Mr. Reginald Stackhouse (Scarborough West) moved

that Bill C-266, an Act to provide for the limitation of interest rates and fees in relation to credit card accounts, be read the second time and referred to a legislative committee.

He said: This Bill intends to impose a financial law of gravity: what goes up should come down. The intention of the Bill is to regulate interest charges on credit cards issued by financial institutions, petroleum companies and retail stores. It will impose a floating rate limit so that interest charges may increase when the cost of money rises and be required to fall when the cost of money declines.

The reason for the Bill is straightforward. If the companies' costs go up, so do the customers'. If the companies' costs fall, so do the customers'.

September 30, 1988

In the case of financial institutions, the limit will be 6.5 per cent above the Bank of Canada rate averaged over the previous month, if the bank, trust company or credit union charges user fees and entry and renewal fees. The limit will be 8.5 per cent above the bank rate averaged over the previous month if no fees are charged at all. The limit will be 9.5 per cent above the average bank rate in the case of petroleum companies and 11.5 per cent in the case of retail stores.

To illustrate, if this Bill were law, credit card charges would have been limited, during the month of September, by the bank rate averaged through August. That average rate was 9.73 per cent. The requirements of this Bill would thus mean important savings for Visa and MasterCard users and dramatic savings for users of petroleum cards and retail store charge cards. Petroleum companies would have been limited to 18.28 per cent instead of 24 per cent. Retail stores would have been limited to 20.8 per cent instead of 28.8 per cent. The Bill will also prevent card issuers from getting even by increasing user, entry and renewal fees. So much for summing up the intent of the Bill.

Let me raise a question for the House. Why should Parliament want to impose this kind of limit? I would like to attempt an answer which is partly philosophical and partly historical.

First, let us face the argument that Parliament should stay out of the market-place, that this Bill represents an unwarranted intrusion. I know that there are probably certain officials in Ottawa who are having apoplexy on this Friday afternoon at the thought of this Bill. It might be a good argument if the users of the argument really meant it, but they do not unless it suits their convenience. They support the theory of free enterprise but often they advocate the opposite.

Where is this free market that they like to talk about? It certainly is not found in Ottawa on Thursday afternoon at 2 p.m., for at that time, the Bank of Canada, owned by the Government of Canada, enters the market-place to control the price of money, to control the interest rate that will be charged to banks and through them to the whole country.

The Governor of the Bank of Canada does not have the slightest inhibition about telling the business community what it can expect from him and what it can expect from him is certainly not a free market-place. That is an important point for all who think that Conservatism and an unbridled free market are one and the same. Obviously they are not. The leftwing critics of Conservatism like to see it that way and so do its radical champions, but the philosophy of Conservatism has stood for something else, and it can be summed up in this way: it is the belief that no power should be unlimited, that each power should be checked and balanced by another.

Conservatives, therefore, want private enterprise instead of state enterprise having a monopoly because they do not want the state to combine economic monopoly with political monopoly. However, private enterprise also must be checked and balanced. Its power has to be limited too.

Interest Rates

This Bill is based on the principle that the state has a right to check and balance the power of corporations. When large corporations are not fair to their consumers, the state has a right to require that they become fair.

In the United States, the top 25 firms in the country control 50 per cent of the credit business. It could well be worse in Canada, and this means that only one power in those two countries is strong enough to defend the people. In our case, it is the power of Parliament, so I bring to the floor of the House of Commons this afternoon this Bill.

Let us take another example of how the state has the right to be active in this arena and is active in it. Our statutes include a penalty for usury. It is not always realized, but they do. They define usury in the most extraordinary way. Usury is defined as interest rates that are 60 per cent or higher. The rate is so fantastic, so ludicrous, that the financial institutions do not worry about it. I suggest that they should worry about it, and all their lobbyists should be arguing against this definition of usury because it means that Parliament has accepted the principle that Parliament has the right to impose a limit on interest rates. If we do not have that right, then how can Parliament be entitled to limit interest rates to 60 per cent or to any per cent? We could choose 60 per cent, 6 per cent or 160 per cent. Once we do so, we are expressing the same principle that Parliament, in the name of the people, has the right to do that.

