Debates of Nov. 14th, 1994

Standing Committee On Industry

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

What are you doing here?

[Ian McClelland, Reform, Edmonton Southwest, AB]

My hon. colleague across asks what I am doing here. I am here to try and stop this foolishness. I am here to try to put an end to this.

[Some hon. members]

Oh, oh.

[Ian McClelland, Reform, Edmonton Southwest, AB]

My hon. colleagues across the way laugh, but the fact of the matter is that 25 years ago the Liberal Party started us on this slippery slope, thinking it is somebody else's money.

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

Here it comes.

[Ian McClelland, Reform, Edmonton Southwest, AB]

It is giggle time over there. I thought that might happen. I just happen to have a list of financial institutions that have gone down the tube since 1970 for which the taxpayers of Canada have picked up the pieces. There are 32 of them, $9,392,000,000. Of that, there is $5,189,000,000 in recoveries. Somehow there is $4 billion of taxpayers' money, people who are struggling to get by earning $8 to $10 an hour, going to the government and all of a sudden we are backstopping huge businesses. There are a few more here, another three pages.

I do want to compliment the government on one of these. This is through western economic diversification. This was federal funding to Consumers' Paper Corporation and SHOTCO Ammunition Corporation. They were cancelled by the minister in charge of western economic development. One was labelled as a

political handout and the other 30 per cent owned by the Venezuelan military. At least it is looking at it. I give the government credit for that.

Meanwhile we have Bell Helicopter, $165 million; Algoma Steel, $15 million-pages and pages of money that has been lent by governments to small and medium size business that has been written off. It is not our responsibility as elected members of Parliament to-

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

What do you mean written off?

[Ian McClelland, Reform, Edmonton Southwest, AB]

What do I mean by written off? From the Department of Industry; International Tin Council, $4.6 million. From FORD-Q; Nambera Studio, $63,000, a grant to a company that went bankrupt. From ACOA; Preston & Area Development Fund, $144,000, $570,000 write-off, uncollectable. There are zillions of them. Maybe not zillions, there are some success stories.

Would we have had the same successes whether or not taxpayers' money was involved in underwriting these businesses? That is the question.

There are some instances where taxpayers' money has proven to be beneficial. For instance, the hon. member opposite has brought to my attention time and time again the auto pact and what a great benefit it has been to the country. However, when we are talking about these things, we are talking about huge sectoral vision things. We are not talking about the little industry or a little micro thing. We are talking about vision and the broad picture.

We did not get into this mess by accident. We got into it because we thought we could make investment decisions on behalf of individual taxpayers. We cannot do that.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I continue to marvel at the member's remarks because I never realized he was such a defender of the banking institutions in our country. I thought that essentially he agreed with most of his colleagues' recommendations, that this was an opportunity and a time in our history when all members of Parliament could get together and challenge the financial institutions to change their attitude and banking practices toward small and medium sized businesses. That of course was the essence and the purpose of this debate today.

I will get right to the question and I will take less than two minutes. The question goes back to the the member's recognition of the auto pact and the fact that this is an area where legislators made a decision that the automobile industry was an industry that we would support.

We have also made similar decisions in the House of Commons for the oil and gas sector. Is the member suggesting that legislators should have nothing to do in trying to assist the oil and gas sectors of the country?

[Ian McClelland, Reform, Edmonton Southwest, AB]

Mr. Speaker, I point out to the hon. member opposite that he must have been working on that question for me during the first 15 minutes of my presentation. At that time I spent a fair amount of time talking about the towers of gold and feet of clay and what led to it and how that came about.

Certainly no one would ever see me standing and defending the banks. The banks certainly do not need any defence by me nor would they be likely to get it.

The second question had to do with the role of government in regulation in the oil and gas industry and in particular the auto pact. Government has a legitimate role to play in the financial affairs of the country. However, the legitimate role should be to ensure that the marketplace is fair, to ensure that competition exists, to ensure that consumers are not taken advantage of by any industry that has an oligopoly or a monopoly. We are talking about the banking industry as an oligopoly.

