Mr. Speaker, I rise today to speak on Bill C-75, an act to amend the Farm Improvement and Marketing Cooperatives Loans Act.
I believe I am going to please the government by saying that its plan to increase loan guarantees to $3 billion is an excellent one. However, if it thinks the criticisms will be coming after the compliments, it is quite right. Let us first turn to the positive aspects. In fact, the change is only raising the guarantee ceiling for loans made by financial institutions, to keep up with the demand.
According to data provided by the Department of Agriculture and Agrifood, the programm is very efficient since its cost is very low. It costs $1.5 million a year, which reflects losses due to loan default. We are talking about 1 per cent of guaranteed loans as a whole. This means that with a $3 billion ceiling, the annual cost should rise to $3 millions, which is quite acceptable.
We are not against logic. According to data also obtained from Agriculture and Agrifood Canada, in 1994-1995, more than 17 000 loans were made under the Farm Improvement and Marketing Cooperatives Loans Act, for a total of $475 million. The total value of guaranteed loans is getting close to the $1.5 billion limit.
The demand and the service provided fully justify the increase in the guarantee limit. We are not against this measure, which allows farms to have access to development funds without the government having to give grants, which come right out of taxpayers' pockets.
However, a dose of constructive criticism will be good for this government which does not realize, or chooses to ignore, that overlap costs money to the taxpayers, who are already overtaxed, and that it could be avoided.
In fact, this measure perpetuates the overlaps between the federal government department, the Farm Credit Association and Quebec. Through the Société du financement agricole, Quebec provides the same services as its federal counterpart. Yes, more overlap. In one ear and out the other. The population got the message, and most importantly, understood it. Overlap.
And regarding the case that we are discussing today, we should specify that there is an overlap not only in activities, but also in the way things are done. Loan guarantees have their place, but they increase the debt load of businesses. Everybody recognizes the importance of evaluating a business's potential and its market before offering more loans. Too heavy a debt load makes a business unable to compete. That is why we maintain that Quebec is in the best position to identify which sectors of its economy are experiencing growth and to establish policies regarding access to credit.
Obviously, these policies are geared to the development strategies elaborated in collaboration with the sector. In its latest annual report, the Société du financement agricole du Québec points out that it creates and develops new programs in collaboration with representatives of the financial and farming sectors. Quebec has established a tradition of consultation on farming issues with the États généraux du monde rural in 1991; the consultation committees which were formed during the Trois-Rivières Summit in 1992 following the consensus reached on the priorities for the agri-food sector's development in Quebec; and lastly, the Trois-Rivières Summit itself.
Quebec has the expertise required to take the program under its wing, of course, with the corresponding transfer of funding. The federal government would save a department desperately in need of saving a great amount of money. Was the Department of
Agriculture and Agri-food not one of the hardest hit by the last round of budget cuts?
Agriculture and Agri-Food Canada is one of those hardest hit by downsizing. It does not make sense to maintain duplication and make cuts in areas where duplication does not exist. Inspection services will now charge a fee, although we have three overlapping inspection services. Where does the money come from to pay for these services? From the private sector, which ends up paying the price of duplication.
The minister must be aware of the fact that officials who helped draft this legislation on farm improvement and marketing co-operatives loans admitted it was competing with equivalent programs in Quebec. For the benefit of those who may not be that familiar with the Société de financement agricole, I would like to comment briefly on its farm loan operations.
This is taken from the agency's latest annual report. The Société de financement agricole authorizes and guarantees loans and credit openings. Farmers can obtain guaranteed loans up to a maximum of $800,000, while the maximum for loans at reduced rates is $200,000. The interest rate for guaranteed loans is based on the residential mortgage rate offered by financial institutions. Farmers now have the option of selecting a one-year, three-year or five-year term, at a rate locked in for the duration of the term selected.
During the 1993-94 financial year, the Société de financement agricole granted 4,682 farm loans totalling $353.3 million, which represents an increase of 12 per cent in the number of loans and 39 per cent in the total amount. Out of the total number of loans, 3,305 representing $279.6 million were granted at the reduced rates provided under the financing program.
