Mr. Speaker, it gives me great pleasure to involve myself in the debate on the industry committee report "Taking Care of Small Business". Indeed, I worked many, many hours on that committee. I thank colleagues from all parties for their co-operation.
One of the basics of that report was the examination of some of this country's banking structures. I was pleased to take this a bit further this week by accepting the invitation of the Royal Bank to go through its executive headquarters in Toronto and speak with the executive staff on how they are administering their loan portfolios for small and medium size business. I think we are getting a little better understanding of where the problems lie but there is still much to be done.
A mere six years before the turn of the century is an ideal time to consider whether we should reinvent a new industrial strategy for Canada. The problem with Canada and Canadians is that we are not aware of our own greatness. Biomedical research, software development, telecommunications, and geomatic engineering are only some of the areas in which Canada is a recognized world leader.
The new economy will not be based on brawn but rather brains. Also, small and efficient will be the watchwords as big industrial structures come apart crumbling into decay. The smokestacks will be silenced as Canada moves from infancy to adulthood.
Nuala Beck in the recent book Shifting Gears: Thriving in the New Economy refers to some of these changes. In British Columbia more people are engaged in telecommunications than in forestry. In Nova Scotia there are more people engaged in the workforce in education than in the fishery, forestry and construction industries put together.
Small and medium sized businesses will be the engine of the future economy. This engine will be fueled by knowledge and driven by a new breed of entrepreneurs. They will be the employers and the wealth creators of the 21st century. It is by them that employment will be created and they will deliver new consumer goods.
As a government we must redefine ourselves in light of these new changes. We must get out of the way of this new engine lest we be run over by it. But more important, we must restructure government so that it can assist this emerging economy, so that Canada's small and medium sized businesses can dare to be the very best in the world.
How can this relationship between government and small and medium sized business be strengthened to ensure Canada reaches its full potential in the next century? I am pleased to see that our government has undertaken a number of initiatives in support of small and medium sized businesses. Over 30 per cent of our gross domestic product is accounted for by trade. Currently almost all of this is done by a mere handful of companies. Clearly this is not good enough.
The Department of Foreign Affairs and International Trade has undertaken along with our banks a robust venture to redefine what skills our business people will need to attack foreign markets. It ranges from aggressive training sessions, more intuitive financing devices for export trade through the Export Development Corporation and the Canadian Commercial Corporation to development of a data bank of contracts and highlights of emerging markets.
In addition we will have to restructure our foreign trade missions. I have had some experience with this having been in Beijing in the spring. I can say that some of the people in our trade missions are not cognizant of some of the needs of small business in an international environment. These people must work hand in hand with business to ensure that Canadian companies can make the leap to international traders.
I need only remind my colleagues of the great successes we are hearing from the Team Canada mission now travelling in Southeast Asia. As I mentioned, I had the opportunity of visiting Beijing on a trade mission along with some of my parliamentary colleagues in the spring. Unfortunately some of my Reform colleagues did not bother to come along, but it was a very big success. It was a trade mission of a lot of small and medium size businesses basically from the Ontario area. We went to Beijing and created new alliances.
I am happy to say that due to that process, their mayors and a number of people from Weifang in China, with over 85 million people, have signed an economic alliance agreement with the township of Whitby in my riding. Many of our small and medium size business today are trading with China. Some of our small businesses have opened branches in Beijing. These are the things we have to do.
The change is happening now. More employment has now reached my riding of Durham. I can only say that we must encourage more of this sort of development. I believe the initiatives of the Department of Foreign Affairs and International Trade will do just that.
I have spoken about the area of trade. We must also address some of the needs of small and medium sized businesses as they attempt to establish themselves in the domestic market. Often government practices are a hindrance to them. High commercial and business tax assessments, meddlesome provincial standards and regulations, our own dreaded GST, as well as an inordinately high level of taxation are only some of the overwhelming obstacles faced by our business community.
The deficit hems us in as a government and does not give us the affordability to pursue more aggressive policy. Indeed, by being a heavy borrower governments have crowded out the capital requirements of small business. In a way our best commitment to small and medium size business will be deficit control and reduction.
Current high interest rates and high taxation are choking off business formation. To arrest this problem is a major commitment to small and medium size business.
Having said this, I believe that there are things that government can do better to achieve a greater degree of business confidence. We should seriously consider bringing back a form of income tax moratorium on capital invested in small and medium size business. In other words, encourage capital retention within the business sector by deferring capital gains recognition to that date when the investor wants to enjoy the fruits of his or her labour. This would allow more aggressive capitalization of small and medium size businesses.
I have mentioned how we could change the taxation system. We also need to reform how small and medium size businesses get access to new capital. I note this was the basis of a report. However, I think there are some other things that we could do. Most small businesses will fail in the first few years of operation. Often this is not because their product was faulty or poorly marketed but because of insufficient capital.
The government has done much in this area. The Small Businesses Loans Act, venture programs administered by the Federal Business Development Bank, working ventures, and even section 25 of the Unemployment Insurance Act are all good initiatives to help small and medium size businesses but still there is something missing.
What we need in this country is an aggressive, over the counter equity market, one which provides relatively cheap access to capital markets but also has the regulatory regime
which can earn the respect of the general public. This is the focal point of investing in ourselves. Canadians have all too often avoided investment risk. This has worked against our potential as a nation. This new and improved market would provide a relatively easy trading system. I note in fact that something of this nature already exists. It is called the Canadian dealer network and is part of the Toronto Stock Exchange. Still, it is too expensive to access and it must be made easier to access.
Finally, we need to believe in ourselves and our great abilities. We need to see beyond tomorrow to what we could be. Business itself will have to be more effective in networking, seeking out solutions of excellence in everything we do. We need to end some of our parochial attitudes which are holding us back from being the best. We must learn to share with each other so that Canadian products will be the best there is and so that the 21st century will truly be Canada's century.