March 5, 1962

?

Some hon. Members:

Shame.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Stuart A. Fleming

Progressive Conservative

Mr. Fleming (Okanagan-Revelstoke):

And

yet the hon. member for Essex East blithely rises in this chamber and says that the present government should be doing more.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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LIB

Paul Joseph James Martin

Liberal

Mr. Martin (Essex East):

Because your party made promises.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Stuart A. Fleming

Progressive Conservative

Mr. Fleming (Okanagan-Revelstoke):

How

can he say this when during all the time the government of which he was a member was in office nothing was done by that administration. If he or the government of which he was a member had acted during that period a great many men and women in Canada who now work for large corporations might have been able to continue in their own business. They might have survived if they had received assistance at the time they really needed it. If there had been available benefits such as those available under this act in the years prior to 1957, many businesses not now in existence would still be in operation because they would have had available to them the required credit for capital expansion and equipment purchases that would have assisted them in competing on a more equitable basis with the large corporations against which they were competing.

This is not a figment of the imagination. This is a thing that is known to small businessmen across Canada. Perhaps there is more the government can do in this area. That may be, but at least more is being done now than was done over a period of many years. Certainly nothing was done by the government in office prior to the 1957 election. As I explained, I speak not in a theoretical way but as one who has participated in small business for most of his adult years.

I know there was nowhere to turn in the years prior to 1957. No act such as this was available. There was no directorate under the Department of Trade and Commerce to which small businessmen could have turned for expert advice and service.

1496 HOUSE OF

Small Businesses Loans Act

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Gage Workman Montgomery

Progressive Conservative

Mr. Montgomery:

There was no sympathy forthcoming from the government either.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Okanagan-Revelsioke):

No,

there was no sympathy forthcoming from the previous administration. It may be said there was not even a lack of sympathy on the part of the previous administration but merely a lack of awareness of the very existence of small business. We were too small to be bothered with. As a matter of fact, my family's business began in the year 1935. It was established at a time when certain measures existed introduced by a previous Conservative government, which measures even in those difficult days after 1935 provided an opportunity to small firms such as the wholesale firm my family operates to compete against chain merchants and chain wholesalers, against very large corporations.

Those protections existed for a few years and then gradually the erosion began. Lost were the opportunities to sell merchandise at what are now termed protected prices. This is something that is looked upon with scorn by many people in the country who have never been in business. Under the Conservative government the feeling is at least that a merchant, however large or small, is entitled to a fair return on the sale of his merchandise. It is felt that a merchant should have an opportunity to compete with those with access to immense capital, who can exist through a period of price decline with respect to certain articles or certain types of merchandise, who can ride out the difficulty caused by lack of profit, in the meantime swallowing up their small competitors. Prior to 1935 and for a short time afterwards these protections existed for the small merchant. Under the Liberal administration they were removed entirely. In my own field of business I watched my friends succumbing to the difficulties with which they were confronted-

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Paul Raymond Martineau (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Progressive Conservative

The Chairman:

Order. I must warn the hon. member that he seems to be wandering far afield from the clause under consideration. I trust the hon. gentleman will relate his remarks to this clause of the bill which is limited in its scope. Therefore the discussion must also be limited inasmuch as it must bear directly on clause 1.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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LIB

Paul Joseph James Martin

Liberal

Mr. Martin (Essex East):

The Minister of Finance did not object.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Stuart A. Fleming

Progressive Conservative

Mr. Fleming (Okanagan-Revelstoke):

I

apologize, Mr. Chairman. I allowed myself to stray down the path established by the hon. member of Essex East. I have no hope of overcoming him but I shall now return to the point.

This amendment provides a further useful expansion of the scope of the act. As I said, other amendments may come in time but meanwhile this will meet an essential need, and I believe during the months to come will provide many more small merchants and businessmen with the opportunity of taking advantage of the legislation, thus contributing even more to the stability and growth of the economy of the districts and towns in which they operate.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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NDP

Walter George Pitman

New Democratic Party

Mr. Pitman:

Mr. Chairman, I do not intend to make additional extended remarks at this point but I wish to ask one or two questions of the minister. In view of the fact that we have no way of knowing the reasons for the rejection of many people who would appear to come within the legislation, I should like to know where the idea came from for the expansion of this measure which was foreshadowed in the speech from the throne. Who brought this forward? Was it the chambers of commerce or the bankers themselves? Who saw this as a large extension of opportunity under this legislation?

Would the minister also tell us to what extent this amendment will increase the amount which it is possible to borrow through the banks over the next year or so?

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinion):

Mr. Chairman, the proposed amendment did not come about in the way indicated in the jaundiced approach of the hon. member. It came about through experience with certain persons who had applied for loans for this particular purpose of relocating premises which caused an examination of this question to be made in terms of the existing legislation. That is how the matter came about.

The first view of the act taken was that the terms were broad enough to permit loans to be guaranteed for the purpose of relocating premises. On taking legal opinion on the question, however, the advice was given that the terms of the act were not broad enough to cover that particular type of business outlay. As the desirability of extending the act to permit extension of credit in such cases was in the view of the government very clear, in aid of small business the government decided to place this amendment before the house.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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NDP

Walter George Pitman

New Democratic Party

Mr. Pitman:

Mr. Chairman, any jaundice which was seen in that question was certainly placed there by the minister. I was just asking where the idea came from.

The second part of my question related to the extent to which the minister expects an increase in borrowing. Does he expect it will be 10, 15 or 20 per cent or more?

