36th Parliament, 1st Session
EDITED HANSARD • NUMBER 158
CONTENTS
Tuesday, November 24, 1998
| ROUTINE PROCEEDINGS
|
1005
| GOVERNMENT RESPONSE TO PETITIONS
|
| Mr. Peter Adams |
| COMMITTEES OF THE HOUSE
|
| Finance
|
| Mr. Maurizio Bevilacqua |
| PETITIONS
|
| Prostitution
|
| Mr. Steve Mahoney |
| Sexual Offences
|
| Mr. Steve Mahoney |
| Property Rights
|
| Ms. Wendy Lill |
1010
| QUESTIONS ON THE ORDER PAPER
|
| Mr. Peter Adams |
| Hon. Andrew Mitchell |
| GOVERNMENT ORDERS
|
| CANADA SMALL BUSINESS FINANCING ACT
|
| Bill C-53. Third reading
|
| Hon. Jim Peterson |
| Mr. Steve Mahoney |
1015
1020
1025
1030
1035
1040
1045
1050
| Mr. Jim Pankiw |
1055
1100
| Mr. Deepak Obhrai |
1105
1110
1115
| Mrs. Francine Lalonde |
1120
1125
1130
1135
1140
1145
1150
1155
| Mr. Nelson Riis |
1200
1205
1210
1215
| Hon. Jim Peterson |
1220
| Mr. Jim Jones |
1225
1230
1235
1240
| Mr. Lynn Myers |
1245
1250
| Mr. John McKay |
1255
1300
| Hon. Jim Peterson |
| Mr. Werner Schmidt |
1305
| Mr. Rahim Jaffer |
1310
| Mr. Art Hanger |
1315
1320
| Mr. Sarkis Assadourian |
1325
| Mr. Peter Stoffer |
| Ms. Elinor Caplan |
1330
1335
1340
1345
| Mr. Ted White |
1350
| Ms. Angela Vautour |
1355
| Mr. Grant Hill |
| STATEMENTS BY MEMBERS
|
| CANADIAN FOOTBALL
|
| Mr. Bryon Wilfert |
| CANADIAN FARMERS
|
| Mr. John Williams |
| MINING
|
| Mr. Brent St. Denis |
1400
| CANADIAN MINING INDUSTRY
|
| Mr. Guy St-Julien |
| QUEBEC ELECTION CAMPAIGN
|
| Mr. Robert Bertrand |
| ABORIGINAL AFFAIRS
|
| Mr. Mike Scott |
| STEPHANIE BOLSTER
|
| Mr. Mauril Bélanger |
| WORLD FINANCIAL MARKET
|
| Mr. Stéphan Tremblay |
1405
| FIREARMS LEGISLATION
|
| Mr. Lee Morrison |
| ELECTION CAMPAIGN IN QUEBEC
|
| Mr. Denis Paradis |
| FISHERIES
|
| Mr. Peter Stoffer |
| ELECTION CAMPAIGN IN QUEBEC
|
| Mrs. Marlene Jennings |
| CHILD POVERTY
|
| Mr. Norman Doyle |
1410
| GERALD VANDEZANDE
|
| Mr. Derek Lee |
| MINISTER OF CANADIAN HERITAGE
|
| Mrs. Suzanne Tremblay |
| LIM GUAN ENG
|
| Hon. Sheila Finestone |
| ABORIGINAL AFFAIRS
|
| Mr. Myron Thompson |
| HAMED SALOOJEWE
|
| Mr. Gary Pillitteri |
1415
| ORAL QUESTION PERIOD
|
| APEC INQUIRY
|
| Mr. Preston Manning |
| Right Hon. Jean Chrétien |
| Mr. Preston Manning |
| Right Hon. Jean Chrétien |
| Mr. Preston Manning |
| Right Hon. Jean Chrétien |
| Miss Deborah Grey |
1420
| Right Hon. Jean Chrétien |
| Miss Deborah Grey |
| Right Hon. Jean Chrétien |
| Mr. Gilles Duceppe |
| Right Hon. Jean Chrétien |
| Mr. Gilles Duceppe |
| Right Hon. Jean Chrétien |
| Mr. Richard Marceau |
| Right Hon. Jean Chrétien |
1425
| Mr. Richard Marceau |
| Right Hon. Jean Chrétien |
| FARM INCOME
|
| Mr. Dick Proctor |
| Mr. Joe McGuire |
| Mr. Dick Proctor |
| Mr. Joe McGuire |
| VETERANS AFFAIRS
|
| Mrs. Elsie Wayne |
| Hon. Fred Mifflin |
| Mrs. Elsie Wayne |
1430
| Hon. Fred Mifflin |
| APEC INQUIRY
|
| Mr. John Reynolds |
| Right Hon. Jean Chrétien |
| Mr. John Reynolds |
| Right Hon. Jean Chrétien |
| Mr. Michel Gauthier |
| Right Hon. Jean Chrétien |
| Mr. Michel Gauthier |
| Right Hon. Jean Chrétien |
| HEPATITIS C
|
| Mr. Grant Hill |
1435
| Hon. Allan Rock |
| Mr. Grant Hill |
| Hon. Allan Rock |
| BILL C-54
|
| Mrs. Francine Lalonde |
| Hon. John Manley |
| Mrs. Francine Lalonde |
| Hon. John Manley |
| HEALTH CARE
|
| Mr. Rahim Jaffer |
1440
| Hon. Paul Martin |
| Mr. Rahim Jaffer |
| Hon. Paul Martin |
| ICE BREAKING POLICY
|
| Mr. Paul Crête |
| Hon. David Anderson |
| HUMAN RIGHTS
|
| Ms. Shaughnessy Cohen |
| Hon. Lloyd Axworthy |
| GREENPEACE
|
| Mr. John Duncan |
| Hon. Diane Marleau |
| Mr. John Duncan |
1445
| Hon. Diane Marleau |
| CHILD POVERTY
|
| Ms. Libby Davies |
| Hon. Pierre S. Pettigrew |
| Ms. Libby Davies |
| Hon. Pierre S. Pettigrew |
| CANADIAN FARMERS
|
| Mr. Mark Muise |
| Mr. Joe McGuire |
| Mr. Mark Muise |
1450
| Mr. Joe McGuire |
| CANADIAN MINING INDUSTRY
|
| Mr. Réginald Bélair |
| Hon. Ralph E. Goodale |
| GREENPEACE
|
| Mr. Darrel Stinson |
| Hon. Lloyd Axworthy |
| ICE BREAKING POLICY
|
| Mr. Yves Rocheleau |
| Hon. David Anderson |
| CANADIAN FARMERS
|
| Hon. Lorne Nystrom |
| Hon. Paul Martin |
| NATIONAL DEFENCE
|
| Mr. David Price |
1455
| Hon. Arthur C. Eggleton |
| INFORMATION HIGHWAY
|
| Mr. John Harvard |
| Hon. Ronald J. Duhamel |
| UNEMPLOYMENT
|
| Mr. Monte Solberg |
| Hon. Paul Martin |
| STEEL INDUSTRY
|
| Mr. Benoît Sauvageau |
| Hon. Paul Martin |
1500
| VETERANS AFFAIRS
|
| Mr. Gordon Earle |
| Hon. Fred Mifflin |
| PRESENCE IN GALLERY
|
| The Speaker |
| POINTS OF ORDER
|
| Tabling of Documents
|
| Mr. Monte Solberg |
| GOVERNMENT ORDERS
|
1505
| CANADA SMALL BUSINESS FINANCING ACT
|
| Bill C-53. Third reading
|
| Mr. Antoine Dubé |
1510
1515
1520
1525
| Mr. Paul Crête |
1530
| Mr. Walt Lastewka |
1535
| Mr. Yves Rocheleau |
1540
1545
1550
| Mr. Walt Lastewka |
1555
| Mr. Yvan Bernier |
1600
| Mr. Odina Desrochers |
1605
1610
1615
1620
| Mr. Stéphan Tremblay |
1625
1630
| Mr. Paul Crête |
1635
1640
1645
1650
| Mr. Louis Plamondon |
1655
1700
| Mr. Yvan Bernier |
| Mr. Stéphan Tremblay |
1705
1710
1715
1740
(Division 277)
| Motion agreed to
|
| PRIVATE MEMBERS' BUSINESS
|
1745
| BALANCED BUDGET ACT
|
| Bill C-375. Second reading
|
| Mr. Yvan Loubier |
1750
1755
1800
| Mr. Tony Valeri |
1805
1810
| Mr. Monte Solberg |
1815
1820
| Mr. Nelson Riis |
1825
| Mr. Scott Brison |
1830
1835
| Mr. Yvan Loubier |
1840
| ADJOURNMENT PROCEEDINGS
|
1845
| Volvo Canada Ltd.
|
| Mr. Gordon Earle |
| Mr. Walt Lastewka |
1850
| Canadian Farmers
|
| Mr. John Solomon |
1855
| Mr. Peter Adams |
| Health
|
| Ms. Judy Wasylycia-Leis |
1900
| Ms. Elinor Caplan |
| Social Insurance Numbers
|
| Mr. Jean Dubé |
1905
| Ms. Bonnie Brown |
(Official Version)
EDITED HANSARD • NUMBER 158
HOUSE OF COMMONS
Tuesday, November 24, 1998
The House met at 10 a.m.
Prayers
ROUTINE PROCEEDINGS
1005
[Translation]
GOVERNMENT RESPONSE TO PETITIONS
Mr. Peter Adams (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker, pursuant
to Standing Order 36(8), I have the honour to table, in both
official languages, the government's response to seven
petitions.
* * *
[English]
COMMITTEES OF THE HOUSE
FINANCE
Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.): Mr.
Speaker, I have the honour to present, in both official
languages, the ninth report of the Standing Committee on Finance.
* * *
PETITIONS
PROSTITUTION
Mr. Steve Mahoney (Mississauga West, Lib.): Mr. Speaker,
I have two petitions. The first is signed by approximately 70
folks from my riding and the surrounding area, all of whom are
members of the Mississauga Gospel Temple. The petition has to do
with their concerns about prostitution. They pray that
parliament pass a bill which would change section 213 of the
Criminal Code to make prostitution a hybrid offence and enable
these offences to be prosecuted as either a summary or an
indictable offence.
SEXUAL OFFENCES
Mr. Steve Mahoney (Mississauga West, Lib.): Mr. Speaker,
the second petition is signed by approximately 80 members of the
Mississauga Gospel Temple and deals with a request to pass Bill
C-284 to ensure that the record of a sexual offence against a
child for which a pardon has been given is disclosed to
children's organizations when they perform a criminal record
check on an individual applying for a position of trust involving
children.
I am pleased to present both of these petitions on behalf of the
congregation of the Mississauga Gospel Temple.
PROPERTY RIGHTS
Ms. Wendy Lill (Dartmouth, NDP): Mr. Speaker, I would
like to present a petition on behalf of over 150 residents of my
riding who live in a subdivision called Lancaster Ridge. The
petition outlines the grave concerns they have regarding a
longstanding dispute between the Gay family and the Department of
National Defence concerning property known as Cannon Crescent
which is situated on the Albro Lake Road.
1010
This dispute has caused enormous problems for this community and
the petitioners pray that the House of Commons will urge the
Minister of National Defence to bring all parties together in
this dispute with a view to finding a reasonable and equitable
settlement.
* * *
[Translation]
QUESTIONS ON THE ORDER PAPER
Mr. Peter Adams (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker, Question
No. 141 will be answered today.
.[Text]
Question No. 141—Mr. John Duncan:
Could the government indicate, for each of the fiscal years
1993-94 to 1997-98, in relation to the Pacific Rim National Park:
(a) the cost, on an annual basis, of operating and maintaining the
said park: (b) the moneys allocated to the park for regional
and national costs: and (c) the revenues generated from parking
fees?
Hon. Andrew Mitchell (Secretary of State (Parks), Lib.): (a) Figures
on the cost of operating and maintaining Pacific Rim National
Park Reserve on an annual basis for fiscal years 1993-94 to
1997-98 are presented in table 1.
(b) There have been no additional costs to the park for regional
and national events—Oceans Day or Canada Day—other than staff
time as the headquarters offfice supplies material for
distribution. For a roll up of the salaries actually paid to all
employees of the park, whether they worked part time or full time,
see note (2) in table 1.
(c) Unlike many national parks, Pacific Rim National Park
Reserve does note have gates to regulate visitation. Instead,
park use fees are implemented via machines in the parking lots,
which may result in some misunderstanding of the intent of the
fees. This fee contributes to the maintenance of facilities and
services such as visitor centres, information centres, washrooms,
information exhibits-materials, day use areas, picinic sites,
surf guards, film programs, et cetera. If visitors have purchased
the western Canada annual pass and it is displayed appropriately,
they do not need to purchase a day use pass from the machine in
the parking lots. See note (6) on table 1.
[Translation]
Mr. Peter Adams: Mr. Speaker, I ask that the remaining
questions be allowed to stand.
The Acting Speaker (Mr. McClelland): Is it agreed?
Some hon. members: Agreed.
GOVERNMENT ORDERS
[English]
CANADA SMALL BUSINESS FINANCING ACT
Hon. Jim Peterson (for the Minister of Industry) moved
that Bill C-53, an act to increase the availability of financing
for the establishment, expansion, modernization and improvement
of small businesses, be read the third time and passed.
Mr. Steve Mahoney (Mississauga West, Lib.): Mr. Speaker,
I am pleased to lead off this debate on third reading of what we
in the government believe is an extremely important piece of
legislation which will help small businesses right across Canada,
including farming operations and any business defined as a small
business with revenues lower than $5 million a year. It is not
really that small a business. From my perspective and in the
community that I come from $5 million a year in productivity
would be seen as a fairly successful business.
It is important that the government define small business. We
recognize the significance of the small business community in
terms of job creation, economic growth, exports, leading
technology, new IT inventions and entrepreneurship. All of the
aspects of life in this great democratic country that we live in
are really encapsulated in the definition of small business.
If we think in terms of what our young people are going to do
10, 15 or 20 years down the road, many of them will have
opportunities to start their own small business. Many of them
will work within a small business atmosphere. It could be in the
insurance industry, in real estate or in the automobile industry.
Small business is like the river flowing downstream. It springs
out of all of the major industries that exist in our country.
There have been many concerns raised recently by members of the
automobile dealers' association, for example, and we would class
many of them in the small business category. Whether or not they
could benefit directly from the Small Business Loans Act may be
questionable since their main requirements are in the area of
high ticket inventory. They need to have their own financial
arrangements in many cases with either the banks or their
in-house financial institution. If we think of the spinoffs from
an automobile dealer as an example, they can be in parts, add-ons
and after market products that are available in the community for
people who want to upgrade.
The same can be said of the housing industry. We may think that
a developer in a community like Mississauga may not be classed
under this definition as a small business.
1015
Granted, they deal in hundreds of millions, at least tens of
millions of dollars in gross revenue. However, spinoffs occur
every time there is a development approved, every time there is a
subdivision approved and every time a single home is built.
It is this government's response to the spinoffs of those
businesses to make capital available through new leasing
arrangements, through capital lending, through various access
points within the Small Business Loans Act. That is probably the
number two concern of small business in this country.
The number one concern would be human capital and the lack of
properly skilled individuals. For instance, if someone talks in
terms of the construction industry, they would be concerned about
the lack of human capital available in the trades.
People today tend to think their sons and daughters should all
become doctors or lawyers, or maybe even parliamentarians one
day.
I have a 23 year old at home who will be taking an
apprenticeship job as an electrician. That is wonderful because
he will probably save me from electrocuting myself somewhere down
the road.
Being an electrician is a terrific opportunity for a young
person. It could lead to the establishment of a small business
or it could lead to that young person working within another
small business with an entrepreneurial flare and an
entrepreneurial spirit.
This bill, frankly, is designed to help those companies which
will create those jobs.
We mouth platitudes ad nauseam in this place, particularly when
it comes to our youth and our small businesses. However, no one
can deny that the future of the workplace is very uncertain for a
young person coming out of school, either leaving school before
graduation or graduating from school.
If government has one responsibility, I would submit that it is
to create an atmosphere that is positive for business to work in
harmony with labour so that they can create the jobs and the
value-added products that are needed to make this an even more
successful economy.
We can do that in many ways. One way, I submit, is by providing
an instrument such as a small business loan, a guarantee to the
financial institutions.
We tend to indulge in the art of bank bashing with some
regularity, but the reality is that 55% of the capital made
available to small business comes from our main large banks. Why
do they do it? They do it because it is an opportunity to put
something back into the community and also because, in the case
of the Small Business Loans Act, they have the guarantee of the
Government of Canada.
The way it works is that somebody has a small business that they
want to start up. There is criteria that must be met. There are
business plans that must be filed and submitted.
Frankly, this is a process I find extremely helpful, having gone
through it myself in the past. There are programs such as the
former new ventures program that came out of the province of
Ontario. Other provinces in Canada I am sure have had similar
types of programs available to assist business.
In the case of the new ventures program, it was a top-up. It
was a matching of $15,000. It was not a lot of money, but maybe
enough to put that business over the top in terms of its
financial requirements. That $15,000 had to be matched by the
actual owner, or the applicant in this case.
The reason I bring this point up is that if someone was
successful at completing the business plan required to qualify
for a new ventures loan, if the person could actually get through
it and still wanted to go ahead, chances were they had a
reasonable chance of success.
The same thing is true with the Small Business Loans Act. Bill
C-53 simply improves that situation by making access to capital
somewhat easier. It is important, in my view, that the word
easier be taken in the proper context. Sometimes the best loan a
small business can receive is the one it does not receive.
Sometimes the small business needs help in terms of mentoring,
which it can get from our Federal Business Development Bank. It
may need assistance in consulting. These businesses do not
necessarily need an influx of cash and the added burden of
additional debt. I think it is extremely important that we look
at the impact of additional debt when we are talking about the
success of small business.
1020
Bill C-53 is not designed to increase the burden of debt on
small businesses. Instead it is designed to meet three basic
objectives: to continue helping small young businesses access
financing, to increase program accountability and to move the
program toward cost recovery.
I want to take a moment to talk about each of these objectives.
With respect to continuing to help small business access
capital, the new rules for leasing recognize that there is a
rather non-traditional way of financing the purchase of heavy
equipment, perhaps trucks, tractors, trailers or perhaps
leasehold improvements in a new operation to take that business
into the forefront. Perhaps an entire revamp of the business
premises is required.
Banks, without the support of the Small Business Loans Act,
without the support of the Government of Canada, would be loath
to lend money for things like these because of the quickness of
the depreciation once the asset is in place. That is a very
difficult problem for small business.
In reality what small businesses have to do in many cases is put
up their first born male child or their first born female child
as collateral before the banks will entertain the thought of
lending them the money. Actually there might be an advantage to
that in some instances.
An hon. member: Some won't take them.
Mr. Steve Mahoney: Some will not take them my friend
says.
But the fact is that at times the requirements are much too
stringent and are simply not available. Generally speaking,
people who start small businesses in many cases are also starting
small families. In many cases they are young, energetic, full of
enthusiasm and entrepreneurial spirit, but they have not built up
an asset base. I think that is true in many different facets of
small business.
It is a bit like the old accusation that is made against the
banks, which I referred to earlier, that the minute it starts to
rain they take away your umbrella. In a similar sense, to a
small business applying for a loan, the bank might say that if
they do not have enough collateral to ensure the bank can recover
its money, if their ideas, efforts and hard work fail, then it
will not lend the money. If the small business has enough, the
banks will lend it to them, but if they do not have enough they
probably do not need it. It is really a double-edged sword.
I am not a fan of government intervention on a large scale. I
am not a person who believes that government can necessarily do
it better. What we need to do is harness the creativity of
Canadians to allow them to open doors that heretofore may not
have been available to them.
I believe that by continuing to help small young business access
capital, as point number one in this bill addresses, we will do
that. We will say to Canadians that we are not here to give them
a free ride. We are the government. They have to file their
business plan for approval by the bank, the lending institution
or the leasing company. It is not up to the federal government
to approve these applications, it is up to the lender. The
lender will have criteria that the business person must meet, and
it is to their benefit to meet it.
If the business can qualify for the loan and the only problem is
access to credit, access to collateral, then the government is
willing to stand in and supply that credibility. However, the
government is not willing to do that without any concern for the
third point, and I will come back to the second one in a moment,
which is cost recovery.
It is important that governments recognize that throwing money
at a particular problem is not going to solve it. I have said in
this place before, and I believe very strongly, that we should
eliminate the word spending from government jargon and replace it
with the word investing.
The reason for that is that we are trying to tell people that we
are here to invest in what they believe in. We are here to
invest in their hard work and dedication as contributors to the
overall economic good of the country, and to create jobs and all
of those good things, but we are not just going to spend. We
want to make sure we get that money back. It is a very
reasonable approach to take.
1025
Industry Canada has invested on a large business scale millions
and millions of dollars in aerospace. In my riding we have
AlliedSignal which is a multibillion dollar worldwide
corporation. Why would a business like that need the help of
government?
As an out and out grant, that is not available, and it should
not be. But we will make an investment that is tied to a
specific program. I will give the House an example that relates
to small business in the sense of spinoffs with respect to the
other businesses that would be created.
AlliedSignal has developed a new technology for de-icing that
hopefully will take away from the environmentally damaging
de-icing liquid that is currently used. If this is successful it
will lead to safer aviation, particularly in this country where
we live with eight months of winter and four months of bad
skating. We know the importance of de-icing aircraft.
AlliedSignal has invented this and the government has invested
$25 million to assist it in bringing the product to market, but
we want it back. We want a share in the success of that program.
Why should we not? The royal “we” in this case happens to be
the shareholders of the corporation of the country of Canada, the
taxpayers, and they deserve to see cost recovery in that
instance.
The spinoffs from a company like AlliedSignal which developed
this wonderful new technology, which received capital to invest
on behalf of the Canadian taxpayer, will lead to jobs and greater
safety in the aviation industry. It will also lead to smaller
businesses which will provide products to AlliedSignal to develop
the components that are necessary to put together this new
technology.
Those small businesses, many of them with fewer than 50
employees, need assistance. They cannot rely on a fund from
Industry Canada that talks in terms of investing $5 million, $10
million or $25 million. They could not possibly handle that kind
of debt load, but they can access through the Small Business
Loans Act credit or cash to allow them to grow their business and
provide the products necessary to a company like AlliedSignal,
General Motors, Ford or any of the larger businesses.
There is a direct correlation between government, big business
and small business and it makes sense for us to have a mechanism
in place that will ensure that small businesses, which are the
real engine of our economy, which are the main creators of jobs
in Canada, have the ability to grow and to function.
The second point is accountability.
It is extremely important, if we are providing capital funds, or
guarantees as opposed to funds, through banks, credit unions,
leasing companies or whatever the lender, that the accountability
rest right here in this place. It is my view that Bill C-53 will
indeed provide that accountability to parliament. There will be
annual reports.
I serve on the public accounts committee with members from both
sides of the House and they will know that the auditor general is
a hawk. The auditor general is someone who will not allow a
program to simply run along without any accountability. The
auditor general will do an analysis of virtually every
department, of every program, of every division, of every aspect
of this Canadian government.
In my view the auditor general functions as the guardian for the
Canadian people to ensure that no government regardless of its
political stripe gets carried away in simply handing out taxpayer
dollars. The one thing that we have to do when we talk about
accountability is come back to the fundamental premise that has
been established by this government under the leadership of the
Minister of Finance and the Prime Minister, that we have to pay
our way.
1030
I know members get tired of hearing this, but it is a fact, it
is the truth. We have eliminated the overdraft. We have
eliminated the deficit, yes with some pain, yes with tremendous
help and assistance by the Canadian people. But the reality is
it has been done.
We cannot take all the credit nor should we try, but clearly it
is the Prime Minister and the finance minister who are at the
controls of the good ship Canada to ensure that we follow that
particular fiscal route, and that is being done. This bill
frankly fits into that as well.
There is another aspect that I think we tend to overlook at
times and that is the volatility and the problems in Asia.
Members will dismiss the crisis. I note this morning in the news
that the Toronto stock exchange has shot up and everyone is
excited. But we all know that tomorrow it can drop right down.
Does that affect small businesses? They may not be publicly
traded companies. In the case of companies that have lower than
$5 million a year in revenue I would suggest they are not. But
they can be impacted. Many of their customers are publicly
traded companies and they rely on the overall health of the
global economy and the overall strength of the Canadian economy
for their success.
At times we dismiss it. We tend to pretend this is just in the
news. What is happening in the far east, what is happening
around the world, some of the instability, some of the violence,
some of the problems, the potential for war, all of this has the
ability to restrict our ability as humankind to grow and to
prosper.
Back in 1989 I led a trade mission on behalf of the hon. David
Peterson to Great Britain. It was at a time leading up to the
formation of a united Europe and the possibility of a single
currency in that part of the world and increased opportunities
for freer trade around the globe. There were 10 people in the
entourage. We arranged meetings with these folks. At the time I
had the distinct pleasure of being the small business advocate
for the province of Ontario. My job and the job of the officials
who were with me on the trip was to try to make deals and try to
put people together. I should correct myself. It was not to make
those deals but to put the people together in the same room, in
the same part of the country within the businesses to see if
there was a possibility of a deal being made.
The reason this was so exciting was the opportunity to use Great
Britain, with a common language, a common type of government, an
understanding and a comfort level that Canadians could enjoy. To
use Great Britain as the launching pad for these small companies
to move into the European market was very exciting.
There was one business from Richmond Hill, a broom manufacturer.
People would say “Exporting Canadian brooms? Surely they make
those in other parts of the world”. The reality was that while
they do, the quality of that product, the low cost of that
product, the availability in terms of volume were such that the
owner of that business was able to strike a deal to start
exporting into the United Kingdom and ultimately into the rest of
Europe. That was a small business, very much so. I think it was
a two person operation. It would bring other people in to
continue the manufacturing process as needed.
I say hello to the member from Parkdale this morning who also
reminds me about the significance of women in small business. I
know that member has worked diligently with women entrepreneurs.
I believe it was the member from Parkdale who led a delegation of
women to Washington, along with some members of our ministries,
to talk about the potential for women in the area of
entrepreneurship and the ability of women to come in with their
energy and their new ideas to find ways to develop exportable
markets.
1035
The member knows better than I that the difficulty women have
experienced is availability of capital. It has been a problem
for many decades. Bill C-53 will help women entrepreneurs access
capital through the mechanisms whether it be the banks or the
credit unions. I note also that the member recently published a
very extensive document on credit unions and their role in the
small business market.
Credit unions really are an alternative to the banks if
Canadians do not like the way they are being treated. Many do
not. Many find the large banks are so bureaucratic. They are
worse than government if that is possible. They create an
atmosphere that is very frustrating. Their requirements are too
stringent. There is little ability for someone who does not have
the time because they are running a small business. They have
employees to keep on track. They have payrolls to meet. They
have sales to meet. They have equipment. They have EI to pay.
Thank God they do. They pay EI for a good reason. It is to
provide safety for their employees. It is to ensure that if
there is a downturn and they have to lay those people off there
is something there for them.
What is interesting is that members harp on what they call the
EI surplus but they fail to go back to the Mulroney days when
things were a little less stable. We ran a $42 billion dollar
deficit.
An hon. member: Oh, oh.
Mr. Steve Mahoney: I am not sure but the member used to
be a Conservative, Social Credit and now Reform. The member
would know from his vast experience in British Columbia that a
program such as employment insurance is extremely important to
all Canadians. It is important to the workers but it is also
important to the employers. How could a small business survive
if it did not have the insurance policy like employment
insurance? How could its employees survive if it did not have
that insurance policy?
I notice puzzled looks opposite. It has astounded to me to no
end that from day one the Reform Party has been unable to support
this bill. What does it have against small businesses? It is a
puzzle. The words do not match the actions in this case. I do
not want to get into a rant. I promised myself that I am going
to start leaving Reformers alone as much as I can. It is
difficult but I am going to suck it up, try to be a good boy and
not pick on them. We know what happens. Every time I talk in
this place and give Reformers a hard time there is some guy in
British Columbia who phones my office and rants and raves that I
am such a meanspirited person. I really am not. I have this
inability to put up with nonsense that comes from across.
I will get back to Bill C-53. I want to talk about the
arguments the members opposite make all the time about our being
a big nasty government and we invoke something that the Canadian
people know as closure. Let me give those members the history of
this bill and how we arrived here. Pay attention and take some
notes Get your crayons out.
1040
In November 1997 the Minister of Industry introduced Bill C-21
to extend the lending period of the Small Business Loans Act to
one year until March 31 to allow sufficient time to conduct a
comprehensive review. It would take into account three
considerations paramount for its continuation.
Because we were here when that happened, I was very confident
that this did not spell the end of the Small Business Loans Act
but more likely the modernization of it, the cleaning up of it.
Any program that has been in place as long as this one, which I
believe is 37 years, should be looked at and reviewed not only by
the auditor, which has happened, but also by this parliament.
The points I made earlier is that it must be relevant to the
needs of small business, financially self-sustaining and it must
have an adequate accountability framework. Those are the three
sorts of legs of the stool that I pointed out earlier that are
very important.
In December 1997, to follow the bouncing ball, the auditor
general issued his report on the first audit of the SBLA in a
decade. That is a long time. Frankly, I hope the auditor
general does not wait 10 years to do it again. I think it is
extremely important for Canadians to have confidence that it is
working, that it makes sense, that it is accountable, that the
cost recovery is there and that it is a successful program to
help small business.
In that report he expressed concerns about the lack of a clear
definition about expected results, areas for improvement in the
management and delivery of the program and the adequate provision
of information to parliament. These are again points that I have
referred to in my dissertation this morning.
In February 1998 the Standing Committee on Public Accounts had
the auditor general and Industry Canada appear before it. I was
there and it was very enlightening and a good opportunity to have
the auditor general hold us accountable, which needs to happen
more often.
In March 1998 the program was extended, again through Bill C-21,
by one year which allowed us to have the time to arrive at this
stage, the third and final reading of the bill.
In May 1998 the Standing Committee on Public Accounts issued a
report with 10 recommendations to focus on the issues the auditor
general had expressed concern about.
I want to share with the House the consultation process. When
closure comes in after a full year of debate, of committee work,
of auditing by the auditor general, of debates in here, of
introduction and first reading, second reading, referral to
committee and back here for debate on third reading, if the
government did not put an end to this we would simply be here
forever in a gridlock and we would have no opportunity to put in
place a bill that will help Canadians. No government, regardless
of its political stripes, could tolerate that.
Who did we talk to? The Alberta treasury branch. How can the
members of the Reform oppose this bill when I am absolutely
confident that the members of the Alberta treasury branch had a
lot to say about the formulation of this bill. We would have
listened to them and taken into account their concerns and their
advice.
The impact on small business in western Canada is painfully
obvious to everybody except those members in the Reform Party who
represent western Canada or parts of it.
We listened to the Alliance of Manufacturers and Exporters of
Canada. This is extremely important because small business would
rely on an alliance of manufacturers and exporters. They need
the assistance of the provincial governments. They need programs
like this to provide capital for them so they are able to export
into the world marketplace.
There is no question that the Bank of Montreal is taking a lot
of hits these days. Mr. Barrett and company are under a lot of
pressure but he announced that they were prepared—the jury is
still out obviously—to establish a new bank that would be
dedicated to small business lending and funded with some $40
billion in capital that would be made available.
That is an initiative we should pursue. It is not a done deal.
1045
There is the decision on whether or not the mergers are allowed
to go ahead. I come from a riding that has a very substantial
number of bank employees who are afraid for their jobs if the
mergers go ahead and are afraid for their jobs if the mergers do
not go ahead. It is a double-edged sword and we have look at it
calmly and rationally.
We talked to the bank. We talked to Boreal Assurances
Incorporated. We talked to Canada Trust on the role of trust
companies as a lender in this particular situation. We talked
with the Canadian Advanced Technology Association on the
potential impact and the possibility for small business to work
in advanced technology, in IT and all of that which is extremely
important. We talked with the Canadian Bankers Association.
There are the chambers of commerce and the boards of trade. The
Mississauga Board of Trade represents thousands of small
businesses. In fact it is predominantly small businesses that
make up chambers of commerce and boards of trade. Sometimes they
take a hit because they are accused of being too right wing. That
is a somewhat myopic viewpoint. The board of trade in my
community takes on social issues. It looks at issues of concern
to the municipality, to the province and to the federal
government. It has an extensive review process in place. It is
mostly small business people who volunteer their time to serve on
boards of trade and chambers of commerce.
Young executive boards of trade exist in many communities.
Young people have an opportunity to get involved in aspects of
business and can volunteer to assist business, particularly small
business.
The Canadian Federation of Independent Business is a group which
I worked very closely with when I was at Queen's Park. At times
it puts out reports that would make one wonder if they were
totally representative of the viewpoint of all members of that
association. In fairness, I say to Catherine Swift and others
involved in that organization, they serve a tremendous purpose.
They serve a purpose of having a link to government, an
opportunity to reach out and survey the federation's members and
find out how important something like Bill C-53 is in terms of a
small business loan to that community. Is it something that is
just government fluff or is it something that the business
community is taking advantage of? I would suggest businesses are
doing that.
The Canadian Finance and Leasing Association is a new twist.
Before this bill businesses could not access with the protection
and the backing of the Canadian government finance capital from
leasing companies. It is a big part of business. It can at
times be a little expensive. I would caution all small
businesses to take a serious and close look at the rates they pay
for leasing. There are real advantages.
One of them is in terms of leasing computers. In two or three
years the hardware may be obsolete and certainly in two or three
months the software will be obsolete. A computer can be leased
for two years and then returned and refurbished. There is a very
active program in Canada to sell those refurbished computers and
hardware abroad in markets that can use them. Then the small
business can renew the lease and get up to date state of the art
hardware. This is one of the few ways small businesses can
ensure they are compatible with the marketplace in terms of
competing with larger businesses.
Municipalities do that. The city of Brampton, for which I worked
for some time as a consultant, has adopted a program through the
Association of Municipalities of Ontario. It leases all of the
computers. There are hundreds of them in a corporation the size
of the city of Brampton. The city of Mississauga has a similar
type of leasing arrangement. When the hardware is obsolete, it
is turned back in. It gets brand new up to date state of the art
equipment from the leasing company.
If for no other reason, this is a reason to support this bill, I
say to members opposite. This is a reason to share with the
small business community. This is a new window, a new frontier,
a new opportunity where the government will give a guarantee that
will back the leasing arrangement.
1050
On the CIBC, once again we have talked to the banks and the
Canadian Restaurant and Foodservices Association, which is
extremely important. The cost of leasehold improvements for a
restaurant can be very large. We could be talking hundreds of
thousands of dollars. This bill will provide up to a quarter of
a million dollars for such a project.
It is important to note that we are not talking about financing
restaurants all over the country. We are talking about leasehold
improvements that will add value. That is why we as a government
wanted to hear from the Canadian Restaurant and Foodservices
Association. We do not want to be the sole source of financing
of leasehold improvements which include the cost of freezers,
cookers, et cetera, but we want to be there to help.
The Canadian Taxpayers Federation should be near and dear to the
hearts of Reformers so I will let them talk about those
individuals.
I mentioned the great work done by the member for Parkdale—High
Park in relation to her report on credit unions. Their role has
expanded tremendously. Canadians should go to their credit
unions. They are not customers. They are owners. They become
shareholders and partners in credit unions. We should be using
credit unions more.
GE Capital is one of the big leasing companies involved. The
list goes on and on of the many financial institutions we have
talked to.
This bill is a classic. It shows the government has consulted.
We extended the old bill to ensure the program would be safe and
that it would carry on. We have not modified the end result.
There is still a quarter of a million dollars available in terms
of a loan. We will still guarantee 85% repayment on behalf of
the borrower to the lender. The bill gives confidence to the
lending institutions, the credit unions and leasing companies,
all the organizations in the financial sector, that they will be
able to support small business.
Make no mistake. This bill is not there to help lending
institutions. This bill is there to help small businesses. It
is there to help ensure their future. It is there to help ensure
they will be able to compete in the incredibly competitive global
economy. They will be able to manufacture and export their
goods, create jobs and continue to make this economy one of the
most vibrant in the entire world.
Mr. Jim Pankiw (Saskatoon—Humboldt, Ref.): Mr. Speaker,
would you please confirm that I have the unanimous consent of the
House to split my time with the hon. member for Calgary East.
The Acting Speaker (Mr. McClelland): The member for
Saskatoon—Humboldt has requested the consent of the House to
split his time with the member for Calgary East, which would be
20 minutes each with no questions or comments. Is there
unanimous consent?
Some hon. members: Agreed.
Mr. Jim Pankiw: Mr. Speaker, I am pleased to speak to
Bill C-53, the Canada small business financing act at third
reading. It is clear that the government's passage of this bill
has been driven by its need to have the regulations in place by
December 1. That is why the bill was rushed through committee,
faulty regulations and all. That is why the Liberals moved time
allocation and limited debate at report stage and third reading.
This bill has many faults which Reform MPs were willing to help
correct. The principled amendments concerning the regulatory
process that we brought forward will not be dealt with. Efforts
to stop the program from expanding into the volunteer sector will
not be given due consideration.
The government has shown a willingness and is all too eager to
ram through legislation at the expense of reasoned debate. Its
rationale seems to be that there is no need to hear what anyone
else has to say, that it knows what is best and pass the
legislation as is. It is typical Liberal arrogance.
I wonder if the irony of this situation is not lost on Liberal
members of this House. After all they were the ones who cried
foul every time the Progressive Conservatives used closure during
their nine year reign of error. To date, after five years the
Liberals have used this procedural hammer twice as often as their
Conservative counterparts ever did. I never thought I would see
the day when the Conservatives would look more democratic than
the Liberals, but there it is.
Another example of the Liberals saying and doing one thing in
opposition and then doing quite another once in power.
1055
Indeed the Liberal government has entirely failed this House. By
moving time allocation it has once again shown its utter contempt
for the democratic process. It has once again moved to limit
debate and consultation. In doing so the Liberals have failed
Canadians once again.
In relation to Canadian small business, the government has also
failed miserably. Within this legislation which will replace the
Small Business Loans Act, the Liberals are using a band-aid
approach when what is really needed is major surgery.
According to the Canadian Federation of Independent Business and
the auditor general, access to reasonable financing is an
impediment to growth in the small business sector. The other
major obstacle is high taxes and this government's irresponsible
approach to economic planning.
What the Canadian Federation of Independent Business and every
small business owner will also tell us is that entrepreneurs need
access to equity, not more debt. Let me see if I can make this
any clearer for the Liberal members of this House even though
they are usually not prepared to listen anyway.
Let us say that a Canadian wishes to open a small business. The
problem is, like many other hardworking Canadians, they do not
have the capital resources to do so. If they do manage to open a
business on their limited resources, tax and spend Liberal
governments will ensure that it is not a profitable venture.
