March 5, 1962

NDP

Frank Howard

New Democratic Party

Mr. Howard:

I have a question for the minister, Mr. Chairman. When the minister was speaking I did not quite catch the figure he used in relation to New Brunswick. Did the sum end with 45 cents or was it 55 cents?

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

Gage Workman Montgomery

Progressive Conservative

Mr. Montgomery:

Read Hansard tomorrow.

Clause 1 agreed to.

On the title.

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

William Moore Benidickson

Liberal Labour

Mr. Benidickson:

I have a question that I think is relevant. We have here an amendment which henceforth will permit loans under the Small Businesses Loans Act to be made under circumstances that involve the construction or purchase of alternative premises where the premises in which the business enterprise is located will cease to be available or suitable for the purpose. Having regard to the fact that we have had this legislation for 13 months I ask the minister this question. At what rate of interest have the loans been made? We have been told that in volume $25 million of loans have been made. Have any loans been made at a rate of interest less than 6 per cent? My next question is this. What is the likely rate of interest that will be applicable for loans or to permit business improvement loans to be made for the construction or purchase of alternative premises?

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):

The loan rate prescribed in the regulations. Practically all of those have been made at 5i per cent.

Topic:   SMALL BUSINESSES LOANS ACT
Subtopic:   AMENDMENT RESPECTING BUSINESS IMPROVEMENT LOANS
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Title agreed to. Bill reported.


PC

Daniel Roland Michener (Speaker of the House of Commons)

Progressive Conservative

Mr. Speaker:

When shall the bill be read a third time?

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

Some hon. Members:

Now.

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):

Now, by leave.

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

John Whitney Pickersgill

Liberal

Mr. Pickersgill:

By leave.

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) moved

the third reading of the bill.

Motion agreed to and bill read the third time and passed.

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

AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.

PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Hon. Donald M. Fleming (Minister of Finance) moved

that the house go into committee to consider the following resolution:

That it is expedient to introduce a measure to amend the Farm Improvement Loans Act to provide for the making of guaranteed loans during the period July 1st, 1962 to June 30th, 1965, and to establish four hundred million dollars as the limit of guaranteed loans that may be made during the new loan period.

Motion agreed to and the house went into committee, Mr. Martineau in the chair.

Topic:   FARM IMPROVEMENT LOANS ACT
Subtopic:   AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

Mr. Chairman, the proposed amendments to the Farm Improvement Loans Act will serve to extend the operations under this legislation for a further period of three years. Briefly, it is proposed to provide for a new lending period beginning on July 1, 1962 and ending on June 30, 1965. It is also proposed to establish a limit of $400 million on the aggregate principal amount of guaranteed loans which may be made by the banks during the new lending period.

As hon. members are aware, this legislation is designed to make intermediate term credit more readily available to farmers for the purpose of financing a wide variety of capital improvements. To this end the act authorizes the government to extend a guarantee of 10 per cent of the farm improvement loans made by any one bank in a lending period. To limit the government's over-all contingent liability, the act establishes a maximum on the total amount of guaranteed farm improvement loans which may be made by all banks during the lending period.

The act came into force in 1945 and was given a life of three years. Subsequently it was extended through the addition of new lending periods. The first extension was made in 1948 and further extensions were made in 1951, 1953, 1956 and most recently in 1959. The current lending period, which is the sixth

since the inception of the act, began on April 1, 1959, and runs until June 30, 1962. The maximum on the total principal amount of loans eligible for the 10 per cent guarantee was originally set at $250 million and was increased to $300 million in 1953 and to $400 million in 1961. Originally, the maximum amount which might be borrowed by an individual farmer was set at $3,000; this amount was increased to $4,000 in 1953, to $5,000 in 1956 and to $7,500 in 1959. In reviewing the history of this legislation I might also point out that an amendment was introduced in 1959 to extend the act's coverage to include bee-keepers as eligible borrowers. The two amendments which are now proposed will enable the banks to continue their lending operations under the act for an additional three years.

During the post-war years, technological advance and the mechanization of farms have been dominant features of Canadian agriculture. In this process, farm improvement loans have played a major role by providing the farmer with loan funds, on reasonable terms and conditions, for the purchase of machinery and equipment. For example, in 1960 an amount of $58 million, or considerably more than one half of total farm improvement loans, was used for the acquisition of tractors, combines and hay balers. While the lending facilities under the act have been especially helpful to the farmer for purposes of mechanization, additional borrowing in substantial amounts took place in 1960, as in previous years, and covered a broad range of investment projects including the construction of farm buildings, the purchase of livestock as well as other works for the improvement and development of farms.

The annual report covering the operations under the act for the calendar year 1960 shows that the total amount of loans reached a record level of almost $102 million. There was a further increase in lending during 1961 and for this 12 month period more than 70,000 loans were made amounting to slightly over $108 million. No doubt, if it had not been for the drought in the west, the credit facilities under the Farm Improvement Loans Act would have been used to an even greater extent.

