Debates of Nov. 14th, 1994

Standing Committee On Industry

[David Iftody, Liberal, Provencher, MB]

Mr. Speaker, I am pleased to rise in the House today to debate and discuss the report of the Standing Committee on Industry on small business, taking care of business.

All members on that committee worked very hard to produce what has been called by the Financial Post a mini task force report because of its depth. Considerable thought was given to the precise nature of the recommendations. It is heartening to hear helpful suggestions from members on the other side of the House with respect to the contents of the report.

I would like to mention a couple of things with respect to what is happening in this country in terms of job growth and economic growth, let us say since January. We can use that as a timeframe. There were 327,000 new jobs created, most of those in the manufacturing sector which, as the House will know, are long term jobs. Only 11,000 of those are considered part time jobs.

I would like to share with members on the other side of the House that the most recent economic indicators on a number of different fronts suggest that business confidence is at a record high, profits are up, expectations for hiring are also on the rise. The retail industry in this country is expecting the greatest volume of retail sales this Christmas. The reason is that consumers are now buying cars, microwaves and refrigerators and so on, what are considered the soft market items or the confidence items in the economy.

This government has set a framework to give confidence to small businesses that are now producing the jobs, a confidence that we need in this country.

I would like to speak briefly about my riding in Manitoba, the rural riding of Provencher, and the importance of small business to rural Manitobans and to rural people across Canada. Because of the farming communities I represent which provide the lifeblood of small business and economic activity in rural areas, a number of small businesses have sprung up around those. One of the larger communities I represent, Steinbach, has done tremendous things working closely with the farm community and has developed a number of leading Canadian companies, taking off from basic family businesses. Small business is an important element in rural Canada and something we ought to continue to support.

Earlier a member from the Reform Party mentioned his concerns about the use by small business of the instrument called western economic development. I believe it was a member from Edmonton. I would remind him and the House about a number of projects that were funded in Alberta, almost 800 since 1988 until 1992 or thereabouts. In Alberta 800 projects in Alberta were funded under the western economic development program, a number of them in Edmonton.

I noticed one recently with great interest with the Edmonton Chamber of Commerce where it received about $17,500 under western economic diversification to undertake a symposium with business people in Alberta to seek ways it might access Asian Pacific markets and assist its small businesses. I do believe that we are making a contribution, a very valuable one, even in Alberta.

Let me speak briefly about one of the other questions that was raised here earlier with respect to women in small business. In my riding of Provencher I have had a great number of calls and interest by women starting small businesses. We have to give this idea considerable thought.

Between 1990 and 1994 during the recession the majority of companies that were created were what we call micro-businesses. In other words, they are not really small businesses defined as less than 50 employees but those creating two, three, or maybe five or six jobs in a small community. We found that women, working usually out of their homes, joining with some other partners, are starting these small cottage industries that are moving toward greater possibilities in terms of growth.

We have seen in the most difficult times the contribution that they have made to the Canadian economy. I was very pleased therefore when my colleague, the hon. Minister of Human Resources Development, announced through western diversification the women's business network instrument which we believe is going to be very helpful in terms of assisting women, and I hope rural women in western Canada, to access and network resources.

I say this because it comes back to one of the principal elements of this report. Canadians, small business people in particular and I believe even more so women, having faced these difficulties are having difficulty getting access to capital. We believe that through a number of these government programs, through the implementation of the recommendations in this report, we are going to be able to provide those kinds of financial tools to individuals and small business people so that they can get these companies up and running.

With respect to the banks I know it has been debated extensively here today. The media has given this topic a great deal of coverage over the last few months. This is not an exercise in bank bashing. I believe all members of Parliament who were sitting on the committee approached it with integrity and good faith and were honestly seeking solutions. We took it with great interest and respect when the banks said to us that they did not want to be regulated. They wanted competition and they were not afraid of competition.

I found it quite surprising that when we announced the suggestion of a schedule III bank to provide more competition outside of the larger cities in the rural areas the Canadian Banker's Association said that it would vigorously oppose these kinds of measures, and its concern about depositors' investments.

I hasten to remind those who perhaps do not know when we are talking about small businesses that they create 85 per cent or 90 per cent of the jobs in the country. If the banks are concerned about depositors' money, who is it on the 15th and 30th of every month who go to the bank with they pay cheques? Who are the depositors? It does not take a lot of thinking to quickly conclude that those depositors the banks are trying to protect are people working for small businesses in this country.

