May 16, 1978

LIB

John Napier Turner

Liberal

The Acting Speaker (Mr. Turner):

Order, please. I regret to interrupt the hon. member but his allotted time has expired.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
LIB

Paul Edmund McRae

Liberal

Mr. McRae:

May 1 have just one more minute, Mr. Speaker?

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
?

Some hon. Members:

Agreed.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
LIB

Paul Edmund McRae

Liberal

Mr. McRae:

I am just completing my remarks. Because of the nature and bigness of these corporations, there is great concern here. This concern must also be felt by the global corporations. In conclusion, I support the nature of the motion. I am very pleased that we will not be voting on this motion,

Small Business

but it is one we can all discuss. We can raise points and make suggestions and, in the end, it is hoped we will have a much more viable small business community in this country.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
PC

Herbert Thomas (Bert) Hargrave

Progressive Conservative

Mr. Bert Hargrave (Medicine Hat):

Mr. Speaker, this allotted day debate on small business is very timely indeed, particularly since it follows the day after the tabling of the Bryce commission report on corporate concentration.

About two weeks ago, during my nomination meeting in my constituency of Medicine Hat, I made this very short and succinct statement which I think is appropriate in this debate:

We should let the private sector operate with much less government restraint and involvement and, given such an opportunity, the private sector would stimulate far more jobs than any make-work projects by governments.

While it is obviously an over-simplification, it seems to me that statement, in a nutshell, is what the Bryce commission report had to say in its 450 pages which came out yesterday after three years of serious work. However, today I want to relate this small business theme to Canada's agricultural industry and, if time permits, to a few other local small business operations that are typical in my constituency.

The original small business in Canada, as in many other countries, is, of course, farming. Every farmer by any definition is a small business operator-manager. In the total picture, they are certainly the most important since they produce society's prime necessity, food. If there has to be a case made for private enterprise, then surely farmers lead the way. As a group, they are probably the last natural private enterprisers left in our society today.

Farming, at least many sectors of it, as a business has had some rather serious problems over the past three or four years. There are now some indications we are emerging from at least some of the short-term difficulties. I want to now examine some of these situations.

I want to make reference now to Canada's hog industry, especially in western Canada. Over the last three or four years, Alberta's hog population has dropped by about one million hogs. At the same time, Quebec's hog population increased by that same amount, about one million hogs. At first glance, it would appear that we have lost our western hog population to Quebec, but this is not so. We lost it to the United States.

Last year, 1977, Canada had to import 202 million pounds of pork from the United States. In that same year we exported only 20 million pounds to the U.S.A. The Quebec hog increase was the result of their provincial incentive and subsidy programs. However, in total we could not produce enough hogs to supply our own requirements. That was last year, and the same situation appears to be continuing now.

Why has this situation developed? I suggest that we lost those million hogs in the west because of a change in the price of our barley. Over that three to four-year period, western barley changed from three bushels for $1 to one bushel for $3. The small businessman hog producer made the obvious business decision to sell his barley instead of slopping hogs. It was the right decision under those circumstances.

May 16, 1978

Small Business

An added reason was the lower cost of hog production in the United States corn belt. Although western barley is somewhat lower in price now, somewhere between $1.75 to $2 a bushel in the west, this situation still exists. There is no stampede back into hogs in the west.

This hog situation has had some serious implications in the west in many of the related industries. Our meat packing industry, which is very labour intensive, now has a serious unused slaughter capacity for both hogs and cattle, especially in Alberta. Our 17 major slaughter plants in Alberta have seen three or four closures over the last year, and more will likely follow. Some of these are modern, efficient plants like our plant in Medicine Hat, which closed rather suddenly in late December.

Our livestock trucking service industry, a very valuable industry that we cannot get along without, has experienced a serious backlash from this meat packing crisis. The fact that cattle and meat prices have suddenly taken off to record high levels has not changed the bottom line problem for our western Canadian meat packing industry.

There is no easy solution to this hog production situation, certainly not in the short term. Surely the long-term approach must be for all concerned to recognize that the natural and obvious market for our western barley is right on the farm where it was grown, or on the one across the road with a hog operation or cattle feed lot on it.

Crop prospects now all across western Canada are very, very favourable, even at this early date. They are favourable because of excellent moisture conditions which extend over the whole of the west. This is in sharp contrast to last year's very serious drought conditions.

A somewhat later seeding, possibly due to wet fields and cool weather, could mean more barley being seeded and less wheat, perhaps all across the west. We might very well produce more feed grains than wheat in Alberta this year. We could see a western barley crop in excess of five hundred million bushels.

If an increasing portion of these feed grains could be fed on the prairies and converted to value-added food products, the load on our railway grain transportation system, which is now very heavily overloaded, would be considerably lessened. We should be exporting our domestic value-added agricultural products, especially to the United States, and not exporting those secondary value-added jobs. This is what is happening when we now export our live feeder-cattle to the United States.

