Debates of Nov. 28th, 1995

Small Business Loans Act

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Mrs. Maheu)]

All those in favour will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker (Mrs. Maheu)]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker (Mrs. Maheu)]

In my opinion the nays have it.

[Some hon. members]

On division.

[The Acting Speaker (Mrs. Maheu)]

I declare Motion No. 1 lost. Therefore, Motion No. 5 is lost as well.

(Motion No. 1 negatived.)

[The Acting Speaker (Mrs. Maheu)]

We will now proceed to Group No. 2.

[Yves Rocheleau, Bloc, Trois-Rivières, QC]

moved:

Motion No. 2

That Bill C-99, in Clause 1, be amended by replacing line 25, on page 2, with the following:

"Minister the annual administration fee fixed by the committee of the House of Commons that normally considers matters relating to industry,".

Motion No. 4

That Bill C-99, in Clause 4, be amended by replacing lines 25 and 28, on page 4, with the following:

"paragraphe 3(4)( c )(i), the time when the annual administration fee fixed by the committee referred to in section 7.1, is payable;''.

Motion No. 6

That Bill C-99 be amended by adding after line 32, on page 4, the following new Clause:

"4.1 The Act is amended by adding the following after section 7:

7.1 The committee of the House of Commons that normally considers matters relating to industry may, for the purposes of sub-paragraph 3(4)( c )( i ), fix the annual administration fee or the method of calculating the annual administration fee.''

-He said: Madam Speaker, I realize these amendments are rather technical and dry but they are nevertheless important, and they take the same approach as the amendment we introduced earlier when we condemned the use of the word prescribe and the whole regulatory process and mechanism that entails.

However, before I continue, I would like to thank the parliamentary secretary for his kind words, which I appreciated. I want to return the compliment, because I think we should realize the parliamentary secretary to the Minister of Industry is not only a very good parliamentarian but also an outstanding asset to our work in committee.

I would also like to comment on what he said about establishing a bloc canadien. In fact, in the forties there was a "bloc populaire" to defend the interests of Quebecers. In the nineties, and English Canada is not about to forget it, we saw the birth of a bloc québécois. To continue the musings of the parliamentary secretary, we might see the birth of a bloc canadien very shortly in Canada, after Quebec becomes sovereign, a bloc that would be foster the best possible relations with a sovereign Quebec, including an economic and political partnership, which we support because it is sensible, it is the way to mutual respect between good neighbours and recognition of the equality of the two peoples here in America who are different from the United States, who are different from Europe and who represent certain cultures on this planet, since Canada is also a distinct society. If there is enough good will on both sides in the months and years to come-and our contribution to the industry committee is a good example of that, we will be able to work together for the well-being and prosperity of our respective peoples.

I would like to comment on the remarks of my colleague opposite, who expresses surprise at the spirit of our amendment on the reduction of government coverage, claiming that we wanted to protect lenders rather than borrowers. I think we have to face the fact lenders are reluctant when it comes to small business. That is the reason for a small business loan act. We know there is a reluctance and that the government wants to keep the legislation but to distance itself from it by reducing its coverage. I think this will be to the detriment of what is increasingly the motor of economic development: the small and medium business, the SMBs. This is why we are being very careful in this. We want to ensure the continuation of the coverage currently offered to the more vulnerable small borrowers, the ones threatening to lenders.

So, getting back to the spirit of this second bloc, it is to reinforce, as mentioned earlier, the roles of parliamentarians. In any civilized society, as ours claims to be, where there is representation by election, I believe there has long been a certain malaise over the role of those elected to Parliament. The role of parliamentarians is becoming more increasingly insignificant. And I think this is one of those times when we are reminded that things could be done differently. Over the course of several decades, the public service has progressively become heavy, especially at the top. As was mentioned earlier, the executive branch assumed a great deal of power, and while Parliament is certainly a place for debate, it has very little power, and that is what we are condemning and want to change. There is also continuity.