The government has a role to play in water resources, in resources like oil and gas. We have to ensure that we have a competitive marketplace, that we have a tax structure for instance that encourages people to invest their money in the oil and gas industry.

The government does not have a role to play in picking winners and losers in the marketplace. It does not have a role to play in taking money from me and giving it to somebody else and saying: "You are the business that we want".

Hon. members opposite pointed out the role of government in their science and technology review. Some of the most esteemed people in the country came together under the auspices of the Department of Industry to discuss science and technology in Canada. They said it is not the role of the government to pick winners and losers but to assist winners that have been decided by the marketplace.

I realize that it is very difficult to make the distinction but there is a distinction. The marketplace decides who the winners are and what has to be done to support them. The way we can support winners in industry is by making sure that we have a steady supply of educated and trained people as a workforce for them. That is one of the things that we can do.

The member opposite asks: "What about Bell helicopters?" What about Bell helicopters? We throw all that money at Bell helicopters. What about Boeing? It is talking about picking up its toys and going home because we ended up buying some air buses.

We get involved in deciding who are going to be winners and who are going to be losers. I am trying desperately not to bring up the names of Lavelin-Bombardier and that whole group in the aerospace industry. How much of what that company has done would have been done had we not gone to them with a public purse and they had had to do it themselves.

The shareholders of Bombardier-Lavelin are the ones that get the benefits. Joe Taxpayer earning $10 an hour is not getting a nickel from them.

[Yves Rocheleau, Bloc, Trois-Rivières, QC]

Mr. Speaker, I would like to ask my colleague from Edmonton Southwest what he thinks of the recommendations made by the Standing Committee on Industry in its report concerning the efforts the government must make to support the new economy based on high technology, patents, research and development, technology transfers, with very little concrete guarantees compared to what is provided to lending banks. We know this is a problem for those who deal with creative people, but then it is tomorrow's economy.

I want to know if my colleague thinks that the report does not go far enough in this area?

[Ian McClelland, Reform, Edmonton Southwest, AB]

Mr. Speaker, the report is the first tentative step in that direction. The fact that nobody quite knows how to address this is reflected in the report. The possibility of the Small Businesses Loans Act being amended to include working capital will go a long way to solving that problem.

Therefore this has been addressed tentatively in the report. I say tentatively because I am sure that most people share a little indecision on just where we should go.

If I may in 10 seconds, I would like to sum up where the Department of Industry should focus. We should try to establish and to maintain a culture that rewards entrepreneurship, innovation and research and ensures a level, competitive, honest marketplace.

[Brenda Chamberlain, Liberal, Guelph—Wellington, ON]

Mr. Speaker, I am pleased to rise to participate in this debate concentrating on one of the most important aspects of Canadian society. The government has recognized that small business is our future.

Small business creates many of our new jobs, stimulates our economy and provides employment for millions of Canadians. In Guelph-Wellington and elsewhere when small business succeeds, Canada succeeds.

I was a small business owner. I am excited about what the government is doing to assist small and medium sized business in my riding of Guelph-Wellington and across Canada. I can tell you, Mr. Speaker, that many of my constituents are excited about it too.

I would like to spend some time concentrating on labour skills and the importance of further enhancing the competitiveness and growth of our small and medium sized businesses. I have had the opportunity to meet with many small business owners and managers throughout Guelph-Wellington. They are excited about their future. They believe they have one. They weathered the recession and they weathered the GST. They want government help in order to succeed. They need government, though, to get out of the way where it creates unnecessary bureaucracy and red tape.

I have been told over and over again: "Please, get this red tape away from us". Single shop people cannot handle it and the government is going to address some of those needs.

They want government to initiate incentives which will encourage their success. They count on us to do that. We can assist the small and medium sized business owner who wants to expand through providing Canadian workers with the skills to compete in this highly competitive and rapidly changing environment.

Guelph-Wellington has one of the finest skilled worker forces in Canada with one of the lowest unemployment rates in the country. However there are still some who are unemployed. They want to work. There are still some in Guelph-Wellington receiving social assistance. They also want to work. There are also thousands of unskilled or underskilled workers who can contribute if given the skills. They have to have those skills.