Let us examine that overloaded railroad grain transportation system to which I just referred. The problem has been building up since the mid-sixties. I refer hon. members back to the government task force on agriculture. Among other things, it recommended that two out of every three western farms should go, as there was no real future in the grain industry. It also recommended that we should export 500,000 feeder calves from western Canada every fall because we could not grow them out or finish them in the west. This was followed by the

famous LIFT program. It also indicated that the government had no confidence in the western grain and feeding industry.

The immediate problem is the shortage of boxcars. There is no labour problem. There are no rail stoppages. In 1975 the railways had 20,000 boxcars and 6,000 government hopper cars. This car count has now shrunk to 13,000 boxcars and

8.000 hopper cars, for a net loss of about 14 million bushels capacity. It is expected to decrease by another five million bushels capacity by the end of this year. The immediate need is for a boxcar repair program to provide some relief until the

4.000 new hoppers requested by the Wheat Board come into service. Our country elevators and branch line systems have never been a bottleneck. Yet for political reasons these areas have received all the attention over the past decade.

These are situations which have hurt every small businessman farmer in western Canada over the last ten years or more. Well-planned, long-range solutions are required, some of which will take years to implement. One such issue requiring attention concerns the statutory rate, or the Crowsnest rate, as it is called. This has been with us for 70 years or so. It won't go away by itself. We shall have to face up to it some time, though that cannot possibly be now, or before the election, whenever it comes.

Now I want to turn to a brief review of other small business matters. I have selected a few examples from my constituency which are typical of what one could find in most regions of Canada. I want to show how small business operators, especially in the rural areas, have been able to get along. First, there is a hockey stick manufacturing company in the short-grass country near Medicine Hat which combines imported Thailand hardwood with British Columbia wood to produce "Westar" hockey sticks used in our western junior league to a large extent and chosen in competition with well known brands manufactured in central Canada.

There is a glass blowing industry called Altaglass involving only six people which creates beautiful works of art through an almost forgotten trade.

There is another manufacturing plant called Scott Manufacturing which specializes in playground equipment and large outdoor Christmas decorations. They ship their products all across Canada, a fair amount going into the northwest United States.

In the towns of Brooks and Bassano there are a variety of small business manufacturers catering to the oil and gas industry. Needless to say their business is flourishing in Alberta today.

In Taber, the heart of the irrigated area, there are other specialized industries which relate to the highly developed and productive irrigation zone in southern Alberta.

These are just a few examples of small businesses which fill a great need, a need which was not being supplied from other sources. They are typical in that they turn their profits back

May 16, 1978

into their businesses within their own community. That is the only way they could get started and expand.

Hon. members may recall Winston Churchill's description of Britain in the dark days of the war as "a nation of shopkeepers".

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
NDP

Stuart Malcolm Leggatt

New Democratic Party

Mr. Leggatt:

It was Napoleon who said that, not Churchill.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
PC

Herbert Thomas (Bert) Hargrave

Progressive Conservative

Mr. Hargrave:

Surely it is appropriate to suggest that Canada is a nation of small business operations with farmers leading the way. The time is long overdue for considered attention to be given to our small business sector along the lines of the motion we are presently debating with its five-step policy suggestions.

Before concluding these brief remarks it seems appropriate to comment on the Bryce report which I mentioned at the beginning of my speech. The suggestion that the capital gains tax should cease can be taken as the end result of seven years of serious inflation which began with the introduction of this new tax approach on, I believe it was, January 1, 1972. It seems to me that either the capital gains tax has to go or inflation must be positively controlled. The capital gains tax rollover provision in the budget last month affecting incorporated family farms is a direct result of the serious threat to family farms due to a combination of inflation and the capital gains tax.

As to the other suggestion in the report that we can live with big business, 1 say that if Canada is serious about engaging successfully in international trade, big business is not only justified but necessary, if only to take advantage of economies of scale. I can also agree with the recommendation in the report that corporate profits ought not to be taxed provided they are re-invested in the business. After all, that is how all business grows, especially small business. I would add, in conclusion, that farmers have always had to do this, though with them it has been a survival technique.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
LIB

Alan Gray Martin (Parliamentary Secretary to the Minister of Consumer and Corporate Affairs)

Liberal

Hon. Martin O'Connell (Scarborough East):

Mr. Speaker, the importance of small business in the Canadian economy can be doubted by no one, not only in terms of the number of firms that are small business firms- something like 90 per cent of all the firms in Canada-but also in terms of the employment created by those firms. Well over one third of all the members of the work force are in small business firms and at least one fifth of all the value of goods and services produced in Canada is in small business firms.

We cannot doubt the importance of policies to foster the viability and success of these firms, nor can we hide from ourselves the fact that small firms in many Canadian small towns across the country are in a state of difficulty. This difficulty arises from erosion of their position. In some cases they are simply manufacturing goods of a standard technological character and are faced by competition coming over the horizon from the third world countries where there has been a transfer of technology, a transfer of industry. We support that, but we also have to take special measures now because small industry in our country is threatened.

