House of Commons Hansard #122 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was brain.


Decade Of The Brain ActPrivate Members' Business

11 a.m.


Sue Barnes Liberal London West, ON

moved that Bill C-239, an act respecting the decade of the brain, be read the second time and referred to committee.

Mr. Speaker, I will be sharing my time today.

I am pleased to introduce debate on Bill C-239, a bill that would declare the 1990s the decade of the brain. First, I would like to recognize and thank all the individuals and organizations that have since early in the decade assisted in this legislative endeavour.

The legislation I am speaking on today is the duplicate of a private member's bill introduced in 1992 by the previous member of Parliament for Niagara Falls. Private members' bills can take a number of years before they are debated in the House.

Given that we are already in 1994, members may ask what the purpose of the bill is and what will be accomplished by declaring the 1990s the decade of the brain.

My response is that the legislation will help to raise the awareness of Canadians and will help to focus attention on the prevention, research, treatment and rehabilitation of brain related diseases and disorders. I believe this to be a worthwhile, rewarding goal, as do many of my hon. colleagues.

We only have to look at numerous examples in the world community to see this is an important issue worthy of our attention as legislators. In 1986 at the 39th world health assembly, the World Health Organization called on member states to apply preventive measures with regard to mental, neurological and psychological disorders and to include these activities in their long term health strategies.

In 1991 Dr. Nakajima, director general of the World Health Organization, urged all governments to designate the 1990s as the decade of the brain. Our neighbours to the south did this in 1990. In 1992 the member states of the European community followed suit, forming an ad hoc task force.

The World Federation of Neurology proclaimed the 1990s to be the decade of the brain in 1992. As we speak, researchers from my riding are gathering with over 12,000 other professionals in Miami to discuss among other subjects advances made in the decade of the brain.

They have expressed to me their support of the bill before the House. Treatments that would have seemed miraculous 10 years ago are now reality and are being applied successfully. We can now look to a day when new drugs may free patients from their struggle with neurodegenerative diseases such as Alzheimer's.

Regeneration research is providing new expectations, new hopes for patients with spinal cord and various other brain injuries. In every riding in Canada research efforts and treatments continue, utilizing more and more advanced and ground breaking technology. In my own riding of London West a young scientist has recently commenced a new research project focusing on brain functioning. Currently magnetic resonance imaging shows brain anatomy clearly. Functional magnetic resonance imaging will allow us to view the working brain and will help map out the centres concerned with such aspects as speech and motor activity.

There is no doubt the human brain is a remarkable feature that distinguishes us from other living creatures. A mere 3-pound mass of interwoven neurons controls all our activities. The brain is the most complex and mysterious wonder of creation. It has been called the seat of human intelligence, the interpreter of senses, the keeper of memory, in essence the sanctum of the soul.

Ailments of the brain carry with them heart rending disabilities that can rob us of the very essence of personhood. A healthy mind is essential for living a full life with total liberty and independence. A great threat to the independence of the elderly are diseases of the brain. Cognitive mental stability enhances the ability to heal and recuperate, to cope and to overcome physical ailments.

Unfortunately like all things human the brain is not perfect, being subject to injury and disease, including the time of development in the youngest members of society. Diseases are

not limited by geographical borders. Nor do they recognize any difference in language, gender, race or economic status. Any human being in the world community is a potential victim of a brain related illness.

I would be very surprised if any member of the House had not been personally affected by such diseases and disorders. All of us have had a friend, relative or family member who has suffered the tragedy of brain related illness. At the beginning of the decade it was estimated that five million Canadians were affected by disorders of the brain ranging from congenital malformations, degenerative disorders, neurogenetic disorders, epilepsy, multiple sclerosis and stroke, to problems with learning, hearing, language and speech.

I have been encouraged by the numerous physicians, individuals and associations that have given me support to work for the recognition of the decade of the brain. I am aware of many who fought for this long before I was involved. Many of these people devoted their careers to the treatment and elimination of brain related illnesses. Designating the 1990s as the decade of the brain would be an acknowledgement of their contributions and an encouragement for them to continue with their noble crusade.

Studying the brain has enormous potential for the health of Canadians, while decreasing the severe economic and emotional burdens placed on our society by brain disease and disorder. In efforts to see the legislation proclaimed, I have also been contacted by people who are right now directly affected, sometimes tragically. I have received scores of letters from parents whose children have died or are dying of brain tumours.

I have listened to people faced with the difficult task of caring for loved ones who suffer from brain disorders. There is more eloquence in their private struggles with adversity, more eloquence in their challenges and their grief than I could ever hope to bring to the Chamber today. It is because of these people that I encourage members to lend their support to the bill.

In 10 minutes it is impossible to speak on the full scope of the problems in research. I would like to highlight two forms of brain related illnesses as well as their effects.

Today over one-quarter of a million Canadians suffer from Alzheimer's disease and related dementias. By the year 2030 it is estimated that this figure will have increased to over three-quarters of a million. The social and human costs of Alzheimer's disease are devastating. A person's ability to understand, think, remember and communicate is affected. The process is always a progressive degenerative one that means the formerly self-reliant men and women slowly become dependent upon others.

The disease has a similarly devastating impact on the caregivers who are often family members. Family members must cope with long periods of emotional, financial and physical stress. Hence we see that the health and well-being of the family members become just as important a concern as that of the person with the disease.

Each year thousands of Canadians are diagnosed with a primary or secondary brain tumour. Since brain tumours are located at the various control centres of thought, emotion and physical function, they can cause serious impairment in motor functions, vision and language abilities and make treatment very difficult.

In 1982 in my home of London, the Brain Research Laboratory was established with both experimental and clinical research units. The Brain Tumour Foundation of Canada was also a founding member of the North American Brain Tumour Coalition, a network of brain tumour organizations dedicated to increasing public awareness of the nature of the brain tumour and of the availability of treatment options.

London has also seen the establishment in 1991 of the brain tumour tissue bank which acts as an international resource from which researchers from Canada, the United States and other nations are able to obtain tissue samples to carry out experiments.

Brain tumours were highlighted in the bill not because they are any more or less important than any other disorder or disability, but rather it was an association that I was involved with at the time when work began on the bill. I have also had some insight through other areas of my previous work into the devastation that mental illness can play in antisocial, violent acts. I can think of no other aspect of our criminal justice and health systems where everyone involved is a victim.

Measures can be taken to facilitate even more effective sharing of knowledge, information and resources to accelerate the research for effective prevention and treatment of brain related illnesses. Canadians must recognize the relationship between the health of the brain and the well-being and quality of life of individuals. Brain related illnesses exact a tremendous toll in human suffering, often during the most productive years in a person's life.

I have mentioned previously the effects that this can have on the individual and his or her immediate circle of family and friends. However we must acknowledge the tremendous financial cost of such illnesses.

Dr. John Evans in the November 1994 Flavelle lecture at the University of Western Ontario stated that neurological diseases require more people to be hospitalized than any other disease group and therefore consume a disproportionate share of scarce health resources. He stated that the staggering burden of the cost of treatment and rehabilitation is estimated to be approximately $300 billion annually for the United States and Canada. In the area of Alzheimer's and other forms of dementia alone Cana-

dians spend approximately $3.3 billion a year providing care for afflicted individuals.

This debate should not be reduced to dollars and cents. To do so is to cheapen the humanity of all involved in the issue. We are talking about the health and happiness of our children, our parents, our friends, our partners and ourselves. No one can go through their lives untouched by brain related illnesses. We all age eventually and our independence will be linked to our physical and mental health.

I stated at the beginning of the speech that the legislation would help to raise the awareness of Canadians and would help focus attention on the importance of the research in this critical medical field. I am seeking approval today of an acknowledgement of that fact and action that will benefit Canadians today and into the future.

Decade Of The Brain ActPrivate Members' Business

11:10 a.m.


Roger Simmons Liberal Burin—St. George's, NL

Mr. Speaker, I am delighted to second and give my support to Bill C-239. Let me, at the outset, congratulate my good friend and colleague from London West for taking this significant and important initiative. It is not a new initiative. Others have put it to the House before, including the former member for Niagara Falls. Several efforts have been made to have the House do what other legislatures and other jurisdictions have already done. As my friend noted in the debate, this includes the United States which as a result of a proclamation by former President Bush is now observing the decade of the brain with considerable results. However I will come back to that.

First, let me read for the information of the House some portions of a handwritten letter that came to a member of Parliament from northern Ontario. In part it reads as follows:

"On May 21, 1992, our 20-year old daughter died from a malignant brain tumour. Our lives and the life of her only sister will never be the same". Later the parents who wrote this letter said: "Most people can only imagine the pain of standing at your child's side, helplessly watching her die. We believe that, had we known more about the symptoms of brain tumours, our daughter would have had medical attention sooner, would have lived longer and might even be writing this letter herself".

In the most graphic and eloquent terms, more so than I could express, this letter states very clearly why we need to have greater awareness, greater public profile for the brain and brain related diseases.

The parents wrote: "We believe, had we known more about the symptoms of brain tumours, our daughter would have had medical attention sooner, would have lived longer and might even be writing this letter herself".

The impressive aspect of this initiative by my friend from London West is that it has garnered so much support from the scientific community. The letters that have come to me and to other members of Parliament, but particularly to the member for London West, are very gratifying. People who know this issue inside out are saying in the most urgent terms: "Let us do it. Let us declare this the decade of the brain because it will have the effect of focusing awareness on an important issue: issues related to prevention, research, treatment and rehabilitation in this vital area". That is why literally every organization that one could mention is on side.

We wonder at the list, such organizations as the Alzheimer Society of Canada, the Canadian Mental Health Association, the Canadian Brain Tissue Bank, the Canadian Paraplegic Association, Epilepsy Association of Metropolitan Toronto, Epilepsy Canada and Huntington Society of Canada. The list goes on.

Let me read excerpts from another letter from the dean of medicine at the University of Western Ontario. He says in part: "Allow me to speak in favour of the concept of the decade of the brain. It is truly an essential initiative from a number of perspectives in light of the discussions that are currently nationally relative to both research and the health care system". He makes two or three specific points. First, the dean of medicine of the University of Western Ontario talks about the aging population: "Increasingly we need to seek alternatives to institutionalizing older Canadians. With the passage of time AIDS tends to be associated with problems afflicting bone, bladder and the brain. In other words there is an increasing disease burden relating to fractures, incontinence and dementia that will affect our senior citizens and which results in the need for admission to hospital".

Then he talks about the impact it would have on disadvantaged children. In short he makes the case that what is needed is more focus on this important issue.

If I sound as though I am repeating myself on the issue of awareness, it is because the bill is such simple legislation. We are not asking for the expenditure of great gobs of public money. We are simply asking to enact a bill that will focus on this important issue. The effect will be felt in many areas.

