that, apart from anything this bill may attempt in the near future in relation to loan sharking, clear and explicit proposals will be brought forward for amending the Criminal Code, to include loan sharking. We say that such provisions should be added to the Criminal Code.

I now mention the recommendations made by the province of Saskatchewan in this regard. It is the opinion of that province that the question of loan sharking has not been dealt with to any great depth in this proposed legislation. Further, the appropriate body in that province has expressed the opinion that loan sharking cannot be prevented, and can be effectively dealt with only by specific legislation aimed at the practice. Loan sharking should be an offence under the Criminal Code, and attempts to deal with it within an act intended to regulate legitimate lenders only reduce the ability of the act to deal with legitimate lenders. Similar language is to be found in other briefs, whether emanating from consumers' associations in Canada, provinces, or other interest groups.

Having said that let me add that we, on this side of the House, intend to make sure, by introducing amendments if necessary, that the loan sharking provisions have teeth in them. I want the minister to listen to us. We are in favour of clear sanctions against loan sharking being included specifically in the Criminal Code.

What can one say about the minister's stated goals relating to protection against excessive interest charges? I will not be definitive. Members on my side have listened to the representations of interested parties; frankly, although we have not made up our minds, we remain unconvinced about the effectiveness of some parts of the bill. We feel that loan ceilings and rate limits ought to be included in the bill. Perhaps as we consider this bill further the minister will tell us more about his concept of the unwarranted rate.

I refer once more to the Saskatchewan brief.

Mr. Gilbert:

Hear, hear!

Mr. Grafftey:

It says that the customers of this country's finance companies will only benefit from a borrowers protection act if that legislation includes provisions for loan ceilings and rate limits. I believe the Consumers Association of Canada also says something pretty pointed about this. The

Protection of Borrowers and Depositors brief goes on to say that without such provisions the improvements made will be minor compared to the cost to the consumer, and the legislation may well prove to be a paper tiger which works to the detriment of the consumers it intended to help. As the brief says:

The elimination of loan ceilings and rate limits may eventually only lead to demands for the re-introduction of same, in much the same way as the repeal of the usury laws led to demands for the re-introduction of similar legislation.

The minister, as the bill proceeds through its various stages, will have to come clean with the opposition and reveal exactly what he means by unwarranted rates. He will have to come clean with the Consumers Association of Canada with regard to the proposed abolition of fixed interest rates for small loans. I question it. I know that the traditional stance from critics of the opposition will be, "Make up your minds".

We do not think that the last word is in here. I say to the minister that it will be a very important aspect of the legislation when we hear the various representations before committees and otherwise. I simply repeat, with the Consumers Association of Canada, that we seriously question the proposed abolition of fixed interest rates for small loans, whether we intend to define in the bill or in the regulations what constitutes a small loan.

In relation to the minister's approach to the unwarranted rate, he has already stated that he does not expect much litigation to arise front this aspect of the bill. I agree with him. Historically speaking, it has been proven over the years, certainly in the past 50 years, that low income borrowers, and that is essentially who we are talking about, are not very litigious in this regard. Therefore it will not be through litigation that we will solve this. At least the minister does not expect much litigation.

Mr. Gilbert:

Low income people cannot afford litigation.

Mr. Grafftey:

They cannot afford it. That is quite true. At any rate that is another reason why we on this side want to hear a lot more about the basic philosophy and the practical application of the unwarranted rate as it affects consumer borrowers in general and low income people in particular.

I intend to read from the Consumers Association of Canada report. I am not just going to quote it. I will make quite sure as I put these thoughts on record that I am speaking for myself and, I hope, this side of the House. I quote:

The CAC's most severe reservation concerns the government's proposal to eliminate the limits on interest rates for small loans. Until now these have been regulated under the Small Loans Act.

The minister mentioned that in his opening remarks this afternoon.

-government officials may believe that the free market is the best mechanism for ensuring that interest rates are reasonable.

I speak for myself in this regard and, I think, for many members in this House who have met with low income credit consumers who were in an awful bind. I believe that the free

November 1, 1976

Protection of Borrowers and Depositors market is not necessarily the best mechanism for ensuring that interest rates are reasonable.

Hear, hear!

Mr. Grafftey:

It further states:

Most people are not very sophisticated money shoppers,-

This does not necessarily just refer to the low income shopper. When people really want credit, maybe they are not always sophisticated shoppers.

