House of Commons Hansard #248 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was privacy.

Topics

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

3:35 p.m.

The Speaker

In my opinion the nays have it.

And more than five members having risen:

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

3:35 p.m.

The Speaker

Pursuant to Standing Order 76.1(8), a recorded division on the motion stands deferred.

The House will now proceed to the taking of the deferred divisions at the report stage of the bill before the House.

Call in the members.

And the division bells having rung:

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

3:35 p.m.

The Speaker

Pursuant to Standing Order 45(6), the recorded division on the question now before the House stands deferred until the usual time of adjournment on Monday, at which time the bells to call in the members will be sounded for not more than 15 minutes.

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

3:35 p.m.

Liberal

Marlene Catterall Liberal Ottawa West, ON

Mr. Speaker, on a point of order, I think you would find unanimous consent to further defer the votes until Tuesday at 5 p.m.

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

3:35 p.m.

The Speaker

Is that agreed?

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

3:35 p.m.

Some hon. members

Agreed.

The House resumed from October 25 consideration of the motion that Bill C-99, an act to amend the Small Business Loans Act, be read the second time and referred to a committee.

Small Business Loans ActGovernment Orders

October 26th, 1995 / 3:35 p.m.

Western Arctic Northwest Territories

Liberal

Ethel Blondin-Andrew LiberalSecretary of State (Training and Youth)

Mr. Speaker, I am pleased to speak to Bill C-99 and about how the government is acting on its commitment to provide leadership in helping small business grow and create jobs.

I will spend some time discussing the consultations that have fed into this legislation and the initiatives we have taken to help small business grow and prosper.

Small business has always played a crucial role in the Canadian economy, be it a local corner store, a remote fishing camp, parts suppliers to the aerospace industry or a computer software developer.

Small businesses are a vital job creator and are contributors to our country's wealth. Today there are about 2 million small businesses in Canada. They account for almost two-thirds of the jobs in the private sector and 60 per cent of Canada's economic output. It has been stated many times that small business creates 82 per cent of all new jobs.

In my riding small business played a pivotal role in the opening up and the development of the north from small aviation companies that led the way, to the service industries that followed to support the growth, to an increasing number of aboriginal owned and operated companies which provide the services needed and which drive the engine of economic growth in the communities.

I now illustrate some of the dynamic things small businesses are doing in the north. People in my riding are becoming increasingly aware of the potential for growth when we work together to create the economic and social development so needed. An excellent example is the Dogrib Nation group of companies. The Dogrib Treaty 11 Council recognized that the best way to address the needs and priorities of its communities was to play an active role in partnership with the businesses that deliver the services needed. Therefore it created the Dogrib Nation group of companies to address economic development needs from investments in hydro-electric power generation to forestry, heavy equipment supply, aviation in partnership with Canadian helicopters and commercial catering.

The group pursues a number of industrial and human resource development activities for and on behalf of the four Dogrib Nation communities. This is a living testament to the empowerment potential that can be unleashed by small business initiatives.

Another example is the Northern Transportation Company Limited, originally a crown corporation. NTCL's primary objective is to provide cost effective, reliable and comprehensive marine transportation and related services in northern Canada and the Arctic. Now NTCL is the wholly owned subsidiary of NorTerra Incorporated, which in turn is owned by two aboriginal corporations, the Inuvialuit Development Corporation and Nunasi Corporation. The Inuvialuit people of the Western Arctic and the Inuit of the Nunavut are the beneficial shareholders of NTCL.

There is recognition for those small businesses that have been able to achieve equity. Recently NTCL was the recipient of the federal locators award given to those companies that demonstrate they can bring in the groups under-represented in the general population or general labour market areas.

When we bring small business down to the human grassroots level, we look at small communities like the community in my riding of Fort Resolution. The people have undertaken to commit themselves to the small business of running a sawmill, a very industrious and skills related industry. The community can see the results of it and have the participation in terms of jobs and watch exactly how small business grows. They have been able to develop

an economic development arm which has allowed them to provide some of the supplies they need in order to build their homes and to provide the region with some of those facilities.

They have taken it upon themselves to get into an industry that would produce some of the materials needed for building homes such as moulds to create bathtubs and all the other things needed for use inside a home.

There are a number of other items they produce. They are expanding and diversifying which is the key to successful small businesses to either focus and do something very specialized they are good at or to capture a market. This seems to be what they are doing, and doing it very well.

During the recessionary years when large multinational corporations were laying off workers, small businesses were responsible for almost all of the net new jobs created. Why are they so successful? Small businesses embody the dynamism and flexibility to respond quickly to new challenges. They know they have to innovate aggressively in order to compete.

Canada is now moving into a new economy, one characterized by rapid technological change, intense global competition and innovation. Small business has the right stuff to succeed in this environment. However, small business cannot do it alone. It needs the right environment and the right tools to get the job done and that is our responsibility.

The task of the government is threefold in terms of small business being successful. The first thing we must do is create the best economic conditions and institutions that will allow these innovators in the private sector to get on with it. It always helps to have a country as politically stable as it is economically stable. It helps to create the right condition and the right climate for those small businesses to flourish. It helps to create an environment where new ideas are spawned and where ideas, technology, and new production processes move quickly throughout the economy. It helps Canadians realize that innovation does not just happen; it thrives best in countries that consciously understand the process and take steps to create a national system of innovation. This means we must work with the private sector to identify strategic opportunities and channel our resources toward fulfilling those opportunities.

In February 1994 we asked the small business community to help us create the environment and the tools they need to succeed. The House of Commons Standing Committee on Industry, the private sector small business working committee, the chamber of commerce, and many other groups contributed to one of the most comprehensive reviews of small business ever undertaken.

Four primary messages emerged from the review. Small business told us that with the proper support they have a vast untapped

potential for creating jobs and wealth. This is no secret. This is something that is quite well known and has been demonstrated time and time again. Reducing the deficit is one of the most important steps toward unleashing this potential, we were told by the various proponents. Government programs must become more efficient, effective, and relevant to the needs of small business. Who knows best? Of course small business does, with their various proponents. Finally, the vibrant small business sector that Canada needs cannot be created by the government alone.