I think that anyone who has seen the Bloc Quebecois at work in the various committees can appreciate the logic underlying our remarks and contribution, in ensuring, rather like I am doing this morning, that parliamentarians have greater power to influence the decision making process so that the public interest remains first and foremost, at the expense, if need be, of other interests, which, as you know full well, have other ways of making themselves heard.

Earlier, I heard the parliamentary secretary criticize our amendment proposal, saying that, should coverage be reduced, as we in the official opposition are concerned it will, the industry committee will make appropriate representations to the Minister of Industry to have this issue reviewed. That is not much, in terms of power.

This means that, when a problem is reported, the industry committee will come to agreement and quietly make representations to the minister, asking him: "Would you please stop doing this, Sir; you are hurting our constituents". Parliamentarians certainly do not have much power, in such instances.

This is what we deplore and want to change by introducing an amendment which, as we can see, has unfortunately not garnered unanimous support in this House. Even the Reform Party is not very keen on our proposal. This is unfortunate because it discredits our role once again, given what that role should be. This is not only the case in the Parliament of Canada, but in all British legislatures where, over the decades, elected representatives were gradually stripped of certain powers because of the size of the bureaucracy, to the benefit of technocrats who want to work behind close doors. It goes without saying that it is easier to resort to regulations and orders in council.

I remember the debate on Bill C-88 dealing with internal trade. It provides that the federal government can, through orders in council, take action against the party deemed at fault. Using orders in council means that there is no public debate. It means that we cannot even discuss the issue on behalf of the province deemed to be unco-operative or at fault. The elected representatives of that province would not even be allowed to make public representations, because the issue would have been settled through an order in council. This, in my view, is rather ominous. This is why we moved these three amendments, which essentially seek to eliminate the use of regulations and replace it with a committee decision. More specifically, Motion No. 6 seeks to add a new clause 7.1 which reads:

7.1 The committee of the House of Commons that normally considers matters relating to industry may, for the purposes of sub-paragraph 3(4)( c )(i), fix the annual administration fee or the method of calculating the annual administration fee.

As things now stand, the minister is keeping this power for himself without too much consultation and is being very discreet about it. So much the better for those who will be aware of that, and too bad for the others.

Instead of that, it is possible to rely on the existing political structure, and to proceed in a manner which is more transparent and more public. This is what we hope to achieve with these amendments.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Madam Speaker, I have always been an advocate that members of Parliament can play a meaningful role in amending or designing legislation in the House of Commons. Therefore, I do not share the view of the Bloc member for Trois-Rivières. It is important that we explain to Canadians how as individual MPs we can have an impact on the system.

If I have a particular view of how the Small Business Loans Act should be amended, then I should sit down with colleagues on both sides of the House and develop a consensus. Quite often when we can get a consensus it has always been my experience that unless it is something that really upsets the fiscal framework of the country most ministers accept good ideas from their parliamentary committees.

I have never experienced a situation in which a minister who had constantly ignored the advice of his political confreres on a constant basis whether in the House, in committee or in caucus still succeeded as a minister. I have never known ministers to succeed if genuine requests from MPs to their departments are ignored. If they are ignored it is the MPs' fault.

[Chuck Strahl, Reform, Fraser Valley East, BC]

Ask the Minister of Justice if he listens.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

I presume the hon. member is talking about gun control. The Minister of Justice did listen. This was a balancing act he had to perform. He had to make a very tough decision. Do we think for a minute the Minister of Justice did not balance in his decision making process the difficulties rural members were having versus the concerns urban members had?

[An hon. member]

He ignored them completely.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

The judge is out on whether he ignored rural MPs or whether this situation will succeed in gun control. That is a fair example. It was a tough decision.

By and large on ideas not as controversial, when we get a consensus ministers tend to listen.

