Madam Speaker, I will be sharing my time with the member for Edmonton Southwest.
One of the most interesting things about human beings is that we very frequently do not learn from history. If we do not learn from history the one thing that we can count on is the fact that we will be doomed to repeat it.
When I was first involved in business, going back a few years to the very early seventies, I became aware of a government regional grant program under the acronym of DREE. Somehow under this DREE program the decision was made that the West Kootenays would be a have not portion of my particular part of the country whereas the East Kootenays had a lot of funds and could do its own thing.
As a result of the DREE program, there was a decision to go ahead with a chainsaw manufacturing process at Waneta, just outside of Trail in British Columbia. This chainsaw manufacturing was really spot on in terms of its time in coming to the market. Rather than just manufacturing chainsaws it was manufacturing a small personal portable chainsaw. For those of
us who are familiar with what was happening in that particular marketplace, it was very timely. Between 1972 and 1976 DREE put $200,000 into that chainsaw manufacturing company.
In Castlegar at about the same time there was another venture that went forward to generate light weight travel trailers. If we go back 21 or 22 years in our minds, we realize that there was a market for a light weight travel trailer. DREE had this light weight travel trailer manufacturer set up in Castlegar and put in $220,000.
Unfortunately, I am forced to report that neither of these ventures are still in place. As a matter of fact, they disappeared from the business scene. They are gone.
Working a little bit in this direction, in the early eighties in Cranbrook, which is where my home constituency is, there was a printing company. I am not really sure of the figures, but it was put into place with between $496,000 and $750,000 of government grants. That business went for about 24 months, ran into cash flow problems and the business was shut down. There was no way the government could ever recover its over half million dollar investment. Because it had run into the cash flow problems it had let its insurance lapse. The building was vandalized and hence there were no assets for the government to reclaim.
Coming even further forward into the mid to late 1980s I am very familiar with an operation in Langley. This one, instead of being unfortunate, unfortunately was a scam. A company decided to develop a communication development laboratory. The principals of that firm actually disguised antiquated equipment. People in smocks were running around and this fooled the government inspectors. The venture lasted one year. It was not quite enough of a scam to catch the attention of the police. As a result Canadians are out half a million dollars.
My thesis is if the marketplace will not support a business start up it likely will not support the business. That is the fundamental flaw, the fundamental problem of regional development grants.
Let me give some specific examples. The federal government wants to forgive $5.3 million it lent to the Sydney Steel Corporation of Nova Scotia which is owned by the Nova Scotia government. The Cape Breton company borrowed the money in the early 1970s to build a wharf. The government also wants to forgive the $20.4 million in interest payments the corporation now owes on that loan.
The government wants to forgive a $4.6 million loan to the International Tin Association, an organization set up to help stabilize the tin process. Since the association was disbanded in 1985 the government has determined the chances for repayment are rather slim.
We have an absolute hole as it were that we seem to be constantly pouring money into with good intentions. I sincerely applaud the motive, the background, and the desire of the government. Unfortunately, it has not learned from history.
In doing some research on this speech I had my assistant make some telephone calls and he reports this:
"Government's best intentions whether it be to assist small business or to employ people or train people would be best left to the people who know how to develop and manage company's employees, which means small business people in every community.
The best way government could do that according to the people I have talked to would be for the government to demand less from each small businessman in the way of red tape, completing forms, GST returns, in other words the services he is required to fulfil for the federal government. This would allow him more time to do what he does best which is to effectively run his company so as to produce some real dollars and provide real lasting jobs for people in his community and Canada as a whole.
Government by trying to control the labour market that interferes with supply and demand whether it be printers or cows only interferes with free enterprise and the people who really know the marketplace".
My point is that when the government gets involved with throwing around taxpayer's money unfortunately that almost invariably interferes with the normal marketplace.
The very best result that we can expect from the funds the Atlantic Canada Opportunities Agency and the Western Diversification Fund are throwing into the marketplace is that it will simply distort the marketplace. The difficulty is when it distorts the ordinary marketplace it makes it difficult for successful tax paying businesses to be able to continue in business. They find that all of a sudden their taxpayers' dollars are being used to subsidize businesses that are in competition with them.
I have been hearing a little bit of yapping from the other side of the House. Perhaps if they were to talk to some of their business people they would get exactly the same story as I am relating here.
I have explained the best result. The worst result is probably best explained when western economic diversification fund officials on January 16, 1990 lent $526,990 to Myrias Research Corporation. On April 17 they gave it another $1.4 million. On May 30, 1990 they gave it another $686 million. On August 9, 1990 they gave it another $775,000. On October 5, 1990 they gave it another $517,000. On October 26 the corporation was placed in receivership.
If the government, which has the best of intentions, granted, is not prepared to take lessons from history and learn from history then we have the difficulty of repeating history.