Small Business

Just think of some of the small companies in many towns manufacturing, for instance, bicycles or textiles or chainsaws or auto parts. Sometimes they provide income and support for the whole community. Therefore, support for small industry is important. It is important socially and economically to maintain small communities. It is important from the point of view of regional balance in Canada. How much of industry is concentrated in the central provinces and how great a sense of unfairness can develop across the country if there is not a fair share of industry in the towns and cities in parts other than central Canada? Policies have to take account of that concern too.

Small industry is more than a romantic ideology. It is possible economically with today's technology to have a thriving and decentralized economy with small industry, and many countries demonstrate that, as does ours to some extent. It is not only possible but it is good social and regional policy as well. So I would like to congratulate the mover of the motion for bringing it forward and giving us this opportunity to make some remarks by way of proposing a network of supporting policies. I say network because what I want to stress, as indeed the motion does, is that there is needed not one given policy but a whole network of policies.

Let us look first at the question of taxation. Too often we think of taxation as the only way to approach the problems of industry, particularly small industry. Already major steps have been taken, inadequate as I suggest they still are, but we should at least recognize that the government has, in effect, rolled up its sleeves with respect to the problems of small industry. It is moving, not only by the creation of a special secretariat in the Department of Industry, Trade and Commerce and a special minister, but also by a whole host of provisions, including tax provisions.

Let us review some of them to see what has been done. There is a special low rate of tax on the profits of small companies. It amounts to 25 per cent compared with the 46 per cent maximum rate of tax on larger companies. There are rebates and tax incentives for investment in research and development. Most recently in the budget, two tax measures were brought forward. There is the proposal for tax credits of 5 per cent, ranging up to 10 per cent in slow growth areas, for new investment in industry and for research and development.

Then, in the most recent budget, there was a special measure to increase the write-off for new research and development over a certain base period. This added budget measure will allow small and large companies to deduct from their income 50 per cent of the costs of increased R&D activities, a very important measure for small business. This would raise the total immediate write-off to one and a half times the amount spent on new R&D. For example, if a company spent $100 on new R&D, it could write off $150 against the taxable income.

This is of considerable help to small business. What would be the savings to a small business? These tax savings would amount to about $16 in every $100 of new expenditure on

May 16, 1978

Small Business

research and development. Instead of the net cost of R&D after tax being $75, the net cost would be approximately $59 in Ontario and $55 in the slow growth regions of Canada.

I should like to suggest an improvement over even this salutary measure which I hope the Minister of Finance (Mr. Chretien) will take into account. It would be an improvement on behalf of small business not granted to large business with respect to these R&D tax incentives. The point is that small businesses pay a low rate of corporation tax on their profits. When that low rate is applied in the R&D context, it means that small businesses receive, in effect, a lesser advantage than that gained by corporations paying at higher rates of taxation. I would like the minister to consider whether it would be possible to expand the tax credit in the case of small businesses.

What are the objectives of R&D? I think we should be clear on what they are because the network of support policies have to focus very strongly in this area. The objects of R&D are to help a company to be technically advanced in its processes, in the methods it uses, in innovating new products and in modifying a product which it has in order to expand its market-in effect, to be aggressive in the entrepreneurial sense, to be right at the leading edge of change in the market.

In the face of these needs, Canada has one of the poorest performances in R&D among the western industrial countries and its performance has actually deteriorated in recent years. Does anyone really believe that this poor performance in R&D is related mainly to the tax environment? I do not think so, and I do not think the situation can be corrected by simply applying tax incentives and tax measures.

The tax environment can help, but there are other aspects that I think are more important. One of them is the relationship between and within firms that exists in a country like ours because of the high degree of foreign control and ownership in the economy. I do not say this in an aggressive sense but I wish it to be recognized that it is the practice for companies to do their main R&D at their head offices where their main market is and where their main corporate strength is. That means that Canada gets R&D transferred to it after new technology, new processes and new products have been developed elsewhere. This lag is important because it puts us behind in getting into new markets. We come in late.

We should recognize at the same time that many subsidiaries of foreign corporations do significant R&D in Canada. The picture is a mixed one. For example, Ortho Pharmaceutical, which is a wholly-owned subsidiary of Johnson, and Johnson, a huge multinational company, has one of the few research and development laboratories in this industry with 40 scientists who have developed worldwide products in certain fields. That is the kind of autonomy and relationship that we need, but all subsidiary firms do not have it. Canadian General Electric has it to a limited extent, so does Eli Lilly and so does Hewlett Packard, DuPont and others; but in the main our branch plant economy lags in R&D because of that parent subsidiary relationship. We have it in our own case where Northern Telecom, a Canadian multinational, does its R&D in Canada.

What we need to do is to examine the relationship which is dragging R&D down in Canada. I think we can do that in the 23 task forces which have been set up a month or so ago and which are due to report for the first time in six weeks. They are developing action plans in 23 sectors, such as in plastics, in the auto industry, in pulp and paper, in mining, and in other manufacturing sectors. They can examine the impact on R&D of the high degree of foreign ownership and control which exists in Canada. We should not rely simply on changing the tax environment, because it will not change fundamentally the underlying patterns which are well entrenched.

