Mr. George Baker (Gander-Twillingate):
Mr. Speaker, I have a few words to contribute to this debate regarding the Small Businesses Loans Act. I want to indicate the negative impact that this Bill will have as it relates to high unemployment areas in Canada.
In order to facilitate loans to businesses, whether it be a Government program or strictly a bank program, one must realize that various areas of Canada have different needs. When considering the Federal Business Development Bank or the Small Businesses Loans Act, one must realize that there are certain areas of Canada that need that legislation in place in order for them to deal with the banks or with the federal bank itself. While it may be feasible to discontinue the operation of the Federal Business Development Bank in certain parts of Canada-there appears to be an opinion in the Chamber that the bank may have outlived its usefulness in certain parts of this country-I can assure the House that that is not the case in the high unemployment areas of this country. Due to the attitude prevalent among the banks and private lending institutions in those areas, it is very difficult for a businessman to obtain loans at various times for various businesses.
The same is true of the Small Businesses Loans Act. I believe it is a step backward for the House to pass legislation that imposes restrictions on the granting of those loans and the cost of those loans to a small businessman. I refer specifically to the provisions of this Bill which will impose a fee on the bank to pay the federal Government for issuing the loan.
The representations made to the standing committee by both associations that represent small business in this country have suggested that that mechanism be transferred to the lender. I believe this suggestion goes back to associations that
look at business on a national scale, that average it out across the country, whether or not the area is rich or poor, whether or not business opportunities exist, and more importantly, what the attitude of the lending institutions is in that particular area of the country.
According to this Bill, the Government will no longer allow a 100 per cent guarantee on the loan issued by the bank. Instead, there will be a retraction to 90 per cent of the total value of the loan. Again, this presents a flaw for the business community in eastern Canada, specifically in Atlantic Canada.
We should remember that when a businessman obtains a loan under the Small Businesses Loans Act or from the Federal Business Development Bank, it is only for a portion of the total amount needed for that business. I am not aware of any loan program that is guaranteed 90 per cent, 100 per cent or even 75 per cent by any Government agency in this country. In other words, even under the Small Businesses Loans Act the businessman must contribute a portion of the total cost depending on the type of business he is expanding or setting up. It can vary from 10 per cent to 20 per cent according to the Small Businesses Loans Act.
The small businessman has an investment that he must protect. It is not, as the two organizations representing small business in this country have improperly stated, a give-away to the businessman at all because he is taking the risk and if he does not pay up he will lose his investment and perhaps his entire life savings to that business expansion or creation. We should remember that when dealing with this legislation.
The two main aspects of this Bill include the fee which is imposed on the bank in order to utilize the Small Businesses Loans Act and the reduction of the Government guarantee from 100 per cent to 90 per cent. There is a third factor to this Bill that I do not believe has been referred to by parliamentarians so far. It is that the regulations under this Act as they relate to the fee and to the very mechanism of the Small Businesses Loans Act can now be changed by the Minister through Order in Council, through regulations. That should be a primary consideration for Members of the House when this Bill goes to committee in attempting to determine whether or not it is beneficial for the Minister to have ultimate power with respect to future changes to this legislation.
When you look at a Bill such as this one before the House of Commons, Mr. Speaker, you tend to think that perhaps the Government is doing something for business in all areas of this country. That brings to mind the fact that there are regions that are different. There are businesses present in certain areas and in certain provinces that are not present in other areas. I
February 25, 1985
Small Businesses Loans Act
give as an example the Atlantic Provinces. Sometimes the presence and encouragement of small business is not paramount in the minds of Governments when they make decisions, and it should be. For instance, I was very pleased recently to see an agreement signed between the federal Government and the Government of Newfoundland regarding offshore resources. I was pleased to see that because it brought to an end years of wrangling, years of political argument-and I say political because it was more politics than anything else. I did not really become involved in this political argument up until now because I did not really believe it would have any great impact on my district on the northeast coast of Newfoundland. I believed it to be more politics than anything else.
When I looked at the Atlantic Accord-and it is interesting that it is called the Atlantic Accord and not the Newfoundland Accord-which was signed by the two Governments, I noticed that the one grave error in the agreement was that it neglected to recognize the importance of business being established in the Province of Newfoundland as a result of the utilization of that natural resource. That is a tragic error, Mr. Speaker. It is an error which I believe in 20 years' time will probably be seen to be the greatest error in Newfoundland's history.
I have a reason for saying that. Section 54 of that Agreement says that that natural resource, offshore oil, will be treated as if the natural resource were on land. But then Section 54 says that that resource must go first to existing industries in eastern Canada that utilize oil. Then it says that in excess of that a new industry will be allowed to be established in the Province of Newfoundland. It goes on to say in the agreement that Newfoundland will receive x number of dollars into the provincial treasury, which is a good thing for the operations of the Newfoundland Government and in providing services to the people of Newfoundland. That is what all the hoopla was about. That is what all the press conferences were about. That is why the Prime Minister (Mr. Mulroney), the Minister of Energy Mines and Resources (Miss Carney), the Premier of Newfoundland and the Government of Newfoundland were so happy.
But hidden in that Accord was that one clause that discriminated against business. It discriminated against business and it discriminated against future small business that could be established in the Province of Newfoundland. I say it is an error because no matter how much money you give to a Government it all boils down to how much money is in circulation with business in that province; because that is what determines the prosperity of that province in jobs. I say that because when I look at the Province of Alberta, the Province of Saskatchewan or the Province of Ontario, one can see how a natural resource then leads to the establishment of small and big business relating to that resource if it is utilized in the proper way. I am referring specifically to the petrochemical industry and to the chemical industries which are primarily offshoots of oil refineries in the country. This is where we see the jobs. This is where we see small businesses and big businesses setting up.
The Minister of Energy says that after eastern Canada is taken care of we will have businesses operating in the Province of Newfoundland and utilizing that offshore resource. Then I read in the statement that there was perhaps a billion barrels of oil in eastern Canada off the coast of Newfoundland. That sounds like a lot. That sounds like businesses could establish in Newfoundland. However, a billion barrels of oil is only a thousand million barrels of oil; that is all it is. When we look at the production in Alberta and at Canadian production, which runs over 300,000 cubic metres per day, and we multiply that by 365 days, and when we look at approximately 1.3 million barrels per day being consumed in the country, we quickly realize that at best, so experts claim, with the one billion barrels of oil we can take care of Canadian needs for about 2.2 years or 2.4 years, no matter how we look at it.
Then if we examine eastern Canadian consumption in the refineries in the petrochemical industry in the Province of Quebec-and I am thinking about Petromont which is in the area represented by the Hon. Speaker who is in the chair today-somehow we believe that under this agreement we were more concerned as a national Government about the future of Petromont than we were about the establishment of new business in Newfoundland.
There is a reason for saying this. I should like to deal with capacity in eastern Canada because that is the only thing to which Hon. Members can relate as far as refineries are concerned. When we look at the capacity, it works out to about a third of the total capacity for all Canada.
Subtopic: SMALL BUSINESSES LOANS ACT
Sub-subtopic: MEASURE TO AMEND