Debates of Nov. 17th, 1998

Canada Small Business Financing Act

[Alfonso Gagliano, Liberal, for the Minister of Industry]

moved:

Motion No. 4

That Bill C-53, in Clause 4, be amended by replacing lines 41 to 45 on page 3 with the following:

“tions, of all loans made under this Act and guaranteed business improvement loans made under the Small Business Loans Act.”

Motion No. 5

That Bill C-53, in Clause 7, be amended by replacing lines 18 to 22 on page 5 with the following:

“made under this Act and guaranteed business improvement loans made under the Small Business Loans Act.”

[Deepak Obhrai, Reform, Calgary East, AB]

Mr. Speaker, as my colleagues and I said this morning, we oppose the bill. We gave excellent reasons as to why the official opposition does not agree with the bill.

We recognize that since we do not have a majority the chances are that the bill will go through. Therefore, my colleagues have come up with amendments which will bring more accountability to this issue and two motions were put forward.

One is to make sure that only one family member receives the loan. As well the limit is being reduced from $250,000 to $100,000. The average loan has been $65,000. Reducing the limit to $100,000 in no way will have a major impact but it will bring more accountability and ensure that the loan is given to small businesses.

This morning I read a news item which said that the banks are going to set up a small business bank. This came out of their desire to merge. They have said to the small business people that they will set up a small business bank to address this issue.

I am glad to see that the banks feel they have to do that. They have come up with an innovative idea. I think it is a good idea. They are addressing that issue, but that is the whole point of what we have been trying to say. The banks have to come up with innovative ideas to address the issue of small business financing. It is not a bill like this one under which the banks can hide and not take any risk and say they are helping small businesses.

The debate this morning by the official opposition has been that the private sector and in this particular instance the banks have to take more responsibility. They have to come up with innovative ideas on how to finance small businesses. They need to change their thinking. The banks have to change from thinking about how much money they can make. The banks must think of how they can be partners with small businesses to improve the Canadian economy. That is the thinking that requires change.

I was talking with the vice-president of the CIBC. He said they understand and realize there needs to be a change in thinking and that they would be working on it. I would just tell them that they had better hurry up so that they do not miss the boat. The official opposition is asking for the banking sector to open up to more competition.

There are ways the banks can work with small business. As I said, I have had experience with small businesses. That is why I am saying that the way the banks can help small business is to set up advisory councils of business people who can advise the banks so they can broaden their criteria on how they give out loans. And here we have another intervention by the state in the banks through this bill by saying the state is coming in and it will guarantee the loan. The banks will shirk their responsibility.

As I mentioned this morning, this kind of financing has been available for the last 25 years but still there are complaints out there that small businesses are having a hard time accessing funds. This bill is not going to solve the problem of financing for small businesses.

Some good news I mentioned earlier is that the banks want to set up another institution that will primarily address the needs of the small businesses. Great. It is a good idea. They should have done it a long time ago.

In the overall picture the responsibility for the burden on small business is the economic climate created by the government. We have made it clear and we are saying it again. The high level of taxation, which takes into account payroll taxes, the bureaucratic reporting and the huge amount of paperwork businesses have to do which is an indirect cost on small businesses is what leads them to ruin and stops an entrepreneur from putting time into the business to make it successful.

Business people are asking to be left alone so they can carry on doing their business. That is what they want to do. Is the economic climate there for them to do it? No. They are mired by government bureaucracy. They are mired by reporting structures. They are mired by this report and that report.

When I started a small business 16 years ago it was great fun. One would work hard, pay one's little taxes, pay one's employees and get going. It used to be fun. Today it is not fun. It is becoming a burden. Today you have to think “Oh man, I have to send in this report. I have to do this and I have to do that”. What a change over 16 years in doing business in this country. The blame lies partly with that side. And I am talking from experience.

I am telling the government to create the environment and reduce the taxes. The GST which the Liberals said they were going to remove is another big headache. The reporting structure of it is a problem. We need to create the economic climate to let Canadians do their job and let Canadian businesses try.

The motion we are supporting is an attempt to bring forward accountability. We hope the banks will not shrink from the responsibility of addressing the issues. We hope the government will recognize that it has to create a climate in which small business can thrive.

[Gurmant Grewal, Reform, Surrey Central, BC]

Mr. Speaker, I pleased to speak to Group No. 2 which contains Motion Nos. 2, 3, 4 and 5. The bill is about small businesses. If there is a big storm the big trees fall. Only the grass remains green and survives a big storm. It is very important that we take care of small businesses at least as much as big businesses.

I have no difficulty in supporting the motion, but one thing that is clear is that the Liberal government has had all the opportunities. Some amendments were brought forward from 1993 and so on, but nothing significant was addressed or taken care of to enable small businesses to get the benefits the act intended, not to mention that medium and big businesses borrow money from it.

The rationale behind Motion No. 2 which we are dealing with is that it is designed to prevent one family member who is part owner of a small business from taking out a loan if another family member has already done so. The idea is that the system should be more equitable. It should be fairer and should not be subject to abuse as it has been in the past according to the auditor general.

According to the Small Business Loans Act each borrower has been limited to a maximum loan of $250,000. The auditor general detected a few cases in the sample loan file where certain individual corporations with substantial common ownership managed to collectively obtain numerous loans far in excess of the stipulated maximum loan amount of $250,000.

In one case, according to the auditor general, a group of 23 related corporations managed to collect more than $4 million under the SBLA. This is a gross abuse of the system. Although Industry Canada had already notified lending institutions in writing that such loans would not be covered under SBLA after July 1996, detection of such cases by the department is difficult because of the lack of complete access to loan file information during review of submitted claims. These practices are contrary to the intent of the act.

The auditor general also noted that while the Small Business Loans Act specifically defined the eligibility conditions of those who may borrow under the program, there were no provisions designed to prevent a group of entities with substantial common ownership from gaining multiple access to loans under the program.

The auditor general recommended a clarification of this issue to ensure the SBLA program meets the goal of providing financial assistance to smaller businesses within the acceptable risk exposure of the government.

These practices are contrary to the intent of the act. Currently there are no provisions under the Small Business Loans Act to prevent this even though such rules exist under the Income Tax Act, which has provisions designed to limit access to the low corporate rate of tax for smaller businesses and to prevent abuse by the creation of a number of related corporations. More rigor is needed to address the issue.

We would like to support Motion No. 3. We know that the government is slow in learning, but I am the one who brought forward the issue in Motion No. 2 and No. 3 in the first debate we had on the bill. I am glad that it is learning but learning slow and I am glad to support Motion No. 3. The rationale is that the amendment lowers the maximum amount of a small business loan from $250,000 to the pre-1993 level of $100,000.

Groups such as Canadian Federation of Independent Business made presentations before Senate and House committees which called into question whether the ceiling of $250,000 was too high. Industry officials concede that the average size of loans made under the old SBLA was only $65,000. In view of this, present levels could be trimmed. I am glad the government has learned that.

The problem of column shifting appears to be more pronounced in loans over $100,000. This could mean a number of things, but most likely there is an inverse relation: the larger the size of a loan to an SME, the smaller the bank's willingness to underwrite the loan. There is an inverse relation between the amount of the loan and the willingness of the bank.

From its inception to March 31, 1993 the program made $339 million in net payments to lending institutions over a 32 year period. Following amendments to the Small Business Loans Act in 1993 the program considerably broadened eligibility criteria and increased the maximum loan amounts per borrower from $100,000 to $250,000. The auditor general noted it and it has been addressed. I am glad that it has been addressed in the bill.

The Canadian Federation of Independent Business which has over 90,000 members has been saying that if the current abuses of the Small Business Loans Act were curbed and if the parameters of the program were restricted, the program would require less of an allocation of funds while being effective in meeting the program's objective. The thresholds for financing are too high in the old SBLA. The legislation defines small businesses as those firms that have up to $5 million in sales. That is not small.

The CFIB says that we are not talking about small businesses in this case. What we are talking about is medium or large size businesses. That becomes an alternative source of financing for medium and larger businesses, depriving smaller business of the facilities which are intended for them. Small businesses are not being given any advantage compared to what medium and larger firms are getting from Bill C-53.

If the size of the loan and the size of the annual sales of the business were reduced, we would have a system that serves smaller businesses. We would also have a system with a drastically reduced rate of abuse, which is important.

As I said in the beginning the government cares about larger businesses, not about smaller businesses. When the storm comes, the government will remember that smaller businesses which are supporting our economy can survive any type of storm but the big firms are subject to falling.

The government has been giving big businesses all the big benefits it could give. We know that Bombardier got $25 million worth of interest free loans. We know that Bombardier or some other businesses like it have been getting all those facilities. Bombardier also got sole source contracts of $2.85 billion from NATO through the government.

Smaller businesses have been subject to abuse. They have been subject to high taxes by the government. CPP and EI premiums have been so high that smaller businesses could not cope. Even the government knows that $350 per employee and $500 per employer are being paid too much by the smaller businesses.

I summarize by saying that I am happy to support Motions Nos. 2 and 3. Motions Nos. 4 and 5 are more of a technical nature rather than of any significant legislative importance. We will be supporting Motions Nos. 4 and 5 along with Motions Nos. 2 and 3.

