Debates of May 29th, 1995

Request For Emergency Debate

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I do not know if the hon. member heard my remarks earlier in response to the House leader for the official opposition when he rose a half hour ago and made essentially the same request.

I am aware that the hon. member regards the situation as urgent. Standing Order 52 of the rules of the House of Commons provides an opportunity for the hon. member to ask the Speaker to order an emergency debate. That opportunity will be afforded to him at three o'clock this afternoon. That is only three hours away. I am sure the hon. member can wait.

We have a significant number of urgent government bills before the House to be dealt with today, and members are here and ready to deal with those.

[Jim Silye, Reform, Calgary Centre, AB]

MPs' pensions.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

The hon. member says MPs' pensions. That is not one of the bills on today's Order Paper, and he knows that.

[The Acting Speaker (Mr. Kilger)]

Order. I would not want to set the precedent that when any member from any party from any side of the House should want to ask for unanimous consent we would engage in a debate before the actual question be put to the House.

I know the subject matter is one that is deemed of great importance. This is twice today that we are dealing with this question, and possibly we will deal with it again later today or maybe even now, whatever the choice may be by the House.

I simply put the question to the House following the intervention from the hon. member for Red Deer for unanimous consent for an emergency debate. Is there unanimous consent?

[Some hon. members]

Agreed.

[Some hon. members]

No.

On the Order: Government Orders:

May 29, 1994-The Minister of Industry-Second reading and reference to the Standing Committee on Industry of Bill C-91, an act to continue the Federal Business Development Bank under the name Business Development Bank of Canada.

Business Development Bank Of Canada Act

[John Manley, Liberal, Minister of Industry]

moved:

That Bill C-91, an act to continue the Federal Business Development Bank under the name Business Development Bank of Canada, be referred forthwith to the Standing Committee on Industry.

Mr. Speaker, I am very pleased to begin debate on the motion to refer Bill C-91, the Business Development Bank of Canada Act, to committee before second reading.

I have every confidence that the members of the committee will bring their ideas and convictions to bear on this legislation, which establishes a new mandate for the Federal Business Development Bank under the name of the Business Development Bank of Canada.

The objective of Bill C-91 is to make government assistance in the area of commercial financing more efficient, effective, and relevant to the needs of small business.

The bill reaffirms the bank's mandate, which is to provide management, consulting and training services to Canadian entrepreneurs. Small business is faced with a variety of challenges, ranging from the tax burden and deregulation to skills improvement and technology acquisition. But the most pressing need certainly remains sufficient financing and adequate consulting services in commercial management.

Without financing and adequate consulting services, small business cannot set out to conquer either the national or the international market.

It is essential that small businesses have access to financing through debt financing, as well as equity financing at every stage of their development, but especially at the initial stage.

Let us look at the challenges small businesses face when seeking debt or equity financing, in terms of four weaknesses in the services currently provided by Canada's financial markets.

First is the risk factor, as several lending institutions are reluctant to grant loans to certain small businesses, even at rates that take into account the higher risk associated with such loans.

Second is the size of the loan. Whether the loan requested is for $1 million or $50,000, the cost to the bank or venture capital holders to prepare and assess business plans and financial proposals as well as to monitor the progress of the venture generally remain constant.

Third is knowledge. Often financial institutions are not familiar with the nature of industries emerging in the new economy. They do not have any tried and true method to assess the risk associated with granting a loan to new industries or investing in them.

Fourth is flexibility. Lenders are often reluctant to provide financing to potential winners on flexible terms. Traditional lenders usually require payments to spread over the term of the loan. This type of financing can prove overwhelming for businesses at the product development stage, as these businesses have not yet reached the point where they can generate enough sales revenue to offset their debt.

These four problems arise from the fact that our economy is changing rapidly. In meeting the challenges of a knowledge based market, small business has modernized much more rapidly than traditional financial institutions.

The small business community in Canada must move swiftly to innovate and to secure a share of emerging business opportu-

nities. The Canadian economy as a whole relies upon their abilities and entrepreneurship to sustain economic growth and to create jobs.

Here is an instance where government can make a difference to the marketplace. No one is suggesting that governments can replace private sector financial institutions in meeting the needs of the marketplace, but it is in situations such as those I have described where government can provide leadership. We need leadership to demonstrate that it is possible to address the needs of small business in the knowledge economy. One government institution has experience and skills to provide that leadership: the Federal Business Development Bank.

Members may be aware that the bank is approaching its $3.2 billion statutory ceiling for capital and liabilities. With no change to this ceiling, the bank would have to ration credit, turning away qualified entrepreneurs who otherwise are positioned to create jobs. Under this legislation the bank's capital and liability ceiling would be removed and the bank would be subject to a 10-year legislative review, which is similar to the requirements imposed on chartered banks under the Bank Act.

Hon. members will recall that in the 1995 budget the finance minister said that the bank and regional agencies will forge new strategic alliances to ensure co-ordinated delivery of business financing. The bank's new mandate will encourage stronger partnerships and increased cooperation with the regional agencies and other federal financial institutions such as the Export Development Corporation.

Mr. Speaker, I would like to address the issue of regional development by showing how important the Federal Business Development Bank is in Quebec. Its head office is located in Montreal, and nearly twenty per cent of its offices are in Quebec.

Over the course of 50 years, the FBDB has provided more than $4.5 billion in loans to small and medium size businesses in Quebec. At present, the loan portfolio for Quebec totals $1.1 billion, shared among 3,600 clients. These past five years, FBDB clients have created 8,500 new jobs and more than 9,000 entrepreneurs in Quebec have benefited from management consulting services provided by the bank.