Furthermore, the Société de financement agricole authorized the transfer of existing loans, representing another $39.5 million. The total amount of loans and transfers was $392.8 million.
In other words, Quebec already offers these services. It is in a better position to understand what is involved, thanks to a consultation model unique in North America. Agricultural partners in Quebec have given a lot of thought to sustainable regional development.
The Société de financement agricole is closer to the farmers and to the markets. It is in a better position to develop a consistent credit policy based on economic development strategies identified by the parties concerned. If Agriculture and Agri-Food Canada lets the Société administer the loan guarantees to which Quebec is entitled, duplication will no longer be an issue.
Bill C-75 may be worthwhile to farmers in the rest of Canada, but I have some reservations about the impact of this program in Quebec. Is the Canadian government going to say yes to a farmer whose loan request has just been turned down by the Société de financement agricole? If a project review was done by experts, is the federal government going to do another one? We are still stuck in the murky waters of federal duplication, lack of efficiency and interference.
Furthermore, Quebec already faces duplication through the presence of the Farm Credit Corporation, which reports to Parliament through the Minister of Agriculture. In Quebec, we have shown that the Société de financement agricole is capable of managing the loan guarantee program. The rest of Canada could benefit from the expertise of the Farm Credit Corporation, which is the largest long term lender in Canada. A document provided by the FCC itself indicates that it has the human resources and expertise required for agricultural financing.
In addition to providing traditional loans, the FCC can now finance diversification projects on the farm or value added agricultural businesses off the farm. In addition, the FCC can now administer programs and services jointly with federal agencies, provincial governments and other lenders.
Our colleagues opposite will again tell us there is no duplication. Officials have said that Agriculture and Agri-Food Canada's program was not duplicating the activities of the Farm Credit Corporation, since it did not offer the same program. We are always hearing these arguments. Once and for all, will this government not understand that these arguments do not hold water? Let us look at the thing objectively. Since the industry seems to consider the program valid, why does the Farm Credit Corporation not use its own resources to provide it?
The FCC has the capability, with a staff of over 760 people working out of six regional offices and 101 district and rural offices. The FCC loans portfolio includes some 55,000 accounts valued at $3.3 billion.
It is therefore biased, dishonest and wrong to say that there is no overlap between the activities of Agriculture and Agri-Food Canada and the Farm Credit Corporation. It has, I repeat, all it needs to offer the program elsewhere than in Quebec, where the Société de financement agricole can do the job.
The federal government talks of single window here and single window there. However, when it comes to making it operational, it is another story.
Here is the situation. The government takes a perfectly logical step.
Under the terms of the act, once the $1.5 billion limit is reached, the government is no longer obliged to guarantee loans granted by lenders. This obviously prevents new loans from being accepted under the Farm Improvement and Marketing Cooperatives Loans Act.
So we agree that it is necessary to amend the legislation to raise the limit of the five year loans to three billion dollars. We agree on the benefits of such a measure: it will make credit readily available to farmers and marketing cooperatives, for a wide range of farm improvement projects.
Furthermore, borrowers will get good interest rates and requirements concerning their equity will be lowered. The program encourages investments in new kinds of machinery, new technologies and different agricultural ventures, as we see more and more in my riding where there is an ostrich farm, for example. On those points we agree with the government. But the idea loses much of its appeal because this government is unable to tap into existing and competent resources to manage the program.
We have shown repeatedly, and not only today, that Quebec is in a better position to identify growth sectors in its economy and to implement credit access policies reflecting the development strategies established in co-operation with the community. Yet, with the Farm Improvement and Marketing Cooperatives Loans Act, the federal government competes with comparable Quebec programs.
In Quebec, the Société du financement agricole has all the necessary expertise to manage the program. Elsewhere in Canada, wherever the Farm Credit Corporation has offices, there are also adequate resources for that program to be offered. So we are once again in the vicious circle of overlap and duplication where there is no logic.
In spite of a drastic downsizing of the public service, the federal government is not restructuring its activities efficiently. There is still some useless overlapping within its administration. Today, we gave yet another example of that. The public will have to bear the consequences. So we say stop, enough is enough.