The point I am trying to make is that in addition to killing
jobs, taxes also kill business ventures. High taxes reduce the
opportunity for existing small businesses to expand. High taxes
kill individuals' dreams to open up a business. High taxes, not
access to debt, are the problem.
What do the Liberals offer as a solution? One would think they
would offer to cut personal income taxes so that individuals
would have access to more of their own capital equity. One would
also think that the government would cut payroll taxes such as
employment insurance or CPP. A reasonable person might also
believe that a government interested in stimulating growth in
small and medium size enterprises would cut capital gains taxes.
But no, rather than tackling the fundamental economic problems
inherent in this economy, Liberals instead choose to apply a
taxpayer guaranteed loans program, the result of which is to
skewer the playing field in the marketplace.
What is the legitimate role for government? The first thing
that should be done is to determine whether there is a legitimate
market failure. In that regard the performance of this
government is abysmal.
What has the government done to quantify the degree to which
access to financing for small business is a problem? How
extensively has the government reviewed the performance of
Canadian banks in this respect?
Instead of answering these questions, instead of being proactive
and demonstrating leadership, what do we see from this Liberal
government? We see it tinkering with yet another fundamentally
flawed government program. Despite the fact that the government
has not quantified the problem of access to financing by small
business, we can safely assume that a problem does exist.
Improved growth of small business would clearly have a
beneficial effect on the economy, lower unemployment, more
disposable income, et cetera. How do we achieve this? Again we
need to ask ourselves what are the obstacles which truly inhibit
the growth of small business?
Once again, in case the Liberal and NDP members of this House
missed it, the obstacles to growth are excessive employment
insurance premiums, high levels of taxation and a banking system
that lacks competition. It is also a regulatory burden that
hinders the growth of small business. The obstacles to growth are
not a lack of government programs or a bureaucracy that is too
small. Unfortunately this Liberal government has been unable to
recognize this very simple fact.
Instead of taking measures that would clearly have a positive
impact on every small business owner in Canada, the government is
more preoccupied with changing the name of the Small Business
Loans Act to the Canada small business financing act.
The fundamental flaw with this Liberal government is that it
does not understand the most basic economic principle. A dollar
left in the hands of a consumer, investor, entrepreneur or
taxpayer is far more productive than that same dollar sent off to
Ottawa to be dealt with in the hands of a lobbyist, a bureaucrat
or a politician. I rather doubt that the Liberals and their
socialist NDP allies will ever figure that out.
1100
I also want to comment on how the government has shoved the bill
through the House so rapidly. It has had due process,
introduction, second reading, clause by clause, report stage and
now third reading. However the Liberals do not care what
knowledgeable criticisms there are. They just want to get the
bill passed so that they meet the December 1 deadline to have the
regulations published in time. The government needs the
regulations in place by January 1, 1999, so that the banking
industry can have the requisite 90 days to implement changes.
The government never really cared what stakeholders and
opposition parties had to say on the bill. The only thing that
mattered to the industry minister was getting it passed to meet
his own deadlines. In fact witnesses that appeared before the
committee explained the inherent flaw in the approach the
government was taking. They explained the distorting effects
that government interference in the marketplace has on the
economy. They explained that the proper approach was to cut
taxes and reduce the regulatory burden on business. The minister
was not present to hear any of that. During all the debate on
the bill he has not been here once either. The significance of
that should not be lost.
The regulations were just as hastily conceived as the
legislation. Indeed we saw proof of that in committee three
weeks ago when it came to life that the draft regulations were
flawed. That is pretty much par for the course when it comes to
the legislative agenda of the government.
The government needs to think about its approach to the economy
and to small business in general. The bill does nothing to
improve the economy or to reduce the burden placed on small
business by government. As such the bill is fundamentally
flawed.
In closing I urge my colleagues on both sides of the House to
take time to consider the flaws in the legislation carefully
before voting to support it at third reading.
Mr. Deepak Obhrai (Calgary East, Ref.): Mr. Speaker, we
have been asking the government to keep its hands off the UI
premium. My colleagues on the other side seem to be getting a
little worried about it and have started dreaming about premiums.
All of a sudden they started mentioning Mr. Premium. That is a
good sign.
I listened to my colleagues on the other side. Before
discussing the reasons we oppose Bill C-53, I heard my colleague
on the other side talk about the business plan, how small
businesses are creating jobs and leasehold improvements. Another
member talked about helping women entrepreneurs. I agree with
it. That is right.
I commend the member who referred to the business women's
delegation. Women play a very important role in businesses, but
she is not the only one. Across the country there are
organizations working to ensure that women have access to capital
and become entrepreneurs.
From my own personal experience, I have been in business as a
small entrepreneur with my wife for the last 16 years. My wife
has been the backbone. She is a woman entrepreneur. I have
supported her wholeheartedly. She has made a tremendous success.
From one store she eventually expanded to four stores.
As well, I have been involved in international investments. Talk
about a business plan and talk about leasehold improvements are
nothing new to me. I have dealt with banks. I have dealt with
business plans. My experiences in accounting also gives me
insight into reading balance sheets and how to present a proper
business plan.
In reality we have had small business financing for many years
in the same act that is now before us. All my colleagues on the
other side, and I hope my colleagues in the NDP, know that there
are still problems with accessing financing. They hear from their
constituents, from small businesses.
They still cannot access financing, which would tend to indicate
that the approach the government is taking by creating the Small
Business Loans Act is somewhat flawed. The government may think
of a program to assist small businesses, provided the risk factor
is carried by all equally, so in principle I would agree that
there should be a mechanism for that.
1105
We have another attempt by my colleagues on the other side, by
the government, to look good and to feel good. Time after time I
have heard in the speeches made by my friends on the other side
that they are the supporters of small business. They are relying
on this little program and calling themselves the great
supporters of small business. Let me say that small businesses
do not see it that way.
The Liberals keep standing up and saying the Reform Party is
anti-business and that the Reform Party is not a supporter of
small business. I was a little amazed when my colleague from the
NDP said that a couple of days ago. I tell him that we are for
small business. We have had experiences like many of his
colleagues and supporters have had. We understand the mechanism
of small business, but we do not feel that the bill is the
solution.
There are two reasons for that. First let us talk about the
banks. If a program like this one is implemented and given to
the banks or private organizations, to a degree they will do a
better job than it being given to a bureaucracy. Giving this
program to the banks is fine.
Where the problem comes and where most Canadians and most small
business people have difficulty is that the banks have a
monopoly. The banks have been protected in the past. They have
been given all the tools to make them a strong partner in the
economy. They have become very strong partners in the economy.
They are so strong that today the majority of Canadians now see
banking as a vital service, putting them next to utilities.
Because the banks have been protected so much and have become a
vital service to Canadians, they also carry a social
responsibility. They also carry a burden to ensure that in
return for getting the protection they have achieved they have to
address the concerns of Canadians, of small businesses.
Today I will be meeting with the senior vice-president of
Toronto-Dominion Bank in charge of small businesses who will
explain what his bank is doing. I have met with the CIBC small
business vice-president who indicated what they were doing.
My friend on the other side alluded to to the fact that the Bank
of Montreal and the Royal Bank have come up with a plan to create
a small business bank. I am a supporter of the small business
bank. It is an extremely good idea. It is an excellent idea. I
am a little sad that it has come forward just because they are
putting a case for merger. They should have done this before.
These are good initiatives.
Where is the responsibility of the banks? I have mentioned to
the banks the areas where I feel they have not addressed the
needs of small businesses. Examples are rapid change of their
managers, high cost of doing business and extremely stringent
rules for collateral. At some stage it has become ridiculous,
where even I was told by one loans officer that if he had the
opportunity he would also mortgage my dog.
The banks carry responsibility in addressing this issue.
1110
If a small businessman walks into a bank, I am not saying the
banker should blindly give him a loan. Banks have a
responsibility, as does the small businessman, to ensure that the
business plan is sound. Perhaps the banker could sit down and
show some compassion and work with the individual to ensure that
his idea becomes successful. Bankers should help such people and
not sit in their chairs saying yes or no.
The Federal Business Development Bank has small business weeks
which target small businesses and students. It provides a very
successful initiative for them. Students come to those banks by
themselves; the government does not send them.
Government wants to be business friendly and comes up with this
program so that it can tell Canadians that it is the friend of
small business. That is fine. If government wants to do that,
it is its prerogative.
In reality the problem is that the climate for successful
entrepreneurship, for the success of a business in Canada, is
becoming more and more difficult. Why is it becoming more
difficult? What do small businesses face? Let me speak from
experience. They face the high cost of EI, the severely high
cost of CPP and government bureaucracy which has now started
charging user fees.
Let me give an example. I received a letter a couple of years
ago from the government when it introduced a $20 fee for the
registration of corporations. I sent in my $20. It was the
first time the government said it had to recover the cost. It
was the usual rationale for user fees, a tax on the other side.
The letter was from the government agency thanking me for my
cheque. If I wanted a receipt, I had to write to them and a
receipt would be sent. Why should I write? They have already
written me one letter. I needed to write a letter back to tell
them that I needed a receipt. Then they would write back and
send me a receipt.
Let us talk about the tax burden on a small business. As every
small business that leases property knows, first we pay property
tax which is part and parcel of the leasing of property. The
landlords tack it on to the businesses.
Then we have what is called a business tax. Small businesses
pay property tax, business tax, user fees, high cost of fuel and
other high costs. Then our friends opposite introduced the GST
despite the fact that they said they did not want to do it. The
GST came with a tremendous amount of bureaucracy and paperwork
attached to it. It is another huge burden to small business.
Now the government talks about harmonization, harmonization
which we understand the people in the Atlantic provinces are not
happy with. We do not know what my friends opposite will come up
with next. They may come up with some new idea to take the money
from small businesses. We will keep an eye on them and not allow
them to take the EI surplus.
1115
We will be fighting on that. Time after time Canadians have
told us. Canadians are also constituents of government members
and hopefully they are telling them that as well. We are going
to make sure Canadians know if the government tries to go after
the EI fund.
This legislation brought in by the government has a lot of
flaws. It is not well thought out. If it wants to help small
businesses there is a way. First, create the climate to help by
reducing taxes, allowing families to come up with ideas, to work
and to get the reward for their thinking.
People in small business do not put in a nine to five day. When
we take all the time put in, owners of small businesses are
probably earning $3 to $4 an hour so that they can realize their
dreams and hopes.
The government trots in and says no, the owner has to do this
and that. He or she has to pay this tax or that tax. Hopes,
dreams and hard work go down. That climate is what the
government should be creating, not introducing a bill like this.
The banks looked at it and said “We will also look nice. If
there is a default we will get our money from the government, the
taxpayers. What is the problem?” They do not take the risk.
It is not important for them. Come on in, fill out the paper.
Who cares?
Of course they are supposed to follow criteria but they have
been guaranteed, guaranteed of making money. What is wrong with
the banks? Why should they address them? Where is their social
conscience? In the meantime we have given banks the tools to be
stronger. We have given them the monopoly.
This two way approach is what small businesses are looking for.
That is why I am having difficulty supporting this bill.
[Translation]
Mrs. Francine Lalonde (Mercier, BQ): Mr. Speaker, I have been
listening patiently to all the speeches since the beginning of
the debate, and I must say that I am disappointed. As you know,
the Bloc Quebecois supported the principle of this legislation
and tried to have some amendments passed. Not only did the
government party not bother to consider these amendments, it did
not even take into account the work conducted by one of its own
departments.
I listened to the comments made by our colleagues from the
Reform Party, who were against the bill at the beginning, and I
read their amendments, with which I disagree. They made many
interesting remarks, but there is one fundamental thing I cannot
accept.
They contend that, as flawed as it may be, such a bill is
essential but that, with lower EI and pension contributions,
small and medium size businesses would no longer need government
guarantees to secure equipment, rental and leasehold improvement
loans. But these are two completely different matters.
The Small Business Loans Act, which was passed back in 1961—no
party can therefore claim it as theirs—has served Canadians
well.
1120
In preparation for this morning's fascinating meeting, I read
three brochures, including one from Industry Canada.
When I was young, my first job was in the field of economic
history. It is most interesting to note how much this program
has been used by successive governments to stimulate the economy
after hard times. That is normal.
Governments are not the ones that create employment, but it is
true that they can make it either easier or harder for
businesses to create jobs.
Governments—and by this I mean all governments—are always faced
with the challenge of deciding which types of incentive programs
would best help the private sector, companies, banks or other
lenders, to create jobs.
That is what I want to address. I shall try to be equal to the
challenge of explaining to the two or three people listening in
Canada a bit of what is going on here.
An hon. member: Not in Canada, now?
Mrs. Francine Lalonde: Yes, because television goes everywhere.
This program was used, particularly during the 1981-82 crisis
when we had a very marked increase in interest rates, coupled
with a slowing economy.
In Quebec, within the space of one year, 200,000 jobs were lost,
the highest number in both absolute and relative terms of all
the provinces.
Then in 1980, some reforms were tried. Finally, in 1983, the
program was liberalized in order to help small and medium size
businesses get off the ground, or improve their situation. And
what was the result of these reforms? Two years later we could
see that there had been some success, but that it was time to
impose restrictions because there might have been some abuses of
the system. Restrictions were therefore imposed, starting in
1985. I could have gone further back in time, but I have stayed
with the relatively recent past.
From 1985 to 1993, no changes were made. Why did we make them
in 1993? Because the economy plunged once again in 1990-91.
So, this program was again used to stimulate and promote job
creation by the establishment of small businesses.
Here again, the government played with the parameters of the
program. In two years, the loans tripled. Naturally this was
not noticed at the start, but it was later on. The federal
treasury had to provide guarantees to clear up the debts
resulting from various problems and bankruptcies. In the early
years, when the program was starting up, these negative
consequences were not apparent.
I would point out that this type of program cannot be frozen
forever. It must be regularly submitted to parliament and
regularly evaluated against approved indicators.
It seems to me that after this experience, there should
necessarily be a consideration, which should not just examine
the recovery of costs, but also the effects on employment,
effects that could be called macroeconomic. There could be
times when it is appropriate to stimulate the economy by
promoting job creation in the knowledge that an increased number
of bankruptcies will follow.
On the whole, it is better to have small business people moving
the economy than staying at home collecting employment
insurance.
1125
This is that sort of program. I think it is with this sort of
consideration in mind that we parliamentarians should have
pushed and should push for continued analysis of the effects,
not only in terms of the recovery of costs—the auditor general
wants that and that is understandable—but also the effects on
job creation. Let us ask them about the real effects and about
the effects on the economy.
The program worked and needed reviewing because, in 1993, the
machine was opened up further and then in 1995 it was closed
down somewhat. Nobody knew exactly where it was all leading.
So, when the auditor general sounded the alarm, not only did he
recognize the importance of the legislation, because of the
great need of small and medium size businesses for credit,
particularly for start-up and expansion, but he also said that
the program had to be tightly run, that unscrupulous individuals
could not be allowed to take advantage of the system and stick
taxpayers with the bill.
But it is not just the auditor general who is calling for a
review, because the Canadian Federation of Independent Business,
which, as we know and should point out, represents over 90,000
small businesses throughout Canada—the very active Quebec branch
of this federation represents over 16,000 small businesses—was
also heard from.
At the time of the review early in the year, the president of
the Quebec branch said that 29% of SMB owners consulted in 1997
cited the availability of credit as one of their most pressing
needs or concerns. That is almost one third.
The president concluded as follows “This means that lending
institutions still have some way to go to meet SMBs' needs”.
She added that the amount of credit available had increased for
the group, but that these so-called gains had benefited primarily
businesses with 20 or more employees. This means that
businesses with fewer than 20 employees are still in dire need
of credit.
This press conference was held in English and I will quote from
it in that language:
[English]
“Economic growth is compromised when businesses do not have
access to a sufficient financial lifeline. The fallout hurts
everyone”.
[Translation]
As for the Canadian Federation of Independent Business, it
insists on the glaring need for credit. It stresses that some
small and medium size businesses do not even dare go to lending
institutions, because they know these institutions are not
always receptive to their needs.
Surely, there are members here who have had entrepreneurs, both
men and women, come to them because they have major credit
problems and do not dare go to lending institutions, because
they do not want to tarnish their reputation. They are hesitant.
1130
The entrepreneurs who start a business do not all have easy and
free access to advice that they can follow with confidence.
Starting up a business is no easy thing. The business world is
merciless. If one is not big and do not have support, one's
application may be turned down flat. Alternatively, they will
take one's shirt by demanding collateral such as one's house,
one's pension fund, everything one owns.
It is only normal that Mrs. Swift would ask for improvements to
financing for very small businesses, which are the emerging
businesses and which are responsible for economic renewal in
several communities.
Naturally she adds that governments must be concerned about the
effect of the various payroll taxes, especially on small and
medium size businesses, which are often in service and
non-capital-intensive sectors.
The Canadian federation knows it needs a program, a sound law on
loans to small businesses. There is an interesting letter from
the Canadian federation, calling for loans, written to the
Minister of State for Small Business in 1993. I mentioned that
the strings were loosened a bit in 1993.
The federation said “The federation expressed its concern about
one point early on. The modified program may likely encourage
financial institutions to simply shift the figures to another
column, in other words, to move the highest risk accounts into
the government guaranteed loans folder”.
Like my colleagues, I have heard them a number of times. They
want a program available to businesses most in need of
it—specifically for them, they say—but one that is neither a
subsidy nor a gift—a program that permits businesses to develop
at reasonable cost.
Another passage dates from 1994. It was shortly after the
November 29, 1994 election. The federation wrote to the
Minister of Industry that “According to international statistics
on this type of program, no more than 5% of the total number of
term loans to small businesses should be given under this
program”. So the target is businesses that would not otherwise
have access to credit.
The federation added “When this percentage is exceeded, it is
because the banks are manipulating things considerably by
including in the program loans that do not require a government
guarantee. The program as designed at the moment is overly
generous to the banks, which draw maximum benefit from it,
because they try to appear to support small business at
taxpayers' expense”.
1135
I stress, and I will probably do it again since the learning
process is based on repetition, that it is not a coincidence
that the Bloc Quebecois proposed that a clause be added to the
bill dealing with small and medium size businesses that would
not otherwise have access to credit. We could have seen, in the
regulations, what this meant.
If we do not try somehow to target businesses that would not
otherwise have access to financing by helping them in any way
that we can, we may create a situation where banks could
conceivably grant loans that are more risky, without really
meeting the needs of new and growing small businesses.
The Canadian Federation of Independent Business made
representations on the bill itself. However, to follow the
outline I made for my speech, I must go on to say that there was
a need for a reform. That reform was dictated by two
considerations. The first one was to correct the magnitude of
the flaws in the legislation as amended in 1993 and again in
1995, or at least to see whether it was possible to better
ensure cost recovery for the Department of Industry and to
control spending. This is what I call the accounting component,
which is looked at by the auditor general.
But there was also an obligation to see under what conditions we
could ensure that small and medium size businesses with credit
needs have access to financing. These two considerations had to
be dealt with together.
This is where the disappointment occurred. The disappointment is
the bill. It is, of course, a new version of the SBLA and the
general framework is still the same.
In a financial package I look at with young entrepreneurs—and I
am sure members come to the same conclusion when they do it—we
look for a small business loan, because such a loan is needed
for buying or renting equipment. This is one component of the
financial package.
I regret that it was not improved, that the government
concentrated only on cost recovery and did not concern itself
with the second component, except through a pilot project that I
supported but whose success I am not sure of. Since we will
certainly be in this House for some months still, we will have
an opportunity to raise this issue again.
Instead of being a new version of the Small Business Loans Act,
this bill is called, and I quote:
That caught my attention when I read the bill. Great, I said,
they are going to meet needs. It goes on:
It says “small businesses” not “small and medium size
businesses”.
The problem, and it is a big one, is that there is no provision
for this in the bill.
This is quite a problem. The minister may have had good
intentions, but they are not borne out anywhere in the bill.
Yes, availability should be improved, but how? We are told by
officials that the funds available will be largely the same,
$15 billion over a five-year period.
So we find ourselves with a bill that is supposed to be a
reform, but that is really, given all the consultations, a big
to-do about nothing. If the Small Business Loans Act were left
essentially intact, we could at least be sure that SMBs that
needed financing would have access to it. But I am not sure
that those most in need of financing will qualify.
1140
I am not sure that others who do not need such loans will be
excluded. I am not sure of this, because the bill, to my
knowledge, contains no provisions for such exclusion.
There are other very tiresome aspects to the bill. Of these
really quite unacceptable aspects, the main one is that the
minister, or the department, has removed from the body of the
bill the criteria for identifying eligible lenders. A few
indicators remain, but the type of loan is not mentioned.
The contract as it were that used to be in the legislation has
been removed from the bill.
Right now, we cannot tell. In fact, since regulations depend on
him, the minister could come out and say that, from now on,
under the Small Business Financing Act, loans on equipment are
excluded. And, legally, there is nothing we could do about it.
Of course, when the members across the way hear opposition
members suggest that this is illogical, that it makes no sense,
that the core message of any legislation ought to be stated in
the body of the act, and not in its regulations, they respond by
saying any odd thing.
They should consider this suggestion on the face of it, so that
the department is not left with all the power. I have nothing
against this minister in particular. I knew the human resources
development minister fairly well, and if he knew anything at all
about what was going on in his department, that in itself was
something. This apparently is an advantage of this government
from coast to coast to coast.
I rather see it as a disadvantage.
While regulations used to be included in the act, they no longer
are. I want to tell the House what impact this has had at
committee. First of all, I would say it was a major source of
embarrassment for the parliamentary secretary; bank officials
who declined to testify until they had had a chance to take a
look at the draft regulations.
Then they showed up in a panic, saying “Look, if passed as they
stand, these regulations will preclude lending to such and such
small business category”. A franchiser came and told us “This
would spell the end of our line of business”.
As members can see, the new draft regulations caused a great
deal of trouble. We also found ourselves in a rather
embarrassing situation as parliamentarians. We suspended our
proceedings and asked the department to go back to the drawing
board.
But instead of slowing things down, things happened fast.
We in Parliament found ourselves faced with a fait accompli.
Representatives of banks and franchise holders—and not of small
and medium size businesses—met with department officials. We
parliamentarians got a letter stating that the bank
representatives were satisfied with the assurances they had
received. It is not reassuring to parliamentarians to see a
bill where the most important part, called for by the Canadian
Federation of Independent Business, is not in the bill itself
but in the regulations. For me, this is the most significant
problem with the bill. It is even rather surprising to see such
a thing happening with a piece of legislation.
There are two types of legislation we pass.
In a former life, I worked a lot on legislative texts such as
labour codes.
1145
A labour code is the type of text where every word, every comma,
every colon, counts because it affects the hiring or laying-off
of an individual, determines an entitlement or a non-entitlement.
The text of the law itself must be substantial and detailed.
That is the type of legislation I am accustomed to. But the
latitude being taken with the law and with what has to be done
in this case is unacceptable.
Some legal experts may feel offended, but I have no bone to pick
with them.
The type of law we are dealing with here is a form of
governmental decree announcing policies that do not always
reflect the utmost of care, the utmost of concern for democracy.
In reality, even if the policies are hard to read, citizens'
rights are covered. What kind of small and medium size business
can say that it is entitled to a loan under the act? This is
not possible, because it is not stated that capital or equipment
loans are included. This kind of information can be found in
the regulations.
I moved an amendment in committee, and it was of course swept
aside. “Just an opposition member trying to stir up trouble”.
There is another clause I want to address, one that I see as
favourable and one we supported, while trying to get an addition
made to it. It is the one which states that the minister may
establish a pilot project to guarantee loans to the voluntary
sector and capital leases.
If this is done as a pilot project to see where the difficulties
and advantages lie, I believe this is good. I would have liked
to see a third element brought in, about capital funding.
I am in favour of the fact that the voluntary sector, what is
called in Quebec and elsewhere the sector of the social economy,
is included in those able to benefit from this legislation. I
think, moreover, that there will be fewer problems with this
sector than with the small and medium size businesses in sectors
where the risk is higher.
This sector of the social economy, a growth sector for some time
now, has some highly competent and eloquent spokespersons in
Quebec. This sector is part of the market economy, and
therefore financially autonomous, but its goal is not to
generate profits but to create employment and deliver services.
A typical example of this is a work co-operative. A work
co-operative is designed to be part of the market economy, to
produce and sell products. The money it receives goes to
salaries and business development, not to profit. The job
co-operative sector is a growing one, and we have seen some of
these co-operatives, these different types of businesses, come
through the crisis and provide their workers with a very
different environment.
1150
This does not mean there is no authority in these co-operatives,
but that the workers themselves own the business. Therefore, it
is in their interest to make it a successful venture and to
share the duties and responsibilities accordingly. It is their
security, their business. There are also housing co-operatives,
whose members are co-owners.
There are other types of socioeconomic businesses that can
provide services. For example, there are co-operatives or
non-profit organizations that provide services to the elderly.
Funeral co-operatives have recently been developing very quickly
in Quebec.
This is a steady business. In fact, it is growing, given our
demographic realities. Funeral co-operatives help fight the
invasion of American multinational companies in the funeral
service sector.
We agree with having borrowers from the voluntary sector—as
mentioned in the bill—or in the social economy, as we would say
in Quebec, be part of the pilot project that could eventually
make them eligible under the new Small Business Loans Act.
Why was working capital included? When I read the background
document prepared by the Department of Industry, I realized
that, after 1983, there was very strong pressure to include in
the act the authority to guarantee the working capital of a
business.
I can understand.
I introduced this amendment attaching a condition that I saw in
a board of management regulation because, in this life and my
former life, I have seen all too often businesses that had
everything they needed for success run out of money. I have
seen business owners borrow from a brother-in-law, a sister-in-law,
and so on, and find themselves unable to survive the two or
three months before money came in from sales to businesses or
individuals when they had to pay their suppliers. I am sorry
this amendment met the same fate as the others.
Finally, there is one last provision I would like to mention
even though it is not in the legislation either. In this
regard, parliamentarians must renew their attack in committee
and elsewhere. I am talking about the provision that does not
require the examination of the application of the law take job
creation and macroeconomics into account.
In other words, up to now, there has been interest only in cost
recovery, in expenditure control but no interest in the effect
on the economy of the businesses created, even if they are
bankrupt within two years. Every effort must be made to prevent
them from going bankrupt after two years, because there has been
too much pain, too much sweat, too much effort, too much
investment and too much everything. But even if they do go
bankrupt after two years, even if we have lost $50,000, was it
still not amply worth the effort in economic terms? It seems to
me we must introduce this approach in the analysis of the new
law. I add one final concern.
The minister plans a review
within a year, and then not for another five years.
As I read the history of the SBLA last night, I said to myself
we could be facing another recession in a year or a year and a
half. This Parliament or this government will want to use this
legislation again, as it has done in the past, in a
countercyclical fashion in order to stimulate a weak economy.
When things are tough, are the bankers prepared to make it
easier to obtain credit, as would be a reasonable thing to do
economically or macroeconomically? No. They do not do that,
they do the opposite. They limit credit and make it harder to
obtain.
1155
Hence the importance of a loan guaranteed by the government,
which says that, even if the banks tend to be tight fisted at
present, that is not what is needed. The economy still needs
help to recover.
In this part of the bill, therefore, I think that the minister
and the department ignored their own experience. Although it is
well drafted, the bill may well have to be reviewed further
before the anticipated date of 2004.
The front page of the last issue of The Economist, an extremely
serious and not at all left-leaning publication—I imagine that
some of my colleagues must delve into it from time to
time—featured a balloon showing the rise in stock markets.
For some time now, The Economist has been saying that the
greatest short-term risk is not Asia, but the United States,
whose inflated stock markets could take the same dive, with
serious consequences.
Canada was not mentioned. As members know, The Economist is a
British publication, but it is interesting to hear these experts
draw comparisons with the situation that led to the 1929 stock
market crash. I do not wish to scare anyone, just to say that
the minister was unwise not to provide for a more periodic
review of the legislation, given its past effect in
counteracting cycles, even if the purse strings subsequently had
to be tightened each time.
The Bloc Quebecois is in favour of the bill because it
nonetheless gives SMBs access to loan guarantees that they would
otherwise have greater difficulty obtaining.
But this is not a good enough reason for changing the title of
the bill which, I repeat, used to be the Small Business Loans
Act. The new short title is the Canada Small Business Financing
Act. The Small Business Loans Act was much more to my liking.
[English]
Mr. Nelson Riis (Kamloops, Thompson and Highland Valleys,
NDP): Mr. Speaker, I appreciate being recognized for this
important third reading debate of Bill C-53, an act to increase
the availability of financing for the establishment, expansion,
modernization and improvement of small businesses.
I wish to spend a moment or two elaborating on the purpose of
this legislation. This bill replaces the Small Business Loans
Act in order to reform the small business loans program. The
purpose of the program is to increase the availability of
financing for the establishment, expansion, modernization and
improvement of businesses with gross annual revenues of up to $5
million by allocating between the minister and lenders portions
of eligible losses incurred by lenders in relation to loans up to
$250,000 to such businesses for those purposes.
The key elements in this legislation include the following. It
provides for the continuing operation of the program, subject to
a comprehensive program review every five years. It limits the
minister's aggregate contingent liability to $1.5 billion for
each of these five year periods. It authorizes the minister to
conduct compliance audits and examinations. It authorizes the
establishment and operation of pilot projects to determine
whether the program should be extended to include loans to the
voluntary sector, and involving capital leases. Finally, it
reforms the offence and punishment provisions.
1200
That is the summary of the major thrust of this legislation, but
let us acknowledge the environment in which it is introduced.
All of us in this House are well aware of the fact that if we
are interested and concerned about the employment situation in
the country we have to acknowledge that most of the jobs that
have been developed in our country over the last number of years
have been developed by the small business community. Certainly
the vast number of jobs that will be developed in Canada in the
foreseeable future will be developed by the small business
community.
In 1996-97, a year for which we have good data, small business
created more than 80% of all new jobs. If we look at the last
two or three years, a significant number of new businesses and
new jobs included people who we would generally refer to as
self-employed; people who have been unable to find a job with a
firm, a government organization or a non-profit group who have
gone out and created a new enterprise.
This legislation acknowledges this reality in terms of the
development of employment opportunities in our country coming
largely as a result of the initiative of small and medium
enterprises in Canada.
It is also acknowledged that most of the businesses that were
operating in this country in 1989 were still operating in 1996.
The idea of many businesses starting and then ending is a trend
that is shifting greatly.
Recent surveys by the Business Development Bank of Canada have
indicated that small business operators work between 50 and 70
hours a week on average. Most work evenings in one capacity or
another related to their business. They inevitably work either
on Saturday or Sunday, or both. Almost half said that they take
less than seven days of vacation each year.
We are talking about Canadians who work very hard to make Canada
work. These are the people who spend an extraordinary amount of
their energy, time and talent making the Canadian economy tick,
making the economy of Canada grow, and in the process providing
employment opportunities not only for themselves and in many
cases for members of their family on a full or part time basis,
but for others as well.
One of the most successful programs that I have seen in my time
as a member of parliament has revolved around the community
futures program. This program is a federal initiative that
provides capital for communities which is administered and
managed by local individuals in terms of really offering micro
credit to people who have good business plans that are brought
forward. I am proud to say that in the city of Kamloops and the
surrounding area hundreds and hundreds of new enterprises have
started at least partly, if not largely, because of this
community futures program.
Another important aspect of the program is that people who are
presenting collecting employment insurance can make the case to a
local board that they have a great business idea. If it is
approved by the board they are able to not only start a new
business, perhaps even borrowing up to $50,000 or $60,000, but
they are able to continue collecting employment insurance for a
period of time while the business gets started. I do not
overemphasize this. This has resulted in hundreds of new jobs
and hundreds of new businesses being developed in this part of
Canada. It is a tremendous success. The success is due in part
to the program being there and the credit that is offered, but it
is also due to the people who have managed the program and who
have very seriously reached out to the business community,
particularly the newly emerging business community, to provide
support.
1205
I set myself aside from some of the previous speakers who said
that government has no role in business. That is absolutely not
true. The fact that we have the Bank Act which encourages banks
to do certain things, and I think that they need to do a lot
more, is obviously an indication of how government can involve
itself in business. The amount of support that we have for
research and development in this country, some of the most
lucrative tax credits for firms that are interested in research
and development, and programs like community futures are means by
which governments can provide an environment for businesses to
grow, to expand the economy and to create employment
opportunities.
I am pleased to say that we will be supporting this legislation.
We think it is a continuation of a relatively good program and it
comes at a rather opportune time.
I had a lot of advice on this legislation, in a sense
inadvertently. On the weekend I was invited to a Grey Cup
gathering. It was a tremendous game. It was one of the best
Grey Cup games I have ever seen. People were asking what was
happening in the nation's capital. I explained that we were
going to be discussing Bill C-53, the small business financing
act. Immediately the whole room lit up. I asked people what
their relationship was with business.
It was interesting because every single person in the gathering
owned, operated or was a major employee of a small business. I
recorded a handful of those businesses in anticipation of today's
presentation. They included the following: a small insurance
company, a ski resort, a snowboard-rollerblade store, a hair
salon/barber shop combination, a nine hole golf course, a
landscaping-snowplowing operation, a horse training and horse
boarding operation, and a fur trapper. This person traps animals
for eight months of the year, obviously for their fur.
One was a rather interesting entrepreneur who had started a
mining development company. However, he is not mining in Canada,
he is mining old Aztec mines in Central America. The Aztecs and
the Spanish developed these mines hundreds of years ago. He went
into the jungle and found these locations and is now re-mining
the old mines. It is an interesting initiative.
One person is running a firm that is into geographic information
systems and mapping. Another is running a small gift shop. Two
run restaurants. One runs a pub and a grill, and one runs a
tattoo parlour and suntanning salon. I could go on. These were
all people very interested in small business financing. They all
had very interesting stories to tell about the problems and the
hurdles and the difficulties that confront young, newly emerging
businesses today.
Fundamental was the access to capital. This was crucial. I
think everyone indicated that they had experienced a problem in
terms of accessing adequate capital, particularly working
capital. They were pleased that some of these changes were being
made, but they pointed out that this was certainly only a step in
the right direction, that there was much more to do.
In an effort to identify what more has to be done, I think we
should consider the MacKay report recommendations in terms of the
future of financial institutions. I think we can say that most
Canadians believe that our financial institutions could be doing
more, particularly to support the small and medium size business
sector.
The United States has the community reinvestment act which
requires banks to provide capital support to businesses in the
areas where they have branches and where people make deposits. In
other words, if people are going to put their money into a bank
in community x, there is an obligation on behalf of the
bank to support business enterprises in that area.
We do not have that in Canada. I suspect that we would find in
many cases branches where all sorts of people are depositors, but
very little small business investment is taking place. I think
at least the theory behind the community reinvestment act of the
United States that compels banks to invest in those areas where
they have branches, particularly in terms of supporting the small
business sector, makes a lot of sense.
1210
Let me share with members a number of things the MacKay report
recommends. It recommends that the government should undertake a
substantial program of information collection and analysis to
ensure that there is adequate information relating into the
financing needs of small and medium size businesses for effective
public policy development.
To that end, the report suggests that Statistics Canada should
collect data on the supply of debt and equity financing to small
and medium size enterprises, including, in particular, coverage
of knowledge based industries, aboriginal enterprises and other
sectors or subsectors determined from time to time to be of
particular public interest.
The data question program should cover all regulated and
unregulated private and public sector financial institutions
engaged in significant loan, lease, equity investment or security
activity in the small business market.
Details of the information collection program, which should be
comprehensive, should be determined by Statistics Canada in
consultation with data providers, potential users in the
community and representatives of Industry Canada.
The MacKay report says a number of things which I will get to in
a moment, but I want to say something about the banks.
We have once again heard today that the profits of one of the
major banks in Canada are at historic highs. There are
incredible profit margins. I know the banks are complaining that
times are tough and they are not doing as well as they could be,
but I think that whining falls on deaf ears when people are
reminded once again that profit levels are at historic highs.
Setting aside the discussion around the size of the profits, the
point is that banks from day one have operated in a privileged
business environment, a protected business environment. Can we
think of another free market player which has been protected from
any foreign competition in its sector?
Imagine if the Canadian forest industry had laws which said that
no foreign companies could invest in the forest sector, or no
foreign companies could invest in some other sector. That would
create a privileged environment for a Canadian investor or a
Canadian business.
The banks have done that since day one. They have operated
under the Bank Act in a relatively privileged business
environment. As a result, the banks have done incredibly well.
One of the strong things we can say about the Canadian banking
system is that it is recognized as a strong, stable banking
system and is very profitable in terms of its shareholders and
investors.
Setting that aside, I think most Canadians would say that
because of the privileged business environment in which the banks
have found themselves since day one there goes with that some
social responsibility. It is almost like a banking utility. A
protected group of businesses ought to feel some responsibility
to do something more than simply make a profit in Canada. There
should be some feeling that they have an obligation to assist in
the development of the Canadian economy beyond the bottom line
consideration.
If we think of the banks as business utilities, I think it is
fair to say that they should be doing a lot more. I am pleased
to say that the MacKay report seems to agree.
The MacKay task force suggests that Industry Canada should
assume responsibility for co-ordinating an annual survey of the
attitudes of small and medium enterprises to examine the
availability of financing from the perspective of small business.
This is something that Industry Canada should do.
The task force also says that Industry Canada should conduct and
publish periodic benchmark surveys of small business users,
including knowledge based firms, to provide a comprehensive
benchmark picture of the financing they require and the source of
financing upon which they rely as the various markets evolve.
The task force goes on to say that the government should urge
depositing institutions, particularly the banks, to find new and
creative ways to address the problem in small business financing
created by the frequent turnover of business account managers,
including the establishment of career paths and compensation
incentives that would provide long term, meaningful careers for
community based small and medium enterprise account managers.
What they are basically saying is that since so much of the
financing of small business is done by the banks, the banks
should be particularly sensitive in terms of their employment and
career path development to ensure that when a person comes into a
community to develop the small business lending portfolio, that
person stays for a while and gets to know the community, the
business and the changing marketplace, as opposed to simply
popping in for a few months and then moving on to another
position.
The report also suggests that Canadian financial institutions
should be prepared to make credit available to higher risk
borrowers with more innovative financing packages and appropriate
pricing.
1215
What they are getting at is a knowledge based economy. This
requires a whole new mindset in approaching financing. The old
asset based financing, when people were able to have all sorts of
guarantees for loans, is not necessarily available for the
knowledge based economy like with the young entrepreneur who
walks in with a baseball cap on sideways and wearing a creative
T-shirt and is the creative force in that business because of the
human capital that individual brings to that business.