A similarly impressive story can be told elsewhere in the country. The arrangements we are making with regional agencies, in co-operation with the provinces and territories, will avoid costly overlap and duplication.

Finally, I want the House to understand that Bill C-91 is a key element in our commitment to provide leadership in creating a business climate that promotes small business growth, innovation and job creation. I believe that the innovative approaches the Business Development Bank of Canada will take after this legislation comes into effect will show the chartered banks in Canada that there is a profitable future for them in the service of Canadian small businesses.

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

Mr. Speaker, I am very pleased to speak on Bill C-91, an act to continue the Federal Business Development Bank under the name Business Development Bank of Canada. I want to draw your attention immediately to the fact that the legislation proposes to continue the Federal Business Development Bank. However, after my comments, you will see that this is hardly the case.

We oppose this bill. As the critic for industry, I oppose this bill for three main reasons, but also for another reason which my colleagues will tell you more about and which concerns regional development. The three main reasons we oppose this legislation are the name change from Federal Business Development Bank to Business Development Bank of Canada, the change in the status or purpose of the new Business Development Bank of Canada, compared to that of the original Federal Business Development Bank and, finally, the issue of the new so-called hybrid capital instruments, which we will discuss in greater detail.

I will first deal with the name change from Federal Business Development Bank to Business Development Bank of Canada. The issue was discussed by members of the Standing Committee on Industry, after the parliamentary secretary made that proposal somewhat unexpectedly. The committee did not reject the suggestion for reasons of courtesy and also to avoid any conflict. However, even Liberal members seemed uncomfortable with the idea. The proposal made by the parliamentary secretary sought to change the name Federal Business Development Bank to Canadian Bank for Small Businesses.

Again, committee members accepted that proposal out of respect for the parliamentary secretary. If you read the report tabled by the committee, you will not see any mention of that proposal. That recommendation was made out of the blue, and everyone felt that the name Canadian Bank for Small Businesses was too restrictive. The fact is that the Federal Business Development Bank is involved in the financing of more than just small businesses. Consequently, the proposed name was too restrictive and should have been rejected, but was accepted out of courtesy.

Now we find ourselves at the other end of the spectrum with the name Business Development Bank of Canada. Please note that the French name of the new bank makes no reference to "business". So what we have with this bill is a switch from small businesses alone to the development of the whole of Canada. And this is just as extreme. I do not think that Canada's development is related to a bank, nor is that of Quebec. All this is to say that the original name, Federal Business Development Bank, is well-known and respected in Canada and Quebec, and we do not see why it should be changed. Such a change would

result in a waste of money and energy, given the costs generated in terms of paper burden, logos, etc. Again, this change would result in useless spending and a waste of energy.

The name Business Development Bank of Canada is no better than that of Canadian Bank for Small Businesses.

The second point that deserves criticism, and a fundamental one, is the change of mandate implied by the so-called maintenance of the Federal Bank, which is becoming the Business Development Bank of Canada. This is being done without debate or consultation. It has come out of nowhere and is not based on any mandate. Nobody asked the federal government to change the name of the Federal Business Development Bank. This is done in a routine manner, on the sly, by administrative means, the way this government likes to do things; and that may be the Canada of the future, where things will be done in a routine manner, on the sly. They have come up with this proposal that has nothing to do with what the proceedings of the Standing Committee on Industry, of which I am the vice-chairman, led us to expect. There was no recommendation to that effect.

Previously, the Federal Business Development Bank had a very specific mandate as the last resort for small and medium size businesses. Its primary concern was the development of small and medium size businesses, as stated in section 20(1)(b) which specified that the borrowing legal entity could get a loan if: "credit or other financial resources are not otherwise available to that person on reasonable terms and conditions".

That is what led the Federal Bank to be described as a last resort bank. After one or two refusals at the hands of lending institutions, the borrower, provided it had a good record, could get a loan from the FBDB, once those conditions were met.

At that time, the federal bank was concerned only with economic development through the assistance provided to small and medium size businesses. As we can see in subclause 4(2) of the Business Development Bank of Canada Act, the purpose of the bank will now be to support Canadian entrepreneurship. In carrying out its activities, the bank must give particular consideration to the needs of small businesses.

What is being proposed is a far cry from the last resort bank totally dedicated to small businesses development in Canada. As we will see later on with my colleagues, the scope of the bank's activities is being extended. Clauses 20 and 21 of the bill allow outright interference in everything related to development in Canada, at the expense of provincial governments, and more particularly the Quebec government, by promoting regional development in Quebec's stead by way of unconstitutional or virtually unconstitutional dealings, with Quebec parties.

We already know the Canadian government will try to entice Quebec institutions and companies by telling them: if you want our money, you should ask an equal amount from the Quebec government; if it refuses, that will put an end to our involvement. We can see through that kind of trickery, specially on the eve of the referendum.

If Quebecers vote no at the next referendum, it is that kind of centralist instrument that will be used in the Canada of the future.

With Bill C-91, the bank will not be a last resort bank but a complementary lender to other traditional banks on the market. It will be empowered to make agreements with any organization to become its agent in order to provide services, programs, and financing. It will also be allowed to set up lending consortiums. This is a far cry from the development of small businesses. Those lending consortiums could include both private and public partners.

We think that the complementary role of the Business Development Bank of Canada should be limited to filling the gaps on the market and thus improving the situation. We should specify that its primary role and mandate is to meet the needs of small business, as is said in the act.