Business leaders in Guelph-Wellington know what they need to succeed. Our economy depends on small business; 69.7 per cent of businesses in Ontario have less than five employees. The needs of each one of those businesses are unique but government can help.

In the past we have spent too much time training people for skills that are not required. What is required now is flexible training programs that provide on the job training, training for which the employer provides time off or tuition assistance, or classroom training at educational institutions. Business people in my community will help to train workers because they want to ensure that our community and, more important, all of Canada have the best skilled labour force so that we can compete in this world.

We must train people for jobs that do exist or will exist and business must play a role in both identifying these positions as well as helping in the training process. This is a win-win situation.

Guelph-Wellington business people want better information. They want to share that information with other business leaders across Canada. Our knowledge based economy means that we must work together to make it work. Eighty-five per cent of new employment is being created today in small and medium sized businesses.

Our businesses will need child care workers, veterinarians, dental hygienists and psychotherapists in the near future. If we are going to prepare for the future we must invest in people today.

The social security review process will assist us in identifying priorities and overcome the obstacles to successful skills development in Canada. We must decide how basic skills training can best be improved and what priority this training should receive.

Employers in my riding want to be given a better role in training. They want to be consulted and informed and they want to participate in all facets of skills training. Already employers and employees are working together to shape this kind of training. The reason for quality skills training is obvious: Well-trained workers are more employable and can adapt more easily if they must change jobs.

The enthusiasm is there. Guelph-Wellington workers want the skills necessary to compete. They want to be able to adjust to marketplace changes and they do want to work. The employers in my riding are asking for new and innovative ways to provide training. They want tax credits, direct government assistance, educational leave and work sharing agreements. Like their workers, they are not looking for handouts. They want the tools which will enable them to invest in developing employee skills. Investing in the workforce of Guelph-Wellington means investing in our future.

The workplace is changing. Canada is looking to expand into an ever competitive global market. As the Prime Minister and Team Canada have shown us over the past few days, we are not afraid of competing with the world's best. We are the world's best. Business people in Guelph-Wellington and elsewhere in Canada know they can do business anywhere in the world. They need workers who are adaptable, flexible and willing to learn new job skills.

We are talking about investment. Business leaders know that smart investment leads to success. We must invest in our people in order to compete, to expand, to grow, to be healthy. We must encourage lifelong learning. Gone are the days where a worker can be trained for a position of 30 or 40 years. We must build on providing literacy training, encourage our young people to stay in school and to prepare for the jobs that are available and provide incentives for individuals and employers to invest in continuous skills upgrading. Learning is a lifelong adventure.

Responding to the demands of the global marketplace means keeping pace with changes in today's workplace. The progressive business person in Guelph-Wellington knows that for every dollar spent on training by Canadian businesses American businesses spend twice as much. Japanese business spends five times that and German business spends eight times that. Without ongoing skills training we cannot survive.

This government is forging partnerships. Team Canada has shown what working together can do for Canada. Guelph-Wellington business people want to be partners with their employees. Workers want their employers to be successful. All want government to work. We know that investing in people will result in a highly skilled and competitive workforce in Canada. I am proud of the optimism of businesses in Guelph-Wellington. They are looking ahead. They have weathered a terrible storm.

Our workers do not want unemployment insurance or social welfare. They want to work. They want to contribute in a successful and expanding society. They want to give their children and they want for themselves the skills necessary to ensure economic prosperity. They are tired of facing layoffs and work slowdowns. They want sustainable employment. They want to be the best that they can be.

The United Nations has stated that Canada is the best place in the world in which to live. Through continued partnerships while fostering training, Canada will continue to be the best place in the world to live.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I want to touch on a couple of points the hon. member mentioned. I acknowledge that certainly people in Canada want to work and people in Guelph-Wellington indeed want to work. They want jobs. No one wants to be on welfare, although that seems to be somewhat of an industry in the country these days.