Imagine when that young entrepreneur walks into the bank. The
banker is sitting there is his three piece suit. He sees this
young guy sitting across from him in a T-shirt and with a
baseball cap on backwards. He wants to get financing to start a
knowledge business. This person is going to have a tough time.
That is the way of the future. This is one of the major cutting
edges in entrepreneurial change that is taking place in Canada.
Our lending institutions need to be more supportive of that, as
the MacKay report recommended.
It suggests that a medium enterprise group should be established
within Industry Canada to undertake continuing research on
financing this sector, particularly the knowledge based sector,
and this group could oversee the key user surveys and analyse the
data collected by Statistics Canada and report annually not only
to the industry committee but also to the House of Commons on the
state of small business financing. It is fair to say that if we
talk to anyone in the small business sector they would agree that
financing is a crucial issue in terms of their success. This is
where the government could play a role in providing more access
to capital.
The MacKay task force makes a very good point that there are a
whole set of initiatives the government should take to ensure
that adequate financing is available to those entrepreneurs who
are moving in the direction of the emerging economies.
This legislation moves into two rather interesting areas. It
moves into the area where we are going to do some pilot projects.
One is to extend the program guarantees to cover capital leasing.
Increasingly in the world of franchising the whole issue of
leasing equipment often results with ownership of the proprietor
at the end of the lease and has never been possible. Under this
legislation it will be. It also includes the voluntary sector.
This is critical. This pilot study will have major implications
in providing a whole group of people access to capital who right
now have difficult a time.
I want to identify the work done by the Digby Network which is
an association of 17 organizations involved in community economic
development. The community economic development organizations
play a crucial role in helping small enterprises, particularly at
the grassroots level, at the entry level. These are people who
are new to the world of business and who are starting new
enterprises. They do not have the basic knowledge of a business
plan. They do not know what the funding opportunities are.
Under these community economic development structures they can
find this information.
This legislation is a step in the right direction. Over the next
couple of years it will be interesting to watch how these the two
pilot projects develop. There are many sectors yet that have to
be addressed in order to provide the support and nurturing the
small business sector in Canada deserves.
Hon. Jim Peterson (Secretary of State (International
Financial Institutions), Lib.): Mr. Speaker, I was pleased to
listen to the constructive presentation by the hon. member
opposite. He brings to this debate a long record of having
worked on behalf of not only his constituents but also small
business across this country. He has made a number of very
important recommendations. A lot of them are based on the MacKay
report.
I would like to ask the member a question on the problem where
we do not have a continuity of bank managers. Customers are not
dealing with the same person all the time and the individual
cannot get to know their character, history, background or
potential. They cannot assess whether they are capable of
carrying out the business plan they put before them.
1220
How does the member feel the banks could go about changing this?
Would it mean paying much more at the branch level? Does
government have a role in terms of achieving the goal the hon.
member has adumbrated for us?
Mr. Nelson Riis: Madam Speaker, I appreciate the comments
by the secretary of state for finance indicating what I assume he
agrees is a problem probably in all financial institutions,
particularly the banks on which the small business sector depends
so much in terms of access to capital.
There are two things that can be done. One is for the banks to
show some sensitivity in this area. I know they are promising
the creation of a small business bank and so on if the mergers
are approved. This is a pretty desperate sop at this eleventh
hour but we appreciate at least that they are saying the right
things.
If they were serious about supporting that small business
sector, which they say they are, they would be putting more
resources into creating a more stable environment in terms of
working with that sector, in terms of paying people adequately so
that they stay in a community, that they develop the necessary
expertise and understanding, that they are able to visit some of
the more creative business opportunities as opposed to simply
sitting in their offices and waiting for people to bring in their
business plans.
I also want to acknowledge what I think is a changed mandate for
the business bank of Canada. In the past this bank used to do
much more in terms of advising people in terms of business
opportunity, advising individuals on how to proceed in business
as opposed to simply providing the traditional banking function.
That is still done to a certain extent in the various branches
but I think this is one area where the government can move.
Second is the area of community economic development
organizations. There are all sorts of models across the country
and spinoffs of what I would describe as a small business
incubator centre, a place where individuals can go who are
perhaps new to the business world.
Let us face it, during this period of downsizing and during
these periods of massive layoffs a lot of people are entering the
world of business who never had any intention of doing so. They
had been a whatever in a large corporation or they had been a
government employee and can no longer find employment in those
sectors. They cannot find a job in the traditional economy and
so they are, if you like, almost forced into being a business
person. They are forced into opening up a home based business or
a small business, a self-employed initiative whether it is a
consultant or whatever.
Often there is a role where government can assist those people
who are newly emerging entrepreneurs, who perhaps lack some of
the crucial skills, certainly lack some of the critical
background in terms of technology development and so on and can
be assisted in a variety of ways.
I want to mention one thing about the EI surplus as mentioned by
the previous speaker. If there is one thing the EI surplus could
be put toward that I think most people would support it would be
retraining people who presently have lost their job, retraining
into areas that would enable them to open up an enterprise or
enable them to be more marketable in the job market. I would
like to see some of these EI funds, after the benefits have been
increased, put into more training and skilling of people who need
to be upgraded, as we all do, in order to play a rightful role in
the knowledge based economy of the 21st century.
Mr. Jim Jones (Markham, PC): Madam Speaker, I rise today
to speak on Bill C-53, an act to increase the availability of
financing for the establishment, expansion, modernization and
improvement of small businesses.
For the purpose of brevity, this bill seeks to replace the Small
Business Loans Act with a new Canadian small business financing
act. In essence, parliament will be guaranteeing that the
principles of the success story known as the Small Business Loans
Act will continue into the next millennium.
Since 1961 the Small Business Loans Act, implemented by the
Progressive Conservative government of John Diefenbaker, has
helped over half a million Canadian businesses. In the 37 years
that have followed parliament has shown its resolve to assist
small business by continually updating and innovating the act to
ensure that it remains responsive to the needs of Canada's small
and medium size enterprises.
1225
By and large, this duty has been discharged with commitment and
diligence.
Since its inception, the SBLA has experienced a successful
repayment rate in excess of 94% of all loans. When we consider
that during this period the program has guaranteed loans worth
$22 billion, the numbers become all the more impressive.
In 1997-98 SBLA borrowers reported that they would create 74,600
new jobs. This is even more significant when we understand that
over 50% of all loans made under the provisions of the act would
never have been made under conventional lending practices.
This is easy to believe when we note a 1996 study entitled
“Economic Impacts of the SBLA”. The study found that
approximately 45% of the borrowers in this sample were companies
less than a year old. In comparison, only 5% of non-SBLA loans
went to start up firms.
Much has already been done to facilitate the work of this House
as well as the industry committee when it begins its indepth
examination of Bill C-53. To date a comprehensive review of the
financing needs of small business has been completed with special
emphasis on economic impact studies, compliance and default
studies, stakeholder consultations, cost benefit analysis and
future evaluations, and capital leasing studies.
As well, our hon. colleagues in the other place finished their
committee work, a review of the Small Business Loans Act.
I am very pleased that an issue I raised at second reading and
with the department has been addressed, specifically the
treatment of non-arm's length transactions under the new Canadian
small business financing act. At that time I spoke about a
clause in Industry Canada's review of the SBLA. Specifically in
the booklet entitled “Meeting the Changing Needs” on page 27
there is a reference to asset transfers. Included in this is a
reference to non-arm's length transfers of assets of going
concerns.
The issue I raised was that the sale of a business from a parent
to a child was specifically itemized as being excluded from the
CSBFA guaranteed loan. This needed to be reviewed, and for a
very good reason. We no longer live in a time when the purchase
of family businesses is financed by long apprenticeships; that is
to say, children working at below market value with the
understanding that some day the businesses will be theirs.
Instead, the inherent value of small businesses represents the
equivalent of an RRSP to many business owners. This provision
would have resulted in children being unable to secure the proper
financing. Then what would have happened? I suggest parents who
are facing the insecurity of retirement would have been forced to
look at selling their businesses to a non-relative who would not
know the ins and outs of that business but who would have access
to the Canadian small business financing loans guarantees, a
possibility that would have been inconsistent with Canada's
reputation as a fair, small business-friendly nation.
At a time when high taxes and a lack of opportunity is leading
to brain drain and breaking down the family unit, we do not need
to make this situation worse with punitive anti-family
legislation.
For that reason I am pleased that the industry department
reversed this decision and saw fit to withdraw this provision.
The other contentious provisions of Bill C-53 would have seen
leasehold improvements removed as a valuated asset for financing
purposes. This would have had a huge negative impact on several
industries but especially the restaurant industry. This is an
industry that has suffered particular difficulties accessing
financing over the years. Once again the process works and this
provision was successfully removed.
I have spoken thus far about the positive outcomes of the
efforts of my colleagues on the industry committee. I think we
have accomplished much as a committee in an exceptionally
co-operative manner. The reason for that is very clear. We trust
one another and the process that allows us to make changes to
legislation.
In light of this I feel I must comment on the decision by the
government to invoke closure on debate for the ninth time in this
parliament.
Sixteen amendments to Bill C-53 were listed on the order paper.
Some may have more merit than others. However, through the
course of parliamentary debate members of the House may have come
to appreciate the motions put forward by others. Unfortunately
we will never know. If the government has a problem with the
process perhaps it should undertake to reform it. The censoring
of members should only be undertaken as a last resort.
1230
Many provisions of the SBLA have remained unchanged. The
loans loss ratio remains at 85% of the cost of claims for loans
in default. This is same rate it has been since 1995. Lenders
remain responsible for the remainder. The Liberal government
reinstated this ratio in 1995 after the Conservative government
reduced the risk to lenders in 1993. The Conservative government
did this to encourage greater financial sector participation in
the SBLA.
When a government sets up a program like the SBLA, which
guarantees loans for small business, it does so for one very
obvious reason. Without such an act, loans would be labelled too
high risk by lenders and they simply would not be given.
Therefore I have to question the judgment used by the government
when it increases the risk to lenders. At the risk of
attributing motives, this appears to be an instance where good
politics took precedent over good policy.
I say that because since the Liberals did this, studies have
shown that SME lender dissatisfaction has been steadily
increasing. Rather than point fingers at the lenders or the
borrowers the legislation should instead be focusing on improving
the environment for both.
A few other program parameters have not changed but should be
noted. The maximum loan size remains at $250,000. My colleagues
in the Reform Party have been actively working to lower this
figure to $100,000. However, while the average loan is still
well under the $100,000 threshold, there are numerous examples of
situations where that figure is just not enough.
I have heard from many individuals in the tourism and restaurant
industries. They face large equipment and infrastructure costs
before they are able to open for business. Therefore the
Progressive Conservative Party is pleased to see the $250,000
threshold remain.
The percentage of the cost of eligible capital assets accepted
for financing remains at 90%. This is a reasonable figure and
there is no need to review it.
If there is a shortcoming in the bill, it lies in its failure to
come to grips with the issue of the lack of access to the SBLA
that currently exists for knowledge based industries. The
minister raised hopes when he asked for a report on whether the
SBLA should be expanded to target knowledge based industries.
When the answer came back that something definitely needed to be
done unfortunately he chose to ignore it.
Knowledge based industries are among the most dynamic job
producing companies in Canada today. The problem lies in the
fact that their major assets are intellectual and thus are not
capable of being financed under current criteria. In the past
the Minister of Industry has indicated his willingness to
encourage the development of knowledge based industries. My
party stands ready to assist, although it is possible that we
have missed an opportunity to use Bill C-53 toward this end.
I turn my attention to the specific changes that will come about
when Bill C-53 is implemented. First is the mandatory program
review provision. This will mean the end of current provisions
that require an automatic ending of lending authority if a new
bill is not passed, as we saw last year with Bill C-21. While we
are still a little short on the details of what would constitute
this review process, it appears to be a good idea in general
terms.
Under the current system the government is in a situation in
which it must present a bill to parliament in order to keep the
program alive. The bill could potentially contain clauses the
government of the day would like to slip through while at the
same time keep the opposition handcuffed by inherent time
constraints.
1235
With this in mind, the review process is a better way to deal
fairly with any necessary changes. Under the proposed process
the review would see data collected over a five year period prior
to the review used to give parliamentarians and policy makers the
tools needed to evaluate where changes need to be considered.
At the end of the five year period currently designated as March
31, 2004, the minister would have 12 months in which to cause a
comprehensive review. At this point we are not prepared to
comment on the reasonableness of these time constraints and we
look forward to reviewing them at committee stage.
There is a new component to the act that Bill C-53 proposes,
that is the idea of pilot projects both for capital leasing and
for the voluntary sector. Capital leasing has been an ever
growing and popular financing option for SMEs. This type of
lease ensures that the lessee will own the equipment at the end
of the lease. A provision of this nature seems to protect the
interests of taxpayers, as the equipment would become an asset of
the company at the end of the lease.
A revealing analysis of the financing realities of the SME
sector was brought to light in the conference board study
published last fall entitled “What is new in debt financing for
small and medium size enterprises”.
The study highlights two major findings. First, the size of the
business debt financing market targeted at SMEs continues to be
misunderstood usually because analyses limit their review to term
loans and lines of credit provided by the large deposit taking
institutions. In the process they capture only about half the
financing provided to SMEs. Sources of SME funding are much
broader. One of the main conclusions of the report is that SMEs
are being funded by a wide variety of providers of financial
services using various innovative products, services and delivery
channels.
The second major conference board finding was that while the
total business debt financing market has grown, increasing 7%
over the last two years to $271 billion, growth has been
relatively even. The bulk of the growth has come from
specialized finance companies that experience a 31% increase in
total business debt financing. The study identifies the
specialized finance institutions as heavily represented in the
financing and leasing industries. At present the leasing
industry does not approve leasing for firms under two years old
that are seeking less than $100,000. This typically excludes a
majority of present SBLA borrowers.
The other proposed pilot project deals with the voluntary
sector. The document “Securing our Future Together” made a
commitment to reviewing federal small business programs with a
view to extending their mandate to the voluntary sector. This
program raises many questions. In fact in recent hearings
concerning this issue witnesses generally were opposed to
extending provisions of the SBLA to the voluntary sector. Some
of the reasons cited included cost as well as instability of
revenues.
These are legitimate concerns. I am also concerned that we are
about to put in place a program which would allow non-profit or
voluntary organizations to unfairly compete with other business
interests. If Bill C-53 is passed, it will be incumbent upon all
MPs to monitor any negative impact this pilot project might have
on businesses in their ridings.
Cost recovery is a worthy goal in the Canadian Small Business
Financing Act. Toward the achievement of that, Bill C-53 seeks
to allow the government the ability to restrict access to program
loans or guarantees. I would caution that any legislation
covering this area must be generous in scope with allowance for
various contingencies. We already have a heavily regulated
financial services sector. If any abuse of process is suspected,
other avenues may exist to achieve compliance.
The next area I wish to address is that of the proposed
accountability framework. This proposal by Price Waterhouse will
access the CSBFA over the next five years. Several criteria will
be used including the visibility of the program to potential
borrowers, its impact on creating and maintaining jobs, and the
performance of the borrowers.
The auditor general in his report, “Management of the Small
Business Loans Program”, pointed out that claim audit procedures
needed to be strengthened. This is an area that will have to be
dealt with, with great sensitivity to the viability of the
program as a whole.
1240
I remind the House that the reason this act exists is due to the
unidentifiable fact that a program exists. The problem was the
unwillingness of banks to lend to SMEs. Any attempt to change
the program so as to put greater compliance demands on lending
institutions will only result in fewer small businesses getting
the financing they desperately need.
I am not opposing the provision at this time. I am suggesting
that we tread carefully. As I have indicated throughout my
address today, my party is supportive of Bill C-53 and much of
its intent. However there is an issue that needs to be raised in
the interest of full disclosure.
When the comprehensive review was undertaken one of the issues
to be reviewed was the issue of personal guarantees and whether
or not they should remain in effect. In the end personal
guarantees were deemed to be a necessary component and thus they
were retained.
The PC Party has no problem with this. When we were in
government and performed a review of the SBLA we did not remove
the personal guarantee either. However there is a difference.
Perhaps members across the way will want to brace themselves, as
I am going to discuss the entire discredited Liberal red book of
1993. In that fictional collection of whimsical vote getting
prose on page 49, for those keeping score at home, a commitment
was made to remove personal guarantees from the act.
I realize this was just an election promise much like
eliminating the GST or tearing up the free trade agreement. The
new leader of our party has certainly seen this in the past. He
saw the willingness of Liberals to promise anything to get
elected, and they turned around and increased the gasoline tax
anyway. Some of the hon. members across the way will remember
this incident.
I reiterate that my party has no problem with the personal
guarantee being retained. We just wish the Liberals had
recognized its importance before they started making wild
promises to voters which they knew they could not possibly keep.
In conclusion, my party is pleased with Bill C-53 and the work
of the industry committee in making it a better piece of
legislation. All members of the committee deserve special
commendation for their co-operative approach in making necessary
changes to the bill. Out of this process we now have a small
business loans tool which will stand up to any comparable
legislation in the world.
Mr. Lynn Myers (Waterloo—Wellington, Lib.): Mr. Speaker,
I will be sharing my time with the member for Scarborough East.
It is a pleasure to rise in the House today to debate this
important matter, and I do so on behalf of the residents of
Waterloo—Wellington.
I note at the outset that the proposed Canada Small Business
Financing Act builds on the proven success of the previous loan
guarantee program which has a 37 year history of meeting the
needs of small business. It introduces features that will
continue to guarantee stable access to financing for one of
Canada's most dynamic growth sectors.
I also note at the outset that the Standing Committee on
Industry did an excellent job and excellent work on Bill C-53.
Committee members have been conscientious and helpful in
improving the legislation and the regulations. I think that is
important to note. They understood the needs of stakeholders and
the bill is stronger for their scrutiny and their attention.
We are all aware that the legislative and regulatory process is
evolving. The bill is one of the first to have the proposed
legislation and regulations before a committee at the same time.
That too is important to note. It is worth noting that we have
all learned some important lessons from this process. We still
need to work on improving that process to meet the expectations
of parliament. In particular, we have to make sure we consult
affected stakeholders about regulatory changes well before a bill
is considered in committee. Members of the Standing Committee on
Industry were sensitive to this issue and we need to thank them
for their assistance in this matter.
This raises a second point about regulations under the new
process. It is an issue that came up in committee and it is one
to which I would like to draw the attention of members of the
House. This legislative initiative reflects a new way of
drafting legislation. The details of the administration of the
program are now to be found in the regulations. Members have
expressed some concerns about how this may impact on the scrutiny
of the program.
Nevertheless the government has responded to their concerns by
agreeing to table all regulations.
1245
The amendments adopted by the committee require that every
proposed regulation be laid before both houses of parliament
before it is made. They also require that the regulations be
referred to the appropriate committee of each house.
The intent of these amendments is to impose an obligation on the
government to notify parliament of proposed regulations and
ensure these are brought to the attention of the appropriate
committees. If they choose to do so, committees would then have
an opportunity to schedule time to study the proposed regulations
and to provide comments.
Although this notice requirement would not delay the making and
coming into force of the regulations in accordance with the
established regulatory process, where the proposed regulations
are prepublished in the Canada Gazette, the committee's
comments as well as those of other interested stakeholders made
during the prepublication period would be taken into
consideration.
I will now turn to another example of this government's openness
and willingness to consult stakeholders. I refer to the bill's
provisions for pilot projects in capital leasing and the
voluntary sector, and the greater involvement of parliamentary
committees.
I reiterate what the minister said and the promise that he made
when introducing the bill. He said then that he intended to call
on the advice of hon. members through the Standing Committee on
Industry to help in designing the pilot projects.
Capital leasing is a rapidly growing form of financing for small
business, but our consultations indicated that the leasing
industry generally does not approve leasing for firms under two
years old and which require financing of less than $100,000.
Similarly, our consultations indicated that a number of voluntary
groups would find the loan guarantee program useful, given that
these groups are also an integral part of the economy and the
labour market.
The pilot projects would determine the feasibility of extending
the program to the capital leasing market and the voluntary
groups. I believe that the input of committee members will be
most important in devising sound pilot projects.
This is above and beyond the notification of the committee in
respect of any proposed regulations for bringing in the pilots
provided for in subparagraph 13(5). In essence we hope to
benefit from the committee's expertise at both stages, program
design and examining regulations.
I have just mentioned that this bill embodies provisions for
greater accountability to parliament in regulatory matters. In
calling for greater committee involvement in designing the
pilots, I hope that hon. members will also see this correctly as
a response to members' desires to be involved earlier in the
policy development process.
I would like to conclude with a brief overview of the main
strengths of the proposed Canada small business financing act.
Most significantly, this bill meets the needs of small business,
the entrepreneurs who are the driving spirit behind nearly 80% of
new jobs in this country. They are the young small firms
recognized and targeted by the bill's loan guarantee provisions.
Bill C-53 offers them continuing stable access to financing even
as the financial services industry is restructuring, access that
a large majority would not have without this program.
The bill offers taxpayers the reassurance that the loan
guarantee program will continue to move toward cost recovery. It
is delivered by private sector professionals, not bureaucrats. It
uses private sector money, not taxpayers' dollars.
Under the revised program, parliament will release more accurate
information and performance measurements by which to judge the
program's effectiveness. The new five-year review provision
gives parliament a closer and more active role in scrutinizing
the program. That is very important.
Canada's 2.5 million small businesses and self-employed
entrepreneurs can flourish and grow in an encouraging
environment. That environment is exactly what Bill C-53 will
continue to provide, and rightfully so.
Our women and men in small business need to see that the federal
government values and encourages their willingness to take risks.
It is our small businesses after all that devise new products
and services, and create jobs by their hard work. This bill
recognizes and supports their contribution to Canada's
prosperity. Their financing needs are exactly what this bill
recognizes.
The bill before the House is a product of informed review by
financial and audit experts, of widespread consultations with
borrowers and lenders, and of exhaustive examination by members
of this House.
It meets the demonstrated requirements of small business people,
large and small lenders, and taxpayers.
1250
On all accounts it is a very sensible and integrated set of
improvements to an already strong and creative program. Therefore
I would urge all members in this House to support the passage of
Bill C-53, the Canada small business financing act. It is an
important piece of legislation and is deserving of our support.
Mr. John McKay (Scarborough East, Lib.): Mr. Speaker, I
appreciate the enthusiastic support of certain members of the
House on this important matter. There is quite a number of very
enthusiastic members in the House, at least on this side.
I wanted to speak to this bill from the perspective of a member
of the national Liberal caucus task force on the future of
financial services. We spent some eight months canvassing and
listening to Canadians on this issue. We heard from 150
witnesses in seven different cities.
At the beginning of the day and at the end of the day the issue
Canadians spoke to us about most was that of access to capital.
After all strangely enough it is their money. Canadians want to
use it as they see fit, subject to prudent lending principles.
Bill C-53 is about access to capital, a loan guarantee program
which will fill a gap where private lending is reluctant to go.
Let me concede that the task force got somewhat hijacked by the
proposed mergers. I would say that the banks proposing the
mergers did themselves no service when they tried to jump the gun
with their proposals. I would suggest that the biggest reason
Canadians are leery about the proposals is their sense of
discomfort with respect to access to capital. Canadians
intuitively feel that when four banks become two banks it will
reduce their access to capital on a competitive basis.
That is what this bill is all about. It allows small business
access to start up capital and financing which is fair, equitable
and competitive.
In our analysis we looked at the competitive environment. In
chapter 3, titled Access to Capital for Small Business, our
analysis was as follows. The existence of adequate competition
in the financial services sector is vitally important to ensuring
SMEs have adequate access to financing at affordable rates. Small
businesses are highly dependent on the chartered banks for
financing. This dependence has been increasing over the last few
years.
The conference board has shown that domestic chartered banks
held 50.3% of the SME financing in 1996 compared to 48.4% in
1994. In addition they held 72% of the outstanding commercial
loans to SMEs in 1996, up from 66%. There is a significant
linkage between SMEs and chartered banks.
Then we looked at the gaps. While the overall situation in SME
lending markets has improved in absolute numbers, and I stress
absolute numbers, over the past few years due to the development
of innovative products and general growth in the volume of demand
for financing, the proportion of SME financing to total business
financing by the chartered banks actually declined by about a
full percentage point.
Testimony to the industry committee over the past few years from
bank representatives indicates that the loan loss ratios of SMEs
is lower, if not the same, to large businesses.
We then turned to government involvement. The Small Business
Loans Act was one of those issues. We said that one of the
principal programs is the Small Business Loans Act. The SBLA has
been focused particularly on assisting young, small and new
business in accessing financing through private lenders. The SBLA
is currently being revised and will continue to be a vital
participant in small business lending. I emphasize it will
continue to be a vital participant.
We did identify one notable gap and that is the absence of
support for working capital financing which this bill does not
address. I think it appropriately does not address this because
access to that kind of financing premises an involvement on the
part of the government which in our view is inappropriate.
1255
The quarter ending December 31, 1995, which was the earliest
date that the Canadian Bankers Association supplied any lending
statistics to the industry committee, reported lending to small
and medium size business at $45.4 billion. Lending to large
businesses at that time amounted to $123.7 billion, making SME
lending account for 26.8% of the total loans. This is a
significant portfolio and is of great significance to Canadians.
As I said, we have noted the gap in working capital. We
encourage governments to consider other ways of accessing this
particular financing need.
One idea is being circulated by the Canadian Community
Reinvestment Coalition and is relatively simple. A scoring
report card would be developed whereby lending activity would be
assessed by geographic area; by numbers and volume of loans in
assessment areas; the numbers and volume of loans to low and
moderate income loans; small business; farmers and community
development loans. Banks and other lenders would have a score
card and would be assessed annually on their performance.
This idea originated in the United States. While translating
American experience here has some limitations, it is an idea that
merits consideration on the part of the government and indeed on
the part of all members of parliament.
May I say that initially the U.S. banks resisted fiercely this
kind of report card, but now they embrace it with enthusiasm.
They see it as a promotional tool they never had before and a way
to access loans they have never been able to access before.
Incidentally, when the Bank of Montreal took over the Harris
Bank of Chicago, the Harris Bank had one of the poorest records
in the United States on this issue. It now has one of the best.
In speaking to representatives of that bank and other large
banks, I am encouraged to see that none of them vigorously oppose
the report card concept. They do have concerns about what goes
into the report card and how it is initially scored, but as an
overall idea they are not resistant to it.
I am a believer in the concept that government should not be
unduly involved in the financing of the lives of Canadians. The
attraction of this idea is that it would not involve direct
government participation. However, I am knowledgeable enough and
after having had 22 years of law experience, there is a role to
be played by government to come alongside Canadian entrepreneurs.
This bill addresses that need.
Ultimately one would wish that the private financial market
would step in. The indication from the United States is that
their experience in this particular area is that those in the
private financing market like to poke into these areas and to
access places where they have been very reluctant to go. They
want to show that they are involved in their communities. In the
interim, there is this need for continuing government
involvement.
I would like to again leave the House with what I consider to be
the benefits of this bill. Most significantly, this bill meets
the needs of small business, the entrepreneurs who are the
driving spirit behind nearly 80% of new jobs. They are the
young, small firms recognized and targeted by the bill's loan
guarantee provisions.
Bill C-53 offers them continuing stable access to financing even
as the financial services industry is in the throes of
restructuring. We have heard how that the status quo cannot
remain the same. We all agree. The question is how.
The bill offers taxpayers the assurance that the loan guarantee
program will continue to move toward cost recovery. It is
delivered by private sector professionals, not bureaucrats. It
uses private sector money, not taxpayers' dollars.
Under the revised program parliament will release more accurate
information and performance measurements by which to judge the
program's effectiveness. I would suggest that the proposal being
floated by the coalition is in fact one of those report card
concepts that needs to be worked into the analysis of whether the
private financial sector is in fact accessing these areas. The
new five year review provision gives parliament a closer and more
active role in scrutinizing the program.
Canada's 2.5 million small businesses and self-employed
entrepreneurs can flourish and grow in an encouraging
environment.
1300
Our women and men in small business need to see that the federal
government values and encourages their willingness to take risk.
The bill before the House is a product of an informed review by
financial and audit experts, widespread consultations with
borrowers and lenders and extensive examination by the House and
its members.
On all accounts it is a sensible and integrated set of
improvements to an already strong and creative program. I urge
all members to support the bill.
Hon. Jim Peterson (Secretary of State (International
Financial Institutions), Lib.): Mr. Speaker, I think all of
us owe the member for Scarborough East our thanks for a very
eloquent and content charged presentation.
I have two questions for the very diligent and eloquent member
for Scarborough East. In his experience did any of the other
parties in the House of Commons undertake the type of detailed
and consultative process for dealing with the issue of the future
of Canada's financial institution?
I know the hon. member has done considerable work on the issue
of coercive tied selling within the context of financial
institutions. Would he care to elaborate on his conclusions?
Mr. John McKay: Mr. Speaker, as far as I am aware no
other caucus has undertaken any review of the financial services
sector and has tried to piggy-back on some of the work of our
caucus.
This was a very extensive consultation. As I indicated in my
main speech, we did it through 7 different cities with 150
witnesses. We did all this on our own budgets and on time
outside of the House and outside of our committee
responsibilities.
I have to commend the members who participated in that task
force because I think it made a very useful contribution to the
dialogue.
With respect to the second question on tied selling, the report
is divided into two parts. The first part deals with mergers.
The process of the dialogue has been hijacked by the merger
discussions.
The second part of the report deals with a number of
contributions by a variety of members on issues such as bank
governance, competitiveness, community credit unions, et cetera.
My contribution was in the area of tied selling. I appreciated
the responsiveness by the Secretary of State for Financial
Institutions in looking into that area and making amendments to
section 459 of the Bank Act so that the area of coercive tied
selling is something Canadians can be somewhat comforted about.
In my paper my argument is essentially that when a Canadian has
a complaint about coercive tied selling there be a reverse onus.
This would mean that the person is presumed to be correct in his
legitimate complaint and then the bank has the onus to say that
the individual was not coercibly tied sold.
Cross-selling is of benefit to all of us. We get benefits in
rates and in terms and conditions. However, coercive tied
selling is an area that we need to continue to monitor.
My argument is that we need to look at the issue of a Canadian
financial ombudsman and whether it is an appropriate area for the
government to go into. This is also an area of jurisdiction for
a Canadian financial services ombudsman. The idea of a reverse
onus would level the playing field and allow all of us to feel
comfort that as an unequally resourced Canadian we can deal with
the overly resourced financial institution.
Mr. Werner Schmidt (Kelowna, Ref.): Mr. Speaker, I am
thrilled that the hon. member knows so much about financial
institutions.
1305
I will ask him a very simple question about the office of the
superintendent of financial institutions. Is he convinced there
is a sufficient number of personnel in the office of the
superintendent of financial institution? Is the superintendent
exercising the kind of monitoring and control he ought to in
cases of coercive tied selling? Can they be reversed? Is there
the clout in the office of the superintendent of financial
institutions?
Mr. John McKay: Mr. Speaker, I thank the hon. member for
his questions.
My reference was to a Canadian financial services ombudsman
which is a differently mandated concept from OSFI. The office of
the superintendent is directly responsible for the soundness of
financial institutions. It does not necessarily directly involve
itself in complaints between consumers of financial services and
those who lend in the financial services. They are different
offices and different concepts.
I encourage all hon. members to urge the government to consider
the concept of a Canadian financial services ombudsman so
Canadians can have some meaningful recourse when they find
themselves aggrieved by financial service providers.
[Translation]
Mr. Rahim Jaffer (Edmonton—Strathcona, Ref.): Mr. Speaker, I will
be sharing my time with my hon. colleague from Calgary
Northeast.
I would now like to recap the key elements of Bill C-53.
According to the purpose of the existing Small Business Loans
Act, which will be maintained with Bill C-53, the government,
and therefore the taxpaying public, take on more risk than
private lenders. Even with the changes proposed in Bill C-53, the
government will still cover 85% of any defaulted loan.
We must ask ourselves two important questions. Does the Minister
of Industry think it reasonable to use tax dollars in such a
risky manner?
And why should taxpayers take more risk than the banks?
It is widely understood in economic circles that government
intervention leads to a misallocation of resources. The
intervention by the government maintained by Bill C-53 will
remove important market forces from the lending process and will
lead to the funding of less viable business ventures, which will
do nothing to foster a healthy economy.
Clause 5 of Bill C-53 illustrates the government's indifference
to the fact that it is playing politics with the paycheques of
Canadian people. This clause refers to the minister's liability
should a loan not be repaid. However, it is clear that the
liability is that of Canadian taxpayers.
As for risk, which is a key element in the proper functioning of
a free market, eliminating it creates a moral hazard, in that
lending institutions will be less inclined, despite the
provisions for due diligence contained in Bill C-53, to evaluate
the long term viability of a business venture. This situation
will lend itself to the financing of unsustainable market
ventures and, under this regime, it is the taxpayers who will
inevitably be the losers. This is supported by the government's
own statistics, which show that the default rate under the SBLA
is 5.6%, compared to 0.8% in the private sector.
The impact of small business on the Canadian economy is
substantial, and Reformers have always supported the needs of
small business.
However, the debate on Bill C-53 is not about whether small
business is valuable, but about whether small businesses can get
access to financing without government intervention.
1310
I would like to point out that the importance of small and
medium size businesses in the Canadian economy must not be
under-estimated. The question we need to ask ourselves is the
following: Is it possible to use deregulation in Canada to
create a framework that will provide this financing in a more
efficient way?
I believe the answer is yes, and that is why I cannot support
this bill.
[English]
What we have heard from all sides has been interesting during
the course of the debate on Bill C-53. Members from all parties
have said how much they care about small business. In
summarizing their comments on Bill C-53, my colleagues outlined
how important small business is to this economy and how important
it is to them as members of the House. Many of those members
actually were small business people prior to becoming involved
with the House. No matter where members stand in the House, no
one is against small business.
The fact remains that we all have different views as to how to
support small business and as to what should be done in providing
that support. As I outlined in my brief address, the suggestion
of members opposite has always been to implement various programs
in order to intervene in the economy which can cause an
unfortunate obscurity in the economy. Members on this side of
the House have always argued that we should leave the business of
business to the business people. I am sure the solutions will be
found.
Government members have a responsibility to create a framework
for a positive business environment. That is what many of us
from this side of the House have argued. We have said that Bill
C-53 is a sort of band-aid solution for the problem of small
business financing. We have encouraged members opposite to look
at the fundamental problems in relation to access to financing
for small business and to look at ways to reduce taxes and other
burdens on small business as opposed to implementing other
government programs that will only add more paperwork and put
taxpayers and small business people at risk in the sense of
liability. This is the basis of our argument. It is the basis of
what this side of the House has been offering as a suggestion. It
is an alternative approach to what we believe has been a flawed
direction on behalf of the government.
I commend all members of the House on their input as to how to
help small business. Let us really look at ways to reduce the
burden on small business. Let us reduce taxes. That is one of
the reasons my colleagues and I oppose Bill C-53.
Mr. Art Hanger (Calgary Northeast, Ref.): Mr. Speaker, I
thank my colleague from Edmonton—Strathcona for sharing his time
with me. I appreciate his comments and I agree with them for the
most part. I make it absolutely clear that I am also opposed to
this bill. I do not know if my colleagues across the way would
really understand that or if they suspected anything different
but that is the case. There is good reason for that.
All this bill does is put a band-aid on the problem. It seems
the Liberal government is good at putting band-aids on what could
be and should be considered as systemic problems, and those
solutions really do not hold up.
There is no question that all businesses need capital, they need
cash. They need equity investment. There are presently certain
inhibitors to the cashflow process. Those who have cash should be
able to create a situation in which small businesses could
flourish more than they do.
1315
What they do not need is for the government to drive them into
more debt when it does not have to, and too often that is the
case. I can cite example after example in and around the region
where I came from in Alberta with government interference. A lot
of that so-called easy money seems to go to friends of the
Liberal government. The playing field is not even when it comes
to government distribution of money to the small businesses to
help them develop. I find it reprehensible for the most part.
Why is it that the government turns to debt to solve cash
shortages? It wants businesses to do the same thing. It is like
most Liberal initiatives. Bill C-53 addresses only the symptoms
of the problem. Canadian small businesses do not need more
access to debt. They need more access to equity. They need more
access to customers with money and they need the government to
leave them alone.
It is not government that creates small businesses or all that
much employment. It is the small businesses that create
employment for the most part. They do not need more debt.
We say that until the systemic problems associated with
excessive taxation are addressed small business will continue to
struggle for more available cash. We recognize the concerns of
small business owners. We know they need more disposable cash
and I have had many come to me in my riding. Members across the
way undoubtedly have had the same experience. They are just so
much short of operating capital. Their businesses are close to
being very viable. It is just that they need to get over that
hump. So many of them fail because they do not have access to
the cash they need. I am not saying that every business will be a
viable one but there are many that are and just do not have the
cash they need.
We strongly feel, though, that the way to address these concerns
is through lowering the tax burden on individual Canadians as
well as businesses. More money in the hands of customers, the
wage earners, means more money spent on and at Canadian
businesses. More money in the hands of businesses means stronger
businesses, more jobs for Canadians and more opportunities for
new business ventures as well as expansion.
I think we have seen some examples of some profitable businesses
over this last bump up in the economy where businesses have
expanded in a substantial way just through their own initiatives.
It certainly was not as a result of the government. It was their
own initiatives.
Addressing a short term cash crunch through more government loan
programs will only exacerbate the existing problem. Bill C-53
does nothing to address the underlying causes of small business
troubles. It deals merely with the symptoms of larger economic
problems which are the responsibility of the government. The
government should be creating an atmosphere for business to
thrive in.
Unfortunately this bill not only skirts the real issues facing
small business it actually creates more of the same problems
which led to small business failures in the first place. I have
seen government intervention in Alberta where it encouraged
farmers to invest money into expanded operations. It would even
lend money. It almost threw it in their faces to expand value
added businesses that were in a way on shaky ground because there
was no telling what the commodity markets were going to do. It
was not a natural process of expansion.
The banks were also involved and then the crunch came. Millions
of dollars were invested. What happened? The farmers lost their
equity. They lost their new business ventures plus the land.
That has happened in far too many cases because of government
involvement in lending money or pushing it on them. There were
some who of course jumped at it.
Instead of letting the normal flow of business take its own
course, this is what happens. As a result we end up with many
failures, far above what it should be.
1320
The other case at hand when we come to government throwing
capital to small businesses is who pays when a venture collapses.
It is the taxpayers of course. It falls on their shoulders. The
tax situation in this country is unbearable. The responsibility
lies across the way here. I do not have to tell you that, Mr.
Speaker. You are a small businessman and would know full well
what expansion would mean. I am sure that when you expanded your
business you went to the government to get more capital. It is a
foolish thing. There are many entrepreneurs that do not need to
do that.
