House of Commons Hansard #157 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was business.

Topics

Canada Small Business Financing Act
Government Orders

12:05 p.m.

The Deputy Speaker

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

Canada Small Business Financing Act
Government Orders

12:05 p.m.

Some hon. members

Agreed.

Canada Small Business Financing Act
Government Orders

12:05 p.m.

Some hon. members

No.

Canada Small Business Financing Act
Government Orders

12:05 p.m.

The Deputy Speaker

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

Canada Small Business Financing Act
Government Orders

12:05 p.m.

Some hon. members

Yea.

Canada Small Business Financing Act
Government Orders

12:05 p.m.

The Deputy Speaker

All those opposed will please say nay.

Canada Small Business Financing Act
Government Orders

12:05 p.m.

Some hon. members

Nay.

Canada Small Business Financing Act
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12:05 p.m.

The Deputy Speaker

In my opinion the nays have it.

And more than five members having risen:

Canada Small Business Financing Act
Government Orders

12:05 p.m.

The Deputy Speaker

Call in the members.

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

Division No. 265
Government Orders

12:45 p.m.

The Deputy Speaker

I declare the motion carried.

The House resumed from November 17 consideration of Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses, as reported (with amendment) from the committee; and of Motions Nos. 2, 3, 4 and 5.

Division No. 265
Government Orders

12:50 p.m.

Reform

Roy H. Bailey Souris—Moose Mountain, SK

Madam Speaker, I might say that the vote that we just had is somewhat alarming in that in the last parliament closure was moved 35 times either by time allocation or by closure motions. In this parliament we find that already time allocation has been moved nine times, including the bill we are now debating.

When I talk with people in the community I talk with them in private more often than in public because in private people are more apt to say things which they would not otherwise disclose.

The amendment that we are debating 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.

With respect to financing for small business, we only hear of the times when it proves to be successful. What the government never hears about are the disastrous effects of ill-conceived loans. It is my purpose this afternoon to draw this to the attention of the House. I could go from now to midnight talking about what is designed to be a positive thing which turns out in fact to be a negative thing.

I can assure hon. members opposite that it is not very pleasant to sit in the kitchen with people who have run a third generation family business and hear their story about being put out of business because of a government loan to a competitor while they continued to struggle to survive and eventually lost their business.

This is not a rare occurrence. It is very common throughout Saskatchewan. Depending upon whom a person knows at the right time, which could be a politician, they get a loan to build a business in an area when that general trading area cannot support another business.

I would like to draw the attention of the House to a couple of instances. There were four eating establishments in a small town. Of those eating establishments, three of the four were family businesses. They had been family businesses since the town virtually began. All of sudden two of those businesses received big government loans, one in excess of $100,000 and one in excess of $125,000. The total pie was divided. There was not sufficient business to support those six eating establishments in that town. Two of the businesses which were struggling went under, while the other two businesses which received the government grants continued. I might add that one of them is now closed. We never hear what happens when government makes small business loans which create competition for a family business or some other business which is struggling to survive.

There is a long list of names. Hundreds of thousands of dollars have been paid out.

There was a small cafe owner who had always paid his local taxes. He was a part of the community and supported every activity in the town. Government money came in, his money in effect, and another business moved in and forced him to dilute his business to the extent that it is no longer a profitable organization. Did that happen once? Not at all.

When we look at the budget and the amount of money that is given to small business we never know how many times it happens. I could take two hours going through all of the business places I know of that have gone out of business because the government, with disregard, put money into an area which could not support another business of that nature. It is a sad story.

I know of as many people who have been desperately hurt and ruined by the Small Business Loans Act as I do of those who have prospered. The government only tells us about those businesses which have prospered. In all fairness, we need to look from coast to coast to see those who have been hurt.

I draw the attention of members to another incident. This was in a fair sized town where there were two bakeries. Again they were both family enterprises. They were both doing well. They both supported their community. They were both engaged in such things as the town council. A person came in who knew the right person at the right time and a loan was floated. That loan was in excessive of $140,000. As a result, that person was able to keep going on government funding until they put a community owned bakery out of business. There was not enough business to support three bakeries.

This motion is designed to stop a current practice. This motion has been put forward 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. In other words, at present it is possible for an individual who is a member of a family running a business to get another loan. Even though the first loan was not under his name, he can take out another loan for a different purpose when the business is already operating with a government loan.