It is very important that we take notice of the Bloc's point on the control the bureaucracy has in this community. I have been working around this town since 1979. I came here as a young political assistant, not a bureaucrat. I was amazed at the way the bureaucrats, the public servants, operated and managed departments within government. We call it the machinery of government.

I had a terrific experience working in the Prime Minister's office for almost four years. I was amazed even in that office when we

wanted things done the public service had this capacity to actually control the tempo of implementation. I coined an expression back in 1981 called the MAD treatment, maximum administrative delay. They were good public servants. It was just part of the culture. It was part of the thought process that even though the political will wants a particular policy implemented, before we actually put it into the factory and implement it we must do further analysis. We must check this, we must check that. The delay was enough to drive one nuts.

The member for Trois-Rivieres has given us a very important point on which we must be ever vigilant. Those of us who are elected, who are accountable, have to make sure the things approved in the House are implemented and not steered off and done in a way the bureaucracy thinks should be done.

I do not share the member's view when he says we do not have an opportunity for input. I think we do. If we are passionate about our ideas and we get support from other colleagues usually they can be implemented.

It is not always easy. I could give a personal example and pass it on to the members opposite on the whole issue of tax reform. I have been working on the issue of tax reform for six years, the single tax system.

I was hoping that with 50-odd members from the Reform Party who apparently believed in tax reform we would have much more energy in support of the notion of comprehensive tax reform, but that has fizzled. Obviously I have not done a good enough job on that issue in convincing other colleagues we need comprehensive tax reform. We are not talking about it enough, debating it enough or selling it to the rest of the decision makers in the Chamber.

[An hon. member]

Convince the Minister of Finance.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

We cannot simply convince the Minister of Finance. This is where we go to the member for Trois-Rivières' point about the technocrats, the bureaucrats. What we really should be doing is lobbying as elected men and women. We should lobby the finance department.

How many members have taken the time to go to the finance department, sit down with a senior bureaucrat and talk to him or her about their ideas for tax reform? Those public servants cannot refuse to see elected members of Parliament.

[Chuck Strahl, Reform, Fraser Valley East, BC]

They do it to me all the time.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

If they are refusing to see the member, he should go to the minister. They do not refuse to see the lobbyists so I cannot imagine a public servant refusing to meet with a member of Parliament. I find that crazy.

If a member tells me of any public servant who refuses to meet with an elected person I will stand up in the House and we will talk about it. Even before I will, the Prime Minister will go berserk. As someone who has been in nine different government departments, the Prime Minister understands the public service is there to implement the political will of the approved legislation in the House. If there is resistance to it, it is our fault to allow the resistance.

I appreciate the comment from my colleague from Trois-Rivières that we should be ever vigilant as we deal with the public service in the way it manages some of these pieces of legislation we approve in the House. However, I do not share his view that members of Parliament cannot have a substantial role in amending and designing legislation. For that reason we will not be supporting this motion.

[John Williams, Reform, St. Albert, AB]

Madam Speaker, I am pleased to debate the motions placed by the Bloc. I listened to the eloquent defence of Parliament by the previous speaker. I wondered why in his eloquent defence he would be opposed to the idea that Parliament make the decisions regarding the levels of the fees and so on charged within Bill C-99.

The member also told us about how difficult it is to get through the civil service, how difficult the bureaucracy is to move and the challenges we as members of Parliament face in achieving these things. Yet he gave no indication whatsoever that he was prepared to recognize these decisions should be made right here on the floor of the House rather than some back room by some unelected unknown bureaucrat we cannot even find much less influence as far as making these decisions.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Madam Speaker, I rise on a point of order. I would like to humbly correct the member because I did not in any way, shape or form say the elected people in the House do not have an influence on the way bills are designed and approved.

[John Williams, Reform, St. Albert, AB]

Madam Speaker, I advise the member that decisions regarding the level of fees should be made right here on the floor of the House. We should not be delegating the authority to some bureaucratic who is nameless, unelected and unknown, who advises his minister that he thinks they should vary or increase the fee and the minister does it. This is how the bill reads.

