John Solomon

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, the hon. member who just rose on a point of order would not know that his colleague from Souris—Moose Mountain was a member of the Devine party. He was a member of the party that bankrupted the province. It went to the polls and said “government does not work, vote for us and we will prove it”. The Reform Party is saying “government does not work, vote for us, we are going to prove it”.

We have had that experience in Saskatchewan and it will never get elected in Saskatchewan as a government. That is the way it is, because people have memories about $16 billion in debt. The Reform Party does not seem to get it. It figures it can hoodwink or trick people in Saskatchewan once and maybe it can do it twice. I do not think that is the case. We will let the people of Saskatchewan decide whether what it is talking about is truthful or not.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, the Reform member who just intervened comes from a district that probably has not had a history of Reform style politics.

In Saskatchewan, for the member's benefit, we had a Reform style government under the name Grant Devine. Many of those people who were involved with the Reform style government of Grant Devine—

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, I have operated two businesses, one a Dairy Queen brazier store which employed about 29 people full time and part time. I also had a consulting business on two separate occasions. I made my livelihood from those two businesses, unlike certain acupuncturist claims that members of the House might make from time to time.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, I am pleased to have the question from the MP for Lakeland with respect to the Reform style government that we had in Saskatchewan between 1982 and 1991. By the way, one of his colleagues is a former member of that Reform style government right here.

For the record, let me make two points. First, if Reform opposed and killed this bill there would be $14 billion in loans to small business people in this country that would be in default. They would have to pay back that money. It would put tens of thousands of businesses out of business right now. It is in support of putting small business people out of work, having its big business friends take over all the equity and jobs and send the money down to the States to their friends the Republican Party.

The second point is with respect to the FCC and the debt. We have the Reform Party of Saskatchewan that instituted a $16 billion debacle. It bankrupted the province of Saskatchewan in nine years under the Reform style government of Devine who promised the same thing the Reform Party has been promising for the last two years, less government, less tax and more jobs for people.

There was less tax and fewer jobs in Saskatchewan all right. The province is bankrupt because of the bloody policies of the Reform Party.

I say to the member who just asked the question that if we undertook in this country to follow Reform style policies with respect to small business there would be no small business. We would just have the Wells Fargo, the Cargills and the huge international conglomerates like Exxon running this country without any kind of opposition whatsoever.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, I thank the hon. parliamentary secretary, the MP for St. Catharines, for that question. Of course, the credit union system in Saskatchewan is quite significant with respect to agriculture, small business and personal financial matters.

The credit union system in Saskatchewan has been involved with about 25% of the SBLAs that have been provided. They have approved somewhere in the vicinity of 300, which is about 25% of the 1,200 SBLA loans outstanding in Saskatchewan.

The average coverage for the credit unions across the country is about 20% but in Saskatchewan it is much higher than that.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, it is interesting to note that Reform members are standing in the House and feeling a bit touchy about the fact that people see through their policies.

There is an old saying in Saskatchewan which my colleague from Saskatchewan who just stood on a point of order that was out of order would know about it: if you throw a rock in the dark and a dog yelps, you hit a dog. That is what we have here.

When the Reform policy is exposed Reformers start yelping, whining and hissing from their seats. In their dictatorial, philosophical unbending drive to eliminate government from people's lives, they feel any criticism based on fact and on thousands of examples is not something they want to debate. They do not want to talk about the truth or things that are accurate. They prefer to talk about things that are fictional and perhaps less important to people.

There is an important situation in Canada with respect to the SBLA. I just went over the three engines of the economy which are very important and which the New Democratic Party and millions of Canadians believe in with all their hearts.

I remind my colleagues in other parties about the importance of small business. The NDP is very supportive of small business. The small business community in Saskatchewan supports the NDP in a very broad way. Many small business people are active in my executive and in my campaign. There are about 1,200 businesses in my constituency. There are approximately 39,700 small businesses in Saskatchewan that employ about half of the population of Saskatchewan, a very significant number. The New Democratic Party Government of Saskatchewan would not be elected or re-elected if it did not have small business community support. I am grateful for the support of the small business area over the years.

