Debates of Oct. 27th, 1995

Quebec Referendum

[David Collenette, Liberal, Minister of National Defence and Minister of Veterans Affairs]

Mr. Speaker, I welcome the question.

President Clinton clearly said that Monday's vote is a domestic issue. It is for Canadians to decide. However, the president also said that his country hopes to maintain relations with a strong and united Canada. I have no doubt that, after Monday's vote, Canada will remain united and strong.

As for the other part of the question, I fully agree with the opinion expressed by the hon. member.

The question of trading arrangements in the context of sovereignty will be the one described by the hon. member.

Somalia Inquiry

[Bob Ringma, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, earlier this week government lawyers were chastened by Justice Létourneau of the Somalia inquiry. He was concerned that a letter from crown counsel would put a chill over the inquiry.

The government has tried to gag members of the forces before. Now it is trying to filter both the information and the sources of information.

Why are both the justice department and the Department of National Defence working to intimidate soldiers and keep them from testifying before this important commission? Why?

[David Collenette, Liberal, Minister of National Defence and Minister of Veterans Affairs]

Mr. Speaker, the hon. member knows full well there is no truth to that assertion.

The government has nothing to hide with respect to the engagement of Canadian forces personnel to Somalia. It was this government in opposition that had asked the former government to set up a board of inquiry. That was long before the election. We did that once the court martials were dealt with.

However, what happened this week is rather unfortunate since the tone of a letter sent by a Department of Justice official has given the wrong impression to the various counsel. The chairman of the commission has called for the various counsel to discuss this matter and to make sure the impression the hon. member has reached that somehow we want people not to come forward is dispelled.

The lawyers for the respective individuals before the commission and the commission lawyers themselves are working this matter out.

[Bob Ringma, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, indeed I would really love to see that impression dispelled. In a hierarchical society such as the military, even subtle signals from the top permeate down and can cause an undesired effect below. In

this case it is telling the troops to keep quiet. The commissioners are doing their best to send the soldiers the signal that the inquiry is open, but the assurances must come from the very top. The very top in this case is the Minister of National Defence.

Will the minister put himself in the position of our uniformed troops and recognize that he has a responsibility to reassure the military personally that all is fine, they can speak as they will.

[David Collenette, Liberal, Minister of National Defence and Minister of Veterans Affairs]

Mr. Speaker, no one has ever accused me of being unduly subtle. Every member of the Canadian Armed Forces has an obligation to come forward to that commission. The government will not tolerate any intimidation toward any of those people.

I hope the hon. member understands the message. Certainly the members of the armed forces understand it.

Old Age Security

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, my question is for the Minister of Human Resources Development.

Yesterday, the minister refused to admit that a document from his department entitled "Serving Canada's Seniors" does indeed show the direction his government intends to follow in restructuring old age security programs.

The government has been saying since its budget of February 1994 that it would table a document unveiling its new approach.

How can the government justify that, after reviewing Canada's old age security program for over 18 months, the human resources minister still claims that he has not yet made a decision on the new direction to be taken? Mr. Speaker, it has been 18 months.

[Marcel Massé, Liberal, President of the Queen's Privy Council for Canada]

Mr. Speaker, I believe the answer sought by the hon. member is included in a statement made last night by the Prime Minister to Mr. Mongrain, regarding the issue of pensions. The Prime Minister said: "What I do know is that, if people vote no on Monday, all those who receive pension cheques will still get the same cheque. Some tried to make me say that I was going to cut pension cheques. I clearly said in the House of Commons that there will be no statement in November to the effect that the government is cutting pensions, and that the February budget will include no changes to old age pensions. I cannot not be any clearer than that".

This quote shows that we looked at the issue of old age pensions and that we arrived-as the Prime Minister clearly said-at a conclusion which is valid now and for next February.

Social Programs

[Jan Brown, Reform, Calgary Southeast, AB]

Mr. Speaker, as both Reform members and Canadians, we sincerely believe in a strong and united country now and in the future. I am confident that the Liberal government shares our vision of decentralized powers.

My question is for the Minister of Human Resources Development. What changes in the powers and responsibilities attached to social programs will he offer the provinces to show them that a no vote is not a vote for the status quo?