Before I conclude, I would like to touch briefly on the new so-called hybrid capital instruments. That means that the federal bank will be able to tap private capital instead of relying solely on government funds, as it has up to now.

Nowhere is it mentioned that, in order to attract private capital, there will be a fixed rate of return. So, the new bank may have to focus on profit maximization in order to provide the most interesting rates of return possible. This will mean a complete turnaround for the new bank, since the old one had fixed rates and could focus solely on economic development.

I want to draw the attention of members to clause 36 that provides for the confidentiality of the information held by the bank. It says that the bank has to protect the information it gathers.

Members have to remember that the committee recommended that information be systematically gathered from all financial institutions in Canada under the direction of the Bank of Canada, Statistics Canada and the Superintendent of Financial Institutions. This bill will hopefully include a provision in order for the new bank to co-operate in inquiries supported by Parliament.

By the way, I see that the Bankers' Association is against the bill, which is a good indication that the government has some very concrete plans in mind. We all know that the Liberal government and the bankers usually agree, but not this time. Why? Probably because the government has some other motives that are political and not economic, especially where the province of Quebec is concerned, in order first to influence the referendum and then to be the only one in charge of economic development in Canada, hence building a centralized and increasingly unitary state.

These are some of the reasons why we will vote against this bill.

[The Acting Speaker (Mr. Kilger)]

I would like to take a moment to remind the House that pursuant to Standing Order 73, under which we are presently conducting our affairs, members have 10 minutes for their interventions, without questions or comments.

[Ian McClelland, Reform, Edmonton Southwest, AB]

Mr. Speaker, I am happy to participate in the debate. Once again I am moved to ask myself the rhetorical question: What is it about getting elected that makes venture capitalists out of us all? What is it about getting elected that makes us feel we should be imposing our collective wisdom on the private sector? I would like to address my short remarks at this juncture to that basic premise.

When those of us in this body get together to deliberate, to create laws and entities, the overriding principle we should have, is this: Government should not be involved in any enterprise which is being carried out or could be carried out by private enterprise. We have no business, in my estimation, getting involved in any way, in setting up a crown corporation, which is what we are doing, in competition with existing businesses.

We may not like the banks. Canadians may not get up in the morning and say: "Thank God we have the Royal Bank" or "Thank God we have the Toronto-Dominion Bank" or any bank for that matter. We already have mature, functioning and very capable banking institutions.

In the context of what the establishment of a crown corporation in the financial sector will do to enhance the competitiveness of Canadian business, to promote entrepreneurship, to be an incubator of new business, or in any way enhance the standard of living in Canada, we will find that the legislation falls far short of the mark. All it does is create one more bureaucratic organization.

Having said that, I do not fault the rationale or the thinking behind the initial desire to do this. Not too long ago the people of Ontario and Quebec, in particular, found that the heavy hand of recession dealt a vital and terrible blow to the entrepreneur and to the people involved in the business sector, particularly the small business sector. In the west particularly in Alberta, we felt that about 10 or 12 years earlier.

The industry committee, in its report dealing with small business which we worked on for months and months and months, the whole idea was to make the banking institutions in Canada far more responsive to the needs of Canadian business, small business in particular. Then what is it about this new expanded Federal Business Development Bank that is going to change all that?

The role of opposition is to oppose legislation preferred by the government. The intent is to make the legislation better, to point out weaknesses in the government's legislation. Looking at it from that perspective and looking at this legislation and the rationale behind the change in the Federal Business Development Bank, we would first have to ask what the mandate is.

Looking at it from the devil's advocate point of view, what is the mandate of the new Federal Business Development Bank, renamed the Business Development Bank of Canada? According to a news release under the minister's hand the mandate of the new bank is to develop and deliver innovative responses to small business financing and managerial needs. If ever there was a motherhood statement, that has got to be it. How could we possibly argue with such a motherhood statement?

I am a small businessman. The Reform Party is 100 per cent behind the notion of incubating, helping and working with small business. However we are not in the business of competing with existing businesses, even if those competing and existing businesses are, God forbid, banks. Banks already exist.

There is no need for Canadian taxpayers, however tenuously, to be supporting or propping up yet another crown corporation which is what this new entity will be. We are at this very moment trying to get rid of crown corporations. There is the privatization of CN and the recent privatization of Air Canada. Why on earth would we want to set up a crown corporation in the banking sector?

I have already covered the point that there are many people in Canada represented by this side of the House, and I am sure many people in Canada represented by the people opposite, who feel that we should not be reinventing the wheel. We should not be putting our energies into creating something that already exists.

Then the question is: Will this new entity do something different? I tried to find out if it would or would not. I went into the historical record. A speech was delivered to the Board of Trade of metropolitan Montreal on October 25, 1994 by Mr. François Beaudoin. Mr. Beaudoin is now the president and chief executive officer of the new Business Development Bank. He quite accurately pointed out that there are three developing sectors of our economy that need attention: export markets, the

new economy, and working capital. He said that these are three areas in which business really needs some significant support.

He makes the case that 85 per cent of Canada's exports are generated by only 900 businesses. Only 900 businesses in Canada represent 85 per cent of our total exports. The majority of our total exports is in lumber and cars. That very clearly identifies the fact that we should have far more emphasis in our country on entrepreneurial zeal in exporting. What then is this new bank going to do that the Export Development Bank does not already do? We already have the Export Development Bank. Its mandate is to do exactly that.

That portion of the business development bank's new mandate that has as its central purpose the incubation and education of entrepreneurs is something we can support very handily. This new bank is to be nothing more than a bigger, broader representation of the bank which is already in place.

