Mr. Speaker, it is an honour and a privilege for me, as the member for London-Middlesex, to address the House of Commons this morning on a very important subject, Bill C-99.
I am very pleased to speak on Bill C-99 this morning as the member for London-Middlesex. We like to think that London is the unofficial capital of southwestern Ontario. Our business community is quite diverse, with small business being an important part of it.
With Your Honour's indulgence, I must confess that as you called for a moment of silence this morning my thoughts then and even now are with people from all across Canada and many people from the London area. I know my staff worked very hard to organize 11 buses from London and area. They are on their way to la belle province of Quebec to tell the people there how much we understand that they face a very crucial decision and that our prayers and our hopes are that they will remain a part of Canada.
It is with some mixed thoughts that I stand this morning to speak on the subject of Bill C-99 when frankly I would like to be with friends and fellow Canadians from all parts of Canada who are on their way to Quebec to make it clear to our fellow Canadians in Quebec that we sincerely hope they will continue the partnership and the great country we have built together. I did not feel that I could launch into debate on Bill C-99 without sharing a few personal thoughts.
Bill C-99 is very important. It continues the process of modernization and improvement that has moved the Small Business Loans Act program to a full cost recovery. We could ask ourselves what is so important about the bill since we deal with so much legislation in the House and most of it, if not all of it, is important and significant. I believe it is particularly important given that we are discussing it at the end of 1995 and as parliamentarians we face the enormous challenge of trying to help the country prepare for the 21st century. As I have already said, we certainly hope it will be a united country that heads into the 21st century with all members of the family intact.
We obviously need an economic recovery. We have made some steps in the right direction toward it over the past couple of years. Quite candidly, we have had some backward steps in that regard. It has not been a steady progression forward as we would all like. It has been a two steps forward one step back process. However we must continue and we must persist in an economic recovery as we prepare the nation for the 21st century.
There is no area of greater importance in my mind as a Canadian and as a member of Parliament than the area of small business. In times past we would lure a large employer to a community who would create 1,000 jobs. It seems appropriate to use a baseball analogy with the World Series going on. We used to look for the grand slam home run in economic terms in wanting a major employer. I have several in my riding such as General Motors Diesel and 3M, to name two.
The days are gone of attracting major employers to our cities, except for rare circumstances. We will not see situations in which we instantly gain 500, 1,000 or more jobs. It seems evident that our number one crisis is the job crisis. The debt and deficit are very crucial. My colleagues opposite certainly know that, as they speak to it all of the time. While we may differ on the pace of the deficit reduction as part of economic recovery, I do not think we differ on the goal.
In spite of the importance of the debt and deficit, the number one crisis in the country we all love is the inadequate number of jobs. The best way to solve that crisis is through encouraging small business. It will be through new small businesses starting up and employing three, five, ten or twenty Canadians that we will create
new employment. We would love to see the large corporations coming in and suddenly creating 1,000 jobs, but I do not think we will see that happen too often.
The evidence is clear that Canadians can succeed in small businesses but they need help. That is what the act is specifically designed to do. In my riding many women, for example, have shown great entrepreneurial spirit, have launched small businesses, have been successful in that regard and have employed three to five people who before were unemployed.
There is a fairly significant immigrant population in my riding. There are many Arab Canadians and a large Polish Canadian community, people from all parts of the world. I see evidence time and again of how immigrant Canadians come to Canada and successfully launch new businesses. Despite the xenophobia Canadians are from time to time perhaps prone to engage in, I can give many examples where new Canadians have come to Canada, started businesses and employed three to five Canadians who were born here in their quite successful businesses. The evidence is there that small business will really be key to economic recovery and to solving the jobs crisis in Canada. That is not totally new but it is much more obvious to us now that it will be the case.
Since 1961 more than 400,000 SBLA loans totalling close to $16 billion have been made by financial institutions to small businesses. The SBLA helps entrepreneurs whose firms have less than $5 million in annual sales.
I should like to speak about that number for a moment. Within my party there has been considerable discussion about this subject. None of the businesses that I referred to earlier do $5 million in annual sales. Some small businesses of three, four, five or ten employees do not do $5 million a year in business. We might have to look at that number as we fine tune. What is a small business? Does it need sales of up to $4.5 million to $5 million to be considered a small business? I think not. We should have a look at that definition.
The program success both as an economic development tool and as an example of public and private sector co-operation has inspired similar guaranteed programs at both the federal and provincial levels. The program will engender new approaches to encourage small business in Canada. That will be one of its most important purposes.
