Thank you.
Achieving our goals will foster strong Canadian global competitiveness, support expansion projects and help companies develop markets, enhance profits, boost capital productivity, and most importantly, create jobs.
I'd like to begin by addressing the availability of reasonably priced credit to business. Our survey results confirm that businesses are finding that access to credit has significantly tightened, its cost has risen, and the process of securing credit has become much more difficult. Our survey revealed that the situation is particularly difficult for small enterprises, businesses seeking longer-term credit facilities, and companies whose loans need to be syndicated because of their size.
Increased credit availability can be accomplished in four ways.
One is to encourage funding of small and medium-sized businesses, which could be done by adjusting the Canada Small Business Financing Act to allow for larger loans, and by supporting an emerging new economy by both making funds available to early-stage enterprises that focus on innovative new processes and technologies as well as green investments and funding more innovation centres to serve as incubators that nurture the development and sustainability of start-ups in a knowledge economy.
Second is to help increase the availability of long-term credit facilities by providing incentives to financial institutions that grant loans for the longer term, and by enhancing existing government guarantee programs for qualifying business loans, particularly in the most impacted area of equipment lending and leasing.
Third is to help improve working capital credit availability by increasing the rates for and the refundable portion of investment tax credits and scientific research and experimental development tax credits, since banks lend against this collateral.
Fourth is to provide relief to defined benefit pension plans by allowing plan sponsors to fund solvency deficits over the actual liability timeframe. Not only would this be more equitable, it would free up capital to reinvest in the economy.
Finally, we call upon the government to encourage EDC, BDC, and similar lending agencies to increase loan volumes and venture capital availability to companies requiring capital.
Our second set of recommendations deals with improving the efficiency of capital markets.
FEI Canada encourages the government to reduce interprovincial trade barriers. This would include moving to a single national securities regulator and achieving the free flow of capital, goods, services, and labour among Canadian provinces.
There must be a review of the tax system with an eye to easing the burden of economic restructuring on Canadians. How might this be accomplished? First, expand tax credits for flow-through shares to ease the raising of equity for small and medium-sized businesses, particularly early-stage companies not yet in a taxpaying position; provide relief to displaced workers and troubled companies by extending to three years the period over which severance payments and capital gains on debt forgiveness are reported for tax purposes; and provide a three-year tax holiday for start-ups launched by entrepreneurs coming out of employment displacement.
Finally, we call upon the government to help in the restructuring of the securitization market through better transparency, accountability, and reporting practices, as this will instill greater confidence and will improve liquidity and availability of short- and long-term funding.
I'll move to our final category of recommendations: rebuilding confidence in the economy.
To keep our banking system strong we must continue to enforce capital regulations and lead the way in international oversight of financial products. While we support some economic interventions, such as infrastructure spending, it is key to ensure that these moneys are being spent responsibly and that Canada stay fiscally prudent by avoiding structural deficits.
Ladies and gentlemen, the objectives highlighted here not only contribute to the stability of our financial system; they also strengthen Canadian competitiveness and long-term prosperity.
FEI Canada thanks you for your time and the opportunity to present our ideas to you.