-and they do need the protection that realistic interest ceilings afford to prevent price-gouging by relatively powerful lenders.

I say to the minister, let's not dream, let's not kid ourselves. Basically I am a free enterpriser. However, if we are going to be serious about legislation like this, we should pay very close attention to those remarks.

Overburdening high-risk people with loans at say 48 per cent or 55 per cent will not do much to help them deal with the everyday problems of being poor ... low-income people will be much better off if government decides to help them directly-through ... community debt counselling facilities and other programs implicitly designed to meet the needs of the poor.

It further states:

A major objection relates to the decision to drop federal licensing of small loans companies.

In my view that could be a very major objection. The evidence is not all in, but possibly we will have a major objection relating to that decision.

As well, the bill allows consumers only limited means to obtain restitution for losses incurred as a result of illicit lending practices.

We then come to another question put by the minister in terms of his goals for this bill. Will the bill provide the public with more and better information on all credit and deposit dealings?

Obviously the minister is starting out by making progress in this regard. However, if one looks at the Senate and joint hearings of the past, the various commission recommendations, and at what has been said by previous ministers, we on this side cannot be blamed for being just slightly confused by what the government has said to date in this regard.

Webster defines interest as "the price paid for borrowing money". I am not too shy to admit in this technical area of these considerations, whatever that means, that how we define interest affects the notion relating to the minister's stated principle of eliminating unnecessary complexities and confusion in the credit field. We do not think the last word is in this part of the bill about full and complete disclosure, be it interest rates or ancillary costs which the minister talked about in his opening remarks.

I have had consultations with many financial institutions, consumers, and consumer bodies. It seems to me that we can ensure that the individual consumer can do realistic comparative shopping from one institution to another if we make sure in this legislation that the interest rates and ancillary charges are clearly delineated and spelled out.

Let us not rush into this proposal. I rather think the minister is contemplating a few amendments to the legislation in front

of us. I know that in spite of Webster's definition that interest is the price paid for borrowing money. We can get into the concepts of money rent and that sort of thing.

We would be very negligent if in our approach to this part of the legislation we forgot entirely about common usage over the past years. Interest is interest, and with regard to these ancillary charges of on-loan contracts, whether they are insurance or administrative, as the minister so ably delineated and made comparisons about in his opening remarks, we have to be very careful in this part of the legislation. The minister is on the right track, and that is very laudable, in making sure that the individual borrower, and borrowers collectively, can really do comparative shopping and get the best deal. We have to ensure that part of the legislation spells out clearly interest plus the ancillary charges. Whether we want to lump them all together in one rate is another matter. I warn the minister that we may have lively meetings in committee unless some minds are changed in this regard. I believe we must approach this part of the bill with great care. I know that economists can be very confusing in this regard. They talk about "retaining flexibility, then money rent will be a working definition of interest."

We can listen to economists until the cows come home, but it is possible that what we have to do in this legislation is make sure we spell out to the consumer the real cost he is paying on one hand and separate the charges on the other. If, in some ancillary part of the information given to the consumer, we want to calculate the real interest rate he will be paying, as the minister did so ably in his remarks, well and good. But I am a little leery of accepting the computation of interest rates by lumping them in holus bolus with ancillary services because, if you carry that principle over to transactions outside the field we are discussing, we could end up in some degree of confusion. The minister's argument in this regard appears at first glance to be inconsistent with the recommendations on consumer credit made by the Joint House and Senate Committee on Consumer Credit and the Cost of Living.

We hear time and time again that the interest rates and ancilliary costs must be properly presented. That goes without saying. The first recommendation of the committee, dealing with truth in lending, says that every person or financial institution extending consumer creditshall be required by law to disclose to the consumer the total cost of that credit, expressed both as a lump sum and in terms of simple annual interest.

There is no mention here of potential income forgone, not of an "effective" rate of interest. I am taking a fair amount of time to deal with this important aspect of the bill because it is one which must be handled with care to make sure we have drafted the best clause possible.