[Marcel Massé, Liberal, President of the Queen's Privy Council for Canada]

Mr. Speaker, I think that, in the past two years, our government has indicated very clearly that it is upholding the Liberal tradition of supporting the most vulnerable members of our society. We are forced to do so in a context of financial and economic constraint. I feel that we have assumed our responsibilities within a responsible fiscal framework by stating in the February 1995 budget that we would continue to help the neediest in our society.

There is no question that, in order to help the most vulnerable in our society, we must overhaul our social programs to make them more effective, efficient and productive, and that is what we are doing. The changes under way to improve government will also help us convince Canadians, including Quebecers, that the Government of Canada looks after the interests of all its citizens, including Quebecers, and that it is in their interest to vote No on Monday.

Tourism Industry

[Pierrette Ringuette-Maltais, Liberal, Madawaska—Victoria, NB]

Mr. Speaker, could the Minister of Industry briefly mention the main initiatives he has undertaken, since the announcement, last February, of the establishment of the Canadian tourism commission, and could he also give us some details on the impact that these initiatives have, and will have, on the tourism industry and on the Canadian economy?

[Jon Gerrard, Liberal, Secretary of State (Science]

Mr. Speaker, the Canadian tourism commission has already spent $50 million, while its partners have invested $35 million.

This year, revenues related to tourism increased by 18 per cent in our country. Clearly, a united Canada, in which the provinces and the federal government co-operate, is the best thing for Canadian tourism. It is definitely an argument in favour of a no vote on Monday, so that we can indeed have a united country and the best possible environment for tourism.

Government Response To Petitions

[Alfonso Gagliano, Liberal, Secretary of State (Parliamentary Affairs) and Deputy Leader of the Government in the House of Commons]

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to six petitions.

Interparliamentary Delegation

[Charles Caccia, Liberal, Davenport, ON]

Mr. Speaker, I have the honour to present the report of the Canadian delegation to the Committee on economic affairs and development of the Council of Europe, regarding the activities of the organization for economic co-operation and development, and of the European bank for reconstruction and development, which held meetings in Paris and in Strasbourg, in June 1995.

I also have a report of the Canadian delegation to the Parliamentary assembly of the Council of Europe, regarding the expanded debate on the activities of the organization for economic co-operation and development, held in Strasbourg, on September 27 and 28, 1995.

[George Proud, Liberal, Hillsborough, PE]

Mr. Speaker, pursuant to Standing Order 34(1), I have the honour to present to the House the ninth report of the Canadian delegation of the Canadian NATO Parliamentary Association from the seminar of the working group on northern security issues of the North Atlantic Assembly held in Copenhagen, Denmark, on September 25, 26 and 27, 1995.

Committees Of The House

[Ron Fewchuk, Liberal, Selkirk—Red River, MB]

Mr. Speaker, I have the honour to present, in both official languages, the 21st report of the Standing Committee on Finance on Bill C-102, an act to amend the Customs Act and the customs tariff and to make related and constitutional amendments to other acts.

Questions On The Order Paper

[Alfonso Gagliano, Liberal, Secretary of State (Parliamentary Affairs) and Deputy Leader of the Government in the House of Commons]

Mr. Speaker, I ask that all questions be allowed to stand.

[The Deputy Speaker]

Is that agreed?

[Some hon. members]

Agreed.

The House resumed consideration of the motion.

Small Business Loans Act

[The Deputy Speaker]

The Parliamentary Secretary to the President of the Treasury Board has the floor. He has six minutes remaining.

[Ronald J. Duhamel, Liberal, Parliamentary Secretary to President of the Treasury Board]

Mr. Speaker, I will repeat the key points I made earlier and continue my speech. I said that the Small Business Loans Act was part of a global strategy by the government to boost the growth of such business, and more particularly its access to financing and capital. I also said we did a lot of consulting, before we went ahead. I said, as well, that this project would be self-supporting, and that the government's action was in keeping with two of its policies: to reduce subsidies to business and to reduce the deficit and the debt.

I also indicated that the new program would better suit businesses with a greater need for access to capital, because, according to our research, 30 per cent to 40 per cent of businesses are getting from the existing program capital which could be used elsewhere. I added that I had talked to many business men and women in my riding of St. Boniface, who told me this was a step forward.

I concluded the first part of my speech by saying that this was the sort of government initiative that reached across the entire country-an example of what we can accomplish together.

