February 26, 1993

LIB

Dennis Joseph Mills

Liberal

Mr. Dennis Mills (Broadview-Greenwood):

Madam Speaker, I want to begin by saying that I am actually just as excited as the government is today about getting this bill through the House.

I am excited about this bill going through the House today because this represents a tremendous opportunity for the 960,000 businesses in this country whose sales are less than $5 million. Many of them have tremendous difficulty in getting access to bank credit.

What has happened here today is that a law will momentarily be passed which will say to the financial institutions of this country that if small business people come into their bank and ask a loan officer for some credit to expand and grow their business or start a business and if that business plan which they present to the financial institution is right and makes sense then under this act the Government of Canada will guarantee 90 per cent of the loan. It will insure it to 90 per cent.

Businesses with sales of $5 million will have a loan limit of $250,000 at prime plus 1.75 maximum, and it could be less. When I say it could be less I would like to give a specific example of a banking institution that came to our all-day committee meeting on Tbesday. We worked into the night and heard witnesses from 9 a.m. right through. The Bank of Montreal was represented. One of the witnesses, Mr. Ronald G. Rogers, senior executive vice-president, personal and commercial banking, said: "The Bank of Montreal will do better than 1.75 per cent, in fact on loans for small businesses of $100,000 and under, it will be prime less 1 per cent".

If the prime is at 7 per cent-I realize that it is less than that today but let us just use that figure for discussion purposes. If a person has a small business and is only looking for $100,000 or less the Bank of Montreal will use the Small Businesses Loans Act, under which 90 per cent of that loan is guaranteed, and will only charge 6 per cent.

If this is used by the financial institutions of this country I really do believe it will get the economy of this country going again.

February 26, 1993

I have been standing in this House talking about small business and about getting capital for small business. I have asked questions in this House. I have participated in 50 different debates in this House during the last 3 years on behalf of small business. I have been pleading, practically begging this government to focus its energies on the small business sector because that is where the job creation potential is. That is where the greatest hope for new job creation lies in this country.

It is no secret to anyone in this House or anyone in this country that all the major corporations are downsizing, that they are laying off workers. My goodness, I think of a small city like Hamilton where Stelco and Dofasco laid off something like 1,200 people at a shot, or Oshawa where General Motors laid off thousands of people at a shot. Does the House know what that does to the hope and confidence of a community? We can go into a major mall, not just in Hamilton or Oshawa but anywhere in the country, after there has been a major layoff and almost feel the lack of confidence.

We can tell by the number of purchases in clothing stores, pet stores or, in my case, restaurants. On Dan-forth, Queen, Pape and Gerrard Streets in Toronto there are some of the nicest restaurants in all of Canada. Most of the time these restaurants have line-ups, but in the last eight to ten months it has changed. There are 300 restaurants in my riding. There are restaurants in my riding that represent over 40 different countries. There are a large number of Greek restaurants and a very large number of Vietnamese, Chinese, Italian and East Indian restaurants. They provide the largest number of restaurants, but there are restaurants from many different countries, many different cultures and many different communities. Collectively they employ 5,800 people; they are my Stelco, my Bombardier. In the last eight months people can walk into these restaurants and pick what seat they want because there are no line-ups any more. It is awful.

The confidence and the hope in our communities, no matter what part of the country, has been very low. We cannot get the hope or the confidence from the large corporations because they are all downsizing, they are all bureaucracies and they are all restructuring. Where do we get the jobs? We get the jobs from the entrepreneurship of this country.

I do not mean to be disrespectful but this is sort of like a deathbed conversion. The government is finally begin-

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ning to realize that small business is where the action is because there is no bureaucracy in small business. If a proprietor of a small business decides over a two or three-hour meeting that he or she wants to expand his factory or buy a new piece of machinery to be more competitive then he or she makes the decision in a couple of hours and goes forward.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Charles A. Langlois (Parliamentary Secretary to the Leader of the Government in the House of Commons)

Progressive Conservative

Mr. Langlois:

Call the bank manager.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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LIB

Dennis Joseph Mills

Liberal

Mr. Mills:

The hon. member is so right. That person makes the decision about how he or she wants to move but then says: "Now we have to go meet our bank manager".

For the last two years the financial institutions of this country have been so rocked and shocked by the collapse of Campeau, the Reichmanns, Edper, and the list goes on and on and on.

What have they done during that period? They have put out the word: no more lines of credit. Cut those lines back. No more new loans. It has been small business which has received the brunt of that abuse from the major financial institutions of this country.

Now with this piece of legislation when small business people decide on a way of expanding their business or starting another facet of their business they can go happily and proudly to their bank manager. They can say that the Government of Canada just passed a piece of legislation called Bill C-99 and that 90 per cent of the money the bank gives them is guaranteed by the Crown. It is guaranteed by the taxpayers of Canada. That should make one dramatic difference in the attitude of that bank manager.

A few weeks ago I spoke about the responsibility of banks in helping us reignite this economy. I mentioned in those remarks that banking institutions have to be the only business that I know of where the customers are afraid of the person they are doing business with.

In other words, Madam Speaker, if you and I went out to dinner in a restaurant-whenever you come to Toronto you are welcome and I will take you to one of the nicest restaurants in all of Canada-I will tell you what would happen if we went into that restaurant. You should come to my riding some time. Visit your daughter and come into my riding and I will take you out.