I will share with my colleagues in the House today-we are not as numerous as normal because many of our colleagues are on their way to or already in Montreal to make their feelings known about Canada-that the city of London has two important initiatives in the area of small business worth mentioning. The first is the advanced manufacturing technology centre that we hope will soon come to fruition. The groundwork has been laid. It is our government that announced it. It looks like we might have to scale it back somewhat because of the economic times we face.
However, at the research park at the University of Western Ontario in the city of London we are awaiting very anxiously, along with municipal and provincial government officials, the completion of the advance manufacturing technology centre. It will be located in an existing research park and will be a very important part of helping to encourage innovative technologies and business opportunities as it combines with research opportunities available at the university right now.
There has been quite a bit of time spent on the project. It will come to fruition soon and is anxiously awaited in London. I have been very pleased to spend quite a bit of time working on the project along with my colleagues in London. It will be a big benefit not only to London, Ontario, but to the whole region of southwestern Ontario.
In southwestern Ontario the agri-food industry is a major industry. We ought not to forget there are many opportunities in urban centres and in the agri-food industry for small business. The centre is awaited with anticipation.
The second successful venture that has been under way for several years in the riding of London-Middlesex is a small business centre just inside the eastern part of the city of London. It is a converted plant that closed some years ago. It was formerly called Prototool. I remember it well, being that it was my first summer job. I was there recently for a ribbon cutting ceremony because they had refurbished and expanded the centre. I made the point that every time I went there, as much as I enjoyed it, it seemed as if I was going back to work. In sense I was that day.
The small business centre is located in the George Stewart building which was named in honour of a well known Londoner who has poured many, many years into the facility. It is a business incubation centre. The centre helps those people who are starting up a business with one or two employees. These people need mentors. They certainly need start-up capital. They need the help which is available to them largely through the voluntary efforts of London's successful business people who are now mostly retired and are willing to help younger people launch small businesses. The small business centre in my riding of London-Middlesex has been very successful. It is an example of the type of program the SBLA meshes with very nicely.
I look forward to the visit of the industry minister to this centre in November. He will see firsthand the success we can have with this kind of program. It is an excellent example of why our government must continue to consider small business as a key part in our attempt to get the economy moving again.
In recent years the SBLA program had been running at an annual government cost of some $20 million to $30 million. Significant changes were made in April 1993. There was a major increase in activity from some $500 million to over $4 billion in 1994-95. In historical loss rates, this increase in lending was projected to cost over $100 million which was obviously a threat to the program in these economic times.
It is a very correct change to the program and a wise move by our government to move to full cost recovery on this program. We might say it is a bit of a user pay concept, which I think we are seeing more of at all government levels. My previous government experience was at the municipal level in London, Ontario for 13 years. There is certainly a call for more of a user pay concept at all government levels.
I would never subscribe to the user pay concept for things like health care. Certainly we on this side of the House would not subscribe to the user pay concept in health care and in certain other fundamental core services which as Liberals we believe must be available to all Canadians regardless of their ability to pay. There is however a place for the user pay concept in our society.
Moving the SBLA program to full cost recovery is employing that concept. I applaud the effort of the government in that move. To this end, the government initiated a review of the program which included extensive consultations with major stakeholders representing both borrowers and lenders. Likewise we heard from the Standing Committee on Industry and the small business working committee. All of these groups were unanimous in recommending to the government that we proceed on a full cost recovery basis which is exactly how the government has responded.
Two major changes have been made through regulatory amendments which came into effect on April 1. First, a new 1.25 per cent annual fee was levied on each lender's average outstanding balance of SBLA loans made after March 31, 1995. Second, the maximum rate a lender can charge under the SBLA has been increased by 1.25 per cent to the prime interest rate plus 3 per cent for floating rate loans and to the residential mortgage rate plus 3 per cent for fixed rate loans.
Bill C-99 will continue the process of renewal by putting in place additional changes to the Small Business Loans Act. As I said at the start of my remarks, if we are to make a serious attempt at solving the job crisis and getting the economy moving again on a steady basis, we will have to focus our efforts on small business.
I applaud the government for the changes in the bill. It clearly indicates the intention of our government. That is what I am hearing from Canadians. In all parts of Canada people are speaking out with that kind of message. Certainly in my riding of London-Middlesex new business opportunities and job creation are happening in the smaller micro-firms with one to four employees. The government is moving in the right direction.
We need to consider what is a small business. Five million dollars strikes a lot of people whom I know in business as a pretty big number to achieve. They would be thrilled with that, but they do something like $750,000 or $1 million worth of business each year. We have to continue to look at that number to determine exactly what constitutes a small business.
I want to say very clearly that this bill is a major step in the right direction. I am pleased as a member of the government to be part of the team which recognizes that we have to make this a priority.