May 14, 1993

GOVERNMENT ORDERS

ALLOTTED DAY, S. O. 81-THE ECONOMY

LIB

Sergio Marchi

Liberal

Mr. Sergio Marchi (York West) moved:

That this House condemns the government for its miserable failure to offer leadership and direction to Canadian banks and other lending institutions in order to provide adequate financial resources for the growth and development of small and medium sized businesses and the consequent creation of thousands of new jobs.

He said: Madam Speaker, I would like to say at the outset that this motion and this debate are long overdue. It has become painfully evident to all members on this side of the House that the general lending practices of our major banks and lending institutions have failed our small and medium-sized businesses.

The federal government has failed to provide the leadership, the nurturing and the direction to those lending institutions which are under exclusive federal and parliamentary jurisdiction to improve and right the wrongs.

As a result, since it is well known, recognized and documented that the small and medium-sized sector is the engine of economic growth and job creation, an unfair lending bank policy for that sector complemented by a failure by this government to act on it has in my opinion undermined economic growth in Canada, dampened job creation and prolonged, not expedited, an already long and painful economic recession.

In a key address in February of this year to the Empire Club of Toronto, the Leader of the Official Opposition said:

But for many small -companies it's not just the Small Businesses Loans Act -It is some of the practices of the major Canadian banks.

Canadian banks do not operate in an unregulated environment. Over the years, they have benefited a great deal from the protection of the Bank Act-I believe it is time for the banks to give something back. The time has come for the government to exercise leadership and to challenge the banks to sit down and develop concrete ways to help small and medium sized Canadian businesses find the capital that they need.

It is time to give something back. How many times have we heard that from Canadian business people in our ridings over a cup of coffee, on the floor of their plant or in fact from workers at the gates?

We constantly hear about the banks and lending institutions pulling back loans to those small businesses, freezing and undercutting their lines of credit. All too many times those businesses cannot get to first base with their banks. Despite being a long and loyal customer for many years of a bank or despite which bank they try, often and regrettably the response is a negative one across the board.

In the last couple of years our small businesses have not needed additional pressures from our banks. There are enough pressures in the marketplace. Try to think what those small businesses and firms have had to face: the collapse of Meech Lake, the Persian gulf war, the aftermath of the free trade agreement, the consternation over NAFTA on the horizon, the introduction of the GST, a high dollar-high interest rate policy in respect of the United States for all too many years, record unemployment, cross-border shopping, a national constitutional referendum that sucked the energy and confidence of a nation, no consumer confidence, an economic recession, and I would suggest a psychological depression of Canadians.

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That is the background these firms have had to work with. On top of those burdened shoulders they cannot get the financial lending strength from the banks that they come to expect and rely on.

In my own city of Toronto, my own province of Ontario which is the economic centre of the country that produces over 40 per cent of all goods, over 50 per cent of all manufactured goods, 225,000 jobs were lost during the recession in manufacturing, most of them small and medium sized firms. There were a record 31,400 bankruptcies last year in my province alone.

The budget of two weeks ago said nothing about an economic growth strategy, nothing about a job creation strategy and not one line on what the role of our banks and the lending institutions ought to be for our country in developing that so-called new economy.

On top of that there is no hope from the leadership candidates who have embraced the economic agenda of the current Prime Minister and the former finance minister and current trade minister. They have embraced them.

The banks have an important and indispensable role in the equation of a national economy and that role becomes doubly important when the economy is faced with a serious recession such as ours has been faced with over the past several years.

I do not want to put the whole blame for the economic malaise and performance of our national economy on the doorstep of our banks and lending institutions. Not at all, because that would be too simplistic and quite unfair. I am not suggesting that.

I am asking myself, and business people in my riding are asking themselves, within that one important variable of that equation what the banks have done to help get Canada working again. What have those banks done to assist those small business people over the incredible hurdle they have faced?

We as a Parliament should be asking ourselves, given that the federal statutes give rise to a very prestigious position for banks, and some would suggest a monopoly, that it is time for us to discuss and debate as we are doing today, what is the role of our lending institutions vis-a-vis our small business entrepreneurs who create the wealth of jobs.

There are 66 banks in Canada, 58 trust companies, and over 3,000 credit unions and caisses populaires with $600 billion in assets. In terms of aggregate assets the big five have more than all the other lending institutions combined. Let us look at the profits of the six major banks alone. Last year their profits came to $1,843 billion. In 1991 their profits were $3.7 billion and in 1990 their profits were $3,567 billion. The only reason they dropped in profits in 1992 was the shellacking those loans to the large multinational commercial real estate holdings took.