What would happen would be that the maitre d'-is that the first time a Speaker has ever been asked out?

February 26, 1993

Government Orders

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Andrée Champagne (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Progressive Conservative

Madam Deputy Speaker:

If I may answer the hon. member on that. If he does not blush neither will I.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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LIB

Dennis Joseph Mills

Liberal

Mr. Mills:

Okay.

Madam Speaker, if you went into that restaurant on the Danforth the maitre d' or the person looking after the tables would wait on you hand and foot. That would happen in any business, such as a clothing or furniture store.

If someone goes into a bank the bank manager says: "We are doing you the favour". With this bill we can flip it around because if someone does not get service with the first loan officer that they meet, if they do not feel comfortable or if they do not feel they are being respected then they can walk across the street to another financial institution.

I received this advice to pass on to the small business sector from the president of the Canadian Bankers' Association. Helen Sinclair, the president, came to my riding a few weeks ago to speak to a conference "Women in Business". We appreciated her candor. She said: "If you walk into a bank and if you don't feel that the chemistry is right, if you don't feel you are getting good service from the person operating the bank, walk out. Walk across the street".

We have 50-odd financial institutions in this country and there are over 7,000 branches. We have a great banking structure in this country. The problem has been that the loan officers-not all of them, there are lots of great loan officers-act in a condescending way toward their customers.

I know that there are other members of Parliament that hear this as many times as I do. It does not matter whether we are Conservative or NDP or Liberal, we are all hearing the same complaints when it comes to financial institutions.

With Bill C-99, the small business person in this country can go to their financial institution and say: "I want some help and I would like you to get your Small Businesses Loans Act forms in place since I believe that my business plan qualifies me, because Mr. or Mrs. Bank Manager, 90 per cent of the loan you are going to give me is guaranteed by the Government of Canada".

I think this will make a dramatic difference. There are 960,000-odd businesses in this country whose sales are $5 million or less. Just think if each one of those businesses

hired one person, we would move that unemployment insurance-welfare liability, which combined today is close to $30 billion including interest payments, down to about $8 billion to $10 billion. Overnight we would have productive people, people with their dignity back, people paying taxes again. Just think what that would do to the deficit and ultimately the debt of this country.

I have had some frustration with this piece of legislation. In fact, the Canadian Bankers' Association mentioned the same frustration. In 1986 it brought to the attention of the government amendments that were needed to the Small Businesses Loans Act in order to make it work. 1987, 1988 and 1989 passed and finally in December 1992 the Minister of Finance put it in his budget papers and it is through the House 60 days later.

I think the government missed a tremendous opportunity by not doing three years ago what it is doing today. However, we are going to focus on the positive today. The bottom line is that this act is in place.

I want to mention two concerns. Even though the Canadian Bankers' Association, the Credit Union Central, the Bank of Montreal and Federation des caisses d'economie Desjardins du Quebec came to committee and said that they liked this bill, they were going to support this bill and they were going to market this bill, I must say through you, Mr. Speaker, to the government that I am nervous about that commitment. I want the government to be nervous about it as well because there is no time. I have said in this House at least half a dozen times that if this legislation is really going to work, if it is really going to do the job we all would like it to do, to pump some hope, some energy and some employment back into the system, we cannot rely solely on the marketing of the banks.

I appeal to the government, and I have taken this up with the Minister of Finance and the minister responsible for small business and I am going to repeat myself on this until it happens, to drive this act, not from the banks to small business, but from small business to the banks. The way to drive it is not by a few of us standing in this House today on third reading. I will definitely put it in my householder and I will promote this bill to all the 2,100 small businesses in my community. However, not all the small businesses in my community or I dare say in every other member's community read our householders.

February 26, 1993

We have to use the same principle on this bill that the government used on the "we can do it" competitive package. What is the package of the minister of trade called? The prosperity initiative.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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?

An hon. member:

That was a big hoax.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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LIB

Dennis Joseph Mills

Liberal

Mr. Mills:

My good friend Jim Ramsay, using all his old marketing skills, spent millions of dollars on television advertising and sending papers to all households in Canada saying: "We can do it". If the government can spend millions on saying "we can do it", I beg it to use a little bit of the taxpayers' money to help the small business community of this country, not the ones that are already in business. You cannot just go to the Federal Business Development Bank and put it in their profits magazine. With the downsizing of large corporations in this country, there are literally tens of thousands of people right now thinking about starting a new business. We have to get this message into their hands.

I mentioned that there was a women in business conference in my riding three weeks ago. It was just a four and a half hour event. I expected 40 or 50 women to show up to hear how to start a home-based business, how to approach the bank manager and how to do a business plan. We had mentors, women in business who had succeeded, speaking to these women. The shock of the day was that not 40 or 50 women showed up but over 400 showed up.

Today the most credit-worthy customers of financial institutions are women in business. Did you know that? I was shocked, not that I do not think women are capable of running a business but that the banking institutions had such a favourable attitude. They prefer women customers, in business especially. They have a much better track record.

I appeal to members opposite to promote this bill. Take out some eighth page or quarter page advertisements and communicate to the people of Canada that this instrument is available.