I think the government should be addressing the economic
problems. There are ways it can do that. I am urging the
government to implement substantive systemic change that will
address the underlying causes of business failures, freeing up
for instance capital gains. Get rid of the capital gains tax and
there would be more capital to actually invest. I do not think
that is a bad idea. I think it is something that should be
addressed in a substantial way.
There are trade barriers between provinces and from one region
to the other that should be removed. What does that cost the
business community every year? If I remember correctly, it is
somewhere between $5 billion to $6 billion. Let us work toward
eliminating some of the trade barriers.
There is high taxation. Money placed in the hands of a wage
earner is more profitable than in some government bureaucrat's
hand. That would be money spent and it would assist the business
community in establishing a firm base. There are payroll taxes
and employment insurance both from the business community and the
wage earner.
We have a surplus right now. The Minister of Finance cannot
wait to get his hands on it. Really it is money that should be
placed in the hands of the wage earner and the businessman. What
would they do with that money? I know exactly what they would do
with it. The wage earner would spend it. The businessman would
look at it and say “here is an opportunity for me to buy another
machine and employ two or three more people”. That is what
would happen. But on the other side, it is gone. It is going to
disappear.
Mr. Sarkis Assadourian (Brampton Centre, Lib.): Mr.
Speaker, I have followed with careful consideration the hon.
member's speech. I found the speech by my colleague from
Scarborough much more logical.
There are a few points I want to bring to the member's
attention. He opposed the policies of this government for the
last five years. That is fair game. But he has to admit the
record is that we have the lowest inflation ever over the last 10
to 15 years; 1.4 million new jobs were created; the lowest
interest rate in 25 years; from $42.5 billion we now have zero
deficit; it is the first time ever we have had a surplus and we
are paying down the debt; higher disposable income for Canadians;
four times in a row we have cut EI.
Why does the hon. member not speak about this record? He
chooses to be negative, negative, negative.
Mr. Art Hanger: Mr. Speaker, it has become more than
clear about the situation as far as the economy is concerned. It
certainly was not as a result of this government's action. The
hon. member should not pat himself on the back for something he
had nothing to do with.
1325
Employment insurance is a tax cutting into the wages of
employees and beating up on employers. How was the deficit
reduced? Was it with the austere program this Liberal government
put forward? No. It was an increase in the economy that, in
spite of what this government has done, allowed more revenues to
come into the coffers. That is how the books were balanced.
If the government were truly interested in creating a level
playing field for businesses it would attack the more significant
problems. It is not willing to do that.
Trade barriers should come down. There should be some tax
relief. Where is the tax relief? There is none. The Liberal
government has increased payroll taxes through bracket creep by
$3,500 for a family of four. That is disgraceful. It is money
taken out of their pockets.
Mr. Peter Stoffer (Sackville—Eastern Shore, NDP): Mr.
Speaker, the hon. member talks about tax cuts with the surplus
that we have.
The surplus was accumulated on the backs of those people in this
country who can least afford it. Now we have a record number of
children in poverty. We have record numbers of people who pay
into EI and who cannot collect it because of the changes in the
rules.
Would the member not agree that the surplus is really money that
was confiscated from employees and, I am sure they will argue
employers as well, and that money should go back to the
employees? When they could not find work or when they were
displaced from the work force, they at least had EI to fall back
on while they were looking for other work.
Mr. Art Hanger: Mr. Speaker, I thank the member for that
question. I certainly agree with him regarding employment
insurance.
Much of the deficit reduction has been on the backs of
individuals and the provinces. Look at the social commitment the
Liberal government has in plain terms. It has betrayed the
taxpayer and has cut back on transfer payments to the provinces.
Really, looking at the situation plain and simple, it betrayed
the social contract. There were health care cuts to the point
where there are line-ups in the hospitals and where there is a
serious technology gap in our hospitals as far as treatment is
concerned.
I agree with the hon member that the money taken in this regard
should go back to the wage earner and to the businessman.
Ms. Elinor Caplan (Parliamentary Secretary to Minister of
Health, Lib.): Mr. Speaker, I am pleased to have the
opportunity to rise in the debate today to discuss Bill C-53, the
Canada Small Business Financing Act.
I speak today on behalf of my constituents in the riding of
Thornhill, the businesses of Markham, Vaughan and Concord, the
many small and medium size businesses that have taken advantage
of the long history of small business loans in Canada and those
that will be looking in the future to this kind of assistance.
I also speak today on behalf of the residents of Thornhill who,
over the next numbers of years, will want to start businesses of
their own and who will need a helping hand.
Bill C-53 deserves, and I expect to see, the unanimous support
of the House because it is a bill to help small business.
1330
When we talk about the climate in Canada in which small business
can and should flourish, we have to look at what exists today. We
have heard a lot about the climate that is needed for small
business and business development.
I am proud to say that as a result of the policies of the
government we have low inflation. Inflation in Canada is among
the lowest in the world. We have low interest rates. As a
result of prudent fiscal management and the balanced budget, we
have not only low interest rates and low inflation. We also have
the lowest payroll taxes in the western world.
As well we have a very high quality workforce. People in Canada
are well educated. The work they perform is considered among the
best in the world. We know Canada is a good place in which to
start a business and to invest.
What is missing? Too often small entrepreneurs who are just
getting started and may not have anyone to support and finance
them may not know how to go about getting the support and capital
they need. Access to capital, particularly for small and medium
size businesses, and particularly for new businesses, is still a
key component of creating jobs in Canada and creating the kind of
climate where young entrepreneurs will flourish and succeed.
Often it is the young entrepreneur who is the individual with a
good idea, the individual with expertise in one area. However
there may be a number of areas where the person needs help and
support.
When I looked over some of the research surrounding the bill I
found interesting that in the last three years some 70% to 80% of
all new jobs in Canada were created in the small business sector.
It was not only the small business sector. It was in new job
start-ups. It was entrepreneurs with good ideas, making it
happen, creating jobs not only for themselves but often for
others in the community. Small businesses have contributed
enormously to prosperity and job creation.
Small and medium size businesses are a very important component.
Some would say they are the anchor for our national economy. They
make a crucial contribution to our collective economic
well-being. This is one reason I expect to see overwhelming and
unanimous support for this endeavour by the Liberal government. I
believe everyone on all sides of the House recognizes that we
must do our part as a national government in helping small
business secure the dollars they need to succeed.
We know there are 2.5 million small businesses in Canada which
include many self-employed individuals. If we were to do a scan
of my riding we would find that in Markham, Vaughan and Concord
many of the businesses that are working very hard to succeed
would fall into the category of small and medium size businesses.
The Small Business Loans Act has been serving Canada's small
business community since 1961. Bill C-53 that is before
parliament today improves upon the existing Small Business Loans
Act. The existing act has been an effective tool for small
businesses accessing financing over the last 37 years. That is
why I was surprised by some of the rhetoric I have heard from the
other side of the House.
I stand in the House as an advocate of small business, as an
advocate of job creation, as an advocate of a strong economy, and
as an advocate of government playing its important and rightful
role in ensuring that small business has all the tools it needs
to succeed in this great country.
1335
Bill C-53 was designed to meet three objectives to continue
helping small businesses, young businesses, that need access to
financing. Since this act is supported by taxpayers there is an
important need for increased program accountability.
Accountability, openness and transparency are values to which the
government has committed itself. Bill C-53 is another important
step in ensuring appropriate accountability of a government
program designed to assist small businesses.
As well, this program is moving toward cost recovery, which is
appropriate. As those businesses succeed, and we all hope they
will, it is important that we have the resources and that they
are available to help the next young generation of entrepreneurs
trying to succeed in making their mark and helping Canada to
maintain its leadership in the world when it comes to knowledge
based and communication industries.
Bill C-53 contains no changes to the basic program parameters.
However it meets the program long term viability and cost
effectiveness requirements. It will provide greater stability,
which I believe will better meet the needs of small business.
Stability is a very important word for business. Recently we saw
unexpected volatility in currency and in trading markets. We are
all concerned and should be concerned about that.
That is why the bill is important. That is also why it is
important to have sound and consistent public policy so that the
business sector, and particularly the small business sector in
this case which is so vital to Canada's economy, will have some
sense of confidence in terms of what will be in place for the
foreseeable future.
Last year Canada's small business loans program helped some
30,000 small businesses across the country to access nearly $2
billion in financing from Canadian lending institutions. Without
this program many of the small businesses among those 30,000 may
not have been able to secure financing without a guarantee from
the Government of Canada. Too often major lenders do not respond
as we all wish they would.
Back in the early 1970s I had my own small business which I was
financing out of my household account. It seemed appropriate
after having been in business for six months to go to the bank
and say “I am quite successful. I do not need a big loan; $500
will do. I own my own car so I have some security, but that is
all I have”. I also had a list of clients and thought any bank
would judge me a good risk. I was young. I was an entrepreneur.
I needed a little help.
Mr. Hec Clouthier: You are still young.
Ms. Elinor Caplan: I hear my colleague. I still feel
young although a little older and wiser.
As I was saying, I had a car that was worth about $4,000 as
security. The bank said to me “You will need your husband to
guarantee this loan for you”. I think things have changed
since those days in the early 1970s.
However, I am not so sure they have changed enough to help young
entrepreneurs or older workers who are starting businesses later
in life and may not have a pile of money either to put into their
business or put up as security. Or, they may be people like I
who resented being asked to have my spouse as a co-signator. I
felt I had the stature and the ability not only to look after my
own business but to have a relationship as an individual with a
lending institution.
1340
While I admit that times have changed, it took me two years
before I was able to secure a loan from a lending institution.
By that time I was very grateful for my tenacity. I was sorry I
did not know about this program. I now know it was in place
then. I was so busy growing my business that I did not have the
energy to keep fighting lending institutions.
Therefore I ended up financing my business out of my household
accounts. I was fortunate to be able to do that. Many people
starting businesses today should not have to juggle worrying
about putting food on the table for their families and financing
their businesses. Businesses with timely and appropriate access
to capital are set up in a way that creates jobs for Canadians
and contributes to their communities.
The story I told relates directly to why I am supportive of Bill
C-53 which results from a comprehensive program and policy review
conducted over the past year in private as well as with public
consultations with stakeholders. It took into account the
recommendations of the auditor general and the work of the
Standing Committee on Public Accounts of which I was a member
last year.
I will refer to the basic parameters of Bill C-53. It is
important for business people or Canadians watching this debate
to understand the types of things the government is doing to
assist small business. Under the provisions of the act loans may
be made by approved lenders for up to a 10 year term. Businesses
will be able to borrow up to $250,000. We also know that there
will be a one time up front 2% registration fee for lenders which
can be charged to borrowers. In addition, lenders must pay an
annual administration fee of 1.25%.
Bill C-53 is also a step forward in streamlining, improving and
stabilizing the existing Small Business Loans Act. The key
provision I wanted to point out is that the bill will provide
authority for the Department of Industry to conduct audits to
ensure compliance with the act and regulations. That is part of
the accountability mechanisms I spoke about earlier.
For the first time it provides the authority to create limited
pilot programs on a cost recovery basis on capital leasing and
lending to the voluntary sector. That is a very important part
of the bill. Organizations in the voluntary sector sometimes
have difficulty in accessing the capital they need.
Today with computerization there is a need to upgrade systems,
especially as we face the year 2000. As has come to be known,
the Y2K problem is putting many public and private sector
organizations in the situation where it is in everyone's interest
for them to ensure they are Y2K compliant, that their computer
systems are compatible, and that they have dealt with the problem
posed by the year 2000 for all of us.
1345
I believe that Bill C-53 will provide an opportunity that is
extremely important for small business and entrepreneurs, as well
as voluntary, not for profit agencies.
A very important provision of this bill is that there will be a
program performance review tabled in parliament every five years
which will be available for committee consultation. Rather than
the sunset provision of the past, where automatically a program
is sunsetted unless we keep it alive, this provision allows us to
say that this is a good program. It has proved itself. It has
been in place for 37 years. We have had it in place since 1961.
It is now 1998. What we want to know now is, will this program
on a continuing basis remain effective and relevant? If we can
look at it every five years we will be able to make
recommendations for change. This gives security to the business
community. It gives stability.
Canada's small business financing act will provide an even more
effective mechanism for government and financial institutions to
share the risk of lending to small businesses. That shared risk
is really what the essence of this program is all about. The
federal government says to the major lending institutions in this
country “We want you to do your part. We want you to support
small, growing businesses like the ones in Markham, Vaughan,
Concord and others in the great riding of Thornhill”. The
federal government is saying “We want you to support those
businesses. That is the way we grow jobs”.
Yes, it is important to have low inflation rates. Yes, it is
important to have unemployment coming down. Yes, it is important
to have low interest rates. Yes, it is very important to have
strong fiscal management, a balanced budget and the kind of
climate in which business can grow and flourish. But it is also
very important for those small and emerging new businesses to
have access to the capital they need.
While we are saying to the lending institutions that we want
them to do their part, this Liberal government with Bill C-53 is
saying that we are committed to doing our part. We are prepared
to share the risk. That is what this bill is about. I support
it on behalf of the riding of Thornhill and the many people who
will benefit from this bill. I hope that all members of the
House will join me in supporting this important and worthwhile
initiative.
Mr. Ted White (North Vancouver, Ref.): Mr. Speaker, I
would like to make a comment with respect to the speech that was
just made. The Liberal government claims that it has had to
force closure on this bill because it is so interested in helping
business that it actually has to take away our right to speak on
the bill. But I think government members are just paying lip
service to this whole process. As long as they do not actually
physically have to do something to help business, it is very easy
for them to give away other people's money.
There is a group from British Columbia here in Ottawa this week
from the forest industry. It is a broadly based group of unions
and businesses which is trying to meet with the Minister of
Foreign Affairs and the Minister of Labour to ask for help in
countering a Greenpeace attack on the British Columbia forest
industry. It is eco-terrorism. Greenpeacers are boarding
vessels in Los Angeles. They are chaining themselves to the
doors of Home Depots in the United States. This is a more
broadly based group than one could find. It is desperately
trying to meet with the government to ask for help,
internationally, to save businesses and jobs in British Columbia
and the government will not meet with them.
The government has done everything it can to fob them off, to
make excuses and to cancel meetings. It has been impossible for
a broadly based group of business interests and union interests
to meet with the government.
1350
If the Liberals are so concerned about small business, why do
they not actually do something physically and go into a meeting
with this group to discuss its concerns and to see what the
government can actually do? We have made many suggestions about
how government can help businesses by getting out of their lives,
by cutting their taxes and by cutting down on regulations. Here
is a role for government play.
In international aspects of trade, the government has a role and
this government is refusing to fulfil its role.
I would ask the parliamentary secretary why the government is
refusing to meet with the delegation from B.C.
Ms. Elinor Caplan: Mr. Speaker, I would point out to the
member opposite that we are in this House today discussing a bill
that is going to, I believe, improve the climate for small
businesses and entrepreneurs in this country.
This government cares about small businesses and does everything
it can to support them. I want the member to know that Canada
has low inflation and that our unemployment rates are coming
down. We know they are still too high and the way to deal with
that is by encouraging small business development. We have low
interest rates. We have payroll taxes that are amongst the
lowest in the western world.
Because we have balanced our budget and have a good
international reputation, small businesses are flourishing and
will continue to flourish. If the member would put his mind to
the bill that is before the House today and support it we could
resolve many of the problems that are before us. Instead, what I
have heard is too much rhetoric and not enough support for
important, good government programs.
Ms. Angela Vautour (Beauséjour—Petitcodiac, NDP): Mr.
Speaker, the member just said that this government cares about
small business.
I come from a region where unemployment is very high. I know
the importance of making sure that small and medium size
businesses are not only going to be created but that they are
going to survive.
Through changes to employment insurance, $927 million has been
taken out of the New Brunswick economy. We have the HST of 15%
on electricity, heating fuel and children's clothing. We have
toll highways that have already been paid for by both the federal
and provincial governments, but they are going to cost thousands
and thousands of dollars for the same small and medium size
businesses that this member is saying the government cares so
much about.
[Translation]
Members should take a look at the communities, which have been
deprived of $927 million. That money was removed from rural
communities where the unemployment rate was very high, where
people received unemployment insurance benefits. Small
businesses in these communities are not only suffering, they are
closing.
The hon. member just said that her government is doing
everything it can to help small and medium size businesses. How
can she reconcile that statement with the fact that employers in
New Brunswick have all these burdens to contend with?
[English]
Ms. Elinor Caplan: Mr. Speaker, as I said before in this
House, some 30,000 businesses across the country have access to
this program. We know that businesses in New Brunswick have
access to this program. Without this program businesses in New
Brunswick, British Columbia and provinces from coast to coast to
coast would not have the same access to capital that they need to
start and to flourish. Whether it be in New Brunswick or
anywhere else, without this program we would not have the same
strong, viable small business community.
Bill C-53 is very important to the people of New Brunswick. It
is also very important to entrepreneurs across the country. There
are many issues facing businesses across this great country and
access to capital is one of the most important.
She must be aware that in the province of New Brunswick young
entrepreneurs and small businesses need help and assistance, and
Bill C-53 is designed to do just that. I know she will support
it.
1355
Mr. Grant Hill (Macleod, Ref.): Mr. Speaker, I am sure
the parliamentary secretary missed the question from my colleague
because she did not answer it, so I will rephrase it in a way
that she can understand it.
The individuals who are here from the B.C. forestry industry
cannot meet with government officials. They have tried
everything they can.
Why will government officials not meet with these individuals?
Is it because they are too far away from B.C.? Is it because
there are too many Reform Party MPs from B.C.? Is it because
B.C. is not important to this government? Why will the
government not meet with forestry people from B.C. on an issue
specifically related to small business? Why will they not meet?
Mr. Walt Lastewka: Mr. Speaker, I rise on a point of
order. I believe we are talking about the Canada small business
financing act. The Reform Party has complained that it has not
had time—
The Speaker: The parliamentary secretary has the
opportunity to answer or not to answer. That is her prerogative.
I see her on her feet. She has about 40 seconds.
Ms. Elinor Caplan: Mr. Speaker, I did respond
appropriately to the member's colleague when I informed him that
the matter before the House at this time is Bill C-53. There are
other appropriate times for members to ask other questions. As I
look at the clock I note that in about 20 minutes that time will
arrive.
At this time my question for Reform members is, why are they not
addressing themselves to the issues in Bill C-53 which are very
important to small business? We on this side of the House know
how important it is for the federal government to do its part and
for this bill to be passed as expeditiously as possible to help
small business in Canada.
Small businesses know where we stand. We want to know where the
Reform Party stands.
STATEMENTS BY MEMBERS
[English]
CANADIAN FOOTBALL
Mr. Bryon Wilfert (Oak Ridges, Lib.): Mr. Speaker, I
would like to comment on the great cultural institution of
Canadian football. On Sunday we were treated to one of the best
matches in a long time, the Grey Cup. The cup was donated by a
former Governor General of Canada. It recognizes the supremacy
of Canadian football in Canada.
At a time when we have the Americanization of the National
Hockey League, the Americanization of basketball and other
institutions, football is truly a Canadian game. It is about
time that we took notice of the fact that this is an affordable
form of entertainment for families in Canada. It does not have
the big salaries of the NHL or the national basketball league.
It is truly a Canadian game with Canadian rules.
I was very proud that Mr. Don Carmichael from my riding of Oak
Ridges participated as one of the officials. I would like to—
The Speaker: The hon. member for St. Albert.
* * *
CANADIAN FARMERS
Mr. John Williams (St. Albert, Ref.): Mr. Speaker, there
is a crisis in our country that requires immediate attention by
the minister of agriculture. The price of a finished hog is $25
less than the cost of the food to produce the hog, never mind the
overhead, interest payments and fuel charges that a farmer also
has to pay. If this trend continues for a few more months many
farmers are going to be wiped out.
The minister of agriculture has a responsibility to ensure that
Canadian farmers, who are the most efficient producers in the
world, are not victims of global subsidization policies. The
Government of Canada has an obligation to ensure that these
farmers, some of whom are my neighbours and friends, will not be
driven from their farms and their livelihoods.
If they are the most efficient in the world, why are they among
the first to lose everything?
* * *
MINING
Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Mr.
Speaker, the Canadian mining industry is a major creator and user
of advanced technology for the global resource industry. Mining
companies spend over $100 million a year on research and
development and over 85% of the mining workforce uses advanced
technology from electronics and advanced materials to geomatics
and telecommunications. The primary metals industry is the most
intensive user of the 10 leading technologies in the marketplace.
With the use of high technology and a highly skilled workforce,
between 1986 and 1996 labour productivity increased by 48% in
mining and by 37% in the smelting and refining industries. That
compares with about 16% in the entire Canadian economy.
1400
I call on members of the House to salute mining day on
Parliament Hill and the achievements of this high technology
industry.
* * *
[Translation]
CANADIAN MINING INDUSTRY
Mr. Guy St-Julien (Abitibi—Baie-James—Nunavik, Lib.): Mr. Speaker,
the mining industry plays a vital role in the Canadian economy.
It provides direct employment to 368,000 Canadians, many of whom
live in rural or remote communities.
In 1997, this high tech, knowledge-based industry injected $26.2
billion in the Canadian economy, or 3.8% of the GDP.
The mining industry also has an important impact on several
downstream sectors, including manufacturing, finance,
transportation and services.
Today is mining day on the Hill, an annual event sponsored by
the Mining Association of Canada and the Mining Works for Canada
campaign, where decision makers from the industry and the
federal government get together to exchange views on issues of
common interest. This year's theme is international
competitiveness.
I urge all members of this House to recognize the Canadian
mining industry.
* * *
QUEBEC ELECTION CAMPAIGN
Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.): Mr. Speaker,
less than a week before the people of Quebec make a crucial
decision concerning the future of Quebec and of Canada, the PQ
definitely seems to have decided to go for a referendum, while
the Liberal Party has chosen to stand for economic growth and
job creation.
On November 30, Quebeckers must vote for the Liberal Party in
order to ensure political stability in coming years.
The Liberal victory on November 30 will put Quebec back to work
to improve quality of life for Quebeckers.
On November 30, I will be voting Liberal.
* * *
[English]
ABORIGINAL AFFAIRS
Mr. Mike Scott (Skeena, Ref.): Mr. Speaker, a long time
ago in a place far away political leaders decided that people
should be divided and segregated so that some lived under one set
of laws and the rest lived under another very different set of
laws.
The world condemned the decision. The world said it was wrong
to divide people on the basis of skin colour, ethnicity and
language. The world said such state sponsored segregation was
unacceptable and if we engage in it we do not have democracy.
Now, years later, the federal government gives us the Nisga'a
treaty in British Columbia which proposes exactly the same
segregationist ideas. The Nisga'a government is given supreme
law making authority in at least 14 different areas, laws that
will take precedence over federal and provincial laws but which
will apply only to Nisga'a people. If you are not Nisga'a you
cannot participate in this government even if you live in a
Nisga'a community, are married to a Nisga'a person and have
Nisga'a children.
All Canadians should be deeply concerned because this government
proposes to sign similar agreements right across Canada that will
entrench segregation as a major—
The Speaker: The hon. member for Ottawa—Vanier.
* * *
STEPHANIE BOLSTER
Mr. Mauril Bélanger (Ottawa—Vanier, Lib.): Mr. Speaker,
it is my pleasure to congratulate a very deserving
constituent of mine. Ms. Stephanie Bolster was awarded the
Governor General's Literacy Award in poetry for her book White
Stone: The Alice Poems.
I offer the jury's citation for her work: “White Stone: The
Alice Poems was judged the best book of poetry in 1998 for as
many reasons as there are poems in this wonderful sequence, but
due primarily to Stephanie Bolster's ability to depict the
emotional life of Alice Liddell as girl and woman in brilliant
narrative juxtapositions. She uses her lyrical powers to present
Alice the creation and Alice the person in a cultural context
that, on one level, re-examines cognition and dissociation and on
another liberates the poetic sequence from the monotony of story
and closure”.
I congratulate Ms. Bolster for her creativity and contribution
to Canadian culture.
* * *
[Translation]
WORLD FINANCIAL MARKET
Mr. Stéphan Tremblay (Lac-Saint-Jean, BQ): Mr. Speaker, we are
witnessing the rise of a new philosophy in world financial
markets.
After the Mexican financial crisis in 1995, the Asian crisis,
whose effects we are still feeling, the problems in Russia and
the turbulence in Latin America, a new trend is developing.
It is now clear to us, as it was already to George Soros, the
most prolific speculator in the world, and to hard-line free
trade economists, that we must attempt to control large-scale
movements of capital within the global economy. That having
been said, although everyone has identified the problem,
different solutions are being recommended.
One solution that could be tried is that of professor James
Tobin, winner of the Nobel prize for economics, who suggests a
small tax on currency transactions to reduce runaway
speculation. The Bloc Quebecois agrees with the principle of
such a tax, as shown by our support for Motion M-239 introduced
by our New Democratic Party colleague.
It is high time that parliamentarians had a better understanding
of these economic phenomena so that we can moderate their
negative impact and avoid a financial crisis.
* * *
1405
FIREARMS LEGISLATION
Mr. Lee Morrison (Cypress Hills—Grasslands, Ref.): Mr. Speaker,
hundreds of thousands of Quebeckers opposed to gun registration
are not being represented by their MP. When these people asked
the Liberal and Bloc Quebecois members to support them, they
were met with a refusal. The only people speaking out on their
behalf are Reform Party members. It is Reformers who are
defending the provinces' jurisdiction over property.
With four provinces fighting against this federal interference
in provincial matters, Bloc Quebecois members are silent. They
are cosying up to the centralist Liberals. They have sold out.
The Speaker: “Sold out” is pushing the limit. The hon. member
for Brome—Missisquoi has the floor.
* * *
ELECTION CAMPAIGN IN QUEBEC
Mr. Denis Paradis (Brome—Missisquoi, Lib.): Mr. Speaker, the PQ
is offering Quebec a program based essentially on the holding of
a referendum leading to Quebec's separation from the rest of
Canada.
On November 30, I will reject this option because I
believe that Quebec can and must take its place within the
Canadian federation.
Next Monday, the choice will be simple: the Liberal Party, to
ensure economic growth, or the PQ, which is keeping open its
option of separation for Quebec.
That is the real issue of the upcoming Quebec election. Our
choice will be clear on November 30. In Brome—Missisquoi we will
be voting Liberal.
* * *
[English]
FISHERIES
Mr. Peter Stoffer (Sackville—Eastern Shore, NDP): Mr.
Speaker, three weeks ago on Cape Sable Island, Nova Scotia I
attended a funeral of a 26 year old fisherman who committed
suicide because he could not make a living from the fisheries
sufficient to support his family.
This is the fifth suicide in southwest Nova in the last six
months and it coincides with a rash of suicides in small coastal
communities on Vancouver Island. The government and the
Department of Fisheries and Oceans have been warned repeatedly
that their policies of individual transferable quotas and
corporate concentration of the resource have to be addressed.
If the destructive policies are not modified the hope and
dignity of coastal communities, fishermen and plant workers will
be lost.
When will the government stop punishing these people and begin
to listen to their concerns? The suicide note of the latest
victim summarizes the situation many fishermen find themselves in
today. It simply said that if the government would not allow him
to provide for his children maybe God can.
* * *
[Translation]
ELECTION CAMPAIGN IN QUEBEC
Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Mr.
Speaker, in 1980, Quebec clearly rejected the PQ option of
breaking up Canada. In 1995, for the second time, Quebeckers
rejected the option of separating Quebec from the rest of
Canada. In 1998, the PQ is once again offering the option of
preparing another referendum on Quebec's independence.
[English]
The Péquistes need to learn that no means no.
[Translation]
Quebeckers understand that the PQ understands nothing. Quebec
understands that the choice on November 30 is clear and obvious.
We must once again speak out in favour of keeping our country
unified and strong. Quebec also understands that it must assume
its leadership role and help to make Canada an ever better
federation.
On November 30, I will be voting Liberal, because I believe in
Canada's future. Quebec must be able to deal—
The Speaker: The hon. member for St. John's East.
* * *
[English]
CHILD POVERTY
Mr. Norman Doyle (St. John's East, PC): Mr. Speaker, in
1989 the House of Commons passed a resolution that our nation
should strive to eliminate child poverty by 2000.
However, between 1989 and 1995 the number of poor children in
the nation increased by 58%, resulting in more than 1.5 million
children living in poverty. In my province of Newfoundland some
38,000 children live in families that are below the official
poverty line and many of these children go to school hungry each
morning. In other words, the problem has become worse since that
1989 resolution.
I call on the Government of Canada to significantly increase the
Canada child tax benefit in the upcoming budget and to generally
support initiatives by the Canadian School Boards Association to
deal with the issue of hungry children in our schools.
1410
The budget is in surplus. The time for talk is over and the
time for action on child poverty is right now.
* * *
GERALD VANDEZANDE
Mr. Derek Lee (Scarborough—Rouge River, Lib.): Mr.
Speaker, Citizens for Public Justice is celebrating 35 years of
strong non-partisan advocacy in policy development and reform on
behalf of many in our society who would not otherwise have such a
strong voice. Today I want to pay tribute to the volunteer
leadership of in that organization.
Mr. Vandezande is a constituent whose commitment and dedication
has played a major role in the pursuit of public justice during
his 35 years of service. He has attended many political
gatherings and waited patiently outside meeting rooms to twist
the arms of MPs, MLAs and ministers on social policy issues. His
accomplishments also include extensive writing on social,
political and economic issues for many publications. He has
provoked thought and encouraged society to challenge the status
quo and fight for those in need. Gerald Vandezande will continue
to passionately voice these messages of CPJ even in retirement.
On behalf of our constituents I congratulate him and wish both
him and CPJ well in all future endeavours.
* * *
[Translation]
MINISTER OF CANADIAN HERITAGE
Mrs. Suzanne Tremblay (Rimouski—Mitis, BQ): Mr. Speaker, “If
silliness were sold by the metre, there is no doubt the Minister
of Heritage would have become a billionaire a long time ago”.
This comment was made on Sunday, in Le Soleil, by journalist
Jean-Simon Gagné.
Mr. Gagné came to this conclusion after hearing about the
following anecdote. The minister visited an elementary school in
a poor neighborhood of Ottawa. As is her custom, she boasted
about her country, saying: “Canada is the best country in the
world. It is a rich country where people are happy and wealthy.
Everything there is to be found in huge quantities—wheat, oil,
gold, uranium, maple syrup, potash and even one quarter of the
world's freshwater reserves. Canada is a paradise”.
A young schoolgirl from Ottawa sitting at the back of the class
stood up and asked the minister “How do we get to Canada?”
* * *
[English]
LIM GUAN ENG
Hon. Sheila Finestone (Mount Royal, Lib.): Mr. Speaker,
Lim Guan Eng is a member of the opposition party of the Malaysian
parliament, a prisoner of conscience who is now in jail and a
victim of a miscarriage of justice. He has been wrongly
incarcerated for stating that double standards were applied in a
statutory rape case involving a prominent state chief minister
and a 15 year old school girl. Mr. Lim was jailed for sedition
and publishing false news because he used the term “victim
imprisoned” in reference to the rape victim.
Today we welcome his father, parliamentary leader of the
opposition in Malaysia, Mr. Lim Kit Siang. It is important for
all parliamentarians and all citizens to note that both these men
remind us of the precious freedom of expression that we are
privileged to enjoy in Canada and underscore the importance of
people of courage who speak out and speak up for justice,
freedom, democracy and human rights.
Our message, Mr. Lim, is to wish your son's early freedom and
return to his family, his three children and to the Malaysian
parliament. Good look, Mr. Lim, in your venture.
* * *
ABORIGINAL AFFAIRS
Mr. Myron Thompson (Wild Rose, Ref.): Mr. Speaker, I take
this opportunity to read a small article that appeared in
Friday's Ottawa Citizen for the minister of Indian affairs:
As many as 25% of Canada's 500 Indian bands are broke enough that
the federal government will have to either intervene or take over
financial management this year, Indian affairs managers said
yesterday. The bands have made little headway in recent years to
dig out from debt loads that are causing federal officials grave
concern even as aboriginals strive toward self-government. The
trend, blamed on mismanagement by both federal officials and
Indian leaders, has continued for the past five years. The
problem has been like a revolving door: a dozen indebted bands
straighten out their finances each year as another 12 sink into
the red.
When will the minister finally listen to her own officials and
close that revolving door of mismanagement? The grassroots
people are suffering and deserve accountability. I challenge her
to be the first minister of Indian affairs to do the right thing,
not the political thing, and clean up this mess before we go from
a bad situation to an impossible one.
* * *
HAMED SALOOJEWE
Mr. Gary Pillitteri (Niagara Falls, Lib.): Mr. Speaker,
today I am bringing to this House's attention the good work
carried out by the general manager of the Niagara Citizens
Advisory Committee, a non-profit organization that runs programs
for ex-offenders and youths at risks.
Hamed Saloojewe came to Canada with his family 22 years ago from
his native South Africa where as a boy of 10 he started to work
against apartheid in the offices of Nelson Mandela. Hamed
believes that by living in a segregated society he learned to
appreciate Canada's freedom more than the average citizen.
1415
Today Hamed is continuing his work within our community with
actual results. Individuals are being reinstated as productive
members of our society. Youths that may otherwise not have had a
chance are steered in the right direction.
The work carried out by Hamed shows us that by working within
our communities, we can prevent crime and render our streets and
homes safe while providing new beginnings for people who need it.
ORAL QUESTION PERIOD
[English]
APEC INQUIRY
Mr. Preston Manning (Leader of the Opposition, Ref.): Mr.
Speaker, Canadians are still waiting to find out why their Prime
Minister sacrificed Canadians' freedom of speech in order to
protect a foreign dictator from embarrassment. While the former
solicitor general may be gone, he left behind a question on this
matter which deserves an answer.
When the former solicitor general said that a senior Mountie
named Hugh Stewart would take the fall, what did he mean?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, we will know as soon as the commission looks into the
matter. That is why there is a commission. It has been set by
this parliament. The members have been named for five years.
They have the mandate to look into this matter. There was a
complaint filed with them. They are doing exactly what the
Parliament of Canada has asked them to do.
I want everybody to wait for the commission to give us its
report. I want the commission to ask all the questions of
anybody who it wants to interview.
Mr. Preston Manning (Leader of the Opposition, Ref.): Mr.
Speaker, the public complaints commission is not going to get to
the bottom or to the top of this particular matter.
Remarks of the former solicitor general have undermined the
commission. The chair of the commission is under investigation.
Lawyers for the students want the commission quashed, as do
lawyers for the RCMP who are being paid by the government.
Question period may be our only avenue to get to the bottom or
to the top of this matter. I ask again, for whom was Staff
Sergeant Stewart supposed to take the fall?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, the hon. Leader of the Opposition will have the answer
from the commission.
Mr. Preston Manning (Leader of the Opposition, Ref.): Mr.
Speaker, the Prime Minister is running away from this question.
He is trying to hide exactly like the solicitor general.
Staff Sergeant Hugh Stewart, a senior Mountie, is being set up
as a fall guy. This is confirmed in at least two affidavits
filed with the commission. It has never been contradicted by
anyone in the government.
I ask again, for whom was Staff Sergeant Stewart going to take
the fall? Was it Eddie Goldenberg? Was it Peter Donolo? Was it
Mr. Pelletier? Or was it the Prime Minister himself?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, the officer himself said this morning that his one hope
is to be in front of the commission and to give exactly all the
facts of the problems when he was there.
Let the officer go in front of the commission to explain what
happened. This is exactly what we want. It is exactly what the
law of parliament asks the board to look into. As quickly as
possible we will have satisfaction.
Miss Deborah Grey (Edmonton North, Ref.): Mr. Speaker, it
is the Prime Minister that we want investigated. An independent
judicial inquiry—
Some hon. members: Oh, oh.
The Speaker: I would ask all of you, my colleagues, to be
very judicious in your choice of words.
Miss Deborah Grey: It looks like we hit a weak spot. Mr.
Speaker, a judicial inquiry can investigate the Prime Minister.
The public complaints commission cannot. An independent judicial
inquiry can get to the bottom of the Prime Minister's involvement
in this. The public complaints commission cannot.
An independent judicial inquiry can force the Prime Minister to
produce documents. The public complaints commission cannot.
1420
Will the Prime Minister please stand up and admit that these are
the real reasons he does not want to have an independent inquiry?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, the commission that exists has been making inquiries
with everybody in the government and it was given all the
documents that it asked for. There is absolutely nothing to
hide. We want the commission to look at every document it wants
as soon as possible and we will have the results of the inquiry.
I know that the opposition has nothing else to complain about.
Keep asking these questions and you will still have the same
answers. Let the law of the land apply in this case.
Miss Deborah Grey (Edmonton North, Ref.): Mr. Speaker,
that answer is exactly the answer that the former solicitor
general gave every day and we know what happened to him.
The Prime Minister knows that if he is subpoenaed to go to the
public complaints commission, he can refuse to answer any
question that he just does not want to answer. That is different
than a court, a judicial inquiry where a judge can order the
Prime Minister to tell the truth.
If the Prime Minister really has nothing to hide like he just
said, why does he not call a real inquiry headed up by a real
judge? What is he so afraid of?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, a commission and inquiry can be set up and not have a
judge. There have been inquiries by people who were not judges.
This commission has the right to ask any question of any witness
it wants.
I said yesterday what my involvement was in that and the long
answer was none. I cannot add more than that. I had a job to do
that day. I had to preside over a meeting and that was my
preoccupation. I have absolutely nothing to hide. I want the
Canadian public to have the whole answer as soon as possible.
[Translation]
Mr. Gilles Duceppe (Laurier—Sainte-Marie, BQ): Mr. Speaker, now
that the solicitor general has resigned, we have to move on to
the real problems.
All observers agree that the main point of the whole affair is
the present commission of inquiry into the events at the APEC
summit.
Does the Prime Minister realize that the present inquiry is as
discredited as the former solicitor general was, and that if the
Prime Minister really wants to clean up his image, it is his
duty to put into place an independent commission of inquiry?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr. Speaker,
that is what we have: a commission of inquiry under the
authority of an act of Parliament.
A complaint was lodged. I could not even ask them to stop.
They are totally independent. It is their duty to do what is
dictated by a law of this Parliament, and they want to do their
work. They are resuming hearings tomorrow.
Mr. Gilles Duceppe (Laurier—Sainte-Marie, BQ): Mr. Speaker, what
needs to be clarified is not just the actions taken by the RCMP,
but also the actions and orders of the Prime Minister's
entourage, and of the Prime Minister himself.
Yesterday the Prime Minister told us he did not want to start
back at square one. But is the real danger not going back to
square one, but ending up there?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr. Speaker,
the real problem is that the opposition refuses to recognize the
truth.
The opposition does not want the commission to do its job,
because they know very well that, when the commission has
finished its work, they will have nothing to say, because the
police did a good job. If not, the commission will report on
this.