I should like to suggest further in this connection that perhaps we should be considering a Canadian institute for intermediate scale technology. There is, however, a bias against new agencies and new initiatives of this kind. Nonetheless, it will work against our interests if we allow that bias to proceed too far. Why do I suggest a Canadian institute for smaller scale technology? In the first place, small businesses to succeed, certainly in manufacturing, have to be discontented with simply being a manufacturing firm manufacturing products on behalf of some other firm which has done all the design, all the research, all the development, and then says: "Bid on this contract. If you succeed fine, if you do not, we will go elsewhere". They must have independent, autonomous sources of product improvement and process improvement. Given the fact that we are on the lagging end because of the ownership and control situation, perhaps we do need research into intermediate scale technology to help Canadian businesses benefit from those improvements by developing them, and ensuring those improvements get into their operations.

As many hon. members have mentioned, perhaps we also need export consortia to help small firms grow out beyond their regional and domestic market. Because they are small and do not have a marketing organization to sustain the penetration of foreign markets, it would be an advantage for government to assist in the formation of export consortia. Let us not be driven off from such proposals by the argument that yet another government bureaucracy is being formed.

My main point in all this is that tax incentives are the easy way out. They will not do the whole job because of the particular problems we are faced with. I am referring to problems with the third world, the industrialized world and the scattered character of the Canadian economy. One aspect of the motion I should like to support was proposed and passed at the Liberal party national convention. I am referring to an amendment to the Income Tax Act which would suspend the operation of capital gains tax when small businesses pass within families or indeed to employees of firms.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
?

Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
LIB

Martin Patrick O'Connell

Liberal

Mr. O'Connell:

I am glad to see the party opposite has reached the same conclusion. Obviously that is because the need is evident. I hope it will not take long for the Minister of State (Small Business) (Mr. Abbott) to convince, with our

May 16, 1978

assistance, the Minister of Finance of the importance of that provision.

There are other tax breaks for small businesses which are appropriate at this time as part of a network. Again I say that they are not the entire story. The Minister of State (Small Business) is proposing and developing what Americans have called small business investment corporations. We are likely to call them small business venture capital companies. What is such a company? Canadians with some savings can put their money into an intermediary corporation known as an investment corporation, a venture capital corporation, and not therefore directly into a small business itself. What will that venture capital company do with the money? It would invest in a number of risky ventures, some more and some less risky than others. It would diversify its total investment. It would protect investors by its diversification. It would be similar to an insurance principle. If one puts one's own money into a risk area, the risk is quite high. If one puts one's money into a company involved in the business of investing money in a diversified manner, then one has a chance at making a profit. Thus our small Canadian companies would be provided with the venture capital they need to go forward. Currently we lack such institutions. As I understand the minister, he is proposing their creation through a statute. I am sure all hon. members would support that.

What would be the inducement for Canadians to put money into such ventures? Well, they are given tax incentives. What kind of incentives? They are not difficult to find. They are allowed to write off any losses they might incur against other income. Also, they are allowed a lower than normal rate of tax on the gains made. As they look at the prospect of making gains with lower tax and being sheltered against total losses, then they will put their money into such a venture capital corporation. Entrepreneurs who would be assisted through other means in the network of policies would have this new source of capital with which to be innovative in products, and to become involved in new industries. With the capital gains adjustments mentioned earlier, they would be encouraged to retain capital and build it up.

I should like to mention another item, the special funds such as those the Canadian auto part manufacturers are requesting. This is not a tax measure. They are asking for repayable loans. Why are they requesting that? It is because we are entering a new phase of the auto industry. There is a demand for smaller, more economic, energy-saving, safer cars. The manufacturers will be required to make new parts. They will be using more plastic parts and will require new designs. Will we have our share? The auto parts industry is asking for a loan fund of a quarter of a billion dollars. That would be a repeat of a similar loan fund which was implemented 10 or 12 years ago when the auto pact began. They need such a fund again. Most of the money loaned from the previous fund was repaid. That is one method of assisting many of the smaller plants in the small towns and large cities across Canada. It would assist them in becoming involved in the next phase of the auto industry.

Small Business

My time is running out but I should like to refer to the plastics processing industry. That industry has 1,400 firms. It is growing at twice the rate of our economy. Its productivity gains annually are twice the average in the manufacturing industry. It requires stabilized framework policies in tariffs and taxation. Above all, it needs a plastics institute to assist in the development of new technology in order for that industry to become very advanced. Other policies could be mentioned in the areas of procurement and tariffs.

At this stage, however, I should like only to refer to the need for a change in the internal organization of the federal government. We require more than a minister of state for small business. There should also be a senior economics minister. I am thinking of the office of the Deputy Prime Minister and President of Privy Council (Mr. MacEachen) as being assigned that role. One should consider the government's position in policy, the need for coherence and the meshing of policies. For example, one could look at such economic ministries as the Department of Regional Economic Expansion, the Department of Industry, Trade and Commerce, the Department of Finance, the Department of Science and Technology, as well as others. At a time when policy and the creation of certain agencies are being considered, surely we need one minister who can bring it all together. The Deputy Prime Minister and President of Privy Council is the person who ought to be assigned that special role.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
?

Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
PC

A. Daniel McKenzie

Progressive Conservative

Mr. Dan McKenzie (Winnipeg South Centre):

Mr. Speaker, I congratulate the hon. member for High Park-Humber Valley (Mr. Jelinek) for presenting this excellent motion today. If all of the recommendations in this motion were accepted and implemented, certainly Canada would be back on track. It is evident we are off track today.

There was a previous excellent motion regarding the role of government in society and the economy on February 2, 1978. It was an attempt at bringing some sanity back into the Government of Canada. Also it was an attempt at bringing expenditures under control and to implement methods to limit the growing and undemocratic use of legislation which stifles Canadian businesses. Of course, the Liberal and New Democratic Parties united to vote against this excellent motion on February 2. No doubt we are going through an exercise of futility tonight.

It was interesting to hear the hon. member for Scarborough East (Mr. O'Connell) talking about venture capital. I have in my possession a document which was prepared by Peter Henry Jerch and Associates. Mr. Jerch in this document, which appeared in a recent weekend magazine, states:

For years I've been hearing the same scenario over and over again, with hardly any variations. It goes like this: Canadian entrepreneur develops hot idea, sets up company, gets successful in a small way, needs money to expand, goes to banks, goes to government agencies, goes to venture capital firms, knocks on half the doors in the Toronto-Dominion Centre, gets nowhere; his proposal is met with

5490

May 16, 1978

Small Business

incomprehension or, at the very best, a cautious display of interest that's followed, weeks later, by a short letter saying no thanks.

Mr. Jerch in his document goes into some detail about the 40 firms he represents which are looking for capital venture so they can expand but are getting absolutely nowhere.

I should like to congratulate the Minister of State (Small Business) (Mr. Abbott) and the government for the excellent job they are doing to expand the economy. Unfortunately it is not the Canadian economy they are expanding but rather the economy of the United States. They are doing an excellent job of driving businesses and money out of this country, to the extent of billions of dollars.

I have done a little research into this and I know the amount of money that has gone to nine states. It totals $6.5 billion since 1976. Would it not be wonderful if we could have kept that money here for venture capital? We would then really have grown. I would like to challenge this government tonight, and perhaps the Minister of State (Small Business) could take this up with the Minister of Finance (Mr. Chretien), to determine how much has gone to the other 41 states. If $6.5 billion has gone to nine states, what are we looking at in regard to what has left this country? These businesses are just not staying here. Businessmen have no faith in this government and are losing faith in this country. They are flocking to the United States with billions of dollars and numerous business ventures.

I have done a geographic breakdown in respect of this departure of businesses and money. Florida is going to be taken over by Canadians. The estimated capital expenditure in the state of Florida by Canadians is estimated to be more than $2.5 billion. While Florida is attracting large amounts of Canadian capital, California has become the second most invested area. To this date over $1.5 billion from Canadian pockets has ended up in California. Texas and New York comprise the third largest area of investment for Canadians, and the figure is $1.3 billion. In Colorado $500 million has been invested. In New Jersey the figure is $400 million, in North Carolina it is $400 million, and in the states of Georgia and Illinois the amount invested is $300 million. There is one area I have left off which should be listed. Some 30 per cent of the high rise apartments in Seattle, Washington, are owned by Canadians. Canadian Pacific invested $150 million in New York recently.

The Ottawa Citizen did an excellent study last year on the number of businesses moving out of Ontario. That article pointed out that 140 Canadian manufacturing firms moved to the state of New York, taking $28.6 million with them.

Union Nationale Leader Rodrigue Biron pointed out recently that $4 billion has left the province of Quebec. You can see how serious the situation is, Mr. Speaker. Until this situation is corrected we can talk all we want about the nice things we are doing to help Canadian business, but where will the money come from? As I have just pointed out, in respect of nine states alone $6.5 billion has left Canada for investment there since 1976.

Peter Henry Jerch and Associates also prepared a document regarding the number of firms they represent. That firm represents 42 Canadian firms, and right now 30 of them are looking for expansion or a move to the United States. Let me give the reasons why they are going. While the known facts about small private investment in the U.S. makes Canada the most active foreign investor, even these facts are considerably understated according to Mr. Jerch. The vast majority of such investments or acquisitions are never reported officially, mostly for the reason that the normal successful businessman is good at operating a business but is generally publicity shy or fears that he may get burned somewhere in that process and that it may hurt his business to expose the transaction prematurely.

This is one of the problems we have when these investors or businesses decide to leave. They do not put ads in the paper. I hope the government is trying to keep some track of the number of businesses which are leaving as well as the amount of investment money they are taking with them in order that we can see how serious this problem is. This is a matter which has been raised in the House a number of times. The Prime Minister (Mr. Trudeau), the Minister of Industry, Trade and Commerce (Mr. Horner) and the Minister of Finance have been questioned a number of times about this but we have received nothing but a negative response. We have seen absolutely no response from them, and no suggestions about meeting with these people in an attempt to keep this investment money in Canada.