About 98% of the businesses in Saskatchewan employ 50 people or less. That is the same as the average. About 98% of small businesses in Canada area actually employing 50 people or less. That means there is a large number of small businesses in Canada. The SBLA is one very important component of their equity and debt to acquisitions for business purposes.

Members of the House might not know, although some on the government benches might, that 98% of the approximate 975,000 business in Canada employ 50 people or less. That is a very significant number. About 861,000 or 90% of that figure employ 20 people or less. This is the type of business that looks for alternative financing in Canada. This is where the SBLA is very important.

In 1995 small business represented 43% of GDP in Canada. In 1997 one out of two Canadians were employed by or owned a small business. In 1997 paid employment actually declined by 0.4% while self-employment and business ownership grew by 11.5% from January to August. One in five of the labour force is now self-employed, which is up from about 12% twenty short years ago. In the province of Saskatchewan, as I indicated, over half of the people who are employed are employed in a small business or own a small business.

The small business loans program has been around since 1961 but assumed growing importance with these new trends in the early 1990s. It provides a government guarantee of registered business improvement loans which have been approved by registered lenders to qualified small businesses. Some two-thirds of the approved loans go to businesses less than three years old. The default rate of 4.5% is among the lowest of similar programs in OECD countries, compared with 19% in the United States and a high of 40% a few years ago in the United Kingdom.

In 1993 a number of amendments were made to the program, including an increase in the loan cap from $100,000 to $250,000. The concern was that during the height of the recession it would be particularly important to promote new sources of employment within the small business sector, especially given the loss of tens of thousands of manufacturing jobs that followed Canada's signing of the free trade agreement and the NAFTA, which by the way was supported by the Reform Party.

Some recent studies indicate a slightly higher default rate on the higher value loans. A few critics have suggested that the higher loan cap may have enticed some banks to skirt the rules and allow related businesses to assemble several quarter million SBLA loans into a government backed financing package of up to $4 million each, as the auditor general has discovered. This is an abuse by the financial institutions which must stop or the SBLA program will die.

It has also been pointed out that Industry Canada does not review loan applications but only claims submissions. On the one hand this has allowed the banks to charge user fees not permitted in the act and to get away with other abuses. On the other hand, as some of my constituents in Saskatchewan credit unions have complained, it also means that Industry Canada has rejected lenders' claims for occasionally quite picky reasons which may be viewed as being contrary to the spirit of the act.

These are all issues that we will want to see reviewed over the next year in anticipation of some major amendments to the legislation governing the SBLA.

While my party supports the speedy passage of Bill C-21, it is without prejudice to views that we may express on how the program might be improved on the next round of amendments.

The Small Business Loans Act is not the only element of government policy which affects small businesses in Canada. My colleagues on the government side are rather selective when they trumpet the government's record in the field. It is because they are too embarrassed to remember what they said in opposition about issues affecting small business.

Here are a few quotes of Liberals in opposition on one business issue. I ask all members and people of the country to guess what small business issue the following quotes concern.

The current Minister of Public Works said in 1989 “It is a burden on all small businesses in this country”.

A current Liberal senator who was a former member of Parliament, Shirley Maheu, in 1989 called it “a nightmare for small business and Canadians don't want it. The message is loud and clear”.

The current Minister of Western Economic Diversification, the hon. member for St. Boniface, claimed in 1993 that it was particularly onerous for small business. He said that some of his constituents told him daily that they felt like giving up their businesses and finding another job in order to escape the heavy burden imposed by government.

The then member for Parkdale—High Park reported that it was “killing his small business constituents with red tape, the paperwork and the taxes”.

The current Minister for International Trade said that it had deflated businesses and marketplaces in his constituency.

What were they talking about? Were they talking about the SBLA or other issues? They were talking about the GST, the read my lips campaign of the Liberals in the last two elections. “We hate it and we will kill it” they kept saying. They said that in the 1993 election and ever since they have been trying to defend breaking their word.

However they are still collecting it. They have even worked out with their Liberal friends in Atlantic Canada, Nova Scotia, New Brunswick and in particular Newfoundland, to harmonize it. They are calling it the BST, the blended sales tax. That shows us how trustworthy Liberal government commitments are to small business.