[The Acting Speaker (Mr. McClelland)]

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Regina—Lumsden—Lake Centre, Agriculture; the hon. member for Tobique—Mactaquac, Asia Pacific Economic Cooperation Summit; the hon. member for Cumberland—Colchester, Aircraft Safety; the hon. member for Louis-Hébert, Scrapie.

[Walt Lastewka, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, first I will speak to Motions Nos. 4 and 5 which reference the Fisheries Improvement Loans Act. After review of the act it was seen that reference to the Fisheries Improvement Loans Act was no longer required.

Several small business support programs were restructured in 1987. Fishers became eligible borrowers under the Small Business Loans Act and no new loans were made under the Fisheries Improvement Loans Act. Loans that were still outstanding continued to be administered by fisheries and oceans and borrowers continued to make payments on those loans. Some 85 loans were still outstanding under the program when the bill was being developed. It was decided that a reference to the Fisheries Improvement Loans Act was necessary.

We have subsequently learned that the loans still on the books under the old Fisheries Improvement Loans Act have declined to a negligible amount. Given that most of these loans will soon be paid off the books, reference to the Fisheries Improvement Loans Act in the proposed Canada Small Business Financing Act is no longer required. An amendment to the same effect was made to clause 3 when the bill was at committee. I urge all members of the House to support these amendments as technical clean-up of the bill in its references to the fisheries loan act.

There have been many comments with respect to Motion No. 3 which recommends the reduction of the amount that can be lent to small business from $250,000 to $100,000. Much of the discussion has been referenced to the CFIB, that its recommendation was to reduce the amount to $100,000. The Canadian Federation of Independent Business surveyed its members and found that over 49% supported leaving the limit at $250,000. It notified the standing committee along that line.

I remind everyone here, especially the official opposition, that other stakeholders like the Canadian Restaurant and Food Services Association, the Canadian Bankers Association and some independent witnesses in committee also spoke to maintaining the $250,000 limit.

There was much discussion on related borrowers which is what Motion No. 2 addresses. I am surprised the member for Saskatoon—Humboldt put forward this motion after all the debate we had in committee including a discussion of the preliminary regulations. It was agreed among the bankers and the stakeholders, the CFIB, the Canadian Restaurant and Food Services Association and the department, that they would look at and come up with the respective regulation that would follow up on the auditor general's comments.

This process has started. It is well under way and the regulations will be issued in due course, after the bill is approved, hopefully by all members of this Chamber, despite some earlier comments.

With respect to Motion No. 2, there are some 1,600 deliverers of what is now known as the SBLA, the future Canada small business finances act.

Because of the timing for regulation approval and training of between 1,500 and 1,600 deliverers, this item will be taking effect, as noted by all the people as discussions were held in the industry committee.

For that reason, I would not now support going back on what we had said in committee and on what we had agreed to with respect to the regulations coming forward to change the items shown in Motion No. 2.

I wanted to speak to those motions. Hopefully members of the official opposition will realize that there has been more fine tuning of this act. The standing committee on industry had great discussions.

I welcome the new NDP member on the committee, specifically the member for Kamloops, Thompson and Highland Valleys. I want to mention his contribution. He took a great interest in this bill and has shown that he wants to be more involved with small business.

I hope all of the opposition parties, when the time comes, will approve this bill for the benefit of small business rather than for political reasons.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, this amendment is very positive. I would like to refer, in particular, to the hon. member's comments just now about “related”.

We need to be very careful about “related” and how we define it. It is all very well to argue that we are going to have this very carefully defined through regulation and things of that sort. I agree that has to be done. However, there are times when “related” needs to be defined very clearly in the legislation itself. Perhaps even this definition may fall slightly short of what is needed.

I want to refer to a practice which has happened. I do not know how often it has happened, but I know of at least several instances. A company, which was not such a small business, needed capital of about a million dollars. It discovered that, yes, there was a small business loan that it could get. However, the maximum it could get was $250,000 and it needed $1 million.

With their ingenuity—and a lot of these small business people are characterized by their ingenuity—they said “How can we do this?” They divided the company into four subsidiaries. Each of those subsidiaries qualified for a small business loan. Subsequently, each of those four businesses borrowed to the maximum of $250,000. Lo and behold, the full $1 million was available to the company.

There was common ownership among the four subsidiaries. Obviously, what was happening was that they met all of the technical requirements of the regulations and the provisions of the act; however, they definitely did not meet the spirit or the intent of the legislation. I believe that is really what is behind this motion.

I believe that the hon. parliamentary secretary who spoke a moment ago recognizes full well that that is precisely what is involved here and I hope this amendment makes that very clear.

The other point we need to recognize, which I want to reinforce, is the point that was made earlier by my colleague for Calgary—Nose Hill, which had to do with payroll taxes and the impact those taxes have on the effectiveness and profitability of small businesses and their ability to hire people.

She referred to the Canada pension plan. The point that needs to be added is that over the next four years Canada pension plan premiums will increase by about 71%. There will be no corresponding increase in the benefits received by the individual who subscribes to the pension plan. The difficulty for the businessman who has an employee is that it will cost him an additional $700 a year to have that person on the payroll, and yet the individual does not receive additional benefits. We need to recognize that this is what is happening.

The other point has to do with EI premiums and the hon. member covered that point very well. But we need to recognize that when the two are added together it means that each new employee costs the small businessman roughly $1,200 a year. That is a very significant amount of money. That reduces the bottom line by that amount of money.

I want to draw the House's attention to something I find rather unique. I discovered it in the November 14 weekend edition of the Globe and Mail . What struck me was the logo. The BDC has a new logo. It says “We are a different kind of bank. We are the small business bank”. The ad reads:

Buy Japan without risking principal. The Business Development Bank of Canada, Japanese Stock Index Linked Notes, Series 2, due November 24, 2006. Interest based on 100% of any increase in the Nikkei 225, Japan's major stock market index. If held until maturity, principal is fully protected and paid. Direct obligation of Business Development Bank of Canada, an agent of Her Majesty and right of Canada. No direct foreign currency exposure. RRSP eligible as Canadian contact.

For further information, please call CIBC Wood Gundy Securities Inc. 1-800-563-3193.

In very small print it says:

CIBC Wood Gundy Securities Inc. is a member of the Canadian Investor Protection Fund and a subsidiary of Canadian Imperial Bank of Commerce. The Nikkei 225 Index is intellectual property of Nihon Keizai Shimbun, Inc. (“NKS”) and is compiled and calculated solely by NKS. “Nikkei 225” is a service mark of NKS, which licenses the use of the index and the mark to the issuer of the Notes but does not sponsor or endorse the Notes.

I have a couple of observations. First, in this ad the Business Development Bank of Canada is offering to sell or make available to investors and individuals notes that have guaranteed principal if held to maturity. If we invested $1,000 and we left it until November 24, 2006, we would be guaranteed the full principal on the maturity date.

Preliminary investigations suggest that the notes themselves are backed by a basket of stocks on the Nikkei Stock Exchange, the Japanese stock market. This suggests that the interest is based 100% on any increase in the Nikkei 225. So if there was no increase, then only the principal would come back. If there was a substantial increase, then the value of those notes presumably would increase by the value of that basket of stocks.

This is interesting. It looks to me that these are Japanese stocks that are being talked about, yet it says clearly that there is no direct foreign currency exposure nor is there foreign content. It is RRSP eligible as Canadian content. This is an interesting ad. It requires a lot more study before we get into the detail of what is going on.

I would also refer to the CIBC Wood Gundy Securities Inc., which is a subsidiary of the Canadian Imperial Bank of Commerce. We know that last week the CIBC advised the world and all of its shareholders that in the previous quarter its profit had dropped by 70%, largely as a result of its unsuccessful operation within the investment market.

I am not suggesting that there will necessarily be bad performance. However, the BDC is acting as an agent of the crown, an agent of the Government of Canada, which means that if the stock market goes down, as it did recently, in November 2006, the Canadian people will be responsible for the full principal that has been invested.

If this is a different kind of bank, a bank for small business, I would like to know what in the world is going on. It is incumbent upon the Minister of Industry and the Minister of Finance and even the Prime Minister to look at this and ask “What are we doing with this kind of a corporation in Canada?”

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, from the very start of the debate, I have been hearing our Reform colleagues say that if taxes and wages were lower, small businesses would be doing just fine, and that in any case government guaranteed loans were not needed when businesses were sound.

With all due respect, unless the situation out west is very different from that in Quebec, what they are saying does not fit in with the needs of small businesses.

In a number of sectors, start-up or expanding companies represent a risk. Members who were with me when bankers appeared before us know that, every time we asked them about start-up companies, they said that there was indeed a risk, that a new venture is always a risk. An expanding business needs room to grow and this also represents a risk.

I believe that the thrust of the bill is to ensure that, when a small business which is considered a risk but has a reasonable chance of being successful cannot get a loan, the government steps in to guarantee the loan. This is the intent of the bill.

I might have been the first one to say that small businesses should pay lower EI premiums, but I will never say that lowering them means that start-up or expanding companies no longer need the Small Business Loans Act.