If we have to spend $400,000 or $500,000 to let all the small business people, those thinking of getting into business, and those who are in business, know in order to

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get this bill moving-and I say this with respect to taxpayers who pay this-I think it is the cheapest and best money we could ever spend. If in the next 30 days

100,000 people knew of this bill, went to a bank and each hired one more person, just think what that would do to the employment numbers. As those employment numbers come down, just think of the ripple effect that will have on this economy.

Because the spirit right now is locked in such a state of depression and no confidence, I think anything less than a major approach with this bill is not going to work and we are going to miss a great, great moment.

I am happy today about this piece of legislation. I support this government initiative. I support all the amendments we brought through. One of the real flaws in this bill was the fact that in the past it never had a provision for working capital. Under this legislation any capital purchases that have been made on April 1 or prior, going back six months, can be refinanced under this Small Businesses Loans Act, which would mean that money would go back into their working capital. That is a pretty good instrument.

I conclude my remarks by saying two things to the government: it has one shot at getting some credibility back between now and the end of June, and the only hope it has for getting any credibility is with the small business sector. It has an instrument called the Small Businesses Loans Act. The only way it is going to work is if the government takes some advertising dollars and promotes it. I would also appeal to the government that in 90 days we review what happens with this bill and make sure in 90 days that we ask for a report from all 58 financial institutions in Canada on the number of small business loans each one has approved and how many people they will put back to work in the next 90 days.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

John Cole

Progressive Conservative

Mr. John E. Cole (York-Simcoe):

Mr. Speaker, it certainly is an honour for me to stand and speak today to Bill C-99. I would like to take this opportunity to compliment the member for Broadview-Greenwood who has just given an excellent speech. He talked about many aspects of this bill and certainly was a major contributor at the committee level. I do want to have that on record because I think it is important.

February 26, 1993

Government Orders

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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?

An hon. member:

He might get pumped up if you continue.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

John Cole

Progressive Conservative

Mr. Cole:

We might even get him to move over.

This bill, as has been previously mentioned, was put in place to improve the access of small business to financing and really help increase that working capital, increase the availability of that working capital to small businesses, the entrepreneurs.

That is something to recognize. I believe when you talk to small businesses they want to get going. They feel they are being held back. They feel there are restrictions on their entrepreneurial spirit, on their financial capabilities and on their drive to make things happen. Most of these people have the kind of initiative that it takes, but sometimes they do not have the financial wherewithal to make that happen.

.(1315)

This bill presents a great many opportunities for small business. I think this is a very positive bill and a very positive step.

Someone mentioned earlier the excitement and the really good feeling a piece of legislation like this gives and certainly I concur with that. This is a real opportunity for businesses.

I think about the people back in my riding of York- Simcoe. I think about the Chamber of Commerce in Newmarket, East Gwillimbury, Bradford and the Georgina Board of Trade. In my riding alone there are over

7,000 small businesses that will now be eligible to take part in this program, a program that we could not even find an application for six months ago.

The program was sitting around but we could not get it. It was stuck in the bottom drawer, probably glued upside down to make sure that the loan officer, when he or she went in to get it, could not find the thing so it was not available and whatever happened after that happened.

Many of us in this House have heard those kinds of stories from businesses that have tried in their own way to help the economy. They have said continuously to us: give us some help, give us something. We do not want you to throw money at us. We do not want you to spend more money, especially when we know you do not have any, especially when we are in a deficit position, but just

make sure that we have access to money. Put the boots to the banks and the lending institutions and force them to co-operate.

I believe this bill will do that. With the changes we have brought in, I think there will be improved access for these small businesses.

Mention is often made in this place about the importance of small business. I believe the number is rapidly approaching a million small businesses in this country. We want them to be successful because it is going to take them being successful to pay the bills. It is also going to take them being successful to hire more people because the big companies are not hiring people. However, the little companies have the ability to do something like this. What a wonderful opportunity.

Small business is really and truly the engine of this country. It can get things going, create jobs and do some very positive things for the economy and just for the general feeling and attitude of Canadians, whether they are in business or whether they are employees the fact that there is an opportunity there, that there just be a change of attitude by everyone involved with it.

I want to talk a little bit about some of the particulars in the bill. I know we get excited because we have been involved with it. The one other group it is important to recognize is the number of people who may be sitting at home today who do not have a job. Perhaps they received a golden handshake. Maybe they have a few bucks tucked away in their jeans and they are thinking: "Gee, I have always wanted to be in that kind of a business or I have always wanted to set up my business this way. I can manufacture whosits or I want to manufacture something else". This presents a real opportunity.

Think of the dreams of those people who quite often and very recently have had their dreams shattered because of the economy of the world and because of everything that has gone on internationally. Here is an opportunity for these people to take some of their assets, but not all of them, not to lock them up to buy that one piece of machinery to make a dream business start but to have the government back them to the tune of 90 per cent, putting in some of their own capital, again depending on whether the financial institutions are even going to insist on that.

February 26, 1993

One of the things that was very interesting was that we talked about limiting the personal commitment on these loans. It is in the regulations that the limit is going to be 25 per cent personal commitment as far as the financial contribution is concerned. There are obviously other things that are important like a game plan, the way the business is run, the structure and everything else, including competitiveness and ability to sell product.

We are not asking entrepreneurs to mortgage their houses to the limit, to mortgage their futures to the limit, to sell their car, to do everything else in order to get this one piece of equipment that will allow them to start the business.