Another government policy which has hurt small business is high interest rates. The SBLA charges floating interest rates that are pegged to the prime or fixed rates which are pegged to prevailing mortgage rates. When the Bank of Canada needlessly raises interest rates, it immediately hits small business owners that are struggling to meet their loan payments, as well as their payrolls and all the other expenses of keeping their businesses afloat.

As if small business owners did not have enough to worry about, there are always the banks, the good friends of the Liberals and of course the Reform Party.

Business loans under $100,000 account for just 3% of business loans made by the big six. A recent CFIB study says that small business loans are now more expensive and harder to get. Furthermore, it estimates that service charges to small businesses have increased on average, 12% over the past year alone.

Some 44% of small businesses were forced to use credit cards to finance their operations in 1996 but the government refuses to regulate the exorbitant credit card interest rate being charged by the banks. Of course, the government is very heartily cheered on by the Reform Party.

There are plenty of challenges facing the small business sector in Canada, one of the three engines of the Canadian economy I referred to earlier. They need all the help they can get.

That is why, although we have some questions that should be addressed in the forthcoming review of the small business loans program, we are anxious to ensure that the program does not expire on March 31, 1998, jeopardizing literally thousands of businesses in this country.

We have agreed to co-operate with the government to pass Bill C-21 and to extend the program at least for one year until March 1999.

I take this opportunity to thank all the business people I have met with over the past number of weeks with respect to this bill. I would also like to thank the auditor general's department and the CFIB, Credit Union Central, Professor Alan Riding of Carleton University, and Keith Nixon of the Saskatchewan Credit Union Central who advised me on all issues with respect to the SBLA.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, I am very pleased to rise in the House of Commons as the New Democratic Party spokesperson for small business to debate the merits of Bill C-21 at second reading.

This bill as has been outlined increases the total loan pool offered by the Small Business Loans Act from $14 billion to $15 billion. This bill is before the House because the small business loans program is set to expire in about six weeks, on March 31, 1998.

In existence since 1961 the SBLA is a small business loans guarantee program which increases the availability of loans for establishing, expanding, modernizing or improving small business enterprises. We believe that this bill is necessary in the greater picture because the review of the entire SBLA is necessary considering what has come out of the auditor general's report.

The SBLA provides another alternative source of funding for businesses in this country. It is a program which many people in the Reform Party do not understand and actually which I do not think anybody in the Reform Party understands.

The SBLA is a leveraging program. It leverages billions of dollars out of other sources for business people to invest in their businesses. It is only one small component of the financing requirements of the business community. It is a very unique and very important because of the leveraging factor.

If Reform members had any business experience they would know that leveraging in business is extremely important when accessing capital either to establish a business or to increase manufacturing capacity or to improve and modernize as the case may be.

The NDP has supported the Small Business Loans Act program in the past. Although we believe it is unfortunate that Canadian banks need the incentive of a government guarantee to do their job and service their small business customers, we will continue to support the program with certain conditions and with certain improvements required.

The conditions are related to the auditor general's review of the SBLA and Industry Canada's handling of the SBLA. We are concerned about a number of the auditor general's findings in last December's report about abuses by some of the bankers that are registered lenders under the act and about the tendency of bankers and the industry department to inflate the program's job creation numbers.

As a result of that audit the government has brought forward Bill C-21 as an interim measure to extend the SBLA for one year while the industry department conducts a program review. We are informed as well that the standing committee on industry of parliament will be conducting as parallel review. My NDP colleagues and I intend to be active in that process when it shows up on the order paper of the House of Commons.

Before I get into the substance of the bill I want to mention a couple of points. Reform believes that there is one engine. The Liberals believe that there are two engines, but the NDP actually believes there are three engines of our economy.

The first and most important engine of our economy is the business community. Members of the business community risk the capital. They are the ones who have the ideas and bring their ideas to fruition by investing money in them, creating jobs and producing a product or a service which is needed or purchased in Canada and in other parts of the world.

This is a very important component of our economy. They truly are the entrepreneurs that show how people can create jobs. They are the people who risk their lives in terms of their finances almost on a daily basis. We feel this is a very important component of our economy. However this component would not work very well without the other two components, the other two engines of the economy.