Now for the second part. Speaking of what we can accomplish together, let us have a look at what we have already done in Canada. We all know that Canadians are respected around the world, for a number of reasons. We all know that we are the best country on the whole planet, and we are not the ones to say so. Organizations are saying so. We all know that people in many countries, in the vast majority of countries, would like to join us.

We are a pretty formidable economic power, since we rank seventh based on our gross domestic product. We know that the government is evolving, and even when people do not have the same philosophy of government, I think they should realize that governments and government institutions evolve and change. And that is exactly what this government has done for the past two years. To put it another way, it has embarked on a review of the federal government's mandate and that of other levels of government in order to eliminate duplication and overlap.

It has done so while respecting the authority of other levels of government and at the same time reducing government expenditures. it has taken steps to ensure that this initiative will be able to continue, because we still have some way to go.

Consider what we have done together so far. If we look at the past two years, we see that more than 600,000 jobs have been created. That is a lot, but it is not enough. We must create more jobs. We need a climate that is conducive to job creation. Our objective with respect to the debt and the deficit is a case in point. We wanted to ensure that the deficit would not be in excess of 3 per cent of the gross domestic product. We think we can achieve that.

Interest rates are among the lowest we have seen for a long time. The inflation rate is much lower than it was. Consider our growth figures. Economic growth has increased by 33 per cent. Exports have gone up by 5.2 per cent; investment in materiel and equipment, for instance, has increased 11.6 per cent; deliveries in the manufacturing sector have gone up 10.9 per cent.

Quite frankly, we have done remarkably well in a pretty difficult situation. Our concern, and this includes both government members and the members of the opposition, should be the results of the vote on October 30. Because we must continue to do well.

These successes improve Canadians' quality of life. These successes can assure us of growth, of keeping our number one status, if you will, as the best country in the world. I have a few quotations here I wanted to share on the successes we have enjoyed, the successes others have applauded us for.

For example, Sherry Cooper, chief economist at Nesbitt Burns, responded to the drop in September's unemployment rate to 9.2 per cent by saying:

Today's buoyant job report is yet another arrow in the quiver of economic recovery.

That was on the CP wire on October 6.

Andrew Pyle, Path International senior economist, responding to the drop in September's unemployment rate to 9.2 per cent said:

One would expect in October barring any surprises we should see even better job growth.

Robert Fairholm, chief economist with DRI/McGraw-Hill, in reacting to the Statistics Canada report showing that the country's GDP increased by 0.1 per cent in July, said:

Pull out a microscope and you'll see growth in July. But it's an improvement and that's encouraging for the markets.

Gordon Thiessen, Governor of the Bank of Canada, said:

I know the economy is not booming along, but it is performing in such a sound way, such a basically sturdy way.

I could go on. I have another dozen quotes from influential, knowledgeable, insightful people that show the country is working. As has been said by the Prime Minister on many occasions and by many colleagues, it is not perfect but it is the best country in the world. The commitment of all of us, whatever our political preferences, political values or political ideologies, ought to be to make this country, which is the best, better still.

For this reason I hope from the bottom of my heart that the Quebecers who see all of those Canadians rallied together in Montreal will listen to their heartbeats, listen to what they have to say. Some would like to have us believe this is not real, not spontaneous. It is real, it is spontaneous.

There is a deep affection for Quebec, for Quebec men, and for Quebec women, and that affection is being manifested today in Montreal. If on October 30 we can have a no vote to separation, to the breakup of this country, we are going to continue to improve the quality of life of all Canadians, whether they live in Quebec or in other parts of the country. This is why I want a no vote, and I hope from the bottom of my heart that is exactly what the answer will be. No to separation, no to breakup, so that we can continue to progress.

[Beryl Gaffney, Liberal, Nepean, ON]

Mr. Speaker, I am very pleased to speak to Bill C-99.

Since taking office two years ago the government has created an economy of employment that has grown. Good fiscal management is the foundation of the government's jobs in a growth agenda. The 1995 budget marks a decisive turning point, making $7 in cuts to government spending for every new $1 of tax revenue raised. The deficit is being reduced, as planned, and the red book target of 3 per cent of GDP by 1996-97 will be met.

Small business has been the engine of job creation in Canada in the last decade. To fulfil its promise to help them compete, the government has cut red tape and has increased access to government services, financing new technologies and export markets.