One company alone in Canada, O&Y, cost the banks $2 billion. Who is paying for those sins, for those loans that unfortunately went bad? With all due respect I would suggest that it is the small business person who is being denied and who is being unfairly asked to pay the price for those bad loans. That is not only unfair, but it is not helpful to attempts to stimulate economic activity.

We have had reviews of the financial banking act. We had legislation but it was a strengthening of the lending institutions allowing banks to offer insurance activities through subsidiaries. Banks can now own real estate brokerage firms. Banks can now hold, manage and develop land holdings. Banks can now offer in-house investment counselling, portfolio management and financial planning. Our government has given us green plans, blue plans, all sorts of coloured plans about strengthening financial institutions.

Has anybody asked why there have been no amendments to serve and help the clients of those lending institutions? Why did the last revision of the Bank Act, which is supposed to take place every 10 years and which we did in 1991, silent on anything that had to deal with the small and medium-sized firms? How have those lending institutions helped Canada prepare itself for the new economy?

It is important for the banks to support small business because it is the small enterprises that are the sparkplug of our economy. Between 1979 and 1989 businesses with less than 100 employees created 80 per cent of all new jobs, 80 per cent over a 10-year period. Since 1989 that percentage has increased to 98 per cent.

When we talk about bank losses, bad loans to small businesses last year totalled $600 million. That may be a big sum, but there are 900,000 businesses in Canada and the banks have lost $600 million on bad loans for all of

May 14, 1993

that sector. Compare that to the financial losses incurred on the big corporations, $2 billion on O&Y, and that is not mentioning the loans to South America and other faraway places.

Yet loans during the same decade to small business people have dropped 11 per cent and loans to the so-called big businesses have increased 11 per cent. In fact the Canadian Bankers' Association, which was invited recently to our caucus at the urging of caucus members such as the members for Broadview-Greenwood, Willowdale, Nepean, and others who have been active with the small business communities in their ridings, told us that the ratio between business loans to big and small businesses are 70:30.

I am giving the speaker the benefit of the doubt because in fact he told us that it was 26 per cent to small and medium-sized firms and I am rounding it off. Seventy per cent of all business loans go to big business, 30 per cent to small and medium sized firms. Yet in the same breath the Canadian Bankers' Association told us that most jobs are created in the small and medium sized sector.

Why is it that the lending practices of the banks do not go to where the most economic activities are going to be derived? Should those loan percentages not be at least better balanced, if not tilted, toward small and mediumsized firms? We have to get our loans in sync with where jobs are created.

Can members imagine how it would be if we harnessed those loan practices with the small business sector? If only half of the 900,000 small industries in Canada created one new job we would immediately put back to work 500,000 unemployed but willing Canadians; half a million jobs.

We do not have to imagine it. We do not have to dream about it. We do not have to hold it up as an ideal. I believe, as do members of my caucus, that if there is a partnership between a national government responsible for banking and those lending institutions with the small business network we can right those wrongs. We can fix those mistakes. We can reverse that trend. We can provide the financial spark that would ignite the entrepreneurial engine of our small business sector.

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In this debate I propose six recommendations which I believe the government can use to help banks move forward with what I would refer to as a small business development strategy. I know my colleagues who will be speaking after me will put other ideas on the table and by the end of the day we will, if we can, grab one, two or three good ideas. My ideas are by no means exhaustive but are an attempt to address the problem we hear first hand on Saturday mornings when we visit our constituents and at our many appointments.

I offer six ways. Recommendation No. 1 is for the government to call a national summit among the national government, the major banks and the small business network. Let us meet, sit down, become partners and talk about the short-term and long-term challenges facing small businesses and the whole question of the credit crunch. Let us talk about it now. If we bring those representatives together and pool our ideas, we will be doing justice and honour to the economic needs and aspirations of a people and a country.

Recommendation No. 2 is that the federal government immediately urge, if not demand, that banks stop withdrawing capital from small businesses that are meeting on a regular monthly basis their interest charges on loans. How many times have we heard that the banks have moved in to pull back loans or freeze credit lines and that the small business person has had to react? How? He has to either close the operation, scale down or lay off employees because he is being asked to pay the long-term debt to the bank in a very short and constrained time period.

We have a recession. After the business person pays monthly instalments on that loan, any left over capital should not be forced irresponsibly by the bank to finish the loan. It should be allowed to be reinvested in that operation so that the business can survive, if not prosper, in the economic drought.