We are telling Canadian entrepreneurs that if they have a plan of action, if they can produce a product, if they can convince the institution that this is a good idea, the Government of Canada is going to back this loan to the tune of 90 per cent.

That is going to leave this new entrepreneur, the man, the woman and even the young person today who has these ideas thinking they just do not have enough to buy the equipment and still have some money left over for working capital. Anybody going into business knows they need to have working capital. This plan is going to allow that to happen. I am really excited about this because this is a group of people we have not even tapped. We have not even thought about them. That is an area that certainly has to be addressed.

I look at some of the changes that are a little more technical but they are basic to the whole program. Changing the loan limit from $100,000 to $250,000 is a major step forward for businesses, as is increasing the size of the eligible businesses up to $5 million. We can all recognize that businesses are still small businesses and can still be doing $4 million worth of business in their gross sales. It is very important to recognize that. I think it is something that the business community can recognize and understand. Obviously the banks will recognize that.

The other thing that is important, and it was mentioned a little earlier, is it is terrible putting the limit of the rate to 1.75 per cent over prime. It is too bad that hon. member was not in committee because if he had heard the banking institutions it might be different. That is not the critical factor. It is not the rate.

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We want to make sure that this entrepreneur can make this a success. We want to make sure that he or she has a product or the ability to do that.

That is not the key factor. It is important because the banks are owned by Canadians. They are not owned by some person sitting on Bay Street or sitting maybe in the Speaker's chair today. He does not own a bank. They are owned by Canadians. He probably has a lot of shares in a lot of banks, but he wants to see those banks successful.

We as Canadians want to see banks successful. If the banks are not successful we are going to have major problems throughout this country.

It is very important to recognize that we want the banks to be successful but not at the expense of small business and everybody else. That is the key point.

It was very interesting in committee to hear different bankers saying they really liked this program and that it was going to be interesting. All of a sudden there was one particular banker saying: "I think we can do a lot better than 1.75 per cent for most of our customers". There was another banker who said: "I can even do better than prime for a lot of our customers under this program".

There are a number of people who have to realize there is going to be major competition among the banks. It is not going to be a closed shop. It was mentioned earlier about the fear and trepidation of an individual going into a bank. We wonder what will happen when we walk into the bank.

Now small business people will have the ammunition. The facts will be available to them. They will be able to walk into the bank and tell them they have a plan. "I am going to be successful. I want to do something. I want to be an entrepreneur". We all have good days and bad days. Maybe the loans officer of one particular institution says he does not think someone is a very good risk and does not want to get involved. However that business person is now going to be able to walk across the street and maybe get a rate of 1.75 per cent, maybe 1.5 per cent, but that entrepreneur is not going to stop there. He or she is going to go to another lending institution and say: "Look, I am getting a loan under the Small Businesses Loans Program of x dollars because I have this program and I am going to go ahead with this. Can you beat that rate?"

February 26, 1993

Government Orders

We will see major competition among the lending institutions because they are going to want to take part in this. They really want to take part in this. This is a good program. It is a win-win situation, if you like to look at it in that regard among the lending institutions and the business communities of the country. If they both win, the country is going to win. People in Canada are going to do much better as a result of all of this.

Earlier we talked about some of the changes the committee had recommended and the minister has responded by changing the six-month retroactivity. We can all think of businesses that are struggling right now. Perhaps they bought some capital equipment maybe two or three months ago. As long as it is within that six-months prior to April 1 when this comes into effect they are going to be able to use it. That is a major change. Before it was 90 days. It was going to be too tight. The committee members recognized that and the minister responded by making this change. I think this is a major plus.

There is also protection for the government. We are saying to business, we are saying to the banks that it is a two-way street. We are going to make sure that a cost recovery fee is put in there to make sure that the people of Canada are not on the hook for all of this. That is an important aspect to keep in mind.

We have had some discussions concerning the eligibility of some businesses in Canada. As I said when talking to some of the officials, and I think they understood where I was coming from, in my riding there are about

7,000 businesses. I would bet that under the proposed legislation 20 per cent of them would not have been eligible. It was suggested that the bill could be fixed up and they could be made eligible in the regulations.

That is fine but you and I know, Mr. Speaker, that there are not too many Canadians and fewer businesses that have ever read the regulations of any act, let alone proposed regulations in this bill and understand, particularly after the bill has said they are not eligible.

I am very pleased that we were able to make these changes and the officials were able to understand where we were coming from. Now all these businesses will be

eligible. A business that is active, that is manufacturing, maybe it is in the insurance business, maybe it is in the automotive business, and maybe it is in the real estate business, because those are very active businesses in my view.

We are not suggesting for a moment that a person could go out and purchase a piece of land under this program and hope it is going to go up in value. That is not an active business. That is not what we are suggesting. That individual has other ways of raising funds and it is certainly not to be going through the Small Businesses Loans Program. It is very critical that we recognize that.

It was mentioned earlier that there needs to be a commitment by the Government of Canada to promote this program. I agree. I could not agree more. I am not an expert in advertising and promotion but I know that by word of mouth, by communicating with chambers of commerce, boards of trade, we will get the message out.

I think quite frankly it is necessary for the Minister of Small Businesses and Tourism to work it into his budget, to advertise and promote this to businesses, but also to those individuals who might be thinking about starting a business. Those are just as critical if we look at this process.