We have told them that all of the documents they want to look
at, and all of the people they want to hear in Parliament, are
available to them. They can interview them all and get them to
testify if they want.
Mr. Richard Marceau (Charlesbourg, BQ): Mr. Speaker, what
concerns us in the APEC affair is not only the problem of the
police, it is primarily the problem of the Prime Minister.
Does the Prime Minister not understand that the RCMP public
complaints commission is far too narrow a context for what needs
to be investigated, because at issue, in addition to the role of
the RCMP, is the role of the Prime Minister's office and of the
Prime Minister himself?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr. Speaker,
this is exactly what we have been saying since the start. We
have told them they can ask anyone in my office to testify.
1425
This is why Mr. Pelletier and Mr. Carle have offered to testify,
and anyone the commission wants to send for will testify. So
what is their complaint? We have offered to provide all the
documents and to let them interview or send for anyone from the
public service or from my office.
Mr. Richard Marceau (Charlesbourg, BQ): Mr. Speaker, what the
Prime Minister does not understand is that we do not want to
know who pepper-sprayed the demonstrators, but who issued the
order to do so and where it came from.
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr. Speaker, I
am not worried. I did not give it. I have said that in the
House and I repeat it. The commission will look at the work of
the police and whether or not they acted properly. Yesterday,
the officer in question said he was keen to testify, because it
was about time his version of the matter was heard.
* * *
[English]
FARM INCOME
Mr. Dick Proctor (Palliser, NDP): Mr. Speaker, my
question is also for the Prime Minister.
I am sure the Prime Minister would agree that we are facing a
growing crisis in this country. I refer of course to the farm
income crisis. We have been saying this for months. So have
farmers and the farm media. Even Canada's so-called national
newspaper says that half of the grain farmers on the prairies are
now on the brink.
Will Canadian farmers have to face this crisis on their own or
is this government going to provide some help now?
Mr. Joe McGuire (Parliamentary Secretary to Minister of
Agriculture and Agri-Food, Lib.): Mr. Speaker, the hon.
member is a member of the Standing Committee on Agriculture and
Agri-Food. That committee is holding hearings on farm income
which will be given to the minister. He knows the minister held a
national meeting with farm organizations on November 12. He
knows that the deputy ministers of agriculture have been meeting
with their counterparts in the provinces. The advisory committee
on farm income safety nets has reported to the minister as he
requested before the end of November. Progress is being made. The
minister has talked to his cabinet colleagues. Within a short
period of time, an announcement will be forthcoming.
Mr. Dick Proctor (Palliser, NDP): Mr. Speaker, as we
know, this Prime Minister rarely admits anything without first
being backed into a corner. After much prodding, the government
now agrees that farmers are in dire straits.
When an ice storm hit Ontario and Quebec, the government helped
out. When the Red River flooded, the government helped out. Now
western Canadians are facing disaster. When will the Prime
Minister step up to the plate and announce a disaster relief
plan?
Mr. Joe McGuire (Parliamentary Secretary to Minister of
Agriculture and Agri-Food, Lib.): Mr. Speaker, as I stated in
my first answer, everything that can be done is being done to
address the farm income crisis.
The minister and the government know there is a crisis. They
are well aware of what is happening in the farming communities,
especially in hogs and grains. In due course, a program will be
announced.
* * *
VETERANS AFFAIRS
Mrs. Elsie Wayne (Saint John, PC): Mr. Speaker, the
Minister of Veterans Affairs has stated that he considers the
hunger strike by the merchant navy men to be a disgrace and a
blackmail of the Canadian government. This has hurt those
merchant navy men terribly.
I know we all make statements that we wish we had not made. In
this case, I would ask that the minister retract his comments and
that he sit down with these brave men to discuss their concerns
very soon.
Hon. Fred Mifflin (Minister of Veterans Affairs and Secretary
of State (Atlantic Canada Opportunities Agency), Lib.): Mr.
Speaker, I think the hon. member knows because it was set up
through her office, she is assisting these veterans on their
hunger strike, that I will be meeting with them tomorrow.
Mrs. Elsie Wayne (Saint John, PC): Mr. Speaker, if it
was sent to my office, I did not receive it but I did hear about
it through the merchant navy men.
I want to remind the Minister of Veterans Affairs that in the
past five years the Department of Veterans Affairs has had a
total of over $475 million in lapsed unused funds.
Once again, knowing the money is there, will the minister sit
with these veterans tomorrow with an open mind and seriously
discuss the issue of benefits and compensation?
1430
Hon. Fred Mifflin (Minister of Veterans Affairs and
Secretary of State (Atlantic Canada Opportunities Agency),
Lib.): Mr. Speaker, the member has been asking for a meeting.
I will say to her again that I have met with these veterans on
two occasions. I met with them this morning and I will meet with
them again tomorrow.
* * *
APEC INQUIRY
Mr. John Reynolds (West Vancouver—Sunshine Coast, Ref.):
Mr. Speaker, the Prime Minister knows that the public complaints
commission can only investigate the role of the police in the
APEC affair. It cannot investigate the role the PMO played in
APEC. It cannot investigate the role of the PMO pressure on the
CBC to get rid of Terry Milewski.
Why will the Prime Minister not call an independent judicial
inquiry to clear up the role of the PMO in the whole APEC affair?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, I know the commission has already interviewed many
people working in the public service concerning this matter.
Every department, including PCO and the Department of Foreign
Affairs, has collaborated with members of the commission and has
given it all the information and documents it wanted.
It is not true that the commission cannot investigate it. We
have offered to help it and we will keep offering all the help it
needs.
Mr. John Reynolds (West Vancouver—Sunshine Coast, Ref.):
Mr. Speaker, the Prime Minister stands in the House, as his
former solicitor general did, day after day talking about the
public complaints commission and what it can do.
If he read the act he would see that it can only investigate the
police. If he went back to the speeches when that bill was
brought to the House, he would see that the member sitting next
to him spoke against the bill in the House for that reason.
Why will the Prime Minister not read the act and find out that
the commission can only investigate the police? Everybody will
co-operate if they know that nothing can be done to them, except
for the police, under this commission.
Why will the Prime Minister not call an independent judicial
inquiry?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, the frame of reference is extremely wide. At this time
the commission is interviewing everybody in every department who
had anything to do with this meeting in Vancouver a year ago. Let
the commission do its work.
[Translation]
Mr. Michel Gauthier (Roberval, BQ): Mr. Speaker, the only reason
the Prime Minister is defending the commission of inquiry on the
peppergate scandal as vigorously as he did his former solicitor
general is because it is the only thing left that can protect
him from embarrassing accusations that could be made against
him.
Will the Prime Minister admit that having a commission of
inquiry on police ethics instead of a real judicial inquiry is a
lot more convenient for him and for his office?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr. Speaker,
no, because this commission exists under the laws of parliament.
A complaint was made to the commission, and the commission
itself, without receiving any instructions from anybody in
government, decided to conduct an inquiry. That commission has
the authority to question and to call before it any witnesses it
wants concerning what happened in Vancouver a year ago.
Mr. Michel Gauthier (Roberval, BQ): Mr. Speaker, everybody
knows the role of that commission is to investigate the actions
of the police. It is a commission on police ethics. It does not
have the mandate to go to the Prime Minister's office, and that
is what we are interested in.
Will the Prime Minister not admit that he gave the commission a
role and a mandate that it cannot fulfil because it does not
have the authority to go to his office and to question him on
his involvement in this matter?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr. Speaker,
the commission has the authority to call any witness it wishes
to hear. It is its decision. The commission's lawyers started
questioning people several weeks ago, and all the documentation
they asked for has been handed over to them. They have
absolutely no restrictions on their inquiry, and they can
question anybody they want in the government.
* * *
[English]
HEPATITIS C
Mr. Grant Hill (Macleod, Ref.): Mr. Speaker, yesterday
Premier Harris kept his word. He promised to compensate all the
poor victims of hepatitis C and he did that.
The position of the health minister across the way was to attack
Premier Harris. Did Premier Harris, in this minister's view, do
the wrong thing yesterday by looking after all the victims of
hepatitis C?
1435
Hon. Allan Rock (Minister of Health, Lib.): Mr. Speaker,
the government has kept its word. It has acted out of principle.
It has extended with other provinces an offer to dissolve
litigation when we felt there was some argument as to fault and
in relation to everybody else who contracted hepatitis C through
the blood system.
We have offered assistance in making sure they get the care they
need without paying money out of their pockets; research to help
us find treatment and a cure for this disease, much needed
research; trace back programs to find people at risk so they can
get treatment; and $125 million over—
The Speaker: The hon. member for Macleod.
Mr. Grant Hill (Macleod, Ref.): Mr. Speaker, everyone
knows that the minister has a personal dislike for Premier
Harris. It looks to me like that vendetta is getting in the way
of hepatitis C victims.
Why should the hepatitis C victims themselves suffer because of
a personal vendetta of the minister against Premier Harris?
Hon. Allan Rock (Minister of Health, Lib.): Mr. Speaker,
the government just takes a different position on this issue than
the government of Premier Harris.
Let me give an example. The only known drug to help hepatitis C
is Interferon. At the moment in Ontario it costs about $10,000
out of the pocket of the victim in some cases to get that drug,
$10,000 for one course of treatment. The $10,000 cheque that the
Harris government is mailing out is not going to do much good to
the person who needs that drug.
What we propose is cost sharing with the provinces to get that
drug into their hands without any out of pocket expense. Why
will they not do what we propose and help those who are sick with
treatment and not with payment?
* * *
[Translation]
BILL C-54
Mrs. Francine Lalonde (Mercier, BQ): Mr. Speaker, my question is
for the Minister of Industry.
Last Tuesday, the Minister of Industry said Bill C-54 “would not
apply to Quebec at all”. On Wednesday, he changed his mind and
said the opposite, when he stated that his bill would apply, in
Quebec, to federally regulated businesses, such as banks and
telecommunications, broadcasting and transport companies.
Does the minister admit that the act will also apply to Quebec
businesses that transfer personal information to other
provinces?
Hon. John Manley (Minister of Industry, Lib.): Mr. Speaker, I am
convinced that Canadians in Quebec and elsewhere in Canada truly
want personal information to be protected. In fact, according to
an Angus Reid poll, 80% of Canadians feel that personal data
should remain strictly confidential.
We will protect personal information. We are doing so in Bill
C-54. I would appreciate it if the Bloc Quebecois supported this
legislation.
Mrs. Francine Lalonde (Mercier, BQ): Mr. Speaker, Bill C-54
provides much less protection than the Quebec legislation does.
My question to the minister is: Does he think the only way to
protect the rights of Canadians is to weaken those of
Quebeckers, or is everyone not entitled to the best possible
protection, namely the protection provided in Quebec?
Hon. John Manley (Minister of Industry, Lib.): Mr. Speaker, I
would simply like to quote privacy commissioner Bruce Phillips,
who said, when the bill was introduced, and I quote “Today's
tabling of private sector privacy legislation in the House of
Commons is the most significant advance in protecting Canadians'
personal information since the Privacy Act regulated federal
government handling of personal information in 1983”.
It is simple. This is a good bill. It will protect individuals.
It is a bill for—
The Speaker: The hon. member for Edmonton—Strathcona.
* * *
HEALTH CARE
Mr. Rahim Jaffer (Edmonton—Strathcona, Ref.): Mr. Speaker,
according to an Angus Reid poll released today, the public's
greatest concern, even before unemployment, is the way the
Liberals are attacking the health care system.
This is no surprise. Since 1993, the Liberals have slashed $7
billion from health care financing, and hospital waiting lists
are longer than they have ever been.
Enough talk. When is the Minister of Health going to act?
1440
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker, it is
absolutely incredible to hear the hon. member from the Reform
Party speak to us of health care when, year after year of their
first mandate, their recommendations were to cut, to slash
health expenditures. But we refused.
Moreover, the first thing we did when we saw the deficit had
been eliminated was to restore in excess of $7 billion to health
care, over a five-year period.
[English]
Mr. Rahim Jaffer (Edmonton—Strathcona, Ref.): Mr.
Speaker, this is not about the official opposition. This is
about the government's record. Seven billion dollars have been
cut out of health care. Nearly 1,400 doctors have left Canada
for the U.S. Hospital waiting lists are the longest in history;
188,000 people are waiting for care.
How many more polls will it take before the health minister gets
the message and stops this Liberal sabotage?
Hon. Paul Martin (Minister of Finance, Lib.): Mr.
Speaker, this year in terms of tax point transfers alone the
provinces will be receiving over $13.5 billion. The equalization
transfer this year is $8.5 billion, up from $8.1 billion when we
took office. The child tax benefit is $1.8 million. That is
money that is going into provincial coffers and into the hands of
Canadians with children to enable them to protect their health.
Whether we put money into research and development or into the
health transition fund, this party, the party that created the
Canada Health Act, stands behind the health of Canadians.
* * *
[Translation]
ICE BREAKING POLICY
Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques,
BQ): Mr. Speaker, the new ice breaking fees are so much
ad-libbing.
The proof is that, in Rivière-du-Loup, the ferry operator will
have to fork out $68,000 in ice breaking fees between December 21
and January 5, date of the last winter crossing, when
ice breaking services have not been needed for this period since
1973.
Is this ridiculous proposal not a clear indication that the
Minister of Fisheries and Oceans should go back to the drawing
board?
Hon. David Anderson (Minister of Fisheries and Oceans, Lib.):
Mr. Speaker, industry stakeholders have been consulted over the
past three years. There is no ad-libbing about it. The
industry's proposals are now being considered.
In a few days or weeks, the new revised fee schedule will be
available for examination by industry stakeholders. There is
nothing unusual about that.
* * *
[English]
HUMAN RIGHTS
Ms. Shaughnessy Cohen (Windsor—St. Clair, Lib.): Mr.
Speaker, my question is for the Minister of Foreign Affairs.
Lim Guan Eng is a Malaysian opposition MP who has been wrongly
incarcerated for simply doing his job, which is to oppose the
government of the day. Canada has made a concerted effort to
assist Lim Guan Eng and today his father, Lim Kit Siang, is in
Ottawa to meet with parliamentarians.
Could the Minister of Foreign Affairs tell us whether the case
of Lim Guan Eng was raised by Canada at the APEC summit in Kuala
Lumpur?
Hon. Lloyd Axworthy (Minister of Foreign Affairs, Lib.):
Mr. Speaker, while we were at the meeting in Kuala Lumpur I had
the occasion to meet with Mr. Lim's father to discuss the
treatment that his son had received in terms of raising issues as
part of his parliamentary duties.
Subsequent to that we were able to raise with the minister of
foreign affairs the way in which the judicial system was being
used to suppress certain statements and expressions of freedom of
point of view.
I also asked our high commission there to register officially
our concern and to continue to monitor the situation. I am
hoping we will be able to meet with Mr. Lim during a meeting on
human rights that will be held in Edmonton this weekend.
* * *
GREENPEACE
Mr. John Duncan (Vancouver Island North, Ref.): Mr.
Speaker, Greenpeace and other lobby groups have launched an all
out war on logging in B.C. That is not fair because B.C. forest
practices are among the best in the world.
Greenpeace's attack on jobs is being helped in its campaign by
money from CIDA. Why are Canadian tax dollars being used to help
a campaign to destroy the jobs that pay those very same taxes?
Hon. Diane Marleau (Minister for International Cooperation
and Minister responsible for Francophonie, Lib.): Mr.
Speaker, CIDA does not do any direct funding of Greenpeace. As a
matter of fact, CIDA tries to transfer the good forestry
practices practised in B.C. to the developing world.
Mr. John Duncan (Vancouver Island North, Ref.): Mr.
Speaker, the minister and the minister's officials do not know
where CIDA money goes. We do. The money goes to the World
Resources Institute, a lobby group that supplies Greenpeace with
its information and political ammo.
1445
Why are tax dollars from CIDA being spent to kill Canadian
logging jobs?
Hon. Diane Marleau (Minister for International Cooperation
and Minister responsible for Francophonie, Lib.): Mr.
Speaker, there has been no direct funding of this particular
group since 1994. It is very important for Canada to show the
developing world the good practices we have here. Whether they
believe it or not, we do have wonderful practices and the
developing world appreciates our help.
* * *
CHILD POVERTY
Ms. Libby Davies (Vancouver East, NDP): Mr. Speaker, my
question is for the finance minister. Today is the anniversary
of the all-party motion to eradicate child poverty by the year
2000. Shamefully we are one year away, but farther than ever
from reaching that goal.
What does the finance minister do? He has the gall to stand up
at a Liberal fundraising bash and call child poverty a national
disgrace. It is his policies that are a disgrace. Six billion
dollars in cuts have forced more than half a million more kids
into poverty. Where is the real commitment, backed up by real
dollars and not empty promises?
Hon. Pierre S. Pettigrew (Minister of Human Resources
Development, Lib.): Mr. Speaker, poverty is definitely an
issue that has concerned this government in a very big way, and
child poverty in particular. We should look at the record of
what this government has done over the past few years.
We have been able to negotiate with the provinces the national
child benefit in which we are investing $1.7 billion per year to
help children in low income families.
We have also developed the Canadian opportunities strategy. We
have developed the transitional jobs fund—
The Speaker: The hon. member for Vancouver East.
Ms. Libby Davies (Vancouver East, NDP): Mr. Speaker, the
minister should take his head out of the sand. Each time he is
questioned on poverty he says that the child tax benefit scheme
is the cure-all, but the truth is that most kids on welfare will
gain nothing from this scheme and many of the poorest children
will receive less in real dollars than they did in 1984.
While the government dines on rubber chicken at Liberal
fundraisers, more than a million kids are waking up hungry. Half
of them have been pushed into poverty during this government's
term.
Again, will the minister keep the promise that was made in 1989?
Hon. Pierre S. Pettigrew (Minister of Human Resources
Development, Lib.): Mr. Speaker, I do not think that $1.7
billion per year toward the national child benefit is nothing. I
think it is a lot of money for children in low income families.
That money helps parents to leave welfare and to get a job, which
is a lot better for fighting poverty.
We have also implemented the family income supplement to help
the poorer families on employment insurance. The transitional
jobs fund helps to fight unemployment in regions where
unemployment is high. That is the way to fight poverty and to
help the economy.
* * *
CANADIAN FARMERS
Mr. Mark Muise (West Nova, PC): Mr. Speaker, Canadian
farmers across the country are struggling to survive in the grips
of the most severe crisis to hit our farming communities since
the Great Depression. Faced with a worldwide downturn in prices
for grain and hogs, wheat prices have dropped by 41% and hog
prices have dropped by 65%. Canada's farmers cannot continue to
produce at a loss and hope to survive.
Why will the minister of agriculture not stand up for farmers by
providing them with immediate financial assistance?
Mr. Joe McGuire (Parliamentary Secretary to Minister of
Agriculture and Agri-Food, Lib.): Mr. Speaker, it is pretty
early for the hon. member to be self-righteous in demanding
compensation from this side of the House. If his party were in
government it would have cut $600 million from that department.
It would not even be called the department of agriculture.
This government and this cabinet know the situation of the
farmers and are duly addressing it.
[Translation]
Mr. Mark Muise (West Nova, PC): Mr. Speaker, even the Minister
of Agriculture and Agri-Food has said that our farmers are at
risk.
Despite this admission, the minister and the government are
still refusing to step in. The hog industry is in crisis, as
Quebec producers have recently brought home to us. These
farmers will soon be forced to declare bankruptcy.
The United States and the European Union are offering financial
assistance to their farmers. When will the Minister of
Agriculture and Agri-Food announce a program to assist our
imperiled Canadian farmers?
1450
[English]
Mr. Joe McGuire (Parliamentary Secretary to Minister of
Agriculture and Agri-Food, Lib.): Mr. Speaker, our minister
of agriculture has met with the minister for Nova Scotia, his
deputy minister, and the producers of Nova Scotia.
The facts are coming in. They are being distilled and the
response will be forthcoming very soon.
* * *
[Translation]
CANADIAN MINING INDUSTRY
Mr. Réginald Bélair (Timmins—James Bay, Lib.): Mr. Speaker, my
question is for the Minister of Natural Resources.
[English]
Today is mining day on Parliament Hill. Business leaders from
Canada's mining community are in Ottawa to meet with members of
parliament, cabinet ministers, senators and other government
officials.
Will the minister inform the House how deep is the impact of the
mining industry on northern Ontario's economy, as well as
Canada's economy?
Hon. Ralph E. Goodale (Minister of Natural Resources and
Minister responsible for the Canadian Wheat Board, Lib.): Mr.
Speaker, the mining industry contributes $26 billion to the
Canadian economy every year. It accounts for 16% of our trade
exports. It adds $7 billion to Canada's positive trade balance.
It generates 368,000 Canadian jobs. It is the lifeblood of 128
communities, especially in rural, remote, northern and aboriginal
areas, and it is very much a sophisticated high tech industry
that leads the world in sustainable development.
* * *
GREENPEACE
Mr. Darrel Stinson (Okanagan—Shuswap, Ref.): Mr.
Speaker, my question is for the Minister of Foreign Affairs.
The government revoked the charitable status of Greenpeace in
1995. That has not stopped that group's efforts to tarnish
Canada's image around the world and destroy Canada's forest
industry.
Will the minister ask Germany and the United States to revoke
the charitable status of Greenpeace before it can do more damage
to Canada?
Hon. Lloyd Axworthy (Minister of Foreign Affairs, Lib.):
Mr. Speaker, over the years Canada has undertaken a very active
campaign in support of the forest industry and many of its
stakeholders to promote the interests of the Canadian forest
industry in Europe.
We are certainly in a position to provide good, strong evidence
that Canada does follow proper forestry practices. We are using
all of that information to take the message to European
countries. Perhaps the most effective way is to tell them what
Canada does best.
* * *
[Translation]
ICE BREAKING POLICY
Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Speaker, judging by
his responses to our questions on ice breaking, it is quite
obvious that the Minister of Fisheries and Oceans is confirming
that his proposed fee schedule will not hold water.
Since his policy kicks in less than a month from now, does it
not seem urgent for a moratorium to be called on fees, allowing
the minister time to go back to the drawing board, and time for
discussion of a new and fairer fee schedule for Quebec users?
Hon. David Anderson (Minister of Fisheries and Oceans, Lib.):
Mr. Speaker, the proposed fee schedule was established by the
industry representatives themselves. Seven of the ten
representatives were from Ontario and Quebec.
This is not the end of it, I am currently involved in examining
the representations that have been made, and within the next few
days, or weeks, I will be providing the hon. members and the
industry with a revised fee scale. So far, no final decision
has been made.
* * *
[English]
CANADIAN FARMERS
Hon. Lorne Nystrom (Regina—Qu'Appelle, NDP): Mr. Speaker, my
question is for the Minister of Finance.
Recently the Royal Bank announced a profit of $1.82 billion, the
largest profit of any company in the history of our country, and
at the same time prairie farmers are in their worst economic
crisis since the 1930s.
I have a suggestion for the Minister of Finance. Will he
consider calling in the CEOs of the large banks in this country
to try to get from them the idea that they might seek to share
the wealth in terms of imposing a moratorium on farm debts in the
country? Will he do that?
Hon. Paul Martin (Minister of Finance, Lib.): Mr.
Speaker, I will be meeting with the presidents of financial
institutions, including the large banks. Obviously, as in the
case of other areas that are in severe difficulty, we will
certainly ask those institutions to be as understanding as they
can be.
* * *
NATIONAL DEFENCE
Mr. David Price (Compton—Stanstead, PC): Mr. Speaker,
yesterday the Minister of National Defence said that he is asking
his cabinet colleagues for more money to give our soldiers the
quality of life they deserve.
My question is for the Minister of Finance. Does the minister
understand that the men and women who serve this country in
uniform need his help?
Is the Minister of Finance listening to his colleague and will
the Canadian forces receive the quality of life they deserve?
1455
Hon. Arthur C. Eggleton (Minister of National Defence,
Lib.): Mr. Speaker, I just returned from Honduras where the
men and women of the Canadian forces are providing terrific
service in a humanitarian way.
I have been to Bosnia. I have seen them patrol areas where
otherwise ethnic cleansing would occur. I have seen them operate
in the ice storm and during the floods.
They do a great job for Canadians and they deserve our support.
They deserve a far better standard of living.
* * *
INFORMATION HIGHWAY
Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.):
Mr. Speaker, the government often has pledged to make Canada the
leading electronically connected country in the world. In that
regard I want to put a question to the Secretary of State for
Science Research and Development.
What is the government doing to ensure that western Canadians
have the very best possible access to the information highway?
Hon. Ronald J. Duhamel (Secretary of State (Science, Research
and Development)(Western Economic Diversification), Lib.):
Mr. Speaker, just a few weeks ago the Alberta library, in
partnership with Industry Canada, made an announcement whereby
200 new Internet access sites will be established throughout the
province of Alberta.
This is part of a tremendous achievement, making Canada the
first most connected country in the whole world, led by Industry
Canada. This will provide community information centres. It
will provide technology training. It will provide jobs for young
people. It will permit Albertans to be additionally connected to
Canadians, indeed to the whole world. This is great stuff.
* * *
UNEMPLOYMENT
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, you
ask a stupid question and you get a stupid answer. Today
StatsCan—
Some hon. members: Oh, oh.
The Speaker: I am not sure which question the hon. member
was referring to.
Mr. Monte Solberg: Mr. Speaker, today StatsCan issued a
scathing indictment of this government's job creation record. It
said that since 1989 the government has given up 228,000 full
time jobs and that the only job growth has come from part time
employment and the self-employed.
What is the big reason? The big reason is high payroll taxes.
When is this government going to get the message? When is it
going to obey the law and cut EI premiums by $7 billion? When
are they going to wake up over there?
Hon. Paul Martin (Minister of Finance, Lib.): Mr.
Speaker, now we know that it was his question.
The fact is, as the hon. member knows, employment increased by
over 57,000 new jobs in the month of October. As he also knows,
over 321,000 new jobs have been created this year alone, and over
1.5 million jobs have been created since we took office.
When we took office the unemployment rate was 11.5%. Today it
is 8.1%. That is the lowest rate in over a decade.
* * *
[Translation]
STEEL INDUSTRY
Mr. Benoît Sauvageau (Repentigny, BQ): Mr. Speaker, the steel
industry in Quebec and Canada is facing very serious problems as
a result of the financial crisis in Asian countries and in
Russia.
To clear their stocks, these countries are selling their
rolled steel at a price that is lower than what it costs to
produce, which clearly represents an unfair dumping practice.
My question is for the Minister for International Trade. What
does the minister plan to do to stop this unfair competition,
given that this industry generates nearly 200,000 direct and
indirect jobs in Canada?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker, as
the hon. member is no doubt aware, steel companies have raised
the possibility of putting a motion before the international
tribunal to make this kind of import stop, in which case the
government is certainly prepared to help further the process.
* * *
1500
[English]
VETERANS AFFAIRS
Mr. Gordon Earle (Halifax West, NDP): Mr. Speaker,
Canadians who served Canada in the merchant navy are not getting
any younger. In fact, they are dying at a rate of about 12 per
month. Justice delayed is indeed in this case justice denied.
The minister has indicated he will meet tomorrow with the
merchant mariners. Will he commit today to use that occasion to
seek a positive resolution to the compensation issue of concern
to these merchant navy survivors?
Hon. Fred Mifflin (Minister of Veterans Affairs and Secretary
of State (Atlantic Canada Opportunities Agency), Lib.): Mr.
Speaker, as the hon. member knows, I have met with these veterans
before and I will meet with them tomorrow. No decisions have
been made. I am there to listen.
* * *
[Translation]
PRESENCE IN GALLERY
The Speaker: We have two visitors with us today. Let me
first draw the attention of members to the presence in our
gallery of the hon. Sada Samake, the Minister of Territorial
Administration and Security of Mali.
Some hon. members: Hear, hear.
[English]
The Speaker: I would also like to draw to your attention
to the presence in the gallery of the honourable Maynard Sonntag,
minister responsible for post-secondary education in
Saskatchewan.
Some hon. members: Hear, hear.
* * *
POINTS OF ORDER
TABLING OF DOCUMENTS
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, I
rise on a point of order to seek unanimous consent of the House
to table the labour force update I made reference to in question
period.
The Speaker: Is there unanimous consent?
Some hon. members: Agreed.
GOVERNMENT ORDERS
1505
[Translation]
CANADA SMALL BUSINESS FINANCING ACT
The House resumed consideration of the motion that Bill C-53, an
act to increase the availability of financing for the
establishment, expansion, modernization and improvement of small
businesses, be read the third time and passed.
Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): Mr. Speaker,
as a member of the Standing Committee on Industry and as
regional development critic for the Bloc Quebecois, I am pleased
to speak at third reading of Bill C-53, which deals with small
business financing.
This bill is not perfect and we think it should have been
improved through, among other things, the main amendments
proposed by my colleague from Mercier and myself, on behalf of
the Bloc Quebecois, in committee and in the House at report
stage. Our amendments dealt mostly with access to working
capital and greater access to capital for borrowers in the
voluntary sector, which is more and more referred to in Quebec
as the social economy sector, and not only, as the government
proposes, in the form of pilot projects that are yet to be
established in accordance with the minister's wishes.
Of course, we are not opposed to the idea of pilot projects, but
we think it would have been preferable to include directly in
this bill provisions that would have made this type of financing
or loan guarantees available to borrowers in the voluntary
sector, or social economy sector.
The main reason we support this bill is that the small business
owners we consulted do want this loan guarantee program even
though, as I said earlier, it should have been improved.
The hon. member for Mercier, myself and the other Bloc Quebecois
members would have appreciated it if the industry committee, on
which we both sit as full members, had conducted a more thorough
assessment of the issue of financing for small businesses, if it
had evaluated all the programs provided by the various
stakeholders. According to the people I consulted, there are
some 100 assistance programs—not just lending programs, but all
sorts of programs—and entrepreneurs do not always have time to
get familiar—so to speak—with each of these programs.
Sometimes, when a program is described in a booklet or some
other type of brochure, we realize that the funds are no longer
available, that the structures have changed or that the programs
themselves have changed. It is difficult to face that situation.
We also think that the Standing Committee on Industry, or the
Department of Industry itself, should conduct a macroeconomic
impact study. This means it should not merely do an audit as
suggested by the auditor general, but also a financial audit of
lending institutions, as the government intends to do. Given the
various programs that are in place everywhere, it would be
appropriate to see their actual impact, for example on a
region's economy.
We would have liked to know the impact on competition. It is all
well and good to grant a loan to a small business, but under
what conditions and what about its impact on the business across
the street?
We must also look at the impact on the region's economy. Will
there be an impact or not?
Right now, we are under the impression that the department does
not have the tools to properly evaluate the impact of these
projects.
When we agree to provide help in the form of a guaranteed loan,
we must consider the multiplying effects. Do these effects go
beyond the business itself? It is often said that the effects
are more significant in certain areas.
1510
For example, it is said that, for every dollar invested in the
tourism industry, the benefits are multiplied by four. The same
goes for the export sector. Nowhere in the bill is this taken
into account.
We must also consider the number of jobs and not only the number
of new jobs. Maintaining existing jobs may be quite a feat for a
small business that has to modernize its equipment to remain
competitive. If it does not go through this modernization
process, it may have to reduce the number of jobs or even to
close down. Therefore, maintaining jobs is often very important.
We must look at the number of jobs, and I think that should be
the first criterion, but we must also look at the kind of jobs.
Are they quality jobs? Are we helping a business that, in the
short or medium term, would only provide minimum wage jobs? If
working conditions are not very good, maybe we should take a
closer look at it.
Not only do we have to think about the number of jobs, but we
must also realize that well paid jobs with good working
conditions are good for the workers and their families. When
there are quality jobs in a region, jobs that have an impact on
the economy, people have more money in their pocket. They spend
more and they invest in the local economy. That is the kind of
indicator we must look at, the impact on the community.
When all regional economies are doing well, so is the economy in
Quebec and Canada. For some Quebec regions, this would mean
losing fewer of their young people. The hon. member for
Lac-Saint-Jean often raises the issue of young people moving to
major centres. Members from eastern Quebec also raised it, as
did those from the Atlantic provinces. This is insane. Something
has to be done to keep our young people in our regions.
I personally come from eastern Quebec. I later moved to the
Quebec City-Lévis region, a very beautiful region, and I do not
regret this decision. However, had there been job opportunities
in my native region 30 years ago, I would probably have stayed.
I would have chosen to stay home, if only because I knew the
place well and felt I belonged there and because of my family
ties.
Yet I had no choice but to leave.
The eastern Quebec phenomenon had been looked into under the
ARDA initiative and by the QPDB at the time. When business
owners see young people leave, they wonder whether it is a good
idea to keep investing in developing their business while this
exodus is taking place. It is no longer the case, but I am
trying to show that small businesses are important to rural
regions. Unfortunately, they are few and far between. In the
Lac-Saint-Jean region, they have big businesses, such as Alcan,
but in regions like the Beauce or the Chaudière-Appalaches
region, which is my new home, small businesses are the engine
driving job creation. In fact, they account for nearly all new
regional jobs created, hence the need to make financing
available.
The less unemployment there is, the less social spending there
is. This may seem obvious, but it is good to point it out. The
more employment there is, the more collective wealth there is.
The more collective wealth increases, the more property values
increase, and the happier business people are. This is called
development and it goes without saying that we, in the Bloc
Quebecois, who defend the interests of Quebec and its regions,
support any program that helps small businesses develop the
regional economy.
1515
When I first heard about the review of the Canada Small Business
Financing Act, my initial reaction was to consult the local
development board, a permanent body in my riding, to get its
opinion on the small business loans program, the SBLP. It told
me it supported that program. Why? Because, according to the
development board, this is one of the best known programs, if
not the best known. It has remained stable and it is the
simplest one to administer. It is a basic program that allows
any business in any sector to have access to financing.
Consequently, it is often the program most used. It is a
multipurpose program and it is known by banks and caisses
populaires in the regions.
I do not want to get involved today in a debate over bank
mergers, but we are all aware that there are concerns in remote
or rural areas that major bank mergers may decrease the number
of financial institutions and thus the access to financing in
their communities.
Businesses are, therefore, greatly attached to this program. It
must be pointed out, however, that it is more costly than other
loan programs, 3% higher than regular loans. Nevertheless, it
is an extremely popular program, and one that is in demand.
Despite its popularity, I have been told by the LDB in my riding
that people would like access to this program improved.
Is this program as accessible as it seems to be?
The banks tell us that it is. Bank representatives who appeared
before the industry committee told us that it was an accessible
program and that it was working well.
I invite hon. members to consult the statistics the banks
compiled, but an examination will show that they apply only to
completed applications. When businesses are consulted, however,
we learn that in certain communities many people wanting to set
up new businesses do not complete their application. They get
discouraged, or are discouraged by certain financial
institutions who tell them that their business is not all that
viable.
Incomplete forms are not included in the statistics, so it is
easy to say that there is a highly satisfactory success rate
among those who go through the process and meet all conditions
and criteria. But if those who do not follow the process
through to the end were taken into consideration, we would end
up with another kind of statistic.
The Canadian Federation of Independent Business made us aware of
this problem by saying that, contrary to the view expressed by
the banks, financing was not so accessible.
We, the members of the Bloc Quebecois, made aware of this
problem, wanted to go a little further and so we conducted a
poll in our ridings. In my own riding, I sent a questionnaire
to all businesses I had an address for, and 84 of them returned
it.
The first question was “In your experience and from what you see
around you, would you say it is easy for a SMB to obtain credit
at a reasonable cost easily?” Only three businesses or 3.6%
said yes. Thirty-six businesses, or 42.9%, said it was
difficult, and 45 businesses or 53.6%, said it was very
difficult.
The next question was “Are you familiar with the Small Business
Loans Act?” Only 34.5% of businesses indicated they were
familiar with it, 65% were unfamiliar with it.
Then they were asked “Do you think that the federal government
should guarantee loans only to SMBs that could not obtain them
otherwise, even though they represent a reasonable risk?” The
response was 70.2% in favour, 22.6% against, and 7.1% refusing
to answer.
1520
The next question was “Do you think loans should be given as
well for working capital—and this was one of the amendments we
proposed—and not only for equipment and assets and real
property?” To this question, 92.9% responded yes, and only 6%
were opposed.
Another question was “From your experience and what you see
around you, do you think SMBs previously had greater access to
credit at a reasonable cost and to management advice?” The
response to this question was unanimously yes.
And, if that were still the case, “Would there be fewer
bankruptcies?” We received an affirmative answer from 86.9% of
respondents.
Overall, nearly 97% of those polled said it was either difficult
or very difficult for small business to secure a loan at a
reasonable rate; 43% believed it was difficult and 50% believed
it was very difficult. Sixty-six per cent of those who responded
were not familiar with the legislation. More than 70% agreed
that the federal government should guarantee only loans made to
small businesses that would not get one otherwise.
The bill also deals with access. It does not merely deal with
small business financing but, as the title specifies, it is an
act to increase the availability of financing to small
businesses. Since the word “increase” is used, the purpose of
the act is therefore not to reduce availability, as requested by
members of the Reform Party.
They want it reduced, and if they had it their own way, they
would even have it eliminated; they would let the chips fall
where they may, in order words let the stronger survive and the
small and the weak die out.
We could not disagree more with the attitude and position of the
Reform Party in this respect. While the bill is not perfect or
ideal in any way, there is a need for such a small business
financing program through guaranteed loans. It does meet a need.
Tat is why, at third reading as before, we support this bill.
We figure that, if it agrees to some improvements today, the
government may eventually agree to do more. That is our fondest
hope.
I notice that the Parliamentary Secretary to the Minister of
Industry, who sits on the same committee as I do, is listening.
He has a background in industry. He supports economic
development. I know that, by repeating certain arguments, we may
succeed in convincing him, and let us hope he, in turn, will
succeed in convincing his colleagues, particularly the Minister
of Finance, that we need legislation to help small businesses,
and businesses in general, create jobs.
I would like members to remember one key word from my speech. I
know that the member for Kamouraska—Rivière-du-Loup—Témiscouata—Les
Basques, who will be speaking after me, will agree with that. He
keeps talking about employment insurance and the problems facing
the unemployed. We both know that one good solution—and in some
cases the only solution for young people and for people with
years of professional training—is starting up a business. It is
often the only way to earn a living.
I know my colleague will agree with me that helping small and
medium size businesses is part of the fight against poverty.
That is the purpose of this bill, and that is why we must
support it. However, it must not be the only program available.
As regional development critic for the Bloc Quebecois, I would
like people in each region to get together and use the best
tools available and to adapt them to their particular situation.
Once again, this bill is not perfect, but it offers enough
flexibility and versatility to meet many needs. That is why we
support it.
