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.