The second engine of our economy is the co-op sector. An example of that is the Saskatchewan Wheat Pool or Federated Co-ops. Co-ops are very important, as is the credit union sector. There are caisses populaires in Quebec, parts of Ontario, British Columbia and Atlantic Canada. There are significant co-op and credit union sectors.

The reason co-ops are an important engine is that groups of people have come together to do things in their communities or regions that business would not do or that government could not do. That is where people underestimate how important the Canadian economy is in terms of its uniqueness.

We have business as one of the major engines of the economy. We have co-ops as another major engine. The third engine of our economy is the government sector.

The government sector is obviously not supported by Reformers. They want to see the elimination of police services in our communities. They want to see the elimination of fire protection. They want to see the degradation of education and health care. They want business to run the whole shebang.

Canadians see through their very transparent policy situation. They see the Reform Party as being the party that says “Government does not work. Vote for Reform and we will prove it”.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, the member for Medicine Hat and now the member for Kelowna are quite unsupportive of Bill C-21 as it applies to the financing of small businesses around Canada.

The premise of the argument of the member for Medicine Hat was that there was a lot of abuse by the banks of the SBLA.

Members who have been in small business will know that the banks administer the provision of the SBLA loans. The members for Medicine Hat and Kelowna have said that 40% of the loans under the SBLA would have been approved anyway by the banks. Their approach in respect of small business is not to look at the program and its abusers and to try to figure out how the program could work to the benefit of Canadian small business. Their approach is to kill the program.

Can the member for Kelowna tell me why you feel we should kill the program while we let the banks get off scot free? They are the ones that are abusing the program. You said the banks are allowing these loans to go forward. Why will the Reform Party not say that one of the solutions could be to look at the banks?

[Canadian Wheat Board Act, February 12th, 1998]

Madam Speaker, before I commence my debate with respect to this issue I wish to raise a matter that arose in the House on Monday. It pertains to the member for North Vancouver.

He made a comment in the House to which I responded from my chair. The matter he raised was a suggestion that the whips order their MPs how to vote. I wish to withdraw a comment I made in respect to his comment on that.

I do not believe that is the case in every party, especially not in the NDP, but at that time I used the word lie, and Hansard picked it up. I wish to withdraw that word out of respect for this institution, but I still maintain that his comment was not accurate with respect to the NDP. I wanted to get that on the record at this time.

The NDP at this point, as most people know, believes that Bill C-4 before the House is flawed legislation. It undermines the Canadian Wheat Board as we know it. The NDP tried to improve the bill in committee, but the Liberal majority refused to accept our amendments.

Bill C-4 proposes a number of issues which we do not support. As a result of three or four key issues, we will not be voting for the bill. I wish to take some time right now to inform the House of why we will not support the bill, in particular the clauses we are discussing right now.

First, the bill proposes a cash buying option. In our view this will destroy a fundamental pillar of the wheat board. It will undermine farmers' confidence in it. The wheat board would buy grains under cash buying from anyone, anywhere, any time at any price. We believe this disrupts the board's long practice of buying grain from farmers at announced prices and distributing profits to all on an equitable basis.

The second reason we are opposed is that Bill C-4 proposes a contingency fund which would cost farmers as much as $575 million in check-offs. It is our view that is not needed at this time, particularly because farmers cannot afford it. A contingency fund is not necessary if Ottawa continues to provide financial guarantees to the board, guarantees that have been seldom used.

My constituency of Regina—Lumsden—Lake Centre has a significant number of farmers. They are squeezed right now with input costs. They have fuel cost crunches for spring seeding. They have fertilizer cost crunches for their inputs affecting this coming season. They are very concerned about the transportation increased costs as well as a result of the minister responsible for the wheat board doing away with the Crow benefit, which has taken about $350 million to $375 million dollars a year out of the Saskatchewan economy.

This was taken out of the economy after the bill which established the railway to the west coast, passed by parliament over a century ago, provided for a Crow benefit in perpetuity. The reason they did that was not because they were shortsighted in terms of their forecast for inflation or value of the dollar. They gave the CPR billions and billions of dollars in alternating sections of land across the western part of the country. They gave the CPR the mineral rights to those lands so that in future the revenues from the land and the minerals the mining and oil companies produced would have provided more than adequate compensation to the railways in a very generous way.