Let me again demonstrate my point by reading from another letter, also from the dean of medicine at Western.

"As former vice-president of the North American Brain Tumour Coalition, I can relate to you that the declaration of the decade of the brain legislation in the United States has resulted in increased awareness of brain related disorders. This has occurred at local, state and national levels. The support for charitable organizations and for patients with tumour related

disorders has changed because of this legislation. Many pharmaceutical companies that I deal with use the decade of the brain logo on their letterhead and are fairly supportive. The decade of the brain legislation in the United States has resulted in a number of new initiatives which I have been involved with. As a member of the board of directors of the Brain Tumour Foundation of Canada, I have interacted with several U.S. organizations. I can relay to you that there is a commonality of purpose in goals among our organizations. We are working together to help both Canadian and U.S. patients".

The point of the letter from the dean of medicine is the point of my speech, the point of the intervention made by my colleague from London West in introducing the legislation. The legislation, as simple as it is in its wording, will effectively focus attention on this very important issue. And so we should.

An estimated five million Canadians are affected by disorders of the brain ranging from stroke, degenerative disorders, problems with speech, language and hearing. Today these patients are justifiably hopeful as a new era is unfolding in brain research. We can help smooth that along a bit by giving our support to this very significant piece of legislation.

Decade Of The Brain ActPrivate Members' Business

11:20 a.m.


Pauline Picard Bloc Drummond, QC

Mr. Speaker, it is with great pleasure that I rise in the House today to support Bill C-239, the Decade of the Brain Act, introduced by the hon. member for London West.

The human brain, a mass weighing more than one kilogram and essentially consisting of nerve cells that control our emotions, reactions and activities, is one of the most impressive and mysterious wonders of creation. This seat of human intelligence, which enables us to control our movements, interpret our senses and interact with our environment, continues to intrigue researchers and scientists throughout the world.

In recent years, science has made it possible to clarify certain aspects of the human brain, but too many questions still remain. How does the brain function? By what is it affected? How can we prevent its degeneration? The rise in diseases related to disorders of the brain means that increasing our knowledge in this field is no longer an option but a necessity and also one of the greatest scientific challenges of our time.

Japan was the first country to launch a scientific program in 1987 to maximize the effectiveness of neurological research. Three years later, the Americans proclaimed the nineties as the decade of the brain and decided to set up a wide-ranging research program. The Europeans followed suit in 1992.

The purpose of Bill C-239 is therefore to ask Parliament to follow the example of other western countries and to declare this decade the decade of the brain and, at the same time, support and recognize the importance of research in this field.

The brain is the seat of many neurodegenerative disorders and diseases like Parkinson's disease and Alzheimer's, of mental health problems like schizophrenia, emotional disorders, drug addiction and neurological disorders such as learning disabilities.

Canadians suffer from a wide range of neurological diseases. In 1989, the Canadian Neurological Coalition sponsored a ten-year retrospective survey of the frequency of neurological diseases in Canada. The results of this survey are disturbing: it was found that more than one Canadian out of six is affected by some mental disorder.

Our mental health is a very fragile thing and over a lifetime, a number of emotional problems may affect its delicate balance. We may experience a divorce, the loss of a loved one, the loss of a job, poverty, drug addiction, alcoholism or stress, and one morning we get up and we are in poor mental health. The balance is upset. The very strong are able to overcome such problems but others are not.

More than 50,000 Canadians today are also suffering from multiple sclerosis, the neurological disease most frequently found among young adults in Canada. Researchers have yet to find a way to treat this disease, and there is no explanation for the fact that Canada is one of the countries where the probability of getting this disease is particularly high.

There is also the problem of brain tumours. According to the Brain Tumour Foundation of Canada, brain tumours rank second as the cause of death in children under 14 and third as the cause of death in men between the ages of 15 and 34. The number of deaths caused by brain tumours increased 100 per cent between 1968 and 1987.

And what about Altzheimer's, a neurodegenerative disease that causes the irreversible destruction of brain cells and is one of the main causes of death among the elderly, although we now know it can strike at any age. Today, more than 250,000 Canadians are affected by Altzheimer's and related dementias, and it is estimated that 30 years from now, their number will reach 750,000 30 years from now.

In addition to the social impact, neurodegenerative diseases also have economic repercussions that cannot be ignored. We already invest substantial amounts of money in patient treatment and accommodation. As the number of individuals affected by this disease increases, long-term treatment will put an additional burden on health costs.

According to a study on health and aging in Canada, Canadians spend approximately $3.3 billion annually for the treatment of at least 150,000 people with Alzheimer disease in long-term health care facilities. This figure does not include the costs to families caring for afflicted relatives at home.

It is clear that diseases of the brain, including mental illness, degenerative diseases such as Alzheimer's and stroke are very costly. By making the public aware of disorders and disabilities of the brain, we will be encouraging increased support for research in this field, and thus stretching our health care dollars.

The decade of the brain has already begun. As I have already mentioned, Europe and the United States have proclaimed the 1990s the decade of the brain, and a number of research centres in Quebec and in Canada are already on board.

The Montreal Neurological Institute will be playing a major role in the upsurge in research resulting from the proclamation of the decade of the brain in the United States, decreed by President Bush in 1990. The Neurological Institute, an affiliate of McGill University, with about sixty professors, neurologists, computer scientists, students and other researchers, is participating in one of the most ambitious projects to come out of the decade of the brain: the creation of a computerized atlas of the most complex organ in the human body, the brain.

This project to map the brain is part of an extensive program being carried out by a large consortium of research centres, co-ordinated by the National Institute of Mental Health in the United States and funded by eleven American agencies. The Montreal Neurological Institute, which is a member of this consortium, is the only non-American institution to take part in this important project, an indication of its reputation.

The Montreal Neurological Institute and its McConnell Centre have become leaders, possibly world leaders, in the field of brain mapping. Although we must recognize their excellent research and their contribution to medical research in Quebec and Canada, we must regret that this work is largely supervised and financed by foreign interests.

In medical and pharmaceutical research, Quebec and Canada have the ability to excel and be leaders and, for that, we must continue to promote research and development. Proclaiming the 1990s the Decade of the Brain would be major support, since it would make Canadians and governments aware of investment in prevention, research, treatment and rehabilitation for those who suffer from various diseases of the brain.

Today, millions of Quebecers and Canadians and their families have the right to hope that science will elucidate the mysteries of the human brain. Following recent discoveries in genetics, with research and exhaustive studies compiled over many decades and extremely sophisticated medical equipment, scientists are about to penetrate one of the most closely guarded secrets of our civilization.

The impact of such a discovery is incalculable. Not only would it help to finally find a cure for the terrible mental illnesses that ravage our society but it would also make it possible to take a new approach and even cure certain disorders, like phobias, addiction and even violent behaviour.

While we support research and wait for further discoveries, we must propose effective prevention programs. We must always keep in mind that as our health care system and its funding are restructured, we must adopt an approach based more on prevention and education.

As health critic of the Official Opposition and as a member of the Bloc Quebecois, I am pleased to support Bill C-239 and to ask this Parliament to proclaim the 1990s the Decade of the Brain.

Decade Of The Brain ActPrivate Members' Business

11:30 a.m.


Ken Epp Reform Elk Island, AB

Mr. Speaker, I am very honoured to enter into today's debate on Bill C-239. I will begin by acknowledging the good work of the hon. member for London West in bringing the matter forward for our interest and debate.

I would also like to go on record as applauding all those many researchers in the private enterprise companies and certain government funded organizations that do research. I would also like to give my accolades to those who work in medicine, particularly in the area of neurological and brain disorders.

I think the bill is somewhat misunderstood because of its name. Not long ago a columnist in one of the Toronto papers indicated total ignorance of the subject. The same thing happened this week in my constituency when I indicated to someone that I would be giving a speech on the decade of the brain today. She laughed and said: "Don't you people have anything worth while to do there? Everybody has a brain". She had totally misunderstood. When I explained to her that we wanted to increase awareness about brain disorders and increase awareness and understanding for people with these various illnesses and diseases, her attitude changed abruptly. She immediately became very supportive.

I could probably use my time best today by bringing some personal experiences into this debate. I have been challenged and privileged to be near some people who have suffered from brain disorder. I would like to say first that it is right in my own family.

In February 1945 my mother was taken to the hospital because though we did not know it then, it was time for our little sister to be born. To everyone's regret there was what was called an accident. Actually it was very clearly an error on the part of the

medical people present. It was ignorance. My sister suffered brain damage at birth because of oxygen deprivation.

My sister is going to be 50 in just a few months now. All her life she has suffered from a disorder called cerebral palsy. She is a bright young woman and understands everything but she is unable to speak. How do we know she is bright? It is because she has developed her own language that my mother mostly understands and the rest of the family understands to some reasonable degree. However she does not speak so that anyone else can understand. She is totally dependent.

How I wish there had been enough information so that hospital workers would know that one does not prevent a baby from being born because the timing is inconvenient, thereby causing this very severe trauma for our family over the years. I will say just as a parenthetical phrase here that I take great umbrage at the suggestion from some that perhaps my sister should be put away because she is not useful to society. She is part of our family and we love her dearly.

I would also like to share another experience of a young lady who used to come to our home when she was in nurse's training. She got married and had a family. One day she and her husband and young family were in a car accident that was not of their cause. Unfortunately their oldest son, at that time a very bright precocious 10-year-old, suffered brain damage. He has become totally dependent. His life was never allowed to be fulfilled as it would have been had that not occurred. Despite the best medical efforts, it seems there was nothing that could be done for him.

The next experience is probably the one closest to our family. My wife and I know a couple who have been our closest friends for years. About 10 years ago my friend who is indeed even younger than I-I guess just about everyone is younger than I-showed the first symptoms of what was diagnosed as premature Parkinson's disease. I do not know how I can express and communicate the impact that has had on his wife, his family, his own life and those of us who know him and who care for him.

My friend went through some research studies. He was involved in some of the experimental work. A number of years ago he underwent a new and very intriguing surgery. They actually took off the cap of his skull. A cavity was made between the two hemispheres of the brain in the part that is called the caudate nucleus which generates the chemical dopamine which is necessary for muscular movement. After a short time they operated on him again and removed part of his adrenal gland. That was put into the cavity in the brain. They thought that perhaps it would stimulate the caudate nucleus again to do its work.

Unfortunately this attempt was not successful and 10 years later now my friend continues in total dependency. I am sure members can hardly understand the impact that has had on us.

We try to see him every week, although with this new job I have it is more difficult. He cannot speak most of the time. He communicates very poorly and it is a very severe intrusion into our relationship because we cannot communicate well.