I mentioned that to the minister earlier this morning before he unavoidably had to leave Ottawa. He agreed with me. He said that he will do everything in his power to promote this particular program. I believe that is the right way to go. I believe that if we can do this, if we can market it, many people will benefit directly and many more will benefit indirectly.

I think I have covered most of the bill. It is an important piece of legislation. I could probably go on for a lot longer, but it is Friday afternoon.

I do want to take the time to particularly thank the members of the committee, the witnesses who were very informative, very constructive and helped us quite a bit in making the changes and particularly to the staff of the minister's office who were able to accommodate the concerns we had by making the amendments and changes.

February 26, 1993

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

Rodney Edward Murphy

New Democratic Party

Mr. Rod Murphy (Churchill):

Mr. Speaker, it is a pleasure to rise on this bill. It is not often that the New Democratic Party supports a piece of government legislation. I must admit in the last eight years of this particular government it has been very seldom that we have actually supported a piece of its legislation.

I agree with a lot of the statements made by the two previous speakers. We really need to make sure that small businesses and those that are in small business know about this opportunity.

We do not want to see one of those fancy government ad programs where it is patting itself on the back saying: "We have done a wonderful job. Rah, rah for us". We want an informational campaign. It is hoped that whatever campaign is proposed by the minister ends up as an information campaign as opposed to one of those that might be considered a pre-election campaign, especially at this time.

I am very concerned there is no monitoring system to make sure that the banks are actually allowing their customers to use this program. We have heard many good words, many good intentions in this place and in the committees of the House of Commons. Quite often circumstances change, new opportunities develop and perhaps banks or other lending institutions, to be fair, may have other priorities.

We recognize that the government has gone quite far in insuring the risk for the banks. That should be enough to encourage them to promote small business in this country. However, I do have to disagree with one of the other statements made by the previous Conservative speaker. I do not believe that increasing the rate from 1.5 above prime, which was the government's original intention, to 1.75 per cent above prime is any indication of the banks' competitive spirit. It looks more like greed to me.

We heard the hon. member indicate that the banks say: "We can offer less than prime with this bill". If that is the case, why is the government amending the purpose of its own legislation through regulation? If it believes what the banks said in front of the committee that 1.5 per cent is probably not even necessary, that the banks will be offering loans to small businesses at a much lesser

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amount, then why is the government increasing the maximum?

I also do not believe it is the individuals with personal loans or small businesses in this country that have threatened the financial situation of our banks. Our banks had record profits after taxes year after year after year. It is only their own bad loans to very large institutions that have caused their financial plight as of late.

I think the previous speaker from the government side may have left a wrong impression. The problem is certainly not created by small businesses and individual borrowers. Most Canadians will pay back their loans. One problem that most small businesses have is getting the money in the first place. They have not been defaulters in great numbers, although I do recognize that with bankruptcies and all the rest of it there certainly have been some problems in that area.

This is a good measure which is supported by the three parties in the House today. The others are not here today, so I do not know what they think. We have said that we support the legislation. We hope it works. We hope the government monitors the situation. We hope the government advertises appropriately in this area and we hope it can report back to this House that there has been great success in this area.

When I was the regional and economic development critic for our caucus, it would upset me when I got the figures from DREE, the old Department of Regional Economic Expansion. When I looked at where the money from the government was going, it was going to large corporations. We asked: "How much are you getting when you give a large corporation $100,000 or $1 million?" The government would admit in the figures produced for me year after year that investment made by the government in small businesses was producing more employment. To be fair to the government, the Liberals were in power at that time. Using the government's own figures it was very difficult to understand why small and medium-sized businesses were not getting a larger share of government support through loans, grants or whatever.

February 26, 1993

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It seemed that the government of the day and its officials, many of whom are still here in top positions, had blinders on which made them say: "We have to have the megaprojects. We have to go to the big schemes. We have to give a lot of money out". Maybe it was for political purposes, I do not know. But there was no focus on developing small business.

In an earlier intervention today I said that we have all had people come to our constituency offices. Some of these individuals are in business or want to be in business. They are finding it very difficult to get loans and support from the banks.

This legislation is a challenge to our banking institutions. They obtained the amendments they wanted. They are getting the improvements, the higher profit that they wanted through regulations. They said they would go out and sell this program. It is the job of the House of Commons and especially the government to make sure that happens.

While I have the opportunity to speak about small businesses, I will be very brief because I know there are others who want to speak and I understand that there is an assurance that this legislation will pass this House by three o'clock today, so I am not going to abuse this opportunity.

During the last trip I made to my riding I talked to small business owners. I would say that the great majority of those people, by nature, are not supporters of the New Democratic Party, although a few have made donations to my campaign in the past. I was still facing a great outcry against the goods and services tax. We have had hard economic times in this country. I heard from tourist operators, small machine operators and people in retail business who said that the GST was killing their businesses. Those are their words, not mine.

It is time that the government stopped listening to the large concerns. We know that the Canadian Manufacturers' Association has always promoted the goods and services tax. We can understand why a number of the large corporations in this country, especially in some sectors, were very favourable to the goods and services tax.

However, from day one small businesses knew that the goods and services tax was going to hurt their businesses. They knew from day one it would be harder to attract tourists. They knew from day one it would encourage

people to cross our borders and shop in other countries. They knew from day one it would add to their administrative costs. They knew from day one it would make attracting Canadian customers into their institutions that much more difficult.