What are we doing? We do not have a careful watchdog to monitor who is getting the loans and for what purpose. I am not just talking about the banks which guarantee the loans. In my province we have business development corporations that would be a better source to inform the government under this loan procedure as to what business is most likely to succeed without hurting the businesses already in place.

Where I come from I cannot afford nor do I have the time to sit and listen to those people in my cities, towns and in some cases my villages who have been totally put out of business and have moved simply because government money is going in opposition to them.

The government should reconsider this bill because a person does not deserve to lose his or her business of three generations and be wiped out with government money going in opposition to their business which has probably been in existence over the last 50 or 60 years.

I wish the government would consider this motion which I will be supporting.

Division No. 265
Government Orders

1 p.m.

Reform

Gary Lunn Saanich—Gulf Islands, BC

Madam Speaker, I am pleased to support the amendments put forward by my colleague.

These amendments will do two things. First, they will lower the maximum of a small business loan from $250,000 to $100,000. Second, they will prevent a second family member from obtaining a small business loan for a business when one has already been granted to another family member.

I would also like to comment on this whole small business loans program which, again with all due respect, I think has completely gone down the wrong track in what we are doing for the Canadian people.

This bill essentially will put $1.5 billion into the small business loans program where businesses that do not qualify for any other funding, that have been turned down by the banks and financial institutions for various reasons, would then try to obtain financing from the small business loans program.

I would argue this is the wrong approach. These people obviously are a higher risk. We are using taxpayer money as a poor investment. We are giving it to the worst business plans of this country, the businesses that are most likely to go broke and most likely to go bankrupt. The taxpayers will receive zero dollars on their investment. We are throwing money at bad business plans.

I would argue it is the role of government to be responsible for introducing legislation in this House that ensures there will be a strong economic climate. Again, I do not necessarily support subsidizing business after business by throwing money at it. Instead, we should be creating an economic climate where businesses can survive without government subsidies. In essence that is what this is. That is what we have failed to do.

My home province of British Columbia is in an absolute crisis state. As an example we can look at the forest industry in British Columbia. Many of my colleagues from British Columbia can attest to the fact that one of the principal reasons the forest industry and the business climate in the forest sector is in a crisis situation is largely government policy and the direction the government has been going in both provincially and federally.

The federal government cannot be let off the hook. It has created an economic climate, due to the quota system with the United States, where British Columbia has now lost a significant part of its quota to eastern Canada. The mills are suffering incredibly.

I was speaking with the senior forester in one of the forest product companies in British Columbia over the weekend. He tells me that their wood costs in 1994 were $43 a metre. Today their wood costs are $83 a metre. This has almost doubled. I asked him why they had doubled and what had caused the cost of the wood landed in the mill to be double to what it was three or four years ago.

He said strictly government policy, both federal and provincial.

I am a big defender of small businesses. They are the economic backbone of this country. If we are to have successful businesses, let us not do it with government subsidies. We have the government saying here is $1.5 billion available for small businesses.

Many of the ones that probably are struggling and will survive do not have access to this. Again, only the highest risk business plans are going to get access to this. We may never recover this money. I would argue very little we will recover.

The government gives out but takes right back through high payroll taxes. The EI premiums are billions of dollars higher than what they should be. The list goes on and on.

Speaking with small business owners, even very small businesses with only a few employees, they say they get government forms, both federal and provincial, in the mail two or three times a week. It never ends.

A full time bookkeeper is needed to keep up with the bureaucracy, the paperwork, whether it is the GST or the payroll tax forms or worker compensation forms. Some of them are provincial but the list goes on and on. How can they possibly survive?

It is our role as legislators to cut that down, break down these barriers. What kind of taxes are these companies paying? Can they be competitive? It goes further. Some of our most entrepreneurial people who should be creating these small businesses are running down south of us to the U.S. the day after they leave school. Why? Because of the economic climate in this country. Why? Because of the taxes they pay.

People pay double the taxes to our friends to the south. These are realities. These are the things the government should be focusing on.

The small business loans program has been around for a long time, which would only reinforce that the government is absolutely prepared to accept the status quo. It thinks things are just fine. Let us not change, just send out another $1.5 billion and that will take care of itself.

