Mr. Speaker, I do wish to extend my appreciation to the hon. member for letting me speak. I am going to split my time with the hon. member for Fraser Valley West. I will take 10 minutes.
We are talking about small business today. That is something that I am not totally unfamiliar with, having spent a number of years in small business, most of my life actually. I have come face to face with almost every single problem that small business today and over the last 25 or 30 years could ever face. I am happy to say that I was able to meet those challenges in most cases.
Although I agree with the report from the committee in many respects, I think it is important today that I spend some time talking about the difficulties and the attitudes of small business if for no other reason than to try and put it again in front of the government and again in front of the banking industry, if it happens to be listening today, so that some of the challenges that small businesses face is driven home to them as well the important role that small business plays in the economy of Canada.
Most people probably believe that it is Esso, IBM, General Motors and the other mega companies that we all so familiar with that are the engine that drives the economy in this country. These same people would probably be of the opinion that it is these large corporations, these mega companies, that employ the majority of the people in this country. This is truly not the case. In fact the opinion that these mega companies drive the economy and hire the most people in the country is very far removed from reality.
The truth is that the economic health of this country depends on small business. It is the small businesses with less than 20 employees that create new jobs, create new growth in the country, and create growth in the economy and opportunities for Canadian workers.
Given the importance of the role that small business plays in the economy of this country it is surprising, as highlighted in the report from the Standing Committee on Industry, to see again the numerous obstacles and challenges that small business must continue to deal with in order to simply do business in this country, obstacles established by government and by the banking industry in this country.
I hope today that the banking community and the government will take note of what is being said here today as well as the contents of the report in the interest of the health and welfare of the country, the survival and growth of small business in this country, and the future well-being of Canada.
In 1990 small business employed some 4.2 million people in Canada. That is out of a total of 12 million people who are working in this country. Small business was responsible for 80 per cent of all new jobs created between 1977 and 1987 and it continues. Small business continues to be the lifeblood of the Canadian economy.
The government is truly aware of these numbers. It has displayed its understanding of the importance of the role that small business plays in the country. As a matter of fact, the red ink book devotes quite a few pages to extolling the virtues of small business in Canada and some of the challenges and impediments that small business faces.
The budget promised a small business review, the purpose of which would be to determine how government can help these smaller firms succeed. It recognized in the budget that the tax burden, paper burden, lack of financing and lack of access to government information and programs were all issues that needed to be addressed by this government in relation to small business.
During the G-7 in Naples on July 9 all countries agreed that it was important to focus on removing the challenges and the impediments to small and medium sized business. It was important to the lifeblood of the economies of all the countries that participated in that conference.
In short, the government is certainly well aware of the importance of small business and the various difficulties it encounters. The government knows about small business according to the report from the industry committee. It is reminded of it every night as well during the required reading of the red ink book and is reminded of small business importance when attending international economic conferences.
Beyond trips to Naples, beyond the red ink book rhetoric, beyond the issuance of this report, what has the government done to assist this vital sector of the economy? We have had lots of talk, lots of words and lots of promises. In fact, what has been accomplished in the year since this government took office to help small business is almost absolutely nothing.
I spoke earlier about some of the things the government could do to encourage the banking industry, the big six that controls the banking community in this country. They control all the financing for small business. I spoke of some things they can do. Make no mistake about it, until the government puts a hammer to the heads of the big six that control all the money and tells them they are going to have to start paying attention to small business in a real way, nothing is going to happen in the area of financing for small business.
That is one thing the government can do. It does not have to wait for two or three years. It can do it almost immediately. It is the government. It controls the regulations that govern the banking industry in Canada. That is something it can do right away.
In the government's last budget it created another impediment when it increased the taxes on all medium sized business that had at least $15 million in capital. We are not talking about small business in this group, but there are many small businesses that benefit from medium sized businesses having this kind of capital and this kind of revenue. It increased the taxes on that particular sector of medium sized business.
Now the Minister of Finance in his new work entitled "A new framework for economic policy" is of the opinion, and this is surprising, that income taxes and payroll taxes distort economic behaviour and stunt economic growth.
All he had to do was walk downtown and talk to a few small businesses and he would have got this in a moment without having to spend a lot of time pondering it. It is not a trade secret in the small business community that taxes hurt.
Nowhere are taxes more abundant than on small and medium sized businesses. This is the major deterrent to economic growth of small businesses and expansion and job creation. They have income tax, payroll tax, capital tax, sales tax, property tax, and who knows what other taxes.
If we take the ratio of taxes levied on a business in relation to the income of the business we find that small businesses are saddled with 30 per cent more taxes in comparison with larger firms. Payroll and local taxes hit small businesses particularly hard. They carry up to 44 per cent of the tax burden in this area while the megafirms carry some 28 per cent or less.
I just want to sum up now by saying that I stated in this House before that the biggest thing this government can do to help private sector job creation, to help private sector growth in the economy is get out of the pockets of business. In particular, that applies to small and medium size business. They are the lifeblood of the Canadian economy.
That is the area that the Minister of Finance and the Minister of Industry can look at if they want the economy to grow. That is the area they should be looking at if they want to reach that magical 3 per cent deficit to GDP. That is the area they can look at to help small and medium size businesses. One place they
have to concentrate is lowering the tax levels and getting on the backs of the big financial institutions.