In addition, Mr. Jerch goes on to say that many of these businessmen have tried to make their experience known, only to meet with civil service or political apathy. The experienced businessman therefore adopts the attitude that he should stick to what he knows best. Of course, they are worried about government reaction too, which tends to take the approach of controls-for example, control on exchange, like Italy, rather than taking the enlightened approach of making equity investment in a company at home less of a risk.

Mr. Jerch, in this document he has provided to me, points out that of 42 Canadian smaller and medium-sized active manufacturing and service enterprises, only 12 were looking for acquisitions in Canada only. Some 15 thought they would consider a further acquisition or investment in Canada as a second alternative, which suggests that reason tells them to go elsewhere, but they still tend to be optimistic despite all their complaints. However, 30 of the 42 are either actively looking in the United States or have already made one or more acquisitions or investment decisions there.

He also provided me with a document regarding a group of firms in Manitoba on whose behalf he was working. They total

49 and all are planning to move out of Canada. The amount of investment money they would be taking to invest in U.S. plants would amount to $196 million. According to Mr. Jerch's figures, this would mean a loss of up to 17,000 Canadian jobs.

50 hon. members can understand the difficulty we are running into.

May 16, 1978

Let me give additional reasons for this flight of capital and business. There are numerous reasons that money is fleeing Canada, and all of them are directly related to the economic policies of this government. Let me now examine briefly some of the more important causes of the lack of business confidence in Canada. Such an analysis will clearly show that neither Canadian businessmen nor American chambers of commerce can be blamed for the exodus of capital from this country.

Contrary to widespread public belief, the Quebec situation is not the only factor accelerating Canadian investment abroad. While events in Quebec have had a serious negative effect on investment in Canada, capital had been departing this country at alarming proportions for several years prior to the election of Mr. Levesque.

The way to judge whether you have a good government and an attractive country is to determine whether you can attract investment money. Canada is no longer a country attractive to investment money. We cannot even keep the investment money of our own companies in this country. If there has been an exodus of $6.5 billion from Canada to nine states, I wonder what the amount has been for the other 41 states. Are we looking at $100 billion which has left Canada in the last few years? This is a staggering thought. There will be a huge burst one of these days when we find out the total amount.

We know what the effect of this has been in Canada, or at least the partial effect. We have one million unemployed, and unemployment is costing Canadian taxpayers $8 billion a year. More specifically, a climate of uncertainty has existed for several years in Canada, created by the policies of the present government. The best climate for quarterly and normal business growth is economic and social stability. During the decade this government has been in power, Canadian businessmen have been living in a state of uncertainty and insecurity because of the lack of leadership by this government.

Instead of enacting policies conducive to investment, the government seems to have done everything in its power to scare it away. The vast increases in spending, the proliferation of boards and regulatory agencies with numerous arbitrary powers and overlapping jurisdictions, and the lack of consultation for enterprising entrepreneurs, are just a few of the factors contributing to the uncertainty. These policies reflect the socialist leanings of this government, and it is no wonder that businesses look elsewhere when investing their money. References by the NDP to the effect that corporations are welfare bums does little to enhance investor confidence in Canada.

Mr. Jerch did a study on the number of businesses that were leaving Manitoba when the socialist government was in power. The number pulling out plus invested money would contribute to the loss of 4,000 jobs in the province of Manitoba.

Also related to the preceding point is the problem of too much government. The ever-increasing size of the federal public service and the problems created by this expansion are factors which hinder business activity. Businessmen are forever

Small Business

hassled by federal regulatory agencies, departments, boards, bureaux, offices and councils with their myriad of rules, regulations, laws, edicts, orders, decrees and statements. In short, they are inundated with paperwork. Moreover, should a businessman disagree with a ruling it is extremely difficult to appeal to that body, and the time and effort involved usually precludes an appeal anyway.

Businessmen do not run into this problem in the United States. The government and labour there welcome businessmen and investment money because they know there is no alternative to a business establishing a factory or a plant. They do not harass businesses to death.

Government involvement in the economy has increased to the point where 42 per cent of our GNP, which is the sum of all goods and services produced in Canada, is produced by the government. If present trends by provincial and federal governments continue, 88 per cent of all goods and services produced in Canada by 1990 will be under the state. Only 12 per cent will be left for private enterprise. That is the reason why businesses are pulling out. They have no faith in their government. There is so much uncertainty that they are not going to leave their money here.

It is all very well for government members to be talking about venture capital and what-have-you. There is not going to be any venture capital in this country. This is high risk capital, and nobody is going to take any risks in Canada. The solution to the problem is to slowly reduce the size of the government, not through massive lay-offs of dedicated civil servants, but by attrition. In addition, wasteful make-work projects could be eliminated. If governments want to make work, the best way to do it is through proper incentives to private industry.

Our motion on February 2 of this year was put forth to deal with these things, but the last thing this government wants to do is to reduce the size of any of its bodies. The NDP want more and more government employment because they want to do everything in their power to harass business as much as they possibly can so they can drive more and more of it out. They want everybody to work for the government. Everybody is going to work for the government and they are going to chase every business out of the country. That is what they want to do and they are successful. We saw it with Blakeney in Saskatchewan when he started it all in 1975 by nationalizing the potash industry. He put the fear of death into the American investor. They also did the same thing with the mining industry. Our friend from New Westminster (Mr. Leggatt) knows his leader in British Columbia put the fear of death in business and investors in that province.