The same thing goes for lower wages. We are not looking to create an economy based on lower wages. What we want is an economy where small businesses about to start up choose to operate in sectors where work is highly paid and people can earn a decent living. You can be sure that developed countries and nations enjoying stronger growth have not relied on low wages.

Although I feel I need to defend this bill against the attacks of my Reform colleague, I also want to tell my Liberal colleagues that they could have done a much better job of it. In fact, this bill is supposed to help small businesses, but what we have seen is some kind of negotiations with the banks and the big franchisors.

It is important to understand that we need the banks to lend the money and to compel them to meet a number of conditions, that the loan guarantee cannot be seen as their chance to get some bad loans paid back, which is why the spirit of the legislation has to be clearly stated. Unfortunately, nowhere can it be found in this bill.

Nowhere in the bill before us is the spirit of the legislation mentioned. The regulations previously included in the legislation have been withdrawn. The committee agreed to ensure that the regulations would not be changed without prior consultation of the parties and the committee. We hope things will stay that way. The regulations really reflect the spirit of the legislation.

Here are some of the points we, in the Bloc Quebecois, want to make about these amendments. The first point that we will continue to make is that the purpose of the act must be stated in the act. We will also make the point that, in assessing the act, we must not only ask ourselves if the total cost of the loans will be paid by the borrowers.

There are fundamental questions that must be asked. What is the effect on the economy? What is the effect on employment as well as on the survival and the growth of small and medium size businesses?

When a loan application is denied, when a prospective business is denied access to a loan and cannot start up as a result, how much does it cost to our economy? How much does it cost in terms of money that is not being injected into our economy? How much does it cost in terms of social spending for the person who is unemployed? We must take into account the costs of a business not being able to get off the ground as well as the risk of problems for small and medium size businesses.

We will make that point. We will also make the point that pilot projects must include working capital.

Everybody knows that the financing of working capital is almost an essential requirement for a business that wants to start up or to grow. We agree that it is not appropriate to use this general program to finance working capital. However, we think there should be at least a pilot project where working capital would be guaranteed, but the business receiving the loan would also receive management counselling.

A number of my colleagues and I sent out simple questionnaires to our small and medium-sized businesses. One of the things we asked was: “In your opinion, if credit were easier to get, would the growth of your business be better, and would the risk of bankruptcy be lower?” Many of the respondents said “Yes”. The reason we asked this is that, in our experience, small and medium-sized businesses often do not manage to hang on for more than a year and a half, two years, two years and a half, because of administrative problems, yes, but also because they often have financing problems.

The Canadian Federation of Independent Business had good reason to say that this is a very significant problem for more than 29% of businesses. This is why we are going to defend these points which will help advance the financing of small and medium-sized businesses.

It is worthwhile pointing out at this time that loans for equipment account for 73.4% of the total, loans for land, 12.8%, and loans for commercial space, 12.8%. It seems to me that this should help our colleagues beside us understand the importance of this bill, because equipment is what enables the company with some commercial space, whether or not it owns the land, to get started up.

Sometimes the business also needs to finance its working capital. Businesses which have to purchase products for use in their production, to purchase raw materials to be manufactured, and then sell their products perhaps without any return for three months, may fail, despite all their spanking new equipment, their employees, because they lack the working capital.

We ask that all this be looked at in order to improve the bill, and not to make it unworkable, as my colleagues next to us would like to do.

[Jim Gouk, Reform, West Kootenay—Okanagan, BC]

Madam Speaker, I have a couple of points I would like to raise under Group No. 2. One deals with some of the comments made by the hon. member from the Bloc who just spoke. The other deals with comments made by the government side.

Starting with the comments on the government side, members said they held their committee hearings, listened to people across the country and got a particular input from those people. But then later they said there were supplemental letters to the committee. I am not aware of these. I have seen what was presented at committee and I have not gone beyond that. In that committee many groups, including the Canadian Federation of Independent Business, specifically said they thought the ceiling on this was too high.

I go back to a time when I was on the transport committee. There was one particular blatant piece of legislation that I recall, the Canadian Transportation Act. On that we had a tremendous number of interveners from across this country, from one end to the other. A huge majority of them, in the 90% range, were opposed to clause 27. They were clearly against it and they went on at great length to explain why they were opposed to it. I made an amendment at committee to delete that clause which was so objectionable to so many people.

I found it incredibly interesting that not one of the government members supported that amendment to delete that clause of the bill.

When the hon. member from the government said that the Canadian Federation of Independent Business amended its position after consultation with its membership, I do not know if he misspoke but he gave a figure that less than a majority was in favour of a higher ceiling.

It is most curious that he used a figure of less than 50% because it automatically implies that more than 50% still wanted that lower ceiling.

The member from the Bloc made reference to how the Reform Party says the answer to this is lower taxes and lower salaries. She is half right, which is probably not bad on an average day. We certainly think there should be less tax. No one has suggested that people should get paid less as the answer to businesses making more profit. We would like to see people making more profit and able to buy more things which means they should have more disposable income.

We have for a long time been very clear about disposable income and the ability of a Canadian business to compete and to sell its products cheaper by all means, but not by cutting profits. Most cannot cut their profit as most of it has already been taken away.

I refer to the speech I made earlier today. I hope the hon. members listening were privy to that. I used an example of my being in small business just prior to being elected. I was in the construction business and the results of the increase of the CPP tax alone accounted for two of the eight houses I built each year; 25% of my gross profits, not for all payroll taxes, not even for all the cost of the CPP. This was just for the amount that this government was increasing it by, 25% of my gross profit, $12,000 a year.

I carry a dandy little device, a financial analyst calculator. While I was listening to the hon. member speak I pulled my calculator out of my briefcase and quickly calculated the $1,000 a month, which is what the government would have taken out of my pocket were I still operating my small business just for the increase in the CPP alone. I calculated the amount at 9% interest which is pretty nominal for a small business trying to get a loan these days. I amortized it over a 10 year period, compounded semi-annually, which is the normal banking practice. It would have required a loan of $80,000.

What we are saying is that the problem with this whole bill with its $250,000 limits, government guarantees and high ratios which we will get into in part three of this debate, is that it suggests we have to give more money and back up more. What we have to do is stop taking money away. I do not care if we are talking in terms of intent, in terms of how high a ceiling we should put on this or what ratio we should guarantee. The best way to help businesses is to stop taking their money. We should not be creating legislation that makes it easier for them to borrow money to give to the government.

As a small business operator, if I had to maintain my gross revenue income flow to pre-CPP tax increase levels I would have to go to the bank and borrow $12,000 a year. Over the course of 10 years I could take and amortize with interest a loan of $80,000. That is $120,000 with interest payments added up that my business would have to put out in order to come up with the money the government would take out of my pocket for the CPP increase alone.

The problem in this bill is not whether the whole ceiling should be lowered. It is the government's approach to the idea of what small business needs. It somehow thinks that it is all right to fix the whole problem in our economy by making it easier for business to borrow money.

We will repeat in each section of this bill that the true way to solve the problem for small business is to leave the money in that business.

I remember back in the late 1970s the banking industry decided this was a pretty vibrant economy and it could make tons of money by just getting businesses and individuals to borrow more. Contrary to what we have now where we have to go on bended knee and beg the banks to loan us money, in the late 1970s they were begging people to take it. Because it was so easy and they made it sound so great, people borrowed more and more.

They wanted to borrow $50,000 to buy a used machine they saw. They felt they should be able to borrow $125,000 and buy a new one. This was no problem. They would write a cheque right then.

That is what this government is leading people toward. The government has increased the cost to operate business then makes it easier for these businesses to borrow money. We get into a vicious cycle.

This government and Liberal governments in the past, all governments past, the old style politics of Canada operated by the two principal parties that have occupied this House, have often in many parts of Canada created a dependency on government. They have created that for businesses and individuals and they have created it for entire regions of this country. They created dependency for a race of people, a culture of people, through the Indian and northern affairs legislation and acts of that branch as well.

Now this government is trying to do it once again. This government is trying to get businesses on hook to the generosity, in its view, of the Liberal government through a loans program.

There is something wrong when the government thinks that the first thing it has to do is tax away everyone's money then turn around and loan some back. It will arrange to have some of it loaned back. The government will guarantee it. That is mighty generous of the government considering what it is really guaranteeing is individuals' own money. The government took the money from them in the first place. The amount the government stands to lose can be paid out of the CPP increase alone.

I think we should be lowering those limits. The majority of people who borrow money, the majority of businesses that borrow money, traditionally borrow on average far less than what we would like to see that ceiling reduced to, partly in response to many of the groups that spoke in committee. We think that is good.

The real way to solve the problem, which the government will hear a lot and I hope it sinks in, is that it will have to recognize that borrowing money to overcome oppressive taxes is not the answer to getting the economy going in this country again.

The government should deal with all businesses by ensuring that they get to keep some of that money in their pocket. Businesses earned it. It belongs to them. The government has not earned it. Unlike the thinking of the finance minister the money does not belong to the government.

[Ted White, Reform, North Vancouver, BC]

Madam Speaker, we are talking about Motion Nos. 2 and 3.