I will give two examples. Two years ago a food manufacturer in my riding took out a loan with one of the big five for $700,000. He has paid down almost $500,000 in two years. Last week he received a notice from the major big five bank saying he has to pay the remaining $250,000 in 30 days or else.

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He has paid $500,000 during a recession and is continuing to pay it. Now his loan is being called in 30 days. What is that food manufacturer going to do? If he cannot get the money through private financial ways he is going to have to let employees go or close down.

A construction company in my riding employs 15 people. That person took out a loan one year ago of $150,000 for new machinery. He has paid back more than half. He has about $75,000 outstanding. Three weeks ago he received a notice telling him he has to pay the $75,000 off in 30 days or else.

That same business owner owns a house in Wood-bridge that is appraised at $600,000. He has an outstanding mortgage for $250,000. No one asks him any questions and it is the same bank. The bank on that loan says nothing but on the $80,000 business loan it says it is time to collect. He has 15 employees who he is worried about, 15 families that rely on the small construction company.

The practice has to stop because it is irresponsible. The banks which are entrepreneurs and have taken the risk should put loyalty, confidence and risk back into the loans they have made to those small businesses and not choke the businesses by pulling them back in the irresponsible fashion suggested in those two cases.

Recommendation No. 3 would be for the national government to encourage the banks to expand their small business loans portfolio. My colleague from Broadview-Greenwood has been a strong advocate of these small business loans. The ceiling for loans has increased over the years from $100,000 to $250,000. However the business people in my riding tell me they still cannot get access to those loans. We have increased the ceiling, but people are telling me they cannot even get $100,000, never mind $250,000.

The banks should at least double the portfolios available for those loans. They should not double the value of their portfolios. They should double the effort in selling the program and encouraging customers to take advantage of it. The banks should not put up a poster and rely on the world to take care of itself. Let us add some muscle to the program.

Recommendation No. 4 would be the establishment of a business development corporation joint venture among the major five banks. Today it is no longer the local bank manager who knows the business person and who is

making or turning down that loan. It is a faceless bureaucrat from a regional office.

The banks do not have the culture to deal with the small entrepreneur because they are driven by maximizing profit margins. Rather than taking a lot of time with the small or medium sized firms they would rather take the risk with some of the big players.

I believe a new culture can be created by establishing such a joint venture. Each can put in $150 million to $200 million capital. Then the banks will be more in sync with the concerns and needs of small business.

Recommendation No. 5 would be the strengthening of the Federal Business Development Bank because both the number of loans and the average size of those loans are going down significantly. We have to remember those are the same businesses that are being turned down by the chartered banks which are now being turned down with greater frequency by the Federal Business Development Bank. We have to reverse that trend.

The last recommendation, No. 6, is to have a joint task force made up of government, banking institutions and the small business network come together to hold public hearings with real live Canadian small and mediumsized firms. We could then have that information updated as well as the experiences they are having. They could then plug into that national economic summit. We may be on the leading edge.

Those are six ideas that I propose for debate. It is not an easy situation. I am not blaming the entire situation of our economy on the banks. I realize they have an obligation to their shareholders and the people who invest in their banks and obviously the depositor, but I believe they also have an obligation to the national economy by virtue of the federal statutes.

I believe there needs to be a better balance between the banks and small business so we can once again put wind behind the sails of our entrepreneurs and thank God for small businesses.

Topic:   GOVERNMENT ORDERS
Subtopic:   ALLOTTED DAY, S. O. 81-THE ECONOMY
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PC

Allan Koury

Progressive Conservative

Mr. Allan Koury (Hochelaga-Maisonneuve):

Madam Speaker, I have been in business for 45 years, so I have seen the ups and downs the hon. member referred to. I have seen about six or seven recessions like the one we

May 14, 1993

are seeing today, and unlike what the hon. member says, it is not necessarily the government's fault. They always accuse the government, but they forget that the government is elected by the people. I think if anyone is to blame, it is promoters.

The kinds of comments he made are misleading and should not be said because I do not believe the hon. member is right. If he thinks that banks withdraw money just for the fun of it, that is not proper. If he was a bank manager and he saw a corporation going under he would try to salvage as much as he could, but if the corporation is paying regularly we can be sure the bank will not withdraw.

I would like him to answer. Why was the bank withdrawing from the corporation that paid over $500,000 on a $700,000 loan?

Topic:   GOVERNMENT ORDERS
Subtopic:   ALLOTTED DAY, S. O. 81-THE ECONOMY
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LIB

Sergio Marchi

Liberal

Mr. Marchi:

Madam Speaker, I suppose I respect the opinion of my hon. friend and at the same time I am offended somewhat that he would have the courage to suggest I am misleading the House.