1525
Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques,
BQ): Mr. Speaker, thank you for giving me the floor in this
debate at third reading, after the magnificent speech by the
member for Lévis-et-Chutes-de-la-Chaudière. He and the member for
Mercier made several constructive suggestions for improving this
bill.
I would like to ask him a question that I think is a very
important one today. In our regions, we have seen the emergence
of a new type of entrepreneur, men and women who were not
necessarily trained in the same way as former small business
owners. Very often, these are people who have been told that
they have to create their own job.
Will this bill create sufficient interest to allow this new
generation to emerge?
Did we not propose amendments that the government should have
retained? I realize that, overall, the bill at least introduces
technical improvements, that it corrects a certain number of
flaws, but is there not more that needs to be done?
Should the government not move as quickly as possible so that
this new generation of entrepreneurs, who are not necessarily
the most outstanding, those that act as quickly as possible,
that have the necessary training, because we are asking them to
create their own jobs, to start up and run new businesses, can
benefit? They often have an important impact, particularly in
rural areas.
Does this bill give us the necessary tools? Does the federal
government seem to have a sufficiently open attitude to allow
small businesses in rural areas to develop their projects and
create two, three, four or five jobs, which make the difference
between an up and coming community and one that is losing steam?
Can the member for Lévis expand on this?
Mr. Antoine Dubé: Mr. Speaker, I will answer yes to my
colleague, there are possibilities.
He mentioned one amendment we moved, but which was defeated by
the government side. I will explain what it was about, because
it is not obvious at first sight.
Why not limit this program to businesses which otherwise would
not have access to loans from financial institutions? I stress
this point because it could be tempting for a bank or a credit
union, seeing the possibility of using this program, to use it
to benefit businesses that provide guarantees. There is an
annual $1.5 billion limit for Canada as a whole, that is a limit
on the total amount of the loans, not on what this program is
costing the government. This is not what the program costs.
If banks and financial institutions were to finance businesses
which could otherwise have access to financing, they would not
have enough money left to finance those business people my
colleague mentioned, who want to set up their own business and
who might pose a greater risk.
In my opinion, this guaranteed loans program should be aimed at
those who are in a certain risk category, who might have a cash
flow problem for instance, but who show potential for
innovation, who have just completed some kind of training, who
have ideas, energy and youth. Such a loan could give them a
start in life, in business and help them succeed.
We presented this argument and although our amendment was
rejected, I believe that by debating it today we might convince
the people opposite, the minister and his officials to look at
it some time in the future.
They could adopt it and see that it is implemented through the
regulations.
This is the reason why we, in the Bloc Quebecois, are in favour
of this legislation. Although the bill's objectives are
worthwhile, it is often the regulations themselves that make it
possible to realize them.
1530
If we take things seriously, and I want to take them seriously,
it means that, when we propose an amendment, we are assuming
that somebody who is listening to the debate or who will read
Hansard tomorrow will say “this is a good idea that is worth
considering”. That is what we hope when we speak in the House.
We are not only trying to pass the time.
This bill deals with a fundamental program that provides access
to financing for a large number of businesses in Canada and in
Quebec. I may be a sovereignist, but I still think this bill is
a positive measure.
As long as we Quebecers remain within the federal system and
send part of our taxes to Ottawa, we have the right to benefit
from that system.
[English]
Mr. Walt Lastewka (Parliamentary Secretary to Minister of
Industry, Lib.): Mr. Speaker, I listened to the comments of
the member for Lévis-et-Chutes-de-la-Chaudière and I know of his
contribution to the industry committee.
I want to remind the member, and I will read only a couple of
the items, that over the last five years the Small Business Loans
Act was involved in 68,250 loans worth $4.2 billion in Quebec.
The Société d'aide au développement des collectivités in 2,001
loans invested some $82 million with the SMEs in Quebec. That
helped create or maintain an additional 20,045 jobs. I should
also bring to the attention of the member that since 1993 the
business development bank was involved with some 7,878 loans
worth $2 billion which was carried out through the 18 branches in
Quebec.
Does the member not believe that as a result of these various
programs, the entrepreneur in Quebec has various different
avenues to look at to help a new business get started or to help
a new small business expand? I would like his comments on that.
[Translation]
Mr. Antoine Dubé: Mr. Speaker, I am not outraged by the fact
that the hon. parliamentary secretary is taking this opportunity
to brag about the program. He is right.
As we say in Quebec, we do not turn up our noses on a good
program. As my hon. colleague just indicated, many Quebeckers
are using the program and want to be able to keep on using it,
because it is a fundamental multipurpose program.
However, the program is not a cure-all. The statistics used by
the hon. member do not invalidate the argument we made. What I
was suggesting earlier is that the government guarantees on
loans made by the banks to small business should be for
businesses that otherwise would not have access to them through
any other program.
We would probably get the same statistics, but with the
following difference. Instead of having banks use the program
with all the guarantees currently provided by the government,
help would be given to businesses who otherwise would not get
assistance from any other program.
Yes, there are some shortcomings. The parliamentary
secretary knows that these issues were discussed at length in
committee. For existing businesses, there is the whole issue of
working capital to consider. Several businesses have mentioned
it. However, it is not addressed in this bill, because, since
the government has decided not to support our amendment, working
capital is not eligible under this program, and that is
unfortunate. It is very unfortunate indeed, because working
capital is very helpful during tough times, as the parliamentary
secretary knows. It is crucial to be able to face tough times.
1535
Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Speaker, I am
pleased to join in the debate today on Bill C-53, which concerns
financing for small and medium size businesses.
I do so somewhat nostalgically remembering that during the
government's first term in office I was Bloc Quebecois critic
for industry, when it formed the official opposition. I was
given this assignment by the leader of the official opposition,
Lucien Bouchard, who now carries out his duties at the highest
level in Quebec society with his usual talent and energy. His
personal qualities are no doubt admired by all parliamentarians
sitting in this House.
I recall great moments, I recall also the complexity of this
industry, which is part of our daily lives, a highly complex and
far reaching many faceted industry, the SMBs.
I would like to take this opportunity to pay tribute to my
colleagues from Mercier and from Lévis-et-Chutes-de-la-Chaudière, who
spoke earlier. They give heart and soul to the work on
industry.
I would also like to thank them for their efforts in the area of
research and development, in which we think the federal
government—if I have grasped the problem—continues to treat
business unjustly, especially business in Quebec, where
brainpower is being lost through lack of sophistication,
negligence or budget cuts to research and development,
preventing Canadian and Quebec industries from maintaining their
former position with respect to foreign competitors.
I am thinking of United Aircraft, in Longueuil, where there was
a threat—settled now I hope—or a risk, of large numbers of the
most competent employees losing their jobs to workers in the
U.S. or elsewhere, because of the lack of Canadian government
encouragement of R&D.;
I would also like to mention the battle being waged by our
colleague from Mercier on the Y2K bug. She has made a lot of
people think. She has raised the awareness of a number of areas
of activity about the dangers in store for us if we do not get
our act together as far as informatics are concerned.
Where the Privacy Act is concerned, she has succeeded in making
the Minister of Industry more aware of the fact that the
disclosure of personal information is already well looked after
in Quebec.
This is no doubt part of our needs in this modern society, to
ensure that corrections and refinements are made as required so
that confidential information remains exactly that.
These are all examples of the fine work being done by our
colleagues in the Bloc Quebecois in conjunction with the others
on the committee. Industry is a very thankless area to work in,
because there is rarely anything spectacular about it, but it
does affect the everyday lives of the population.
When we speak of peoples' everyday lives, we cannot avoid
mentioning small and medium size businesses. If there is one
area where our communities can expect development, it is the
area of small and medium size businesses. Each in its own way,
in its own area of activity, they are at work, often in a very
humble way, but they also have to be highly efficient because
they do not have much margin for error.
I take this opportunity to pay tribute to all women and men who
work in or run small and medium size businesses in my riding of
Trois-Rivières, which includes the municipalities of
Trois-Rivières; Trois-Rivières-Ouest; Pointe-du-Lac; Yamachiche,
where there is an impressive small business called Dufresne et
Fils, which does business all across the North American
continent. In Louiseville, there are a number of very prosperous
small businesses. In Maskinongé also, in the furniture industry.
In Saint-Léon-le-Grand, Bergeron et Cie is active in the potato
industry.
1540
These are very prosperous businesses that are run well and
responsibly. These are businesses that keep a close eye on the
books, know where they are going, and know how to best use the
resources at their disposal, including of course the Small
Business Loans Act, which is of very great use to them.
As the hon. member for Lévis-et-Chutes-de-la-Chaudière said earlier,
should Quebec achieve sovereignty some day, as I dearly hope,
this is legislation that will probably serve as a model for
Quebec. It is the outcome of a long process between the Canadian
government and the business community to try to meet a specific
need.
It is to the credit of the federal public service to have
initiated and maintained, since 1961 if I am not mistaken, an
act as relevant as that one, which of course should constantly
be reviewed, as was the case when I was the critic for industry.
This is why I am somewhat familiar with the issue. This is a
bill that is greatly appreciated by the business community. I
can attest to that.
There is one criticism that is often heard about the
administration of that act. Between 30% and 40% of the loans
made by banks and lending institutions would be granted even if
the act did not exist. This is a criticism about the act which I
find rather petty.
We should not be criticizing the bill, as some members of the
House would like to do, and claiming that, given the situation,
we should perhaps be repealing the legislation or slashing the
budgets involved to the point of ineffectiveness. What we
should be doing is talking plainly about abuse of mandate. We
should be talking about some instruction for officers in lending
institutions who should not be using the legislation to serve
their own interests.
If memory serves, the intention of this legislation is to have
the government help offset the risk run by lending institutions.
However if this becomes the rule, it goes against the spirit of
the law. If there is no risk in making a loan, then there is no
need to rely on the Small Business Loans Act with the
government's guarantee.
As a member of the public and a parliamentarian using the forum
available to me, I say that loans officers need to be told to
respect the spirit of the law and to make loans when
appropriate. When the loan does not represent a risk, then make
it. That is one of the reasons we have banks.
Speaking of banks, and given the billions of dollars they make
in profit, we could ask them to take risks, with respect to the
social responsibility that is rightfully theirs.
When profits amount to $7 to $8 billion annually, when the Royal
Bank made $1.8 billion this year, it should not be as hard as
all that for the Minister of Finance or the Prime Minister to
tell the banks to take a few more risks. It is obscene to want
to make increasingly high profits and, to top it all, to use
taxpayers' money to offset the risk when you are dealing with
those you have a responsibility to deal with, which is to say
those borrowing money.
I hope the government will change course and take the necessary
steps to bring, through publicity and governmental influence—and
we all know how much influence government can have when it wants
to—pressure to bear on universities and financial commentators
to ensure that banks and lending agencies stop misrepresenting
and using for their own purposes the objective set out in this
legislation, which is to reduce the risk, if any, incurred by the
lender. However, when there are no risks involved, the lender
should not be able, under this legislation, to avoid risk
completely and have the government take on all liability.
The other criticism levelled at this legislation, one that has
always annoyed me, concerns potential losses for the government.
1545
Sometimes, businesses go bankrupt, and the risk incurred varies
according to economic conditions, because the government
guarantees loans up to 85%. The government then has to dig in
the pot set aside to compensate lenders after a financial
disaster. When this happens, we are tempted to say that the
costs are too high, that the amount paid out of the contingency
fund for losses is too large.
Vigilance must always be exercised, because public funds are
involved. However, for that very reason, our approach should not
be based solely on accounting but on public interest. It would
then be clear that, while it may have cost so many millions or
hundreds of millions of dollars in a given year, the program
also generated so much economic activity.
They helped create so many jobs and generate so much direct and
indirect tax revenues. They also helped to promote certain
economic activities that would not have come about if these
hundreds of millions or tens of millions of dollars had not been
lost.
If these issues are not taken into consideration, there is a
link missing. One cannot use an approach based only on
accounting if one wants to protect the public interest. When
relying too much on an accounting approach, it is even possible,
according to some kind of dubious logic, to wish for the total
elimination of this fund, which would be disastrous in my view.
So, we need to emphasize not only the negative impact but also
the positive effects of losing or risking part of the taxpayers'
money.
We have to go back to basics. We have to follow the spirit of
the law and ensure that the lending institutions lend the money
when there are no risks involved but also that they have the
protection they need to take a reasonable risk that they would
not take if there were no funds to this effect. That is the
spirit of the law.
I also want to remind the House of some statistics on what is
being said about this problem. There are always interesting to
review.
According to the Canadian Federation of Independent Business,
29% of small business operators claim that financing is one of
their biggest concerns. The existence of this legislation and
its orderly management are crucial to those who are the main
engines of our economy, who help create and maintain jobs
throughout Canada and Quebec, especially in the regions.
This is very important: 29% said that credit availability was
one of their major concerns.
Close to 90% of SMBs said they find it very difficult, or
difficult, to get credit at a reasonable cost, whereas only 10%
said it was easy to get financing. This gives us an idea of the
difficult context in which SMB managers operate.
Fifty-six per cent feel the small business financing program
should only guarantee loans for those SMBs that otherwise would
not have access to credit. This is another important point.
Some 80% answered that the Small Business Financing Act should
also address working capital financing. This is the other thing
I wanted to talk about.
For a long time now—as long as I have been in politics, which is
a long time—we, in the Bloc Quebecois, have been saying that the
Small Business Loans Act should cover working capital, which is
often the Achilles tendon of SMBs. They have bills to pay, the
accounts payable are not being paid and, when it drags on for
too long, creditors get worried, they panic and get the bank on
board. They pull the plug resulting in a lot of layoffs and all
the economic and social consequences we know.
1550
Knowing how difficult working capital management can be,
including clearly defined measures in the legislation would
provide a tangible and practical means to support economic
development, especially regional economic development, through
the small business sector.
I will close on a very positive note. I think the Department of
Industry deserves credit for recognizing volunteer and non-profit
organizations. I am thinking particularly about cooperatives
which, from now on, will be able to benefit from the Canada
Small Business Financing Act.
It is a plus, knowing how important the cooperative movement and
the cooperative spirit have become, particularly in Quebec.
Cooperatives will now have the additional advantage of being
able to rely on the support provided through this important
program. Let us just hope that the lenders will have an open
mind in administering this legislation.
I remind members of the valuable role played by small and medium
size businesses, both in Canada and in Quebec, especially in the
regions, which, for the most part, could not survive without
local economic development. Let us hope these small and medium
size businesses will not suffer too much from the perverse
effects of globalization, where more and more we see not only
the concentration of capital, but also the concentration of
businesses.
This is to say that decisions are increasingly made by select
groups, too often by the same international stakeholders, who
can change the rules of the game at will and put undue pressure
not only on the countries themselves, but also on the
continents.
There is a risk that globalization may become the globalization
of misery, of misery that is all too prevalent in Africa and
South America and that could reach us should governments yield
to transnational corporations, which have recently exerted
pressure to achieve that result. Let us not forget it because
this directly affects our small and medium size businesses.
Transnational corporations are taking measures to give
themselves even more power, quasi-political powers, against
sovereign states.
This was articulated in documents such as the Multilateral
Agreement on Investment, which would have had eminently perverse
effects on the whole economy. This agreement would have been a
kind of charter of rights and freedoms for multinationals
against sovereign states. In fact, what is required is an
international code of conduct to ensure that, particularly in
the environment sector and in developing countries, we put a
stop to measures or to investments that worsen the situation and
only serve the interests of shareholders. This is a shameful
short term vision.
Rather what we need to do is to plan, discuss wealth
distribution and business deconcentration, and help small and
medium size businesses. There are too often people who are
endorsed by sovereign states through the slush fund. We know how
it works.
We also know that it will take a lot more intellectual
discipline in the years to come—it is not over yet—and that we
will have to support our local leaders, including industry
people and the unions representing our plant workers, to ensure
that society operates in a civilized and increasingly fairer way
from a socio-economic point of view.
[English]
Mr. Walt Lastewka (Parliamentary Secretary to Minister of
Industry, Lib.): Mr. Speaker, I listened intently to the
member.
He has been valuable as industry critic in the past.
1555
I listened to a number of items. One he mentioned was the
contribution of members of the industry committee. Not only his
party but all the parties debate intently and make a good
contribution to the industry committee.
There was another item he mentioned that I would like better
defined. I detected from the previous speaker's words that he
would have hoped that the $250,000 limit would be reduced. We
had a lot of discussion about this in committee but it was
decided to maintain it at $250,000. Maybe he could clarify this
item. Was it his hope that this $250,000 maximum be reduced or
did I misunderstand his remarks?
[Translation]
Mr. Yves Rocheleau: Mr. Speaker, off-hand I do not recall
mentioning a $250,000 ceiling. What I might have said is that I
wanted, should there be any losses—which is perfectly normal
since capital provided through the Small Business Loans Act is
venture capital—that we look at the possible social and public
interest benefits of the defaulted loans instead of coldly
referring to them as losses.
In the end did the community benefit? Let just say that one year
the losses amount to $55 million in loans of $10,000, $15,000,
$20,000 or $30,000, at the end of the day have they not created
activities bringing the unemployment rate down, generating so
many millions of dollars in direct and indirect taxes, and
giving rise to more economic activities all around, thus
improving the situation in a given community?
This is what I mean by an approach that goes beyond numbers and
is more global, more socioeconomic. This is what I meant.
Mr. Yvan Bernier (Bonaventure—Gaspé—Îles-de-la-Madeleine—Pabok, BQ):
Mr. Speaker, I made a few notes during the speech by my
colleague from Trois-Rivières. His time in industry served him
well. There is, however, one point I would like to return to.
It is a principle of politics that, if we keep hammering at it,
we might make the members opposite understand.
An hon. member: That takes time, sometimes.
Mr. Yvan Bernier: It is true, it takes a long time. I would
like to give the member for Trois-Rivières the opportunity to
speak more on the notion of working capital in the management of
our small businesses.
I have in the past headed a business assistance centre in the
Gaspé. I have also worked in business.
Insufficient working capital was primarily what prevented
businesses from expanding so they could carry out their
contracts. It is also one of the causes of bankruptcies, as I
have been seen, because people used their working capital to
acquire equipment like a new truck or a lift truck to speed up
the handling of their merchandise.
People were working to improve their business, but they were
forced to use working capital to make this sort of purchase.
We could expand SBLs to include working capital. In certain
cases, instead of financing a business based on 85% of its
assets bought as collateral, the government could finance them
at the rate of 100%.
The lender could give the borrower the following advice: “You
are buying a lift truck because you want to increase sales and
improve your bottom line. However, for this asset you are
buying for, let us say, $100,000, should you not be borrowing
$125,000, because you will have to wait a little longer for your
accounts payable, because you will have more of them?”
This is an idea I put to you and I ask my colleague to expand on
it a bit or to bring me back down to earth if I am dreaming.
1600
Mr. Yves Rocheleau: Mr. Speaker, I thank my colleague, the
hon. member for Bonaventure—Gaspé—Îles-de-la-Madeleine—Pabok
for his question. We can see that he is already very comfortable
with this matter and has probably had more business experience
than I.
This is not a subject of discussion every day, but I do know
that this is an Achilles' heel for many businesses in difficulty
because they have, let us say, “misused” their working capital.
This fund, which should have been used to pay off their debts
after taking into consideration the money coming in as accounts
receivable, is sometimes used to make investments. The banks
and financial advisers have a very important role to play in
this regard.
It is a question of education. Perhaps it is overly optimistic
to think so, but it might be good for lenders to use the SBLA to
encourage entrepreneurs to make more use of industrial
commissioners, more use of the services of the Quebec department
of industry and commerce, or those of Human Resources
Development Canada, which has excellent financial advisers.
These people can guide entrepreneurs' choices and orientations
as required.
In my former job, I saw someone expand his plant using his
working capital. This was probably done out of ignorance, not
bad faith, out of enthusiasm on the part of an entrepreneur in a
rush to get things moving. People do not have time to fill out
all sorts of forms, to ask advice, to find out whether the
financial institutions have any funds set aside for this
purpose. Care must be taken not to be too hasty, because that
is often the way to get into trouble.
In my opinion, there is no magic recipe. Progress must be slow,
must involve education. Before decisions are made that could
affect the survival of a business or its rate of expansion, the
right advice must be given and the right choices made.
We cannot go any further. I invite the people at Industry to
look at the fact that working capital will always be a very
sensitive aspect of a business' operations. If the government
can help employers, entrepreneurs, to find solutions or to feel
more secure about this concept, this will be good for our
communities.
Mr. Odina Desrochers (Lotbinière, BQ): Mr. Speaker, I am pleased
to have the opportunity to speak to Bill C-53 at third reading.
This bill means a lot for regional economies. It means a lot
for my riding.
During the next few minutes allotted me, I will share with you
the information I gathered in my riding, as an elected
representative, mostly from people who came to me to ask about
small business financing. I will also quote liberally from the
Mackay report. At the present time, we are deeply involved in
consultations on the future of Canadian financial services.
As public accounts critic, I will also draw the attention of the
House to some extensive quotes from an auditor general report
tabled in December 1997. That report was about an inquiry on
the management of small business loans.
To start with, I will briefly summarize the Bill which is
intended to amend the small business loan program. This program
is geared to businesses with gross annual revenues of up to five
million dollars.
One of the objectives of the bill is, and I quote, to “increase
the availability of financing for the establishment, expansion,
modernization and improvement of small businesses”, by
allocating between the lenders and the department the eligible
losses incurred in relation to loans of up to $250,000 granted
to such businesses and for those purposes.
This bill is needed for the economic wellbeing of all regions in
Quebec and throughout this country.
1605
I will now deal with the key points of Bill C-53.
The government will continue to be liable for 85% of the losses
on loans not repaid, the rest being the lender's responsibility.
Financial conditions and fees remain the same. The bill provides
for the continuous operation of the program subject to a
comprehensive review every five years. It limits the
department's aggregate contingent liability to $1.5 billion for
each five-year period. The bill also authorizes the department to
conduct compliance audits and examinations.
The lender must exercise due diligence, as provided in the
regulations, in the approval and administration of loans.
That summarizes Bill C-53.
I would like to explain briefly what is at stake in this bill.
As I said at the outset, this bill is most important for small
businesses, and small business are crucial in our economy. Bill
C-53 concerns also employment and productivity issues.
During all election campaigns, in various economic summits and
meetings dealing with regional economy, the importance of small
business for the economy is always emphasized.
Let me just quote a few figures.
In 1995, when we had our last recession, SMBs with fewer than
100 employees accounted for 99% of the 935,000 businesses
operating in Canada, employing 42% of private sector workers and
paying 38% of all salaries.
On the same subject, I also want to mention that SMBs are a
major part of the regional economy, particularly in my
constituency of Lotbinière where, as is the case everywhere else
I am sure, the SMBs are the main job creation motors.
In my constituency, SMBs offer a wide range of quality products,
particularly in the town of Plessisville now considered as an
important leader in the manufacturing of metallurgical products.
Plessisville and its SMBs are well known in the province, in
Canada and in the world, but there are also other important
areas in my constituency where a number of SMB operate.
I would like to mention a few of them: Daveluyville,
Princeville, Bernierville, Laurier-Station, Sainte-Croix,
Saint-Appolinaire, Sainte-Agathe and a number of other
municipalities where many SMBs are at the centre of the economic
vitality.
This is the interesting part as far as the small businesses
financing is concerned. But many small businessmen in my
constituency, as in any other constituency, are equally
interested in establishing a SMB. However, financing often put
an end to their projects. There are many interesting and
innovative projects out there, but no money to realize them.
I would like to come back to the importance of small business
financing, an issue that was widely discussed this fall with the
proposed merger of four important banks and the release of the
MacKay Report on the future of financial services.
So, the financing of small and medium size businesses has been
the object of lots of discussion.
Everywhere across the country—and I had the opportunity to go
on a tour that took me out West, to Alberta, as well as Toronto
and Montreal—we promoted small and medium size businesses.
Associations, even the Canadian Federation of Independent
Business, expressed their concerns with regard to access to
credit for small businesses in an environment of financial
services restructuring.
Very early, our political party has been in the forefront.
First, at a special caucus meeting held on September 9, we took
the time to listen to the positions of each financial
institution, including the four which are involved in a merger
project much talked about in the press.
The Bank of Montreal and the Royal Bank are quite open in
promoting their projects, and the same can be said for the
Toronto-Dominion Bank and the CIBC.
1610
As I was saying, at everyone of these meetings, the issue of
small business financing was discussed and much time was spent
talking about this sensitive issue.
I would like to state what is precisely our party's position on
the financing of small businesses. On October 26, we tabled an
official paper, presented by my colleague for
Saint-Hyacinthe—Bagot, where he summarized our party's position in
the current debate on the MacKay report dealing with the future
of the financial services sector. Obviously the issue gives rise
to strong discussions. It matters a lot to our party.
It says:
Throughout the debate concerning the financial sector's
reorganization, the final objectives must always be kept in
mind, namely:
1) ensuring increased competition by stronger
Quebec and Canada institutions, then with the help of new
international players, better serving consumers and businesses.
2) increasing the industry's capacity to compete internationally
to ensure its continued contribution to the economic growth as a
job creation engine.
This approach, inspired by recommendations
of the MacKay report, would allow these objectives to be
attained.
As we can see, economic growth, job creation and small business
financing are still questions that are discussed at the table
and we are trying to find solutions to help those people.
The report goes on:
We support the MacKay report's suggestion that a follow-up
mechanism, preferably within the Parliamentary structure, should
be established to measure the impact of changes made in the
financial sector's regulations on competition, institution
service fees, jobs, credit access, transparency and services in
rural regions—
When we say that we also want to ensure access to credit,
whether for consumers of for small business, the Bloc Quebecois
is always there and stand by small businesses because they are
an essential tool for job creation.
The subject of the bill before us today was discussed at length
in the auditor general' report tabled last December on the
administration of the small business loans program.
In his report, the auditor general, Mr. Denis Desautels,
highlighted the importance of small and medium size businesses.
In his introduction, he mentioned the major contribution of the
small businesses to the Canadian economy.
According to this report, in 1994, more than 98% of all
businesses in Canada were small businesses with fewer than 50
employees. In 1996, one out of two Canadians were employed by a
small business.
In his report, the auditor general had this to say:
Small businesses play a very significant role in our economy. In
many regions of Canada, they are at the heart of economic
activity and community development. In addition, they sometimes
develop into large firms of the future. Small businesses
contributed 43 percent of Canada's private sector economic
output in 1995.
In his introduction, the auditor general continued his analysis
of small and medium size businesses and addressed the issue of
financing. He said:
Management experience, market access, availability of financing,
application of technology, and fiscal and monetary policies are
all important factors that contribute to the success of small
businesses.
Financing, however, is vital for a small business,
particularly in its early years. Typically, the initial capital
comes from the owner or from family and friends. Much of the
additional equity comes from the earnings of the business. The
other significant source of financing is through borrowing,
primarily from the chartered banks, caisses populaires, credit
unions and trust companies.
The lack of financing on reasonable terms and conditions has
often been identified as a significant barrier to the growth of
small businesses.
1615
He also pointed out that:
Governments in industrialized nations have traditionally played
an important role by offering financing and/or guarantees to
improve access to capital, with the objective of creating jobs
and stimulating economic growth.
He was referring to the small business loans program, which is
among the initiatives taken by the federal government to reach
its objectives. This program was established in 1961 and has
undergone major changes in 1993.
At that time, changes in the act were aimed at relaxing the
eligibility criteria, increasing access to financing and
reducing personal guarantee requirements.
Two years later, in 1995, other changes were made in order to
reduce the percentage of financing allowed and the ratio of loss
sharing, to charge annual administration fees and to increase
the maximum interest rate.
The auditor general, still with regard to the management of the
small business loans program, mentioned that the small business
sector had been the subject of many recent studies.
These studies on the small business sector showed that some
action to assist them had to be taken at any cost. In 1994 a
committee produced the report “Growing Small Businesses”.
The working committee on small business created by the ministers
of finance and industry and including small business
representatives overcame the difficulties.
The report highlighted the important challenges facing small and
medium size business. One of these was obtaining the proper
financial support to expand. Given the many problems at the
national as well as international levels, a small business often
has to expand rapidly, but, without the necessary financing, it
must turn to the banks for venture capital. Banks do have an
important role in our economy. One thing they should do is
support SMB initiatives.
The working committee recommended a series of initiatives to
provide a sound basis for small business growth and development.
I now wish to make a few comments about Bill C-53. They say many
improvements were made and the federal government has taken into
account some of the auditor general's well-founded
recommendations.
Of all those recommendations, the following were incorporated.
First, the limits of the program are better defined to avoid
abuses of the system. The bill provides for reducing the
interest paid by the government.
A reporting system has been introduced to ensure some
accountability to Parliament. But, as we can see, the auditor
general made many recommendations that were not taken into
consideration by the Liberal government.
It ignored what the committees who studied this matter had to
say. In particular, it ignored the amendments or the suggestions
made by our party.
These are encouraging pilot projects, but they do not go far
enough. This bill gives numerous powers to the minister, which
is typical of our friends across the way. When they have the
privilege of reviewing legislation, they quickly lay their hands
on everything. The ministers are trying to control everything
but unfortunately, now and then, they interfere with provincial
jurisdictions.
1620
The minister took advantage of the review of this act to grab
increased powers without any real checks and balances. It is not
difficult to understand. The minister grabs power, controls, but
there is no mechanism to correct these abuses.
The industry critic for the Bloc Quebecois talked about this
problem in September 1998 in one of the numerous speeches she
made on this issue. The technical clauses in the act have now
been deleted. The minister will be able to make whatever
regulations he wants.
Part of the regulations needed to be modernised. Everyone agrees
on that.
However, our hon. colleague from Mercier told us there was a
serious problem, in that the bill does not include the whole
range of provisions.
On Bill C-53, the Canadian Restaurant and Foodservices
Association also explained to the Standing Committee on Industry
that some major changes introduced were to be found not in the
act, but in the regulations. The most important, without a
doubt, was the exclusion of existing leasehold improvements. I
was speaking earlier of expansion. So, in the restaurant
industry, when there is a need to expand, they start by
modernising and expanding the premises.
Finally, I can say that the Bloc Quebecois is in favour of Bill
C-53.
I also point out that the financing of small and medium size
businesses is important and is one of the major sources of
development in each of our regions.
I support this bill, although I would have preferred to see
certain changes.
Mr. Stéphan Tremblay (Lac-Saint-Jean, BQ): Mr. Speaker, I would
like to make a few comments because setting up
businesses and entrepreneurship are issues of great importance
to me.
Before becoming a politician, I took a course on how to start up
a business.
This program was designed to help people with business ideas to
get ahead, help them to develop a business plan, seek financing
and, finally, help them reach the crucial stage, which is the
setting up of their business.
The various stages of setting up a business are quite important,
in my opinion, and I am familiar with them. Furthermore, it was
one of my favorite themes, mainly on the regional level, when I
entered politics.
I represent the riding of Saguenay—Lac-Saint-Jean, a region which
has been greatly developed by big business. Even nowadays, we
are still very happy that big business has decided to reinvest
in our region.
The largest private investment project in Canada and in North
America is located in Alma, in my riding.
Sometimes, it is said that the uncertainty chases investors
away. But it can truly be said that it is not the case in Alma.
A very interesting partnership has developed among several
stakeholders, namely unions, people who contacted the plant,
etc. It is a real breath of fresh air for us, but I still say
that we should not rely solely on big business for regional
development. We should diversify our economy. The establishment
of small and medium size businesses can play a major role in job
creation.
In fact, this is what I am still doing. I encourage people in my
region to try to set up their own business.
If the economy is going well, it is even easier for SMEs to
develop very precise niches in order to meet the needs of big
business.
This is undoubtedly an avenue we should encourage as much as
possible at the regional level.
1625
A few weeks ago, I was at the gala of the Haut-Saguenay CFDC. In
that area, people are working very closely together. In very
small municipalities, the establishment of one or two businesses
can make an enormous difference for the local economy.
In Alma, which is at the eastern tip of my riding, we set up a
single window office one year ago. For many potential small
businessmen, the difficulty is to get to know where to access
know-how and financing. People do not know where to go to get
technical and financial support. We have therefore created a
single window office where every potential small businessman can
get advice.
Everyone in this House is in favour of job creation. I certainly
want to see jobs created in the Saguenay—Lac-Saint-Jean region. As
my colleague, the hon. member for
Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques said, the best way
to distribute wealth remains job creation. In this respect
employment remains a matter of dignity for every individual. It
is therefore extremely important.
What does it take to start up a business in order to eventually
create employment: highly specialized skills, research,
development, technical training, marketing intelligence, market
research, distribution, production and sales? In the end, when
the products or services are marketed, jobs will be generated.
As we can see, there are several stages in the job creation
process, and small business people can appreciate the problems
associated with starting up a business.
That is not all small business is about, and this is a debate we
take to heart, especially as it relates to diversity. It is
often said that small is beautiful. Small and medium size
businesses often succeed in finding very specific opportunities
in very specific markets. That is the beauty of the market
economy. It has been criticized by many people today, starting
with myself. I do blame on the market economy a number of
current trends, including the trend to merge companies.
Businesses tend more and more to merge, and it seems that this
tends to kill diversity.
Small businesses are bucking this trend. They bring diversity
and healthy competition to the economy. This is good for
everyone.
When I talk about mergers and I look ten years into the future,
I sometimes wonder where this will lead us. It often reminds me
of the game that taught me capitalism, the game of Monopoly.
Everybody starts off with the same amount of money, but the
player who succeeds in buying everyone else's property as the
game progresses is the winner. These are things we must think
about in our economic system.
Starting up a business requires considerable resources. One
method I recommend is the blending of knowledge, expertise,
ideas and money. Two years ago, I designed a program aimed in
that direction, because I knew perfectly well that, normally, it
takes a business idea to start up a business.
Not everyone has business ideas.
One needs to have business acumen, and this is something that
needs to be demystified. It is estimated that 10% of the
population has some business acumen, which means that they want
to expand their horizons and want to be their own boss. Taking
on such a responsibility is not for everyone.
I think we need to bring together people who have business ideas
with people who have some business acumen and, of course, people
with money problems, and that brings us to the very heart of the
matter, which is the financing issue. When starting up a
business, money is everything and one of the biggest problems is
the financing, which is addressed in this bill.
1630
When the hon. member for Mercier brought this piece of
legislation to our attention, I thought it important to consult
with businesses back home who probably had had dealings with the
Small Business Loans Program.
It could be useful to potential business owners to know that the
purpose of this bill is to increase the availability of
financing for the establishment, expansion, modernization and
improvement of—
The Acting Speaker (Mr. McClelland): I regret to interrupt you,
but there are only two minutes left for questions and comments
and I am sure the member for Lotbinière would like to comment.
Mr. Odina Desrochers: Mr. Speaker, the long speech made by my
colleague, the member for Lac-Saint-Jean, shows how sensitive most
of my colleagues and I are to the issue of the importance and
vitality of small and medium size businesses. Be they
established in the Lac-Saint-Jean region, in the Lower St.
Lawrence region, in the Gaspé region, or in my riding,
Lotbinière, in the heart of Quebec, they are all important.
The Lac-Saint-Jean region has benefited much from Alcan. However,
if we want to create jobs now, if we want to rebuild the social
fabric, the collective fabric of each and every one of our
regions, we must count on small and medium size businesses.
Frequently, a small business with ten or twenty employees will
allow a small community to survive. How many times have we seen
a community lose a school? But the arrival of a new investor who
created jobs and made possible the coming of new families can
allow a community to survive.
It is a part of Quebec's history that must be preserved.
I believe that this heritage depends on the creation and
survival of our small and medium size businesses.
Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques,
BQ): Mr. Speaker, I am pleased to take part in this debate at
third reading on the Canada Small Business Financing Act.
When the time comes to amend a piece of legislation such as this
that has been around for several years, care must be taken to
ensure that it will meet the existing as well as the future
needs of business.
It was in this perspective that the member for Mercier and the
member for Lévis in particular analysed the bill, and that we
proposed amendments and suggested improvements in order to
ensure that the Canada Small Business Financing Act will allow
small businesses reliable access to financing so that they can
be competitive.
Today and tomorrow, new businesses that are created will have to
keep pace with international competition. This is just as true
for those starting up as it is for those expanding. They must
be able to keep pace with international competition, have core
financing that will give them a solid base on which to grow, to
sell their goods outside the country, to export, to compete
globally.
This requires flexibility in terms of businesses' accessibility
to financing.
Does the bill before us meet this requirement? I think that the
amendments to the initial bill represent interesting technical
improvements.
In my view, the Bloc Quebecois has offered constructive
criticism of the bill and proposed amendments that we feel would
have made it that much better.
There are questions to be asked, however. Will the bill help
meet the needs with respect to preparing and launching a
business, consultant services and business expansion?
Considering all these questions, there is still room for
improvement.
I would like to speak to that as a member of parliament. I have
now been a member of parliament for five years.
1635
Almost every week, in my constituency, at least one person comes
to us with a business proposal. A new generation of entrepreneur
is born. Some people are fully equipped to launch a business
with management training, technical skills or engineering
diplomas.
But there is a new type of entrepreneur, people who do not
necessarily have all the needed tools to manage a business. I
mean young people, women, the 50 to 55-year olds who face a basic
change.
They were always salaried workers and all of a sudden, their
business closes and they have to adjust, to be flexible and to
face new situations. They often come to us because they have a
hard time finding the right place to go for adequate financing.
This is particularly true of women. This is something that
strikes me at home. Women who want to go into business run into
the system's negative, paralysing aspects because all the
financing rules were set by men. When women have a project, they
need to be a little better in order to get financing.
In the proposal under consideration, I would have liked the
government to take even more responsibility and to find a way to
avoid cold financial calculations done by computer in which the
borrower is told: “This is our business loan software. If you
fit our profile and if you have some extra money, we will give
you a loan”.
But the situation is sometimes different with new products, as
we saw in the last few years. I recall the case of a young
entrepreneur from my area who wanted to produce an electronic
tuner for musical instruments. A hi-tech device like that cannot
be developed in three weeks. It takes time and money. It took
almost one year to develop the project and we were looking for
support. We checked all existing programs. It was not easy.
That young man and his family had to invest time and money. The
bill could have made it easier to start up this kind of
business. In this case, the entrepreneur had a solid
technological background.
Just last week, I saw someone who wanted to open a specialized
butcher shop in my region. Because of his background and past
experience, this man did not have easy access to credit. How can
someone get their foot in the door so they can receive the help
and direction they need to bring their project to fruition? Our
new businesses expect their lenders to provide financial advice
as well and to support them through their growing pains.
The bill before us today includes many provisions that reflect
the experience of the past 20 or 25 years. However, the
government should have had an even more open attitude.