Anyone who has ever applied for loans probably found it disappointing if they were turned down. It would be unusual if at some time in our lives when we applied for a loan we were not been turned down. It is not always because the idea was not good or the product we wanted to buy was not a decent product but it could just be because the proposal or our income was not sufficient to support the loan.

This does not remove the disappointment but one of the things this bill does is facilitate dependency by groups of businesses that cannot qualify through the normal lending channels. That is one of the thrusts we have been talking about today.

The government is going about financing small business the wrong way. What the government is doing is building a dependency where people who cannot get money through a regular bank can go through the back door by having taxpayers guarantee the loan.

Earlier today when I was speaking on the first group of amendments, I was talking about the alternatives that can be used to get around that. It is not a problem that these businesses cannot get money. Businesses can always get money. But it is the problem of there being a price to be paid for it. Sometimes these people do not want to pay the price.

When it is a new business, a risky venture, it may be a good idea but the banks have never seen it before. Individuals approach various banks and the banks say they have never seen any history of this type of business and do not think they can make it and they do not qualify.

Those individuals are not satisfied that they cannot get the money from the banks. But there are alternatives out there if they pay a bit more in interest.

We have had examples today from some of my colleagues of businesses that were started with borrowed money from friends or from a venture capitalist. I explained that my business, prior to being a member of parliament, was specializing in the financing of home based businesses. Certainly we lent the money out at an interest premium to the banks because we were filling that niche of handling that risky area of business.

The biggest problem we had as a small company involved in that financing sector was that when we used mortgages as a guarantee the government considered us to be in an investment business and it taxed us at a 50% rate on our profits. That took away our ability to reinvest in these people. Yet we were willing to make all sorts of creative financing options for people that made it possible for them to get into business. In the five years we ran the leasing business prior to my becoming a member of parliament we never had a single loss.

Yet we always took on businesses that could not get financing at the regular places. All it took was a little creativity. Instead of going through the normal procedure a bank might go through of making people fill out pages and pages of information about their personal financial history and being unable to prove they had a previous background, we would look instead for stability and trustworthiness.

We did that in a very simple way. We had five telephone directories in our office that went back five years. The first thing we did when a person called and asked for lease financing was look in those telephone directories to see if the person had lived in the same place for five years. If they had, that gave us the first good clue that the person was stable, reliable and would be there.

Second, we asked applicants for their job histories. Had they worked at the same place for a good length of time, four or five years? A second clue that they were trustworthy, reliable and would not run away would be if they had the same job for five years, had just been laid off and thought they would get into business for themselves. If we leased them a fax machine or a photocopier they would not just run away and disappear out of sight.

Third, we asked if we could do a credit check on their credit cards to find out if they were up to their limit. If the people going into business were not up to their credit card limits, that indicated they were not yet under financial stress.

Those were all good signs, being in the phone book for five years, having a good steady job prior to going into business for themselves and having credit cards that were not maxed. If these criteria were met they got their loans. That is all we did. There was no indepth financial investigation of their pasts. We just looked for reliability, trustworthiness and a sense these people would not run away if something went wrong.

Of course a portion of the loans we made started to go bad. People would miss payments. Because these people were trustworthy and believed in their ideas we could approach them, talk with them and make arrangements for them to catch up. They could find alternative positions, to sell the equipment or to make adjustments to their portfolios.

That sort of creativity is possible but because the government taxed away so much of what we made from this exercise we were robbed of capital to expand. The demand for what we could do was much greater than what we could ever fill.

The government response is to build dependency by providing money at a bank market rate by making taxpayers carry the can on any defaults. It was mentioned earlier that only a small percentage are in default. It is about 5.6% to 6%. The aggregate amount that can be paid out under this program is $1.5 billion. A default rate of 5.6% amounts to about $75 million under default at any particular time. That is a significant chunk of money. We should be pretty concerned about the liability faced by taxpayers when they are guaranteeing these sorts of loans.

That is why the amendments proposed in Group No. 2 are being put forward. Motion No. 2 makes sure no loans are made to relatives of the initial borrower to put more money into the same business. It is not right to use a loophole to get around the intent of the act. If we have decided a business can borrow a certain amount it is not right to allow relatives working in the same business to borrow their share and to increase the total amount being risked on a particular business. That was the reason we introduced this amendment stating the loan must not be in addition to other loans made under this act to persons related to the borrower for the operation of the same small business. More than two of my colleagues have given examples found by the auditor general of abuse in this area.

The other amendment we put forward is that the amount given to the borrower does not exceed $100,000. Industry officials had to admit that the average loan size was $65,000, which is still a reasonable chunk of change for people starting a small business.

Borrowing $250,000 for the average person is a lot of money. That is more than starting a small business. There really is no need to go to that level. Restricting it to $100,000 is quite enough, especially if the minister will not agree to preventing this multiple borrowing we are trying to correct with Motion No. 2.

I urge members to support the Reform motions and if they do they will significantly improve the bill.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Madam Speaker, it is a pleasure to speak on Bill C-53, Motions Nos. 2 and 3.

We have gone through this before. The government is nibbling around the edges. The bill unfortunately will not address the problems affecting the private sector by any meaningful way. I will continue with the speech I was making earlier on constructive solutions that can be applied to the bill if the government would listen. It would find there would be widespread agreement among the electorate.

There are various things the government can do with respect to labour policy. It can work with the provinces. I challenge the ministers across the way to call their provincial counterparts together to deal with the issue of labour policies which are having a restricting effect on the ability of the private sector to function as well as it can.

Unionization techniques are being done to quite significantly restrict productivity. Certain things can be implemented. For example, there is the aspect of members taking a strike vote. The strike vote or a vote on whether to unionize should be a silent or anonymous vote rather than public. Often strong arm tactics are used on members to vote for unionization or a strike. That should be done by a secret ballot system.

The aspect of sexual bargaining should be banned, as this also restricts the private sector.

It is really horrible that we have not been able to address these significant problems that have been beleaguering the private sector for so long.

The government has an enormous role to play regarding industrial policy in reduction of interprovincial trade barriers. We had an opportunity to do that in this House and rather than taking meaningful measures to reduce interprovincial trade barriers the government once again nibbled around the edges.

The private sector says we have more boundaries east-west in Canada than we have north-south. In part that can explain the reason why, although we have implemented free trade agreements, they have not been as good as they can become because the Government of Canada has actually impeded and impaired the ability of the Canadian private sector to be competitive with its counterpart south of the border because it has not done much with removing the interprovincial trade barriers that hamstring them so badly. I would encourage it to do that.

By eliminating direct subsidies to businesses we can save taxpayers a lot of money. They really are not necessary because the private sector does not want the money. It wants the environment that will enable it to be productive.

We have a fetish for introducing regulations but have little desire to remove them. British Columbia has enacted 3,000 new regulations since the government was elected.

[The Acting Speaker (Ms. Thibeault)]

I must interrupt the hon. member. When the bill is brought back before the House for debate he will have approximately six minutes left.

The House resumed from November 5 consideration of the motion that Bill C-51, an act to amend the Criminal Code, the Controlled Drugs and Substances Act and the Corrections and Conditional Release Act, be read the third time and passed.

Criminal Code

[The Acting Speaker (Ms. Thibeault)]

It being 5.30 p.m., the House will now proceed to the taking of the deferred division on the motion at third reading of Bill C-51.

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Division No. 263

[The Speaker]

I declare the motion carried.

(Bill read the third time and passed)

The House resumed from November 5 consideration of the motion.

Canada Student Loans

[The Speaker]

Pursuant to order made on Thursday, November 5, the next deferred recorded division is on Motion No. 132.

We will vote again under our relatively new system. Because the mover is on my left, those in favour of the motion in the rows to my left starting with the fifth row and moving to the front will vote and then we will go to the other side.

(The House divided on the motion, which was negatived on the following division:)

Division No. 264

[The Speaker]

I declare the motion defeated.

[The Acting Speaker (Mr. McClelland)]

The House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

Canadian Human Rights Act

[Diane St-Jacques, Progressive Conservative, Shefford, QC]

moved that Bill S-11, an act to amend the Canadian Human Rights Act in order to add social condition as a prohibited ground of discrimination, be read the second time and referred to a committee.

Mr. Speaker, it is with emotion and hope that I initiate today the second reading debate on Bill S-11, an act to amend the Canadian Human Rights Act in order to add social condition as a prohibited ground of discrimination.

I would like to be able to start my presentation by stating that we have every reason to be proud of living in this country because Canada is internationally recognized as one of the leading proponents of human justice, as a country whose society is said to acknowledge every human being's right to dignity, respect and equal opportunities. Unfortunately, I cannot make such a statement because nothing could be further from the truth.

As governments in this country concentrate their energies on reducing the budget deficit, the equality deficit caused by poverty in the form of discrimination is being overlooked. While being increasingly recognized on the international scene as a human rights issue, poverty remains one of the main barriers to equality in Canadian society.

Indeed, Canadians who, because they are poor, are excluded from the social, economic and cultural life the rest of us enjoy are often treated like second class citizens. The everyday reality of many Canadians, living in poverty generally means lack of food, substandard housing, increased vulnerability to illness and systemic barriers to schooling and employment.