Those are some examples. I am sure all of us can relate to someone who has had these problems. The question is what we should do about it. The proposal before us is to declare the nineties the decade of the brain, the purpose being to promote research and understanding. Certainly we must do more to promote understanding of these diseases among Canadians and people worldwide. People do not know how to react when in the presence of those with a brain disorder. They need to be educated. They need to be taught.

I think of my friend in the hospital. At times he can move very easily and then within minutes he is totally immobilized. Even the nurses misunderstand and sometimes ridicule him. How unfortunate. There needs to be more understanding.

We definitely need to put our resources into research. I do not think Canadians would approve of the bill if they thought it was only making a case for people to travel around the world on junkets to get together and have a good time. However if it is used for people to work together internationally sharing their research and discoveries and promoting advancement in this cause, and if it is genuinely used in an efficient way I am sure there would be a high degree of support.

We need to promote medical research, but we also need to start looking very seriously at how we are spending money in the whole medical field. It is atrocious that people with brain disorders and brain tumours sometimes have to wait for up to half a year before they can get an MRI diagnosis while we fritter away our money on other things.

We need to focus very sharply the limited funds that are available to us and use them for properly directed research. We need to make sure that some very distinct objectives are met in that research.

We could accomplish a great deal if we were to focus on this issue in the same way the Americans did some several decades ago when they said they would put a man on the moon. They put all their resources into it, all their technology and top scientists. It is definitely a challenge to us to do that and to focus our resources. I am sure that through research and with our scientific abilities and the available technology we can do very much to discover new frontiers in this area.

Decade Of The Brain ActPrivate Members' Business

11:40 a.m.


Rey D. Pagtakhan Liberal Winnipeg North, MB

Mr. Speaker, I rise this morning to voice my strong support for Bill C-239, an act respecting the decade of the brain. I also would like to commend my hon. colleague from London West for her initia-

tive in bringing the issues of mental and neurological health of Canada's citizens to the floor of the House.

I feel the case for the adoption of the bill can best be made by applying a legislative litmus test. The questions for us are: First, can the bill if enacted make a positive difference in the lives of all Canadians? Second, can the bill make a positive contribution to Canada as a whole? In both instances the answer where Bill C-23 is concerned is an unequivocal yes.

Formally declaring the 1990s the decade of the brain can only serve to heighten awareness, as has been said, of neurological and mental health disorders in Canada and throughout the world. Awareness can do much to dispel some of the damaging means surrounding mental and neurological illnesses and their victims.

That awareness can prompt Canadians to monitor their own mental and neurological health more carefully in a preventive way and thereby prevent ill health. Awareness can increase our resolve as a nation to support efforts to develop cures and superior treatments for the variety of elements that afflict the human brain and the human mind.

Some observers of this morning's debate may wonder why we in the House have elected to focus part of our energy and attention on the health of the brain. Certainly it is not as though the afflictions that strike other areas of the human anatomy are any less worthy of our attention. Indeed the Canadian Neurological Coalition has noted: "Far from being a single organ to be centred out, the brain is the focus of an enormous range of frontier medical science as the seed of logic, reason, creativity, intelligence and yes, even compassion and human understanding in the human body. We are understandably taken aback when disease affects the normal, healthy functioning of the brain".

Witness the public reaction when a former U.S. president announced just this past week that he is suffering from Alzheimer's disease. So much of what makes us human is rooted in our brains. Mental and neurological illness has the power to strip us not only of our good health but also of our identity, our sense of human self.

The statistics from the neurological association placed the number of Canadians affected by disorders of brain at some five million, nearly 20 per cent of Canada's population. This number only serves to underscore the importance of acting to call attention to the various ailments that range from strokes, degenerative disorders, neurogenetic diseases, to speech, language and hearing disorders.

There is hope. Medical scientists in Canada and throughout the world are working diligently to find effective treatments for the various disorders. As they do so, they are also unlocking the mysteries that are intrinsic to the body's most complex organ. As our understanding of the brain and the pathogens and chemicals that attack it has broadened to techniques such as magnetic resonance, imaging and computerized action tomography, sophisticated treatments previously unimaginable have become reality today.

As the neurological coalition points out, neuroscience has a direct impact on almost every area of modern medicine, including cardiovascular and immunologic disorders. The coalition has stated: "Studying the brain has enormous potential for contributing to the health of Canadians and decreasing the severe economic and emotional burden exacted on our society by the diseases and disorders that affect the brain". Disorders of the brain ultimately affect the remainder of the human body.

"Declaring the 1990s the decade of the brain", the coalition adds, "would ultimately increase public support of research, thereby reducing the eventual government burden of hospital and service delivery costs".

For the thousands of Canadians who suffer from Alzheimer's disease, Parkinson's disease, Huntington's disease, schizophrenia, multiple sclerosis, epilepsy, dementia, amyotrophic lateral sclerosis and other disorders, this declaration would be proof positive that the government would not turn a blind eye to their needs and, indeed, that the government would continue to give them the attention they deserve.

It is for these individuals as well as for the health and well-being of Canada as a whole that I offer my wholehearted support for Bill C-239, an act respecting the decade of the brain.

Decade Of The Brain ActPrivate Members' Business

11:50 a.m.


Margaret Bridgman Reform Surrey North, BC

Mr. Speaker, it gives me great pleasure to speak on the bill. I commend my colleague for London West. I have listened to the debate today. We have discussed the intricacies of the brain. We have also discussed numerous illnesses of the brain.

The brain is indeed a very complex organ. Attention should be given to the brain. I feel strongly that we are not aware of how important the brain is to us. Everything we look at, everything we do, every philosophy we have has been generated by the functioning of our brain. It is an extremely important organ and we know very little about it.

My colleague from the Bloc commented on the mapping of the brain. It was not long ago that we thought memory had a specific location in our brain. Experiments that have been done on Parkinson's disease have shown that one can have very small

sections of the brain stimulated and suddenly start singing the Coca-Cola song or something.

We now realize that the brain is functioning like the rest of our body based on chemical components. It is the chemical structure of our body that allows messages to pass through the synapses, making us function and do things that we think are very important to our lifestyle and to build the societies we need.

We talk about brain disorders. Someone here previously mentioned that five million Canadians are suffering from brain disorders. It was also mentioned that a considerable amount of the health care dollar is spent on conditions involving the brain, which is true, but this does not seem to be a situation that is going to go away rapidly. We do not cure a condition of the brain in six weeks like we do a fracture of the arm or some other bone.

Disabilities of the brain can vary from very minute kinds of behaviour pattern to extreme disorders. We really do not know why this is happening. It is very essential that we look at this organ and try to understand it so we can better understand our own lives.

For example, in my background of psychiatric nursing I have had the opportunity to witness and work with people who are totally incapable of dressing themselves. They do not know how to put on their pants. They will stick their arm in the pant leg. On the other hand, the particular young man I am thinking of could be given questions like: "What is the total of 2,925 plus-?" One could go on and on with a list of figures. He could have the answer by the time one was finished saying what the figures were. Yet here was a man who was totally incapable of functioning in any other way. All that was required to get his mathematical mind going was the bribe of a cup of coffee. He was very serviceable in the accounting department and that seemed to be his role. Those were the days before computers.

The other thing we tend to think about is the human brain. We have to also consider what has happened over the years in relation to our awareness of animal brains. We are now looking at the possibility of not being the only species that is capable of thinking. There is a tremendous amount of research being done on dolphins. We are gradually becoming aware that other animals do indeed communicate. This is something that has come about because of some people's awareness of the brain, its intricacies, its unknown powers, et cetera.

We do not actually know what we are capable of doing. We hear people talk about having a sixth sense, ESP. Some of us think that we know what that means; some of us do not. Some of us are very capable of carrying that out. Obviously there is a mechanism in our brain that could be developed along this line. Again, we do not know because of lack of research or whatever.

Also with regard to awareness, we seem to be more aware of the mysteries and the wonders of outer space, for example. That can be common coffee table talk in restaurants or wherever. Yet we do not even know the capabilities of our own brain or our own head, our capabilities of what we as a species can do. We wonder about outer space and this kind of thing. We are more aware of that than what actually makes us who we are. Nothing that we have achieved to date would be here were it not for the capabilities of our brain, and yet we still do not understand how it functions.

A few years ago schizophrenia was thought to be, and some aspects of schizophrenia are still thought to be, a behavioural disorder. Through research it has been discovered that there is a physiological situation involved in our bodies that creates some diagnoses of schizophrenia.

Another tremendous condition affecting us today in our present lifestyles is depression. We really do not know why we get into the various states of depression, yet we have all kinds of drugs and all kinds of people taking these drugs for depression. We are rapidly moving into a situation in our society where we are going to have a pill for everything. You can probably change your personality if you just start taking medication.

We realize that the brain is totally dependent on the chemical constitution of its environment. We also realize that it is very very subject to trauma. There have been situations in which trauma has occurred and we do not understand why. It is not only trauma. It can be stroke as well. Certain people are left with aphasias. These conditions can differ as well. Some people can say only half a word. Some people know what they want to say. For example, they know it is an ashtray but they cannot remember the name so they say "something to put your cigarette in". This is debilitating for them in their existence. We do not know how to help them help themselves.

I strongly advocate that the decade of the brain, and I realize that we are about halfway through it, be recognized. I think that our awareness as a species is inadequate. I would also suggest that it not only happen once in a lifetime but that it happen probably once every hundred years, if it is going to take this kind of legislation or this kind of awareness to make us aware that we do not know very much about ourselves and what we are capable of doing.

Decade Of The Brain ActPrivate Members' Business

11:55 a.m.


Sue Barnes Liberal London West, ON

Mr. Speaker, I would seek unanimous consent of the House to make Bill C-239 votable.

Decade Of The Brain ActPrivate Members' Business

11:55 a.m.

The Deputy Speaker

Is there unanimous consent to make this a votable item?

Decade Of The Brain ActPrivate Members' Business

11:55 a.m.

An hon. member


Decade Of The Brain ActPrivate Members' Business

11:55 a.m.


Sue Barnes Liberal London West, ON

Therefore I move:

That the bill be not now read the second time but that the subject matter thereof be referred to the Standing Committee on Health; and that accordingly the bill be withdrawn.

Decade Of The Brain ActPrivate Members' Business

11:55 a.m.

The Deputy Speaker

Colleagues have heard the motion to withdraw the bill and refer the subject matter of the bill to the Standing Committee on Health. Is there unanimous consent for that?

Decade Of The Brain ActPrivate Members' Business

11:55 a.m.

Some hon. members


(Amendment agreed to.)

Decade Of The Brain ActPrivate Members' Business

11:55 a.m.