The Liberal government and its predecessors, the Tories, allowed the CPR to hive off the land and sell it to Marathon Realty. The profits have gone away. They have allowed, persuaded and encouraged the CPR to take its Comincos, its mining companies, its Pan Canadian oil company, the second largest oil company in Canada, and hive them off into subsidiaries and not use those revenues or profits to sustain the railways and the transportation to western farmers, to our western population.

Literally billions and billions of dollars have been hived off. All we have left is a stand alone branch line kind of railway system in western Canada. The railways are now saying that they are not sustainable on their own.

If the billions and billions of dollars in assets are returned to the CPR there will be more than adequate transportation in they country. That is where we have a problem. Canadians do not understand the fact that Liberal and Tory governments in the last 100 years have allowed and encouraged assets to be removed from the CPR which were meant for, intended and provided by the House of Commons and the Parliament of Canada for the maintenance of the railways and a transportation system for western Canada.

Now we see CNR going south and expanding in the United States at the expense of what is happening in Canada. Billions and billions of dollars were hived off into Marathon Realty, Pan Canadian, Cominco, the shipping and airlines. They are all gone. All the assets are gone and the poor old railway says it cannot make a profit.

The Minister of Agriculture and Agri-Food is now the minister in charge of the wheat board from Saskatchewan. He encouraged all this. He put the nail in the coffin in terms of some of the transportation problems that western Canada now has. Farmers will never forget that.

Another reason we oppose Bill C-4 is that it claims to put farmers in control of the wheat board's destiny. The Liberal government will continue to appoint the chief executive officer. This makes talk of a farmer controlled board in our view a travesty.

How can a farmer controlled board not have accountable to it its chief executive officer? Anybody in business will know that the chief executive officer has to be accountable to the board. The board knows what is going on and the CEO reports to the board.

The government has made it a political issue. The minister who has screwed farmers on the Crow rate will now screw them on this matter with respect to the wheat board. I do not think farmers will be very happy about that.

We support many parts of the bill. We support the provision for a possible inclusion of more grains under the wheat board's jurisdiction. This inclusion allows farmers to decide in a vote to remove grains from the board's authority. It is only fair that farmers can vote to include extra grains as well.

Agribusiness and the Reform Party are a bit concerned about this matter. The Reform Party embraced the referendum principle. It should understand that if there is a referendum among producers to exclude or include something perhaps the referendum decision should be honoured.

Reform philosophy is always do as I say and not as I do. Reformers say one thing to one part of the country and the opposite to another part of the country.

One of the fundamental principles of Reformers is that they believe in referenda. Yet, when it comes down to the inclusion or exclusion referendum, they think it is bad. They only want one as opposed to both. They want the exclusion referendum but not the inclusion referendum. Reformers believe they know better than farmers, that they know better than the 60,000 farm families in Saskatchewan. I do not believe that for one second. Neither do the 60,000 farm families in Saskatchewan nor the farm families in Alberta or Manitoba.

We have a bit of a problem. The organizations that are opposing the Canadian Wheat Board, a strong institution supported by our party, are good farm organizations like the National Citizens' Coalition. One Reform member used to work for the National Citizens' Coalition. I challenge the member to name 10 citizens.

I will name a few citizens who belong to this organization: Conrad Black, Imperial Oil and Pan Canadian that has just plundered and raped our oil resources from railway system and hived them off for its shareholders all over the world. These are the real citizens of Canada that support the National Citizens' Coalition which supports the Reform Party. Its chief executive officer is Mr. Harper, former Reform member of Parliament from Calgary. I have a great deal of respect for Mr. Harper but his philosophical and ideological position is in lockstep with the Reform Party.

That is one example but there are other significant examples. The Winnipeg Commodity Exchange, the Winnipeg Chamber of Commerce, oilseed producers or processors and Cargill are all great people who support the abolition of the wheat board. They want to see the wheat board totally dismantled so they can go in there and finish the plundering of farmers that the CPR has undertaken and the Liberals, the Tories and the Reformers are all partners in.

[Pairing, February 6th, 1998]

Mr. Speaker, I rise on a point of order. The Reform private member is casting aspersions upon all members of this House by making reference to either presence or non-presence of members of Parliament, talking about naivety—