But, to add insult to injury, there is more to this horrific state of affairs.

In addition to having to endure the material hardships that accompany poverty, poor Canadians are always having to face ostracism and negative stereotyping in their dealings with financial institutions, owners, businesses and their staff, officials, the legal system, neighbours and strangers and in the media.

Canadian society is indeed intolerant of the poor. This disparaging treatment is in part fed by the generalized obsession with the debt and the deficit, as I mentioned.

Canadians who depend on social programs in order to live are disparaged and humiliated by taxpayers as a whole. The conclusion is self evident. Disparagement of the poor promotes discrimination against them. In other words, I would say they are faulted in a way for being poor.

Despite this general attitude, I am convinced that many Canadians would be upset to see how financial institutions treat the poor.

Although I recognize the recent efforts by the banks to give disadvantaged clients greater access to basic services and to treat them fairly and courteously, I feel they have a long way to go when I hear that some people are still having trouble cashing their government cheque.

As recently as last month, the media in Quebec were talking about how difficult it is for welfare recipients to obtain services in federally chartered banks as well as in the provincially regulated caisses populaires.

A simple amendment to the Canadian Human Rights Act would prohibit discrimination against the poor and would give these people an effective recourse when they are discriminated against, for example, when they are denied housing or the possibility to open a bank account.

Let us not kid ourselves. There are still people in this country today who are victims of discrimination when they do such simple things as apply for a job, look for an apartment or open a bank account. Add to that the feeling of shame from having to stand in line at the soup kitchen and the feeling of anguish from not knowing if their children will have a roof over their heads and food on the table the next day. Members will certainly agree with me that these people unquestionably need to have their right to respect and to dignity protected under the law.

I am talking about the protection of a right since Bill S-11, which supports both the intent and the purpose of the Canadian Charter of Rights and Freedoms, does not grant any special privilege to the poor in Canada. Its sole purpose is to ensure explicit recognition of poverty and its related attributes, such as being a welfare recipient, and to prohibit discrimination against the poor in areas under federal jurisdiction.

Need I remind members that the Canadian Human Rights Act does recognize that some people in our society are considered vulnerable and must be protected against discrimination. The prohibited grounds of discrimination include race, national or ethnic origin, colour, religion, sex, marital status, family status, disability and, since not too long ago, sexual orientation.

Bill S-11 simply proposes to add the words “social condition” to the list of prohibited grounds of discrimination in section 2 and subsection 3(1) of the act. And the reason for that is very simple: one-fifth of the Canadian population does not live the same way you and I do.

I know this concept is hard to grasp for those of us who have never had to face the human misery associated with real poverty. Let me ask you to follow me for a few seconds on an imaginary trip that might help you measure the magnitude of the terrible social and human problem that poverty is.

Imagine yourself coming home to announce to your family that you just lost your job, a job in which you poured all your talent and energy, sometimes at the expense of your loved ones, because there was just not enough time.

Now, you have all the time in the world, but what are you going to do with it? You just did not think this could ever happen to you. In the weeks that followed the initial shock you started looking for work, knocking on every door and meeting every employer who might need your services.

Unfortunately, the labour market is saturated. While being apologetic and polite, employers constantly explain to you that they have to face the new economic realities. They simply do not need you.

Weeks have gone by. You have used up your savings and your retirement fund. You must now sell the car, and you will soon have to do the same with the house, because you can no longer pay the mortgage.

You managed to save face in front of your friends and your neighbours during the first few weeks of this nightmare. But now they are aware of the situation. There is no way you can hide the sad reality of your human and social decline. You are a poor and undesirable human being that one may nod to but would rather cross the street not to have to acknowledge.

For some time now, no one has come to shake hands with you and ask you how you have been. No one wants to hear bad news. It is too depressing. You may think you have reached bottom, but you are wrong. You have seen nothing yet, because now you have to find ways to survive.

So you go to your bank manager, with whom you have always enjoyed a friendly relationship, and now it is his turn to tell you, in a very official tone, that he cannot lend you money. “I am sorry, but I have to abide by the rules of the institution. My hands are tied, you have to believe me”, is what he tells you, secretly hoping this is the last time he has to deal with you.

What is next? To whom do you turn to? To a food bank? No. To the state, of course, to this welfare state that cares so much about the have-nots in our society. You will have to forget about your pride and your dignity, that is if you have any left. But you have no choice. You have to feed your hungry children, who are giving you a reproachful look, blaming you for the social stigma that will no doubt mark them for the rest of their lives.

Poverty is a debilitating scourge which strikes at random. Let us stop thinking we can be spared such a plague and let us work together towards its elimination.

“The day will come when nations will be judged not by their military or economic strength, nor by the splendour of their capital cities and public buildings, but by the well-being of their peoples: by their levels of health, nutrition and education; by their opportunities to earn a fair reward for their labours; by their ability to participate in the decisions that affect their lives; by the respect that is shown for their civil and political liberties; by the provision that is made for those who are vulnerable and disadvantaged; and by the protection that is afforded to the growing minds and bodies of their children.” This quote from the United Nations report entitled “The Progress of Nations” sums up perfectly the spirit in which I am undertaking this initiative in the House today in order to give some dignity back to the poorest citizens of this country.

The Prime Minister himself said: “Canada may not be a super-power, but we are a nation who speaks on the international scene with great moral authority”. Are we really entitled to waiving our moral authority in the face of other economic world powers? I wonder. We are indeed perceived as such, but what are the facts? I willingly acknowledge that for the fifth year in a row, the United Nations world report on human development has rated Canada as having the best quality of life compared to 174 other countries.

However, in spite of this highly desirable ranking with regard to human development, according to the same report, out of 17 industrialized countries, Canada has the 10th highest level of poverty. Indeed, according to the UN human poverty indicator, 11.7% of Canadians live under the poverty line, a most embarrassing situation for a country that is so proud of its moral values.

I say that citizens of this country have a right to expect their government to take without delay the steps required to reinforce and clarify the current legislation on human rights.

The Canadian Human Rights Act, which is the keystone of our legislation in this regard, is essentially aimed at protecting citizens against discrimination and guarantees equal opportunities in federal jurisdictions such as telecommunications and banks. It also embodies the international human rights commitments Canada has made since the Universal Declaration of Human Rights was signed in 1948. With the Canadian Charter of Rights and Freedoms and provincial legislation on human rights, this Canadian law promoted the fundamental values of equality and human dignity.

Unfortunately, this act is not currently clear or consistent. Although it is aimed at promoting equity for all Canadians, it perpetuates the discrimination it seeks to eliminate by protecting only certain vulnerable groups.

The fact that the Canadian Human Rights Act does not include social condition among prohibited grounds of discrimination is an indication of the social and economic alienation of the poor and of their lack of influence in the Canadian political system.

Until this oversight in the legislation is corrected, the poor will continue to be the victims of discrimination and prejudice. The specific purpose of Bill S-11 is to rectify the situation by building a society where everybody are equal.

That is why this bill is so important to me. The almost ideal society where everyone is entitled to the same respect and the same human dignity is now within our grasp. The poor may be the only marginalized group that has not yet been included in the Canadian Human Rights Act. It is up to us, as members of this House, to correct this deplorable flaw in the legislation.

From a practical point of view, this will tell employers and service providers under federal jurisdiction that they cannot discriminate against a person because he or she is, for example, a welfare recipient. I want to emphasize that adding social condition as a prohibited ground of discrimination would not force businesses to provide services if they have good reason to believe that the client is unable to pay or that he or she clearly represents a financial risk.

Indeed, paragraph 15(g) of the act states clearly that there is no discrimination when an individual is denied services or is a victim of any adverse differentiation and there is bona fide justification for that denial of differentiation.

Having said that, I want to mention that national antipoverty organizations that are unsatisfied with the lack of legislation on human rights have started to use the judiciary system to bring about some change. They essentially claim that marginalized groups that are not listed in the charter of rights, but who are the victims of such discrimination, must be considered on the same footing as the groups that are listed and be treated as such under the law. They only have to prove to the court that these groups are the victims of such discrimination.

For example, this was the direction taken by homosexuals rights' advocates when they got tired of waiting for politicians to act. Noting their success, other groups in search of equality are already starting to follow suit.

By amending the Canadian Human Rights Act to include social condition among prohibited grounds of discrimination, parliament will then fulfil its responsibility to abide by the Canadian charter of rights, while saving taxpayers the costs associated with court challenges in order to bring the Canadian Human Rights Act in line with the Constitution of Canada and international commitments made by Canada on human rights.

On both a symbolic and practical level, it would be important, on the 50th anniversary of the Universal Declaration of Human rights, for Canada to reaffirm the commitments it made when ratifying international covenants, including the International Covenant on Economic, Social and Cultural Rights.

I remind the House that Canada ratified this international covenant in 1976. By signing this covenant, the federal government recognized the right of all Canadians and of their families to enjoy an adequate standard of living, including food on the table, good clothing, appropriate housing and living conditions that keep improving. The agreement also provides for periodical reviews of Canada's compliance with the covenant.

