A plan developed by the federal Conservative government to phase out cheque payments to Canadians in favour of direct deposit is receiving heated criticism from the opposition.
The plan comes as part of the Public Works and Government Services Canada (PWGSC) study on deficit reduction, and is estimated to save roughly $17.4 million a year. The cheque services will be phased out until April 2016, when it will cease.
According to PWGSC, 93 per cent of Old Age Security payments and 90 per cent of Canada Pension Plan payments already go to seniors who use direct deposit.
“This is part of our consumer-first agenda,” Crowfoot MP Kevin Sorenson said. “It’s something people wanted.”
He said that in addition to saving Canadians money, eliminating cheque payments will also help seniors be safe. Removing cheques means they won’t be lost by or stolen from Canada Post, lost by the owners, and just simply save time.
“It’s just another job they have to do, taking the cheque down to the bank,” Sorenson said. “There’s also been cases of elder abuse, where those cheques have been taken and in some cases, deposited in wrong accounts.”
While the NDP have raised concern that the plan targets the vulnerable, Sorenson said the plan actually helps them.
“This is a safety measure,” he said. “(And) it’s a measure many of the seniors were asking for. More and more are doing it, and we’re thinking it’s a good use of taxpayer money.”
By the time the program comes to a close, the only people receiving cheques would be those in the rare circumstance of having no access to a bank, such as those living in exceptionally rural areas, such as the territories or very northern parts of the provinces.
NDP launch petition to dismantle phase out
The Conservatives should wait until there’s an option for the “unbanked” Canadians before initiating any sort of phase-out of cheques for people on Old Age security, Canadian Pension Plan payments, or on disability, according to NDP National Caucus Chair Glenn Thibeault, MP for the riding of Sudbury, Ont.
“They’re still leaving 20 per cent of the most vulnerable population in the lurch,” he said.
Thibeault and his party have launched a petition calling on the Conservatives to call off the phase out until there’s something for the people who are affected by the plan to fall back on.
And while he approved of the phase-out being given a pass for people with no access to banks due to the lack of banking options in rural areas, he questioned how having no physical access to a bank is different from being financially unable to access a bank due to barriers such as banking fees.
“What about people who live in urban centres (and can’t afford banks)?” Thibeault asked. “This (plan) targets people who can’t even afford ‘no frills’ bank accounts.”
Government announces no-cost, low-cost banking agreements
As part of its “consumers-first agenda,” the federal government met with the major Canadian banks to insist upon no- or low-cost bank accounts to help out the most vulnerable of Canadian society, Sorenson announced in late May.
“One thing we noticed was that there were no low-cost options for banking,” he said. “The government negotiated with Canadian banks to extend coverage to people who are vulnerable.”
The new accounts would be available to youth, students, seniors receiving income supplements, or people receiving disability payments. The plans come with 12 no-cost debit transactions, up from eight, and two in-branch transactions per month. The low-cost accounts will cost $4 a month.
The bank accounts should be rolled out by Jan. 15, 2015.
While unrelated to the PWGSC announcement regarding the phase-out of cheques in favour of pre-authorized deposits to its payees, the bank accounts will help those who find themselves financially marginalized and currently unable to afford bank accounts, Sorenson said.
As the phase-out of federal cheques ramps up, the government will be increasing its public awareness campaign and providing information, so no one will be caught off-guard, Sorenson concluded.