The Deputy Speaker

Accordingly, the order is discharged, the bill withdrawn and the subject matter thereof referred to the Standing Committee on Health.

(Order discharged and bill withdrawn.)

Standing Committee On IndustryGovernment Orders


Saint-Léonard Québec


Alfonso Gagliano LiberalSecretary of State (Parliamentary Affairs) and Deputy Leader of the Government in the House of Commons


That this House take note of the Second Report of the Standing Committee on Industry ("Taking Care of Small Business"), presented to the House on Tuesday, October 18, 1994.

Mr. Speaker, in the ten years I have been sitting in this House, I have always taken an aggressive and enthusiastic stand for the small and medium-sized business sector. This is one of my priorities because I know how crucial and invaluable the vitality of our small and medium-sized businesses is to our economy.

Our small business sector accounts for nearly 40 per cent of our gross national product. It already provides employment to over four million people across Canada and generates a great many new jobs. Between 1979 and 1989, 85 per cent of new jobs in Canada were created by small businesses. This sector of our economy is the one with the highest growth rate. Because they are closer to the people and more closely tied to the community, small businesses are at the heart of our society. They are part of our daily life. The vitality, creativity and success of Canadian businesses is recognized world-wide. We all benefit from the talent, ingenuity, perseverance and sense of responsibility of our small business leaders.

Of course, much attention is being paid to Quebec Inc., these groups of Quebec businesses that have grown very quickly during the 1970s and 1980s. This is the fabulous success story of small businesses that expanded greatly in a very short time with government assistance, particularly that of the federal government. But Quebec Inc. is more than that. It is also thousands of less flamboyant and lesser known businesses which are nevertheless very successful and, more importantly, provide employment to thousands of people.

I am very proud of the fact that our government has made assistance to small businesses one of its priorities. For years, when we were in opposition, I have done everything to try and make the previous government realize how important our small and medium-sized businesses are to the Canadian economy. I asked in every possible way for governmental red tape to be reduced, single windows to be established and access to capital be made easier. I suggested that our embassies and consulates put more emphasis on the export of Canadian products. I called for the Canadian government to take a more active part in developing new markets in conjunction with businesses.

I must say that the events of the past week have made me very proud and very happy. Night after night I could watch on television as our Prime Minister and hundreds of business leaders from here developed trade ties with the most populous country in the world: China. The approach used by Team Canada has already been widely praised as a model of effective and efficient trade development. This is when we were able to see how a Prime Minister that takes the trouble to do so can, better than anybody else, develop trade opportunities abroad.

The team that represented us in China is an all-star team; it is the best team our country has ever produced. All my colleagues will agree, I am sure, to award the Prime Minister the first star of this historic diplomatic and trade mission. However, its success is not measured in goals as in hockey. It is measured in terms of jobs for our workers and expansion opportunities for our businesses.

This diplomatic and trade achievement did not happen by accident. It rests on this government's fundamental belief in the need to identify in concert with the private sector the strategic niches likely to enable the small businesses of today and tomorrow to achieve their full potential. In this regard, my colleague, the Minister for International Trade, has just published a report outlining how the government intends, with the help of banks, to shore up its support of small exporters.

This report sets out an action plan and proposes concrete solutions to the needs of small businesses to ensure their development and their access to export markets. We still do not fully realize how much momentum exports can give our small businesses and our economy. For example, Quebec is a trading province where not enough entrepreneurs care to face external markets. Quebec exports are worth almost $35 billion a year, but only 22 per cent of Quebec's small manufacturers export their products. And they only export 14 per cent of their production.

Two hundred businesses account for almost 95 per cent of foreign sales. Let us think for a second about the amount of business and the number of jobs that would be created if the majority of Quebec's 160,000 small and medium-sized businesses took full advantage of export opportunities.

The action plan identifies three areas where support of small exporters must be improved: access to information, access to short-term financing and access to intermediate financing. Entrepreneurs will recognize these as areas where the government's strategic involvement can largely benefit small businesses.

Through the measures it proposes to make it easier for small businesses to access information, this action plan is designed to eliminate the real frustrations felt by entrepreneurs who want to obtain crucial information on their export capacity. It creates a real resource guide that will allow small businesses to save precious time in their efforts to break into international markets. It gives them access to a team of experts and a series of dynamic and effective training programs.

We also want to create a climate of co-operation between financial institutions and small businesses. This would meet an essential need of our businesses. In this regard, the government's role is crucial because many entrepreneurs were not well treated by financial institutions during the recession. As it is, Canada does not have enough businesses that can face the new competition, without our small and medium-sized businesses having to overcome financing problems.

This reality is clearly identified in the report of the Standing Committee on Industry entitled "Taking Care of Small Business", which was tabled recently and which we are debating today here in this House.

The report deals with the obstacles which our small businesses must overcome to find the capital required to grow and expand. The committee came to this conclusion: "Financial institutions, especially the banks, in accepting that their own responsibility to society is greater than `merely' being efficient, stable and profitable, must recognize the importance of small and medium-sized businesses to the national economy". This is a very important and serious point.

I congratulate the members of the Standing Committee on Industry for their clear and articulate report. Obviously, this government wants businesses to develop and to create jobs which will benefit all Canadians. For that to happen, we must act on several fronts. We want services provided by the federal government to be concrete, well targeted and, particularly, efficient. This is why the Minister responsible for the Federal Office of Regional Development-Quebec is in the process of redefining the mandate of that agency. The minister wants the federal government to become a strategic ally of small and medium-sized businesses in every region of Quebec. He wants federal services and programs to be better integrated and more accessible for those businesses, everywhere in the province.

From now on, federal programs will be based on four initiatives which relate to supporting the development of small businesses, namely innovation, market development, promotion of entrepreneurship and projects which serve as regional catalysts.

The objective is to allow the Federal Office of Regional Development-Quebec to help small businesses meet new challenges, at a time when markets are increasingly more open. The agency currently has 13 business offices in Quebec. It will put these offices at the disposal of other federal departments, in order to provide an integrated service to small businesses in the various regions. The Federal Office will thus become the real broker regarding information and programs; it will be the single window which entrepreneurs have been asking for so long.

Federal services will therefore be accessible to all small and medium-sized businesses in Quebec and there will no longer be second-class businesses or regions in that province.

This work is not only being conducted in Quebec. Federal agencies in other regions, including the Atlantic, the West and Ontario, are doing the same thing, because the number one priority of the government is to develop small and medium-sized businesses.

Our government formally pledged to cut public spending and we are taking measures to reach that goal. We must often make difficult choices. However, we are firmly convinced that the federal government must remain an efficient partner of small and medium sized businesses, because they are the ones creating the largest number of jobs.

Our approach will be better targeted and will rely more on the provision of strategic services than on financial assistance. This is what entrepreneurs have been asking for a long time. We are going to concentrate on those sectors where the federal government is better equipped to ensure real added value. There will be no waste, nor any duplication.

Real waste would be to ignore the potential of Quebec regions by depriving them of efficient federal services. As well, real duplication would be for another level of government to build from scratch a second international network to open world markets to Quebec regions.

Canada's geographic location is unique: Two main windows, one on the Atlantic, the other on the Pacific, plus a long border with the United States. We are in a unique position to develop our trade with the largest markets in the world. This is how we will ensure our prosperity.

No doubt our small business sector faces many challenges. Our entrepreneurs are concerned about the scope, the complexity and the rigidity of the regulatory processes. Our regulations are complicated and confusing. Compliance takes too much time, effort and money. Regulation by different departments or different governments leads to confusion, overlap and additional paper burden. Small businesses operating outside their own provinces often have to comply with different product and operation standards.

In 1992 a Canadian Federation of Independent Business survey found that 71 per cent of small business owners found regulations and paper burden to be an increasing problem. It is clear that with their limited resources small businesses face a disproportionate burden of compliance requirements. The government knows that and it is taking action to reduce that burden.

The House committee on regulatory reform and federal government review has been studying the situation. Thousands of small business managers have contributed to the work of the committee. More than 1,700 federal regulations are now examined and improved.

The small business working committees will be submitting their report within the next few weeks. The committee on business environment has examined the regulatory best practices of other countries and governments in areas such as sunset legislation, elimination of unnecessary or inappropriate licences, certification costs and the use of phase-in periods, differential standards and thresholds to alleviate the burden.

It is also considering how to reduce the complexity of the federal regulatory process, how to reduce or simplify the numbers of forms, reports and records required by regulations.

We must also improve the delivery of our programs and services. Currently there are over 700 federal and provincial government support measures for small business. Accessing the right program and service is a complex and most often a very unfriendly process. There are extensive overlap and duplication. Sometimes the government may also be competing with private sector suppliers of services for businesses.

The government believes that it is urgent to take action. That is why the Canada business service centres provide small businesses with referrals to sources of assistance. They provide quick, accurate information about relevant programs, services and regulations as well as some diagnostic assistance.

Business service centres minimize telephone runaround, that is where small business operators are sent from one office to another, from one telephone number to another. The business centre is supposed to take care of that problem as well as inadequate or incorrect information and duplication of government services. This will enable clients to make well informed business decisions in an increasingly global economy. Each centre offers a combination of products and services tailored to meet the needs of its distinctive client base. Currently 19 federal business departments or agencies participate in this initiative as well as other levels of government and non-government organizations.

The combination of participants varies from province to province with the designated managing partners who are responsible for the development and management of the Canada business service centres. In British Columbia and Alberta it is Western Economic Diversification. In Saskatchewan, Manitoba and Ontario it is Industry Canada. In Quebec it is the Federal Office of Regional Development and in the Atlantic provinces it is the Atlantic Canada Opportunities Agency. Each managing partner is well suited to deliver the best services to our clients, the small business owners.

We want to go further. We want to spread the business service centre concept to every province as a model of co-operation between the public and the private sectors. We want to work with the private sector, provincial and municipal governments to eliminate duplication and overlap.

Our colleague, the President of the Privy Council, is currently reviewing all federal government programs. A key element of his initiative will be a rationalization of small business programs.

This is more than the words and vague promises we were given by the last government. This is action. This is action to eliminate duplication and overlap. This is action to minimize the paper burden small businesses have to face on a daily basis.

I am glad to see the Minister of Industry here listening. I hope he will be listening to the debate all day so that in the near future he can respond to the report of the House industry committee and give us more good policy for small business.

In conclusion, this is action to help our entrepreneurs to do what they do best. What small business does best is create jobs. It is what every government has to do to help small business create more jobs and when we have more jobs we have a better country.

Standing Committee On IndustryGovernment Orders

12:20 p.m.