Our trade missions to China and Latin American led by the Prime Minister brought home $10 billion in trade deals for Canadian businesses and positive jobs for Canadians. Barriers to trade within Canada are dropping, thanks to the agreement on interprovincial trade. These efforts help Canadian businesses find markets for their products and services at home and abroad.

Changes to the Small Business Loans Act is one of the most significant efforts of the government toward a strong economy and creating opportunity for growth. The changes made by Bill C-99 will enable the completion of the process of modernization and improvement that has brought 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.

Over the years the program carried out under the Small Business Loans Act has been very successful. The SBLA was passed in 1961, and since then more than 420,000 SBLA loans, totalling over $15.5 billion, have been made to small business.

The benefits of SBLA are widely recognized. It provides needed help to small businesses, which are so important to the Canadian economy. The program is open and simple to administer. It is delivered by private sector lenders who have great expertise in the granting of credit and the monitoring of loans.

The program's success both as an economic development tool and as an example of public sector and private sector co-operation has inspired similar guarantee programs at both the federal and provincial levels in Canada.

In recent years the SBLA program has been running on an annual government cost of $20 million to $30 million. However, following a significant program change effective April 1, 1993 the annual activity increased from $500 million to $2.5 billion in 1993-94 and to over $4 billion in 1994-95. Assuming a continuation of the historical loss rate, this meant that the annual program costs would increase by over $100 million. Clearly this was a threat to the sustainability of the program.

Both the potential costs of the program and the government's overall need for deficit control required that the program be brought to full cost recovery. Consequently the government initiated a review of the program. Extensive consultations with major stakeholders representing both borrowers and lenders were held in October and November 1994. Recommendations were also provided by the industry committee and the small business working committee of the House of Commons. The views of the federal Liberal caucus task force on small business were taken into account as well.

The major recommendation of all those consulted was unanimous: the government should act quickly to put the SBLA program on a full cost recovery basis. We have responded.

Two major changes were made through regulatory amendments that came into effect on April 1, 1995. 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 was 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.

These changes have put the SBLA program on a sustainable cost recovery basis for all loans made after March 31, 1995. Now Bill C-99 will continue the process of renewal by putting in place additional changes to the SBLA. It will grant an authority respecting the release of security, including personal guarantees taken by lenders for the repayment of SBLA loans. It will grant an authority to make regulations for the establishment of a claims processing fee.

Bill C-99 will improve government guaranteed coverage for low volume lenders. It will enable the SBLA program to respond more quickly in future to changing economic and program circumstances by allowing the guaranteed percentage to be adjusted by regulation, and it will potentially accelerate an already legislated decrease in the percentage of an SBLA loan that is guaranteed by the government from 90 per cent to 85 per cent.

The changes that will be brought about by Bill C-99 will complete the transformation process that has made the SBLA program sustainable. Putting the program on a full cost recovery basis has caused the cost of loans made under the SBLA to increase slightly. However, the federal government's consultations with all parties recognize the need for the program to be self-sustaining.

The changes we are making are entirely in keeping with the need to reduce subsidies to business and the overall need to get the deficit under control. These changes actually mean the SBLA will

be better positioned to target its loans toward those small businesses that really need its help.

At present, an estimated 30 per cent to 40 per cent of SBLA loans go to enterprises that are able to take advantage of normal business financing. Without the subsidy implicit in the present interest rate, the higher cost of SBLA loans will mean that these financially strong businesses will probably now switch to lower cost commercial financing.

Even the most successful programs must be kept relevant and responsive and must be run in an effective manner, especially in these days of deficit fighting and limited government resources. The increase in government costs resulting from the surge increase in SBLA activity was a challenge that had to be met if the SBLA was to continue to serve the needs of small business. That challenge was met, and now the changes we are proposing will further enhance the administration of the SBLA program.

I bring to the attention of the businesses and people in Quebec who have been part of this program and who have participated in it in an effort to better not only the economy of Quebec but also the economy of Canada that this is very beneficial to the province of Quebec. Obviously we hope that all those businesses, when it comes to voting on Monday in the referendum, will recognize the importance of staying within Canada and vote with the rest of Canadians with a resounding no.

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, it is appropriate that we discuss Bill C-99, an act to amend the Small Business Loans Act, at this time because this week is small business week.