We have to have a closer look at that. We are willing to work with the banks in a very constructive way to address the needs of small business. It is very disconcerting to hear that they are criticizing some of the elements of the report.

One of the things that I wanted to mention in my final minute is the most recent deal in China with the CANDU reactors involving some $3.6 billion and the export of high tech and value added jobs in this country. I wish to advise the House that the majority of those contracts once successful are going to go to hundreds of high tech companies that will export in terms of services and direct sales their capabilities to this China deal.

I thank the government and the Prime Minister for taking leadership in that role, for undertaking those memorandums of understanding on those deals. I believe it is going to help small business all over Canada.

[Randy White, Reform, Fraser Valley West, BC]

Mr. Speaker, it is a pleasure to talk about taking care of small business.

One of the things I want to concentrate on here in my 10 minutes in speaking about what I think small business needs in this country is government involvement in small business. I am going to select for my example ACOA, the Atlantic Canada Opportunities Agency, which the government is up to its arm pits in donations, grants and subsidies on.

We all know there has been a shift in political ideals in recent years. The government now talks about a fiscally responsible way of operating business, how to cut dollars and how to operate efficiently which is a good change for this government. However, I think when you look at where this government has come from from a sociological point of view, you only have to look at what Michael Thomas once said, just because you have been bad at socialism doesn't mean you will be good at capitalism. That fits well in my mind with this particular government because I do not think this government has a real good idea of what capitalism really is. I am going to demonstrate that by talking about ACOA.

The Business Council of British Columbia has recently issued a report on cutting the deficit. The business council gave all kinds of suggestions on how the government might be able to do that. One of the suggestions it made was to phase out all three regional development agencies.

I know there was some talk here earlier about regional economic development programs but it is relative today to talk about that in the line with small business. The relevance is we have our hands into small business in two ways. We tax them to death and we create a terrible inequity between small business. Why do we do that? On the one hand we give some grants and subsidies. Note that it is non-taxable, just a gift. It is like winning the Lotto 6/49. The competitor down the street has to borrow money to try to get some kind of capital back into his business or if they want expansion they have to borrow money. ACOA comes along in many cases in Atlantic Canada and just issues a cheque.

I have done a lot of talking to some of the recipients of ACOA grants in Atlantic Canada. We have also had some discussions with ACOA. I want to give members an idea of some of the grants that come out of this operation, not to mention the fact that the management of ACOA is well known for its spending habits. I really do not have to get into that because that is known all across Canada.

Let us just take a look at some of the grants that are given to small business in Atlantic Canada. For instance, Cynthia Billard in Newfoundland received $37,105 to construct two housekeeping units. That is a gift from the taxpayers of this country. I somehow think that if somebody came knocking at my door in Fraser Valley West, British Columbia and asked if I would like to give Cynthia Billard some money toward building two housekeeping units out of my taxes, my answer would be no. You do what the other people do when they want to expand on their housekeeping units. They borrow money or they save their money through profits from using their other units and they allow the expansion that way. We do not give money to some and not to others. It creates a terrible imbalance in small business.

I will run through a lot more of these grants. This government is quite well known for giving grants around the country.

Let's take Mr. Stedman Brophy. He advertised in hunting magazines and attended trade shows. He was given $5,000. Congratulations. They have given $5,000 of taxpayers' money away. How did that benefit the other people in the same line of business? It does not.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Did the hon. member ask him?

[Randy White, Reform, Fraser Valley West, BC]

The question I am asked by one of the Liberal members is: did I ask him. I really do not have to ask him. He is not going to complain. This individual is not going to complain. He got $5,000 tax free from this generous Liberal government.

What about the people in similar industries down the street who did not get any of that money? They went to the bank and borrowed money, or saved money to produce a similar exercise. Is it the idea of this Liberal government to perhaps try to cover everybody in Atlantic Canada that is in business and try to get everybody at the trough all the way along the line.

[Fred Mifflin, Liberal, Bonavista—Trinity—Conception, NL]

Did you tell them that when you were campaigning in St. John's West?

[Randy White, Reform, Fraser Valley West, BC]

Mr. Speaker, let us look at a couple more. I invite the Liberal members here and all the people watching and listening to see if they would spend their tax money this way.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Irrelevant.

[Randy White, Reform, Fraser Valley West, BC]

Let's talk about Ducky's Homebrew in Newfoundland that got $15,816 tax free, I might add with no pay back, risk free, to establish a facility to produce home brew beer kits.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

What is wrong with that?