Bill C-266 is therefore not a radical imposition of state power where the state should not intrude. It is just the opposite. It is an application of the principle that is found in our existing law.

So much for philosophy. Let us turn briefly to history. History shows that issuers of credit cards have been very quick over the years to raise rates but have been equally reluctant to lower them. Let me give a few examples from retail stores. In the 1970s, the major retail chains throughout Canada imposed charge card rates that rose steadily from 18 per cent in 1971 to

23.4 per cent in 1980, and this was because of the rising cost of money. Then they catapulted to 28.8 per cent in 1981. That was because the bank rate soared that year to 18.3 per cent. Note this carefully: the spread between those two rates was

10.5 per cent. That is a full point less than the spread that would be imposed by Bill C-266, so it is a very moderate Bill.

A reasonable person might expect that stores, given the situation, would have cut their charge card rates when the bank rate fell so dramatically in the mid 1980s. You would expect that, but they have not come down a fraction of a point. The Bay, Home Flardware, Canadian Tire, Eaton's, Sears, Simpson's and Zellers are still charging 28.8 per cent. Woodwards charges 26.4 per cent.

Some of the lobbyists justify this by claiming their customers pay less than Visa or MasterCard users since the stores do not charge any interest for a certain period, often 30 days after

September 30, 1988

Interest Rates

the purchase. Let us acknowledge that, whether it is 30 days or 21 days, but let us also see that it is only part of the truth. A customer may pay less if he pays in full in a few months, but if the bill goes on longer than three months, he will find himself paying more than if he used Visa or MasterCard.

Tough on him, you say, that is his fault, he should have paid up. Perhaps that is right, and it is tough, tough, tough on a Toronto man who wrote me and showed me how a debt he had incurred when he was working had doubled in the two years he was unemployed and could not keep up with the credit card charges.

I ask the House to take this seriously, to see this as a human problem, and to recognize that we have an opportunity and an obligation. Let us come back to the point that is so important for us to recognize. If the major store chain of this country can make profits in 1981 with a rate that was 10 per cent above the bank rate, why in August 1988 did they have to levy a charge 19 points above the bank rate in that month? Perhaps part of the answer is given here. I quote from The Globe and Mail of May 7, 1988. The news item is headed: "Card operations get the credit at Canadian Tire". It is a report by Karen Howlett.

Profit at Canadian Tire Corp. Ltd. was up a whopping 27 per cent in the first quarter of this year. But most of the gains did not come from selling lawnmowers, hammers and spark plugs-they came from the company's credit card operation.

Over-all, profit has been growing faster than sales at the Toronto based retailer. In its core merchandising division, however, profit gains have lagged behind sales increases.

Further on in the report we read:

For the first time last year, the division passed the $1 billion mark in credit sales for its own and other credit cards, Mr. Groussman told shareholders. Canadian Tire's total sales, by comparison, were $2.5 billion.

The credit division recorded a 29 per cent profit gain, far surpassing its revenue increase of 13 per cent.

Is it not clear, Mr. Speaker, that people who are using these charge cards of our major stores are paying more than reason and fairness should allow? Some Members may say that is true but they still do not want to pass a Bill like this. They may argue that in view of past successes by Parliament, the way to deal with this issue is to focus on it the spotlight of a House of Commons debate, such as the debate this afternoon, and committee inquiries such as we have had with some success. That method produced results with credit cards in 1987 and bank service charges in 1988. They were not the great results anyone in the House could have wished but, notwithstanding, they were results.

Why not rely on that method now? The reason, I submit, is simple. The public surely has the right to a guarantee that it will not be gouged. It cannot take that guarantee for granted in this country given the past and current practices of credit issuing institutions. Through the 1980s the bank rate has been up and down and up again and surely will be down again, but the store charge cards seem now written in stone.

Albert Einstein said that everything in this universe is relative, but he forgot about these charge cards. They are absolute. The rate on these cards cannot be changed no matter what else changes in the 20th century? So there is only one absolute left, the rate on these store charge cards, unless Parliament is ready to help the people. I ask in this debate that the House give the consumer a break and pass Bill C-266. Send it to committee. If there is quibbling about some feature of it, let the committee improve it. That is what a committee is for. It could be the Committee of the Whole this afternoon. That would be great. This Bill could be refined, of course. It is a human document, but let us pass it.