I am trying in this debate to be fair, to be practical and to live up to the experiences those business people have recounted to us. When I talked to those business people yesterday to let them know I would speak to their issues, they said: "Even if nothing happens at least we have a conversation that took place in your office some time ago and now it is offered on the floor of the Parliament of Canada".

When I asked those business people why those loans were being recalled they did not have a great explanation. They were not provided with any great explanation in the notifications. Time prevents me from talking about other businesses and other experiences. I hope my colleagues take up the challenge of talking about other experiences in their ridings. [DOT]

As I mentioned earlier, I am not castigating the banks for the entire performance of the economy. That would be irresponsible, simplistic and totally unfair. I am saying there is an important role in the national economy for

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the banks to play. When there is a recession in my opinion that role is all the more important.

I suggest there must be a balance. We know they have an obligation to the people who deposit and their shareholders. That obligation is financial. It also may be moral. I do not take anything away from those obligations. I am saying that the lending institutions, because they are governed by federal statues and are an important variable in the economy, have an obligation to a national economy and to how we can earmark lending policies, not only to make profits for banks, and to help the aspirations of people and a country as I mentioned.

I believe the banks sometimes, like all of us perhaps, want to have the easiest route to make those profit margins look better. They get into mortgages, consumer financing, Treasury bills and increasing service costs.

I will give another example that I did not have time for earlier. There is a small business person in my riding, a contractor. He has a plot of land north of Alliston on which he is ready to build 33 homes. Those homes have already been pre-sold, guaranteed. He went to his bank, a major five, where he has been a client for 15 years. The bank has told him a flat no: "We are not giving money to people who are in the industry of building homes".

I ask myself why those 33 would-be home buyers would be able to get mortgages from the same bank and the person who wants to build the homes that are guaranteed cannot get the money. As soon as the money would be guaranteed the shovel would go into the ground and there would be 150 construction jobs on that project. Does it make sense that a bank would allow 33 would-be home buyers to get mortgages and a small contractor who employs 30 people cannot get the financing to put up the project that would also create 150 jobs? I think that is insane.

I do not think those kinds of lending policies are predicated on the foundation the banks are built on, and that is entrepreneurs. They have to get behind ideas again. I believe they have to get behind people again. I believe that the banks have to take the risk again with respect to the small and medium sized firms. I stand on those words. We can prove it by showing real live Canadian examples.

May 14, 1993

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Topic:   GOVERNMENT ORDERS
Subtopic:   ALLOTTED DAY, S. O. 81-THE ECONOMY
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LIB

Dennis Joseph Mills

Liberal

Mr. Dennis Mills (Broadview-Greenwood):

Madam Speaker, I agree with everything my colleague from York West has said.

One of the problems with the financial institutions is that the leadership of the banks seems to live in a different realm than the people on the street. We have heard vice-presidents of banks support the initiative of the minister of small businesses called the Small Businesses Loans Act. We know the minister has been promoting it, yet when we go to the local commercial officer at the branch level in all the various communities across Canada there does not seem to be the same spirit in terms of implementation.

I wonder if the member could talk a little bit about the fact that there seems to be two different realms of activity within the banking institutions.

Topic:   GOVERNMENT ORDERS
Subtopic:   ALLOTTED DAY, S. O. 81-THE ECONOMY
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LIB

Sergio Marchi

Liberal

Mr. Marchi:

The member for Broadview-Greenwood who has been actively involved on this dossier is correct. There is a difference in the intent of the Small Businesses Loans Act, the new ceilings, the application and the execution. That is why in part not only did I suggest in recommendation No. 3 encouraging the banks to increase the portfolio sizes of those small businesses loans but to excite them about selling and advertising them more.

That is why I also speak to recommendation No. 4, a separate, leaner and meaner joint venture with the five major banks that can get closer to small business people. I talk to people in the banks. Off the record the banking industry tells me, because of the profit margins, that it takes longer to sit down with a small business person and take him or her through it. A yield on a small loan is a lot smaller than the yield on a big loan. The banks are not properly equipped to give maximum attention to small and medium-sized firms. Their 6,000 national branches are not equipped because of centralization and therefore there is a loss of potential when a small business person goes to the major banks.