The Bloc is trying to change the motion so that a committee of the House would make that decision in lieu of the minister by order in council.

Unfortunately we cannot support the motion by the Bloc even though we feel the decision should be made right here on the floor of the House because unfortunately the Bloc does not understand the rules of the House. Committees do not make decisions. All committees can do is report back to the House. Committees do not have the authority to make legislative decisions.

Any motion approved on the floor of the House is not legislation by itself. It is only an expression of the House. We only approve legislation. We cannot initiate legislation through a committee. That is where the Bloc is totally misinformed and cannot understand the rules of the House, which leads me to the question of separation. When Bloc members want to separate from the rest of the country they have no understanding of the process. The referendum they had in Quebec last month was ruled illegal by a court in their own province, and yet they proceeded with the referendum anyway.

We now find they do not understand the rules of the House, where they expect committees to make legislation. It is little wonder we have a party that cannot understand how to enjoy life within the confederation and would rather head off on its own. I am concerned for the people of Quebec if they are to be led by a group with no concept of how to live within a set of rules.

Getting back to the legislation and getting back to more relevance, we want to see decisions made by members of Parliament. We do not want to delegate the authority to the minister who acts on the advice of some bureaucrat. We want to see the minister make up his mind and bring a proposal to the House in the form of legislation. We look at it, debate it and vote on it. If it is approved that is fine, but we do not want to give him a carte blanche to vary the rules at his whim without debate, without the public at large realizing what is going on. That is why we have to oppose the motions proposed.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, it gives me great pleasure to once again enter the debate on Motion No. 6.

I listened to the hon. member for Trois-Rivières talking about how different Quebec and its people are from the rest of the country. The Small Business Loans Act shows us very realistically how we are all similar. The problems of small and medium size businesses whether in Montreal or Chicoutimi, Oshawa or Vancouver are very much the same. Small and medium size businesses have difficulty obtaining access to capital.

Clearly it is important for us as a country to look at as big a market, as big a capital access as we possibly can and to assist small and medium size businesses. What are we talking about here? Ultimately, we are talking about jobs and the ability to create jobs.

I was very interested recently to read a summary by the Quebec Manufacturers Association that stated that Quebec is the least attractive jurisdiction in Canada in which to do business. This is not something that has been created by the federal system; it is something that has been created within the province of Quebec. I addressed some manufacturers from Ontario this week and asked them how we could assist our fellow business people within that province overcome some of the problems of high wage structures, high interest rates, and so forth that the manufacturers of Quebec are having, which means an inability to create jobs in that province.

This motion deals with the ability of making the administrative changes to acts within the purview of the committee system. What we have to do is ask ourselves what is our role as parliamentarians. Psychologically, it sounds very good to say that we should be involved with every decision of government, possibly every change in the Income Tax Act, possibly every idiosyncracy or change in the Environmental Protection Act, fee structures that are administered by Canada Post. There are all kinds of administrative actions that occur on a daily basis.

When I practised as a chartered accountant I had a list of complaints, and I agree that the system is too complex. I had a stack of information that came in every week of changes within the system, a stack of about four or five inches. If that is to be the purview of the committees, I do not think they will get much work done.

The other aspect of this is that we need to empower somebody with responsibility, somebody who is answerable, somebody who can appear before the committee and answer for decisions that are being made. I question whether on a daily basis we can have members of Parliament involved in all of these individual decisions. On paper it sounds very good, but the reality will be that we are going to delay the decision making.

For instance, on administration fees, the object of that exercise was to basically make the administration of those loans break even for the government, for the government to have no costs involved, covering our loan losses, et cetera. For the committee to make rational decisions on an ongoing basis, they would have to know almost on a weekly basis the administration of those loans, the numbers that have gone into default, the industries that are being pressured, and so forth to know whether to increase or decrease fees in certain areas.