Some people cannot go to the bank. They get turned down and then go to the finance companies and get turned down there. They cannot raise any money, but we will give them some taxpayer money. We likely will never see it again because their business plans are flawed to begin with. The point I am trying to make is that government subsidies are not the answer. It has been proven time and time again.

Let us look at the fishing industry on the east coast in Newfoundland and the Atlantic provinces. What has this government done since 1993? It has spend $2 billion paying fishermen to sit at home and wait for the fish to come back but it has not changed anything within the department and how it operates. It has not looked at the root problems. It has not focused on anything.

The idea was to throw money at it and hopefully the problems will solve themselves. It accepted the status quo. That is not good enough. We need change. It is the same thing with the small business plan. That analogy can be drawn with small business people. Throwing money at them and saying go create a new business, we will create another level of bureaucracy to help them with their bankruptcy in six months is not the answer.

We have to create an economic climate where these businesses will thrive, where they will create employment, where they will be valuable contributors to their local economies.

We are not doing that. It is in every sector whether fishing, forestry or mining. All these areas are suffering. We have our heads buried in the sand. We are not looking at it. Now the government has forced time allocation. It will shut the debate off on this.

Again I plead with the government to look at the real problem. Travel to British Columbia to some of these interior communities. Go up to Lumby. Go down to Duncan. Go into Cranbrook. Go up to Prince George and see what is happening. One and a half billion dollars in the small business loans program will not solve anything. It will just be a high risk. If that is what the government is going to do it might as well go down to Vegas and dump it into a slot machine.

Some will argue I am against the small business programs. I am not. I will stand up and fight for small businesses. But I would do it differently. I would ensure that they have a strong economic climate. I would ensure that they are not being taxed to death on payroll taxes. It can be done without government subsidies. If I can leave one message, the answer to our problems is not government subsidies. It is our job to create the economic climate where they can survive.

Division No. 265
Government Orders

1:10 p.m.

NDP

Gordon Earle Halifax West, NS

Madam Speaker, I am pleased to lend support to Bill C-53 and to join in the debate around the motions that have been put forward.

The Canada small business financing act is designed to assist small business. We in the NDP feel strongly that small businesses are a very important part of our community, a very vital part.

We believe that small and medium size businesses are an integral part of successful communities. I am sure that all of us can think of our various communities and point to many of the small businesses within our communities, whether they be construction companies, restaurants or information technology businesses, and we can see examples of people who are working hard, people who are dedicated, people who put in long hours to earn their living and to contribute in a meaningful way to our society.

I think of a small business in my riding of Halifax West, a small family restaurant. I go there sometimes in the morning for breakfast. I am served the most beautiful breakfasts, home cooked by the lady who operates this restaurant. This business creates an aura of hospitality, an aura of friendliness within the community. A lot of the local people come to that restaurant. They sit there and talk over the affairs of their community. They relate one on one with their neighbours. There is an atmosphere which is really good to see, people in the community interacting around this family business.

But it is also very noticeable that the owner of this business works very hard. She is in there first thing in the morning. She bakes homemade goods. She then deals with the customers who come in on their way to work. She is going all day. At the end of the day she has worked very hard and many long hours.

In 1996-97 small businesses created 81% of all new jobs, we are told. In 1997-98 small firms with fewer than 49 employees created 56,516 new jobs. Of the businesses operating in 1989, 51% were still operating in 1995. This is a testament of the endurance of these small businesses.

It is very important to realize that the people who operate these small businesses are people of integrity. They are people of honesty and they are people who would not necessarily take advantage of the programs that are being offered in a negative way. It bothers me when I hear Reform talking about not making things easier for people to access loans and to have help with their businesses. The inference is almost that these people will automatically take advantage of the grants and the programs available. But we must realize that most people in their small businesses are people of honesty and integrity and they are people who want to succeed. If we as a government, if we as a society, can help them, we certainly should be doing that.

It is for this reason that I urge all members in the House to give full support to the kinds of initiatives and the kinds of effort which will assist small business persons.

Division No. 265
Government Orders

1:15 p.m.

Reform

Lee Morrison Cypress Hills—Grasslands, SK

Madam Speaker, I listened with great interest to the comments of the member for Halifax West. I think he misconstrues the intent of the amendments in Group No. 2, which is to protect existing small businesses.