We have listened to these messages and we have acted on them. We have placed the needs and concerns of small business at the centre of our job creation agenda. Our consultations reaffirm that high deficits and a rising debt burden spoil even the best prospects for any country's economic growth. We need stable economic policies for sustained growth and job creation. The fiscal policies we are pursuing address this need.

We in Canada recognize the serious debt-to-GDP problem we face, and we are responding to it with the biggest budget cuts since demobilization following World War II. The 1995 Canadian budget will reduce the federal government's borrowing requirements to 1.7 per cent of GDP by the next fiscal year, 1996-97. This is the lowest of all the G-7 countries.

We also set an inflation target range of 1 per cent to 3 per cent and we have in fact kept inflation below the midpoint of that range since 1991. In terms of inflation, Canada is the Switzerland of North America in the 1990s.

Also in the last budget the Minister of Finance announced a rollback of unemployment insurance premiums from $3.07 to $3 per $100 of wages to lighten the burden of profit-insensitive taxes. We are refocusing our remaining programs to reduce duplication and serve the needs of small business in the best way we can.

The red tape and associated paper work and complex regulatory hurdles faced by any venture can be discouraging, if not insurmountable. We have eliminated 250 regulations. We are in the process of reviewing another 370 in an effort to achieve a more efficient and effective framework for business.

We continue to work with the private sector financial institutions to improve their ability to serve small business. They have responded with new services, including specialized lending units to serve the needs of knowledge-based firms. We recognize that there are some areas the private sector will not be able to serve very well.

We have responded by reviewing and then giving a new mandate to the former Federal Business Development Bank. The new name Business Development Bank of Canada is intended to highlight the bank's new approach. The bank will focus on filling our four marketing gaps. First is the knowledge gap, gaining an understanding of the information technologies, software, and related indus-

tries in order to serve businesses where the principal assets are between the ears of the owners and not conventional hard assets.

Second is the size gap, finding ways of providing smaller loans to meet small business client needs while still breaking even financially. People do not go into small business to go broke. People go into small business in order to flourish, in order to specialize and develop and diversify if they have to, to capture those markets that are out there. Essentially, small business means business; essentially that is what it is.

Third is a flexible financing gap, providing loans and other forms of financing on flexible repayment terms, to take account of clients' variable cashflows, particularly in the early years.

Fourth is the risk gap, lending up the risk curve to provide clients with appropriately priced access to capital. This tends to be generally a big problem where you do not have a lot of built-in infrastructure, where you have a lot of difficulty for those small businesses to succeed in areas where they may be very remote and do not have the kinds of infrastructures that are available in a more broadly based population.

We recognize that implementing this new mandate as a complementary lender will require nothing less than a cultural revolution. The bank is developing a corporate plan that will give effect to this new mandate. We expect that the new Business Development Bank of Canada will become recognized in Canada and around the world as a leader in developing new financial instruments for small business. The example set by the new bank will show the major banks that small businesses are worth their time and effort and will inspire them to greater participation in small business financing. Access to financing remains an important issue for entrepreneurs. However, development of a business climate that encourages growth and job creation is equally important.

We are determined that the business framework laws shall be part of Canada's comparative advantage. We are seeking to forge new partnerships among the innovative players in the economy to ensure a vibrant small business sector. We recognize that support for innovation must be sharply focused on the commercialization of science and technology. We are concentrating our efforts in two key areas: building partnerships between all players, especially innovative small businesses, and improving strategic access to information.

We have launched a Canadian technology network that will help small business acquire and manage new and complex technology by putting them in contact with the Canadian research community and we will provide business with rapid access to information on domestic technology.

We have established the technology partnerships program to promote collaboration between Canadian universities and small and medium-sized businesses to turn university technologies and ideas into new and improved products and processes and services. It will bring together universities and businesses in cost-shared efforts to demonstrate, develop, and market promising technologies.

Perhaps nowhere is there greater opportunity for innovative businesses to realize their full potential than through the information highway. The federal government is moving quickly to develop an information highway strategy that will build on national strengths in telecommunications and information and information technologies to create jobs through innovation and investment, reinforce Canadian sovereignty and cultural identity, and ensure universal access at reasonable cost.

We established this commitment to small business in the Liberal Party's red book because we recognized that they are the engines of Canadian economic growth. We put this commitment into action by announcing proposals designed to help small business grow. We furthered this commitment with the measures contained in the last budget, and we will continue to maintain this commitment to ensure the health and prosperity of Canadian small businesses.

We brought forward Bill C-99 to enable the completion of the process of modernization that moved the SBLA program to full cost recovery. This renewal will relieve the financial burden of the program on Canadian taxpayers while enabling the SBLA to continue to provide its benefits to small business.

I would like to emphasize the importance of what can be accomplished when we work together in partnership as Canadians. Earlier I talked about some of the innovative and dynamic things that are happening in my riding as a result of people working in partnership and co-operation.

The United Nations recognizes Canada as the best country in the world to live in. We accomplished this by living and working together. We created the environment, economically, socially, politically, and the opportunities for all Canadians to empower themselves and in turn contribute to society. It is through these actions that we will also fulfil our promise of creating jobs and prosperity for all Canadians.

The north is no different. As proud Canadians in the north, we too want to contribute to society, we too want to contribute to the overall economy and well-being of our country. It is through an innovation like this that perhaps those opportunities and those doors of opportunity become more available.

Small Business Loans ActGovernment Orders

3:55 p.m.

Broadview—Greenwood Ontario

Liberal

Dennis Mills LiberalParliamentary Secretary to Minister of Industry

Mr. Speaker, I would like to thank the member for Western Arctic for participating in this debate, for supporting the bill and talking about the importance of small business, especially in the north.

I would like to ask a question that arises from an experience I had three weeks ago when I was travelling in Austria. I met some Austrian businessmen who had travelled to the north on tourism trips to hunt and to enjoy the beauty of the Arctic. They felt there was tremendous potential and opportunity for tourism in the north, especially if there were more extensive promotion in Europe. They also thought there was an opportunity to develop a tourism infrastructure in the north.