Yves Rocheleau Bloc Trois-Rivières, QC

Mr. Speaker, I am delighted to take the floor on behalf of the Official Opposition in this debate on the second report of the Standing Commit-

tee on Industry, since I am also the vice-chairman of this committee.

The committee sat from February to September and then prepared the final text of its report. We heard from 58 witnesses and received 62 submissions. I must stress that proceedings were conducted in a very constructive, cordial and non-partisan atmosphere. The problem of business financing is, obviously, a non-partisan issue and, although we are particularly interested in the political status of Quebec, an issue which will remain important and forever present irrespective of the political status we choose.

In all, the committee came up with 22 recommendations. We totally agree with some; we agree with others with some reservations; but there are three recommendations on which we totally disagree with the view and direction expressed by the committee.

At this stage, I should probably remind you of the reason why the committee considered credit or rather the tightening of credit. Because of the recession, many members, especially in Ontario, received representations protesting the attitude of the business and banking worlds towards small businesses when it came to credit. This generated a consensus among members of the committee to study this question and find out whether or not there was indeed a credit crunch. As we shall see it is not all that clear.

Concerning the 22 recommendations, I would like to draw your attention to the major ones, those that seem to me the most significant, starting with the ones we totally agree with.

The first recommendation we agree with and the most significant is the second one, a recommendation to the business world, and to banks in particular, that they report quarterly on lending to small business. The collection, compilation and publication of the data would give a picture of past economic activity based not only on actual loans, but also on loan applications. The information requested would include the size of the business, the nature of its activities, the gender of the applicant, the number of employees at the time of application, the volume of sales and the location of the company, so we could have, ideally by municipality, a true picture of the situation.

As I mentioned earlier, it proved impossible for the committee to demonstrate, appearances notwithstanding, that credit was tighter. In spite of all the horror stories which were related to the committee and are familiar to any well-informed citizen, especially the way borrowers are treated by bankers, the committee members were unable to demonstrate that credit was indeed getting tighter, due to the lack of proper data. We could have demonstrated that credit was tighter if we could have shown how many applications had been turned down and how many had been accepted. But without the total number of applications and the total number of loans, we are not in a position to prove that credit was indeed tighter. All we can say is that there was a drop in lending and that it may be due to a drop in demand; we have documents from the Bank of Canada to back this up.

It is presently impossible to prove anything, which justifies this seemingly technical but very important recommendation to the effect that, from now on, all business stakeholders, especially the banking world, should report their activities on a quarterly basis.

The second recommendation we totally agree with is recommendation no. 3; it deals with the drafting of a code of conduct which would compel both sides to better manage their activities, especially with regard to interpersonal relationships. On one hand, borrowers would have to disclose a certain amount of information in an objective manner, and on the other, lenders would have, of course, to behave constantly in an ethical manner, avoiding arbitrary decisions and clearly stating all the reasons why the loan is refused, and suggesting alternative sources of financing. Moreover, all lending establishments would create internal complaints-handling mechanisms.

As I said, we do agree with the establishment of a code of conduct; we understand that one is already being drafted by the Canadian Bankers Association.

The third recommendation of the committee with which we agree is recommendation no. 5. It concerns the establishment of an office of bank ombudsman, in case the internal complaints-handling mechanism described earlier fails to address the concerns of disappointed and frustrated clients. The ombudsman would be independent, impartial and could investigate complaints of breach of duty or maladministration by the banking world. Also, following the British model, if the complaint is well-founded, the bank could be required to pay compensation.

These are the three recommendations of the committee with which we readily agree.

We agree with the rationale behind two other recommendations, although we have some reservations. First of all, there is recommendation 14 which promotes the creation of a new category of banks, the so-called schedule III Banks. Let me remind hon. members that Schedule I Banks are the banks we are familiar with, that is the six major Canadian-owned banks, and Schedule II Banks are foreign owned banks, for example, the Banque nationale de Paris and the Hong Kong Bank. Now, we would have Schedule III Banks, institutions set up by Canadian stakeholders, like Canada Trust, mentioned in the report, or by existing groups or very wealthy individuals in Canada who would now be able to create their own banks.

We have reservations, because this recommendation, as worded, does not limit the size of these institutions, of these Schedule III Banks. There is no restriction to avoid extreme concentration of financial powers that would let some groups or very wealthy individuals become even richer.

We also have reservations about the fact that there is no restriction to avoid what can be called incestuous relationships between the parent corporation and the subsidiaries set up by this parent corporation. There is currently no code of conduct for related companies, but what makes it worst is that this kind of relationships can be set up at the expense of the people dealing with these financial institutions.

Moreover, we have no guarantee that the Schedule III Banks, these new banks, will be particularly concerned about small businesses, even though this bill tends to promote competition in the current banking system, by opening the door to new players who would be more sensitive to the needs of small businesses. The current recommendations include no measures to ensure that these new banks deal more specifically with the small and medium-sized businesses.

As I said, we agree with the principle, but with the reservations I just mentioned.

We also agree with recommendations 18 and 19, which we find a good lead that should be explored and which provide for owners of small businesses to invest up to 20 per cent of their own RRSPs in their businesses.

Since small businesses in general lack capital, we consider this to be a good idea even though we should keep in mind that the primary goal of RRSPs is to help Canadians and Quebecers to better prepare for their retirements. We must realize that this will always be some kind of alteration of the terms of reference.

The main objective is retirement planning. Until now, people were allowed to use this fund to buy a first house; they would now be able to invest up to 20 per cent of it in their own businesses. This is not a bad idea, but we must remember that it is an alteration in the terms of reference. So much so that if the businesses go bankrupt, owners will not only lose their businesses but up to 20 per cent of their RRSPs also. The loss could be significant.

Also, nowhere is it stipulated that business people who have invested part of their RRSPs must pay it back over a certain period of time. Thus, the risk is all the more important. In any case, we think that this recommendation is not supported by a sufficient number of studies and that an in-depth study should be carried out before anything is done.

I will now turn to the three recommendations we completely disagree with, as shown in the minority report which is an integral part of the report. These recommendations are about section 22 concerning labour sponsored venture capital corporations, section 8 on the Small Businesses Loans Act and section 10 on the Federal Business Development Bank and more specifically on changing the name of the FBDB.

In case the minister has to leave to attend to his numerous obligations, I will speak first on the changing of the name of the FBDB. Personally, I find this proposal rather ludicrous. The name of the Federal Business Development Bank is known in Quebec as well as in English Canada. I think I forgot to mention that one of the proposals is to change the name of the Federal Business Development Bank to Small Business Bank of Canada. This is nothing more than a business decision. It limits considerably the bank's mandate because it is not only the small business sector that has legitimate needs which have to be addressed.

Of course, as a nationalist and a sovereignist from Quebec, I cannot help but think that the minister and his parliamentary secretary want to use the name Small Business Bank of Canada as part of their referendum campaign strategy. It is very obvious, Mr. Speaker. Every Quebecer will know it. I would almost like to see the name changed just before the referendum campaign because it would give us one more example to show the people the kind of things that the federal government is doing, to show them what is going on in the Langevin Block.

It is similar to what the government just did with the new tourism policy, increasing the budget by $35 million to sing the praises of Canada and Canadian federalism from coast to coast. It is easy, especially when it is done with the taxpayers' money.

There is something indecent about changing the name of the Federal Business Development Bank in this period of fiscal restraint, right after the announcement of a new war budget. The government wants to spend a lot of money at the taxpayers' expense to play politics so that Quebecers will soon be able to see, as my colleague the parliamentary secretary was telling me, nice signs announcing the Small Business Bank of Canada in all of the province's regional capitals. This must mean that the government is short of arguments, which is comforting to us.

Labour sponsored venture capital corporations were our first point of dissent. It is a very subtle way for the federal government to interfere in an area under provincial jurisdiction. I will read to you proposal no. 22. "Labour sponsored venture capital corporations. The committee recommends the adoption of a new self-regulating mechanism for labour-sponsored venture capital corporations. This mechanism would link the annual supply of federal tax credits to the labour-sponsored venture capital corporation's prior investment in small and medium-sized Canadian businesses, and be subject to a strict annual audit."

And here is where the shoe pinches: "Where such a self-regulating mechanism exists under provincial legislation, the federal government would limit its review to ensuring that the labour-sponsored venture capital corporation's performance meets the objectives for which the federal tax credits were provided".

This is a very subtle, technical way of interfering in an area of provincial jurisdiction, especially, in the case of Quebec, in an area which is very well managed by the Quebec government. That government, together with the Solidarity Fund, represents a third of all labour-sponsored venture funds in Canada.

The Solidarity Fund was set up under a legislation which also defines its objectives. The application of that legislation is well managed, and we do not accept that the federal government could be coming in through the back door, by defining objectives for the Solidarity Fund because of the tax credits it gives to Solidarity shareholders. If, in the final analysis, and hypothetically, these objectives were not met by the Solidarity Fund, the federal government could come in and change the rules of the game, interfering with the Fund's mandate and its portfolio management, because of the tax credits given to Solidarity Fund shareholders. That scheme should be exposed. It is also an attack on shareholders of the fund.

If the federal government wants to do away with this tax shelter, let it be upfront and say so publicly. Let it be open about this, and wage the political fight that will ensue. It should be warned, though, that we will join the fray, all the more so because the Parti Quebecois government has kept its word and eliminated the ceiling forced upon the QFL Solidarity Fund by the former Liberal government in Quebec.

When this government tries to restrict such a positive initiative, an initiative that is costly for the government but maybe not that much, when it dares to create difficulties for an institution such as the Fonds de solidarité, which is more than a mere investment mechanism but is also a means to foster regional economic development-together with other actors in Quebec such as Mouvement Desjardins, the National Bank, the Quebec Deposit and Development Fund, and local actors, the Fonds de solidarité managed to create regional units in order to fulfil specific regional needs-when this government dares to interfere with instead of improving such an initiative, we have to expose that action, which we will oppose as forcefully as we can.

It would be ill-advised for me to do otherwise, since my riding benefitted immensely from the Solidarity Fund. When you think that CIP Forest Products, a well established pulp and paper company, almost a multinational company, which closed its doors for all kinds of reasons is now reopening with the help of the Solidarity Fund which invested $28 million in Trois-Rivières so that the plant can resume its activities and put 350 people back to work, you have to admit we will never be grateful enough for the Solidarity Fund.

The other important point on which we disagree entirely, as in the first two cases, has to do with recommendation No. 8 on the Small Businesses Loans Act. That act is very popular and increasingly put to use. I think it is a sound measure implemented by the federal government which supports the development of small businesses.

However, some committee members were of the opinion that the administration of this act is too expensive for the public purse. I think that is wrong. We will not successfully fight the deficit by reducing investments. On the contrary, we should think of investing much more in order to promote the establishment and development of small businesses. That is how we can promote economic growth.