Now some would say that Canadians have to shop somewhere and most will shop at home and therefore most small businesses will not suffer. The reality is they are telling me that they are suffering. They are telling me it is time to get rid of this tax.

Since the government has done one good measure today, a measure we support, I can assure you that if it moved to get rid of the goods and services tax we would support it yet again.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

Lyle Dean MacWilliam

New Democratic Party

Mr. Lyle Dean MacWilliam (Okanagan-Shuswap):

Mr. Speaker, I am very pleased to have the opportunity to rise and speak on Bill C-99, an act to amend the Small Businesses Loans Act.

As my colleague pointed out earlier it is one of those unique opportunities when we on the this side of the House have an opportunity to agree with and support legislation that this government has brought forward. This is certainly the case with respect to this particular piece of legislation. So I stand and give my enthusiastic support to see this legislation go through.

We have to recognize that our small business community is really the life-blood of our social communities throughout Canada. Small businesses are the major engines of growth in our economy. Eighty to ninety per cent of all new jobs created over the last decade have been created by our small business sector.

Over the past 10 years Canada's large corporations, many of them branch plants of U.S. companies, have fared very poorly in terms of job creation. The figures indicate they have not provided one iota of new jobs over the last 10 years. New jobs in Canada over this 10-year period have been created largely from our small business entrepreneurial sector.

Had it not been for our small business communities from Victoria to St. John's and their ability to create jobs and their ability to attempt to continue the stimulation of the economy, the job loss we have experienced as a result of the restructuring that has taken place with the free trade agreement would have been even greater than it has been. Much of the credit has to go to our small business communities in their demonstrated resilience and their ongoing ability to maintain job creation.

I am thinking back to a previous piece of legislation that passed through this House with the implementing legislation to allow the government investment in the Hibernia oil fields. I was quite upset at the time. I pointed out that the government had decided to spend millions of dollars to basically subsidize yet another energy megaproject.

I come from the province of British Columbia. A few years back in the old Bill Bennett administration hundreds of millions of dollars in taxpayers' money was spent in trying to develop the infrastructure for the export of north-east coal. That was another energy megaproject.

I said at the time with respect to north-east coal and also with respect to Hibernia that the number of jobs that can be created from such investment is really veiy limited. One has to spend over $1 million of capital investment in projects such as Hibernia and north-east coal to generate one long-term job.

If we take that $1 million of capital investment and, rather than apply it to the megaprojects that past governments have been so willing to endorse, put it into the small business sector we find that 40 to 50 times the number of jobs will be created: long-term jobs, lasting jobs, jobs that provide cash flow in our communities and tax revenues for the government. We find that 40 to 50 times the number of jobs can be created for every $1 million of capital investment in the small business community than can be created with capital investment in our energy megaprojects and our large business sector.

That is real bang for the buck. Getting back to the current legislation before us, I was very pleased to see the government has at least attempted to recognize the necessity to provide assistance for our small business communities so they can get on with the job of serving the public interest and creating jobs.

We all know that the 4,000 to 5,000 job loss directly or indirectly attributed to the free trade agreement has been very damaging to Canada's economy, particularly in the central region, in Ontario and Quebec. We need as much assistance as we can from our small business community to overcome the long-term damage brought about by the implementation of the FTA.

Government Orders

The amendments in the legislation, the amendments to the Small Businesses Loans Act, provide a greater flexibility to encourage the Canadian banking system to assist the government in its task of creating economic incentives for small business development.

Our banks have been very reluctant. If we go into our communities and talk to people in the small business sector, we find out that they are extremely frustrated with their inability to obtain financial assistance either to start a company, to expand a company or to invest in a company for future growth opportunities. They are extremely frustrated with the hard-nosed, hard-headed, almost pigheaded attitude of established Canadian banks.

I am pleased the changes brought about by this legislation will hopefully encourage Canadian banking institutions to loosen the purse strings and provide the opportunity for small businesses to acquire the SEED capital needed to run their particular businesses.

I understand there has been a number of amendments made to the legislation. One amendment would increase the interest rate charge to about 1.7 per cent above prime and liability underwritten by the Crown would increase to 90 per cent from 85 per cent.

Those changes have been made to encourage Canada's banking system to be a little more forthcoming in providing the necessary loans for small businesses. I am very pleased to see them. The increase in the size of businesses eligible under this amended Small Businesses Loans Act will go from some $2 million to $5 million in annual gross revenues.

I understand as well that loan limit will more than double from $100,000 to $250,000. These changes are positive ones. They are changes that are necessary. They are changes that will allow more flexibility in helping our friends in the small business community to fulfil their obligations and their desires to contribute economically to the growth of our communities throughout Canada.

It is one of those unique opportunities when as a member of the opposition I have an opportunity to agree with this government and to support this government enthusiastically. Small business people throughout our larger cities and our smaller urban centres need and desire the assistance this amended legislation could provide.

February 26, 1993

Government Orders

If I could summarize, we have to look very carefully at focusing what assistance this government can provide. We have to recognize that in future years we will have to provide the financial incentives necessary to generate the maximum amount of job creation that we can.