I wonder what the member's experience has been when she talks with the small business men and women in her community who are tourism operators, who have incredible potential with the resources of the north. What has been the experience of those small business entrepreneurs with the financial institutions in this country? Do they find the financial institutions are becoming much more progressive in their thinking and are supporting these small businesses with loans to build those businesses so they can promote these opportunities? What has been her personal experience as a member of Parliament serving the tourism operators in the north?

Small Business Loans ActGovernment Orders

3:55 p.m.

Liberal

Ethel Blondin-Andrew Liberal Western Arctic, NT

Mr. Speaker, I am very pleased the member for Broadview-Greenwood has brought forward this question. I am very appreciative of his question. If there was ever an industry that would be next to the resource industry in the north, it is the other resource industry, tourism.

We do need the infrastructure. I suppose one of the dreams we have as politicians and one of the things I often refer to as an infrastructure requirement would be the completion of the Mackenzie Valley highway. That would open up a tremendous potential and complete the loop of having to come down to travel the Trans-Canada Highway right into the north, go right up the Mackenzie Valley and travel along 1,800 kilometres of river on a highway. It would allow the resource industry that is there to have access to the Mackenzie Range and the Nahanni National Park. It would open up a tremendous amount for Canada to see. That is what makes this country so wonderful. That is what makes this country so beautiful. It makes us appreciate all parts of this country.

The Reform Party laughs. When we talk about our individual areas we tend to appreciate and respect each other, not laugh at each other. The hon. member has been to my riding. It is really important for members to see that beauty, to see that vast expanse which says this is part of Canada. This is what we are debating today. We cannot describe how wonderful and beautiful our country is. As Canadians we have the opportunity to build on it, to continue to expand and make it even better than it is by building that infrastructure.

The financial institutions my colleague referred to have provided this opportunity with the revamping of the Business Development Bank of Canada. It is going to open the doors of opportunity to those small businesses and tourism operators to do what was suggested and make it accessible.

There is an influx of European tourists from Germany, Austria and Japan. They are going to see the pristine north, to see the flora and fauna species which are not available in their own countries. That resource is worth sharing with Canada and the world. The way to do that is by making these institutions and resources more accessible by changing the Small Business Loans Act.

Small Business Loans ActGovernment Orders

4 p.m.

Reform

Garry Breitkreuz Reform Yorkton—Melville, SK

Mr. Speaker, I want to clarify some of the accusations that came this way. We were not laughing at the minister. What we were laughing at is the fact that the Liberals have frittered that infrastructure money away on all kinds of pork barrel operations. Now when a highway needs to be built, there is no money left.

I would like the minister to comment on why that infrastucture money was not used for true infrastructure.

Small Business Loans ActGovernment Orders

4 p.m.

Liberal

Ethel Blondin-Andrew Liberal Western Arctic, NT

Mr. Speaker, I appreciate the back-handed compliment from the Reform Party. It is unfortunate it could not just be an up front compliment.

I understand what Reformers are saying. In terms of the infrastructure, I must say that all projects the infrastructure money has gone to are priorities set by the people in the north. We gave them the money and they decided what they wanted to do.

If we are going to talk about building a highway, in 1984 it cost $1 million a kilometre. Simply put, Canada does not have that kind of money. There are a lot of kilometres of road to be built and we do not have that kind of cash.

I am happy the Reformers are lobbying for a road in my riding. I would welcome them to transfer their infrastructure money to help us build the MacKenzie Valley highway. That would be great. Let me say that it is a tremendous investment and even though I would like the government to make that commitment, it cannot do so at this time. In light of deficit reduction, we must be realistic in all the priorities we set. It is a long term goal, a dream of mine and a dream of northerners. It is something I appreciate the help of the Reform Party on.

Small Business Loans ActGovernment Orders

4 p.m.

NDP

Nelson Riis NDP Kamloops, BC

Mr. Speaker, I had the good fortune to visit my hon. friend's constituency this past summer. I concur that it is one of the most spectacular parts of the country.

I visited a number of business people in her constituency. One runs a small hotel or lodge and has been trying to sell it for about

15 years. He would find a potential buyer and they would try to arrange financing. He found the difficulty was that he lived in an environment that often was rather vague in the minds of southern bankers. It is dark for half of the year and has an unusual tourist season. It was not clear what the season was, whether it was summer or winter, and consequently, the individual could not get financing.

My question in a sense is a take-off from my hon. friend for Broadview-Greenwood. When it comes to financing, particularly with respect to tourist related enterprises in the north, does the hon. member agree it is a major area and that financial institutions simply do not have the financing mechanisms in place to meet the demands and needs of the emerging northern economy?

Small Business Loans ActGovernment Orders

4 p.m.

Liberal

Ethel Blondin-Andrew Liberal Western Arctic, NT

Mr. Speaker, there is no dispute of the fact that certain operators and owners of businesses, be they big game hunters, lodge owners or whatever have had trouble because the economy has not allowed for people to buy into those opportunities. There has been some difficulty in accessing those resources.

I must reiterate that changing the Small Business Loans Act will make these resources more available. Not only that, some of the Canadian banks are developing partnerships, for instance with aboriginal communities. There is more cash available now since we have settled land claims. Potential partners are speculating and looking at new opportunities. Things are actually getting better, but there are no magic solutions.

We were very lucky. If I might compliment my colleague, my riding was made more beautiful by his presence as a tourist. I welcome more people to the north.

Small Business Loans ActGovernment Orders

4:05 p.m.

NDP

Nelson Riis NDP Kamloops, BC

Mr. Speaker, I am delighted to have the opportunity to say a few words regarding Bill C-99, an act to amend the Small Business Loans Act. At second reading stage the assumption is that we are talking about the principle of the bill. On that point I want to register a deep disappointment with this initiative.

We have heard thoughtful presentations from all sides of the House regarding the value of small business, the importance of small business and the critical nature which small business has taken on in the changing economy. If this is any indication of how the government plans to react to these needs, to this new sense of dynamism in the country, it is pathetic.

My hon. friend from the territories indicated that this is a major step forward. This is not a major step forward. Quite frankly, this is a little technical housekeeping which will build total cost recovery into the legislation. Actually, it will probably make it a bit tougher for people to obtain a loan because of the loan guarantee being decreased to 85 per cent from 90 per cent. That will cause the banks to be a bit more wary in terms of lending.