I might add for the purpose of providing a broader perspective on the growth of activities under the act, that during the current lending period from April, 1959 to the end of 1961, over 198,000 loans were made amounting to almost $294 million. This is approximately $55 million, or 23 per cent, higher than the amount borrowed during the whole of the preceding lending period from April, 1956 to March, 1959.

26207-1-96J

Farm Improvement Loans Act

I am sure hon. members will agree that this is a gratifying and enviable record. In this, the co-operation of the banks deserves much credit. Progress under the legislation has, of course, been encouraged by the guarantee on loans as well as the steps taken by the government in recent years to enlarge the scope of the act. I believe the soundness of the operations is attested by the fact that out of total lending of over $1.1 billion since the inception of the act, accumulated losses during this period amounted to roughly $1,356,000 of which some $134,000 has been recovered. Thus, the loss ratio is only slightly in excess of one tenth of one per cent of the total of loans made.

In conclusion, I should like to say that the provisions of the Farm Improvement Loans Act have been of great assistance to Canadian farmers in meeting their credit needs. The government's proposal for extending these operations for a further period of three years will I submit contribute to the wellbeing of our farm population and will help to ensure the development and improvement of Canadian agriculture.

Topic:   FARM IMPROVEMENT LOANS ACT
Subtopic:   AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.
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L L

William Moore Benidickson

Liberal Labour

Mr. Bsnidickson:

We are only too happy to agree to the extension for a further three year period of a certain sum of total liability for which the Farm Improvement Loans Act will be available. The minister indicated that the last information in front of members of parliament refers to the calendar year 1960. However, I think some of his statistics embraced some activities in 1961. I hope the minister will indicate when we might have available the report for 1961. For the period of the next three years there will be a guarantee of $400 million rather than the $300 million which was the maximum for the previous three year period.

I have no information whatever as to what happened in 1961. If the minister gave us any statistics relating to 1961 I took it in listening to him that they were included in a three year statistical period. In 1960 the amount of lending was over $100 million. This indicates, of course, how worth while this measure is, which was introduced by a Liberal government as one of many to try to bolster the ordinary economy of the country after the cessation of hostilities that had taken so much of our attention prior to 1945. In 1960 there was a progression of lending to the extent that $101 million was lent under this splendid legislation. It is not intended by this amendment to change the purposes of the original act or to enlarge in any way the opportunities of farmers to borrow. The simple fact is that there has been a rising volume of loans under a stable set of terms. But if $101 million was lent-

Farm. Improvement Loans Act

Topic:   FARM IMPROVEMENT LOANS ACT
Subtopic:   AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinlon):

May I ask the hon.

member a question? Has he overlooked the fact that the ceiling on individual loans was raised to $7,500 in 1959?

Topic:   FARM IMPROVEMENT LOANS ACT
Subtopic:   AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.
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L L

William Moore Benidickson

Liberal Labour

Mr. Benidickson:

Yes, I am aware of that but I say that this amending legislation does not involve an increase in the ceiling on individual loans. In fact, on two occasions I had the honour of introducing amendments to the act which increased the ceiling.

Topic:   FARM IMPROVEMENT LOANS ACT
Subtopic:   AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.
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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

You did not introduce the $7,500.

Topic:   FARM IMPROVEMENT LOANS ACT
Subtopic:   AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.
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L L

William Moore Benidickson

Liberal Labour

Mr. Benidickson:

I should say that I did not introduce the bills. In 1953 and 1956 we increased the ceiling on the maximum loan that could be provided. As parliamentary assistant to the then minister of finance I had the honour of piloting the legislation through the house. One additional amendment of that nature was made by the present government in 1959. I acquiesce in that, but there is nothing of that kind in this amendment. I was about to say when I was interrupted that we have no information as to the volume of loans in 1961 unless the minister gives it to us before we pass the resolution, but if in 1960 loans amounted to $101 million is the minister prepared to assure the house that over a three year period $400 million will be adequate?

With the growth that has taken place in farm improvement loans it seems to me that perhaps we should not say that $100 million per year will be sufficient in 1962 or 1963. This legislation, of course, will be operative until June or July of 1965, and I question whether $400 million is adequate. If we have a rate of growth in loans such as we have fortunately experienced, it may become necessary to amend the act again. The amount of losses under this legislation, as the minister has said, has been amazingly low, one tenth of 1 per cent.

Topic:   FARM IMPROVEMENT LOANS ACT
Subtopic:   AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.
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LIB

Paul Joseph James Martin

Liberal

Mr. Martin (Essex East):

One half of one per cent.

Topic:   FARM IMPROVEMENT LOANS ACT
Subtopic:   AMENDMENT TO GUARANTEE LOANS, ESTABLISH LIMITS, ETC.
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March 5, 1962