That is not coming from our large corporate sectors. Canada has seen a veritable haemorrhage of jobs from large corporate entities across Canada, jobs that have left Canada, have gone to other areas such as the United States and even Mexico, and are not coming back. This kind of restructuring is permanent.

In order to combat economic haemorrhaging we need to provide the assistance our small business communities require now and will require in the future so that we can hopefully re-energize the economy and create the jobs that have been lost over the past few years.

I am pleased this legislation has come forth and I am pleased to support it.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

Raymond John Skelly

New Democratic Party

Mr. Raymond Skelly (North Island-Powell River):

Mr. Speaker, I take pleasure in having an opportunity to put a few remarks on the record concerning this legislation on small business.

I want to take a different tack. Small business is a very broad term. We tend to think in terms of small manufacturing organizations, retail outlets or service opportunities. One area of small business involves the fishers who participate in the Pacific fishing industry off the coast of British Columbia. These individuals view themselves as small business entrepreneurs. They are generally individuals who own a fishing vessel, who go out in pursuit of economic activity and who generally participate in the ebb and flow with the prevailing nature of the resource, the economy and the management plans of the Department of Fisheries and Oceans.

The impact of the combination of the chartered banks and the Government of Canada on fishers or that small business sector on the coast of British Columbia is interesting. I want to talk about what the government has done to fishers in the Pacific fishing industry.

First, just over 20 years ago along came a fellow named Jack Davis, a Liberal minister of fisheries, who decided the way to resolve the problem of overfishing on the west coast was to put in place a licence limitation program. I

guess we can say that was the first government impact without any response to consultation. In this small business area many people actually advocated against the activity. The government forged ahead and imposed on these small business people a regime that was extremely harmful, contrary to the recommendations made by people in the industry and wise observers. This was the wrong approach. There was no consultation.

This licence limitation program created an enormous increase in fishing capacity. People went out, especially some companies involved in the fishing industry, and pulled every wreck off the beach in British Columbia and threw a fishing licence on it. They understood clearly how Jack Davis and the Liberal government had instantly created a source of enormous wealth. They pulled those wrecks off the beach, put licences on them and created an enormous increase in capacity. Some individuals became very creative in further increasing the capacity when they pyramided those licences and turned-

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Steve Eugene Paproski (Deputy Chair of Committees of the Whole)

Progressive Conservative

The Acting Speaker (Mr. Paproski):

I am sorry to interrupt but the hon. member for York-Simcoe has a point of order.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

John Cole

Progressive Conservative

Mr. Cole:

I rise on a point of order, Mr. Speaker. The hon. member is well-intentioned and is making some very valid points about the fisheries and fishing conditions on the west coast. I certainly appreciate his concern, but today we are debating Bill C-99 and his comments are totally irrelevant to the bill. I would ask that the member speak to the bill on the Order Paper.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Steve Eugene Paproski (Deputy Chair of Committees of the Whole)

Progressive Conservative

The Acting Speaker (Mr. Paproski):

Knowing the member for North Island-Powell River, I am sure he will become relevant.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

Raymond John Skelly

New Democratic Party

Mr. Skelly (North Island-Powell River):

Mr. Speaker, one of the major problems is that the Conservatives do not in fact see the relevancy. There are thousands and thousands of people who view themselves in that industry as entrepreneurs dependent on the actions of government and the chartered banks which in combination have caused them harm over the years. If they listen they will begin to understand the correlation between the two items today. I thank the hon. member for presenting his point of view.

February 26, 1993

To continue the key point, people were able to pyramid these limited licences from gill-netters and trailers and create seiners. By pyramiding they created tremendous increases in overcapacity, further increases in overcapacity. The capacity to catch fish increased well beyond what the resource could ever tolerate.

The department responded correctly with its only weapon and reduced the fishing opportunity. The reduction in fishing opportunity set off a whole new range of capital expenditures. It forced these entrepreneurs, these small fishermen or fishers, to head to the banks under what the government had created, the fisheries improvement loan.

We should notice the small business protection procedures that are in place. In the beginning it was well-intentioned. It was to provide a source of guaranteed funds that the government would guarantee to the banks, if the fishers did not deliver on their payment program and they were able to increase the overcapitalization of those vessels.

In response, the Department of Fisheries and Oceans again reduced the fishing opportunity time. There was more and more limited time to fish in the face of the most efficient catching machine in the world in any industry, this enormous efficient capacity encouraged and fuelled by the management program, encouraged and fuelled by the licence limitation program, encouraged by the banks and a government that provided guaranteed loans.

All of a sudden it crashed. The resource in down-cycled years was not there. The fishing opportunity became even tighter. At the same time interest rates began to rise dramatically. People could not catch enough fish to make the payments on their boats. Then the cycle began of the banks seizing their vessels and people being driven out of the industry with a vengeance. There are all kinds of cases where the banks simply said: "We want to get rid of this loan. We do not care. It does not matter. We are worried about other aspects of the economy. We are going to yank your fish-boat anyway and put you out of business in order to get it off our books".

To give some credit to the Liberal government there was a policy that once the guaranteed loan had been dealt with, with the banks, that was it. They were not interested in taking their homes. They were not going after people who had co-signed the loans. They said:

Government Orders

"Enough is enough. We have driven you out of the industry and that is it".