I would like to draw the attention of the House to the fact that committees do not meet that often. The reality is that Parliament is only in session less than half of the year. How could it possibly react on a daily or weekly basis to these kinds of changes? That is not the purpose of Parliament or even the purpose of the committee system.

Once again, I am opposed to this group of motions. If we want to improve the committee system, we should ask whether the reviews the committees enter into are efficient and adequate, whether the powers of investigation are adequate and whether they exercise them adequately. Those are really properly the issues that would face parliamentarians on how to make this place more efficient and more democratic.

There is room for possibly strengthening the committee system, and I thank the member for Trois-Rivières for making that point. A lot of people in this country would like to see the committee system strengthened to use the talents of members of Parliament to their optimum benefit. Quite frankly, approving administration fees I do not think is one of them.

There is another important aspect we overlook about the administration fee. It has been the complaint of the SBLA program that it was essentially the prime borrowers, well heeled companies, that were getting the loans. In other words, these people could possibly get loans on their own without that guarantee but chose to get the guarantee because it was a cheap source of capital for them, with a government guarantee attached to it. By increasing this fee that will no longer be an advantage to them.

As a consequence, what we have done is opened up a significant amount of capital for small and medium size businesses. What this means is that those companies that can afford to pay regular rates of interest will be unattracted because of this fee structure and will go off and borrow through the normal financial channels without the SBLA guarantee. The companies that will be left will in fact be those emerging companies, the ones that find difficulty in getting access to loans.

Time and time again on the industry committee and through our report, Taking Care of Small Business , we have been told by small business that the most important thing is access to capital and not necessarily the cost. Of course there is a point at which the cost of capital becomes prohibitive, but those small emerging companies, the ones we are looking toward as creating new jobs and new industries, are going to have better access to funds under this system. This sounds ironic, because the fees are slightly higher, but it will open up an area for small and medium size business that does not currently exist.

Getting back to the original motion, I think it will be a detriment to those industries if for some reason the administration fee is somehow logged into a committee that is cumbersome and takes a long time to react. It is wise that the government leave that decision making possibly with a bureaucrat. That bureaucrat from time to time and at the discretion of the committee can appear before the committee and explain his actions. If for whatever reasons we find him negligent, we can get rid of him and hire somebody who is better. I believe that is more appropriately the administration of the committee system.

In conclusion, very simply, I am opposed to Motion No. 6 because I do not believe it is in the best interests of small and medium size business.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Madam Speaker, it is a pleasure today to speak on Bill C-99 and related amendments 2, 4, and 6 put forth by our colleagues from the Bloc Quebecois.

The backbone of our economy is made up of the small and medium size businesses in this country. They are the ones who truly create longlasting jobs within Canada. They are the ones who create real employment in our country. They form an essential part of our tax base in areas of innovation, science, technology, finance, and many other areas. They are something we Canadians should be proud of.

The small to medium size businesses are finding it increasingly difficult in Canada to function because of the high tax loads, the red tape they are forced to struggle under, and the difficulty they have in securing loans. Lending institutions within Canada are historically very conservative. Therefore, individuals in this country who bring forth many good ideas find it difficult if not impossible to have their efforts actually go to fruition. This is an enormous loss for Canada.

One just needs to look in the areas of medicine, science, technology, and the pharmaceutical industry to see good ideas going nowhere or in fact being sold to companies in other parts of the world. I recently read some very interesting information on this. I read about incredible ideas being born within our own country and being sent to other countries, where they become productive, profitable, and contribute to the society by providing long term, high tech, high paying jobs for people in other countries. This is indeed a sad thing.

Bill C-99, an act to amend the Small Business Loans Act, comprises efforts to put this program on the road to cost recovery. Everyone in this House approves of this. However, we are also addressing the amendments put forth by the Bloc Quebecois. We oppose these amendments because they bring the power of determining liability directly to the committee, instead of bringing it down to the area in this government that is closest to the public, and that is the House of Commons.