The legislation allows the federally funded crown corporation business development bank which is eventually backed by the Government of Canada to have as an asset base almost $20 billion. The total small business portfolio of all the banks in Canada combined is something in the region of $40 billion. According to the banks, there is more money available than there are people asking for it, based on quality loans.

The last thing in the world we want is the situation whereby the existing banks in Canada are able to tell people who ask them for a loan: "Hey, we think you have a great idea but it is a little risky for us. Why not go over to the new business development bank and ask it for the money?" Therefore, the government is going to absorb the responsibility and liability for all these loans which should rightfully go to the chartered banks. They are the ones that exist in Canada and have the utility, ability and the experience to do everything that is already being done. Our role is to make sure they do the job. Our role is not to put together a complementary lender.

One area the Federal Business Development Bank wants to get involved in is providing working capital loans based on receivables and inventory. Well, where has it been? Does every bank not extend operating loans based on receivables and inventory?

In the vast majority of loans existing with the Federal Business Development Bank today, 53 per cent are in loans of $100,000 to $500,000. The loan portfolio for loans of less than $25,000 for the Federal Business Development Bank which is really the incubator of small business is 1.2 per cent of its total portfolio. Writing these small loans is very risky and very expensive. Of course, the banks do not want to do it. However, we in the House should be very careful that we do not increase the liability to individual Canadian taxpayers just so we can make it easier for the banks to slough off their responsibility to the government funded bank.

[Barry Campbell, Liberal, St. Paul's, ON]

Mr. Speaker, I rise today to support Bill C-91, the Business Development Bank of Canada Act. The legislation represents the next step in the evolution of an institution that has a long and honourable tradition of helping Canadian business respond to the changing demands of the economy.

Fifty-one years ago the industrial development bank was created to help wartime manufacturers convert their facilities for peacetime operations. These businesses needed special attention because it was virtually impossible for them to obtain term loans. At that time chartered banks were prohibited by the Bank Act for making loans against mortgage security.

The majority of IDB loans during its early years went to companies such as machine shops, sawmills, textile and garment factories, flour mills and auto parts manufacturers. In other words, the bank responded to the emerging industries of the day in a nation that was converting its wartime industrial capacity to new challenges.

As the nation's economy changed, so did the nature of the bank's customers. The business community began to respond to new opportunities of the post-war boom and the bank began to lend to wholesalers, retailers, restaurants and the hotel industry among others.

In the 1950s and 1960s the bank began to open branches in non-metropolitan areas of the country. This was a bold move at the time. The chartered banks followed the experiment with a great deal of interest. By the end of its second decade, the IDB had 22 branches across the country.

In 1971, the bank began to give businesses regular advice on how to run their operations efficiently. The bank became the only national organization to provide management services, such as consulting, training and planning, to small businesses.

In 1975, the Federal Business Development Bank was created as a crown corporation. Since then, businesses could no longer rely on government grants to execute their bank transactions. The new agency also decided to take up the challenge of providing risk capital to entrepreneurs. Today, the bank has offices in all provinces and territories. It employs 900 people who furnish financial as well as management services to Canadian small and medium size businesses.

Last year, the bank's share financing increased by 45 per cent, for a total of $80 million. As the years went by, the bank acquired an excellent reputation in the field of customer services. According to the most recent survey, 97 per cent of the bank's customers said that they would deal again with the bank and the same proportion of customers said that they would recommend the bank to other people.

It has become apparent that the FBDB must continue to evolve to meet the changing demands of the economy. This need to change has been widely discussed. In its report "Taking Care of Small Business", the Standing Committee on Industry recommended that the mandate of the FBDB be "refocused as a complementary lender to small and medium sized businesses and that it be authorized to use new financial instruments to fulfil its mandate".

The small business working committee emphasized that government sponsored programs should be refocused to fill financing gaps that are not now served adequately by the private sector. Among its recommendations are the following: "To enforce the FBDB's mandate to ensure that its activities are filling the financing gaps, and funding small businesses in all regions of the country including those associated with small and micro businesses requiring loans of less than $100,000, as well as addressing gaps in regional and sectoral lending and working capital requirements". The committee stated: "These objectives should be pursued on a full cost recovery basis".

The Federal Business Development Bank Act has not been amended since originally passed in 1974. It requires updating to reflect market developments such as the use of financial instruments that had not been invented in 1974. Moreover, the bank is now operating at near its statutory ceiling and financial ratios. To respond to forecasted business volume we need to act quickly to provide the legislated authority to increase the bank's equity. If the statutory lending cap is not changed soon, the bank could be forced to ration credit to businesses in the near future.

Under its proposed expanded mandate the Business Development Bank of Canada will be better positioned and equipped to address the specific needs of small business through innovative financing. It will operate where market forces fail to provide access to financing for promising business ventures.

Under its new mandate the bank will continue to be active in smaller loans and investments in its lending and venture capital programs. It will increase quasi-equity and working capital financings. It will also focus more on knowledge based firms without abandoning its traditional activities.

The Business Development Bank of Canada Act will provide the bank with the ability and resources to keep abreast of changing requirements at a time when the small business community in Canada needs the flexibility the bank can offer.

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

Mr. Speaker, I am glad to rise in the House to talk about Bill C-91, which aims at changing the function and mandate of the Federal Business Development Bank and at renaming it the Business Development Bank of Canada.

I have a few questions to ask about the bill. It is a bit disturbing because the Federal Business Development Bank as we know it works very well.