I fully concur with his remarks concerning the little restaurant, the great service he gets and how hard the owner works. Full marks for that lady and full marks for the business. These amendments are aimed at preventing somebody from moving in and setting up another restaurant right beside it and getting a government loan which would allow it to unfairly compete and put that poor woman out of business. We have seen that happen in Saskatchewan. It is not an uncommon phenomenon.

In my part of Saskatchewan and in that part represented by the hon. member for Souris—Moose Mountain the towns and villages are dying. The small businesses that remain are hanging on by their fingernails. When another business moves in to a place where there cannot possibly be room for two, and that business has a small business loan or a government grant, the business that is already there and just barely hanging on goes down first. Then the business that came in with government help usually goes down within a couple of years because it does not have the feel for the market nor does it have the skills of the business that had survived in that place for two or three generations. Instead of having one struggling business making it on its own, we end up with nothing, thanks to the beneficence of our government in backing these loans.

That type of interference with the marketplace is not good for society. I am not here to get into a long ideological harangue about the free market. We can debate that at another time and in another place. I am sure the hon. member for Halifax West and I could have a wonderful time debating that. We are debating a specific government bill and some proposed amendments to it which, in our eyes, would make it a better bill.

I know there are men and women in small business on the benches opposite. I have talked to some of them and they appear to be very reasonable folks. I think that in their hearts they understand what we are talking about in these amendments.

I would be surprised if there is a member in this House who has not had someone say to him or her “A new business has opened just down the street from an existing business providing a similar type of service in my hometown. It looks like the new business is going to put the old one out of business. We think it must have got a small business loan or a grant”.

There is this cynical outlook. Whenever anybody starts a business in a place where conditions do not look good, the public immediately concludes it was done with government help and by George, I think that 90% of the time the public is right. That is not the way to run a country. However when push comes to shove and the big shepherd holds up his staff, those people over there who understand this phenomenon and who are small business people all say “baa” in unison and the bill passes. This is not parliament as it was intended to be, which brings me to the matter of time allocation.

We are now debating with a gun at our heads. In the 35th Parliament the government used time allocation 32 times and closure three times. In this the 36th Parliament the government has already used time allocation nine times.

Instead of calling this the House of Commons, perhaps we should rename it the Dumas or the Reichstag because this is not parliament as parliament was intended to be. This is contrary to 300 years of tradition. It is contrary to the way that this parliament operated for the first half century or more of its life.

I believe closure was first used in this House by Borden. It was used extremely sparingly right up until the Trudeau administration. Then they started to lay it on heavier. Even that administration did not use it as many times in the several incarnations that it had as this government has used it in the last five years. The Mulroney government used it more extensively and with a heavier hand than the Trudeau administration but it was still a piker compared to this administration which is now routinely using it. The government uses time allocation time after time after time, no pun intended, and for no reason.

If there is an extremely important bill in the hopper and the opposition is being a little obstreperous and the bill has to get through or the country will collapse the next day at six o'clock in the morning, then yes. The technique was put in for a reason, but it was not put in to be used frivolously or habitually.

This is an affront to the traditions of parliamentary democracy. It is an affront which is practised routinely by this government. That is wrong. We have to get back to the tradition that parliament, not cabinet, but parliament is the overall authority in the country. Regardless of what the cabinet wants, parliament should be free to debate the issues of the day for as long as parliament wants and in any way it wants.

The heavy-handed manipulation has to stop. The whole institution is falling into disrepute. Unfortunately, people outside this place do not take us very seriously any more. I am sure, Mr. Speaker, you have run into comments of this nature in your riding.

About three or four years ago I was severely taken to task by a clergyman in my riding for having made a comment to the effect that under the system of parliamentary democracy as it has evolved in Canada, we now have a system of an elected dictatorship somewhat akin to what there was in certain periods in ancient Rome. He was irate. He said that was disrespectful of the country and its traditions. A few weeks ago I met this gentleman at a function and he said “You were right”. And I was right. This place is decaying because we no longer observe the democratic traditions.

It is a sad thing for me to have to stand and make these remarks about an institution of which I am a part, but I think it is time for a little honesty and a little truth. I am not alone in my views. This view is widely held outside this place. It is hurting us, it is hurting the institution, and it is severely damaging Canada.