House of Commons Hansard #153 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was banks.

Topics

Government Response To Petitions
Routine Proceedings

10:05 a.m.

Peterborough
Ontario

Liberal

Peter Adams Parliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to 20 petitions.

Committees Of The House
Routine Proceedings

10:05 a.m.

Liberal

Roger Gallaway Sarnia—Lambton, ON

Mr. Speaker, I have the honour to present, in both official languages, the first report of the Special Joint Committee on Child Custody and Access.

The committee is requesting an additional two weeks' time to complete its final report.

Committees Of The House
Routine Proceedings

10:05 a.m.

Peterborough
Ontario

Liberal

Peter Adams Parliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, I have the honour to present the 44th report of the Standing Committee on Procedure and House Affairs regarding the selection of votable items in accordance with Standing Order 92.

This report is deemed adopted on presentation.

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

Peterborough
Ontario

Liberal

Peter Adams Parliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, I suggest that all questions be allowed to stand.

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

The Deputy Speaker

Is this agreed?

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

Some hon. members

Agreed.

The House proceeded to the consideration of Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses, as reported (with amendment) from the committee.

Canada Small Business Financing Act
Government Orders

10:05 a.m.

The Deputy Speaker

There are 16 motions in amendment standing on the Notice Paper for the report stage of Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses.

Motion No. 1 will be debated and voted on separately.

Motions Nos. 2 to 5 will be grouped for debate and voted on as follows. A vote on Motion No. 4 applies to Motion No. 5. Motions Nos. 2 and 3 will be voted on separately.

Motions Nos. 6 and 11 will be grouped for debate and voted on as follows. Motions Nos. 6 and 11 will be voted on separately.

Motions Nos. 7 and 8 will be grouped for debate and voted on as follows: an affirmative vote on Motion No. 7 obviates the necessity of the question being put on Motion No. 8, and a negative vote on Motion No. 7 requires a question being put on Motion No. 8.

Motions Nos. 9 and 10 will be grouped for debate and voted on as follows. A vote on Motion No. 9 applies to Motion No. 10.

Motion No. 12 will be debated and voted on separately.

Motions Nos. 13 to 16 will be grouped for debate and voted on as follows: an affirmative vote on Motion No. 15 obviates the necessity of the question being put on Motion No. 16, and a negative vote on Motion No. 15 requires a question being put on Motion No. 16. Motions Nos. 13 and 14 will be voted on separately.

I shall now put Motion No. 1 to the House.

Canada Small Business Financing Act
Government Orders

10:10 a.m.

Bloc

Francine Lalonde Mercier, QC

moved:

Motion No. 1

That Bill C-53 be amended by adding after line 22 on page 2 the following new clause:

“2.1 The purpose of this Act is to increase the availability of financing of small businesses, which would not otherwise have access to financing.”

Mr. Speaker, I would point out that the Bloc Quebecois voted for the principle of the bill.

We thought it would reform the situation so SMBs would have more ready access to the government guaranteed capital they need but would not otherwise have access to under the usual credit requirements. That was our understanding. This in fact is what the minister said initially when he introduced the bill.

Oddly enough, this bill, entitled an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses, contains no provision stating that this is indeed the intent of the bill. Given this obvious discrepancy, the Bloc Quebecois decided to propose an amendment indicating clearly the purpose of the bill.

The Canadian Federation of Independent Business, the main voice of small and medium size businesses needing financing, repeated to us that the bill should make it easier for small and medium size business to obtain funding. The president of the Canadian federation stated at a press conference a few months ago that 29% of businesses reported having great difficulty obtaining credit. Very small businesses and new businesses have the hardest time getting this financing.

A number of Bloc Quebecois members conducted a survey among small and medium size businesses. Out of the more than 800 small businesses that replied to these seven members, 89% said it is difficult or very difficult to get financing. Yet, the Canadian Federation of Independent Business feels that, because of the greater competition generated by the active presence of the caisses Desjardins, the level of satisfaction in Quebec is high.

This means that accessibility is the main problem. Given that the act is entitled “an act to increase the availability”, it must provide, in its body and not only in the regulations, that such is its purpose.

We are in no way saying that lenders should not be serious, on the contrary. But all of us here know that it is always easier to lend to a well established business whose profitability has been recognized for years, than to entrepreneurs who are just starting up, who have put all the winning conditions on their side, but who have to prove that theirs will be a profitable venture.

Therefore, we hope all members will support this provision. Otherwise, given that a whole part of the act will now be included in the regulations and thus come under the exclusive authority of the minister, there is a risk that not only will the act fail to increase availability of financing, but that it will in fact reduce such availability. I am convinced that no one here wants that to happen.

We know that small and medium size businesses create jobs. We will go back to the need to look at this capability, which has been recognized by everyone. But if these businesses are to continue to create jobs, they must have access to the credit they need.