Section 7 proposes the creation of a new program that would help export businesses since we know that banks shrink from lending on the basis of accounts receivable from foreign customers. If memory serves me well, banks will guarantee approximately 75 per cent of domestic accounts receivable but in the case of foreign accounts receivable, bankers are very hesitant, perhaps with good reason. That new program would give some form of assurance to the banks.

We feel that this program should not exist by itself but be included in an broader version of the Small Businesses Loans Act. In that way, exporters would benefit from the act, but so would the new economy types of businesses, those based on technology, research and development, patents, those who have no tangible assets as collateral to lenders. The act, therefore, should have a broader scope and cover the working capital of these small businesses. Then, given the guarantee offered by the Small Businesses Loans Act, banks would lend greater amounts to these businesses. That would show some vision, some innovative spirit in dealing with those who represent Canada's economic future, the young entrepreneurs of our new economy. We think that is the key to fighting the deficit on the home front.

As I said before, according to one school of thought, this legislation is too expensive for the public Treasury. We think that before any attempt is made to downsize the cost of this legislation, there should first be a cost-benefit analysis to evaluate the number of jobs created as a result of this legislation: the amount of taxes paid directly and indirectly and the money saved on unemployment insurance benefits and welfare payments. To say that this legislation costs the public Treasury millions of dollars shows a lack of vision and innovative spirit and a failure to see the medium- and long-term benefits. That was the third recommendation with which we entirely disagreed.

Before I finish, I would like to touch on two aspects that were not included in the committee's recommendations or in representations by the Liberal caucus, although the red book, their major source of inspiration, mentioned two measures that could very well have been included among the committee's recommendations.

The first measure was the elimination, as planned in the red book, of personal guarantees under the Small Business Loans Act. The Liberals had promised to get rid of this provision under the Small Business Loans Act; so that personal guarantees could be used to obtain loans from other sources. The Liberals conveniently forgot a promise that would have been a great help to small entrepreneurs.

A second and more substantial measure was a commitment by the Liberal Party of Canada to establish an industrial investment fund to the tune of $100 million, four times $25 million, Mr. Speaker! It was made quite clear during the election campaign that the money would be there, and the mood was very optimistic. Strangely enough, very little was said about this in committee: no recommendation on the allocation or use of such financing, of this amount of $100 million.

We can only hope that, if the matter is ever raised again, the $100 million or $50 million-which is more likely-will not be spent on a new program within a new framework but within an existing framework and especially one that already exists in Quebec.

On a more personal point, something was left out, something I myself recommended which was considered for awhile but, unfortunately it was dropped from the recommendations. It is common practice among banks, and I know this from personal experience, that when a business is in trouble or proves to be a bad risk, the lender has the right to have an outside firm go and check the financial status of the business. It does this at the request and for the purposes of the bank, which bills the individual, who is already in trouble, for the expenses incurred.

This means that the borrower is hit with a so-called double whammy: he is already in financial difficulty, and then he gets the bad news when this outside firm comes, not to further his interests but those of the lender, and in the final instance charges a fee that is often quite substantial and may mean the difference between survival or going under altogether.

I had suggested that responsibilities be at least shared if they could not be completely assumed by the lending institution. This was under consideration for a while, but it does not appear as a recommendation in the final report. Personally I deplore it.

In concluding, I would say that we must always keep in mind that when we talk about small and medium sized businesses, in Canada, we are talking about 900,000 small organizations, a good third of which are located in Quebec; this is more than just a number, it is something we should never lose track of. Small and medium-sized businesses are our hope for the future. If they flourish, the economy in Canada and in Quebec will benefit. If they vegetate, so will our economy. I hope that the report will help improve the situation as a whole.

I would like to point out that regional economic development is a provincial jurisdiction to which Quebec is deeply committed. The Canadian government should always keep in mind that, when it deals with regional development, it must be in a supportive role, not as the driving force.

Standing Committee On IndustryGovernment Orders

12:50 p.m.


Werner Schmidt Reform Okanagan Centre, BC

Mr. Speaker, it is a pleasure for me to participate in the debate this afternoon.

It has been a privilege to work on this committee. It was my first experience as a member to work on a standing committee of the House of Commons. It was an exciting experience and a particularly intense learning experience as we were exposed to procedural matters. The substance of the committee was very significant and required a lot of learning. It was a good experience in terms of co-operation among members as well. It showed beyond doubt that things can be made to happen if people want them to take place.

This afternoon I want to focus on three things. First, why is it necessary to take care of small business? Second, what are some of the major elements affecting small business in the economic and changing social environment that we are going to face? Third, how will some of the recommendations in the report help small business survive today and be prepared to meet the challenges of tomorrow? It is within that context we can well look at the report as setting some pretty good foundational types of statements for the future.

Why is it necessary to take care of small business? Small business creates jobs. Eighty per cent to eight-five per cent of the new jobs created in Canada were created by small business. It is also the engine of economic recovery. I can give some examples from Kelowna. It has been described by many as the best place to live in Canada.

What is the economy of Kelowna? It is small business. I can give some specific examples. Western Star Trucks recently won the Canada export award. In terms of the context of General Motors and Chrysler it is a very small operation. Kelowna Flightcraft recently got the contract for Purolator and is distributing parcels and mail all over the world. Riverside Forest Products supplies plywood and lumber products internationally and nationally. Then there are literally hundreds of small, often mom and pop shop operations that make up the basis of the economy of Kelowna. Some of them are on the cutting edge of new technology.

Take for example Brenda Mines which had to close its mine just up from Peachland and is now using technology that was developed in that mining operation and travelling all around the world, centred in Kelowna. These specialists are going into South American and other countries helping these people to develop their mining operations.

Northern Airborne Technology supplies much of the internal electronics found in helicopters today. The very same small businesses are providing a very interesting transition between the old economy and the new economy. We have a truck that runs on today's highways and yet is using computer technology in terms of the way the trucks communicate with one another and a whole system of record keeping is right on the truck as it moves across the continent.

Let us now look briefly at the environment within which these small businesses today and tomorrow will operate. Our society is in transition. The farmer has become an agribusiness person with specialized knowledge and skill in the agricultural business. Blue collar industrial workers are becoming auxiliary employees in many instances and yet they leave a very significant legacy that affects all of us. With them came unions, with them came middle income salaries without the need for extensive post-secondary education, and with them came strong political power.

Today a new workforce is emerging. That new workforce is the knowledge worker. This workforce will be highly educated and manually skilled. The transition from the predominantly blue collar workforce to the new knowledge worker will require a change of attitude, beliefs and values on the part of every member of society. Education will become the centre of that society. World economic competitiveness will rely on our ability to acquire and apply knowledge. Productivity of the knowledge worker will become the economic challenge of society and productivity of the non-knowledge worker will become the social challenge of the knowledge workforce.

To many of us these are new ideas with significant consequences. Small business will play a significant role in the new economy because small business represents the creativity and ideas of the entrepreneur.

Let us take the establishment and growth of Microsoft as an example. In the beginning it was an idea. Today it is a multimillion dollar corporation that remains on the leading edge of technology. It is particularly significant that Bill Gates, the man who pursued the idea of the Microsoft company, is rumoured to have recently purchased the ideas of Leonardo da Vinci. That is very interesting: greatness then, greatness now; two men, two big ideas, each in their own way changed the world they lived in, the world we live in and the world that is going to be facing our children and grandchildren.

Once farmers ploughed with horses, and today farmers drive tractors with electronic sensors to monitor temperature bearings, they talk to their home base via electronic telephone from pressurized cabs, listening to quadraphonic music played on CDs. Internal combustion engines have computerized fuel injection systems. Making things is often now the function of robots that do not get tired and seldom vary in terms of quality; all ideas, all knowledge, all had their roots in small business.

Ideas are the key. Some of the characteristics of the new economy will require new ideas if our economy, our society and our small businesses are to benefit. We must recognize that the new economy is knowledge based and that means that production will be the application of knowledge and that requires not one time learning but continuous learning. It relies on highly specialized people.

That new economy is also global in scope. Knowledge knows no boundaries. It is portable and can be applied almost anywhere that people live. It is independent of race, age, sex, culture and religion.

The new economy also affects and impacts the old economy. Whether we live in the new economy or the old economy we will still need food, clothing and shelter. This new economy also requires its own infrastructure, for example satellites, fibre optic cable communication systems and so on.

It will significantly affect our workforce. Training and education will become central. Increasingly we will rely on a voucher system of financing education by individuals. Private and public institutions will be proliferating. Industry will take a far larger role in the training and education of its people and continuous learning will be the hallmark. That learning will often be modular in terms of programming and in terms of times when it is delivered or partaken of. Productivity and quality will both be measured in terms of the availability and efficiency of the application of knowledge.

Another point that needs to be put in here is that the ownership of the means of production will shift and will be redefined. It will gradually move into the hands of the workers.

For many of us we know that this has already happened and is happening right now. Pensions, for example, own increasingly large proportions of the equity of businesses and through deferred income very many workers are now owning significant sections of the means of production.

There has also been a shift in sectoral development. Sectors that were once the driving force of our economy are no longer as important as they once were. Auto, steel, petroleum and housing industries are still important. We still need them but they have

been replaced as significant sectors by semiconductors and computers.

Health and medicare, communications and telecommunications and instrumentations are the new sectors that drive the economy. They are the new engines of today's economy. Today Canada's electronic industry is larger than its pulp and paper industry.

The computer service industry in Canada employs more people than the auto industry. More people in British Columbia work in communications and in telecommunications than in the entire forest industry. More people in Ontario are employed in business services than in the construction industry.

More Quebecois work in health and medical care than in construction, textiles, clothing, furniture, auto, forest and mining industries combined. We are in the midst of significant industrial changes and whether by sheer will or by circumstance, we are making the transition from the old economy to the new and small business is the key.

Why is it necessary to take care of small business? Knowledge workers are the ones who will establish small businesses. Small businesses will provide the flexibility for knowledge workers to develop their ideas.

Adaptation to the new economy will require change. Small businesses are much more likely to change than are large ones. Why? There are fewer people involved. There are not as many interrelated parts. Co-ordination and planning are much easier. Learning can take part at one's own speed rather than having to wait for someone else to catch up.

Change can be much faster. The concept stage to the idea stage to the planning stage to the implementation stage can happen with one person. There is no board of directors to persuade. There is no senior manager to convince. There is no petty company politics and there are no petty jealousies. Change is easier and faster.

The rate of change will become a major factor in order to maintain our competitive advantage if that is the situation in the future and it will be. The small business person also owns the knowledge. Take for instance a software company and the means of production, the computer.