At one point there was a suggestion of putting a couple of hundred million dollars into a buy-back program to relieve these entrepreneurs, these fishermen; to get the capacity out of the industry so it simply did not move away from the bankrupt individual into the hands of another fisher who could be a dentist in Tbronto, the way the government set it up; and simply to keep the capacity in the industry. They thought they would just let it bankrupt its way out. They did not go after the homes or the family members who co-signed.

Then we come to the 1980s. The Liberal government decides it has a fiasco and it hires Peter Pearse who says that the way to deal with it is to turn around and manage the fishing industry like they did the forest industry in British Columbia, to turn the whole thing over to 10 big companies, to increase the ability of a small number of people to catch fish and when they deliver the fish to charge a royalty, to get rid of people within the Department of Fisheries and Oceans who are no longer needed to police a small fleet, and to make the fishers pay for the landing and the landing inspection facilities. There is no need for enforcement.

Then we have the situation where these business people have been absolutely shafted by the banks and by the downturn in the economy, the increase in interest rates, the increase in fuel prices, and have been driven out. Along comes Pearse and says: "Let's drive them out even further". So we get a situation in which Pearse wants to model the fishing industry the same way as the B.C. forest industry so that there are a small number of extremely large fishing operators and the marginal ones are gotten rid of.

At that point in time that comes along. In come the Conservatives in 1984 and they say: "Oh, oh. We see quite a big pile of money that we would like to go back and recoup". They reversed the policy. The policy now was to go after those people who they guaranteed loans to the banks for. They hired a chartered accountant firm to go back and figure out how much money there was and how to put this in place. They then told the chartered banks: "You signed a clause in these agreements years ago to go back and shaft these people. We want you to go after the co-signers. We want you to go after their homes, their cars, and their assets, and clean them out even further".

February 26, 1993

Government Orders

That is exactly what they have done. They have revisited these people who have gone through a horrible period of time. They had rebuilt their lives after this catastrophic event which was a combination of government policy, banking, and a misguided approach to things.

All of a sudden these people are visited again, and it is going on today. They are yanking away homes and forcing extreme payments out of people. It has to change. There is a group called the Fishing Redress Committee headed by an individual named Jack Larson on the coast of British Columbia who lost his vessel and virtually lost everything. He is representative of a large number of people to whom this government owes the removal of this harassment a decade later. It went back after assets that they had because of an obscure clause in this thing. It is really a vengeance that has been visited on these people and it should be removed.

The second issue is the whole question of the advisability of the Pearse program. It is continuing. Its objective is to create a small group of bigger and bigger businesses in the fishing industry. It is driving small businesses out. We have a situation in which the government from day one-when the Speaker was the minister of fisheries I remember him campaigning in the riding I represent and saying: "We don't accept Pearse's program. This is the wrong way to go".

Yet this government for nine years has followed it as if it were the Bible. It has wreaked tremendous hardship against people in the fishing industry and the coastal communities of British Columbia. This is a small business sector of entrepreneurs who have been shafted by the banks and this government's policy, and it is continuing.

We now find that the government has involved itself in another policy, the aboriginal fishing strategy. It is interesting. Small business people are involved in this. I know the member has sat in front of a three-day committee and listened to their concerns but there is no response to the concerns.

The minister stood up and said: "Well, what is the NDP point of view on this particular sector that involves fishers?" It is that the Supreme Court has laid down the aboriginal right to fish. You can fish by chaos or you can fish by an agreement. We support an agreement for these individuals in the aboriginal community and the agreement with-

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Ross Belsher (Parliamentary Secretary to the Minister of Fisheries and Oceans)

Progressive Conservative

Mr. Belsher:

Point of order, Mr. Speaker. I have listened with great interest to the hon. member and he has taken us all over creation with regard to the fisheries in B.C.

I do not understand the relevancy he brings to this bill at this time by talking about the current situation of the fishing industry in British Columbia. Would he please come to the point and speak to the bill that is in front of us.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Steve Eugene Paproski (Deputy Chair of Committees of the Whole)

Progressive Conservative

The Acting Speaker (Mr. Paproski):

This is the second time the hon. member has been interrupted as far as debate is concerned. I wish the hon. member would deal with the small business part of the fishing industry.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

Raymond John Skelly

New Democratic Party

Mr. Skelly (North Island-Powell River):

Mr. Speaker, I appreciate that the hon. member for Fraser Valley East does have trouble comprehending this issue. Short of sitting down and drawing him a picture I am doing the best that I can.

This is another government program that is really causing enormous hardship to that industry. The aboriginal fishery strategy is going to create allocations for aboriginal people. It is going to create opportunities for management in recognition of the years that there was a need for greater participation.

However, at the same time there needs to be protection and conservation of that resource, there needs to be decent and fair consultations with all stakeholders in the industry and there needs to be a fair buy-back program on the order of a couple of hundred million dollars, not a paltry $7 million, so that these people in the business of fishing who want to voluntarily leave the industry can hope to sell their boats. They were put in this situation by poor government policy and the banks.

February 26, 1993

We do not take objection to the need for responding to the aspirations of aboriginal people to fish and to have fair agreements but we do take profound exception to the failure to observe the basic requirements of conservation, consultation and compensation.

Topic:   GOVERNMENT ORDERS
Subtopic:   SMALL BUSINESSES LOANS ACT
Sub-subtopic:   MEASURE TO AMEND
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February 26, 1993