February 21, 1957 (22nd Parliament, 5th Session)

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William Moore Benidickson (Parliamentary Assistant to the Minister of Finance)

Liberal Labour

Mr. Benidickson:

Yes, Mr. Chairman. The committee is well aware that it is not long ago that, as a result of more amendments than are presented at this time, a very extensive review of this act took place. One hon. member, I believe it was the hon. member for Battle River-Camrose, suggested that out of that labour of last session, including the work of the banking and commerce committee he felt little had developed except we had streamlined the application form. I feel that is an uninformed statement, Mr. Chairman, to say the least. I think even the board itself would give the fullest credit to the members of the committee for the work that they did in examining the operations of the board. I am very happy to be able to report to the house that in a period of something less than a year the total amount of loans and the average size of loan has increased very substantially.
In Canada as a whole, the number of loans approved for the period April 1, 1956 to January 31, 1957 was 2,751 amounting to $13,100,900. In the full year for the period April 1955 to March 31, 1956 the number of loans approved amounted to 1,949 and the amount of the loans was $7,791,000. I think the committee will be pleased to learn also that in this relatively short period of time since last session's work the amount of the average loan has increased. At the time we were considering the operations of the board the average loan was $3,898 for the last full year and for the period April 1, 1956 to January 31 of this year, the average loan has increased to $4,726.
Now, the hon. member for Greenwood requested some information to indicate what acceleration there might have been in loans in recent years. I have a table that covers a period of some 10 years, but perhaps orally I might just give the figures for the past five years. Taking the net increase in funds borrowed from the Minister of Finance, 1952-53 the total amounted to $1,600,000; in the next year they amounted to $3,700,000; then.

Canadian Farm Loan Act for 1954-55 $4,400,000; then, for 1955-56
$4,700,000; and for the 10-month period up to January 31 of this year to $5,300,000.
Now, similarly, the actual amount of loans dispersed to farmers showed a continuous increase. In the year 1952-53 the loans dispersed to farmers amounted to $5,118,000; in the next year, $7 million; the next year to $8,207,000; the next year to $8,254,000, slightly ahead of the year previously and in the current 10-month period ending January 31, 1957 they increased to $10,139,585. Some questions were advanced as to for how long a period the present increased authority might suffice before there was a requirement for parliamentary authorization of an additional increase in capital.
At the present time the minister may lend to the board $60 million based on the present capital. The amendment will permit the minister to lend the board an additional $20 million. That amounts to $80 million. The outstanding loans from the minister as at January 1, 1957, amount to $43,300,000, so that at present the further amount the minister may lend to the board is $36,700,000.
It is estimated that total borrowings from the Minister of Finance for the fiscal year ending March 31, 1957, will reach $8,500,000, and the loans dispersed in the current year when it ends on March 31, 1957, will probably amount to $13 million, to bring the total outstanding loans from the minister to $46,500,000, leaving a potential of future borrowing power of $33,500,000.
The hon. member for Greenwood and some others made reference to the time lapse between the time of placing an application and the completion of the application by the granting of a loan. The committee will recall that we were given some evidence last year. We were told in the banking and commerce committee that 50 per cent of all loans were completed within 50 days. I am able to report that an analysis of the applications has been made for one province, a representative province, namely, Ontario. In Ontario, in the present fiscal year to February 5, 1957, 533 loans were processed. The length of time between appraisal and head office approval of the loans is as follows: 22.4 per cent took less than 15 days; 50.3 per cent took less than 28 days; 64.4 per cent took less than 35 days; 80.5 per cent took less than 42 days. Therefore, I think members of the committee will again be pleased with that increase in the speed at which applications are dealt with.
The hon. member for Kindersley, at pages 1324, 1325 and 1326 of Hansard, made the point that he believed that applicants are denied a loan unless they actually reside on
[Mr. Benidickson.l

a farm, or at least have some buildings on the farm. I am told by the board that this is not a correct indication of the position. The board does appreciate the trend toward owning and residing in a house in a nearby village, and this, of course, has developed particularly in the province of Saskatchewan. In these circumstances, an applicant who is prepared to include his village residence as part of the security may obtain a loan from the board. Presumably, my hon. friend was referring to a farm that would have no buildings on it at all.
The hon. member for Acadia referred to the item on the back of the application dealing with chattel mortgages. I am told that has always been on the application. Up to now no exception has been taken to it. It is presumed that it followed the regular practice of the private lending companies for many years. I wish to point out to the committee that what it means is simply this: warning is given to the applicant that under certain circumstances he might be asked to provide a chattel mortgage; but if hon. members follow the procedure they will realize that the board, or its representative, is doubtless approached by a letter or a personal interview. The applicant is given this form to complete, and returns it, and then there is an appraisal and the board then writes indicating whether it is prepared to extend a loan. If it does so and if it feels that some chattel mortgage security is required, it states so in the letter. There is no obligation, of course, on the part of the applicant to proceed with the loan if he objects to the chattel mortgage request. I am told, however, that such requests are on the decline. I think that in the 10-months period that I say has been reviewed chattel mortgages were requested in about 16 per cent of the applications. I am told also that usually the term of the chattel mortgage is a relatively short one. The mortgage loan itself is probably for a long period but the chattel mortgage security is usually for a short term of possibly five years and would not run collateral in time to the long term of the land mortgages. I understand, too, that there is a very good reason for requesting chattel mortgages in certain circumstances.
I can illustrate this best by saying that certain farms would not be farms at all from the point of view of real productive worth had they not a valuable and substantial irrigation system, and to secure the irrigation system which is essential to the operation of the farm of course a chattel and not a real estate mortgage is required. This is just one illustration.
In so far as this clause is concerned, the applicant will receive the payment by

cheque and at his risk. I am assured that that has never caused any difficulty over the years. If a cheque has gone astray invariably the board has taken on the obligation of checking upon it, and I think possibly that particular clause in the application form could be looked at with the possibility of having it altered or making clearer to the applicant what is involved. I understand it is simply an authorization to send payment in that manner.
The hon. member for Dufferin-Simcoe complained that he felt farmers were being refused loans because they were energetic and enterprising enough to go out and seek some outside employment on a seasonal basis. Well, hon. members know that only those whose principal occupation is farming are entitled in the first place to receive loans; but I understand that my hon. friend has a completely wrong impression. The board appreciates the fact that some farmers are able to supplement their incomes by seasonal or part-time employment and this is, in fact, considered a favourable feature to be taken into account when approving the loan. I can understand, however, that if one continued indefinitely in this non-farm employment and had a long record of nonfarming at the time of the application he would not be classified as a person whose principal occupation was farming. But working for a short period and working in seasonal employment off the farm is no bar to the making of loans.
I myself, Mr. Chairman, would like to make a correction on page 1324 of Hansard. I referred to the total of loans outstanding as amounting to about $106 million. What I intended to refer to was the total amount of loans made by the board to date, which in fact amounts to $108 million as of March 31, 1956. Hon. members know from the annual report that as of the end of the last fiscal year the loans outstanding were something in excess of $40 million, I think about $43 million, and as of the present time they are approximately $50 million.
I think I have answered the principal questions raised in the previous sitting of the committee.

Topic:   AMENDMENT TO INCREASE AUTHORIZED CAPITAL OF BOARD
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