We know that small business is the lifeblood of our economy. Statistics tell us that 99 per cent of businesses in Canada have fewer than 100 employees. Because of their numbers in small businesses they tend to drive the economy. Growth in small business means economic growth, but the bottom line is that the government does not create jobs, businesses create jobs. Small businesses create almost 80 per cent of new jobs in Canada.

Government plays a very key role. It creates the climate and builds the framework for economic growth. The Liberal government has taken important steps to create the right climate.

We have reduced regulation. We have eliminated 250 regulations already and amended another 300-plus. The process continues to eliminate paperwork and regulations and streamline the cost of doing business.

We have improved the access for small businesses to technology through programs like the technology partnership program.

We have reduced the paper burden and red tape that small businesses struggle with. Ten business service centres have been opened up across Canada from coast to coast, which provide 24-hour a day services.

We have just announced the business networks initiative, which brings businesses together. Networks and working together with people makes things happen and makes business grow. We have introduced a single window business number at Revenue Canada so businesses can make one call instead of four.

We have introduced new legislation like Bill C-102, which creates the equivalent of free trade zones in Canada and allows Canadian businesses like those close to the U.S. border in my riding to compete against the U.S. companies head on. This bill will also assist businesses throughout Canada, wherever they may be.

We have the team Canada trade strategy aimed at helping businesses export. SMEs produce only 10 per cent of our exports, and only about 4 per cent of the small business sector exports. We need to improve this record. We need to make continuous improvements in assisting small and medium size entrepreneurs to export. This is where government can play a key role.

As a member of Parliament I have been able to work with a committee in the St. Catharines-Niagara area to help small business understand what it takes to export and how really easy it is if you know the system. By teaching this system the committee is trying to assist some 350 small exporting companies in my area.

This leads us to a problem, because we know it takes money for small business to expand. Business needs access to capital. One of the largest problems facing small business people and entrepreneurs is financing. Here too government has played a major role. The industry committee of the House has studied this issue extensively. It was very interesting to see the participation of all parties, the Bloc, Reform and the government members, working together on improving the system within the industry committee, such that we could make more improvements for all businesses no matter where they are located in Canada.

Banks have responded to introduce codes of conduct and an alternate dispute resolution system and some have ombudsmen. Maybe there has been some picking on the banks and maybe it was required, but they are also working with many of the small businesses and many of the community committees to really get at making things happen.

Government also plays a direct role in lending to small businesses. We do this through the Business Development Bank and the Business Development Corporation. We lend through the Small Business Loans Act.

The Small Business Loans Act creates an economic development tool for the government. The act was first passed in 1961. Since that time more than 420,000 loans have been made, totalling over $15.5 billion.

Recently the SBLA has been running at a cost of $20 million to $30 million per year. This is a cost the government incurs; in other words, it is a cost to taxpayers. As lending has increased over the last couple of years, we are now looking at a loss of over $100 million annually. Over five years the program will be tripled, from $4 billion to $12 billion, and then we are looking at a potential liability of $12 billion plus. That represents a problem for the government and for the taxpayer. That is why the government initiated a review last year and consulted with borrowers and lenders from across the country and the various agencies and institutions involved.

For a government that is tackling the deficit and the debt, we know that we cannot sustain this SBLA program on taxpayers' backs forever. The government has had to reduce its spending. We have cut overall expenditures by 19 per cent, the public service by 14 per cent, transportation subsidies across this land by some 97 per cent, business subsidies by 60 per cent. This is only a small sample of our cuts to reduce the deficit.

The important item I would like to bring forward to the House is that while we have been doing this cutting, we have done it in a progressive manner. We have done it by getting input from all the people involved and understanding the facts that are required as we go through these cuts.

Yes, we are making changes, and for the last number of weeks changes seem to have really hit the House. We have been making those changes a little at a time, not going from one extreme to the other but making those continuous improvements that are so important to industry.

The reason we have Bill C-99 before us today is to make the small business loans program revenue neutral for the government over time. When this legislation is implemented, we will be able to recover the cost of the program and the burden will not be placed only on taxpayers.

As has been mentioned, several actions have already been taken as of April 1, 1995. There is a new 1.25 per cent annual fee levied on lenders' average outstanding balance of loans made after March 31, 1995. The maximum rate a lender can charge increased by 1.25 per cent, the prime interest rate plus 3 per cent for floating rate loans and for residential mortgages it is rate plus 3 per cent for fixed rate loans. This means the program has been put on a cost recovery basis for all loans made after March 31.