The farmer knows how to farm. He owns the land and the machines. The small businessman needs money to get established in the first place and then to do the operation that is necessary in terms of hiring the right people and in building the buildings that are necessary in a manufacturing operation. They need money for expansion.

There are some serious difficulties with access to capital. One of these is excessive taxation both in terms of payroll taxes and in particular capital gains taxes. Financial institutions, especially banks, stand in the way because they are so large and slow to change.

Remember, one of the big things we are going to have to do is change quickly and to do so successfully. They are often untrained in personnel and not knowledgeable about the knowledge based industries. There are some notable exceptions but by and large they understand only hard assets. They do not know how to value what is between the specialist's ears.

Concentration of financial powers in the banking community in particular is also a resister, a very serious one. In Canada we have eliminated the four financial pillars. We used to have banks, trust companies, insurance companies, brokerage or investment dealers, four distinct financial pillars. Banks now function in all four areas. It has reduced competition among these sectors. It has reduced the efficiency because the size problem makes change difficult and slow.

Of even more significance is that because of their concentration these institutions now determine policy, a policy that is first of all in their best interest and not necessarily in the interest of the general public. Governments are unduly influenced by that. It is a very serious consideration that has to be examined.

The report does not deal with this thing but it is one thing that is very significant and the omission should be recognized. It is really significant that we look at some of the key recommendations now and how they will tie in and help small businesses and clear the way for them to do the things that have to be done.

I would like to pay particular attention here to the community based venture capital companies that exist in some areas. There are a number of people who had advocated these. Larry Zepf is the chairman of Canada's technology triangle alliance, Kitchener-Waterloo, Guelph and Cambridge. This is a pilot project that looks like it is going to do a lot of good things in getting venture capital going. Mr. Doyle cited Austin, Texas, as a good example of how local venture capital companies can work.

In that city which is about the same size as Ottawa technology jobs since 1981 increased from 10,000 to 30,000, a 300 per cent increase since 1981. During that same period in Ottawa the number of technology workers increased from 22,000 to 25,000, a 13.6 per cent increase. That is all. Who is running the show here? Who is at the leading edge?

There are some interesting things happening in Quebec. Let me quote the senior executive vice-president of the national bank: "With regard to start-up capital the route we prefer is to channel our resources through the many regional or sectorial

risk capital corporations that exist in Quebec". We would do well to listen to these community establishments.

Gordon Sharwood, referring to a study by the Canadian Chamber of Commerce, states community investment banks to assist local entrepreneurs to assess risk and capital and apply that capital are the things that we should be advocating in the future.

Another recommendation that comes out of the report has to do with the reporting of statistics to make sure that we get a reflection of how well the banks are serving the needs of the small business person. The new statistics should be reported quarterly and indicate the size, type of loan, the nature of the borrower, including gender and employment, the number of people in the business, their sales volume, major sector of operation and so on. One or more of these banks should report quarterly to the industry committee.

Another key recommendation is code of conduct. I do not know whether we have ever had of such a thing as a code of conduct for the banks. They tell us that they have one. When it comes to calling them to account, we wonder where that code of conduct went. The recommendation says clearly that a code of conduct shall be developed and that there should be an independent, self-financing position of ombudsman to make sure that the banks do live up to the code of conduct that has been set.

In order for Canadians, business workers, citizens, all of us, to receive the maximum benefit from the present economy and to be prepared for the new economy we will require a new attitude for government. First, the government should get out of the way of entrepreneurs; second, set clear guidelines that establish level playing fields for every one; and, third, prevent the concentration of power by preventing the establishment of huge combines and abuses of trust.

Another is the development of a new culture and attitude on the part of each Canadian saying that government does government and business does business. Neither one should try to do what the other one should be doing.

Specifically I would suggest that the role of government is to establish and maintain a culture that rewards entrepreneurship, innovation and research, and ensures a level, competitive and honest marketplace. To do so it should emphasize achieving first an attitude of spending by government that does not exceed revenues and results in a balanced budget over a three-year period beginning now; second, less interference in the marketplace by getting out of business; third, by repositioning and renewing government resources to maximize efficiency at reduced costs; and, fourth, a commitment to no further tax increases for Canadians.

We also need a new relationship among businesses, business networking where businesses learn to work together in new ways to help one another while maintaining a competitive edge and a co-operation among businesses to help assess risk in terms of getting new capital and negotiating interest rates with banks and other financial institutions. This report is called taking care of small business. The truth is small business is creativity. Small business is ideas and if government gets out of the way small business will take care of itself and us. I urge the minister to act immediately to implement the recommendations in the report.

Standing Committee On IndustryGovernment Orders

1:10 p.m.

Broadview—Greenwood Ontario


Dennis Mills LiberalParliamentary Secretary to Minister of Industry

Mr. Speaker, I have a short question for the member for Okanagan Centre.

Sitting on that committee with him over the last nine months was a real privilege. The member provided great insight and was passionate in his concern for small and medium sized business. He in large measure was one of the reasons why we virtually presented a unanimous report to the House. It is something the people of Canada really wanted, the first ever challenge to the banks of Canada coming forward in a unified way.

My question to the member is one of clarification. Members of the Reform Party say they do not want the government to interfere in business or to get involved in business. Many of the recommendations in the report would mean that we would have to reopen the Bank Act and would in effect mean that we as legislators were giving new direction to the financial institutions. Surely the member is not advocating that we walk away from giving that kind of advice to banks.

Standing Committee On IndustryGovernment Orders

1:10 p.m.


Werner Schmidt Reform Okanagan Centre, BC

Mr. Speaker, I really appreciate the kind comments from the parliamentary secretary. I guess this becomes a mutual admiration society at certain stages because it was pleasant working together.

With regard to the involvement of government in business, the key point is that government should not do business but should provide the kind of leadership and parameters within which businesses can operate and where they can be in competition with other businesses so that the marketplace can operate and costs can be reduced and that all of us will benefit.

It seems to me that money left in the hands of the entrepreneur, the individual Canadian citizen, will be far more effectively spent than $1 put in the hands of a politician. It is in that sense that we make the point.

Business people are far more effective in making business decisions than government is about making business decisions. Government should provide the legislation, a level playing field that allows the business person to operate. That becomes the key

and I am sure the hon. parliamentary secretary recognizes that is an appropriate role for government and business. They should not be mixed up like this. They should be separate.

Standing Committee On IndustryGovernment Orders

1:15 p.m.


Alex Shepherd Liberal Durham, ON

Mr. Speaker, I also was very happy to have worked on this committee with my hon. colleague. Could he clarify for me one comment in his very good and very well presented speech? He talked about his concerns with concentration in our economy. Since we focused a lot of our time on the banking sector I am assuming that is one of the specific areas of our economy to which he is referring.

As we know, a high concentration of chartered banks basically control the banking sector. Has he some specific proposals regarding how to break the banks down into smaller units? What are his ideas?

Standing Committee On IndustryGovernment Orders

1:15 p.m.


Werner Schmidt Reform Okanagan Centre, BC

Mr. Speaker, the question is an extremely cogent one and one that will require more study than I am prepared to give it in the next two or three minutes. The fact remains that the elimination of the four pillars that I mentioned in my speech where we had a separate and distinct function for trust companies, for insurance companies, for investment dealers and for banks was a useful distinction.

Now that the banks are doing all of these things we have this concentration of power. Somehow there has to be either more competition outside the banking field so this can happen, or the whole idea of concentration within the banks needs to be re-examined. I would suggest the Bank Act has to be reopened, as would certain other legislation. It would be a very useful exercise for the House to get involved in that type of activity.

Standing Committee On IndustryGovernment Orders

1:15 p.m.

Broadview—Greenwood Ontario


Dennis Mills LiberalParliamentary Secretary to Minister of Industry

Mr. Speaker, I am very excited about participating in the debate. It is something I felt very strongly about in opposition, as did the whole party.

As most Canadians will remember, the Prime Minister made a commitment even before the red book was published. During the last election campaign he made a commitment in the press gallery across the street that his would be a government that for the first time ever would challenge the financial institutions in the country to become much more sensitive to the small businessmen and women who are employing right now close to 80 per cent of the nation's workforce.

I put a little emphasis on women because it is not just the language that is changing. The facts are also changing by the contribution that women are making in terms of owner operated small businesses today, not just in our economy but throughout North America.

I was reading not too long ago in Fortune magazine that women owned or operated businesses in the United States employed more Americans than all the Fortune 500 companies combined. That thrust of women participating in the entrepreneurial sector, the small business sector of our economy, is no less a dominant factor in Canada. It is very important that all of us recognize that, especially the banks of Canada.

After we were elected the first order of business with the industry committee is living up to that commitment. I must compliment the members of the opposition, the member for Trois-Rivières, and the earlier mentioned member for Okanagan Centre from the Reform Party. Without the unified spirit and desire to really make this committee work, I do not believe we would have the report we have before us today.

Mr. Speaker, you have been around here for a long time. I have not been around as long as you have, but I do know for a fact it is very rare that a committee report has such a unanimous spirit about it.

A second very rare thing is that there are no copies of the report left. We had to order a reprint. It shows the keen interest that all members of Parliament have in looking out for the small businessmen and women in every constituency across the country. We have all said repeatedly that the small business community represents the greatest hope for putting Canadians back to work.

Last week was our recess week and I had the privilege of having lunch with a former parliamentarian, a former minister of the crown, Paul Hellyer. He has just finished publishing a book entitled Funny Money , a common sense alternative to mainline economics. As I read the book on the weekend I noticed there is just one page of his description of the attitude of banks toward small business. For the benefit of the House I would like to read a short excerpt from the book Funny Money by Paul Hellyer.

Nothing irritates me quite as fast as a bank spokesperson saying, in response to the suggestion that they make more money available to small business, "We have to act as guardians of our depositors' money." Such fatuous double-speak! What they are really saying is that we, and we alone, will decide for whom we will create loans and we prefer governments, brokers and big business because that way we can make more money for less work. If they were only concerned about the safety of existing deposits they would have been less cavalier in making loans to Third World governments, large real estate developers and the leveraged-buyout monopoly players. It was the banks' greed, rather than their prudence as guardians of their depositors' money, which ruled the day.

If the whole idea of creating new money is to facilitate the creation of new wealth in the form of increased output, then the entire addition to the money stock should be directed to that purpose. In effect new loans should be made for either investment or consumption because they are the two sides of the same coin! I cannot remember a market for anything that some enterprising entrepreneur didn't try to capitalize on. But if, as in the Great Depression and in one or two recent recessions, existing capacity

exceeds demand, entrepreneurs are unlikely to line up for loans to create additional redundant capacity. So consumption, which creates income and savings for others, and investment are Siamese twins which cannot be separated.