That is why in Japan it works on a different basis. The bulk of the businesses in Japan are small businesses. They work in networks and clusters. Financing is tailor-made to the small business sector. That is why I am suggesting a smaller organization of the banks to specialize and deal exclusively with small businesses, to forge

the links, to support and encourage the small business sector which the current banking culture cannot do.

I am not saying that is something the banks should be embarrassed about. I am saying that perhaps it is a reality of the way the banks operate. If the small business sector is the engine of those jobs and economic growth then let us specialize the lending and rapport between those sectors and the banks through our structures and through our culture. Canada is changing and the world is changing. Perhaps the banks have to change with the country, with the world and with how business is being done in the international community.

This is basically a challenge. We are pushing an alarm bell and saying the situation is pretty desperate out there. Let us in partnership with government, lending institutions and small business change the way we have done business and do it better on behalf of all Canadians.

Topic:   GOVERNMENT ORDERS
Subtopic:   ALLOTTED DAY, S. O. 81-THE ECONOMY
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NDP

Lorne Edmund Nystrom

New Democratic Party

Hon. Lome Nystrom (Yorkton-Melville):

Madam Speaker, I thank the government for allowing me to say a few words before it responds to the Liberal motion moved by the member from Toronto.

The motion is a very worth-while one to have before the House today. It asks government to give the banks more direction in terms of helping small and medium sized business. All of us in the House know that the real engine of jobs is the small business sector across this country. All too often in the last 10 or 15 years we have seen many resources going into the promotion of megaprojects, be it by this government or previous governments, which tend to be very capital intensive but not very labour intensive.

We have also seen over the last number of years a lot of money going to tax breaks, grants and subsidies for large businesses. Once again I question whether we are getting bang for the buck in terms of job creation in Canada.

It is really worth while having this debate. I look forward to the minister in charge of small business responding to some of the concerns of small business people.

The main issue, and this motion addresses it, is the whole question of jobs: unemployment and putting Canadian people back to work. We now have one of the higher unemployment rates in the industrialized world. We have all kinds of people who are not working. That creates economic hardship for the country and human

May 14, 1993

misery, which is something one cannot measure in concrete terms. That is what unemployment brings.

We have a very high unemployment rate and a very high deficit and national debt. They are really interrelated. The best way of paying down the national debt and eliminating the deficit is to put Canadians back to work. I believe Canada works as a country when our people are working. If our people were working then we would have a stronger economy. We would have more secure social plans and social benefits. We would have a much happier country from coast to coast.

At the present time when so many people are unemployed, we find the federal government is now paying billions of dollars a year in unemployment insurance, paying billions of dollars a year in sharing welfare costs with the provinces, and losing billions of dollars a year in tax revenues that would go to the federal government if a lot more people were working who are now unemployed.

It is worth while to spend a few minutes this morning just putting on the record the dire situation this country is now in economically. As of April, 11.4 per cent of the Canadian work force was officially unemployed. There were 1,581,000 Canadians without work in the month of April. That is officially unemployed. Economists and others have argued for a long time that many other Canadians are unemployed as well. They have dropped off the unemployment insurance rolls. They have given up, are living with their families, are on welfare, et cetera. Even among those who are working many are underemployed with part-time jobs, low wage jobs, job sharing. They work two or three part-time jobs.

The Canadian Labour Congress recently estimated that there are 2.6 million unemployed and underemployed Canadians. About a month ago the Canadian Conference of Catholic Bishops estimated that there are now 3.9 million Canadians either unemployed or underemployed. That highly respected organization is saying that 3.9 million Canadians are unemployed or underemployed. We have a national travesty of 1,580,000 Canadians officially unemployed and many others who are underemployed.

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That is the unemployment side. What happens when unemployment insurance benefits run out? Many people go on welfare. In the month of March how many people were on welfare across the land? There were 2,644,000 Canadians on welfare in March. In what is the wealthiest country in the industrialized world it is astounding to have 2.5 million Canadians on welfare.

Therefore there were 4,225,000 Canadians unemployed or on welfare. In a population of 26 million people including retired folks and children there were 4.25 million unemployed or on welfare. Well over 20 per cent, an astonishingly large number of our work force or our potential workers, is unemployed or on welfare.

Imagine how wealthy the country would be if these people were working in meaningful productive jobs. They would be paying taxes at the municipal level, the provincial level, the federal level. They would not be receiving unemployment insurance benefits or welfare payments from the various provinces. Imagine how strong our social programs would be and the money we would have to help our farmers and people living in poverty.