Bill C-99 makes further changes to the Small Business Loans Act. The amended act will grant authority respecting the release of security, including personal guarantees taken by lenders for the repayment of the SBLA loans. It will grant authority to make regulations for the establishment of a claims processing fee. The bill will also improve government guaranteed coverage for low volume lenders.

The bill will enable the SBLA program to respond more quickly in the future to changing economic and program circumstances by allowing the guaranteed percentage to be adjusted by regulation, to be adjusted as mentioned as the future unfolds. As things change around the world, we are in the global economy and we will be able to adjust and make those changes on an ongoing basis. As has been said over and over, in this world nothing stands still; everything changes slowly and continuously.

The amended act will potentially accelerate an already legislated decrease in the percentage of an SBLA loan which is guaranteed by the government from 90 per cent to 85 per cent.

The theme for small business week this year is: New Markets-Opportunities for Growth. The government wants to help small businesses grow and expand. I have outlined the many ways in which we are doing that. However, we are not doing a favour to businesses if we hand them money while increasing the deficit which thus reduces the strength and growth of our economy.

We are working to get the basics in place. We are providing several sources of income to small businesses which have difficulty attaining access to capital through other sources. We are improving and refocusing these programs so they will better target those who really need them.

Without the subsidy in the SBLA program's present interest rate the higher cost of these loans will mean financially strong businesses will switch to lower cost commercial financing. More funding will be available to small businesses that really need the programs. We will be doing this in a revenue neutral manner which will not cost taxpayers extra dollars they do not have.

This is important legislation which builds on the government agenda to help businesses succeed. We want a strong and vital growing economy and we need businesses to grow to accomplish that. This bill means financing will be available to help the small business person and it will be provided without an additional cost to taxpayers.

The government has put forward many programs to assist small business. Community groups, of which I have one in my community called the FMP group, are excited about the changes this government is bringing forward to help small business.

I urge all members in the House to join me in support of Bill C-99, an act to amend the Small Business Loans Act, so that we can work together across the country. We have shared across this country and have made improvements across this country. Likewise, I hope that when the people of Quebec, including Quebec's business people, come forward on Monday they will vote no in order to continue to share and make improvements in this great country of ours.

[Jean Payne, Liberal, St. John's West, NL]

Mr. Speaker, I am very pleased to add my voice to those of my colleagues today in speaking on Bill C-99, an act to amend the Small Business Loans Act.

As parliamentarians we are frequently called upon by our constituents to assist in the creation of employment in order to boost the economies of our ridings and subsequently the economy of our country.

Often two very significant areas, increased employment and minimal debt, are found to be in contrast with one another. Bill C-99 will provide a vehicle whereby businesses have greater access to capital which of course in turn creates more employment resulting in a healthier economy.

In my riding of St. John's West, the community of Argentia was struck about a year ago by the closure of the U.S. naval base. The closure of that base caused the residents of the area a great deal of distress. However, they did not roll over and die at the thought of losing their jobs. Instead they decided to build on what had been left on the base by the Americans.

With the very generous assistance of this government, they are now slowly beginning to open a few new businesses. One of the greatest setbacks to many of those new businesses is the inability to obtain financing in order to keep the businesses going. They seem to be having difficulties obtaining the required financing because of the size of their businesses. This new act will be a major asset to them.

Bill C-99 is a vehicle those people will be able to use hopefully in the very near future so they can continue to keep their businesses operating. This loans act is a part of the government's overall strategy to provide a positive environment for the growth of small business, especially with regard to accessing financial capital.

The SBLA came into effect in 1961. Its purpose was to continue to increase the availability of loans for the establishment and improvement of small business enterprises. Since then more than 420,000 loans totalling over $15 billion have been made to businesses. For over 30 years the SBLA has been helping such businesses obtain capital for improvements and expansion. This government is committed to maintaining the basic nature of this successful program.

The goal of the program is to assist small businesses in obtaining fixed asset financing which is otherwise unobtainable because businesses lack sufficient collateral, they are too new, or they are not located in large growth areas such as central Canada. Of all SBLA loans, 35 per cent go to start-ups and a further 20 per cent go to businesses under three years old.