The member for Trois-Rivières alluded to the social mandate that
financial institutions must have. In Quebec, we had an
interesting experience with the development of lending tools
such as the Fonds de solidarité des travailleurs. Our caisses
populaires have tempered what I would call the more mechanical
aspect of the banks' operations, thus helping create an attitude
different from that of the banks themselves.
When I first came here in 1993, Liberal members had a lot to say
against banks and they wanted to revolutionize the way banks
were doing things. Liberal members have been procrastinating
since then. They have played along with the current system.
But there was a concrete reality. In Ontario and in the other English
speaking provinces, the competition created in Quebec by
the Fonds de solidarité des travailleurs, by the caisses
populaires and by the other forms of assistance did not
necessarily exist.
Competition generates quality. Quebec had more lending services,
and this promoted a more open attitude among banks and lending
institutions.
1640
I believe the changes to this piece of legislation reflect the
influence of the model developed in Quebec. Interestingly, some
elements of it, but not enough, can be found in the legislation.
We must look at the issue beyond this bill. Our financial
institutions might give themselves a time frame so that, if
within the next five years we do not see more openness on the
part of banking institutions, we will use a more stringent
approach. This could have been included in the bill.
Another tool we can use to this end is community reinvestment.
In this respect, the hon. member for Hochelaga—Maisonneuve
introduced a private member's bill based on the experience in
the United States, which responds to what we are experiencing
today as revealed by the poll of financial institutions
conducted by the member for Mercier. In order to have solid
arguments to present in favour of this bill, and to find out
what people really thought, the Bloc Quebecois consulted the
population.
We found that credit availability is a major concern for 29% of
small business owners. According to our poll, 89% of SMBs said
they find it very difficult, or difficult, to get credit at a
reasonable cost, whereas only 10% said it was easy to get
financing.
There is a need. Certainly our respondents may be the ones
who ran into the most obstacles. Often the ones who do not run
into obstacles have fewer tales to tell. But the facts are
there. Many companies are experiencing difficulties with
competition these days. There is competition everywhere. A
company needs to always be sure that the required products can
be provided in time, that they are quality products, and that
they can be distributed and sold.
Businesses run into all manner of obstacles. The situation is
far different from what it was 10, 15 or 20 years ago. At that
time, markets were nearly all domestic, within either the
economic space of Quebec or the economic space of Canada.
Today, markets are world-wide.
In the La Pocatière region, maple syrup producers are making
direct sales by Internet to Japan, China and just about
everywhere else in Asia. This is a new trade reality.
When a business seeks a loan, the banks need to understand that
a large building is no longer necessary as collateral; an idea
must be acceptable. This is not easy for banks to understand.
This is one factor to consider in the present situation.
The other factor I wish to address is processing. Will this
bill allow businesses to obtain the necessary credit? Sometimes
the person creating a processing business is already a producer,
a producer of natural resources, or a farmer, for instance,
producing vegetables or working in a food processing sector.
And now he must make the transition from producer to processor.
Not everyone is born with these abilities.
He must therefore determine what technical skills he will need,
whom he should have as an ally.
He has to be ready to accept an inflow of capital other than his
own money, so that his business can grow.
Of course, all of this happens in regions without a lot of
people. New markets have to be found. When we meet these people
in our riding offices, we realize that funding requirements are
always a big concern of theirs. It is always an issue.
We can also get frustrated when we have to deal, in our offices,
with people who have what appear to be very worthy projects and
we try to understand why banks are turning them down, we try to
support them throughout the process and we find out about some
of the problems they are facing.
1645
The small business loans guarantee program improved over the
years. It has had its ups and downs. All sorts of situations
have arisen.
In the vast majority of cases, care must be taken to ensure that
the program really provides investment assistance. I have a bit
of a problem with those who state that businesses do not need
this guarantee to start up. But this must also be viewed from
another angle: without this loans guarantee program, most
businesses could not start up, could they?
In our regions, jobs are created by small business, that is
small and very small businesses. These are sometimes businesses
with one, three, four, five or ten employees, which will operate
for years with this limited staff.
Owners must also act as the finance director, production
director and marketing director, and they must wear all these
hats at the same time, while meeting governmental bureaucratic
requirements. They require some flexibility as well as access to
assistance. The Small Business Loans Act is the kind of tool
through which such assistance can be provided.
Will the bill before us give our businesses more ready access to
loans? It addresses many interesting topics, including capital
gains.
I also think there will need to be some kind of tacit agreement
between financial institutions and governments with regard to
the new attitude of openness to allow projects to be carried
out.
Earlier, we talked about opening this program to non profit
organizations. That is an interesting advantage. In our society,
we have witnessed the development of different types of
businesses. There are capitalistic type traditional businesses
where one entrepreneur starts up the business. But there are
also other kinds of businesses such as cooperatives, in Quebec.
For example, some twenty years ago, on the northern shore of
Lake Témiscouata, a group of foresters formed a company that
belongs to all of them, but from which they do not get
individual. This situation combines the advantages of a company
with those of a cooperative.
These organizations should be treated with an open mind by the
financial institutions they do business with. If a financial
institution asks “What sort of organization do you represent?
You do not fit in with our institution”. Well, that is not a
plus.
At this point in my presentation, I would like to say that this
bill is part of a much larger system in which a problem of lack
of competition in providing financing was noted. Before any
talk of amalgamating banks, we should make sure there is more
competition in our communities.
In Canada, and especially in Quebec, banks have already cleaned
things up, with some going a long way. So, in some places there
is nothing more than the National Bank or a credit union. There
is not a lot of enthusiasm for the amalgamation of the big
banks, but there is for more services in our regions from the
ones that have remained.
Their remaining and the fact that they have developed financial
products should inspire our confidence.
If they could diversify their product and in so doing provide a
lot of opportunities for those needing such financial services,
and if legal changes are made, 10, 15 or 20 years from now we
could see the emergence of this sort of financial holding and
people will say “That is a good thing. There is more and more
competition and service opportunities”. This is how progress is
made.
1650
It is important to consider the Small Business Loans Act while
keeping in mind that there are also other tools available. In
that context, the Bloc Quebecois will be pleased to support the
bill, even though it would have liked to see its amendments
accepted. As we know, we often have to keep trying in this
world. A number of arguments were put forward. The main one
provides that we must make sure that loans to businesses are not
simply granted under a purely mechanical and arithmetical
approach. We must be able to include other considerations.
When a person with a good idea comes to get financing, he or she
must feel that the financial institution has an open attitude,
that it is not only concerned about the guarantee on the loan,
and that it provides true advice to achieve the best possible
results.
In a few years, we will look to see if, indeed, it might have
been possible to give even more leeway to our businesses. This
would ensure that everywhere, and particularly in rural areas of
Quebec and Canada, we would have the necessary tools to develop
quality businesses that are able to go and sell their products
all over the world, while also meeting domestic demand.
I hope that once this bill is passed, we will not forget that
there is still room for improvement. In the meantime, the
changes that have been made will ensure that small businesses
are better served.
The Acting Speaker (Mr. McClelland): It is my duty, pursuant to
Standing Order 38, to inform the House that the questions to be
raised tonight at the time of adjournment are as follows: the
hon. member for Halifax West, Volvo Canada Ltd.; the hon. member
for Regina—Lumsden—Lake Centre, Canadian Farmers; the hon. member
for Winnipeg North Centre, Health; the hon. member for
Madawaska—Restigouche, Social Insurance Numbers.
Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): Mr.
Speaker, I would like to congratulate my colleague, who has just
spoken so eloquently to this bill. It is a bill that has
concerned all Bloc Quebecois members in recent weeks. A number
of attempts to improve the bill met with failure, but I think
the government is now aware of the Bloc Quebecois' arguments.
As for the substance of the bill, it has been pointed out that
it is a small step forward, but that there is room for
improvement. The member who spoke before me mentioned financing
and the difficulty obtaining it, especially for businesses
wishing to restructure and for those interested in exporting in
the rapid new format know as the Internet.
When he mentioned the Internet, he gave as a example the maple
syrup producers in his riding.
I know that my colleague, the member for Saint-Hyacinthe—Bagot,
also has many producers in his riding, as do I. This is an
example of the kind of production that now relies more on the
Internet and that needs much quicker and more effective
financing in order to be able to meet the constantly growing
demand, particularly from Asian countries.
What could be included in this bill in order to meet the needs
of this new way of structuring businesses as well as help the
new enterprises, which must conduct business more rapidly and
need more rapid and better structured service and support?
I would like my colleague to expand a bit on this.
Mr. Paul Crête: Mr. Speaker, I thank the hon. member for
Bas-Richelieu—Nicolet—Bécancour for his comments and question, both
of which strike me as very pertinent.
I started my presentation by saying that legislation on small
business loans has to be able to meet not only today's needs,
but tomorrow's as well.
1655
The question of the Internet came close to home for me, because
a number of people have come to my office with such projects in
past years, when the Internet was just starting out. Financial
institutions and development agencies had to be educated about
it. Now, more of them, the Mouvement Desjardins in particular,
are open to this new way of doing business. When guarantees are
involved, there is more consideration given to the quality of an
idea than to the size of a building.
A new and particular sensitivity is needed. There must be
assurance that a bill like the one before us now contains such
provisions.
I believe it contains some interesting elements as far as the
regulations the department will be introducing and the attitude
of the financial institutions are concerned.
As time goes by we will see whether financial institutions have
indeed met expectations, because this bill left room for a
choice. As was done at one point in the past, we could have
tried making it very coercive, forcing businesses into a far
more open attitude. They were given the chance. Players were
given a chance.
But this does not mean they should take advantage of this to
kill people's spirit of innovation. When novel projects come
along, they must be given proper consideration. Such matters
are not necessarily resolved by legislation, either.
It is a question of making our financial institutions open
minded, and I think they have succeeded in doing so to some
extent.
However, I would caution the House and all Canadians that we
will not fix the problem necessarily by creating huge financial
institutions. People need access to financial institutions they
trust and where they get proper service, especially a variety of
choices.
In this regard, a lot of effort is required, which does not
necessarily relate to the Small Business Loans Act, but which is
related more to all the other financing tools available to
business, whether we are talking about insurance schemes or
other forms of loans. Some experiments have been made.
A look at the accomplishments of the workers' fund known as the
Fonds de solidarité des travailleurs in the area of new
technologies, for example, reveals fantastic development. This
is a union federation that was created with the help of the
Government of Quebec, which provided an initial shot in the arm.
This investment fund today has grown beyond the stage of
protecting traditional jobs. It invests in new technology
sectors and internationally to promote growth in developing and
developed countries, but with the view that the jobs created
there are the highest paying technical jobs.
I think this openness should be encouraged to spread. I say to
the member for Richelieu that I think in 10 or 15 years those
open to these new ideas will permit our businesses to take root
throughout the world.
These business will have penetrated several markets because
somewhere, at the right time, a bank or credit union manager
will have been open to a new idea, and interested in supporting
it and helping the business start up.
We should not think that 75 years ago Bombardier was what it is
today. It was not born a giant. It started with a creative man
who had a good idea, was very tenacious, and brought it to
fruition. Later he was followed by people who developed it even
further.
But to do so, they needed financial assistance from individuals
with an open mind.
For every success story like this one, there are graveyards full
of projects that failed, not necessarily because they were not
good, but because they were not viewed with openness and did not
receive the support they needed.
I believe that today by passing the Small Business Financing Act
we are giving a helping hand to businesses and the economy in
our regions. It is up to them to take advantage of it.
1700
It is up to them to make the best of it, to make sure they know
how to use it well. If within two, three or five years, we
realize financial institutions are not open enough, we will have
to have the guts to correct the situation, and fast. In economic
terms, two, three or five years is a very long time. One must
have the courage to move very fast, to take the required
corrective measures.
Hopefully the bill before us today will meet today's demands as
well as demands over the next few years.
Mr. Yvan Bernier (Bonaventure—Gaspé—Îles-de-la-Madeleine—Pabok, BQ):
Mr. Speaker, my hon. colleague has spoken very passionately.
I will try to quickly summarize what the hon. member has said.
In my view, the measures set out in this reform of the Small
Business Loans Act, contrary to what it says in the preamble, do
not increase the availability of financing. They only straighten
out some administrative rules.
To ensure that businesses understood the good news, I think it
would have been better to tell them about the way macroeconomic
impact could be measured.
I hope there is enough time left for my hon. colleague to expand
somewhat on this.
Mr. Paul Crête: Mr. Speaker, I agree with my hon. colleague.
The message sent when the amount was not increased is not the
most positive message that could have been sent out. I hope the
government will take a responsible approach and ensure that
diversification of the availability of financing comes through
clearly in the decisions to be made in the next few weeks or
months about the regulation of financial services. The framework
of the Canadian banking system should be completely overhauled.
Our only goal should not be to please the banks, which, under
the current system, think that mergers are the only way out. Let
us climb back up the hill to get a better view of the forest and
ask ourselves if it would not be better for the future to change
the whole regulatory framework to allow for great competition.
In a new regulatory environment, mergers may not be the best
option available. Each of the stakeholders will benefit from the
new solutions that will be brought forward.
Mr. Stéphan Tremblay (Lac-Saint-Jean, BQ): Mr. Speaker, it gives
me great pleasure to address Bill C-53, the Canada Small
Business Financing Act.
The purpose of the bill is to increase the availability of
financing for the establishment, expansion, modernization and
improvement of these businesses by allocating, between the
minister and lenders, portions of eligible losses incurred by
lenders in relation to loans of up to $250,000 to such
businesses for those purposes.
The government will continue to be liable for 85% of the losses
on outstanding loans, with the rest being the lender's
responsibility.
It is essential that this program designed to help young
entrepreneurs be well understood.
It provides young or potential entrepreneurs looking for
financing with the necessary guarantee or backing to secure a
bank loan.
You just go to the bank and, if you do not have a house to offer
as collateral, the federal government will guarantee up to 85%
of the amount borrowed up to $250,000.
This bill ensures that the SBLA program will remain unchanged.
For those who used it in the past, there is hardly any change.
We in the Bloc Quebecois take the matter seriously because we
know for a fact that small and medium size businesses play a
pivotal role in creating jobs. That is why we did not take this
lightly. We went so far as to develop a questionnaire that we
distributed to businesses. That is what I did in my riding of
Lac-Saint-Jean.
1705
I wrote to all the businesses in my riding that had availed
themselves of this program for small businesses. Who would be in
a better position to tell us whether this program is efficient
or not?
That is why businesses were asked “In view of your own
experience and what you have seen, would you say that it is
easy, difficult, or very difficult for small businesses to get
financing?”
Some 87% of people in my riding say it is difficult or very
difficult. We know that money is the lifeblood of any business
that is just starting up. And we are being told that it is still
difficult to get money.
We then asked whether businesses know the SBLA, and, if so,
whether they think it should be improved. No less that 98% of
respondents said it should be improved. That is a telling tale.
Here is another question we asked “Do you think loans should be
granted for working capital as well as for equipment and capital
and movable assets?”
This is an rather important question, because we know for a fact
that working capital is crucial for a business that is starting
up and that the lack of it can have dire consequences. Some
businesspeople end up having to put up their personal assets as
collateral, which is not always interesting.
Eighty-eight per cent of respondents said that the loans should
also cover working capital.
The next question was “From your experience and from what you
see around you, do you think the development of small and medium
size businesses would be easier if they had greater access to
credit at a reasonable cost and to management counselling?”
Of course, following the same logic, 96% of respondents said it
would be easier.
The last question was: “Would there be fewer bankruptcies if
businesses had greater access to credit?” Ninety per cent of
respondents said yes, there would be fewer bankruptcies.
I want to thank the respondents, the entrepreneurs of my riding,
who helped me with these questions.
It really helped me see things more clearly. I had also sent
them a few questions on the proposed bank mergers, an issue of
interest to everybody.
Earlier, my colleague from Kamouraska—Rivière-du-Loup—Témiscouata—Les
Basques talked about the social role of banks. Banks and other
lending institutions have an extremely important role in that if
they reject the application of an entrepreneur, it means that it
will be difficult for that prospective business to become a
reality. So there are very important issues at stake.
I feel strongly about Bill C-53 because I, myself, took a course
on how to start up a business. After a first career in aviation,
I wanted to do what a lot of people were doing, that is to start
up my own business. So I decided to take a course on how to
start up a business in order to have a good knowledge and
understanding of each and every step of that process.
There are several of them.
Everybody agrees, and we heard it many times, that small and
medium size businesses are essential to job creation. Right now,
unfortunately, large businesses are not the main creators of
jobs. We see a lot of large business mergers which, in most
cases, result in a significant number of layoffs. I say in most
cases because we have the statistics to prove it. Fortunately,
things are always different in my region.
1710
In the Lac-Saint-Jean region, we have the new Alcan project, which
is worth $2.6 billion and will be the largest private investment
in Canada and even in eastern North America. It is a major
project that will secure the existing jobs and create about 250
new ones. All of this will of course generate economic
activity.
Before entering politics, I had started the process of launching
a business. I did not complete it, of course, since I entered
politics. That business is somewhat different, but there are
similarities.
I made small business one of my hobby horses, because I feel
that regions like mine, the Saguenay—Lac-Saint-Jean region, which
was developed mostly by large companies, should nevertheless
diversify their economy and trust the entrepreneurial potential
of their citizens to create employment. We will never have
enough.
In regions like mine, as in all remote areas around the world,
people are leaving. If we could start small businesses of our
own and thus create jobs, it would be great, because that is
what everybody wants. I will always remember the hon. member
for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques saying that
the best way of distributing wealth remained the creation of jobs.
But how are jobs created? Governments often suggest that they
will create so many jobs. But who creates these jobs directly?
This is clearly the work of those in the field, provided of
course that they have the necessary resources and assistance.
This is where it becomes important to show solidarity as a
community and to provide young entrepreneurs with efficient
tools. By “young” I mean new entrepreneurs because, as my
colleague pointed out earlier, many people who retire in their
50s want to start their own business. So, this is very
important.
There is a basic fact about entrepreneurs that we must
understand: not everyone can start a business.
According to the psychological profiles that were developed,
between 10% and 15% of the general population has the
entrepreneurial potential required to start a business. This is
extremely important.
The number one prerequisite is entrepreneurial potential,
followed by knowledge, skills or services targeting a specific
market niche, to ensure that there will be a market for the new
small business, which will be creating jobs. Funding is also
required, of course. It is an essential element, especially for
young entrepreneurs who, more often than not, do not have a
house to offer as collateral against a loan and who do not
necessarily receive money from their friends and family. So,
financing is still extremely important.
The bill is interesting because it maintains the current Small
Business Loans Program which, I remind the business people back
home, helps the entrepreneurs who do not necessarily have the
money, the car or the house to put up as security to get a loan
guaranteed at 85% by the government.
So, this is an extremely interesting piece of legislation.
However, from a constructive point of view, I think the bill
could have further increased the availability of financing for
small businesses. It could also have helped businesses with
their working capital, in that the loans could have been used as
working capital. This is what the businesses in my region told
us in a poll.
In a nutshell, this is a good bill and we will vote in favour of
it. But there are still some provisions that could have been
improved.
1715
The Acting Speaker (Mr. McClelland): It being 5.15 p.m., it is
my duty, pursuant to order made Monday, November 23, 1998, to
interrupt the proceedings and put forthwith every question
necessary to dispose of the third reading stage of the bill now
before the House.
Is it the pleasure of the House to adopt the motion?
Some hon. members: Agreed.
Some hon. members: No.
The Acting Speaker (Mr. McClelland): All those in favour will
please say yea.
Some hon. members: Yea.
The Acting Speaker (Mr. McClelland): All those opposed will
please say nay.
Some hon. members: Nay.
The Acting Speaker (Mr. McClelland): In my opinion the yeas have
it.
And more than five members having risen:
The Acting Speaker (Mr. McClelland): Call in the members.
1740
[English]
(The House divided on the motion, which was agreed to on the
following division:)
YEAS
Members
Adams
| Alcock
| Anderson
| Assad
|
Assadourian
| Asselin
| Augustine
| Axworthy
(Saskatoon – Rosetown – Biggar)
|
Axworthy
(Winnipeg South Centre)
| Baker
| Bakopanos
| Barnes
|
Beaumier
| Bélair
| Bélanger
| Bellehumeur
|
Bellemare
| Bennett
| Bergeron
| Bernier
(Bonaventure – Gaspé – Îles - de - la - Madeleine – Pabok)
|
Bernier
(Tobique – Mactaquac)
| Bertrand
| Bevilacqua
| Bigras
|
Blondin - Andrew
| Bonin
| Bonwick
| Boudria
|
Bradshaw
| Brien
| Brison
| Brown
|
Bryden
| Bulte
| Caccia
| Calder
|
Caplan
| Carroll
| Catterall
| Cauchon
|
Chamberlain
| Chan
| Clouthier
| Coderre
|
Cohen
| Collenette
| Comuzzi
| Copps
|
Crête
| Cullen
| Davies
| de Savoye
|
Desjarlais
| Desrochers
| DeVillers
| Dhaliwal
|
Dion
| Discepola
| Dockrill
| Doyle
|
Dromisky
| Drouin
| Dubé
(Lévis - et - Chutes - de - la - Chaudière)
| Dubé
(Madawaska – Restigouche)
|
Duceppe
| Duhamel
| Dumas
| Earle
|
Easter
| Eggleton
| Finestone
| Finlay
|
Fontana
| Gagliano
| Gagnon
| Gauthier
|
Girard - Bujold
| Godfrey
| Goodale
| Gray
(Windsor West)
|
Grose
| Guarnieri
| Guay
| Guimond
|
Harb
| Harvard
| Harvey
| Herron
|
Hubbard
| Ianno
| Iftody
| Jackson
|
Jennings
| Jones
| Jordan
| Karetak - Lindell
|
Keddy
(South Shore)
| Keyes
| Kilger
(Stormont – Dundas)
| Kilgour
(Edmonton Southeast)
|
Knutson
| Kraft Sloan
| Laliberte
| Lalonde
|
Lastewka
| Laurin
| Lebel
| Lee
|
Leung
| Lill
| Lincoln
| Longfield
|
Loubier
| MacAulay
| MacKay
(Pictou – Antigonish – Guysborough)
| Mahoney
|
Malhi
| Maloney
| Mancini
| Manley
|
Marceau
| Marchand
| Marchi
| Marleau
|
Martin
(LaSalle – Émard)
| Massé
| Matthews
| McCormick
|
McGuire
| McKay
(Scarborough East)
| McLellan
(Edmonton West)
| McTeague
|
McWhinney
| Ménard
| Mercier
| Mifflin
|
Mills
(Broadview – Greenwood)
| Minna
| Mitchell
| Muise
|
Murray
| Myers
| Nault
| Normand
|
Nystrom
| O'Brien
(Labrador)
| O'Brien
(London – Fanshawe)
| O'Reilly
|
Pagtakhan
| Paradis
| Parrish
| Patry
|
Peric
| Perron
| Peterson
| Pettigrew
|
Phinney
| Pickard
(Chatham – Kent Essex)
| Pillitteri
| Plamondon
|
Power
| Price
| Proctor
| Proud
|
Provenzano
| Redman
| Reed
| Richardson
|
Riis
| Robillard
| Robinson
| Rocheleau
|
Rock
| Saada
| Sauvageau
| Sekora
|
Serré
| Shepherd
| Solomon
| St. Denis
|
Steckle
| Stewart
(Brant)
| Stewart
(Northumberland)
| St - Jacques
|
St - Julien
| Stoffer
| Szabo
| Telegdi
|
Thibeault
| Thompson
(New Brunswick Southwest)
| Torsney
| Tremblay
(Lac - Saint - Jean)
|
Tremblay
(Rimouski – Mitis)
| Turp
| Ur
| Valeri
|
Vanclief
| Vautour
| Volpe
| Wappel
|
Wasylycia - Leis
| Wayne
| Whelan
| Wilfert
|
Wood – 205
|
NAYS
Members
Ablonczy
| Anders
| Bailey
| Benoit
|
Breitkreuz
(Yellowhead)
| Breitkreuz
(Yorkton – Melville)
| Cadman
| Casson
|
Chatters
| Epp
| Forseth
| Goldring
|
Grewal
| Grey
(Edmonton North)
| Hanger
| Hart
|
Hill
(Macleod)
| Hill
(Prince George – Peace River)
| Hoeppner
| Jaffer
|
Johnston
| Kenney
(Calgary Southeast)
| Lowther
| Lunn
|
Manning
| Mark
| Mayfield
| Meredith
|
Mills
(Red Deer)
| Obhrai
| Pankiw
| Penson
|
Ramsay
| Reynolds
| Schmidt
| Scott
(Skeena)
|
Solberg
| Strahl
| White
(Langley – Abbotsford)
| White
(North Vancouver)
|
Williams – 41
|
PAIRED
Members
Alarie
| Bachand
(Saint - Jean)
| Byrne
| Canuel
|
Cardin
| Charbonneau
| Dalphond - Guiral
| Debien
|
Folco
| Fournier
| Fry
| Gallaway
|
Godin
(Châteauguay)
| Graham
| Picard
(Drummond)
| Pratt
|
Scott
(Fredericton)
| Speller
|
The Speaker: I declare the motion carried.
(Bill read the third time and passed)
The Speaker: The House will now proceed to the
consideration of Private Members' Business as listed on today's
order paper.
PRIVATE MEMBERS' BUSINESS
1745
[Translation]
BALANCED BUDGET ACT
Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ) moved that Bill C-375,
the Balanced Budget Act, be read the second time and referred to
a committee.
He said: Mr. Speaker, I am pleased to address this bill from the
Bloc Quebecois dealing with the issue of a balanced budget. This
is more commonly referred to as an anti-deficit law.
Why should we, at this point in time, turn our attention to such
a bill?
Incidentally, I would have preferred that this bill be a votable
item, since it deals, in my opinion, with a fundamental issue. I
can tell you that I will continue to work in the coming months
to have this bill put again in the Order Paper as a votable
item.
Why a Balanced Budget Act at a time when we are increasingly
talking about surpluses? In fact, for the last fiscal year, the
surplus exceeded $5 billion. For the current fiscal year, we are
talking about a real surplus, that is if you look at the actual
figures, not if you talk to the Minister of Finance, who says
all sorts of things. But if you look at the real figures, you
will see that the surplus for the current fiscal year is between
$12 billion and $15 billion.
Why introduce a balanced budget act, an act that would
prevent the government from running deficits?
Simply because we are not protected from what we have
experienced in the past 25 years. In fact, it is a Liberal
government that started running major deficits, and the first
major deficit was incurred under the current Prime Minister of
Canada, when he was Minister of Finance.
We are not protected from the old ways of the Liberals, and of
other federalist parties. They kept running a deficit year after
year, always thinking that it could be eliminated the following
year, without taking their responsibilities, with the result
that these cumulative deficits turned into a debt. We were
paying interest on the debt and leaving that accumulated debt to
future generations.
Old habits die hard. I remind members that several provincial
governments in Canada, including Quebec, and several American
states, passed similar legislation banning deficit or rather
balanced budget legislation. These states and several Canadian
provinces have now balanced their budgets and have surpluses.
However they passed this kind of legislation to protect
themselves and future generations, who have and will have to
carry the burden inherited from previous generations.
It is so easy for Liberals to slip back into their old habits as
witness the initiatives put forward by the government in areas
of provincial jurisdiction these past three years.
1750
They have no qualms about creating new programs parallel to
existing provincial programs, infringing on areas of provincial
jurisdiction, wasting billions of dollars often for nothing.
Let us look at the millennium scholarships. This program is
going to cost taxpayers $2.5 billion. We are not too sure how
useful it is going to be. However there is one thing we are sure
about, some provinces, including Quebec, already have their own
scholarship programs which work very well and have low overhead
costs. They have been in place for years.
The federal government prefers visibility to efficiency. When
partisan politics and a need for high profile supersede
efficiency, the result is perpetuation of the situation that
began 25 years ago: no particular concern for a balanced budget,
and recurring deficits.
If the Minister of Finance has a deficit of under $3 billion,
the bill requires him to fully repay this deficit the following
year, during the next fiscal year, and therefore to present a
one-year budget forecast of a $3 billion surplus the following
year, so as to recover the current year's shortfall. A basic
deficit is forbidden, but if overshooting the budget leads to a
deficit, the Minister of Finance must adjust his aim within a
year.
The Balanced Budget Act also makes it possible, under certain
circumstances, to go over budget, or even have a deficit, even a
recurring deficit.
For instance, if there is a natural disaster having a major
impact on federal expenditures, large amounts over or under
budget are allowed.
If there is a major deterioration in economic conditions
requiring the federal government to intervene with social
programs, the Minister of Finance is also allowed the
flexibility to exceed his forecast and to end up with a deficit
despite this Balanced Budget Act.
There is a similar exception if Canada is involved for example
in a military conflict which would require federal government
disbursements not forecast in the budget presented by the
Minister of Finance.
In these three specific cases, when the federal government has a
deficit, it must submit for each year of the deficit a
reabsorption plan over six years.
It must, over six years, repay all of the deficit it incurred in
the current, subsequent and third year as well.
In the first three years of this six year plan, it must have
repaid 75% of the deficit it incurred in the initial year, and
in the remaining three years, it must repay the other 25%.
It must therefore table a specific plan in the House of Commons,
a six year plan, and provide Parliament with a schedule for the
repayment of the deficit it incurred in the current year over a
six year period.
That is what spending and deficit controls involve. I repeat
that, despite our being in a surplus period, we must not,
especially for the sake of future generations, again find
ourselves in a situation similar to what we went through over
the past 25 years in which we accumulated deficits.
These deficits have become a huge debt worth at the moment over
$550 billion net.
It is therefore important to have a legislative framework to
ensure that budget overruns, uncontrolled spending, visibility
spending and partisan expenditures that could drive us into a
budget cul-de-sac do not recur and that there are very restrictive
provisions governing the Minister of Finance and forcing him to
repay the entire deficit over six years.
1755
There is a second very important aspect of this bill. It
concerns the accountability of the Minister of Finance. As
everyone here knows, even our colleagues across the way, since
his appointment, the Minister of Finance has been telling us
whatever he likes about the estimates, even about expenditures
and how revenue is entered. Every year, he is way off in his
estimates. But forecasting errors of 62% over six months
concerning the deficit are more than just a wrong estimate.
We have said repeatedly, and so has the press, and the public is
very much of the opinion that the Minister of Finance lacks
transparency when it comes to the estimates.
For four years now, he has been telling us just about whatever
he likes about the deficit and, since last year, the same is
true with respect to the surplus. He is in no way accountable
to parliament for his estimates, for the figures he submits, for
the overruns and for items that were not in the estimates.
The bill forces the Minister of Finance to be serious,
transparent and honest in the estimates he tables and in his
economic statement. His statements no longer bear any
resemblance to reality.
I will give examples of things that this anti-deficit bill would
help improve. In 1996-97, the Minister of Finance forecast a
deficit of $24 billion. Mid-stream, he revised his forecast. He
said the deficit would not exceed $19 billion. In fact, we had
been telling him for a year that the deficit would never top $10
billion.
In the end, the 1996-97 deficit was $9 billion.
The same thing occurred in 1997-98. Initial projections set the
level of the deficit at $17 billion. At the time, with the
figures we had on monthly revenues, it did not make any sense to
forecast a $17 billion deficit in 1997-98. A surplus of over $2
billion was more likely. For a second time, the Bloc was right.
The surplus was around $3.5 billion.
Initially, in 1998-99, the finance minister forecasted a $9
billion deficit. He recently revised his projections and is now
talking about a tiny surplus. Once more, hard facts will confirm
the Bloc projections, because we have always been right each and
every year, because the finance minister is not transparent in
his forecasts and because there is no mechanism to force him to
make honest projections.
He has no accountability, but the bill would provide for this.
This year, the minister is talking about a tiny surplus, but we
are forecasting a surplus of $12 to $15 billion, even if the
economy has slowed down because of the crisis in Southeast Asia,
and the economic collapse of countries in the former Soviet
Union, especially Russia.
The bill would require the finance minister to report to the
House on his deficit or surplus projections, and his earlier
projections, and to explain the discrepancy. In other words,
when he makes certain projections in his budget and he realizes
later on that the deficit or surplus will be different, he
should he required to explain why.
There is no such requirement at this time.
He tells us whatever he wants and, when the margin of error on
his six month deficit or surplus forecast is 63%, the only
opportunity we have to say anything to him about that, without
him having to be accountable to parliament, is when he presents
his economic statement to the finance committee. He tells us
“Excuse me, our tax revenues were higher than expected so our
forecast was off by 62%; things are better than we thought”.
An economist in the private sector who made the same kind of
error the finance minister made in his forecast would certainly
lose his job. He would be fired.
Under this bill, the minister would be required to table a
report in the House of Commons. He would have to justify any
error in his forecast. That would certainly be an improvement
from what we have seen, from what the opposition parties have
seen and from what Canadians have seen over the last five years.
They are given wrong information, which is not democratic.
Passing this bill would certainly be an improvement.
What is even more important, he would be required to inform the
House of any changes to his accounting methods and to explain
what impact these changes may have on his budget forecast or
budget results.
1800
The finance minister is the master of accounting tricks. He does
not have his match anywhere, disregarding the practices and
strict standards of accounting.
For instance, after signing an agreement with three Atlantic
provinces to harmonize the GST with provincial taxes, he
reported $941 million right away, in the 1995-96 fiscal year, as
opposed to the year in which it would actually have been
expended.
Recently, he did it again with the millennium fund. While the
first millennium scholarships will not be handed out until the
year 2000, the finance minister has already charged against the
previous fiscal year an amount of $2.5 billion.
He did the same thing with the innovation fund.
The minister was strongly criticized by the auditor general for
taking such liberties with generally accepted accounting
principles, which suddenly change when applied by the finance
minister. He was strongly criticized by the Auditor General of
Canada, who is the watchdog of public finances and is
accountable only to parliament.
Do you know what the finance minister's response was? He said
that they had been told by private corporations that it was all
right. This is another affront to the institution of the auditor
general.
The bill would require a stringent report by the Minister of
Finance to the House of Commons, to parliament, on his changes
in accounting, interpretations and justifications of the budget
level.
I hope, therefore, that I will obtain the support of my
colleagues, both those in opposition and those in government,
and that bill will be votable next time.
[English]
Mr. Tony Valeri (Parliamentary Secretary to Minister of
Finance, Lib.): Mr. Speaker, besides the rhetoric I will
actually speak on the bill before us. Essentially, beyond
anything else the key to ensuring that the federal budget remains
in balance is a strong political commitment to maintain fiscal
health.
Past history and experience has shown that legislation itself is
not sufficient to deliver balanced budgets. The previous
government tried to follow that approach without success. The
Spending Control Act, 1992, put legislated limits on total program
spending with an end goal of eliminating the deficit. We all
know how successful that approach was.
The government has balanced the budget as a result of the
resolve of all Canadians to do so. In 1993-94 we were facing a
difficult situation. The federal deficit stood at a record $42
billion. We said at that time that we would bring down the
deficit steadily each and every year until it was eliminated, and
we did. In 1997-98 Canada recorded a $3.5 billion surplus, the
first surplus since 1969-70. It is an historic accomplishment
for Canadians.
Balancing the budget required difficult decisions and many
sacrifices but it is an achievement that all Canadians can be
proud of and one that will have permanent benefits.
We did not need balanced budget legislation to do it. We
accomplished it with a strategy that has worked. We set two year
rolling fiscal targets and have consistently achieved and
surpassed them. For budget making purposes we used economic
assumptions that were less optimistic than the private sector and
we built into our fiscal plans a $3 billion contingency reserve.
It provides an extra measure of back up against adverse errors in
the economic planning assumptions.
We will continue to use this approach. It worked so well in the
past and it ensured that the budgets will remain in balance for
the future.
Instead of debating legislation on how to ensure a balanced
budget we prefer to focus the government's resources on the
measures needed to strengthen Canada's economy and Canadian
society.
The government has a balanced plan to address the challenges we
will face in the future. Despite our fiscal success, the
debt burden is still too high by historical and international
standards and we need to reduce it.
We have a debt repayment plan. We are committed to ensuring
that the debt to GDP ratio continues on a permanent downward
track. In 1997-98 the debt to GDP ratio fell to 66.9% from 70.3%
in 1996-97, a 3.4 percentage point decline.
1805
It is the largest single year decline in the debt to GDP ratio
since 1956-57.
As well, we continue to invest in the highest priorities of
Canadians. Clearly health care is at the top of the list for all
Canadians. The Prime Minister has said in the past that the
government will invest more of our resources in the years ahead
to reinforce our public health care system.
The final part of our plan involves tax reduction. Initially as
it became affordable we were able to provide targeted tax relief
where the need was the greatest, tax relief for students, for
charities, for persons with disabilities and for children of
working parents with low incomes.
In the 1998 budget we started a process of general tax relief,
reducing tax rates for 90% of taxpayers and providing $7 billion
in tax relief over three years.
We will build on these measures as we can afford to and we will
continue to do so in a measured and responsible way.
Clearly there is no need for this bill. It would allow deficits
and we know Canadians want governments to live within their
means, just like they do. It is a bill that says to Canadians
let's run a little deficit this year and we will make up for it
later. I do not think so and Canadians do not think so.
The hon. member brought up the issue of credibility of the
forecasts. Eight years ago Tory finance ministers were accused
of using inflated economic predictions to mask huge deficits.
Now we are being accused of being too cautious. I would rather be
called too cautious rather than reckless if it meant we were
protecting Canadians' victory over the deficit.
In 1998 the consensus forecast for GDP growth was 3.5% when the
budget was introduced. Today the consensus as forecast has
fallen to less than 3% and the outlook for next year has fallen
from 2.9% to only 2%.
So while the hon. member argues about how the finance minister
meets these targets and makes accusations that the finance
minister is not being transparent, it is the first time in the
history of Canadian governments that we have a budget building
process like we have today.
On the average of Canadian economic forecasters with respect to
the GDP, the average of what Canadian forecasters say the
interest rates will be as we move forward, it is not government
or the departments that are setting these forecasts but the
private sector, and we are making use of all that expertise as we
build these budgets.
For the first time we are saying governments should set a target
and in setting that target it should be the very least we could
do, always striving to do better.
Rather than debating an issue about legislation to balance
budgets, I would submit to the hon. member that it is the
political commitment that is required and that is very important.
Past efforts have shown quite clearly this government is
committed to balancing the budget. we are committed to no
deficits. We are committed to keeping the debt to GDP ratio on a
downward track. We are committed to continual investing in
Canadian priorities.
The finance committee, as it travelled across the country on
prebudget consultations, clearly heard that health care was at
the top of the list of priorities. This government is committed
to reducing income taxes for Canadians.
An hon. member: What about employment insurance?
Mr. Tony Valeri: I have said often in the House that the
debate about employment insurance is not whether to reduce
employment insurance premiums but by how much. This government
has clearly demonstrated over the years that there is a
commitment to reduce employment insurance premiums.