I met its president in Quebec City. As we know, the Bank lends almost one third of its money-about $1.3 billion-in Quebec. Finally, it serves very well its purpose of bank of last resort. Moreover, the Federal Business Development Bank, as it is now, gives training courses for people who want to start new businesses. These are excellent courses and many Quebec entrepreneurs have taken them. Right now, the bank is self-financing and does not cost Canadian taxpayers one penny.

Nonetheless, Bill C-91 will change the mandate of the bank and radically transform its capital structure. The bank now has a statutory borrowing limit of about $3.2 billion but it is proposed to eliminate that limit and to allow the new bank to borrow as much as it wants. I will come back to that later. This change in the capital structure is disturbing because it will allow the bank to enter into partnership with other organizations and other banks.

The capital structure and the mandate of the bank will be changed completely. Right now, the bank is a last resort lender. It makes loans to business people who cannot borrow from commercial banks via the usual channels. There is a real need for that kind of service. But the Federal Business Development Bank will not necessarily have this last resort mandate any longer since the new mandate will require the FBDB to support other projects through partnerships or through top-up funding. This compromises its original mandate which was to offer last resort funding to businesses.

This is quite disturbing because one has to wonder who will do this job if the Federal Business Development Bank is no longer doing it. If the FBDB changes its mandate and works increasingly in partnership with other banks, who will take over the mandate that is presently carried out so efficiently by the Federal Business Development Bank? It is just as though all last resort cases will be ignored.

But the most troubling question regarding this bill relates to the government's motive for introducing it. Why is the government proposing to change the bank's capital structure and mandate? Why is it removing the loan ceiling and telling the bank not to be a last resort lending institution any longer but to go into partnership with other banks and other agencies in projects related mainly to small and medium size businesses

and exports? There are good reasons for trying to find out the motive for such changes.

Do we really want to help small and medium size businesses or do we want to compete with existing financial institutions? We have to ask the question because this bill allows the Federal Business Development Bank, under its new mandate, to compete directly with existing financial institutions. It is troubling.

In fact, should the federal government compete with the private sector? The government has already made such an attempt in another bill, Bill C-52 brought forward by the Minister of Public Works, giving itself the power to compete directly with engineering and architecture firms. Strangely enough, this bill was withdrawn when we started to criticize the government after realizing that these engineering and architecture firms were concentrated in Quebec. We realized that 90 per cent of the businesses that the government would compete with were located in Quebec, and that is why the bill was withdrawn.

But the government is at it again, giving the Federal Business Development Bank a similar but broader mandate since we are no longer talking about one sector, engineering and architecture, but almost any kind of partnership for economic development. And anybody who takes the time to read the definition of the mandate in clauses 20 and 21 will see that it is very broad. There are no limits to this new bank's mandate.

This is what is troubling, because we know that some of the best examples of the growth of small and medium size businesses in Canada have been in Quebec. It is well known that, if there is one sector in Quebec that has distinguished itself, and is on the cutting edge, it is the small and medium size business sector.

We have established funds in Quebec for the development of small and medium size business, such as the solidarity funds of the FTQ and the CNTU, and a number of programs, such as those of the caisses populaires. It is a very active sector. Why, then, is Canada changing the mandate of the Federal Business Development Bank in order to enter this sector? Does it want to compete with Quebec's caisses populaires? Does it want to compete with the solidarity funds of the FTQ and the CNTU?

Ultimately, can it overstep the authority of the province, which has already established a regional development program, in order to once again increase the visibility of the federal government in Quebec, as it has done elsewhere in Canada furthermore, but particularly in Quebec? Is there a hidden agenda in this bill, a deliberate wish to weaken the many programs that have been established in Quebec by the banks and the solidarity funds, as well as the programs established by the Quebec government itself?

These are some of the questions that come to mind with respect to Bill C-91. There is no compelling need for the Federal Business Development Bank to have a new mandate, when the one it now has is perfectly sufficient. One could wonder whether beyond the economic purpose of this bill there is not another deeper political purpose. That, in fact, is why I personally will not support this bill. Basically, the purpose of this bill is a purely political one. Coming from Quebec, from the riding of Québec-Est, I can see that the Federal Business Development Bank, this new bank, holds nothing for us. It would be better to keep it in its present form.

[Werner Schmidt, Reform, Okanagan Centre, BC]

Mr. Speaker, we are debating whether Bill C-91 should be referred to the committee before second reading. In many ways that is positive in the sense that it opens up the debate and allows elements to be raised which would otherwise be restricted because of the conventions of the House. I hope that will be the case and that it will not be a way to circumscribe or limit certain amendments or debate which might otherwise receive the light of day in the House.

I have concerns about Bill C-91 which we ought to look at before we submit it to committee. Changing the name of this bank I do not think will change anything at all. It will cost a lot of money to print new stationery, to put up all the new signs and all those things. What will changing the name do to the actual purpose, function and operation of the bank? I submit it will do nothing.

It sets up a crown corporation which has as its capitalization part a number of instruments which are being used. It has common shares which have a par value of $100. It has preferred shares which are unlimited in number, as are the common shares. The preferred shares have no par value. Hybrid capital instruments will be part of the capitalization. These will be paid in capital by the Parliament of Canada by a parliamentary appropriation but there will be no indication as to how much. There will be retained earnings and contributed surplus to a maximum of $1.5 billion.

