Question Period: Payday Loans – April 9, 2015
There was a commentary by Randy Hatfield in yesterday’s Telegraph-Journal. He is with the Saint John Human Development Council, and he described how payday lenders set up shop around poor neighbourhoods such as Ward 3 in Saint John, where one out of two children lives in poverty now. The Financial and Consumer Services Commission has now completed its public consultations on regulating the payday loan industry. My question for the Minister of Justice is this: Will he establish a $17 cap on the cost of a $100 payday loan, as recommended by the Saint John Human Development Council? Hon. Mr. Horsman: First of all, I would like to thank the member for Fredericton South for his question. I want to let him know that it is an important question, not only for him but also for members on this side of the House. The member also understands that payday loans fall under the FCNB, the Financial and Consumer Services Commission. For the past two or three months, the commission has asked the public, the citizens of New Brunswick, for their suggestions and concerns about businesses such as payday loans, and it has taken those into consideration. That ended on March 31, which was only a couple of days ago. The commission has taken those submissions and concerns, and it may try to extend that to get more concerns and questions out there to deal with those. We know that people out there are having a hard time. That is why our policies and priorities are job creation and getting our fiscal house in order so that people do not have to deal with these businesses. We want to make sure that people can somehow get by so that they do not have to go to these . . .
Mr. Speaker: Time, minister.
Of course, people who are accessing payday loans are working and they are part of the working poor, which is becoming a larger part of our population. In New Brunswick, we lack data about the payday loan industry. However, in Nova Scotia, the estimated total value of payday loans taken out by the working poor last year amounted to $89 million, and that is with an average loan being only $433—$89 million. In fact, half those loans were recurring loans. There is nothing in New Brunswick’s proposed regulations to deal with the debt cycle of repeat borrowing that characterizes this industry. That is the business model. That is what happens, and the working poor get trapped in this situation. In doing so, they cannot afford to pay their rent or pay for their groceries, despite the fact that they are working. Will the minister adopt the repeat borrowing repayment provisions of British Columbia, as recommended by the Saint John Human Development Council, to prevent the working poor in New Brunswick from being trapped in this debt spiral? Hon.
Again, this falls under the Financial and Consumer Services Commission, and we will work very closely with that commission to make sure that it has the correct legislation so that people do not have to go to these businesses and fall into debt. We know it is difficult for people. That is why this government has raised the minimum wage and will continue to raise the minimum wage to $11 by 2017. We understand that the Financial and Consumer Services Commission is also looking at the jurisdictions of Nova Scotia and Manitoba, which have legislation in their provinces to deal with businesses such as these. We do not wish for people to have to go to these kinds of businesses. We know the difficulties for people who are working hard. We understand that they are working hard and that they are the working class. However, we are looking at ways of making sure that, when we do put the legislation in . . . We will be the eighth province to do so, and we will help New Brunswickers, to make sure this is a very safe province to live in and to make sure this is a place where they can live safely. Mr. Speaker: Time, minister.
I am not getting very many answers to very simple questions. The Act to regulate payday loans was given royal assent seven years ago, but it was never proclaimed, despite the urgent need for action to protect the working poor from, frankly, punishing rates and fees charged for payday loans in this province because of the lack of regulation. Seven years were allowed to pass before consultation was finally initiated to establish the necessary regulations. My question is for the minister responsible. He is the minister responsible, so maybe he can answer this question. Can the minister tell the House when the payday loan legislation will finally be proclaimed? Hon. Mr. Horsman: It is a concern, and maybe this question should have been asked of the previous government. We are working on this. We are making sure . . . 013 10:45 (Interjections.)
Mr. Speaker:Order. Order.
Hon. Mr. Horsman:
We are making sure. We are working with the Financial and Consumer Services Commission of New Brunswick to make sure that it is going to be doing this. We will be the eighth province to put in regulations. I cannot give you a time. It takes time, and the member opposite knows that. We will make sure that we look at this. We want to do it correctly, just as we have been doing all along for the last six months. We will make sure that we do things correctly. We will be looking at the ones that are doing very well, such as Manitoba, which also takes some of its finances and brings it back into the public through literacy. We will look at Nova Scotia and Prince Edward Island, which has the highest rate, at 25%. We will do it correctly, we will do it once, and we will be on it.Thank you.