As I stated earlier, the SBLA is particularly significant in my riding of St. John's West because it does provide funding for the formation and stabilization of an economic foundation based on small enterprise. The benefits are widely recognized. It helps small businesses which are so important to the economy right across the country. They are the foundation for economic strength and stability. The future economy of our country has been built on small business and it will continue to depend on them.

The cod fishery off the coast of Newfoundland has suffered a destruction and now there is a moratorium. Alternate measures must be found to promote the economy of that area. The SBLA mandate provides for funding to be targeted toward small businesses which are lacking collateral, which are not new and which are not located in the large centralized or industrial areas of Canada.

Newfoundland is a province with an abundance of culture, an educated populace and an international accessibility through trade due to its coastal location. Throughout my riding of St. John's West, industry based resources are abundant. There are natural harbours, forestry, and watershed management, to name a few.

Since April 1993 activity under the program has increased dramatically. A potential program deficit of over $100 million annually based on the 1994-95 activity levels was threatening the sustainability of the SBLA. The proposed changes would decrease the costs and increase the efficiency of the SBLA. The resulting strengthening of the program will enable it to continue to provide benefits to small businesses.

The proposed legislation was developed after extensive consultation with lenders and borrowers alike. Recommendations of the Standing Committee on Industry and the small business working committee have also been addressed. The major recommendation of all those consulted was unanimous: the government should act quickly to put the SBLA program on a full cost recovery basis, a move initiated by a regulatory change effective April 1, 1995.

Bill C-99 moves to initiate full cost recovery. The regulatory amendments of April 1 include a new 1.25 per cent annual fee which is levied on each lender's average outstanding balance on loans made after March 31, 1995. The second amendment states that the maximum rate a lender can charge under the SBLA is 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. These changes have put the SBLA

program on a sustainable cost recovery basis for all loans made after March 31, 1995.

In addition to full cost recovery incentives, Bill C-99 provides for improvements relating to borrowers and low volume lenders. These changes are secondary to the major regulatory changes of April 1, 1995 which introduced a new annual fee on lenders and an increased maximum interest rate.

Bill C-99 will continue the process of renewal by putting in place additional changes to the SBLA. It will permit the release of security, including personal guarantees, taken by lenders for repayment of the loans. It will also permit the establishment of a claims processing fee by regulation. It will improve government guarantees for coverage for low volume lenders, to improve competition among lenders particularly in the smaller communities, such as those in my riding.

Bill C-99 will permit the SBLA program in the future to respond more quickly to changing economic and program circumstances by allowing the guarantee percentage to be adjusted by regulation. It will accelerate a previously legislated decrease in the percentage of an SBLA loan which is guaranteed by the government from 90 per cent to 85 per cent.

These changes are of particular importance to my riding of St. John's West because of the emphasis on smaller communities.

In addition, new resiliency clauses which will be implemented into the SBLA are tailored to help small business respond more quickly to changing economic circumstances.

In summary, the changes incorporated into Bill C-99 will ensure that the program will continue to be successful in assisting small businesses in obtaining the financing which they so badly need for expansion and the creation of jobs throughout the country.

[Roger Gallaway, Liberal, Sarnia—Lambton, ON]

Mr. Speaker, it is a pleasure to speak in support of Bill C-99, an act to amend the Small Business Loans Act.

I could start out by stating the obvious, that we are reminded daily that the future of jobs in Canada is to come from small business. We are reminded daily that it is the fastest growing sector with respect to job creation. In fact, it is that sector of our economy where there is opportunity for work. I have been reminded three times in the last six days of the importance of the small business sector.

Last Saturday I met with the chamber of commerce in my riding. In a brief which was submitted to me it was stated that there is nothing that can replace a job created by a small enterprise. We all agree with that.

On Wednesday night I was in the city of North York and had the opportunity to attend a small business fair which took place at the city hall. There was a large display by support agencies. There were all types of computer consultants and business consultants. It is important to note that the banks were also there in large numbers. There are groups within the communities which are willing to facilitate ongoing small business and are willing to work with people who want to create small businesses.

Last evening in my riding of Sarnia-Lambton the board of directors of Lambton College agreed to proceed with an innovative international trade centre. I am quite pleased to say I have been actively involved in this project. I started it with the college in conjunction with my neighbour across the river in the United States, Congressman David Bonior from the 10th congressional district of the state of Michigan.