Then of course there is the provision that through order in council the government can make changes to the legislation. I have seen changes in my short time as a member of Parliament. At one time there was a 100 per cent guarantee. Then it decreased to 90 per cent. Now it is being decreased to 85 per cent. It is fair to say that if this trend continues, we will soon see the guarantee being decreased to 75 per cent, 50 per cent, or whatever, which would essentially make it a non-program.

I am concerned about the influence which, behind closed doors, cabinet will have to change this crucial piece of legislation. I happen to think it is a good piece of legislation. However, I do have a deep concern that this is the only initiative which we are discussing.

Let me put this into context. I am one of many members who believe that the small business sector is the crucial job creating sector in the country today and will be even more so in the future. As a result of both government and private enterprise downsizing, the role of the small operation, the independent operator and entrepreneur has become more important than ever.

We are visited regularly in our constituency offices by young people who have sent out 200 resumés, who have filled out 100 job applications or who have knocked on 50 doors trying to find employment. Often these young people are well educated and well trained. They have marketable technical skills and good research abilities. They are self-starters and so on. Yet they are having difficulty finding a job using the traditional process for finding a job.

The young people of the future who will be employed will be those who actually create their own enterprise. They will realize that they will not be working for a firm. They will not be working for an accounting company. They will not be working in a small manufacturing firm. It will be up to them to actually start their own enterprise from scratch. They will be the ultimate entrepreneurs, able to take a concept, see an opportunity and put that into play.

Today we see two different types of small business operators. One type is the small business operator who finds himself attempting to start a small business or is looking for ways of starting one. He has very little experience in the world of business and probably never thought he would actually start a business.

Because of the layoffs in the private sector and the downsizing in the public sector people like him simply find themselves out of work and the only solution they see is to start an enterprise. One of the areas where government could help would be to find ways and means to enable those men and women to obtain the necessary

skills to start a small business and to run it successfully, or to upgrade their skills or obtain retraining.

I appreciate there are programs in place now. I am thinking in particular of some of the work done by the Business Development Bank of Canada and others. This is one area where government can provide some service to encourage the development of these, let us say, incubator centres.

The other type of business people are the individuals who have wanted to be in business all their lives. Simply by their nature, instinct and character they are business people. They have developed the necessary skills or perhaps have them innately and have enrolled in programs or courses to bring themselves up to speed to be successful business operators.

These two types of operators are now becoming increasingly more familiar on the economic landscape of the country.

In Kamloops we are in the process of celebrating Small Business Week. I heard the definition of a small business person the other day and I thought it was very apt. I realize that when it comes to the Canadian Federation of Independent Business and other business organizations, economic organizations, banks and other financial institutions, they all have their own definitions of what a small business operation is.

The one this person came forward with was that a small business person is one who works 18 hours a day, seven days a week for the equivalent of about an eight hour daily wage. In today's economic environment that pretty well sums it up. These people are dedicated and committed to their enterprise. They are prepared to dedicate literally their entire lives. It becomes a lifestyle to see a new business start up or an existing business to continue to expand. These are the people we need to encourage in all ways.

The question is: How do we encourage them? What can we do? Personally I have wrestled with this for many years. I sent out a questionnaire to the small business operators in my constituency a while back. I asked them to help me with ideas as to how they thought the government could help them.

Summarizing what they said, they said three things: "Get out of our way; get out of our way; get out of our way. We will take care of ourselves. We do not actually need help. If you could allow us to more easily spend time on developing a new enterprise, new technologies, new processes, new marketing programs, that is what we need to do. We need to spend time on that as opposed to filling out countless forms". Mountains and mounds of red tape confront the typical small business operator. There is a lot of truth in that.

Underlying all of this is the recognition of the hated GST and what that has done and continues to do particularly to small businesses. I look across the aisle at my Liberal colleagues and do look forward to the day when that GST is replaced. I do not mean that the name be replaced; I mean that the actual tax be eliminated and we come up with a system that is less cumbersome and more fair for the small business community.

There are three good features we have seen developed over the last number of years. On the top of my list in terms of support, assistance, encouragement and nurturing for small business operators is community futures. I do not know what other people have had in terms of experience with community futures but I want to mention what I have experienced.

In the Kamloops area we set up a community futures called Thompson Country Community Futures Society. Over the last number of years hundreds of new businesses have resulted from that government program, but not the government program per se. Obviously individuals who had the ideas, the energy and the dedication to see these businesses through to completion were the critical ingredient.

However the community futures program was able to provide start up funding in two ways. One program working in co-operation with Employment Canada enabled people to continue receiving unemployment insurance while they started up a new enterprise. It has been very helpful and very successful. Everyone would acknowledge that the chance of a person starting up a small business getting into a profit making situation in the first few weeks or months is very remote.

The program enabled individuals who had lost their jobs and were eligible for unemployment insurance to continue receiving unemployment insurance for a number of months while they started their new enterprises. That made the difference. That gave them a leg up, a small opportunity to provide for their families at the same time as they were starting their new enterprises.

Another program attached to community futures was the one where small businesses with good business plans could apply for up to $75,000 in funding. The decision is made by successful local business people who know the region, know the area and perhaps even know the individual. They have a very sound appreciation for what businesses are successful, what businesses have a good chance at being successful and what risky areas should be watched. They evaluate business plans put forward often with help from the Thompson Country Community Futures Society and make decisions.

They are loans, not grants, with modest interest rates attached to them with often generous payback programs that are rather creative in terms of paying back the money being borrowed. They are provided to new firms, particularly the ones that do not qualify easily in terms of usual categories for bank funding, particularly people who are trying new market areas, new technologies or creative new age businesses that do not have a lot of inventory to

use as collateral in the traditional approach to lending of financial institutions.

The Business Development Bank of Canada is playing a more positive role now than it has in the past. Over the last number of years to say that I have been disappointed with the role it has played would be understating my concern. I looked at the old FBDB operation and compared it to the Royal Bank of Canada, the Bank of Montreal or whatever. It seemed that it was the most conservative lending institution on the landscape and was certainly of little help to small business when it came to lending. When it came to case counselling and so on it was another matter. That has changed somewhat and I appreciate the thrust of the new legislation is a step in the right direction.