This committee is currently carrying out its third periodical review. I am afraid that, once again, as a government, we will get bad reviews. Need I remind the House that, while the standard of living has improved for some Canadians in certain areas, Canada has yet to guarantee access to the bare necessities for its most vulnerable citizens.

Food banks, which were nowhere to be found in the 1970s, now number in the thousands and can be found in 450 communities. The problem of affordable and adequate housing has now become a full-blown crisis: almost 400,000 Canadians live in substandard housing.

These are some of the issues that convinced the National Anti-Poverty Organization and the Charter Committee on Poverty Issues to travel to Geneva, in May of 1993, to appear during the examination of Canada's second report on the implementation of the International Covenant on Economic, Social and Cultural Rights. The brief submitted to the Committee on Economic, Social and Cultural Rights, as well as the testimony of these two national anti-poverty organizations, emphasized the inequities in what they ironically call “the land of plenty”. Not surprisingly, committee members were quite stunned by the information they were provided with, since they thought all Canadians enjoyed an exemplary standard of living. They were also shocked to find out about the high levels of poverty among children and single mothers, the large number of food banks, and the state of disrepair of a large proportion of low-cost housing units.

On June 10, 1993, the Committee on Economic, Social and Economic Rights tabled its conclusions, in which it expressed a number of concerns about poverty in Canada. The committee was alarmed at the persistence of poverty in the country, and at the fact that no significant progress had apparently been made in the previous decade. It expressed its particular concern that more than half of all single mothers and a large number of children live in poverty.

The committee recommended among other measures that the legislation on human rights include more explicit provisions on social, economic and cultural rights. By passing Bill S-11, we would confirm Canada's will to take these criticisms into consideration.

I also like to think that, by expanding the scope of the Canadian Human Rights Act, we are doing more than merely defending an ideal. The protection of these rights could well be one of our most powerful tools in the fight against poverty, since it promotes human dignity, justice and equal opportunities.

Since the Canadian Human Rights Act is a powerful education tool, establishing standards would help create social behaviours. A dialogue would then follow, so that institutions and the public in general might better understand what it means to live in poverty.

In another vein, I want to say that the fact that most circumstances leading to discrimination based on social condition come under provincial jurisdiction does not justify the absence of this prohibited ground from the federal act. People in this country have the right to seek remedy and redress when federally regulated institutions such as banks, airlines and telecommunications companies practice discrimination based on social condition.

Bill S-11 does not infringe on the provinces' legislative powers since the Canadian Human Rights Act only applies to areas under federal jurisdiction. This being said, it should be noted that the provinces are ahead of us and have acted in their respective areas of jurisdiction.

As a matter of fact, in eight provinces, the human rights act prohibits discrimination based on social condition, social background, source of income or being on welfare. The steps they took are aimed at protecting the poor against discriminatory practices in areas under their jurisdiction such as housing and public services. The prohibited ground of discrimination applies to every activity legislated by the provinces except in Ontario where it only applies to housing.

I am pleased to add that my home province is a leader in this area since for the past 13 years the Quebec Charter of Human Rights and Freedoms has prohibited discrimination based on social condition in every area covered by the charter.

May I conclude by repeating once more that poverty is a serious threat to the right to equality, and that it has no place in an affluent country like Canada.

I urge you to consider poverty in the light of human rights. I suggest that the prejudice the poor have to face in Canada is similar to that of the marginalized groups listed in the Canadian Human Rights Act. Yet, poverty is still not recognized in the law as a direct and dominant cause of inequality and disadvantage in Canadian society.

I urge all my colleagues in the House to correct this regrettable legislative weakness. Let us stop saying it is time to act, and let us do something right now by passing Bill S-11.

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, I am pleased to rise in the House today to debate this very important issue. It is a matter of great importance not only to the residents of Waterloo-Wellington but to all Canadians.

I support the essence and spirit behind Bill S-11, an amendment to the Canadian Human Rights Act to add social condition as a protected ground under the act. I believe the drafter of Bill S-11 intended it to provide protection to the poor and to prohibit discrimination based on economic discrimination. This is laudable and should be supported by all members.

My concern is not with the object and aim of Bill S-11 but rather the overly broad and necessarily confusing nature of the exact wording. Simply using an open ended term such as social condition will add confusion to the act and will result in an endless sea of litigation.

If we are serious about assisting the poor and disadvantaged in society, we must create opportunities for jobs and provide education, training and the necessities of life so that they will be able to participate as full and equal members of society. We must provide a remedy through our human rights legislation for prejudicial treatment of the poor in a manner that makes that protection meaningful.

This year we are celebrating the 50th anniversary of the UN declaration of human rights. It is a fitting time to review our current human rights legislation to ensure that it protects the most vulnerable of society. In Canada we have honoured our commitment to the declaration for 50 years. I might remind all members of the House that article 25 of the declaration states:

Everyone has the right to a standard of living adequate for the health and well-being of himself or herself and his or her family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, old age or other lack of livelihood and circumstances beyond his or her control.

Recently the United Nations in its human rights development index report gave Canada top marks as being the best place in the world to live based on 1995 data. The hon. member mentioned that in her opening speech. I believe that Canada received the high rating because Canadians take our commitment to human rights very seriously. That is why the government is committed to a broad review of the human rights act in this area. We want to ensure that the act is an effective instrument that protects the human rights of all Canadians.

Let us go a step further and note that although Canada received high marks the authors of the report cautioned Canadians to note that there was a growing wealth disparity among Canadians. This is unacceptable. Acknowledging this, the federal government is very committed to protecting all Canadians. We are particularly concerned with designing programs that provide specific relief to the most needy.

The Government of Canada and provincial and territorial governments have agreed that children are a top public priority and have jointly participated in the design of the national child benefit system. This initiative is an important one which aims to prevent and reduce the depth of child poverty and to promote attachment to the workforce.

In addition, the 1997 federal budget announced a $850 million per year increase to the Canada child tax benefit for low income families. The 1997 Speech from the Throne committed at least an additional $850 million within this mandate for the national child benefit, and this was confirmed by the recent 1998 budget.

The addition of the ground of social condition as stated in Bill S-11 is to extend the protection currently provided by the act to include economic rights. However we need to ask what we mean by economic rights. We must be very clear on the meaning of this additional ground if we want the Canadian Human Rights Commission, the tribunal and the courts to understand the exact type of problems we hope to address by adding the words social condition to the Canadian Human Rights Act.

Let us sit back for a minute and examine the purpose of the Canadian Human Rights Act, what it can achieve and what impact adding this new ground will have on the act as a whole. The Canadian Human Rights Act is an anti-discrimination statute. It does not provide for rights directly but rather it provides for redress of an individual or a group of individuals who believe that they have been the victim of discrimination.

The act covers discriminatory acts in the context of employment and the provision of services and facilities customarily available to the public. Notably the act only applies to the federal sector. This includes the federal government and federally regulated employers and service providers such as banks, airlines, railways, telecommunication and interprovincial trucking companies. The vast majority of small businesses, schools and religious institutions are governed by provincial human rights legislation.

Groups that appeared before the senate committee on the bill such as the National Anti-Poverty Organization provided firsthand experience about the poor in Canada. They spoke of the plight of the homeless, the problems of people below certain income levels finding housing, for example, and the difficulties they encounter in accessing services from banking to telephones. These are some of the problems ostensibly that this amendment was designed to resolve.

However this motivation may be somewhat misplaced. First, housing is primarily a provincial matter. Many provincial human rights codes currently provide as an enumerated ground of discrimination sources of income or receipt of social assistance.

This ground provides a remedy for discrimination for individuals living on social assistance. For example, when a landlord refuses to rent to a family because it is on social assistance, this type of discriminatory act is captured by the provincial human rights codes that contain the ground of social assistance.

It is important to note that the only province in Canada that has the ground of social condition in its human rights legislation is Quebec. Quebec formally added this ground in 1996. There have not been a large number of tribunal decisions on this ground but we know at this point that this term includes both the objective element of being poor with the social aspects of prejudicial treatment against people who are poor. It is too early to determine the impact of adding this ground in Quebec and of course the impact on the federal jurisdiction as I stated earlier is not clear.

There are problems in the federal jurisdiction that do not need to be talked about here but clearly need to be addressed. The National Anti-Poverty Organization for example, citing Quebec statistics found that 80% to 90% of the poor were refused services from the banks, services such as cheque cashing or opening an account. I understand that the banks have taken some measures to correct these actions. We must be sure that no one is denied a service because the source of their income is provided by the state.

I am concerned that the banks and telecommunications companies may not be doing enough to ensure that their policies do not discriminate against the poor. It is this type of situation that needs to be looked at in the broad review of the Canadian Human Rights Act.

We will look at determining the scope of the problem of the poor in this country in the context of what relief the Canadian Human Rights Act could possibly offer. We will then work to find a solution that is tailor made to address the specific problems that we uncover.

Left as it is, Bill S-11 simply incorporates a term that might make us feel good but it does not effectively address the problems in the federal context nor provide a truly effective remedy for the poor.

By comparison, look at the prohibited grounds currently listed in the act, for example, race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability, and conviction for which a pardon has been granted. For the most part these grounds are immutable characteristics.