The committee, in its report, expressed a desire to ensure that the consumer was aware of both the dollar cost of credit and of this cost expressed as a percent per annum of the amount borrowed. It took the view that since the role of both the minister and the committee was to ensure cost of credit

November 1, 1976

disclosure so that the consumer could make a reasoned decision about using credit and obtain credit from the most economical source, the apparent disagreement among the minister, the committee, and the Canadian Consumer Loan Association is one based upon methods rather than goals. We recognize this, but again 1 have to ask the minister: did his department really consult the Consumers Association and the financial institutions with regard to the method of disclosure, comparative shopping, rate shopping? We shall have more to say in this regard.

The final goal, as stated by the minister, was to define strict and uniform rules to protect all borrowers and depositors and to rationalize federal credit legislation. It is a worthy objective, but will it be achieved? We have to move into this legislation with the greatest of care because, as a result of delay on the part of the federal authority, the provinces have naturally moved to a greater extent in this field. This is one reason for suggesting that we move forward into this aspect of the legislation with great care, though not necessarily slowly.

I should like to terminate by addressing my remarks to those aspects of the bill which particularly affect people with low incomes. I believe that if each and every member of parliament could get up in the House and recount his or her experiences of credit problems involving low income people, some tragic stories would be put on record. I share the view of the Consumers Association of Canada that part of the answer to low income credit problems lies in society assuming responsibility for providing an adequate level of basic support so that credit is not needed. This is why it is very wise that the bill before us should be given to the committee on social welfare.

Moreover, since the unwise use of credit is often cited as one of the major sources of personal bankruptcy, public counselling under the sponsorship of credit institutions and government should be vastly extended. Whether we can amend this particular bill in such a way as to make provision in this regard is yet to be seen. The feasibility of providing low cost credit in certain circumstances should also be explored. In any case the vulnerability of the low income population with credit difficulties is now well known and should therefore be a priority target. The minister is making a beginning with this bill. Maybe through detailed and meaningful hearings at committee stage we can do more in this regard, and if the minister decides to take such a course he will find us, on this side of the House, most co-operative. We wish to say, in fairness to the minister, that we too favour the retention of licensing requirements for regulated lenders subject to exemption of lenders already governed by federal or provincial licensing requirements.

Along with the Consumers Association I am worried about the special hardship which could be associated with the use of people's homes as security for consumer loans. This is another aspect we should be very careful about as we proceed.

Both the Minister of Consumer and Corporate Affairs (Mr. Abbott) and the joint committee recommended that a mech-

Protection of Borrowers and Depositors anism be established to supply credit at reasonable interest rates to those on low incomes. A low income does not necessarily render credit infeasible or unwise-the minister has already alluded to that-and credit supplied to those in need may well assist them in breaking out of the poverty circle.

In his opening remarks the minister said that very often a low income borrower does not in itself necessarily mean a high risk borrower. Past ministers have referred to experiments undertaken by the Royal Bank in a low income district of Montreal. There credit is granted to low income workers and welfare recipients at low rates of interest. Assisted by credit counselling from bank officers, the repayment record of those granted credit in this experiment has been excellent.

The joint committee recommended a federally controlled extension to the banking system to grant credit that "would be repayable over an extended period . . . would bear a low rate of interest" and "would be made only for provident and productive purposes related to the preservation of home and family". With the addition of financial counselling services, a low income credit scheme would be a practical mechanism. I am not suggesting, of course, that we delineate a vast low income scheme in this bill, but I would hope that with the provisions contained in the bill we can make some progress in this regard.

We must also consider the establishment of a low income credit scheme. Credit education is a must. There are so many things that fall within the purview of the minister in the area of consumerism, whether it be motor vehicle safety, drugs, food or what you will. We can work, and work, sincerely, across the floor of this House for the benefit of consumers, but unless they are properly informed as a result of our actions in this House or elsewhere, and by education at the grass roots level, if you will, we will not make much headway. Therefore it is my hope that provincial education systems will consider adding a compulsory personal money management course to their curricula. Perhaps this would have been impractical in a bygone age, Mr. Speaker, but in this day and age we should encourage our provincial counterparts to take this step so as to complement what we are trying to do on the floor of this House. In the view of those on this side of the House, this is a classical problem that involves government, the consumer, and the corporate entity.

I congratulate the minister for much that he said today. I do not doubt his sincerity, and again I say that we are in accord with most of the basic principles of his approach. We will work hard with the minister to produce a better law, but in spite of the ruckus when I said this before the dinner hour I am certain that unless we can delineate a common interest between the corporate sector, the consumer sector, and government in its general interest role, we will get nowhere.

