Mr. Speaker, I take great pleasure in participating in this debate today. It is interesting. You can certainly identify those of us in this House who have signed a cheque in our lives because we certainly have a lot more interest and a lot more fire in our bellies when we get to talking about the banks and the banking institutions in Canada.
The relationship with the big sisters, the big banks in Canada, was very well summarized in the title of a book that was published about 10 years ago: Towers of Gold, Feet of Clay . When you think about that for a second it really brings into focus the reason for this debate in the first place and why the industry committee worked so hard on its report on small business financing.
It was interesting to me coming from western Canada that this country did not really have a recession until the late 1980s and closer to 1990 when it really hit southern Ontario. That is when we had a recession. But for business people in the west the recession started much earlier than that and it started overnight. It was exacerbated by the national energy plan but made much worse by the fact that during that time the big banks had loaned vast amounts of money all over the world and then were drawing in the loans all over Canada from the small business sector.
That was one interesting time to be in business. Banks were lending money and had loaned money and taken huge losses all over the world but they were putting the screws to small business people because they were the only ones they could put the screws to.
There is a saying in the banking business that when you are not a lender, you are a receiver, and if you owe the bank a thousand dollars you have a problem, but if you owe it a million dollars it has a problem. That is absolutely true.
Both sides of this story have learned a little over the intervening years and as in everything in life when there is competition in any industry it is good for the business. It is good for the industry. I think we are getting more competition in the banking business and that competition is good.
This report put together by the industry committee has 24 recommendations. They run the gamut of just about everything you can imagine: monitoring and approving statistics, regulating bank behaviour, leasing, federal programs to assist small and medium business, stimulating competition, using RRSPs, provincial security regulations, taxation and capital gains, labour sponsored venture capital corporations and mutual guarantee co-operatives.
I would like to restrict my comments to four separate issues: the role of the Small Businesses Loans Act; the role of the Federal Business Development Bank; whether or not to speak more generally to the role of business and government and the relationship and how much government money should be involved in business; and just a few minutes to speak about the legitimate role of an entrepreneur and just who should have the risk.
Let us start with the Small Businesses Loans Act. For the benefit of those who may not be aware of it, when an entrepreneur gets an idea they go into the bank and say they have an idea, they want to start a business. The Small Businesses Loans Act will lend government guaranteed money up to 90 per cent of the value of the loan and it is guaranteed by the government. It is set and established at a rate of 1.75 per cent over prime.
A few years ago the amount was increased dramatically. I think it went to $200,000 from $50,000. At the same time the economy was going down the tubes in Ontario.
As Don Cherry says, you don't have to be a rocket surgeon to figure it out. If the economy is going down the tube-