I have a very interesting quote from Mr. Neil Wood, president of Cadillac Fairview Limited. He was quoted in the Ottawa Citizen recently as saying:

We're not selling out Canadian assets, nor turning our back on good Canadian opportunities, but they are few and far between. Government delays in getting approvals continue to frustrate us in Canada compared with U.S. where development is welcome.

80038 -5 7V2

May 16, 1978

Small Business

It is not welcome here with the socialist governments we have at the federal and provincial levels. Thank goodness there is only one left.

I would like to go now to some quotes from American newspapers. The Dallas Times Herald of February 19, 1978 says:

The Canadians are coming! All the battle preparations won't be necessary, but our neighbours to the north are invading-in an investment sort of way ... while the Canadians have invested in everything from mining and petroleum to merchandising and manufacturing, much of their money is being poured into real estate... The list of Canadian held properties is quite impressive. They include an ongoing $1 billion, 42 acre housing development in Homestead, Florida, the purchase of several small but profitable banks in Florida, the Peachtree Centre Tower in Atlanta, the development and purchase of shopping malls and mobile home communities in Florida and North Carolina, numerous new and old office buildings in New York, Detroit, L.A., San Francisco and many more.

There are reasons bringing Canadian investors to the States other than age old desire to make a buck. First, the political climate in the 111 year old confederation is anything but encouraging to business. Add to the political climate the fact that Canada has many more environmental and planning restrictions on development than does the U.S., and one has a picture of a nation with a governmental atmosphere that stifles growth.

This debate is nothing but an exercise in futility because the government have no intention of correcting the situation and are not going to implement one recommendation in this motion. They will merely ignore it, just like they ignored our February, 1978 motion. Their philosophy is to stifle business and to make things as awkward and as difficult as they possibly can for people, and to stick their noses into everybody's business.

Here is another comment from the Miami Herald dated March 30, 1978:

The Canadian dollar is buying up Florida in an escalating and often frenzied scramble to find a haven from political and economical uncertainty at home ... Canada's largest financial and development corporations alike are exporting their savings and surplus capital in a classic flight to find sanctuary.

In my remaining minute, 1 would like to ask the government once again to supply figures for the 41 remaining states. I have given Canadian investment figures for nine states with a total of $6.5 billion in the last couple of years. Let us put all our cards on the table and find out the exact amount that has gone into the United States in investment. I have given some examples of businesses leaving, mostly from Ontario to go to New York, but let us get it all out in the open. I would like to know exactly what this government is going to do about this situation.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink
LIB

Gérald Laniel (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order, please. It being ten o'clock it is my duty to declare that, pursuant to Standing Order 58(11), the proceedings on the motion have expired.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S O. 58-MEASURES TO IMPROVE SMALL BUSINESS POLICIES
Permalink

PROCEEDINGS ON ADJOURNMENT MOTION


A motion to adjourn the House under Standing Order 40 deemed to have been moved.


COMMUNICATIONS-TELEVISION PROGRAMS FOR THE DEAF

PC

Philip Bernard Rynard

Progressive Conservative

Mr. P. B. Rvnard (Simcoe North):

Mr. Speaker, I have asked the Minister of Communications (Mrs. Sauve) on two occasions to provide aid to assist persons afflicted with deafness. There are two million such in Canada. First of all, every Canadian has a right, regardless of this handicap, to an education which will allow that individual to develop and function to the maximum of his or her ability. The government has not seriously considered the needs and the welfare of the deaf. Employment of anyone handicapped rarely occurs unless there is some incentive. Manpower offers some assistance but the response is poor.

Very little money is spent on the deaf compared to what is spent on people with visible disabilities. The working deaf are taxpayers but they work in a world where, if not handicapped by the actual job, they are certainly handicapped by their surroundings which are altogether different from those of other people. They have little or no means of oral education, of hearing the conversation of others or of patronizing the things others do and getting news as you and I get it, Mr. Speaker, even though they have the same intelligence as we have. All this is beyond their means without special teachers. They do not yet have equal job opportunities and our twentieth century society does little to help them.

There are some questions that I should like to put to the parliamentary secretary who is representing the minister tonight. For instance, what education do the deaf get? Are they eligible for the $1,000 tax deduction that is available to other handicapped persons? It is rarely that we see these people rise to the level of university teaching, medicine or the other professions that are high on the pay scale. The George Brown college in Toronto draws a lot of people from all across the country and produces brilliant deaf scholars-many as brilliant as you would find here, Mr. Speaker, and maybe a little more brilliant at times. There is also a fine building for the deaf in Toronto which is being completed by the great war veteran, Con Smyth. I know him and the Reverend Roy Rumbull, Ernie Watts, and others I am not going to mention but who are also very interested in this work.