As my friend from Western Arctic indicated, banks and other financial institutions are changing slightly. They are moving slightly in the right direction. A lot of credit goes to members of Parliament, other individuals and organizations that have mounted pressure. They pointed out that banks were simply not fulfilling their roles or were not being helpful to this growing and creative sector.

There have been significant movements in terms of bank policies with the creation of a small business trouble shooter all banks now have in place. It is somebody to phone, to complain to or to ask questions about why a loan was turned down. There is much greater sensitivity in terms of funding women entrepreneurs, women business persons and aboriginal borrowers.

It is not that I think banks are not particularly creative themselves. They are responding to public pressure. They now realize these are areas they have to move into. Perhaps a little less altruistic, they are responding to the fact that as First Nations peoples settle land claims vast amounts of money may be involved. I suspect some banks are looking forward to getting involved in that operation as a financial growth possibility and perhaps have more of an interest in funding aboriginal enterprises. Nevertheless, in reality there is positive movement in all those areas.

I point out what I think is a particular problem area. Again I acknowledge there have been some improvements in the last little while. The government's procurement programs have assisted a number of small enterprises in my own constituency. A variety of programs assist small businesses to develop new technologies. Hopefully we are looking forward to the information highway strategy. It is not only necessary but will be helpful in the development of small enterprises.

There is a need for more flexible financing, particularly in some critical areas of growth in the country such as the tourism or hospitality business. One situation that brings this to mind in my own constituency is an operation called Mike Wiegle Heli-Skiing Operations. It has been in operation for many years. It is a very successful heli-skiing operation that caters almost exclusively to overseas skiers from Europe who come for a week or two to ski down the glaciers of the mountains in central British Columbia. It is superb skiing. To set up a major resort in an isolated area far from airports or population centres and to obtain financing arrangements that allow some flexibility is extremely difficult. The Western diversification fund was helpful in the start up period, but if we are to assist businesses to expand into new areas and if we are to be successful, we have to find ways to be more creative, and I aim these comments particularly at financial institutions.

The legislation is pathetic. I will not say much about it. Enough has been said. It will go to committee. It is a continuation of the same. It is certainly helpful. The SBLA has been helpful to many small business operators across the country including the Kamloops region, but there is much more we could do.

Let me summarize by indicating a critical initiative we need to take. When I say "we" I do not mean as a Parliament or as a government; I mean as a country. We all acknowledge that for a business to be successful or perhaps even for an individual to be successful there has to be some kind of plan, strategy or blueprint. There has to be a flexible business plan that acknowledges changing times and so on.

We need something similar as a country. We could call it the business plan for Canada. We could identify areas where obvious growth potential exists and where we would be putting our special efforts as federal, provincial, regional and local governments, financial institutions, business organizations, investors and entrepreneurs.

We can look around the world at countries that have been more successful than ourselves when it comes to economic development and job creation. It tends to be countries that have a business plan in place which everyone acknowledges. Maybe they do not agree with it but at least it is acknowledged. It sends a signal to banks of the direction of the country for the next decade. It signals entrepreneurs and investors of a direction, whether it is in pharmaceuticals, agri-business, tourism or whatever.

Some kind of national Canadian business plan would be appropriate. Then we would have to find out where we fit into it. What role would the federal government play, if any? What role would the provincial and regional governments play, if any? I suspect there would be significant roles. With that plan we would be much more successful.

Granted, this is most successful with smaller countries in which it is a lot easier to come up with a consensus in terms of direction and development. We are the second largest country in the world geographically and it causes problems that we are experiencing

virtually as we speak. It is something we must look at, and it would be a business strategy for the country for the next decade or two.

I will take leave and look forward to committee work and to debating the bill at third reading.

Business Of The HouseGovernment Orders

4:25 p.m.

The Acting Speaker (Mr. Kilger)

Before proceeding to questions and comments following the hon. member for Kamloops, I have a statement to make concerning private members' hour for tomorrow, Friday, October 27, 1995.

I have received written notice from the hon. member for Fraser Valley East that he will be unable to move his motion during private members' hour tomorrow.

Since it was impossible to arrange for an exchange of positions in the order of precedence, pursuant to Standing Order 94, I ask the Clerk to drop this item to the bottom of the order of precedence. Pursuant to Standing Order 94, the hour for private members' business for tomorrow shall be suspended, and the House shall continue with the business before it at that time.

The House resumed consideration of the motion that Bill C-99, an act to amend the Small Business Loans Act, be read the second time and referred to a committee.

Small Business Loans ActGovernment Orders

4:25 p.m.

Broadview—Greenwood Ontario

Liberal

Dennis Mills LiberalParliamentary Secretary to Minister of Industry

Mr. Speaker, one of the great things the member for Kamloops brings to the House is his ability to remind the Liberal Party from time to time when it tends to move a little too far to the right. The Reform Party influence is pretty obvious in the bill, but we have to focus on some of those matters.

The bill will go to committee. Contrary to what the member said, the bill cannot be amended by regulation. We will make that amendment in committee. Hopefully all members will continue in the same spirit we have had in the committee to amend the bill.

The member alluded to an idea in the first part of his speech about young entrepreneurs needing access to start up capital. It was a very important insight into a very important issue all of us in the House must address. Even Reform Party members would agree. I notice they are agreeing.

I also noticed something in my own community. I ache when I see some young talent that has just finished engineering school or university and the old institutions or the larger corporations that used to be there to provide their first jobs are no longer hiring young people. Many of them are frustrated, and we have not addressed the issue head on in terms of providing entrepreneurial support systems that are required if they are to get going.

I am thinking aloud. When we go into committee I would be interested in the member's views or thoughts on looking at the whole list of criteria in the Small Business Loans Act. Should we look at the notion of including a clause in the bill that deals with young entrepreneurs? The bill could be a tool used by banks to make them a little more sensitive. Obviously the bill will help bank managers take the extra risk they probably would not take on their own.

What would the member for Kamloops say about possibly looking into that area as a way of altering the bill to look after young entrepreneurs?

Small Business Loans ActGovernment Orders

4:25 p.m.