The hon. member touched on the fact that the United States, Japan, Germany and one other country spend many more times on worker training than does business in Canada. I do not doubt that statistic for a moment but the fact is that by comparison the cost of doing business in those countries is many times less than it is in Canada.

The fact that probably our businesses are not spending an equal amount of money on training programs is that they cannot afford it. The taxation levels for small and medium sized business in this country are many times higher than what it is in the four countries the hon. member mentioned. The cost of doing business in this country with taxation in all its forms, property taxes, payroll taxes, is many times more than in other countries.

The fact is the other countries simply have more money to spend on training programs. They do not have a $40 billion deficit ratio to GDP that we have in Canada. They do not have a $535 billion debt which when ratioed out to the GDP is almost uncontrollable or we are going to have a terrible time making a dent in it. They do not have the financial problems Canada has.

The problems that Canada has with its financial house is a direct factor in the cost of doing business in this country particularly for small and medium sized business which invariably do not have the advantages the large mega-businesses do. They struggle to a far greater extent. They do not have the money to put into training programs.

There was a time in this country prior to a Liberal government which started this deficit and debt spiral some 25 years ago, when the cost of doing business made Canadian business extremely competitive in the world market. Canadian business was very profitable because we did not have these extreme taxation levels and cost of doing business. Those times are long gone.

Right now the biggest deterrent to training programs in this country is that the businesses simply cannot afford it. If we did not have the deficit and the debt, this country would be in fine shape.

[Brenda Chamberlain, Liberal, Guelph—Wellington, ON]

Mr. Speaker, the hon. member mentioned that we cannot afford to spend money on training programs. I would submit that we cannot afford not to spend money on training programs. If we do not we will not have a future in this country, quite clearly. There is no question about that.

There is an issue on partnerships. He raised from my speech the issue that other countries do develop and put far more into their training than Canada does. Those are true statistics but Canadian companies are now finally realizing that this is a very important part of their survival too.

I spent this summer visiting the CEOs at many factories in Guelph-Wellington. They realize they have made an error in not bringing people along and not always at a great cost. Many times they could have people on the floor doing things halfway through a shift that they have not been thinking about doing. They have not necessarily seen the new technology coming down the pipe. I submit to the hon. member there are a lot of things we can do better in that area. Our industries know that. I encourage the hon. member to take some time to see this for himself.

The member is quite right. Our businesses have a real problem with some of the wages, CPP and other programs they have to pay into. Our finance minister has continually said that one of the things this government is committed to doing is that we will meet our 3 per cent target. That will help us a lot.

Business Of The House

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I think you will find unanimous consent for the following motion. I move:

That at 3 p.m. tomorrow the House shall revert to presenting reports from committees.

[The Deputy Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

(Motion agreed to.)

The House resumed consideration of the motion.

Standing Committee On Industry

[Alex Shepherd, Liberal, Durham, ON]

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.

[Bernard Deshaies, Bloc, Abitibi, QC]

Mr. Speaker, it is a pleasure to rise in the House today to speak to motion No. 16 standing in the name of the Secretary of State for Parliamentary Affairs, and I quote:

That this House take note of the Second Report of the Standing Committee on Industry ("Taking Care of Small Business").

I should point out that an analysis of the recommendations of this report and the dissenting report of the Bloc Quebecois to this committee provided an opportunity to ask some important questions about SMEs in general and SME funding in particular which is largely the key to economic development in Quebec and Canada.

I agree the report contains some much needed changes in the way SMEs are financed, to raise them to the level of productivity and competitiveness required as a result of globalization. In my opinion, the number of SMEs should continue to rise, and their production capacity and ability to diversify should be improved, all of which will not be possible unless SME financing helps them expand from a small to a medium sized business and, if possible, to a very big company.

Unfortunately, according to the statistics, between 1978 and 1986 only 1 per cent of Canadian small businesses graduated to the rank of medium-sized businesses, compared with 15 per cent, over the same period, in the United States.

It is very important to find an explanation for the unsatisfactory growth of our businesses, but in the short term, for many regional businesses, financing is often the problem.