[Randy White, Reform, Fraser Valley West, BC]

Again, one of the Liberal members asks: "What is wrong?" What is wrong is this. In my community one of these home brew small businesses just started up as a matter of fact. The fellow saved his money, he was telling me, for something like 10 years in another business. He sold that one off. Now he is trying to establish another one. He did not get Lotto 649-type grants from the government. He did not get money from the taxpayer. He saved his money and he borrowed some more money. What is wrong with that?

Let's go to some more. Gerald's Machine Shop Limited, to purchase a computerized milling machine received $70,552. What about the other machine shops? What will be done for the other machine shops? How does small business get competitive in this world when one machine shop gets a grant, not repayable, and not the other? How does small business survive doing that? How does it stay competitive? The government has to get out of the business of handing those cash cows out to some and not others.

Let's talk about some other folks who want to establish a restaurant and bakery that got $48,000. Another person in Newfoundland got $63,560 to upgrade hotel rooms and housekeeping units

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Why is the member picking on Newfoundland?

[Randy White, Reform, Fraser Valley West, BC]

The question was: why am I picking on Newfoundland. I am not. I am going to go through all of the provinces of Atlantic Canada. I am going to go through all of them.

Why would we upgrade hotel rooms and housekeeping units for one person and not all the others?

Let's talk about some bigger bucks, about Maynard Limited in Newfoundland. They received $363,000 to expand existing facilities by adding a dining room. Is that the right thing to do? Is it fair to all the other organizations in the province, in the country for that matter, who want to expand their dining rooms? What kind of mentality is this? How much money did we give to Newfoundlanders? There were 344 contracts in Newfoundland. We gave $19,906,166 taxpayer dollars to some and not to others. Justify to me the logic in that.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

They are all businesses.

[Stephen Harper, Reform, Calgary West, AB]

Check what party they donated to.

[Randy White, Reform, Fraser Valley West, BC]

The suggestion is to check the party to which they donated. I am sure there are a lot of political hacks because we know this party likes their patronage so that would be obvious.

Let's skip Newfoundland then and go to P.E.I. In P.E.I. Broadview Properties Incorporated got to modernize their motel by upgrading furniture and equipment, et cetera, for $74,000.

Members opposite do not like what they hear. They do not like the fact that we are talking about taking care of business. The way the government takes care of business and creates equality in business is to give tax free money to some and not to others. The government's problem is that it has no idea how to be competitive. Competition to this government means giving to some and not to others. It is who you know.

In Nova Scotia 559 contracts were issued since November 4, 1993 for $27,721,000 to some and not to others. In New Brunswick, 617 contracts for $35 million were issued.

How is equity created between competing small businesses by giving to some and not to others? Your book may say a lot. It does say a lot. There are positive things in the book but you do not have what it takes to be capitalists.

[Fred Mifflin, Liberal, Parliamentary Secretary to Minister of National Defence and Minister of Veterans Affairs]

Mr. Speaker, I was listening very intently to the debate on this excellent report. Being on House duty I was listening in the lobby with great interest. I was very impressed with the quality of the speeches and decided to come into the House and hear them firsthand.

I must say I felt a certain amount of disappointment when I arrived because all of a sudden the presentations stopped being about this excellent report. I am sitting here in my seat and I cannot really believe what I am hearing. A responsible member of Parliament is getting up and complaining about a system that supports Atlantic Canada and he states that the people from his area would not support it.

I have a comment and a question. I am very seldom partisan but I have to say I find it very difficult to understand how the hon. member intends to go to Newfoundland after that speech to campaign on his support for ACOA and for regional development in Newfoundland. I suggest he frame this speech and turn around in reverse and never show it to anybody when he goes down looking for votes in Newfoundland.

He is suggesting that ACOA is made up of a group of imbeciles that just willy-nilly give out money to some businesses and not to others. He is totally wrong. I am telling him that the vice-president of ACOA, Gordon Slade, happens to be one of the finest civil servants in the country. He is a very responsible person. He is very selective in what he does. When there is competition the ACOA grant is not given.

My comment to the individual is that ACOA management does not work that way. It is much more responsible, much more selective.

My question to him is: What is his alternative? What would he rather do?

[Randy White, Reform, Fraser Valley West, BC]

I just love it when they sanctimoniously get up on the other side, Mr. Speaker. They do not like to hear the truth.

The comment was that Gordon Slade is selective-

[Fred Mifflin, Liberal, Bonavista—Trinity—Conception, NL]

On a point of order, Mr. Speaker, is sanctimonious a parliamentary word?