NDP

Nelson Riis NDP Kamloops, BC

Mr. Speaker, we acknowledge that in the early days SBLA was intended to be a mechanism to provide encouragement for bankers to lend money to small businesses. In the same spirit, there is a new concern out there which the hon. member has described well. It may be an opportunity to encourage the banks to take advantage of the SBLA to provide necessary funding to these newly emerging group of entrepreneurs.

A mechanism is about to be put in place to track the lending of financial institutions and to see where the loans are going and to what extent the banks are responding to the new needs in society. It is a useful step.

It is time to look at new mechanisms and I will very briefly mention one. Some states in the United States had a vehicle called agri-bonds, that were somewhat like Canada Savings Bonds, to provide agricultural funding. These were set aside for agricultural use only. Farmers and ranchers were encouraged to invest in agri-bonds knowing that the money would go back to assist hard pressed farmers in their state. That is a bit of a generalization but it summarizes the point.

Troublesome areas, such as tourism related businesses, where it is difficult to find funding for new tourist related projects, should be identified. Could we not consider the development of a "toury" bond as opposed to an agri-bond? Investors would put their money into a toury bond, knowing that the money would go to help new Canadian hospitality related businesses to expand or be created. It would be a way to direct money to tourism, as opposed to the old favourite of much of the money, the RRSP, a certain percentage of which is being invested overseas or in other countries. I would like to see a little more channelling of some of these funds into troublesome areas such as tourist or hospitality related industries.

It is another idea on which my friend from Broadview-Greenwood could respond at some later time. The Canadian toury bond could be a take-off on the U.S. agri-bond.

Small Business Loans ActGovernment Orders

4:30 p.m.

Reform

Daphne Jennings Reform Mission—Coquitlam, BC

Mr. Speaker, I would like to tell the member for Kamloops that I found his speech very interesting. I share his enthusiasm for small business and realize the importance of it. I am concerned about one particular item, community futures. I would like to have his expertise on this.

Taxpayers' money is being used by community futures. Granted, some of the businesses that apply do very well and have some excellent results. However a high rate of those businesses do not succeed and, at least in the ones I happened to scrutinize, there does not appear to be any accountability for losses. This is the taxpayers' money and I am sure taxpayers feel they should know how it is being spent. The Privacy Act seems to get in the way when we inquire about accountability.

I wonder what the member for Kamloops feels regarding losses in the community futures program and does he feel there should be some accountability?

Small Business Loans ActGovernment Orders

4:30 p.m.

NDP

Nelson Riis NDP Kamloops, BC

Mr. Speaker, I appreciate the question. Of course there needs to be more accountability built into the program. I would identify that as one of the continuing areas of concern with the community futures program.

In my estimation and my experience the value of the program depends on the personnel who manage it and the expertise of the individuals who decide who gets a loan and who does not.

In Kamloops we have had a very high success rate. But there will be losses, just as there are losses with bank loans and other kinds of loans. Even if there was a certain loan loss, it might be an indication of some success. The role of community futures seems to be to provide funding for those relatively high risk business ventures that cannot, for whatever reason, obtain funding from more traditional lending sources and therefore appeal for support from community futures boards.

If I may use this opportunity to mention a shortcoming of the existing system, it is that individuals who have submitted business plans and have what appear to be good business ideas and are encouraged to continue, but when they are rejected it often seems to be just luck. They are just rejected. The client walks away after spending many weeks or months preparing a thoughtful, careful business plan only to have dreams and hopes shattered. We must have a better system of appeal or a follow-up educational program to indicate to those men and women where they may be a little in error in their planning. This is another shortcoming.

Of all federal government programs of which I am personally aware and have some understanding of their use and value, this community futures program is far the best.

Small Business Loans ActGovernment Orders

4:35 p.m.

Liberal

David Iftody Liberal Provencher, MB

Mr. Speaker, before I begin my comments I should note that I was listening closely to the member for Kamloops. I know of his interest in the banking industry, of his lengthy experience here in the House and I believe on the finance committee.

In his remarks he used words such as deeply disappointed and pathetic and other kinds of language. However, I recall being in Toronto recently with the Standing Committee on Industry where we heard from the banks. I believe the testimony was in July or August. In the promotional material from either the Royal Bank or the CIBC, in which the hon. member had spent six weeks, it was using comments of his praising the banks. I was disappointed to see that.

It gives me pleasure to speak to this bill. The provisions of the bill are the result of consultations with leading Canadian business people such as the Canadian Federation of Independent Business. Equally if not more important to the undertaking was the report of the Standing Committee on Industry "Taking Care of Small Business". I had the privilege to sit on that committee as a government member from western Canada.

The legislative measures introduced in Bill C-99 are ultimately about access to capital for small business. Following the recession which began around 1990 small businesses in Canada had undergone unprecedented restructuring for a new and emerging global economy. These challenges have been more difficult because of the impediments and constraints to access to much needed capital.

Bill C-99 through amendments to the Small Business Loans Act will provide a more predictable relationship between the banks, the Government of Canada and the business community. I will not reiterate here the specific provisions of the SBLA but will merely state its intent and purpose is to enhance that financial environment and relationship between borrowers or small business and the Canadian financial institutions.

Stated very simply, the Government of Canada agrees to stand with small business and where the banks have refused to take the risk on new or expanding businesses, the government will partner and stand with small business to ensure small business loans are available to those who need it the most.

It is instructive to state that legislative changes are, in addition to reacting to the recommendations of the business community, in keeping with the government's belief that small business wants this government, and indeed all governments in Canada, to reduce their

expenditures including those which include direct and indirect subsidies to small businesses.

In recent years the SBLA program has cost taxpayers almost $20 million to $30 million a year. However, the loan loss coverage for the year 1994-95 is estimated to run at close to $100 million, threatening the sustainability of the program itself.

Of equal importance is the fact that 40 per cent of the loans covered by this insurance program would have been made regardless. We are told by outside experts analysing the loan applications made through the banks that 40 per cent of those loans would have been made anyway. They did not need this expensive coverage that government was providing.

Without the high cost of the subsidy these firms would now be seeking financing at a much lower cost than under the provisions of this bill. Furthermore, this will allow those firms that really need financing to have those 40 per cent move out into the traditional lending areas and those new small businesses will occupy the space at the bottom or the top of the lending priorities and we hope creating new jobs.

