March 12, 1993

?

Some hon. members:

Question.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL ROUND TABLE ON THE ENVIRONMENT AND THE ECONOMY ACT MEASURE TO ENACT
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PC

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

Progressive Conservative

The Acting Speaker (Mr. Paproski):

Is it the pleasure of the House to adopt the motion?

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL ROUND TABLE ON THE ENVIRONMENT AND THE ECONOMY ACT MEASURE TO ENACT
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?

Some hon. members:

Agreed.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL ROUND TABLE ON THE ENVIRONMENT AND THE ECONOMY ACT MEASURE TO ENACT
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Motion agreed to, bill read the second time and referred to a legislative committee in the Natural Resources envelope.


PC

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

Progressive Conservative

The Acting Speaker (Mr. Paproski):

Pursuant to Standing Order 30(6), the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL ROUND TABLE ON THE ENVIRONMENT AND THE ECONOMY ACT MEASURE TO ENACT
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PRIVATE MEMBERS' BUSINESS

SMALL BUSINESS SECTOR


The House resumed, from February 4, consideration of the motion of Mr. Whittaker:



March 12, 1993 Private Members' Business That, in the opinion of this House, the government should consider the advisability of developing a healthy small business sector in Canada by targeting more federal contracts to the small business sector and establishing a more aggressive "Buy Canada" program.


NDP

Lyle Dean MacWilliam

New Democratic Party

Mr. Lyle Dean MacWilliam (Okanagan - Shuswap):

Mr. Speaker, it is a real pleasure to support the motion of my friend and colleague, the member for Okanagan- Similkameen-Merritt.

This is a very important motion for small businesses right across Canada because it talks about the need to assist our small business community with an effective and aggressive buy Canada program.

I want to recite some statistical information relating to Canada's small business sector because I think a lot of people do not understand how important this particular sector is to the national economy. Certainly it is important to the economy throughout the Okanagan Valley which relies very heavily on tourism, the forestry sector and the agricultural sector, much of which employs our small business community.

Over 97 per cent of businesses throughout Canada are small businesses. Small businesses are defined as having under 50 employees. Looking at the figures from 1981 to 1989 over those years, small businesses created almost 82 per cent of the new jobs in Canada.

It is interesting to look at the number of jobs created by the small business sector compared to the number of jobs created over the same period of time in the large corporate sector, particularly the foreign-owned corporate sector. What we find is that with the foreign-owned interests in Canada there is actually a net job loss even though there is a substantial increase in net profits. There was a job loss from our large foreign-owned corporate sector whereas small businesses in Canada, taking the brunt of the responsibility, taking the brunt of the impact of the recession, were the ones still able to produce 82 per cent of the new jobs.

Almost 14,000 businesses declared bankruptcy in 1991 when the recession really started to take a bite. Business bankruptcies in the small business sector are up over 50 per cent since the recession began, with over 3,600 companies going under in the first three months of 1992 alone.

Small businesses are risky. They have difficulty in raising capital, in finding venture capital, in finding high-risk capital for acquisition and for expansion of the businesses. They have difficulty securing loans to maintain their businesses. The banking community is certainly

no friend of the small business community. They continually have to fight the high interest rate policy that this government has followed. Even though interest rates have come down somewhat over the past little while, our real interest rate, which is the difference between the interest rate and the inflationary rate, is still very much higher than it is in the United States. We still have a long way to go to bring that down to some degree of sensibility.

Another thing that has really hurt small business is the imposition of the GST. We know that the GST was introduced in large measure because the government was going to lose billions of dollars of revenue from the imposition of the tariff reductions under the FTA. In the first year alone over $2.2 billion was taken out of the revenues of the federal government as a result of the FTA. Who had to bear the burden of that? It was our consumers and our small business sector.

It needs some help. It is a vibrant sector of our economy, but it is a sector that is also the most vulnerable to the swings in our economy.

I would like to point out that the federal Department of Supply and Services purchases some $8 billion in goods and services on a competitive basis each year and some $3 billion on a non-competitive basis. These bids are solicited from lists of companies or individuals who have registered as potential suppliers. For low-dollar bids, less than $25,000 on a bid, Supply and Services Canada uses a rotational bidding system.

This bidding system requires that procurements be advertised to give businesses better access to government contracting opportunities. The Canadian sourcing policy limits competition for government procurement to domestic suppliers wherever possible. We also have some other programs in place, such as the Canadian content premium policy and the area buy policy, that have helped somewhat.

I want to point out a problem we have had since the free trade agreement was implemented, which has really put the concept of buying Canadian and helping our small business sector into jeopardy. According to the General Agreement on Tariffs and Trade, Canada and the U.S. cannot protect domestic products or suppliers or discriminate against foreign products or suppliers who bid on purchases with a value of over $204,000. That is a pretty high value.