Now for the flip side. The reason our living standard is going down is that people are unemployed. For the first time since the 1930s, according to the Conference Board of Canada, we have had three consecutive years where the income of individual Canadians has dropped. Between 1989 and 1992 income has dropped an average of $1,200 per person or 5.5 per cent. That is a pretty sad picture of what has happened to our great land.

If our people work then this country will work. It will work as a country. There are going to be a lot of people on the lawn of Parliament tomorrow. Tens of thousands of people will be protesting against the government policies that have thrown people out of work. When people are unemployed the country does not work and we stand to lose our social programs. We are going to have the problem very soon of people proposing user fees in medicare and the whole issue of medicare itself being threatened.

In addition to the people on welfare and unemployment insurance we find that the number of people living in poverty has sky-rocketed in the last few years. In 1991

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there were 4.2 million Canadians living below the poverty line according to Statistics Canada. This is a before tax figure. Now, two years later, the number is certainly much higher.

Look at bankruptcies in terms of small business. That is the motion before the House today. We find in the month of March there were 6,531 bankruptcies. Personal and business bankruptcies have climbed for the second straight month. When a business goes bankrupt or people go bankrupt there is more unemployment and welfare in Canada. We have a very serious problem.

We also have the problem of interest rates. Last November in 1992 the bank rate was at 9 per cent. Thank goodness the bank rate is now down to 5.39 per cent and the prime rate is sitting at 6 per cent. The inflation rate is at 1.9 per cent.

The real interest rate, if we take the prime rate and subtract the inflation rate, is still sitting at 4.1 per cent. There is still room for the bank and prime rates to go down. If that happens it will further stimulate the economy and help put Canadians back to work.

If we go back the last few years and look at the monetary policy of the government and the Governor of the Bank of Canada, John Crow, we find a deliberate policy to force interest rates up and strengthen the Canadian dollar. This has brought down inflation, but this tight money policy has thrown hundreds of thousands more Canadians on welfare or unemployment insurance.

When the bank rate goes up the economy slows down, businesses cannot expand, farmers cannot expand, people are not buying and building new houses, people are not repairing their houses or expanding their small businesses, and people are unemployed. That is a deliberate policy of the government across the way and the Governor of the Bank of Canada, John Crow.

As a result of that policy our problem with the national debt becomes worse because every single point on the bank rate means the interest on the national debt is going up by hundreds of millions of dollars each and every year; not just the federal debt but the debts of the provinces across the country as well.

We now have one of the biggest debt and deficit problems of any country in the industrialized world. The deficit this year as announced on April 26 was $35.5 billion. The government was out by $10 billion on the projection of a year ago. Where it said the deficit would be around $25 billion, it is now $35.5 billion.

Meanwhile the national debt, the accumulation of years and years of deficits, stands at $458.6 billion. When the Conservative Party was elected some eight or nine years ago it was about $150 billion. It has gone from $150 billion to $458 billion.

One of the reasons for this is the deliberate policy of the former Minister of Finance, John Crow and the Prime Minister to have a high interest rate policy. It has thrown people out of work, increased the interest payments on the national debt and created a deficit situation that is much worse than it should be and much worse than it is in most countries that are our trading partners around the industrialized world.

We are now left with a crippling debt which means we lose a lot of our independence and sovereignty as a country to deal with the things we want as a nation. That is the situation we are now left with.

The government has been saying recently that there is a minor recovery out there. We see a little bit of this once in awhile, but that recovery is export driven because the Americans are now buying more goods and services from us. They are doing it because of the American recovery and because we have had a drop in the value of the Canadian dollar.

Yesterday we had some disturbing news. The American growth rate slowed down to 4.6 per cent in the last quarter of 1992. In the first quarter of 1993 it went down to 1.9 per cent. The Americans are buying fewer goods and services. If they buy fewer goods and services, we will be exporting less and less to the United States and we will find our recovery will also slow down.

That is the situation we are in today. It is probably the worst of any country in the industrialized world. After some nine years of Conservative government we find that 4.25 million Canadians are on welfare or drawing unemployment insurance. Many other Canadians are partially employed working at part-time, low income jobs.

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That is the Conservative legacy today. The government's response has been a free trade agreement with the United States that sold out our sovereignty and our independence and transferred hundreds of thousands of jobs from Canada to the United States. We are seeing that every day in this country, particularly in the province of Ontario where jobs are moving south of the border. Now the government wants to expand free trade to include Mexico in the North American free trade agreement.

We say abrogate the FTA, do not proceed with NAFTA, strengthen Canada's economy, and maintain our sovereignty and our independence.