During the presentations made to the committee on industry the witnesses told members that they would be willing to pay higher premiums, for instance, in the knowledge based industries if they could get the capital needed. Repeatedly the 60 interveners and witnesses that we saw and an equal number the presentations that were submitted to the committee were saying to us that they did not mind paying 1 or 2 per cent more on a loan because if they have a knowledge based industry they are prepared to pay that kind of money to the financial institutions if they are willing to take a risk on them. The point spread was not the real issue.

It is quite interesting to note that the small business community continually talks about the importance of the cost of borrowing money. They were so convinced of their product, so convinced of their market access, so convinced of their success in those small businesses, that they did not mind paying another point or two. They needed an opportunity and somebody to stand with them to take a risk on those businesses.

I would like to talk for a moment about western Canada and in particular of my riding of Provencher in Manitoba. Farming and small business is really the backbone of that constituency. Increasingly I am told by finance officials in the department of finance in Manitoba that small business in the agricultural sector is going to increasingly in the 21st century provide the cash receipts for the finance department as well.

This reflects the fact that in western Canada the number of people employed in small businesses is almost 40 per cent. What is really striking, and a lot of folks perhaps do not realize it, is that in Ontario it is only 32 per cent. These statistics are quite revealing and demonstrate clearly to me, as a member from Manitoba, the importance of small business in western Canada and in the next five or ten years how important this sector will become in our area.

During the first quarter of 1994 in Manitoba, for example, companies with up to 50 employees accounted for almost 20,000 jobs, far in excess of those larger companies with 300 employees or more. In 1994 companies with less than five staff also accounted for many of the growing small businesses in Manitoba. I am told 4,737 new business name registrations were filed in Manitoba in 1995.

A profile of these is very important. I speak to this issue as a member from rural Canada, from rural Manitoba. A profile of the start-up businesses in western Canada demonstrates that a typical new firm, 87 per cent, have less than five employees and for the most part, 57 per cent, are located in rural areas and run out of the homes of the operators. In other words, most of the small business growth is probably a young or middle aged couple who have started a small business out of their home, are looking for a loan, probably less than $25,000 to start. This is what we are told in the data we have received from the banks. These small businesses are creating the jobs in rural Manitoba and indeed in my riding of Provencher. There have been great gains made in terms of the start-up of companies. In 1990 there were almost 600 registered bankruptcies in Manitoba. In 1995 there have been 96. That demonstrates quite clearly what is happening. The economy and the dynamics of capitalism are restructuring. Larger companies are laying off people but young entrepreneurs are stepping up to the plate, trying to get access to capital in order to start a small business.

Here we see a profile of the 21st century entrepreneur who is younger, working out of the home and more likely to be involved in agriculture related small business.

What is the federal government doing? In addition to the changes to the SBLA and the Small Business Development Bank of Canada, what other kinds of measures is the government employing, particularly in western Canada, to help these people?

Through the auspices of the Department of Western Economic Diversification the government will provide a fund of $30 million for debt capital. These resources will be directed toward biotechnology and agri-biotechnology with loans ranging from $50,000 to $500,000. There is also an innovative ten-year program creating a $100 million capital pool to assist Canadian agricultural value added processing firms through patient debt capital. The government will partner these agreements.

The banks have complained both publicly and to the standing committee that in responding to the needs of the business community the government was bank bashing. I want to make it clear this was never the intention of the committee. It was merely to prod the banks, as the hon. member for Kamloops suggested, to open up their gates for small business to have access to capital.

Congratulations to the banks for doing that. The Royal Bank of Canada and the Canadian Imperial Bank of Commerce have joined with the western economic development fund to provide this patient debt capital and they should be applauded for that. However, there is a lot of work to do and a long way to go.

What the government is prepared to do through these public and private instruments is reach to the small business community, to stand with it and encourage it to take the necessary risks.

There have been a number of recent initiatives in my riding which are important and give testimony to the growth in the agricultural and small business sectors. There is a great change going on not only in the small business sector. As we have heard many times, the government is cutting back on its expenditures. That is what the Canadian people have asked it to do. The government has made changes to the Western Grain Transportation Act and those subsidies to business pursuant to its obligations under the WTO.

What has been the outcome of these programs in western diversification? Recently I had the privilege with the Minister of Western Economic Diversification to join with 25 farmers from the Altona region of southern Manitoba, where we produce some of the best durum wheat in the world, to provide them with a $1 million loan for a pasta plant.

These are the initiatives young farmers are asking the government to undertake with them. They intend to build a $5 million plant. They will put in $1.5 million of their own money and hopefully there will be a financial institution, perhaps in southern Manitoba, which will step up to the plate and say it believes in the process as well. It will create jobs in the community of Altona and St. Jean.

It is vital to not only ship our raw resources out of the country but to keep them within our borders, to create the value added, to create the jobs, to keep the wealth and the technology in Canada. This is increasingly important.

Recently there was an announcement by McCain of a $55 million expansion of its potato processing plant. I had the privilege of joining with some private sector investors and my colleagues in the province of Manitoba, the provincial government, to make an announcement for a $55 million canola crushing plant.

Farmers, rather than paying $800 to ship their canola to the west coast or through Thunder Bay, can now drive their trucks 50 or 100 miles down a two lane highway to deliver that product to that plant. The jobs and the wealth from the value added of that product will stay with those farmers.

The pasta plant provides such a dramatic example of that. Farmers last year were getting about $160 a tonne for durum wheat used for pasta. Astoundingly, Canadians had imported 77,000 tonnes of pasta, packaged, at a price of almost $1,600 a ton. It is a great idea that the Government of Canada would stand with those 25 farmers and say: "Instead of shipping your product to the U.S. where it is being processed and shipped back to Canada, we will provide you a loan, not a grant, not a giveaway, a loan". Through that loan and working with those people that $1,600 will stay in our communities. That is a good thing, a positive thing.

We are expecting within a few months, after the announcement of the changes to the Crow, close to $500 million of investment in Manitoba alone. The banks have a role to play in this. The government cannot repeatedly be the instrument and the primary catalyst for these kinds of undertakings. The banks have a fiduciary responsibility, having the privilege of banking in this country, to act and react and join in partnership with small business. This is the one of the key areas they have forgotten.