We are working together on both sides of the border to facilitate small businesses in order that they can find markets on both sides of the border. We want to work in partnership so we have linked these two centres located at community colleges in Canada and in the United States by modem. Now a Canadian small business person can find a partner and can obtain the kind of information he or she needs to enter the American marketplace.

There are 40 million people living within an hour's drive of my riding. That is 40 million. There are 80 million people within an eight-hour drive. The marketplace is not just within Canada for small business. Indeed, for many of us it is in the United States. I am pleased to say that small businesses are awakening to this marketplace.

I know of one small business operator in my riding who employs 17 people. He was able to increase his business by some 35 per cent by working actively in the city of Port Huron in the state of Michigan, 400 yards away from Canada.

The marketplace out there is huge. I know of another gentleman who employs two other people making ice boats. His market is in the area surrounding the city of Detroit on Lake St. Clair. He is able to do that from Canada.

There is a huge marketplace out there for small business but there are two areas of specific need that must be addressed to assist small business people. First, small business needs access to capital. That is stating the obvious. We must remember that job creation in the private sector requires an investment. It can vary.

I am talking only about the private sector. In the high tech business, the cost of creating a job, if I can put it in such blunt terms, is $750,000. In other words, that corporation must, to add a person to it, often invest up to $750,000.

In manufacturing in a general sense that number is somewhere between $750,000 and $1 million. That means a corporation must have several million dollars of capital invested to employ people. For those that are specialized the numbers increase even more. I can speak firsthand of the petrochemical and refining industries where the investment required of the corporation can be anywhere from $1 million to $1.5 million.

Changes in the way large industry works are in fact changing that ratio. Across North America we are undergoing a phenomenon known as restructuring. Large corporations examine their workforces and they tend to remove those who are not tied directly to production so that the ratio of job to investment is increasing all the time.

It is because of this that we have to look to small business where we know jobs can be created when an entrepreneur invests anywhere from $3,000 to $25,000. It is because of numbers like those that tells us the future of the job market is in the small business sector.

We all know also that access to funds is the number one obstacle encountered by small business. The Small Business Loans Act is there to support lenders and in turn help small business obtain debt financing often otherwise inaccessible to them.

I state the obvious when I say that if one reads any number of newspapers one will note there is, across this country, often complaints of the lack of access to funds. Although this will not remove every obstacle, it is working toward it.

It is important to realize that the Small Business Loans Act program is delivered not by government agencies but by private sector lenders. We know the Small Business Loans Act has been around for some 34 years now and this bill simply reflects what the realities of today are from a fiscal perspective.

Organizations such as the Canadian Federation of Independent Business, which I should point out is a group which never is hesitant to express its opinion, have supported this bill. That is an important factor to point out. There is support for this bill not just in the House but where it really counts, within the business community and especially within the small business community, a great number of whose representatives are members of the Canadian Federation of Independent Business.

As a result it is important that the House support Bill C-99. It has, since 1961, resulted in a program which I suggest has been successful. We are told that there have been some $16 billion lent by banks under the Small Business Loans Act since 1961. In many people's opinions it is not enough when one considers that in other economies around the world much greater numbers are spent on an annual basis on small business expansion. However, it is important that this tool be there. It is there as an economic tool and it is there as an example of public sector and private sector co-operation and partnership. That is becoming in government at all levels more and more important.

It is also important to remember that government costs associated with this program have escalated quite dramatically in recent years to the point where its sustainability has been called into question. This, quite frankly, is the reality of government today.

As a result, the government has initiated a review of the program and extensive consultations were held over a year ago involving all concerned parties. It is not a unilateral consultation. It is a bilateral consultation involving the public and the private sectors. We are certainly aware of the valuable input that the industry committee provided on this subject.

It is safe to say that the overwhelming consensus from all the major stakeholders is that the government must act swiftly to transform the Small Business Loans Act program into a full cost recovery situation. It must be operated on a full cost recovery basis.

The bill accomplishes this objective and will grant authority respecting the release of security, as many other speakers before me have laid out the technical details of it. I believe that the changes contained in Bill C-99 will complete a transformation process to make the Small Business Loans Act sustainable and realistic and a program that has the support of small business and business associations across the country.