This report contains some positive reports concerning SMEs and SME financing, but I feel that some recommendations lack real substance and innovative spirit.

I would support the committee's recommendation that the Federal Development Bank be confirmed in its role as complementary lender to small and medium-sized businesses. However, it must be understood that this role should be redefined so as to avoid duplication and overlap, since all provincial governments have their own government policies. The Government of Quebec is no exception, with its new policy for regionalizing development programs.

Instead of changing the name of the Federal Development Bank, which would mean spending a lot of money with no direct benefit, the federal government would be better advised to give this agency a new philosophy, that is, let it act as a complementary lender of venture capital to businesses, the role formerly played by the Federal Office of Regional Development, which has seen its mandate crumble as a result of the absence of budget allocations.

While on the subject of funding and risk capital, I would like to say a few words about the Small Business Loans Act my Bloc Quebecois colleagues referred to in their dissenting report. I would have liked the committee to show more vision, more understanding in its consideration of small and medium sized business funding. Small business loans are very popular tools among small and medium sized businesses and essential ones too, resolving a number of problems in terms of productivity, market strategy, job creation, by making the necessary funds available.

To be eligible to funds under the Small Businesses Loans Act, SMEs must perform well in management and other areas considered important. These are the conditions essential to their success.

In the committee proceedings, we note that the Liberal members of the committee completely disregard or do not understand the first thing about the basic needs of Quebec and Canadian entrepreneurs desperately seeking a way out of the slump.

This government is proposing that small business groups be divided up in categories based on economic priorities. The Liberals want a new short range program to be put in place to support small business working capital financing just for export businesses.

We can see once again that Liberal lobbyists have successfully looked after their own interests at the expense of other SMEs who also need financial assistance to increase their productivity

in order to become more competitive, and they too are exporting.

Innovative ideas are often required. To boost the economic growth in regions such as Abitibi-Témiscamingue, in my riding like every other riding in the region, small businessmen have to be able to rely on regional development funds created by local investors, for local investments, with the input and/or assistance of both levels of government naturally.

The report deals with similar ideas and I hope that they will be considered by the ministers.

By establishing a regional fund, we could avoid unfortunate situations like that of a woman who came to see me in my office after she was refused a $15,000 bank loan for working capital under the SBLA to start her business. The reasons given for the refusal were her lack of experience and the risky nature of the business, when she herself had already invested nearly $45,000 in equipment. This money had come from her family to help her start her business and create jobs.

By cutting funds for small businesses, the banks prevent them from investing and facing the globalization of the economy. One may wonder whether the small-business programs benefit only the banks, because they have rigid discretionary criteria for funding small businesses, as in the case I just mentioned. They only lend to low risk enterprises, although their mission should be much broader. If these banks cannot do the job, then we should find a government agency such as the Federal Business Development Bank which could do it.

We should all know that if some of the committee's policies were reflected in the government's next budget, small businesses would unfortunately decline considerably, especially in Quebec but also in the rest of Canada. Testimony heard by this committee would seem to justify the Bloc Quebecois's apprehensions.

It is harder and harder for some small businesses to obtain loans because the present government favours those that export. This shows beyond any doubt that the government has no job-creation policy that applies to all small and medium-sized businesses. It has not kept the promise that it made in its red book to help all small and medium-sized businesses. It was supposed to promote employment and its slogan was "jobs, jobs, jobs", but the reality for many small businesses now sounds more like "bankruptcy, bankruptcy, bankruptcy".

The policies of this government are disgusting. The Liberals have the nerve to tell us they will create jobs when in fact they provoke the closure of businesses which did not get the financing they desperately needed, this after being told they would get it. Without access to adequate capital, even the most gifted managers and the best commercial strategies can fail.

I want to give an example, from my riding, where federal support helped promote the development of a business. If the government would only continue to provide this kind of support, we would be in a position to create jobs instead of changing policies. The company I am referring to is called Préci-Bois, in the small village of Barraute. New technology would allow the use of trees with a diameter of less than four inches to make small wooden blades, which are sold and exported to the United States.