[The Deputy Speaker]

With respect, there is a dictionary on the table. I think if that word is not a parliamentary word then I do not know what word would be parliamentary.

[Randy White, Reform, Fraser Valley West, BC]

Yes, I think it has more than eight characters in it, Mr. Speaker.

The comment was that Gordon Slade is selective in the grants that come out of ACOA. I would suggest that is very likely the truth of the matter. That is the problem.

It does not take a brain surgeon to go through any list to see that the selection of the grants in ACOA are made on an inequitable basis. There are all kinds of similar industries in Atlantic Canada. And not just in Atlantic Canada, but in Ontario, in western Canada. They do not get money although taxpayers right across the country pays into it.

Where does the government get the right to select the taxpayers' money and pay it to whomever it wants on its basis? It is selective all right. It is a selective procedure but it is unfair to all those who do not get it. The answer is to get out of regional development grants, get out of ACOA.

[Anna Terrana, Liberal, Vancouver East, BC]

Mr. Speaker, first of all I would like to say that the Liberal Party was voted into government. That is where we get our strength to do what we are doing and also get back to being a little more positive.

I am pleased to rise in this House today to speak to the motion on small business. My riding of Vancouver East contains many small businesses. Our proximity to the Asia-Pacific region makes us major players in negotiations with Asia and South America.

Team Canada's trip to the Orient led by the Right Hon. Prime Minister generated a great deal of interest and enthusiasm. Small businesses do not have the resources required to negotiate directly with China but, with governmental assistance, they can create many jobs for Canada, as they have done for several years.

Last May, I had the privilege of participating in a trade mission to Beijing together with over 100 small and medium-sized business owners. I learned a lot during this trip; I realized in particular that small and medium sized businesses cannot operate alone. They need help. Canada has much to offer to the world in terms of skills and resources, but we must sell our potential. Trips to foreign countries are extremely important to ensure our country's well-being and to let the world know all that Canada has to offer, including solid, honest and capable business people. In short, we must learn to become more aggressive.

Canada is a trading nation. The challenge is to transfer Canada from a nation dependent on trade into a true trading nation with a much larger role being played by small business.

Having said that, I would like to discuss the export sector of our country. Facing global competition has become the sine qua non of any serious business plan. The best way to find out if your company is truly competitive is to tackle the export challenge.

The arithmetic is simple. In the global market for many niche products and services, Canada often accounts for only 1 per cent or so of global consumption. Companies that do not export are often ignoring literally 99 per cent of their potential customers.

The process of exporting successfully though is somewhat difficult, particularly for small companies who have never even dreamed they would have to enter global markets. The vast majority of companies has to take to exporting one step at a

time, pausing at each step to seek advice and information about what lies ahead.

The owners of small businesses always emphasize that they are in the market for information about market opportunities and how to exploit them. Canada's trade commissioners can help to achieve this goal. The trade commissioner service has 100 years of experience in opening doors to foreign markets. It knows the ropes and can help exporters deal with the challenges of complex foreign environments.

The government is in the business of offering all kinds of guidance to exporters, particularly to the small and medium sized companies that need help most.

For example, the focus of Canada's program in support of fairs and missions has shifted to smaller businesses. Then there are the programs to provide hands-on training to new exporters to the United States border states, Mexico and Europe.

WIN Exports, the Department of Foreign Affairs and International Trade's electronic databank of Canadian firms capable of taking on export challenges, as well as its market intelligence and information program, is also being enhanced to better meet the needs of small businesses seeking niche markets worldwide.

The efforts of the Department of Foreign Affairs and International Trade are to assist exporters start right at the beginning, when the decision to export is first being examined by entrepreneurs.

To that end government officials work closely with the Forum for International Trade Training. The Forum for International Trade Training philosophy is that to compete successfully in world markets, a company that wants to export has to act like a long distance runner who trains for a marathon. To help out, the Forum for International Trade Training provides a wide range of services which can be customized to the skill and experience levels of participants. This year the program is operating in 30 community colleges across Canada with some 1,000 students registered.

FITT is a major undertaking, patterned after the government-business training vehicles that have long been in operation in Germany and Japan. As such, FITT has received federal and provincial government funding along with the support of business associations, including the Canadian Chamber of Commerce, the Canadian Exporters Association and the Canadian Manufacturers' Association.

As significant as these developments are, we can still do better. We cannot rest on our laurels.

Over the last months the Minister for International Trade has been listening to what Canadians have had to say through meetings with small and medium enterprises across Canada as well as a number of other venues. The message conveyed was consistent and clear; do less but do what you already do better. Government is being told that there are too many programs being run by too many players.