There is no plan whatsoever by the government across the way to create jobs. Instead we now have leadership candidates, the Minister of the Environment and the Minister of National Defence, going around the country saying: "Well, we have a debt and deficit problem and maybe one way to deal with it is not through a comprehensive jobs plan to put Canadians to work. Maybe one way to deal with it is to bring in user fees on medical care". User fees on medical care are a violation of the Canada Flealth Act.

Our present minister of health to his credit has been saying to the leadership candidates that user fees are wrong. We do not fight the debt and deficit problem by bringing in user fees which are really deterrent fees or taxes on the sick. It is really a form of double taxation because people have paid for medical care through general taxes and now, if they are sick, they have to pay again with user fees. That is taxing the sick. I say no to the Conservative Party. I say no to those leadership candidates who are saying: "Let's take a look at user fees and deterrent fees".

The Conservative Party is putting a tax on the sick. It is the same old Conservative Party that back in the 1930s brought us the Great Depression with R. B. Bennett. It is all happening once again in the 1990s. What we have had is not really a recession but a depression.

Our party is suggesting that the solution is a jobs plan. We have announced our jobs plan in detail. We are talking about investment in infrastructure, investment in research and development, investment in training people

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for the new technologies and new jobs, spending more money on agriculture and resources, adding value to our resources, helping our farmers and helping small business people.

This detailed plan is all written out in several pages which announce what our agenda is. I ask the government across the way: What is its plan in terms of job creation? The government's whole fight against the deficit is to cut back on services, cut back on medical care, cut back on health, cut back on education and cut back on transfers to the provinces. That is not a solution.

The Liberal Party across the way can criticize the government but it does not have a plan. Where is the jobs plan of the Liberal Party? I say it is very well hidden. Because people are upset with the Conservative Party it is hoping to coast to victory without telling us what the alternative is.

The time has come to be honest with the Canadian people and go out there with a program and a platform on where the government stands. The Conservative Party has destroyed this country economically. We have 4.25 million people on welfare or unemployment insurance. We have hundreds of thousands of others working in part-time, low paying jobs who underemployed. That has brought all kinds of human misery and human disaster that cannot be measured.

When that happens the economy is destroyed. People are not paying taxes. They are collecting UI benefits and welfare. Eventually we start to see the erosion of our pension plans, our unemployment insurance plan, our medical care and our hospitalization. Less money is going into investment in education, universities, research and development. That is the Conservative legacy. That is what they are going to have to answer for to the Canadian people when they screw up the courage to draw up those writs for an election some time in August, September or October.

Topic:   GOVERNMENT ORDERS
Subtopic:   ALLOTTED DAY, S. O. 81-THE ECONOMY
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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:

It being eleven o'clock, the House will now proceed to statements by members pursuant to Standing Order 31.

We will proceed with questions and comments after Question Period and Routine Proceedings.

May 14, 1993

Topic:   GOVERNMENT ORDERS
Subtopic:   ALLOTTED DAY, S. O. 81-THE ECONOMY
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STATEMENTS PURSUANT TO S. O. 31

PC

Marcel R. Tremblay (Parliamentary Secretary to the Deputy Prime Minister; Parliamentary Secretary to the Minister of Finance; Parliamentary Secretary to the Deputy Leader of the Government in the House of Commons; Parliamentary Secretary to the Minister of State (Fitness and Amateur Sport))

Progressive Conservative

Mr. Marcel R. TVemblay (Quebec-Est):

Madam Speaker, we read in the media yesterday that budget cutbacks apparently did not affect employment in the Public Service. I wish to point out that yesterday, Robert Giroux, chairman of the Public Service Commission, explained that the commission did not calculate the number of government employees according to the same criteria as Treasuiy Board.

Cuts are expressed in person-years, but the commission goes by the number of employees on the payroll. If two employees are hired for six-month terms, they count as two for the Public Service Commission but as one for Treasury Board, because two six-month terms equal one person-year.

When the headlines announced that the number of employees had increased by 6,000, that is just because the media did not do their homework.

Topic:   GOVERNMENT ORDERS
Subtopic:   STATEMENTS PURSUANT TO S. O. 31
Sub-subtopic:   PUBLIC SERVICE EMPLOYMENT
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BELL NORTHERN RESEARCH

LIB

Beryl Gaffney

Liberal

Mrs. Beryl Gaffney (Nepean):

Madam Speaker, yesterday George C. Smith, president of Bell Northern Research and senior vice-president of Northern Telecom, officially dedicated BNR's 600,000-square foot Lab 5. This is Canada's newest and largest telecommunications R and D facility at the BNR world headquarters complex in Nepean, Ontario, Canada.