There are other provisions which I will draw to the attention of the House, particularly sections 21 and 22, specifically section 22(e). Section 22 includes the ancillary powers but section 22(e) is particularly interesting. The bank may acquire, hold, exchange, lease, sell or otherwise dispose of any interest in real or personal property and retain and use the proceeds of disposition. That kind of provision raises some very interesting questions. How much real estate will the new business development bank of Canada be prepared to buy? What will it do with that real estate? Will it deviate from its traditional role, which

has been to lease real property in which it carries on its business, or will it develop a series of branches throughout the country?

Other sections of the bill also give to the board, to the Minister of Finance and to the cabinet powers which rightfully belong to the Parliament of Canada.

Section 27 gives some very specific powers to the board:

Subject to the approval of the governor in council on the recommendation of the Minister of Finance, the board may make bylaws

(a) setting out the rights, privileges, restrictions and conditions attaching to preferred shares, creating one or more additional classes of preferred shares and generally determining the rights and obligations of the holders of preferred shares, including

(i) limiting the right of the shareholders to specific dividends or repayments, whether fixed or variable,

(ii) authorizing the purchase or redemption of the shares by the bank, either at the bank's option or at the shareholder's request, and

(iii) limiting or extending the rights of the shareholders in any other way;

That is the second class of shares which makes up the capital of this bank, which really gives to the board the authority to determine how the bank shall be structured. That kind of power ought not to be given to a cabinet. It ought to exist with Parliament because this bank through the Minister of Finance and the cabinet, given this provision, allows that group to create a liability of $18 billion for the Canadian taxpayer.

Who is the shareholder talked about in section 27? The shareholder is the Government of Canada. The Government of Canada now will be told it may or may not own these preferred shares. It may or may not be paid a dividend. It may be paid this much of a dividend or this little of a dividend. That becomes the issue.

Other provisions of the bill ought to be of direct interest to each of us. In particular, I would like to look at subsections 18(4) and (6).

Subsection 18(4) states that the bank may enter into any transactions for the financial management of the bank, including any financial instrument of financial risk such as interest rate or currency exchange agreements, options, futures contracts and any other similar agreements.

Another way of looking at this is that these are derivatives. It permits the personnel of the bank to enter into futures contracts, options, purchasing and selling of options with public money which should be considered a sacred trust. If we look at the way the options market operates and the futures contracts work it means the bank is speculating with Canadian money or has the opportunity to do so.

I am sure the argument will be presented that it will use this only for purposes of hedging interest rate and currency fluctuations. If the bill specified that there were limitations one might not have such grave concern. Because there are no limitations it does not prevent the manager or the president or whoever is in charge from getting into the market directly. It should be a major concern to all of us. Just remember what happened in the Barings bank.

Other sections of the bill should give us grave concern. The designated minister is identified in section 21. Who is the designated minister? At the moment it is the Minister of Industry. It is possible that cabinet could designate any other minister. For example, FORD-Q is one of the regional development portfolios. We heard the Minister of Industry say this morning that one of the purposes of the new mandate is to expand it so that it would include regional development and things of that sort.

Would it not be interesting if for certain matters the Minister of Human Resources Development were designated as the minister of the bank and could direct the bank? In another instance it could be the minister of FORD-Q and in a third instance it could be the Minister of Industry and so on down the line. There is nothing in the bill to prevent that sort of thing from happening.

The obvious questions we have to ask is what can this bank do that the other banks cannot do. What can the other banks do that the this bank cannot do? If it is none of those things and this bank is doing nothing more or less than what the other banks are doing, what in the world are we doing this for?

Some specific arguments ought to be addressed as well. The indication is that this bank shall be complementary to the existing financial institutions, particularly the banks. Then the bill does not define the word "complementary". The only reference in the proposed bill that deals with the previous act is that complementary is taken as that section which deals with the previous section saying that it must be the bank of last resort. In other words, the applicant has to be refused by some other institution before he can apply for money here.

Does complementary mean that it will make loans of an operational capital requirement? Does it mean that it will become a deposit taking institution? What will the Business Development Bank of Canada do that other banks do not? I submit that it will do nothing more or less than is currently available in the marketplace and it is not required.

I want to throw out two more questions. First, will the bank be able to expand its network of offices? Second, which is more important, is: What is a hybrid capital instrument? It is not defined in the bill. When asked what this means certain officials were unable to answer that question but more significantly than that hybrid financial instruments are different from any other capitalization that is provided for in the other sections of the bill.

The other one says that common shares, preferred shares and hybrid capital instruments are not given to the government but may be given to private individuals or persons other than the government. What does it mean?

We must answer these questions before the bill is presented seriously to the House.

[Herb Dhaliwal, Liberal, Parliamentary Secretary to Minister of Fisheries and Oceans]

Mr. Speaker, I would like to contribute to the debate on sending Bill C-91 to committee before second reading.

Before that however I would like to address a couple of statements made by the hon. member from Edmonton who questioned the need of the FBD bank and indicated in his earlier remarks that when there are already banks out there servicing the community, do we need this?

I want to address those concerns because it is a fair question. The very existence of this bank shows that the present banking system does not meet the needs of small and medium sized businesses. If it did, we would not need it. The present banks do not service the financial requirements, sometimes the operating line, and other needs.

As a small business person I and the hon. member who was also in small business, know that there are a lot of good ideas out there that often do not get financing, that do not get the funds or the financial support from the community. For example, small businesses may start as one or two person operations and expand to become 100 and 200 person operations. As a government we always have to look into the long term. We have to ensure that we have a financial infrastructure to provide small business people with the opportunities to expand and to create new opportunities and employment.

As the hon. member knows, it is the small businesses that are creating the jobs right now. We want to make sure that the infrastructure is there for them to continue to do that. He will know that many times many good ideas get lost because they are not financed.