The owner personally invested over $500,000, was able to borrow one million dollars from a chartered bank but still had to find $500,000 in risk capital, for a total of $2 million. The Federal Office of Regional Development took eight months, almost a year, to make a favourable decision, but after a lot of representations and explanations federal officials probably realized this was an excellent project. Consequently, more than 30 jobs will be created, which means that the same number of people will leave the welfare or unemployment rolls.

This is a good example where, instead of having the government spending money, jobs are being created for the benefit of the whole country.

Unfortunately, many other projects did not get sufficient funding. This government had promised financing sources to the residents of these communities-I named one village, but representatives from many other ones came to see me because they have developed projects but will not have the necessary funds to complete them-so that they would be able to implement projects which enjoyed unanimous support in their communities and which would have created new jobs.

These people were willing to take the risk and to create companies to diversify local economies. By changing its policies, the government broke its promises without offering any alternative financing. For its part, the Bloc Quebecois wishes to broaden the application of the Small Business Loans Act to include businesses' working capital for all SMEs, because this often makes the difference between success and failure for a given project, whether for export or for the local market.

To implement this financing of SMEs' working capital, the Bloc proposes concrete and realistic solutions in its dissenting report, Appendix F of the report. I agree, of course, that the government should gauge all suggestions in the context of fiscal responsibility, and weigh the costs and benefits of all loan applications. SMEs must assume part of the technical responsibilities, that is to say they should have well structured, profitable and sustainable plans.

Clearly, if the government accepts the suggestion of the Bloc Quebecois or any other positive suggestion on small business capital financing, there will be social and economic benefits, in particular in remote areas like my riding of Abitibi, in Quebec.

In 1988, the FBDB, a major agent of development in our regions, gave more than $8.9 million to 86 manufacturing projects in Abitibi-Témiscamingue. The money was allocated under the Enterprise Development Program-Industrial, the EDP-I. This program allowed a number of businesses to acquire equipment and to upgrade their facilities, thereby improving

their productivity and preparing themselves for an economic recovery.

I could mention a number of examples of companies who benefited from this financing and have, today, the means to export wood byproducts from our area. Presently, with a budget of $ 1.5 million last year instead of eight million which could drop to zero, FORD-Q is targetting small and medium-sized businesses with, as I mentioned before, a strong export potential, which is not bad per se, but other small and medium-sized businesses in the tourism industry, for instance, should not be neglected. More importantly, new services provided by FORD-Q will no longer be in terms of investment but in terms of technical support, that is to say feasibility studies review and so on.

With such a small budget, it is going to be difficult for small and medium sized businesses in the Abitibi area to find funding in order to diversify their production since they depend mainly on mining and forestry as a source of funds for regional development. It is urgent to establish secondary industries in the region, which will result in more jobs, lower unemployment insurance expenses and, therefore, lower government expenditures and higher revenues.

The facts speak for themselves. Given the new orientation, the $1.6 million investment by FORD-Q in a tourism project in Val-d'Or will be the last one of this size. I do hope that with respect to the recommendations of the Standing Committee on Industry, budgets will be sufficient to stimulate all small and medium-sized businesses, without any discrimination.

To conclude, I would like to quote Mr. Alain Garneau, president of the Northwest Quebec prospectors association, Val-d'Or sector. It should be noted that, in our community, mining is one of the most important economic sectors. He said: "-most jobs are created by small and medium-sized businesses. They train most of the people employed in their own sector. They are economically and socially extremely important, a fact which is unfortunately too often forgotten by our governments-".

[The Deputy Speaker]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Gaspé-Fisheries; the hon. member for Calgary Southeast-CRTC; the hon. member for Davenport-Law of the Sea.

[Anna Terrana, Liberal, Vancouver East, BC]

Mr. Speaker, apparently one of my colleagues in the opposition would like to speak first. He has an emergency. I would not mind letting him go first.

[The Deputy Speaker]

A most courteous act by one of our members in favour of the hon. member for Prince George-Bulkley Valley. Then we will switch back.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

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.