I have been told time and time again that the consumer and marketing boards, for example, are mutually exclusive, that you will either be before the consumer or before marketing boards. I do not accept that. I accept that you must have viable producers before you begin to protect the consumer; but that does not mean to say that often the government does not

November 1, 1976

Protection of Borrowers and Depositors have to take tough and unpopular decisions. After all, you cannot please everyone all the time.

At the risk of sounding repetitive, let us all on both sides of the House resolve to help the minister draft a good law. By consultation and by opening up communications we can show both the corporate sector and the consumer that their interests are enhanced; we must demonstrate to each where their mutual interest and common ground lies. Again 1 congratulate the minister for his major thrust in this House. We on this side of the House will be here through all stages of the debate and in committee so as to make sure that this is the best possible law.

Mr. John Rodriguez (Nickel Belt):

Mr. Speaker, having listened to the previous speaker dealing with the free market and the provision of credit to low income borrowers I think he advanced light years for both himself and his party in saying that he recognized that the free enterprise system is not necessarily the best way of ensuring credit to low income earners.

I would be less than honest if I did not say that the minister knows that there was a great deal of trepidation when it was announced that he was going to be the new Minister of Consumer and Corporate Affairs since many people in this country saw him as the representative of corporate interests. I think he had to deal with that in the early weeks of his appointment, and I sympathize with him in his dilemma. I think this is why this particular bill has been brought forward. The Minister of Consumer and Corporate Affairs (Mr. Abbott) is being resurrected as the defender of the consumers of Canada. At least that is what appears on the surface. But when you examine the bill very closely, Mr. Speaker, you will see that this is the biggest con job ever perpetrated on the consumers of Canada.

As for the few positive aspects of the bill, finally the government has realized that in a progressive society legislation respecting consumer credit protection and a declaration of interest rates ought to have been in the federal statute books a long time ago. Indeed many of the proposed changes in this bill have already been accepted by the provinces, many have legislated many of the items being regurgitated in this bill. Indeed all the industrialized countries of the western world have much more progressive credit legislation for consumers and consumer protection as they grovel and jostle for credit in the market.

The prime purpose of the bill appears to be an attempt to meet the credit needs of low income borrowers. As I have just said, it is meeting a need for law that has not been previously enacted by federal legislation. For example, I might point out how dated some of these provisions are. The Interest Act has not been amended since 1917. In effect the minister is finally coming into the twentieth century with some kind of legislative progressivity.

There is no doubt that some of the provisions in the bill will go some way toward providing protection for consumers. Our concern is that we feel there are fundamental changes outlined

in this bill which, contrary to what the minister said in his back-up paper, and in the House when he spoke earlier today, in some instances will do a disservice rather than a service to the low income borrower.

One of the greatest problems has to be, as pointed out by the Consumers Association of Canada, the lack of research concerning the credit needs of low income people. I tried to obtain some of that information from the minister's department. I told them they must have some research in respect of incomes of low income earners from which they could furnish me some of the background papers and research done in respect of this bill. There certainly is a lack of any kind of research concerning the credit needs of low income people.

Fortunately I happen to know a consumer researcher who has done some research in this field, Michael Decter, presently of Manitoba. He points out the following in his paper:

.. . generally speaking, those who borrow from finance companies are in financial difficulties of some sort, and have been enable to obtain credit elsewhere .. . statistics show that finance company clients are lower middle income wage earners who work at skilled or semi-skilled or clerical jobs. Middle income and lower middle income people, who are primarily wage earners, form the bulk of the finance companies' clientele, while the poor are ill-served by the industry. About half of all applicants for credit are turned away by the finance companies.. .

These I suspect are in the wage bracket of less than $5,000 a year.

Those who are not turned away are using the money primarily for necessities. The major purpose of loans is to consolidate debts, usually as a sign of financial difficulty.

These loans by low or middle income people are being made at rates of 24 per cent to 33 per cent. The industry blames the high cost of loans on the risk it faces. I shall quote the industry. It is stated that loss ratios for consumer loan companies range from \'A per cent to l3A per cent of outstanding receivables, and for sales finance companies about half of one per cent of receivables. These losses are higher than those of the banks but certainly are not unmanageable. The concept of risk is very important because in Clause 8 of the bill one of the factors to be determined in calculating the cost of the loan is the degree of risk assumed by the lender on the lending transaction. There is also the matter of collateral, the age, the capacity, the financial position, and the mental and physical health of the borrower to be considered.