The financial institutions will not like it, but the people of Canada will. The retail chains will denounce us, but the people will cheer us. The lobbyists will show fury unbounded, but the people will see that this House of Commons is what its name suggests, it is the House of the people.

Since this just might possibly be the last hour of this Parliament, may I thank you, Mr. Speaker, and all the other speakers, for presiding over our debates with such fairness and grace. I want to say thank you, through you, Mr. Speaker, to all fellow members of this House for the opportunity to live and work with them all. I have enjoyed the company of all Members of all Parties so much, I am going to do my best to get back here.

Mr. Reginald Stackhouse (Scarborough West):

Mr. Speaker, some people complain that Canada is giving too much to the Third World. But often that world gives much to Canada, such as our first 1988 Olympic Gold Medal.

All Canada is bursting with pride today because of Ben Johnson, and especially so is the City of Scarborough, where he grew up. But if his mother, Gloria, had not brought Ben and her other children from Jamaica less than 20 years ago, Canada would be less proud as a nation and Scarborough less proud as a city.

When anyone says that Canada is admitting too many immigrants-and I have heard many say that-let him ask himself if he would like the number to have been one less the year that Ben Johnson came here as a young child.

Mr. Reginald Stackhouse (Scarborough West):

Mr. Speaker, my question is for the Minister of Consumer and Corporate Affairs. Many consumers are concerned by rising prescription costs which seem to be due to dramatic increases, not in the costs of drugs but in the dispensing fees.

For example, one constituent in Scarborough West reports that the prescription cost was so divided that the drugs represented only 22 per cent of the total cost while 78 per cent was for the fee alone.

In view of so many consumers being of limited means but having no choice but to purchase prescriptions, what action can be taken to protect consumers against these impossible fees for service?

Mr. Reginald Stackhouse (Scarborough West):

Madam Speaker, I follow the previous speaker not only in time but in general concurrence, although I am not as sure as he is that the House is going to rise on Friday. I feel he is right but we have been wrong so many other Fridays over the past months, I do not quite have his confidence. However, I think the Bill should be put to a vote shortly. I hope a committee could deal with the very real problems more effectively than we can in debate in the House, and that we can bring some relief, comfort and assurance to people who are living under desperate anxieties.

I have been impressed by certain statistics that are available to us from the Good Housekeeping Institute. The report is from a survey taken by that body with respect to concern over reaction to chemicals used in food, snacks and soft drinks. It was ranked second by consumers as being a matter of great concern and danger. In a 1988 survey by a national food association, the Grocery Products Manufacturers of Canada, 93 per cent of respondents believed that food additives should be regulated. Clearly, there is not only a concern on the part of people across North America, but it is a concern that is substantiated by the serious threat to health, indeed, to life,

September 26, 1988

from the failure to have available the kind of information which this Bill wishes to put before the public.

We have to appreciate that if one suffers from this or that allergy, eating the wrong food can inflict not only discomfort but actual illness or possibly even death, so that a person who knows he or she has these allergies lives under the constant threat of taking the wrong food at a reception, a party, in a restaurant or wherever. There is no way that any individual given those circumstances is going to be wholly safe. We should take whatever steps we can take to bring to those people as much safety as we can. That is really the intention, as I understand it, of the legislation before us.

I commend the Hon. Member for Hamilton East who has brought it to the House. It shows the great value of Private Member's Bills. We private Members can focus the attention of Parliament on something that otherwise would be ignored. We can use this greatest forum of the land to be sure that the nation as a whole is aware that a problem is being taken seriously, that a solution is being examined responsibly.

Debate has already illustrated some of the difficulties of implementing such a Bill as we are considering. One difficulty is the fact that there are widely varying estimates about the number of people who suffer allergies. Some say there are three million in the United States alone. Some say there are 20 million in the United States alone. Whatever the number may be, we know there is a vast array of people who live under constant threat that at least their health is threatened and possibly their life by eating the wrong food.