It is not normal to have so many small and medium size businesses find such access either very difficult or difficult. However, we can understand why when we look at the sectors in which they operate. There are some sectors where it is easier. A new optometrist setting up a business is likely to obtain credit fairly readily. It can, however, be very hard for a small business involved in the production sector or high risk sectors such as new technologies.

Government loan guarantees ought not to apply only to loans to businesses that would have obtained them anyway. Nor should they lead banks to assume bad risks. That is not what we are saying. However, we are saying that, given appropriate careful consideration, small and medium size businesses must have access to credit.

According to some people, things are getting easier. Credit is even available on the Internet from a certain bank. But it must be pointed out that ING bank, the one referred to, charges a far higher rate of interest and, according to what we have been told, loans only to businesses with proven profitability.

What I am trying to say here is that this bill is indispensable, because some businesses would not otherwise have the necessary credit to develop, to create jobs, to continue in operation, and sometimes to grow significantly. We support this bill because we are aware of how important it is, but its purpose must be clear. That is what the Canadian Federation of Independent Business has told us on numerous occasions.

I do not want to call on people's sympathy, but we need to know just how risky it is for an entrepreneur to launch a business. In French we say “launch themselves”. I am not sure how that comes across in translation, but there is a reason for saying “launch themselves”. It shows the big chance the entrepreneur is taking. He puts all of his energy into it, often investing everything he, his family and friends have been able to accumulate with great difficulty. It is therefore important, when he has done everything possible for himself, for him to be able to have access to a guarantee so that he may obtain a loan that would otherwise not be available to him. I therefore invite my colleagues to support this amendment.

I repeat, 80% of the small businesses surveyed by us say that this guarantee must apply to businesses that would not otherwise have access to financing.

I hope, speaking for small and medium size businesses, that this House will agree to having the content of the title reflected in the bill itself.

Canada Small Business Financing Act
Government Orders

10:20 a.m.

St. Catharines
Ontario

Liberal

Walt Lastewka Parliamentary Secretary to Minister of Industry

Mr. Speaker, it is a pleasure for me to have the opportunity to speak to this motion.

During debate of this bill in committee a lot of the discussion centred around the same thoughts as put forward by this motion. The motion says very clearly that the burden of proof will now be on small businesses to prove that they have gone elsewhere and were totally rejected. From my understanding, only those who have been totally rejected will then be able to apply under the program.

At the present time we have an incremental amount of about 56%. This was talked about in the report and in the auditor general's report.

The wording of the proposed amendment would create a program of 100% incrementality. I know we continue to move in that direction. There is always a desire that the Canada Small Business Financing Act be applied to small businesses in high risk areas in order to start new types of businesses and expand small businesses. I have a concern about this motion making it 100%.

The auditor general on numerous occasions has expressed the fact that the more the program is opened up and the more we insist on incrementality, the greater the losses are going to be. A balance is required to be struck when we have a program like the Canada Small Business Financing Act and the intention of the government to have a full cost recovery over time. The proposed amendment would limit the goal of achieving cost recovery over the 10 year life of loans under the program established in 1995.

Industry Canada will continue to monitor the incrementality and the cost recovery through independent studies to ensure that these two elements remain in balance.

I know the members of the standing committee who have debated this bill very thoroughly are very concerned about having proper statistics and data on an ongoing basis. Although the bill insists on a review every five years, the Standing Committee on Industry will be bringing this up on an annual basis in order to make sure we have good reports and understand what needs to be done.

Approving Motion No. 1 which would force 100% incrementality starting with this bill next April would not be fair to the small businesses across Canada that continue to seek small business loans because of their high risk factor. We want to protect the new small businesses coming on stream and those that want to expand.

I would suggest that my colleagues not support Motion No. 1.

Canada Small Business Financing Act
Government Orders

10:20 a.m.

Reform

Jim Pankiw Saskatoon—Humboldt, SK

Mr. Speaker, the official opposition is opposed to this motion but for reasons somewhat different than those of my hon. colleague from the Liberal Party.

Essentially the motion states that the purpose of the act is to increase the availability of financing to small business. That is a noble thing and something certainly we in the Reform Party would all like to see because we favour any measures that would assist small businesses.

The point is that this entire approach, an act, a government band-aid solution to a problem, is not the answer. Businesses have a problem in financing their enterprises right now, but the reason is not because of a lack of a government program or an inadequate government program. The reason is much deeper and more far reaching than that. It is because of government mismanagement of the entire economy in general, but specifically because of the high taxes individuals and businesses are subjected to.

For example, the employment insurance premiums are fully one-third over and above the break-even point of the EI fund. That places a great burden on businesses. The average Canadian worker pays $350 a year over and above the break-even point of the EI fund. The average employer pays $500. Per employee, per working Canadian, that is $850 over and above the break-even point of the EI fund. What does the government do with that money? It spends it on programs, useless, meaningless programs, I might add, grants and giveaways to special interest groups, subsidizing things like VIA Rail, CBC and on and on.