When I put my original question the minister told me that they are "researching". What are they researching, Mr. Speaker? They already have the decoder so why have they stopped? She said it costs $2,000 but I say let us spend the money. This device has been perfected and is working in the United States. Have funds been made available to Bell North-

May 16, 1978

ern Research, for instance, to go south of the border and research this system?

The decoder may be a bargain at $2,000 because it gives deaf people a chance to hear the things the rest of us hear. What more right have I, who can hear and see, to view the televised proceedings of parliament which is paid for by the taxpayers of this country, some of whom are deaf? Why can this decoder not be used so that they too can follow the proceedings? Are they not entitled to hear the hockey game that is being broadcast tonight? We are shutting these people out of many things because they are a quiet minority, and I say we have to do something about it.

Deaf people are often very innovative. Some of them took the old CN and CP teletype machines and converted them so that they could be used with the telephone. When you punch the keys a light comes on at the number you have dialed, the person there picks up the receiver and they can communicate back and forth. Why are we not pursuing this and getting ahead of the United States, instead of just waiting to copy them as we usually do?

I want to point out to the parliamentary secretary that it costs about $1 million to institutionalize a deaf person for 30 or 40 years. Yet they say the decoder only costs $2,000. Then when the unemployment rate goes up because it is hard for those persons who are a little hard of hearing to get a job, they look at them and say "no". I am not taking anything away from the government or manpower, because I know what they try to do, but look at what has been the response. Hon. members know the response as well as I do: it has been terrible. They just do not get it in this workaday world.

I want to go on a little further to say that there must be ideas and creative work for these people so long forgotten by the public purse which has poured out money on so many things that were far less deserving. Will the minister make a commitment to do something? Will she give some research funds to Bell Northern Research to make sure that the required research is done, and will she check with those in the United States? Will this invisible handicap then become one that will partially disappear?

In closing, I want to say to the parliamentary secretary for goodness sake let us stop putting things off and making excuses. Excuses only last so long. These are people who cannot speak for themselves or who cannot hear all that is going on. They are handicapped people that we all owe something to. As far as possible they try to work and do the things that they can do.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   COMMUNICATIONS-TELEVISION PROGRAMS FOR THE DEAF
Permalink
LIB

Crawford Douglas (Parliamentary Secretary to the Minister of Communications)

Liberal

Mr. C. Douglas (Parliamentary Secretary to Minister of Communications):

Mr. Speaker, it is a pleasure for me to respond to the hon. member this evening. As we all know, he at all times expresses sincere concern for the handicapped of this country and for those less fortunate than ourselves.

I can assure the hon. member that the minister herself feels the concern, as he does, for all handicapped, whether they are

Adjournment Debate

handicapped by loss of hearing, loss of sight or by other handicaps. However, the solution is not as simple as we would like it to be.

I will deal specifically with the hon. member's concern about the captioning and use of sign language in television broadcasting. As he may or may not know, even in the use of sign language we have not as yet been able to come up with a universal type of sign language that can be used from coast to coast across Canada.

As hon. members probably know, sign language came to this country from France possibly about 100 years ago. Since then it has been developed in individual areas in the country to the point where we have a break-up of dialects even in the hand signals or in the sign language used on television. This, of course, presents a problem when we speak about a national broadcast designed to go into homes right across Canada and the United States. The mandate of the Minister of Communications (Mrs. Sauve) is such that she cannot compel the networks, to use this system. In particular this applies to the private networks and the CBC, because the CBC does not fall under the umbrella of the Minister of Communications as far as programming is concerned. She must cajole and try to persuade them. Her mandate falls into the area where she can permit the use of this system but not compel it, as the hon. member knows. She would be pleased to permit this type of broadcasting right across the country.

However, we have learned that there are problems arising in the United States with the private networks which have expressed some concern. There are two types of captioning. One is the use of the sign language itself in the corner of the picture and the other is the proposed use of line 21 for captioning, either open or closed captioning, in the television screen.

One problem with captioning is that they found in limited use in the United States, primarily at the present time by the Public Broadcasting System, that the actual captioning of a broadcast, for example a news program or an hour long program, could involve the work of people from ten to 30 times as long as the actual presentation of the broadcast in order to put it on the air.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   COMMUNICATIONS-TELEVISION PROGRAMS FOR THE DEAF
Permalink
PC

Philip Bernard Rynard

Progressive Conservative

Mr. Rynard:

How about the decoder?

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   COMMUNICATIONS-TELEVISION PROGRAMS FOR THE DEAF
Permalink
LIB

Crawford Douglas (Parliamentary Secretary to the Minister of Communications)

Liberal

Mr. Douglas (Bruce-Grey):

One has been developed at present at a cost, of, I believe, $2,000. There is still work going on with regard to the decoder. Some aspect has been looked at with cable television which would provide a special channel for the use of the decoder.

A final remark, if I may. The hon. member raised the subject of deductions. I hope he will address that at a later time to either the Minister of Finance (Mr. Chretien) or the Minister of National Revenue in order to get an answer on this specific question.

May 16, 1978

Adjournment Debate

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   COMMUNICATIONS-TELEVISION PROGRAMS FOR THE DEAF
Permalink

May 16, 1978