We do not have precise statistics, but do we need them? Are we not aware that this is a commonly felt problem? Are there any of us who do not know someone who suffers from this or that allergy? They may be allergic to an element in food or to something in the atmosphere. I think all of us are aware of people, sometimes very close to us, who suffer from allergies and need this kind of protection. I can think of one time in the life of my oldest child when she was very, very young. It seemed that almost in a matter of minutes her life was threatened because she was allergic to an element she had taken into her body. If we had not been able to rush her to a hospital and have her receive treatment, she would not have lived another hour. The memory of that traumatic afternoon when the seemingly unbelievable was real before our eyes has certainly made me sensitive to the subject before us.

A little girl was playing as any other little girl might be, and then suddenly she was not able to breathe and had to be rushed to a hospital, we wondered for what reason, and then we were told what the reason was. Fortunately, treatment was a hand. But it has certainly made me sensitive to the critical nature of what we are debating.

When we focus attention, as we are right to do, on the difficulties in implementing this legislation, I hope we will give at least equal attention to the difficulty of living without it. Let us ask about the security of people if they do not have this kind of protection. We are now living in a time when it is needed

Food and Drugs Act

more than ever. We now live in a time when so many people eat so many meals out. As a boy, I remember that going out for a meal out was an event. It is now commonplace. There are fast food restaurants, gourmet restaurants, and all the eating places in between. The fact is that many people are taking a large number of their meals out, some are taking most of their meals out and some, perhaps, all of them. More than ever throughout the western world we are subject to the possibility of being allergic to food in a meal the elements of which are unknown to us. If a person is unfortunate enough to have those allergies that can threaten health or even life, then this is a matter of great crisis.

In general, I support the intention of this legislation. I would like briefly to conclude by citing three steps I think we must take to cope with the problem. The first step is education. We are doing some of that right now. I look upon the House of Commons as a place of education as well as of legislation. It is a forum in which the representatives of the people of Canada debate with one another and put before the people of Canada the great issues of their time. This is such an issue when it affects the lives of people. We need more education to arouse awareness, to strengthen consciousness, so that everyone connected with providing a food to the public will see the serious nature of what we are talking about.

Second, this Bill is about communication, about the most effective way of communicating to people the knowledge necessary for health and life.

Finally, I want to take a moment to dwell on the need for regulation. We need law because we are humans. We do not always respond to good advice, to good counsel, to good information. We should but we do not. So many of us need the law to prod, to force, and so we move from education, which is always the best, the first and, I hope, long step.

We move to the step of regulation. The intent of this Bill, as I understand it, is to provide that measure of regulation which will provide a measure of security, which is surely the right of every Canadian if it can be provided.

I look upon this Bill as an effort at legitimate regulation. I do not quarrel with having traffic police that tell us to drive this way and sometimes to drive that way, to slow down, to speed up. We need that kind of regulating on the roads. We need regulating when it comes to putting up buildings.

I have just had an experience within the past month or so of dealing with municipal authorities over building regulations. They are quite right. For the protection of all, for the public good, we need processes through which we are required to go. Here we have another example of the same thing, a need for regulation in the public domain, regulation in the places to which men, women, and children are required to go day by day, namely, where they can find food and sustenance for life itself.

September 26, 1988

Food and Drugs Act

It has been said that man is what he eats. If that is the case, legislation dealing with the regulating of food is certainly among the basic legislation that can be put before this Parliament. I believe that we have a serious intent of that. This Bill certainly deserves to go to committee and I hope that detailed study will return to this House a Bill that is workable and that will improve the lot of our fellow Canadians.

Mr. Reginald Stackhouse (Scarborough West):

Mr. Speaker, the Gilbert Task Force Report on the transportation of dangerous goods by rail through the Toronto area states that among the major causes of rail accidents are track operational and equipment deficiencies.

We recognize that railways provide economically and ecologically preferable modes of transport. Yet throughout this country for many, many years we have persisted in priorizing what we spend on air and highway transportation. If we were to spend on air and highway transportation a fraction of what we spend on improving railway equipment and track conditions, we would provide this country with safe and speedy transportation that would be much better in conserving the environment.

1 hope that among the points made in this task force report what will be taken with utmost seriousness will be the need to upgrade our equipment and track conditions.