March 12, 1993

The Canada-U.S. Free Trade Agreement dropped that threshold for competitive foreign bidding down to $29,000, which has had a very significant impact on our Canadian small business sector.

Let me point out that American federal departments and agencies are required to participate in a similar program in America. It is called the buy America program and favours suppliers based in the United States and gives preference to U.S. products. It is similar to Canada.

This act is also overruled somewhat by both the FTA and the General Agreement on Tariffs and Trade, but there is a real difference between the limitations placed on Canadian small businesses and the limitations placed on small businesses in the U.S. Let me point out what the difference is.

In the United States the small business administration defines a small business as having up to 500 employees- that is considerably different than the definition in Canada-and up to $3.5 million in receipts. In Canada companies of this size are not considered small businesses. That is a fairly large corporation in Canada.

The U.S. small business act and small business set aside program are not affected by either GATT or the FTA, but the FTA prevents an effective buy Canada program. It affects the Canadian sourcing policy and the Canadian content policy for any purchases over $29,000. In the United States there is a similar situation but the dollar value is not anywhere near as low as Canada's.

Why is the United States allowed to effectively use protectionist trade practices that provide a much greater incentive to small businesses as they are defined in the United States than Canada is allowed to provide to small businesses as we define them in Canada? There is a substantial difference both in the definition and in the allowable limits.

Just to sum up very briefly, this points out one very particular way in which the provisions of the free trade agreement, as they are applied to the small business sector in Canada, have had such a dramatic impact in terms of allowing competitive foreign bids to come in for government procurement. This was one ol the reasons the government wanted to initiate the free trade agreement in the first place. It said that it would allow access to U.S. markets and U.S. government procurement. We see that the programs in the United States have protected its small business sector even under the provisions

Private Members' Business

of the free trade agreement much more so than we have in Canada.

What I am saying is that we have a situation where on the one hand small business in Canada is really under the gun as a result of the free trade agreement. On the other hand, small business in the United States has been given much more latitude and much more protection.

As a result of that, my colleague the hon. member for Okanagan-Similkameen-Merritt has brought in this private member's motion to try and convince this government of the error of its ways. It is hoped this will convince the government that we need some action to help our small business communities, our entrepreneurs from Victoria to St. John's. We need to help them not with a hand-out but with a hand-up. Give them a boost so we can put people back to work in Canada and help our small business community once again become the vibrant job-creating engine it has been in the past.

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
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PC

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

Progressive Conservative

The Acting Speaker (Mr. Paproski):

Debate, the hon. member for Red Deer. The hon. member has two minutes.

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
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PC

Douglas Fee

Progressive Conservative

Mr. Doug Fee (Red Deer):

Mr. Speaker, I do not think that I will need two minutes. The hon. member for Okanagan-Similkameen-Merritt asked me for an indication as to whether or not I was going to support his motion. He knows very well that I have relatives who live in his riding. Unfortunately one of them voted for him which shows a little bad judgment on her part.

I do think this member has shown a little bit of good judgment in this motion and I have no trouble at all in supporting it. The principle in it is real. The government should be supporting small business because, as the previous speaker indicated, small business is the heart of our economy. It is what makes this country go.

While I have the floor I also want to indicate that the Chamber of Commerce in my riding of Red Deer has connected into a computerized program of electronic bulletin boards. It is making information available to its members. Its members in Red Deer have had access to three times as many government contracts during the past year as they have had in the past two years. It is working. The contracts are available to small business.

I am not sure what the hon. member is intending with this motion but it is certainly not going to hurt us to discuss it a little further and to encourage it. It is a good objective and I definitely support it and will be indicating so later.

March 12, 1993

Private Members' Business

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink
PC

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

Progressive Conservative

The Acting Speaker (Mr. Paproski):

It being 3.14 p.m., pursuant to Standing Order 93, the time provided for the debate has expired.

Is the House ready for the question?

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink
?

Some hon. members:

Question.

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink
PC

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

Progressive Conservative

The Acting Speaker (Mr. Paproski):

Is it the pleasure of the House to adopt the motion?

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink
?

Some hon. members:

Agreed.

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink
?

Some hon. members:

No.

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink
PC

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

Progressive Conservative

The Acting Speaker (Mr. Paproski):

All those in favour of the motion will please say yea.

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink
?

Some hon. members:

Yea.

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink
PC

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

Progressive Conservative

The Acting Speaker (Mr. Paproski):

All those opposed will please say nay. Carried.

Topic:   PRIVATE MEMBERS' BUSINESS
Subtopic:   SMALL BUSINESS SECTOR
Sub-subtopic:   "BUY CANADA" PROGRAM
Permalink

March 12, 1993