We can bury our heads in the sand and say: "Everything is fine. Everything is great out there. Every businessman, small or medium, will be able to get financing. They will be able to get the money when they need it for a very good idea that has great opportunities," but that is not the reality.

Reality is a need for an organization such as the FBDB to ensure the financing of those ideas that exist, that have a future, that have potential. The government understands there is tremendous opportunity not only in the short term but in the long term to create employment and to create a strong, dynamic, vibrant economy. That is what we have to do as a government.

We cannot stick our heads in the sand and say: "Everything is fine. We will leave it up to the big banks. We will leave it up to the financial institutions. They will take care of small business. They will do all the funding. They will fund the new opportunities in the new economies". That is not reality.

Innovation has always been the hallmark of the Federal Business Development Bank. The secret of a bank's success has been the close co-operation it has enjoyed with entrepreneurs across the country. The bank has been able to stay abreast of rapidly evolving markets and major trends such as the use of information technology. It has always sought ways to offer new services tailored to meet the increasing, complex needs of entrepreneurs.

For example, a year ago the FBDB introduced a $50 million financing program called working capital for growth. The hon. member knows that one of the problems small businesses have is getting working capital which is very important for their success and growth.

Hon. members will recall that last year, the economy was starting to gain momentum. For many businesses the new opportunities were not matched by sufficient cash flow after several years of a recession. They lacked sufficient cash to finance the opportunities that arose.

The FBDB created its working capital for growth loans that top up financing when conventional lending institutions that the hon. member said would be able to provide these do not offer sufficient lines of credit to support a company's growth.

In addition, FBDB business counsellors work with business owners to ensure that their growth plan is well managed. The maximum loan amount under this program is $100,000 and repayment schedules are flexible and tailored to individual needs.

Another example of innovation by the FBDB is the pilot program called patient capital where returns take a long time and where the return is not over a year or two years but a much longer time. It responds to the needs of companies that do not have the necessary financial resources to service debt during their development stages. This is a problem particularly for new companies in the knowledge based economy that may not have tangible assets to offer as security.

These knowledge based economies have incredible barriers to financing because they are difficult to assess. It is very difficult for many bank managers to look at anything but basic fixed, hard, tangible assets and assess the knowledge based assets, the engineering, design and all the software knowledge. It is so hard

to grasp the value of that and are very difficult to finance. They do not have tangible assets to offer as security and therefore financing is difficult.

The FBDB offers patient capital in quasi-equity forms of financing which provides firms with long term capital on flexible repayment terms. The repayment of patient capital can be postponed for up to three years until a company begins to generate revenues and a royalty on sales can be arranged.

The bank has been pilot testing this patient capital program in Kitchener-Waterloo in co-operation with the Royal Bank and Innovation Ontario. We hope that the test will prove successful so that the FDBD can begin to offer this service across the country. In this way the bank will help to close what the Minister of Industry has referred to as the flexibility gap, one of the four critical gaps that prevents small business from obtaining the financing they need.

The flexibility gap refers to the problems small businesses encounter when conventional lenders require a stream of payment over the term of the loan. This can be impractical, for example, for viable firms in the product development stages which are not yet generating a mature cash flow.

The FBDB has already demonstrated innovative solutions by providing quasi-equity financing approaches through long term loans with flexible repayment requirements. This is what Canada's small business communities need to obtain their capital requirements and the FBDB is leading the way.

The other four gaps that the minister described have also been addressed by the FBDB. Hon. members will recall that he spoke of the risk gap. Conventional financial institutions, to which the member would like to leave everything, are reluctant to set an interest rate for high risk, smaller term loans that would compensate them for increased risk. They tend to adopt self-imposed ceilings with respect to the rates that are charged.

This has advantages for companies that are able to secure financing. They will rarely pay more than the prime plus 2 per cent. But many companies will be willing to pay higher rates in acknowledgement of the increased risk the lender is taking.

A third structural weakness in the conventional financing requirements in Canada the minister has described as the size gap. I am sure many hon. members who have been involved in business know about this. It is a result of the overhead costs that a lender must incur in administering any loan, whether large or small. The administrative costs associated with loans are similar for the lender, whether it is a $50,000 loan or a $5 million loan. Comparing the profits that the lending institution can make by providing the two loans, there is no question that a conventional lending institution tends to serve its larger customers first.

In Canada today we can point to hundreds of examples of small customers who have grown to become big customers. The $50,000 loan of today may become the $5 million loan of tomorrow. The FBDB has been created precisely to respond to the needs of the smaller customer.

The fourth gap in lending institutions the minister has referred to is the knowledge gap. It is carefully interrelated to each of the other gaps but has a particular emphasis on what the lender understands about the nature of the new economy.

How does the lender take into account the assets that leave the building each night? I am referring to the human assets, the ingenuity, the creativity of engineers, the vision of the design teams, the basic entrepreneurial skills of the owners? In the knowledge economy these are perhaps the most valuable assets of all.

How can lenders assess the viability of new forms of enterprise? By what standards can they compare the economic performance of young companies in the newly emerging field of environmental technologies? For example, how can they measure the potential benefits and risks of a new software design?

Industries emerging in the new economy have trouble securing appropriate financing because they are knowledge based and may not possess assets that could be realized in the event of a default.