It is the small businesses, which create the most jobs and increased output, that have the most difficulty getting bank financing. In the Spring of 1994, Helen Sinclair, president of the Canadian Bankers Association, cited one of the best known excuses. She admitted that banks have a problem in their relationship with small business but defended their caution by pointing out that federal government statistics show 50 percent of all small businesses don't make it past their fifth birthday. That may be so but an equally interesting and important statistic would be the percentage which failed because their bank took away the safety net just as they jumped off the highwire. As I mentioned earlier, I have never known an entrepreneur, myself included, whose bank didn't try to put them out of business at one stage or another of their development. It would be in the country's interest if a certain proportion of new loans had to be made to small business with limited or no collateral where the investors, as a condition, were willing to risk their own savings. Character assessment might be part of the consideration. It is one which appears to have been pretty well disregarded in recent decades.

Having considered that, the bank should be prepared to lose and write off some proportion of the small loans each year. It should satisfy their irresistible urge to gamble if they were to gamble on people who want to build real products and provide real services for a change.

I recommend the book that Mr. Hellyer put together. It is extremely appropriate when we are debating the recommendations of this report.

The report in question is a very significant signal from the government, and supported by the opposition parties. Less than a month after it was tabled, we are having an all day debate on it. We realize it is a non-votable motion but it is very important because it is the Prime Minister, the cabinet, the government sending a signal that they are truly committed to the work that all members are doing in trying to get the small business community going.

Therefore Canadians have to ask ourselves what is in the report that is going to change the attitude that banks will have toward small business. I would like to begin by sharing with the House and Canadians that starting with recommendation number one in the report the attitude of banks will change.

The first recommendation is that the committee proposes to continue monitoring small businesses' access to capital by calling one or more banks as witnesses every quarter to review their performance in lending to small business.

I can tell the House that never ever in our history have we had a committee complete a report and then institute a recommendation whereby a sitting standing committee of the House agrees that at every quarter it will continue to do the very work that it was doing in the first six months.

What does it mean? It means that probably in February, because the report was tabled last month, the committee members will sit around and say: "Okay, what three or four banks do you think we should invite first to come before the standing committee to talk about the new products, the new services and the performance that they have given to small and medium size business?"

We are certainly not going to let them know in advance because obviously that would not be fair. What we will do is put them all on notice. There are many financial institutions in this country of course. Some might want to come right away. We cannot do that so we will randomly pull three or four and they will come before the committee and report. By reporting to us they are in fact reporting to all the people in Canada. At that time hopefully they will be proud of the accomplishment they have pulled off just since the report has been tabled.

However, it does not stop there. The second recommendation in the report has to do with the reporting structure. Most Canadians do not realize it but the current situation for banks reporting to the Superintendent of Financial Institutions is very haphazard. In other words, one bank will classify a small business loan as anything under $500,000. Another bank will say a small business loan is anything under $1 million. Another one will say it is everything under $500,000 plus whatever mortgages it loans that small business.

The point is there is no standardized reporting structure. It means we do not have a handle on exactly what is going on with the small business portfolios of all the financial institutions in Canada.

I must say that recommendation number two is a very tough recommendation. I am sure that the banks will find it very frustrating to live up to this one. This is what it is. The committee recommends that the Superintendent of Financial Institutions, together with Statistics Canada and the Bank of Canada, develop a new format for the collection, compilation and publication of statistics on bank lending to small business.

These statistics should be based not only on the size and type of loan but also on the nature of the borrower, including gender, according to employment, sales, major sector of operations and-key word here-by municipality. These statistics should be reported quarterly. That seems self-explanatory but one might ask why by municipality is important. Many members of Parliament brought to our attention that they felt their municipalities were not being serviced by the banks.

There might be a remote region of our country where lots of people are putting money on deposit but the bank might not be putting it back into the community. Recommendation number

two will allow members of Parliament to call the superintendent of financial institutions and say that they want to look at the banking activity in the municipalities located in their ridings.

If all of a sudden it is discovered that a bank is doing well with the loans it is putting back into the small business community in the riding, we can let the bank know it is doing a good job. If other banks are only taking out deposits and not putting anything into the municipality, we can also write nice letters asking: "What about our ridings? What about our municipality? The deposits you are taking out of here are pretty large. Why can you not put some back into the small business community?"

I believe recommendation number two is going to have a profound effect. Everyone knows that the thing banks fear most, believe it or not, is not government regulation. The thing they fear most is competition. Banks cannot stand competition. Never mind the schedule III stuff, we will get to that, but just competition among themselves.

If you put the scanner on banks in your municipality and you see that two or three of them are a way up there in their contributions but a couple of them are not doing anything, that does not look good to the depositors and the customers who provide their lifeblood and their viability.

I am really confident that the recommendation which was unanimously accepted will go a long way in stimulating the small business community. There are many other recommendations in this report I would like to deal with.

I would like to deal with the concern the industry critic, the Bloc member from Trois-Rivières, stated in his address. The member talked about his concern of this government's commitment to the Federal Business Development Bank which the committee recommended should be changed to the small business bank of Canada.

None of us supported the condition that exists currently in the FBDB. Most of us believe that the Federal Business Development Bank needs to rethink its policy approach. It has to be much more contemporary. It should look at new instruments to get more financial support, not by going to the public treasury but possibly by looking at the issuance of preference shares which would not have an adverse effect on the treasury of Canada.

However we believe that the small business bank of Canada, if we could rename it that, could act like a supercharger in terms of creating more interest in that field. In other words it would go back to bringing attention to what it was designed for. It was primarily designed to be there when the other financial institutions were not supporting small and medium sized businessmen and women.

We looked at one of the best banking systems in Canada, the Caisse populaire Desjardins. The people from Desjardins came before our committee. They have a fabulous system. We do not have such a system in Ontario but I wish we did. We are run by the paper pushing towers of Bay Street. That is the problem we have in Ontario. We do not have a Desjardins movement. Many of us thought that through redesigning and retrofitting the Federal Business Development Bank we could create a much more aggressive and grassroots approach to banking.

Bloc members should not think this is part of a referendum strategy. It is a genuine approach to making sure that we have more instruments in getting access to capital for small business. I jokingly said to Bloc members that maybe we would set up a couple of hundred branches of the small business bank of Canada in Quebec to accelerate the federal presence in the province of Quebec. I was only kidding when I said that so the member should not think that is part of our design. We merely want to make sure that this bank becomes much more contemporary and much more aggressive in dealing with small businessmen and women.

I will end my remarks by saying that the Prime Minister and the Minister of Industry have led the way for all of us in the House in making sure that small business becomes a front burner sector in terms of policy making. They have also made sure that this issue is put on the front burner in terms of implementing change in legislation quickly.

I hope that the tone of today's debate can continue. The more constructive we are in making the recommended amendments that are needed to the Bank Act, the quicker we can get on with making sure we create that environment the member for Okanagan Centre described which will cause the entrepreneurial spirit to flourish once again in this country.

Standing Committee On IndustryGovernment Orders

1:35 p.m.


Yves Rocheleau Bloc Trois-Rivières, QC

Mr. Speaker, I have a question for the Parliamentary Secretary to the Minister of Industry. Concerning the name change from Federal Business Development Bank to Small Business Bank of Canada, I would say that the principle of helping small business may be worthwhile, but we consider that this would restrict the bank unduly. And quite frankly, we object to the expression "of Canada", which we consider inopportune and a bit too pre-referendum to our taste.

I would like to ask the hon. member whether he believes that the report deals fairly, sufficiently and adequately with the concept of a new economy, considering that, as he will recall, the committee was seeking to limit the application of the act, while the opposition fought that notion and argued that any restriction should be imposed only after a cost-benefit analysis

of the pros and cons? As regards the new economy and the guarantees to be given to the lender which make the lender insecure, should we examine such issues? Does the hon. member believe that the committee has done anything for the advancement of science in that field so that the movers of the new economy will be better served?

Standing Committee On IndustryGovernment Orders

1:35 p.m.


Dennis Mills Liberal Broadview—Greenwood, ON

Mr. Speaker, I realize that the member for Trois Rivières is talking about the Small Businesses Loans Act. We all agree that the Small Businesses Loans Act has done a terrific job. When in opposition many of us proposed amendments. I have to say that the Conservative government of the day, believe it or not, listened to some of our amendments and the Small Businesses Loans Act is working right now.

The problem of course is with the government float of $4 billion put on that Small Businesses Loans Act. Right now it seems the float program has been so successful that the float is tapped. Therefore the member from the Bloc is asking whether or not I would recommend that we expand the float. This decision of course is ultimately the responsibility of the Minister of Finance.

I say to members opposite that I do not share the pessimism on the loan loss on the Small Businesses Loans Act. I think the loan loss will be much lower than the pessimists predict. The pessimists predict it is going to cost the treasury about $100 million. I do not share that pessimism. The economy is coming back. No doubt there will be some loan loss but I think it will be considerably lower. Of course that spin about the loan loss provision is causing people to get nervous about the float. In fairness the committee said that we would look at it in the next 60 to 90 days.

A far more aggressive thing for us to do is to make sure that the banks start picking up some of that slack in the small business area which the Small Businesses Loans Act picked up over the last year and a half. In other words now that the banks realize the Small Businesses Loans Act did its job and they have had time to rethink they can pick up the slack. As the member for Spadina has often mentioned in committee and in the House, and Mr. Hellyer supports his view, we should give some specific targets for loans to small business. If we started pushing the idea that a percentage of the portfolio in the banks should go toward small business then maybe we would not need to augment the float under the Small Businesses Loans Act.

Standing Committee On IndustryGovernment Orders

1:40 p.m.


Ian McClelland Reform Edmonton Southwest, AB

Mr. Speaker, I read with great interest the industry committee's report on small business. In my view there is one very glaring omission and that is the tax base on small business and businesses at large. I wonder if the member for Broadview-Greenwood would care to spend a few minutes talking about what could be done to encourage business through the tax base.

Standing Committee On IndustryGovernment Orders

1:40 p.m.


Dennis Mills Liberal Broadview—Greenwood, ON

Mr. Speaker, that of course is a glaring omission in the report. There should have been some recommendation as to how this government should look at tax reform for small business but that was not our mandate.

I am confident that over the next 60 days this House of Commons will look at comprehensive tax reform in a very serious way. We are all getting signals that defending the status quo is no longer the right option or the right path to take.

The Reform opposition has the view which I happen to share that it is time the country had a single tax system, 20 per cent across the board. Small business would not pay anything on the first $50,000 which would go to reduce paper burden and a lot of other things.

I hope we can have that debate because I think the whole country is ready for it. However that was not the mandate of the committee, but stand by.