We know what the ground marital status means for example. It includes single, common law, same sex partners and married couples. This ground has resulted in changes to federal programs to ensure that they do not discriminate on the basis of someone's marital status.

I am strongly in favour of addressing the real needs of the poor. No one can support discrimination against anyone simply because his or her income is below a certain level. But I am concerned that we have not in any meaningful way fully canvassed the legal implications of the term social union in the federal context. There would be real concerns in terms of where we are heading.

Does it mean we must not discriminate because of someone's level of income? We apply different income tax rates based on different income levels. Does it mean then that the Income Tax Act could be suspect as potentially contrary to the human rights act if we adopt such a term? We would have to be very careful.

We would also have to note carefully the employment insurance program which requires specific criteria to be met before someone is eligible to obtain benefits. Would this program also be suspect?

Could RRSP provisions be subject to scrutiny under the Canadian Human Rights Act given that individuals of certain income types and levels, or very low levels of income cannot take advantage of this provision? I certainly hope not. That would be most unfortunate.

If we are going to provide additional protection for the poor, and I believe we should and I think all members of this House believe we should, we want it to be meaningful. Let us take the time then through the broad review of the Canadian Human Rights Act to research this problem and to find a solution that will provide meaningful protection for the poor. I believe that is what all Canadians want.

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, I too am pleased to enter the debate on this private member's bill. I sense the deep caring of members of this House for those who are less fortunate or disadvantaged particularly because of their social condition.

The proposal is that the Canadian Human Rights Act would add social condition as a prohibited ground of discrimination. I think the concern for others that is behind this bill is something we all share and applaud. The question is whether this proposed remedy is appropriate, whether it will do the job and whether it will have the consequences we hope it will have.

The first question I have for the sponsor of this bill is what is the definition of social condition? There was no definition offered by the member in her speech. It is very important that we define our terms.

We saw the problem the Liberals got themselves into by committing themselves to something called pay equity. It was undefined and it was left up to courts and tribunals to sort out what the legislators meant. They came up with the result which the proposers of the measure did not like. Now the Liberals are in the very embarrassing position of having to fight the interpretation of their own legislation. That is not a good position to be in.

If we are going to add something into such a critical and strong piece of legislation as the Canadian Human Rights Act, we had better know what we are talking about.

The eight provinces that have similar provisions in their human rights legislation use somewhat different terms. Newfoundland uses the term social origin. Nova Scotia, P.E.I., Manitoba and Alberta prohibit discrimination on the grounds of source of income. Saskatchewan and Ontario prohibit discrimination on the basis of being in receipt of public assistance.

The member in her speech mentioned source of income or being in receipt of public assistance as a concern encompassed by the bill. We need to be clear about what we are talking about.

I noticed that the senator who introduced this bill in the Senate said “poverty is a serious breach of equality rights, which I believe has no place in a country as prosperous as ours”. It is suggested by the senator that social condition refers to poverty. If it does, I think we should be clear about that so that we do not get unwarranted or unexpected interpretations in our desire to protect some Canadians.

The senator also referred to the absence of any direct recognition of poverty as a pervasive source of inequality and disadvantage in Canadian society. If we are talking about poverty, perhaps that is what we should say.

Quebec is the only jurisdiction in which the term social condition is used. It is listed as a prohibited ground of discrimination and it is not defined in the Quebec statute. How has it worked out in Quebec? What has happened is that virtually all applications in which social condition is stated as a ground of discrimination were dismissed by the Quebec courts. I would suggest it is not a very strong protection for people when the courts do not find the term to be sufficiently specific to actually use it to protect people.

There is only one case concerning the refusal to rent a housing unit that was found to be discriminatory on the basis of social condition. That is not an experience the Parliament of Canada would find very helpful in protecting the people we want to protect under the bill.

The human rights tribunal in Quebec has taken a broader interpretation of the term social condition, as human rights tribunals have done for example in the case of pay equity. Damages were awarded in seven of eight decisions that we have been able to identify. In those seven judgments, the social condition was defined fairly narrowly as being a social assistance recipient.

It is important that legislators legislate from their hearts. But they also must legislate in a way that is objectively and legally effective to protect people in society.

The other question I have concerns the whole area of the law of unintended consequences. If we are going to protect people on the basis of social condition, nobody knows exactly what it is. Senator Cohen made a very revealing comment at the end of her intervention on this subject. She said “In passing this bill, hon. senators, we provide protection for our most vulnerable citizens”. We all want to do that. “While you or I may not fully understand the significance of this law, it is clear to me that those who live in poverty consider this to be an extremely important statement about their worth and their value as citizens of this country”.

There probably is not a member in this House who does not think it is extremely to important to affirm the significance and value of each human being, each citizen of this country. We need to do this, but to put an undefined and possibly wrongfully interpreted term in our legislation in order to make this kind of affirmative statement is very dangerous. At the very least, it is a very poor and illogical way of bringing forward a social consequence that we would all support.

We have to look at how this term could possibly be misinterpreted. For example, as the member who spoke before me pointed out, social condition could be used to bring a case that higher income people should not be given higher progressive taxes because it would be discriminatory. By taxing the higher income people more because of their higher incomes, their social condition could be seen as being treated in a discriminatory way.

We want to be careful that those kinds of interpretations cannot be made because our terms are carefully defined.

While the intent of the bill is something we all support, I would argue very strongly that this House carefully consider whether it is appropriate and whether we are going to get the results we want by passing the bill in its present form.

Social condition is largely subjective whereas other prohibited grounds, such as race, ethnic origin, colour, religion, sex, age, all of those things are objective. We have to be very careful when we put subjective criteria in place. We may know what we want and we may think we know what we are getting but we can get something completely different. It would be very irresponsible of us as legislators to do that.

When we talk about this legislation, I would support having a very careful look at how we can remedy the wrongs and the ills that the member so eloquently points out. In my view the bill would not do that. It could very well have undesirable consequences because it has not been carefully drafted at this point and we could be quite aghast at the consequences in years to come.

For that reason, although I fully support the intent behind this bill, the compassion and caring that motivates it, I think it would be a poor piece of legislation for the House to pass. I would ask members to go back to the drawing board and come forward with something more specific and effective to do the job than this bill would do.

[Madeleine Dalphond-Guiral, Bloc, Laval Centre, QC]

Mr. Speaker, it is with pleasure that I rise today to speak on private member's Bill S-11, an act to amend the Canadian Human Rights Act in order to add social condition as a prohibited ground of discrimination.

This is a short bill. It contains only two clauses. But it nevertheless addressed a shortcoming in the existing Canadian human rights legislation, a major shortcoming, by prohibiting discrimination on the basis of social condition.

The first clause of the bill states that:

1. Section 2 of the Canadian Human rights Act is replaced by the following:

2. The purpose of this act is to extend the laws in Canada to give effect, within the purview of matters coming within the legislative authority of Parliament, to the principle that every individual should have an equal opportunity with other individuals to make for himself or herself the life that he or she is able and wishes to have, consistent with his or her duties and obligations as a member of society, without being hindered in or prevented from doing so by discriminatory practices based on race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, social condition, disability or conviction for an offence for which a pardon has been granted.

Clause 2 reads as follows:

1. Subsection 3(1) of the act is replaced by the following:

3.(1) For all purposes of this act, race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, social condition, disability and conviction for which a pardon has been granted are prohibited grounds of discrimination.

It might be interesting to take a brief look at the meaning of “social condition” and its importance in the various provinces.

In Quebec for instance, this ground of discrimination is part and parcel of the Charter of Human Rights and Freedoms, whose section 10 reads as follows:

(Discrimination forbidden)

1. Every person has the right to full and equal recognition and exercise of his human rights and freedoms without distinction, exclusion or preference based on race, colour, sex, pregnancy, sexual orientation, civil status, age except as provided by law, religion, political convictions, language, ethnic or national origin, social condition, a handicap or the use of any means to palliate a handicap.

Moreover, the Ontario Charter of Human Rights stipulates that receiving social assistance is a banned ground for discrimination only in connection with housing. In Manitoba, in Alberta and in Nova Scotia, source of income is a forbidden ground for discrimination. In Saskatchewan, it is receiving social assistance, while Newfoundland refers to social background.

In fact, all of these provisions are aimed at banning discrimination based on poverty. In practice, however, this is unfortunately limited to being a welfare recipient.

Only the Quebec law includes a broader interpretation by having integrated the term “social condition” without restricting it to receiving social assistance. Quebec jurisprudence has, in fact, defined social condition as encompassing income, occupation, level of education, and social background. It is therefore a very broad interpretation, one aimed at clearly emphasizing that it is forbidden to discriminate against the poor, who are becoming more and more numerous as we know.

One example of discrimination based on social condition is a landlord's refusal to rent to a person solely because that person is on welfare. Here, the reason for refusal is not based on the ability or inability to pay the rent, but solely on the fact that the person is receiving social assistance.

Another example, under federal jurisdiction this time, would be a bank's refusal to open an account for a person on welfare. It is a matter of public knowledge that certain banks do not hesitate to charge for opening an account, this being particularly aimed at social assistance recipients.