I conclude my comments on a recent initiative in my riding of Provencher, again through the auspices of the minister responsible for western economic development, with the francophone communities in Manitoba. The francophone communities have developed a francophone chamber of commerce with ten different communities, six of which are in my riding.

We have said we are willing to stand with those communities and work with them to utilize their capacities of their French language, their entrepreneurial skills, their low labour costs, their style of living which is outside of Winnipeg in wonderful communities. If they choose they can send their children to an English school or to a French school. There are both there. We have stood with these mayors and reeves and people in the French communities to provide funding of up to $1.5 million over five years to work with them.

We hope and believe that people from across the country and indeed the world will invest in those French communities and capitalize on their capabilities in precisely the same way thatMr. McKenna in New Brunswick has been doing over the last two years.

This is a clear example of a French community in western Canada, in rural Manitoba, whose origins are from the St. Maurice valley in Quebec, Lagimodière and the first settlers who came from the St. Maurice valley and settled in the west, whose descendants are Louis Riel, the first member of Parliament for Provencher, the seat I now occupy.

I am here to report to the House that these French people I service and have the privilege of servicing in the riding of Provencher in rural western Canada are doing very well indeed. They have their French language. They have their French culture. They have their French communities.

They are not asking to remove themselves from Canada. They are not asking to tear themselves apart from the people of Manitoba. They are telling me to tell the House they are doing very well and that they are joining with the Government of Canada in these kinds of initiatives.

They are not abandoned. We are with them. The Government of Canada is with them and I believe all Canadians are with them.

Small Business Loans ActGovernment Orders

4:55 p.m.

Reform

Myron Thompson Reform Wild Rose, AB

Mr. Speaker, I was enjoying the speeches of the hon. member and the hon. member for Kamloops.

One certainly has to agree and be thankful and glad for individuals being successful in the member's riding on these new enterprises. The help they got is great.

The difficulty was mentioned by the speaker from Kamloops when he talked about a survey he did in his riding. He talked about what we can do to help enlighten the ideas of new enterprises and help them begin and grow; not just for new entrepreneurs but for older ones who may change careers from time to time.

All of that is very important. It is especially important when one hears his response when they say get out of the way, get out of the way.

In the early part of the 1990s in my area of Wild Rose, which is likewise rural and small towns, many small businesses through the first two or three years following the GST went into receivership. In many of the cases they declared the GST was the straw that broke the camel's back.

They were struggling. They were having a tough time. Along came the GST and that really brought the final crunch. That was not the case in all of these. I am sure every member would be able to find some enterprise that flopped specifically because of the GST.

People say to the governments get out of their way, stay off their backs, stay out of their pockets and they will make it. Give them that initial boost they need. I certainly support that idea.

I carry with me in my briefcase the red ink book, the book of broken promises. It says the Liberal government will replace the GST with a system that generates equivalent revenues-I worry where that equivalency will come from-is fair to consumers and to small business and minimizes disruption to small business, all very key statements and very important.

I also read of the mandate of 12 months for this to happen. We are now in the 25th month and nothing has happened with the GST. It would not be fair of me to ask the hon. member why the deputy minister has not resigned with the promise of doing so within this 12-month period.

I wonder if the member could enlighten the House in any way as to what small business has to look forward to beyond being able to get started. That is the first step. Will we achieve things to help them continue and get out of the way and not be disruptive?

Will we see the GST replaced? How long will it take? Obviously it will take longer than this book says.

Small Business Loans ActGovernment Orders

4:55 p.m.

Liberal

David Iftody Liberal Provencher, MB

Mr. Speaker, I thank the member for his question. He raises some valid points and concerns. It is no small secret that the Canadian business community is very concerned about the goods and services tax. It was concerned about it when it was announced and of course it still is. However, that never did the government or the Prime Minister or the Deputy Prime Minister say that we did not need the revenue. In its previous form as the manufacturers' sales tax in 1984 of 9 per cent and then moving up, I believe, in 1992-93 to about 13 per cent or 14 per cent, prior to being changed to the GST, the Government of Canada has been dependent on those revenues and will continue to need them.

The difficulty is the structure and the nature of the tax. The member is quite correct when he states that the imposition of the GST had an inflationary effect and stalled purchases. For example, someone may want to build a home in the riding of Wild Rose or Provencher. That person would order a $100,000 of materials and then there would be labour involved. When taking that lumber out of the yard that person would be stopped at the gate and charged another $7,000. That, of course, is going to kill investment and purchases. I think people have been painfully aware of that.

The government has made it quite clear, particularly leading up to the next budget that we will be addressing the matter. The parliamentary secretary has spoken about the GST only in the last couple of days and mentioned that we are equally concerned about it on this side of the House.

I ask the hon. member from Alberta to speak to his provincial counterparts and ask them to join with the other provinces and with the Government of Canada to work out some reasonable solutions to deal with a harmonized tax which will be in the best interests of all Canadians and, therefore, the Canadian economy.

Small Business Loans ActGovernment Orders

5 p.m.

Broadview—Greenwood Ontario

Liberal

Dennis Mills LiberalParliamentary Secretary to Minister of Industry

Mr. Speaker, it is appropriate at this time to recognize the member for Provencher for all the work he has done in our industry committee during the last two years.

When we started the debate on how we could improve access to capital a lot of people thought we would have one or two meetings, bring the banks in and they would probably give us a good public relations speech which would take our eyes off the ball and we would then lose focus on the issue.

I want to say to the member that his courage, commitment and support in keeping a rigid focus on making sure that the whole bank attitude toward small business really changed. It was not just a PR show and then put it on the back burner. It is something we have stuck with over the last two years. The member for Provencher has made a fabulous contribution to the industry committee. I know all members from the Reform Party and from the Bloc Quebecois would certainly support the view I express here today.

My question for the member has to do with the great story about the past operation in his riding, the value added. That was an exciting story for me to hear. I felt like I wanted to rush out to Manitoba. It sounds like there is more action there than in a lot of the regions in the country. I salute the member for that.

I want him to tell me why those entrepreneurs got so excited and moved from exporters of raw products into taking the risks of turning themselves into manufacturers, taking a raw product and going to the finished packaged good? How was that done?