In response to demands by the private sector, our government has already taken some preliminary steps which will benefit the business community as a whole but, more important, will also benefit small business.

For example, because of their size, small businesses often do not have the resources to find international trade leads. Accordingly, we are undertaking a number of improvements to the way we collect and disseminate market intelligence and market information. We have put into place an electronic bulletin board service that allows exporters access to the latest international market information by a personal computer and a modem.

We are also developing a market intelligence messaging system for broadcast faxing of trade opportunities. Furthermore, small businesses often complain about the plethora of government programs and are confused by what different levels of government are responsible for when it comes to international trade. This government is therefore undertaking a second set of measures to provide greater cohesion and focus to the support role played by governments.

There is a need for better co-ordination of international business development activity among both federal departments and the provinces.

Accordingly, this year's International Trade Business Plan will include the input and international business activities of all provinces, as well as 18 federal departments and agencies that are already part of the process.

In addition, in conjunction with the provinces and a number of federal government departments, this government is undertaking a new initiative called Trade Team Canada. We are looking to optimize services to clients by co-ordinating the delivery of international business development activities among various levels of government. We intend to move ahead promptly by setting up pilot projects in co-operation with those provinces that have already shown an interest in the idea.

In conclusion, the initiatives that I have been describing are based on a co-operative approach of the kind we need to mobilize Canada's export potential and in particular the potential of our small and medium sized businesses.

Our government is making a conscious effort to consult extensively with our clients. We promised that and we are doing that. I do not think we should just go to our next door neighbours to consult but we should call all of Canada to consult with us and tell us what they want.

Our government is making a conscious effort to consult extensively with our clients, the people of Canada who run our small businesses. I wish to assure the House that we will continue to seek ways to work together with the business community so it can meet the challenges and opportunities of an expanding world market. We will not stop trying until the world beats a path to the door of Canadian small and medium sized businesses.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I listened intently to the previous speaker's great commendations about the government's role in helping small business. One thing that strikes me as being rather opposite to the whole idea of government trying to help small business is the fact that the national debt accounts for over $38,000 for every taxpayer in this country. Of course small business people are taxpayers. Not only are they taxpayers for themselves but they create employment that generates all other kinds of taxpayers as well.

I think about how small business has to labour under the heavy taxation caused by the national debt. This government has continued to increase the national debt, to increase the amount of burden that is being put on every taxpayer, including small business. How would the member expect these business people to compete in the international marketplace as she is saying they should, could and will when in fact the best thing that could happen to small business would be if the federal government were to reduce or eliminate the deficit and take the cost of this overburdening national debt off the backs of small business?

What better place could the member suggest that we start after listening to the member for Fraser Valley West who said that this government seems to not just pick winners and losers but to pick individual people and say: "Here is some money that is tax free". He quoted all kinds of statistics and actual numbers about individual people or businesses getting specific amounts of money, $300,000 here, $75,000 there and so on.

If the previous speaker is serious about this government helping all small businesses, would she recommend that her party and the government that she supports get out of this selective subsidization and grants to small businesses in various parts of the country in order to reduce the overburden on small businesses and allow them to complete?

[Anna Terrana, Liberal, Vancouver East, BC]

Mr. Speaker, first of all I want to remind my hon. colleague that we were elected to do what we are doing, to create an atmosphere, and not to cut our deficit in three years or our debt in five. We were elected to do what we are doing.

Second, the approach is very simplistic. We have been in government for one year. We have done a lot of things. We listen to people. They tell us what we should do. We have been hearing them. We listened and we heard.

We are trying to put into place what we have heard. In the meantime we are taking care of the deficit as we promised.

[Werner Schmidt, Reform, Okanagan Centre, BC]

Mr. Speaker, I would like to ask the hon. member who just spoke just exactly what would be the manner in which business could actually get into a true competitive environment without government interference so that we would not have all this subsidization, so that indeed business could compete in its own right and so that it could do the kinds of things that business was intended to do without subsidization and interference by government to give advantage to some business over and against another business.

[Anna Terrana, Liberal, Vancouver East, BC]

Mr. Speaker, I went to some of the hearings. Of course, there are those people who say: "Don't give any subsidies". Some people say: "We need the subsidies".

We will slowly get there. Canada is a big country with a few people and a lot of regional disparities. We eventually will get there. We will eventually find a way to let businesses prosper on their own. There are more and more doing that. I am hopeful. I am a positive person.