Canada Small Business Financing Act
Government Orders

10:25 a.m.

Liberal

Dennis Mills Broadview—Greenwood, ON

What is wrong with that?

Canada Small Business Financing Act
Government Orders

10:25 a.m.

Reform

Jim Pankiw Saskatoon—Humboldt, SK

Mr. Speaker, I was just asked what is wrong with that. I would like to explain what is wrong with that.

In September a constituent of mine called me and said “I work a 9 to 5 job. I make $30,000 a year. I have a wife and three kids. The fellow who lives down the street from me is on welfare and makes more money than I do. Explain that to me”. I said that first I would have to verify this and told him to send me his tax returns. I verified his income and his monthly take home pay after taxes. I checked with social services in Saskatchewan as to what an individual in the same circumstances would be making.

My constituent was not quite right. He is $220 a month better off than if he were living on welfare. But he has to drive to work every day. He has to put gas in his car. He has to maintain his car. Not only that, on social services a person has full medical benefits which are not available to ordinary working Canadians.

That is the point. This country's tax system is so repressive that people do not have a reason to go to work. They are better off to sit at home on welfare. It amazes me that the Liberals can sit over there and somehow justify that or think it is okay. Not only does the excessive taxation result in a situation where people do not even have the incentive to go to work any more, but it is affecting businesses.

I used the employment insurance fund as an example. Fully $5 billion a year is taken over and above the break-even point of the EI fund and dumped into government spending programs. That is what is wrong with those spending programs. The gentleman asked what was wrong with financing CBC and VIA Rail. In a utopian perfect world it would be great if we could finance a railway and have a wonderful state-run broadcaster. But in the reality of today's world, in the reality of the extremely high taxes that it takes to fund those types of things, the consequence is that we have tax system so repressive that people are better off to sit at home on welfare than they are to go to work.

That is what is wrong with those programs. That is what is wrong with a government that spends far too much money and involves itself in far too many programs in areas where it has no business being.

I get back to the small business financing act. If the Liberals would just downsize government, get their little fingers out of every program they want to devise and spend our tax dollars on, and cut taxes, we would not need a government program to cover up or try to be a solution for the problem created by their high tax regime. That is so simple yet they do not understand it.

The Reform Party would drastically downsize government. At the same time we would focus spending on areas that matter like health care and education. We would increase funding to those areas. We would substantially cut government spending so Canadians would pay less tax and would have reason to go to work because they would have a lot more take home pay. They would be able to finance their business enterprises much more effectively.

The problem is not access to more debt. This program purports to assist businesses in putting themselves further in debt. The problem is access to their own equity. The government is taking all the profit in the form of taxes. That is the problem.

The answer is not a government program that provides a taxpayer backed guarantee to businesses that cannot gain financing. The answer is to cut EI premiums to the break even point. The answer is to cut the size of government and to lower income taxes and capital gains taxes so there will be venture capital and businesses will have more equity. In turn they would have no problem financing their business ventures.

There is a fundamental principle that Liberals do not understand. A dollar left in the hands of an entrepreneur, a consumer, an investor or an ordinary Canadian citizen is far more productive than that same dollar being taxed out of their pockets and sent off to Ottawa to be administered by a bureaucrat, a lobbyist or a politician. That is a very simple fact but the Liberal government does not get it.

Maybe I do not give the Liberals enough credit; maybe they do get it. They are so wrapped up in their world in Ottawa, in their bureaucracy, in the big leviathan they have created that they have lost touch with reality. They do not address the true problems.

If that were not true, how could they possibly be contemplating raiding the employment insurance fund? That fund was paid into by workers and employers for the insurance of employment, but the Liberals cannot resist getting their greedy little hands on that money and diverting it to places where it does not belong and violates the law of the employment insurance fund. In order to do that they will have to change the law, and they will.

Canadians need to oppose that. Every working Canadian and every employer in Canada must understand they are being ripped off, that it is unfair and that it is harming them. It is harming the economy and it is harming business.

The motion is noble in the sense that it states the purpose of the act is to increase the availability of financing to small businesses. I agree with and support that statement, but the way to do it is not through yet another government program. The way is to get government out of people's lives, to downsize government and to cut taxes so businesses can truly have access to more of their equity and therefore to more financing. The answer is simple. I implore the Liberal government for once to open its eyes to that fact and to do what is right.

Canada Small Business Financing Act
Government Orders

10:35 a.m.

NDP

Nelson Riis Kamloops, BC

Mr. Speaker, it is amazing what Ottawa does to people. My friend from Saskatoon—Humboldt talked about the Liberals never leaving Ottawa or being captivated by Ottawa. I do not mean this in any personal way to my friend from Saskatoon-Humboldt, but members of the Reform Party came out yesterday with the comments that they have decided to support the bank mergers. I wonder who on earth they would have spoken to in the country to come up with this conclusion.

Canada Small Business Financing Act
Government Orders

10:35 a.m.

An hon. member

Where did you read that?