In today's new transnational economy, information and knowledge-based industry such as telecommunications are providing the foundation for industrial renewal and growth. Leading the Canadian communications sector that is the envy of the world is Bell Northern Research.

Every major telecommunications system BNR has designed is ranked number one in the world in its respective market segment. Its research labs are Canada's largest single contributor to internationally coveted

R and D employment. BNR is Canada's leading employer of university graduates in engineering and science.

Yesterday Mr. Jean Monty, president and CEO of Northern Telecom, remarked that the BNR labs provide strong evidence that when R and D endeavours are pursued in a fertile environment and directed to an outcome wonderful developments can and do happen.

It was my privilege to be there and offer my congratulations.

Topic:   GOVERNMENT ORDERS
Subtopic:   BELL NORTHERN RESEARCH
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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:

The hon. member's time has expired.

Topic:   GOVERNMENT ORDERS
Subtopic:   BELL NORTHERN RESEARCH
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LEADER OF THE OPPOSITION

NDP

Rodney Edward Murphy

New Democratic Party

Mr. Rod Murphy (Churchill):

Madam Speaker, yesterday the Leader of the Opposition tried to remedy his reputation as yesterday's man by reminding Canadians about the good old yesterdays of Liberal governments.

"Yesterday Chretien" forgot to tell Canadians about the high interest rates of 20 per cent when he was in government 12 years ago which provoked 100,000 Canadians to march on Parliament Hill.

"Yesterday Chretien" forgot to mention high unemployment, the elimination of the Department of Regional Economic Expansion, wage controls, and cutting back transfer payments for health and post-secondary education, all of which happened when the Liberals had a majority government.

"Yesterday Chretien" forgot to mention his white paper which would have assimilated native Canadians.

"Yesterday Chretien" did mention medicare but forgot to mention the father of medicare, NDP Tommy Douglas.

"Yesterday Chretien" forgot to mention that medicare, the Canadian Pension Plan, Petro-Canada, training and employment programs were started when Liberal minority governments were forced into these programs by the NDP.

Topic:   GOVERNMENT ORDERS
Subtopic:   LEADER OF THE OPPOSITION
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HELICOPTER PROGRAM

PC

Godfrey Stanley (Stan) Wilbee

Progressive Conservative

Mr. Stan Wilbee (Delta):

Madam Speaker, after a day of special hearings on the EH-101 helicopters by the standing committee on defence I believe it is obvious

May 14, 1993

there is no other machine capable of doing the jobs it is being purchased to do.

Some significant points that were made yesterday include that there is and will continue to be a threat from foreign submarines off our coasts with many subs still being made and sold to large and small nations.

Second, the EH-101 is not too heavy for the frigates that are being built and anything less than the EH-101 grossly reduces the effectiveness of the frigates. The reporter who first made that claim now admits he was wrong but has declined to write a second article admitting his error which has severely damaged this program.

Third, the wash from the propellers is not too strong to permit rescue if the procedure is carried out according to operating guidelines.

Obviously the EH-101, like our peacekeeping troops in Somalia, is taking a bum rap from grandstanding opposition politicians who are taking cheap political shots which do nothing but confuse and demoralize our citizens.

Topic:   GOVERNMENT ORDERS
Subtopic:   HELICOPTER PROGRAM
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ROYAL CANADIAN SEA CADET CORPS BACCALIEU

LIB

Fred J. Mifflin

Liberal

Mr. Fred J. Mifflin (Bonavista-TVinity-Conception):

Madam Speaker, on May 9 I attended the annual inspection of Royal Canadian Sea Cadet Corps Baccalieu in Bay de Verde in my riding. Its performance provided clear evidence of why it won the coveted top sea cadet corps in Canada award among 220 corps in 1992.

This extraordinary achievement reflects great credit on the communities involved: Bay de Verde, Grates Cove, Old Perlican, Lead Cove, Sibley's Cove, Browns-dale, Gull Island and Red Head Cove.

It also demonstrates a great spirit of co-operation and leadership among the parents, teachers, sponsors, commanding officer, officers and the 123 superb cadets involved.

This is the second time this honour has been won in my riding. Royal Canadian Sea Cadet Corps Matthew in Bonavista won this outstanding distinction in 1988.

My colleagues join me in offering our heartfelt respect and congratulations.

Topic:   GOVERNMENT ORDERS
Subtopic:   ROYAL CANADIAN SEA CADET CORPS BACCALIEU
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May 14, 1993