The bill claims to protect that one half of the people who are turned away by the finance companies because of high risk and low income. These were the people whom Captain Henri Marchessault found in a two-year study to be likely to use the services of loan sharks. He found that of 7,000 clients only 20 per cent had criminal backgrounds, which incidentally might explain their inability to get other credit, while the remainder were low income earners with nowhere else to go. From this we see that the people who take advantage of the present high rates of finance companies do so out of necessity. Those who go to loan sharks, because of their very low incomes, probably require money for their necessities as well, but they obviously cannot get it from the lending institutions.

November 1, 1976

The government appears to have looked at this situation and decided to attack loan sharking, while at the same time opening up lines of credit for those whose earnings are less than $5,000 by eliminating interest ceilings on small loans. While this may have some effect on legal loan sharking its other effect will be to make an already profitable business more profitable. Considering that most of these loans are taken out to meet necessities it will also mean that young people with low incomes will go into perpetual poverty through debt to pay for their necessities, at rates of interest as high as 60 per cent or 70 per cent. It should also be noted that these higher interest rates undoubtedly will also apply to many of those people presently receiving loans at 33 per cent.

Moreover, since the bill allows a person's age to be taken into consideration, then because of risk-and this is in Clause 8-it also means that young persons starting out in life will be starting out with very heavy burdens even to buy their furniture. This all seems very unfair, considering the low rate of non-payment of the finance companies and presumably among loan sharks as well.

The elimination of the ceiling on interest rates is one of the two fundamental changes in the bill which will hurt the position of low income borrowers. The other change is the one which forces the borrower to take legal action to have any wrongs redressed. The Consumers Association rejected this and it was pointed out that low income earners, the ones whom this bill is purportedly aimed at, are the very ones least likely to use or to know how to use the courts.

The government suggests that competition in the market place will be the device which prevents interest rates from rising unreasonably for low income earners. We can reject that argument without discussion at this point. In other words, what the bill does is send the low income earners from the loan sharks to the finance companies which have no limit on their interest rates. As my colleague points out, the lawyers also probably will be involved in this.

There are other solutions. The least radical of the solutions would be one put forward by the government in the 1974 election. At that time the government promised a loan insurance scheme for people establishing credit. This is another promise the government has not kept. This would eliminate the risk for the finance companies and, given the low rate of loan defaults among low and middle income earners, would probably necessitate only a minimal increase in interest rates. This is the one part of the bill we on this side of the House could never accept.

The government has said that the rationale, the main purpose in introducing this bill is to get people away from the loan sharks. To do this it will provide and ensure that the low income worker can obtain a loan from the lending institutions. Of course in order for it to be profitable for the private sector, the finance companies and the banks, to go into this business there has to be some assurance, a minimization of the risk, because the low income earners are poor risks. It has to be made worth their while. The interest rate will be one which, as

Protection of Borrowers and Depositors set out in Clause 3, "may provide for any rate of interest that is agreed upon." Well, that is very broad.

I say to the minister that in effect a person who would come to borrow money from a person with money to lend is prepared to accept anything close to what the minister calls the criminal rate. I say he wisely calls it that. In effect the criminal rate could be 60 per cent. Here we have a person who has no credit rating at all coming to borrow money and entering into an agreement for a rate of interest that is agreed upon. The interest rate could very well be 50 per cent. The minister might say it is better for the low income borrower to pay a rate of 50 per cent than a rate of 1,500 per cent to the loan shark. Both instances are totally unacceptable. They are totally unacceptable for the low income earner. I think the minister will agree with that.

This clause setting the interest rate agreed upon between the borrower and the lender is supposed to be in keeping with the minister's statement that this bill underlines his determination to help police forces fight the ever increasing crime of loan sharking. Where I come from in the Carribean we have a fish which is even more dangerous than the shark, and that is the barracuda. It seems to me that we will take these people away from loan sharks and leave them at the mercy of barracudas for whom it will be quite legal to charge 50 per cent interest, or as close to that rate as possible. It seems to me that this is not the solution for low income earners. The government set out the problem very well. It wants to get these people away from loan sharks and into legitimate institutions. I wonder if it is not rather like jumping from the frying pan into the fire.