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinlon):

No one can make such an estimate, Mr. Chairman. We do know that there are such cases. How many cases there will be and how many loans will be made in such cases, no one can state precisely.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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NDP

Erhart Regier

New Democratic Party

Mr. Regier:

Mr. Chairman, I regret very much having to place on record the view that it is most obvious that the minister's memory is very short indeed.

At the time when he first introduced the bill it was our group which advocated that the bill ought to include the purchase of new premises or the relocation of existing premises; and the government went to great lengths, including the minister, to explain to the house why this was not possible. He now tells the house that at the time the bill was introduced into this House of Commons it was anticipated by the government that the bill would cover incidents of this kind. I find it hard to believe that the minister's memory would be that short.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

If the hon. member has any occasion to cite anything that was said in the course of the debates on this measure a year ago, I suggest that he read extracts from Hansard in order to establish his point. The point that was raised at different times during the debate-and I do not know what relevance this may have to the present item-concerned loans for the purpose of acquiring premises and particularly to provide working capital. The purpose of the bill was not-and this was said repeatedly during the course of that discussion-to provide or to guarantee loans for the purpose of providing working capital. That is a different matter altogether from what is now before us.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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NDP

Herbert Wilfred Herridge

New Democratic Party

Mr. Herridge:

I have a very few brief remarks to make and they are somewhat relevant to this amendment. I do not take the same gloomy approach as that taken by the hon. member for Essex East. I remember that for years the small business interests urged the government of the day to pass legislation of this kind. We must recognize the fact that we have an act. However, I think it is our responsibility to improve the legislation from experience. It is in that spirit that I wish to offer one or two suggestions. I have talked to small business people and to bank managers about the operation of the bill. Although I am normally a backwoodsman, I discuss these things with my constituents. I suggest that in some cases bank managers require some instruction as to the spirit and purpose of the act. I think some medium should be found for getting this information out to the bank managers, possibly through the head offices of the banks.

26207-1-95J

Small Businesses Loans Act I think that situation also needs investigation by the small business branch.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinfon):

May I ask the hon. member whether he has not noticed a substantial improvement in this respect since the early days when the legislation was in effect? I agree with him that in the early days bank managers, or at least many of them, were not acquainted with the new instructions. It took time for that acquaintance to develop. However, according to my observation and the representations that have been made to me, that stage has been passed and the legislation is now operating relatively smoothly.

_ Mr. Herridge: The minister is quite correct. There has been an improvement. However, I think there is still room for improvement and I do not think that point should be overlooked. Then, in order for the department or the small business branch to be well informed as to the operation of the act, I think there should be something more than just a statistical report from the bank managers^ or from the banks to the department. I think the branch should ask for suggestions and some report that would cover their experience where the legislation fails here and there to meet certain situations. I think those reports should be under continuous scrutiny by the small business branch, and that matters of importance should be brought to the attention of the minister. Then I think the recommendation of the banks as a result of the reports of their managers and the recommendations of the small business branch should be considered by the minister, and that annually we should have a somewhat fuller report of the operations under the act, not just a statistical report giving the number of loans, the bare figures. I think we should have a report which gives us a fairly clear picture of how the act has functioned throughout the year and even recommendtaions as to how it may be improved.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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LIB

William Hector McMillan

Liberal

Mr. McMillan:

I was interested in the words of the speech from the throne where it states:

Other measures which will help to enlarge employment by stimulating economic activity will include a bill to increase the total amount of financing of exports which can be undertaken by the export credits insurance corporation and an amendment to broaden the scope of the Small Businesses Loans Act.

I think small businesses might be expected to get something more from this amendment. I suggest that this amendment is a broadening of the scope in a most restrictive degree. The amendment can of necessity help very few businesses. After all, there are very few businesses that would wish to move their

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Small Businesses Loans Act offices or some other part of their plant. I admit that in a few cases some businesses might get help. However, in the over-all picture, there will be no help or new enlargement of credit facilities to small businesses in general. The speech from the throne states that this amendment will help to enlarge employment. If this is so, I should like to ask the minister whether he has made any calculation in this respect. I think he should be able to do that. The Financial Post of January 27, 1962, had this to say:

Three basic changes in the Small Businesses Loans Act are planned by the government-

I think small business expected this. The Financial Post asserts that this was the meaning of the announcement in the speech from the throne that small business would be helped by these amendments. Then it goes on to state that the act was not nearly so effective as was announced here in the house when the government introduced it in November and December of 1960.

They suggested three measures that might be taken to help small businesses in connection with this act. For instance, they suggested that there should be an increase in the loan limit which at the present time stands at $25,000.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

Mr. Chairman, we had these irrelevancies this afternoon. They have been repeated now for the third time. Can we not confine ourselves to the clause now under consideration?

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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LIB

William Hector McMillan

Liberal

Mr. McMillan:

Mr. Chairman, I will become relevant. The minister should be able to tell us how much money he expects to put out under this amendment. Previously, when he put it at $300 million he said that within the immediate future $75 million would be taken up. We know that only one third of that amount was taken up in the first year. I think we have the right to have this information and I think I am relevant in asking the minister at this time how much this particular amendment to this act will increase the loan. I think there is every evidence that business needs help. I will close with this observation. We know that business failures increased by 6.6 per cent this last year. Just in the month of January last business failures among small businesses in Canada increased by 19 per cent over those in January of last year.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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March 5, 1962