I think this bill sends the message that at the dawn of the third millennium discrimination against poor people is unacceptable. Quebec long ago adopted this value. It is high time the poor were protected against discrimination in areas of federal jurisdiction.

At a time of globalization and free trade, it is more important than ever that individuals' basic rights be respected, especially the right to equal opportunity.

In this context, it is totally unacceptable for business people, such as the president of Bombardier International, to be anxious about the Prime Minister's discussion of human rights in Malaysia. It is true that it may be easier for the little guy from Saint-Maurice to talk about human rights in Malaysia than to respect them in Vancouver.

Nevertheless, it is regrettable when fundamental human rights are sacrificed at the altar of international trade.

We cannot fail but protest the fact that current Liberal government policies are broadening the rift between rich and poor. More and more children are growing up in poverty in Canada, more and more families are poor.

Entrenching Bill S-11 in the charter should amount to more than wishful thinking. The best way to fight discrimination against social condition is to improve the living conditions of our fellow citizens who find themselves in difficult economic straits incompatible with human dignity.

This government must take specific action to ensure justice for our society's most disadvantaged. Changing the employment insurance plan, returning to the provinces the money savagely cut from transfers, reducing income tax for the middle class—these are all ways to show that the improvement of social conditions is a priority of this government.

Unfortunately, I fear that such wishes, while easily realized, will not become a reality. However, I would hope that Bill S-11 will be passed unanimously by this House. It at least will become a reality.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am very pleased to rise in the House to support Bill S-11, an act to amend the Canadian Human Rights Act, in order to add social condition as a prohibitive ground of discrimination.

I express my thanks to Senator Cohen who worked very long and hard to raise this issue not only in the Senate but in Canadian society. Senator Cohen has done a lot of very good work including producing an excellent report on poverty in Canada. I also thank the member for Shefford who has brought this bill from the Senate into the House for debate.

In March the chief commissioner of the Canadian Human Rights Commission said: “Poverty is a serious breach of equality rights which I believe has no place in a country as prosperous as ours. Human rights are indivisible. Economic and social rights cannot be separated from political, legal or equality rights. It is now time to recognize poverty as a human rights issue here at home as well”. She said this in her annual report to parliament in 1998.

The commissioner is saying what we know from our own experience and what I know from my own riding of Vancouver East, that poverty is one of the greatest barriers to equality in Canada. There is no question when we look at what is happening around us that poor people are losing their rights. Discrimination is growing. We are witnessing a growing homelessness that is now at crisis proportions in Canada. There is an increasing environment of poor bashing. We are seeing municipal bylaws that are discriminatory against poor people such as anti-pan handling bylaws.

There is a growing environment in this country where there is increasing discrimination against poor people.

All of that is contrary to the universal declaration of human rights. It has been very interesting to hear members from the Liberal Party and the Reform Party talk about how this bill and the idea of a prohibited ground based on social conditions is too difficult for us to deal with.

We can always find reasons not to do something. But the fact is we all know in our hearts that poor people do face vicious discrimination. We need the political will to say it should be a prohibited ground as we do in provincial legislation so it is not an issue that there will be too much litigation or it is too difficult, too complex. It already exists as a legal entity, as a legal ground. We are now saying this should be included in Canadian human rights.

What I want to focus on is real point here, that the greatest source of discrimination against poor people in Canada comes from government policy. Yes, there is discrimination by landlords, banks, businesses, services and even in our general attitudes and stereotypes about poor people. But there is no question that the greatest discrimination is from public policy.

Yesterday and today in Geneva representatives from NAPO and anti-poverty groups are briefing UN officials on Canada's hypocrisy when it comes to dealing with poverty. This deals with the UN covenant on economic, social and cultural rights which Canada was a signatory to in 1976.

The anti-poverty groups are meeting with a UN committee to expose what has been Canada's blatant disregard for the covenant as we now are seeing in this growing environment of discrimination against poor people.

I think it is interesting to note that this is not the first time that anti-poverty groups have had to appear as witnesses to the UN committee to point out what is happening in Canada.

In 1993 NAPO and the charter committee on poverty issues went to the UN committee and exposed the extent of Canada's shocking non-compliance with the UN covenant. This is where we really get to the heart of discrimination and what is happening with growing poverty in Canada.

I would like to talk about some of the things that have taken place. We could go back to 1989, to a good day in the House of Commons when the House unanimously passed a resolution to eliminate child poverty by the year 2000, something all members stood up and voted for and it was a very noble gesture. What happened?

In 1993 the federal government abandoned social housing, one of the key issues that determined health and poverty in this country. In 1995 we saw the loss of the Canada assistance plan that had laid out basic rights and conditions in terms of social entitlement.

In 1996 we saw the era of the Canada health and social transfer that abandoned and eliminated those universal rights in Canada and for the first time saw a massive downloading and slashing of social programs that were now up to $6 billion or $7 billion that has affected the most vulnerable people in society.

This brings us to 1998. This discrimination is still going on and I believe it is the worst form of discrimination, discrimination by government and public policy. The child tax benefit discriminates against the poorest families in Canada by denying people and families on welfare the right to the child tax benefit. That is discrimination, something that should be outlawed if we had social conditions in the human rights act.

We only have to look at the EI cutbacks to see another form of discrimination. I think it really begs the question why the government is reluctant to support this amendment.

I went back into the records to see what kinds of positions have been taken by Liberal members in previous years and I came across a very interesting quote in Hansard of May 1993. This is what a Liberal member had to say with regard to the UN covenant on social, economic and cultural rights: “The UN, hardly an enemy of Canada, says that the government record on child poverty, on homelessness and on food banks is deplorable. We live in one of the wealthiest countries in the world yet we are condemned internationally because the Conservative government has disregarded the reality of poverty”.

That was a statement by the Liberal member for Hamilton East in May 1993. The same members who are now part of the government have systematically created policies and programs that have discriminated against poor people and have increased poverty in Canada.

There is no question that our goal and why we should support the bill as a very important step is that we should be working together to end discrimination on the basis of social condition. It is very important to say that is not enough. Our goal must also be to force the federal government to set concrete targets to eliminate poverty and homelessness.

As pointed out by my colleague in the Bloc, if we eliminate the conditions of poverty, elevate people out of poverty, provide jobs, housing and social support, we are meeting the goals and targets we should have.

The greatest challenge for us is to get governments, not just the Liberal government but all governments, to examine their record and acknowledge their policies which have quite deliberately and consciously created increased poverty in Canada.

This is not an issue of individual poor people who are to blame, although they often are. We only have to look at workfare programs as yet another form of discrimination. It is the years of slashing social programs and of scapegoating poor people that has brought us to where we are today.

We have an opportunity in the House today to do the right thing and to say that social condition is something that can work. We can join together like we did in 1989 with the resolution to eliminate child poverty. We can say that social condition should be a prohibited ground of discrimination and should be in the Canadian Human Rights Act. We can do the right thing. I ask my colleagues to think seriously about the issue, join us and vote for the bill.

[The Acting Speaker (Mr. McClelland)]

The time provided for the consideration of Private Members' Business has now expired and the order is dropped to the bottom of the order of precedence on the order paper.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, farm families in Canada are in crisis. Since my question to the Minister of Agriculture and Agri-Food last month on the farm crisis on the prairies net farm income has dropped not to 40% of last year's income but to 70% of last year's income. This is a crisis by any description. That is one particular description of a crisis.

We also have the lowest net farm income in western Canada since the great depression of 1929 and the 1930s. At $3,400 per farm this year that is the lowest per farm net income recorded since Statistics Canada began keeping records in 1926. The agriculture and food industry in Saskatchewan is related to over 40% of all jobs in the province. We have a very significant crisis as well as a social crisis.

Whenever farmers' incomes fell in the previous decade the media and the Liberals implied that farmers were to blame because they insisted on growing wheat for a world that already had enough. The implicit message was to diversify or perish. What have the farmers done? The irony is that today in Saskatchewan farmers are growing peas, lentils, sunflowers, spices and raising llamas, wild boars and even fainting goats. We now face the lowest farm income levels in history.

As well agricultural exports from 1989 to 1997 doubled in Canada. Yet net farm income declined over that period. Machinery operation costs increased 21% over the past five years. Fertilizer costs increased 57%. Farm chemical costs increased 63%. Liberal government user fees increased by $138 million as a result of the privatizations of the agricultural industry.

We have seen U.S. subsidies for wheat at $2.68 U.S. per bushel when the price of wheat right now is $2.46 U.S. per bushel. In addition to that subsidy we have also seen an increase of $6 billion by the U.S. treasury for its farmers, which now totals about $22 billion Canadian. That is what U.S. farmers are getting from their government. Canada is getting zippo as far as subsidies are concerned. Europeans are providing $5.35 U.S. a bushel subsidy for their wheat producers.

The Liberal government betrayed and abandoned farmers by doing away with the Crow rate. Other countries in Europe and the States backed their farmers with their treasuries. I call on the government to commit to a national agricultural policy which will stand up and protect farmers in this very serious condition. I call upon the Government of Canada to establish an emergency farm aid program around the national agricultural policy which I would like to see it announce in the House of Commons tonight.