I would like to congratulate my colleague from Okanagan Centre, who put forth amendments that were adopted by the committee that would bring the decision making process closer to the people, and that is the House of Commons.

I find it quite strange that members of the Bloc Quebecois are putting forth amendments but are not addressing some of the large issues that are affecting their province. Sadly, Quebec in recent times has seen economic destitution and social problems unrivalled in its history. It is easy for the Bloc Quebecois and other separatist forces to blame history and Ottawa for these problems. But I ask

my honourable friends in the Bloc Quebecois, does not responsibility for some of these problems rest on their own shoulders? Is it not the intent of the separatist forces to carve Quebec out of Canada? Are they not at least partly, if not largely, responsible for the terrible economic and social destitution we see in many areas of Quebec? One just has to visit the eastern part of Montreal to see this in real life.

I hope the hon. members of the Bloc Quebecois will look toward building a united Canada and addressing the economic and social problems that affect all of us within the context of this country. I find it extremely strange that they say that if they did not have to give their tax base to Ottawa they would be a lot better off. I ask them to wake up and look at the fact that net transfer payments go to Quebec and not to Ottawa. I ask them to remember that before they continue to pursue their course.

I would also like to address some of the problems that are affecting small and medium size businesses and put forth some constructive solutions. As I said before, small and medium size businesses are have increasingly difficult times because of the high tax loads they are forced to work under. This is indicative of the government's huge tax loads. With these huge tax loads, the high debt and deficit we have incurred, we are forced to pay off increasingly larger amounts of interest on these debts. As a result, interest rates in the country are higher than they ought to be and tax rates are also higher than they should be. It makes it very difficult for these companies to compete in other countries.

The industry committee supported the fact that federal, provincial, and municipal governments should get their fiscal houses in order so that interest rates may be brought down and more money made available to companies, making a stronger, healthier dollar. It would provide an element of stability that is essential if small and medium size businesses are to be effective competitors in the future.

In talking to business, we have found that one of the greatest obstacles they face is the red tape they must endure. It is extraordinarily strange that the great ideas put forth in this country have to pass through so many loopholes to get to where they can be effective that many do not achieve their ultimate end. Red tape that is supposed to work for businesses is in effect choking them. We need to take a very close and hard look at this. We need to work with the finance and revenue departments to determine ways in which we can decrease the red tape and make businesses more effective and virile competitors in this country.

I would also like to raise the issue of using tax incentives to make more capital available to businesses. Indeed, the industry committee looked at this and suggested that decreasing capital gains tax rates for long term investment in Canadian small and medium size businesses would be an effective way to provide these companies with money to invest to build their businesses. Maintaining the $500,000 capital gains exemption is also a useful technique. If that were applied to small and medium size businesses, it would provide more capital for them.

Relaxing the use of RRSPs in investing in one's own business is another measure which would put the responsibility back on those brave men and women who like to go it alone and try to make a private business work. They could use their own funds to invest in their business.

We also need to find ways in which the public can invest in Canadian companies. We need to define new financial relationships for the government, the banks and the private sector.

We can look at many examples. Germany and Japan are two giants which have managed to capture large segments of markets throughout the world. In part that is due to the unique relationship which the private sector has with the lending institutions in their respective countries. We do not have to reinvent the wheel. There are many examples in the world of these ideas being put into effect to support business.

In summary, small and medium size businesses are the backbone of the Canadian economy. They are an invaluable source of taxes for the federal and provincial governments. They are the primary employers. Without these institutions the employment rate would be much higher. They provide long term, long lasting, high paying jobs for Canadians. It is the responsibility of the government and opposition members to support measures which would maximize the effectiveness of small and medium size businesses. Let us look at other parts of the world and find ways in which we can support the backbone of Canada's economy.