While the hon. member continues to provide us with rhetoric what
I am trying to do is lay out the facts for Canadians as they are.
The government has already pursued a deficit reduction strategy
that was deliberate, responsible and successful. Now that the
government's finances are on track we have entered a new era of
fiscal responsibility that includes debt reduction.
Much like we eliminated the deficit, we have committed to
continue to keep the debt to GDP ratio on a downward track. If
Canadians look at our record and look at history, this government
since 1993 when faced with a $42 billion deficit committed to
eliminate it. We have.
1810
We have committed now to keep paying down the debt and to ensure
the debt to GDP ratio is on a downward track. We will continue
to so and will not waver from this course.
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, it
is my pleasure to speak on Bill C-375. It is a good bill and I
think the Reform Party can support it.
I am very happy to see that my colleague, who calls himself a
social democrat, can agree with somebody like me or I can agree
with him as somebody who is a fiscal conservative on the need to
have balanced budgets and to put some limits on government.
Limited government is what we are talking about here.
My friend across the way spoke a minute ago about the
government's great political commitment. Its political
commitment had nothing to do with balancing the budget. The fact
is government took the easy way out.
In the last five years this government has raised revenues by
$37 billion. It dramatically cut transfers to the provinces by
$7 billion. It is talking about its commitment to health care.
There is no question this government has slashed health care more
than any government in Canadian history.
To hear the rhetoric coming from the other side is pretty hard
to take. I cannot believe the parliamentary secretary stood up
with a straight face and shamelessly said his government has a
deep commitment to health care. What a joke. It is
unbelievable.
I want to talk specifically about my colleague's Bill C-375, a
balanced budget act. There are some key points I want to touch
on. Effectively the bill serves to prevent the government from
producing budgetary deficits as of April 1, 1998. A deficit of
less than $3 billion in one financial year must be followed by a
surplus equal to that amount the following year. I think that is
quite reasonable.
A deficit exceeding $3 billion may be occurred over more than
one year but only in the event of a natural catastrophe, economic
collapse or military conflict. All that is very reasonable.
Deficits for any financial year would have to be estimated
during the debate on the budget. I think that makes a lot of
sense. We need some frank talk about just how big deficits would
be or even surpluses.
For deficits incurred under the provisions which are required to
be made up over a maximum period of six years, I think the first
75% of that has to be made up in the first three years. There are
other great points in this bill.
I think one of the most important points is the one that my
friend from the Bloc alluded to near the end of his speech when
he talked about the need to have a report from the minister to
the House annually on the impact of changes to accounting. I
completely support my colleague from the Bloc on this.
What has happened over the last several years is that the
finance minister and the finance department have broken the
generally accepted rules that have been laid down through
consultation with the Canadian Institute of Chartered Accountants
and the auditor general simply so that they can run surpluses
they can use for their own political ends.
What we have here is the government in a fundamental conflict of
interest position. It is time to end that. We need accounting
rules that are binding on the government so that we do not have
situations where the government uses the finances of the country
for its own cynical, manipulative ends, and that is what is
happening here.
My friend across the way was talking about the member
criticizing the government for being too cautious. That is
completely untrue. We are criticizing the government because it
has been calculating and manipulative with the public's finances.
We think that is completely unacceptable.
The Reform Party does have a long history of promoting this type
of legislation. We do believe in limited government. We do
believe there need to be restrictions on government. We do not
have blind faith in the government. We know that governments of
all kinds are typically stupid. The governments that are the
most stupid are the ones that do not recognize how ignorant they
really are. Therefore we feel we need some limits on what they
do so they cannot go stumbling into areas where they do not
belong. We do not want them to stumble into deficits. We do not
want them to blow the public's money, which has been the
situation for many years in this country.
1815
My friends across the way talk about how they have been
successful in balancing the budget. I remind them that they have
done it by raising taxes and in doing so they have lowered
disposable income for Canadians. We think that is the wrong way
to handle it.
While we support this legislation coming from our colleague from
the Bloc Quebecois, the Reform Party has called for another
companion piece of legislation to go with this which would place
a limit on expenditures. We do not want to see governments
balancing the budget by continually raising taxes as this
government has done. Taxes have gone up. Revenues have gone up
by 32% since it came to power. They have gone up by some $37
billion. That is not growth in the economy. The economy has not
grown by 37% over the last few years. Far from it. It has been
very sluggish. But the revenues have been growing because they
are coming out of taxpayers' pockets and that is not acceptable.
We would support companion legislation or an amendment to this
legislation that would require the government to introduce
legislation mandating government spending limits. That is from
the Reform Party policy book, the point being that not all
balanced budgets are equal. We believe that we must balance them
not by forever increasing revenues through higher taxes, but by
putting a limit on spending.
In the last parliament, in 1996, a very learned colleague of
mine, Dr. Herb Grubel, who was the member of parliament for
Capilano—Howe Sound, brought forward a private member's bill
calling for a constitutional amendment that would have entrenched
balanced budgets. There is a tremendous amount of merit in that
idea. It is difficult to get any kind of constitutional
agreement in this country, let alone on a piece of legislation
like Dr. Grubel was proposing. But having said that, it is the
right thing to do.
I want to touch on a couple of the points he made. He said that
if we have a constitutional amendment it is more difficult for
governments to tamper with it. Specifically, he called for the
government to balance its budget every year. That is what he was
proposing. His argument was that we could have a contingency
reserve attached to that so that if there ever was a need to
increase spending for some unforeseen reason we would be able to
do that.
Second, the spending would be limited to today's levels and only
increased to reflect population growth and inflation. That was
the spending limit aspect of that legislation. It is a great
idea. There is no need for spending to grow beyond population
growth and inflation once we get to the point where we have the
proper amount of spending.
The final point was that if either the budget is not balanced or
spending limits are exceeded then those MPs who supported going
beyond those spending limits, or supported spending us back into
a deficit position, would be financially penalized. That makes a
lot of sense. That is what they do in Manitoba. The entire
cabinet faces financial penalties if the government runs a
deficit. It is a wonderful idea.
We must remember that at the end of the day this is taxpayers'
money we are spending. We cannot continue to tax people into
poverty like we have done in this country over the last 20 years
and especially over the last five years. It has to come to an
end. We need to impose some real penalties to ensure that people
do not continue to run deficits and that governments like the one
across the way do not continue to raise taxes forever and ever.
The Reform Party also calls for a referendum on any tax
increases. We are saying no more tax increases. If a government
wants to increase taxes it should have to go to the public in the
form of a referendum.
We support this private member's bill. We wish it was votable.
We would go a step further in a couple of areas. But having said
that, we find it eminently supportable. It is a real positive
sign that members on all sides of the House understand the need
to have balanced budgets and that balanced budgets should be
entrenched in some kind of legislation. We have to place limits
on government. Government is not all knowing. It is not
omnicompetent. It is not always working in the best interests of
the country. One way to ensure that we prevent the government
from doing wrong is to put limits on it and this proposal would
do just that.
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Mr. Nelson Riis (Kamloops, Thompson and Highland Valleys,
NDP): Mr. Speaker, first I want to congratulate my friend for
bringing in Bill C-375. I will say from the very outset that I
was pleased when I saw this bill on the order paper. I think it
is indicative of the kind of debate we need to have in the House.
I have listened carefully to my colleagues. While I support the
bill, I wish it was votable. I think it is an important gesture,
but I do have some serious concerns. However, I support the bill
in principle. I realize this is sort of an opening round of
debate and I suspect that we will have this debate in the months
ahead in a variety of venues.
First, in terms of the legislation itself, it talks about a
balanced budget in any particular fiscal year, with some
exceptions, and these exceptions are identified. I appreciate my
friend in the Bloc saying that a national catastrophe having a
major impact on revenues or expenses would be an exception.
Unfortunately, we have seen that reality in the last while in
Canada, in terms of the ice storm calamity, in terms of the
floods, both in central Canada and in western Canada and—
An hon. member: The farm issue.
Mr. Nelson Riis: I will come to the farm issue in a
second, but in terms of natural disasters, some very serious
expenditures were required. That is what our country is all
about, so I think this is an important qualification to place.
The other qualification is the involvement of Canada in a
military conflict, consequent to its international peacekeeping
commitments or when some other crisis arises. When it comes to
defending peace and security and our democratic traditions, of
course, money ought to play no determining factor. In terms of
our peacekeeping commitments, I do not expect that there is a
single Canadian who would not say that this would be a legitimate
expenditure in order to promote and keep global harmony and
peace.
My concern lies with clause 6(b), “a major deterioration in
economic conditions”, such as the farm crisis in Saskatchewan.
My friend from Regina—Lumsden—Lake Centre earlier today,
commenting to a very important committee, outlined a whole set of
concerns as to why this is in fact an economic crisis, not only
for the province of Saskatchewan, but for the prairie region and
the country generally.
As a matter of fact, my colleague from Regina—Lumsden—Lake
Centre has spoken at least eight times formally and has held 50
or 60 meetings to discuss the issue of the crisis in the farming
community.
The collapse of incomes is placing farmers at the same depths or
even below the depths of the deep recession and depression of the
1930s. This is indeed a crisis.
I also want to say that I am worried about the wording. We
would all agree that this is an economic crisis in the farming
community. We can also make the case for the fisheries on both
the east and west coasts. Many communities have been completely
devastated and will require assistance. I could go on to talk
about other sectors as well. In some of the major resource
communities of western Canada we have seen a collapse because of
the Asian markets. Over-exploitation of some resources has
resulted in economic calamity in some communities.
We are also talking about social calamity. For example, with
the collapse of the prairie farm industry would come a whole
social web of issues that would also be in crisis. I think there
would be a major deterioration in economic and social conditions.
We could make the case, as others have, of the crisis in our
health care system. I do not think we could find today a single
Canadian citizen who would not agree that there is a financial
crisis in our health care system. I would be surprised if we
could find a single person who would say “No, our health care
system is fine”.
In our pre-budget consultations, whether they were in a small
community or in a large community, whether they were on the east
coast, the west coast, the north coast or wherever, the message
was always the same: health care funding ought to be a priority.
1825
Education and training should be a priority. The sewing
together of our ripped social safety net should be a priority now
that we have a surplus in excess of $10 billion.
When we talk about economic and social issues that confront the
country that have to be dealt with, may I suggest that there is
no bigger issue than the calamity regarding poverty, especially
child poverty, in our country.
I was moved, as I know many others were, when I listened to the
the Conference of Catholic Bishops which said “A government that
refuses to address the issue of child poverty is participating in
a form of child abuse”. I think we all agree with that. It is
a form of child abuse when we sit back and allow 1.5 million
children day after day to live and grow in a life of poverty in
what has to be the richest country in the world. It is the
ultimate in neglect.
I was chagrined last Friday when I heard reports that our
Minister of Finance said that poverty in our country is a
national disgrace. I suspect that if we traced the roots to many
of our problems in terms of creating poverty they would go right
back to the seat of the Minister of Finance. After all, his
programs resulted in the massive slashing to support programs for
poor families across the country.
I am getting kind of worked up over this. We put a high
priority on debt repayment to foreign bankers. We do not put
much priority on the pay equity issue, particularly in terms of
the women who are affected. We go on year after year ignoring
child poverty.
I was here in 1989 when we passed a motion in this House, moved
by Mr. Broadbent of the New Democratic Party and seconded by
myself, to eradicate child poverty by the year 2000. We are
almost there, but the situation has simply deteriorated year
after year after year.
It is a national disgrace. It is an immoral act that we
continue to simply ignore this blight in our country. It is a
serious issue.
I am all in favour of balanced budgets. I am in favour of
having as a goal a balanced budget, particularly over the life of
a parliament. But when we have these glaring problems of the
crisis in the farming community, when we have obscene levels of
poverty, particularly with children in our country, when we have
collapsing economies in the east coast and west coast fisheries,
when we have a crisis in our health care system, when there is
not a person in this country who would not say we need to invest
in human resources through education and training, to say that we
have to have a balanced budget as a matter of law I think is
pushing the envelope.
I say to my friend in the Bloc, for whom I have a great deal of
respect, the principle of this bill we support, but until we get
our Canadian house in order, until we can say to Canadians that
we have done what is necessary, particularly in terms of
providing for those who need this help today, I think we can say
that we will address the issue of balancing the budget on an
annual basis at some time hopefully in the near future.
Mr. Monte Solberg: Mr. Speaker, I rise on a point of
order. I would like to seek the unanimous consent of the House
to make this a votable bill.
The Acting Speaker (Mr. McClelland): Is there unanimous
consent to make this bill votable?
Some hon. members: Agreed.
Some hon. members: No.
Mr. John Solomon: Mr. Speaker, I rise on a point of
order. I would ask for the unanimous consent of the House to
have this motion referred to committee for further study.
The Acting Speaker (Mr. McClelland): Is there unanimous
consent to have this motion referred to committee?
Some hon. members: Agreed.
Some hon. members: No.
Mr. Scott Brison (Kings—Hants, PC): Mr. Speaker, I am
pleased to speak to Bill C-375 today, brought forward by my
colleague from the Bloc. The effect of Bill C-375, if passed,
would prevent governments from engaging in the types of fiscal
profligacies that governments have participated in in the past.
It would prevent governments from incurring deficits except under
extraordinary circumstances.
The Minister of Finance would be more accountable to parliament
for his monetary management.
1830
In the 1997 election the PC platform called for making a law
that politicians would have to balance the budget on an annual
basis, legislation that would force governments to meet their
budgets except in cases of wartime or economic crisis, and called
for legislation that would cut the pay of the prime minister and
cabinet ministers if they were to break that ban.
In our current platform and rooted in principles that we
espoused during the time of the election, we are calling for
lowering the debt to GDP ratio from 73% to 50%; a continuing low
interest rate policy; cutting $12 billion in identified
unnecessary expenditures; and balancing the books but not
necessarily at the expense of health care or by raising taxes,
which has been the way the government has achieved some of its
dubious successes in recent years.
While the legislation deserves support from members of the
House, it does not recognize the fundamental problem that
deficits can be reduced and eliminated sometimes by making the
wrong choices. The Liberal government has made many wrong
choices in reaching a point at which we have a balanced budget.
By slashing health care, as the member from the New Democrat
Party referred to; by maintaining unnecessarily and damaging
rates of taxation which pummel small businesses and individuals
and destroy initiative across Canada; and by maintaining the
highest taxes of any of the G-7 countries that put our Canadian
businesses at a competitive disadvantage to their counterparts in
others countries, the wrong choices are being made.
Members opposite in the Liberal government certainly have some
experience with deficits. It was under Liberal leadership that
deficits grew from zero to $38 billion. My party cannot claim
such a stellar record in building deficits. We only took one
from $38 billion to $42 billion, which does not seem like quite
the level of accomplishment the Liberals were able to achieve
under their period of unprecedented fiscal irresponsibility.
Under Conservative governments the deficits between 1984 and
1993 were reduced from 9% of our GDP to 4.8% of our GDP by the
time we left office. That took considerably well planned policy
decisions that were courageous and involved the types of
structural changes to the Canadian economy which were necessary
not only to achieve deficit reduction then but to achieve deficit
reduction since. I am talking about policies like free trade,
the GST, deregulation of financial services, and deregulation of
transportation.
It is through those types of structural changes, those types of
forward thinking initiatives, that we were able to contribute to
the deficit reduction battle. However, since 1993 those efforts
have been combined with the slashing of health care and with the
maintenance of unnecessarily high taxes. The government has put
itself in the black by putting Canadians at an unprecedented high
rate in the red. Canadians have the highest personal debt, the
highest rate of personal bankruptcy in the history of the
country.
Let us look at what has happened to students. Average student
debt has grown from $12,000 back in 1993 to about $25,000 per
graduate of undergraduate programs. The pages in the House have
some benefits. They are in an enviable position in being able to
work in the House and contribute so gallantly, as they do every
day, to our proceedings. I am sure they have many friends who
will be graduating with egregiously high debt loads. They will
be harnessed to those high debt loads and held back as we enter
the 21st century.
Fiscal responsibility has shifted. The deficits that used to be
incurred by government are now being incurred by students like
the peers of these stellar young pages, the stellar young public
servants in the House tonight.
1835
There is no valour in reducing the public deficit if it is at
the expense of the fiscal health of individuals. We must
continue to make the right decisions. I have some concerns about
balanced budget legislation because it has the potential to
contribute further to the ongoing trend of emasculating political
bodies like parliaments. Parliamentarians should be more
empowered to make the right decisions and I fear any legislation
that reduces that power. Over the past 30 years we have seen a
secular decline in the power of parliamentarians.
There are things we could do to increase the role of
parliamentarians and to increase the scrutiny of public
expenditures by the House. It was once the case that individual
members of parliament debated line by line the estimates of
various departments. That would increase the role of members of
parliament as it would increase the level of scrutiny of
expenditures. That would be a good move.
We could have a regulatory budget in the House whereby we could
take a look at all regulations that are being proposed on an
ongoing basis by bureaucrats within the system without being
evaluated for cost. Those costs are very complex. Those costs
involve the cost of implementation and the cost of enforcement,
both of which are government borne. Perhaps most deleterious to
Canadians are the costs of compliance which we never take into
account.
Those are some of things we need to consider before we make new
regulations. Those are the types of things we can do to increase
the role of parliamentarians and at the same time have a greater
level of scrutiny of public expenditure.
The balanced budget legislation has been successful in provinces
like New Brunswick. Quebec had a deficit elimination bill
starting in 1996 as well as Alberta and Saskatchewan. Manitoba
passed the balanced budget, debt repayment and taxpayer
protection and consequential amendments act in 1995. The cabinet
minister who introduced that bill was a recent candidate for the
leadership of our party, Brian Pallister. His bill was a very
forward piece of legislation. It indicates the type of positive
steps many of our provinces have taken to do the right thing.
However, at the federal level fiscal policy is extraordinarily
complicated and complex. We are combining fiscal policy but
there is also a monetary policy responsibility at the federal
level. It is much more difficult for balanced budget legislation
to be enforceable or tenable at the federal level. That is one
difficulty. The American model goes back to 1985 when the
Gramm-Rudman-Hollings deficit reduction act established yearly
deficit reduction targets.
All these things are very positive but nothing can replace
leadership. Political leadership and political will can achieve
far more than legislation that requires balanced budgets. We
need to ensure we not only balance budgets in Canada but that we
do so by making the right choices and the right decisions. We
must ensure that as we enter the 21st century Canadians will not
be encumbered by wasteful government but will be prepared to
compete globally, to succeed globally and to put Canada at the
cutting edge of an increasingly global market based society.
[Translation]
Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ): Mr. Speaker, I would
like to make several comments. I will start with what the
Parliamentary Secretary to the Minister of Finance said in his
critique of my bill.
He said it was not necessary, that transparency and clear
objectives were far more important. He used the exact same
words the Minister of Finance did on February 10, 1998 when the
Bloc Quebecois members started to speak of a balanced budget
act. He has said exactly the same thing, the Minister of
Finance.
He said that greater transparency and clear objectives were far
more important. The parliamentary secretary has learned his
lesson well, but he has contributed nothing to the debate.
1840
What I have heard from the other side of the House is propaganda
about the government's achievements, transparency and caution.
However, the importance of a bill on a balanced budget
transcends not only the performance of a government but also the
present. We must think of the future. Anything can happen in
the future.
The same mistake can be repeated. The error that led us to an
accumulated debt of $550 billion, that is endless deficits over
25 years, can recur in the future. At the moment, it is perhaps
less obvious on the government side, but we must think of future
generations.
My Conservative Party colleague rightly referred to the pages,
who will be laden with a real tax burden in the future.
The parliamentary secretary mentioned that they are cautious.
This is no longer about caution. When the figures presented are
100% at variance, between 62% and 100%, six months apart or at
the most nine months apart, this is no longer a forecasting
error. This is no longer a matter of caution. It is a lie. It
is totally undemocratic.
The money we have handed over to the government is taxpayers'
money. It does not belong to the Minister of Finance. What if
you had an account with a bank or a credit union. You deposit
your money, and the banker refuses to tell you exactly how much
is in the account. What are you going to do? This is a
terrible anachronism. And yet this is exactly what the Minister
of Finance is doing.
He does not give a true picture of the state of public finances.
His forecasts do not make any sense. This is ridiculous and it
does not help the legislator to make sound management decisions.
In addition to providing for some control over public finances,
the bill on a balanced budget makes the Minister of Finance
responsible and accountable to Parliament.
This being said, I am very favourable to the suggestions made by
the opposition parties. The speeches made by members from the
Reform Party, the NDP and the Progressive Conservative Party
were constructive. Some interesting ideas were put forward and
would deserve to be included in a new bill.
I will not stop with this attempt. I intend to table another
bill which will take into account the suggestions made by the
Reform Party, the NDP and the Progressive Conservative Party. I
hope it will be a votable item, because this is an important
issue.
I agree with the Reform member who said that, to achieve a
balanced budget, the government can either reduce spending or
increase revenues. I agree with him that some provisions should
be included to control excessive spending, and particularly to
deal with the fact that the government can impose any tax
increase, year after year, as the Minister of Finance has been
doing for the past four years, taking $37 billion from Canadian
taxpayers.
I also listened to the suggestions of the NDP member with regard
to his social concerns.
I felt I had implicitly provided for these in my bill when I
said there could be deficits if there were exceptional
circumstances and a significant deterioration in economic
conditions. As I see it, a deterioration in economic
conditions would imply social deterioration, but I note his
suggestions.
As for the suggestions of the Progressive Conservative Party, I
will probably discuss them with my Progressive Conservative
colleague privately because I was not very clear on the reasons
for his reluctance to support the bill. He mentioned the role
of parliamentarians.
The role of parliamentarians is strengthened by a bill of this
sort because the Minister of Finance is forced to be accountable
to parliament, and to us, for any budgetary overrun, deficit and
accounting change that could alter the picture of public
finances.
Monetary policy has nothing to do with it. An anti-deficit bill
can apply to a federal government, just as it can apply anywhere
in the world, and monetary policy makes no difference. The fact
that the federal government must intervene with respect to
monetary policy has nothing to do with its fiscal management.
So I will have a talk with him. I am sure my arguments will
convince the Progressive Conservative Party to support this bill
or another amended one in the near future.
The Acting Speaker (Mr. McClelland): The time provided for the
consideration of Private Members' Business has now expired and
the order is dropped from the order paper.
ADJOURNMENT PROCEEDINGS
1845
[English]
A motion to adjourn the House under Standing Order 38 deemed to
have been moved.
VOLVO CANADA LTD.
Mr. Gordon Earle (Halifax West, NDP): Mr. Speaker, I was
astonished with the response by the Minister of Industry to my
question of October 22, 1998.
My question addressed the government's involvement, or lack
thereof, in finding solutions to the shutting down of the Bayer
Lake Volvo assembly plant in my riding. The minister refused to
address the issue of what the Liberal government would do to work
toward saving jobs.
Volvo's abrupt announcement left 223 workers suddenly fearful
for their futures and their families' futures. And abrupt it
was. One Volvo worker was quoted as saying:
Few people saw it coming. Sales were up, and the quality of the
product from this plant was among the best. That's what they
kept telling us anyway. They all had efficiency engineers in
watching us do our jobs. I guess that was so they would know
what to do when they move our jobs to Mexico.
On September 29 I wrote the minister and included in my letter
one suggestion for a manufacturer to replace Volvo, including an
executive summary of the business plan of the company. The
minister appeared to have better things to do than worry about
the loss of a couple of hundred jobs in Nova Scotia.
What is unacceptable is not that the minister did not find the
perfect solution but that apparently he had no interest in even
trying. To make matters worse, the government shares some
responsibility for the closure of the plant. The government
planted the bomb, lit the fuse and walked away. It planted the
bomb by deciding to lower auto tariffs, then lit the fuse with
NAFTA and now it has walked away.
Thanks to NAFTA, Volvo may be producing in Mexico the same
vehicles which are currently produced in Nova Scotia. I would
like to read a quote from a letter I wrote to the president and
chief executive officer of Volvo, Mr. Gord Sonnenberg:
I am deeply regretful of Volvo's decision to close the plant in
my riding.
I certainly wish representatives from Volvo had made the effort
and taken the time to work with myself, and representatives from
other levels of government, our community and the employees to
explore alternatives to shutting your plant down. My
understanding is that your company was welcome in our community,
and I know our taxation system is generous to the corporate
sector.
Demonstrating the common decency of working with our community
to find a solution would have been the better route.
I am painfully aware that such an increase of unemployment not
only directly hurts those workers affected, but negatively
impacts on us all.
I wish I could say that the Liberal government has acted better
but I am afraid I cannot.
I do hope in response to my comments the government specifically
addresses the issue of the closing of the Volvo plant. While the
issues of auto tariffs and the impact of NAFTA are noteworthy,
the real issue of substance here is this federal government's
apparent disinterest in the economy of Nova Scotia.
Who knows if federal involvement may have assisted in finding a
solution. But refusing to work with the community, the workers
and business to find a solution can only lead to the conclusion
that the government cares little for the futures of these workers
and their families.
I close by sincerely offering any assistance I may be able to
provide to the minister to facilitate the government involving
itself in finding solutions.
Mr. Walt Lastewka (Parliamentary Secretary to Minister of
Industry, Lib.): Mr. Speaker, on September 9, 1998, Volvo
Canada announced it would close its car assembly plant in Halifax
on December 18, 1998. As a result of the closing, I understand
that 223 jobs will be lost.
An hon. member: Didn't you work for GM once?
Mr. Walt Lastewka: Yes, I did. I do know the automobile
industry a little.
We are profoundly aware of the impact the plant closure will
have on the Halifax area. As soon as the Minister of Industry
learned of the plan to close the plant he wrote to Volvo to
express the disappointment of the Government of Canada about the
closure.
The mayor of Halifax, Mr. Walter Fitzgerald, created a task
force on the future of the Volvo facility and workforce. The
mandate of the task force is to market the facility and the
workforce worldwide and to ensure that Volvo continues to
tranship automobiles through the port of Halifax. The industry
minister immediately accepted Mayor Fitzgerald's invitation for a
federal presence on the task force by directing that an executive
officer of ACOA, the Atlantic Canada Opportunities Agency, become
a member of the task force.
1850
In addition the minister allocated resources within the Halifax
office of Industry Canada and also in Ottawa to assist the task
force. Industry Canada personnel have been asked to identify
potential leads that would fit in with the mandate of the task
force, to bring these leads to the attention of the task force
and to assist in the development of these leads as much as
possible. Several leads have already been identified which the
task force is in the process of investigating, although it is too
early to say how they will turn out.
We are all aware of the events of last month where workers of
the plant took over the facility and picketed the plant. The
workers took these actions out of fear for the future but also in
an attempt to force Volvo to address some concerns that the
workers have.
In closing, we remain acutely aware of the impact of the closing
of the plant on the Halifax area and continue to urge all parties
to work together to secure a long term future for the workforce
and the facility.
CANADIAN FARMERS
Mr. John Solomon (Regina—Lumsden—Lake Centre, NDP): Mr.
Speaker, I rise to follow up on a question to the minister of
agriculture last Thursday.
I asked him very simply when the farmers in Saskatchewan and
western Canada, and particularly the communities in my
constituency like Craik, Tugaske, Nokomis and others, could
expect him to announce some federal cash and assistance to help
with the immediate net farm income disaster. The minister
answered to the effect that he found the repeated demands of the
NDP for such a program to be a bit of a nuisance, but that he was
working on it.
Today his parliamentary secretary seemed to suggest during
question period in reply to a question by my colleague the member
for Palliser that cabinet had discussed the issue with the
minister of agriculture and an announcement would be coming soon.
I hope the parliamentary secretary this evening can give us more
information on that issue.
Last Friday when I spoke at the Saskatchewan Wheat Pool
convention, I heard from many wheat farmers who just could not
see the light at the end of the tunnel. Then yesterday I received
a letter from Mr. John Germs, the president of the Saskatchewan
Pork Producers, who worried that some of his members were
contemplating suicide because of the agricultural crisis.
As members of parliament, we often receive very strongly worded
representations from constituents and lobby groups but I was
really struck by this letter that arrived in my office. I want to
quote from it:
Words cannot describe the catastrophic situation we as producers
are facing. With the path continuing on this devastating course,
I estimate 50% of the producers will be forced to exit the
industry by spring—. The existing safety nets are not sufficient
to carry us through this extreme low period. Many people have
invested their life savings in this industry and now are watching
it—week by week—quickly destroying their livelihood—. Hog
producers in this province are desperate, many producers are
suicidal, and live every day in fear of a foreclosure or local
utilities disconnected.
Saskatchewan farm income, including that of wheat farmers and
hog farmers, is projected to be negative next year for the first
time since the depression of the 1930s. Hog prices may rebound
for those who survive the year but the situation with wheat
prices may not improve for quite some time unless the Europeans
and Americans cut back on their market-distorting subsidies.
The current net farm income disaster, and I use that generally
overused term advisedly, can be directly traced to the federal
Liberal government's record at negotiating international trade
agreements where it got suckered by Europe and the U.S. We
recall that the government chopped the Crow benefit and other
federal agriculture support programs. While Europeans who had
2.5 to three times the subsidies increased their agriculture
subsidies, we eliminated all of ours.
Those farmers are growing more wheat in Europe and the United
States and the price of wheat is dropping like a stone. Our
farmers and our buyers are waiting until the price drops even
more. But the bins are full and the U.S. is offering even more
support to their farmers. It is crazy.
We need some emergency bridge funding to help especially the
wheat farmers and the hog farmers in western Canada and the hog
farmers in other parts of the country. We need a national
disaster assistance program for all farmers to complement NISA.
I believe that if a forthcoming program was announced tonight or
in very short order, the provinces might be willing to
participate in this sort of emergency farm aid program
financially.
1855
I am calling on the government to recognize the failure in its
cutting the Crow benefit which has cost Saskatchewan $320 million
a year and to reinstate in the interim, while the European and
U.S. subsidies are negotiated away, this particular farm aid for
our farmers.
Mr. Peter Adams (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker, the
Government of Canada is very concerned about the farm financial
situation and realizes the sense of urgency and importance.
The hon. member is aware that the farm income situation was the
subject of a special meeting the minister convened with
provincial ministers of agriculture and farm leaders on November
4.
Since then the minister has had ongoing discussions with his
colleagues in the government, in industry and provincial
counterparts about the problems Canadian producers are facing.
Work will continue with all stakeholders to put in place
solutions to this situation.
We will act as quickly as possible but we will not act rashly,
irresponsibly or prematurely. We will develop the necessary
tools to improve the effectiveness of our safety net system as
quickly as possible. However, all of us agree that inequitable,
ineffective and unaffordable ad hoc measures are not the answer.
We will act quickly but we will also take the time necessary to
ensure the actions taken are the best ones for farmers and for
all Canadians.
HEALTH
Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Mr.
Speaker, I am pleased to have this opportunity to further discuss
a matter I raised in the House on October 21, a matter we have
repeatedly raised in the Chamber and which has been treated with
indifference, rhetoric and callous disregard. The issue concerns
the critical situation facing our health care system today.
Last week the Liberals defeated a motion in the House to
reinvest $2 billion as a minimum in terms of cuts they have made
to health care. During that debate the Liberals talked about how
concerned they were about health care but refused to provide any
specifics with respect to the critical situation. Every Liberal
in that debate voted down a motion to shore up our health care
system to a minimum of $2 billion.
Not only did the Liberals refuse to support that motion, they
also in the course of that debate dismissed the very real
concerns we keep bringing forward to them about the inadequacy of
our health care system and the very real worries that people have
about whether health care will be there when they need it.
The Liberals continue to deny the reality facing many Canadians.
They try to suggest that these very real concerns are a figment
of our imagination. The human situation speaks for itself. We
only have to look at the health cuts especially in provinces like
Manitoba and Ontario where we have a combination of federal and
provincial cuts that has resulted in very real pain and hardship
for people everywhere.
On October 21, I referred to the situation in Toronto of 17 out
of 19 emergency rooms being closed down. I also referred to the
situation in Ottawa where paramedics warned that the overload in
hospitals was putting patients at risk. This past week in
Manitoba we had nurses testifying that they were working 24 hour
shifts and letting IV bags go dry because there is not enough
nursing staff. Nurses are overworked, stressed out and suffering
from complete burnout. They want to care for their patients but
because of funding cuts they are facing very critical situations,
with very serious emotional consequences for their patients.
We are here today to ask the government if it will listen to all
the provinces that have asked for a minimum reinvestment of $2.5
billion. We are here to ask the Liberals if they are listening
to every health care organization in the country demanding a
minimum reinvestment of $2.5 billion.
We want to know specifically if the government will move to
stabilize the system which is now in critical condition. Will
the government assure us that it will not be entering into side
deals with the provinces? Will it assure us that it will not be
bypassing the Canada Health Act? Will it assure us that it will
not be entering into unilateral arrangements that destroy the
medicare model we have in Canada today?
Will it state clearly that it is prepared to stabilize the
system? Will it raise the floor in terms of cash payments to a
minimum of $15 billion? Will it embark on a new chapter of
co-operation, prepared to work with the provinces, the
stakeholders and Canadians everywhere who are deeply concerned
about the quality of health care? Will this government stand up
for medicare in no uncertain terms?
1900
Ms. Elinor Caplan (Parliamentary Secretary to Minister of
Health, Lib.): Mr. Speaker, health care is clearly a priority
of this government.
The very first thing this Liberal government did, once our
fiscal house was in order, was to increase the cash floor in the
Canada health and social transfer from $11 billion to $12.5
billion. This $1.5 billion increase marked the end of cuts and
signalled the important priority this government places on
medicare.
The Prime Minister has said clearly: “The government will
invest more of our resources in the years ahead to reinforce our
public health care”. In the government's recent economic
statement the finance minister said that concerns related to
strengthening medicare will be addressed.
Money matters but it must be said that the complex problems that
confront health care in Canada will not be solved by dollars
alone. The point is not simply to spend more but to spend more
in a way that will produce a better result. The fundamental
challenge Canada faces is to create a real system that is more
responsible and more responsive to Canadians. Meeting that
challenge will require focused action.
First, we need integrated health care delivery that meets the
needs of people. Although strides are being made, we are still
far from providing a seamless web of efficient and effective
care, whether in terms of organizing services or providing public
funding for them.
Second, a quality health care system is one that can be
measured, where performance can be assessed, where all partners
are accountable and have a responsibility to report to Canadians.
A quality health care system would enable Canadians to determine
if their health dollars are being wisely spent. Clearly whatever
steps we take have to be in collaboration and in full partnership
with the provinces. The size and method of the federal
reinvestment are subject to discussions with the provinces.
Let us be clear. While money matters, improving the quality of
health care means also ensuring confidence that when Canadians
need care it will be there for them.
[Translation]
SOCIAL INSURANCE NUMBERS
Mr. Jean Dubé (Madawaska—Restigouche, PC): Mr. Speaker, on
November 5 of this year, I told the Minister of Human Resources
Development that, according to the auditor general, there were
some 311,000 valid social insurance numbers for persons over 100
years of age, even though most of these individuals were
actually deceased.
I also said that fraud involving social insurance numbers was
costing Canadian taxpayers millions of dollars. Yet, not one
department is willing to take responsibility for SIN reform.
I then asked the minister whether he would take his
responsibilities and act immediately. I think I have been rather
generous. I gave the minister a perfect opportunity to redeem
himself, more particularly after the lack of power he displayed
in the urgent matter of social insurance numbers.
Unfortunately, the minister chose to answer that he had set up
five working groups to examine the issue. We already knew that.
What we would like to know is whether the minister is ready to
take action and to correct the problem. I have a hard time
understanding why the minister needs so much time to examine the
problem when the auditor general has done all his work for him.
This brings me to another question: Why did the minister wait
for the auditor general to examine the SIN problem before he
himself took action?
I would like to remind the minister of certain facts showing the
seriousness of the situation. There are currently 3.7 million
social security numbers too many. Not 100, not 1,000, but 3.7
million. This is incredible!
There are 11.8 million social security numbers that have been
attributed without proof of identity, 11.8 million!
1905
In 1996, more than $500 million in social security and workers
compensation payments were made to claimants who had not
supplied their social security numbers.
[English]
With all these millions floating around the halls of HRDC we
would think the minister would want to act quickly to solve these
problems. Unfortunately neither the minister nor anyone in his
government is willing to touch the issue.
I am not the one making these allegations. This comes from an
article published in the Globe and Mail on November 4. The
title reads: “Ottawa has no plans to deal with abuse of social
insurance numbers. Auditor general identifies fraud, says dead
people are still registered, but no one in government accepts
responsibility for reforming the system”.
I return to my original question. The minister waited for the
auditor general's report before looking at the social insurance
number problem. His department still refuses to commit itself to
reforming the SIN. In the meantime, millions of dollars of
taxpayer money are going out fraudulently through illegal claims.
My is simple. When will the minister take charge, when will he
show some leadership and sense of direction? When will he
present to Canadians a clear outline and timetable for a complete
reform of the social insurance number? What more will it take for
the minister to act?
Ms. Bonnie Brown (Parliamentary Secretary to Minister of
Human Resources Development, Lib.): Mr. Speaker, the Minister
of Human Resources Development Canada shares the concerns of the
auditor general with respect to the missing information on deaths
in the social insurance register. He has already told the hon.
member opposite that he is the lead minister, that he is in
charge and that he has already established an interdepartmental
working group for the purpose of assessing the accuracy and
completeness of the personal information currently held in the
register.
As suggested by the auditor general, the working group will try
to determine how the department can use more fully the current
sources of information at its disposal to update the register,
sources such as the Canada pension plan, the old age security
program and information from Revenue Canada.
In addition, the department hopes to investigate other sources
of information such as provincial and territorial vital
statistics, provincial health insurance information and
Statistics Canada data.
We also hope to overcome any obstacles or stumbling blocks such
as system problems which could prevent access to the information
necessary to improve the integrity of the register.
I assure the hon. member that this government shares his
concerns about any fraudulent use of social insurance numbers and
we are taking action to address it.
Last year we investigated about 2,700 such cases and we intend
to increase our investigations.
We are also taking a number of steps to improve our ability to
prevent fraud. For example, we are improving our contract of
service with the RCMP, which investigates the major cases of
abuse and fraud, and we are creating a new investigations unit to
improve our ability to prevent and detect fraud.
In addition, the parliamentary committee, of which the hon.
member is a member, is investigating this phenomenon which the
auditor general has uncovered.
The member can be assured the government will do whatever is
necessary to ensure the accuracy and completeness of information
within the social insurance register and to ensure the integrity
of the social insurance number.
[Translation]
The Deputy Speaker: The motion to adjourn the House is now
deemed to have been adopted. Accordingly, this House stands
ajourned until tomorrow at 2 p.m., pursuant to Standing Order
24(1).
(The House adjourned at 7.07 p.m.)