The team at the FBDB has made it its business to understand the needs of the new economy. Its clients have evolved with changes to Canada's industrial base. It is precisely because those gaps do exist under the present situation that we need the FBDB. That is why I am supporting this bill; to ensure small and medium size businesses that we have the infrastructure to fulfil their financial needs and create more jobs for Canadians and greater opportunity.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Mr. Speaker, my colleagues before me did a good job explaining the subject matter of Bill C-91. Therefore, I will only say that it is mainly aimed at transforming the Federal Business Development Bank, commonly known as the FBDB, into the Business Development Bank of Canada.

To create this new entity, the government is not amending the Federal Business Development Bank Act; it is introducing a new piece of legislation, Bill C-91.

I will deal with three aspects of this bill. The mandate of the FBDB, as we know it, will be extended. Consequently, the

modified FBDB will no longer be solely a financial institution geared to last resort funding. From now on, the new Business Development Bank of Canada will be able to provide complementary funding to other financial institutions.

Second, it will now be easier for the Business Development Bank of Canada to enter into agreements with public and private partners, either at the federal or provincial level, to set up financing syndicates.

Third, the bank will have financial instruments, such as shares, which will enable it to increase its capital without depending on government funds.

I will therefore focus on the disastrous consequences of this amendment on regional development. Unfortunately, it would appear that, under the guise of regional development, Bill C-91 is the new way the federal government has found to once again interfere in provincial affairs.

As in many other areas, it has not been clearly established whether regional development is a provincial or a federal responsibility. Some provinces, such as Quebec, have long demanded exclusive powers in this area. As you might expect, the federal government has always refused to recognize regional development as a strictly provincial responsibility.

At each round of constitutional negotiations, this claim was summarily rejected. However, under Quebec-Canada framework agreements the federal government had made a commitment to the Quebec government to limit its regional interventions.

The Economic and Regional Development Agreement for Quebec came to an end in December 1994 and the federal government refused to renew it. Clauses 20 and 21 of the bill will make the Business Development Bank of Canada more visible in the outlying regions since it will have the authority to sign agreements directly with other federal departments, regional agencies like the conseils régionaux de développement, and, eventually, with the corporations de développement économique and even with individuals.

If the bank can deal directly with local stakeholders, it could have a negative impact on provincial strategic plans since it could induce the CRDs to model their priorities on Ottawa in order to get money. Therefore, the bill disregards the joint efforts made by the provincial governments and the local business community. Once again the federal government comes trampling in, saying: "Make way, here we come with our spending power!"

Let me remind you that this famous spending power has given the federal government a debt which now stands at $550 billion. Let me remind you also that this $550 billion debt has been accumulated largely, if not totally, over the last 25 years. And except for a period of nine years, who were the leaders of this country during those last 25 years? We all know that the Liberal Party of Canada was in office during those years. That is what spending power gives us. They meddle in everything and often spend ill-advisedly. Just look at the facts. In the present case, a simple name change will cost Canadian taxpayers millions.

[Osvaldo Nunez, Bloc, Bourassa, QC]

It is a disgrace.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

This is indeed a disgrace. What is even more regrettable is that the federal will, once more, impose the same medicine to all the regions of Canada. Well-meaning civil servants will decide, from Ottawa, what is good for the regions and other civil servants, also well-meaning, will apply the decisions made in Ottawa.

Decentralization is presented as the way of the future but Bill C-91 shows that the federal government has no use for regionalization. The Government of Quebec is trying to decentralize certain powers and give regions the money they need to exercise them. Bill C-91 goes blindly in the opposite direction. At a time of cuts, when money is getting scarce, with Bill C-91 the federal government is opting for a less cost effective solution simply because it will get increased visibility. This is very sad for taxpayers.

The federal government would rather withdraw from social programs and use taxpayers' money to intrude needlessly on Quebec structures designed to deal with small and medium size businesses. These political choices are not made in the interests of regions but rather in the interests of the federal government. Therefore, I will oppose Bill C-91 because I respect the work done by the Government of Quebec and by regional stakeholders, and because I also respect the choices they have made. Using these means to foster the popularity of the federal government among the people cannot be justified.

I could mention all the duplications that are already costing taxpayers so much because they always end up paying the bill through their municipal, school, provincial and federal taxes. Let us take for example manpower training. It should come under provincial jurisdiction. Yet, because of this duplication, the federal government spent needlessly, in Quebec alone, $265 million in administrative costs. We are literally stepping on each others toes.

I have no objection to the federal government meddling in provincial affairs. It can show off its spending power all it wants. But it should start by paying its own debts. We had to fight, in this House, to obtain that the federal government pay its share of the 1992 referendum, a promise made by the previous Prime Minister that the present Prime Minister wanted to renege on.

The native crisis in Quebec cost hundreds of millions of dollars and we are still negotiating the federal government's

share. Therefore, Mr. Speaker, rest assured that the Bloc Quebecois will oppose this bill that we consider totally useless.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, I was very interested in the comments of the hon. member for Vancouver South in response to the speech of my colleague from Edmonton Southwest. He said the Liberals feel we have to have a financial infrastructure to create a strong, vibrant and dynamic economy. That is exactly the problem with Canada at this point. The Liberals today feel the way they have felt for the last 25 years, that if the government does not do it then probably it will not happen.

The Liberals consistently are coming forward with legislation like this which will interfere even further in the affairs of ordinary Canadians in its own small insidious way.

I will speak about this issue from the point of view of what I call coffee shop common sense. There is a real vacuum of talk in the Chamber which comes from the common sense that we hear from Canadians as they gather in coffee shops, in their living rooms or around their kitchen tables at home. There is very little talk using the ordinary English or French used there. We always seem to end up hearing speeches from people using wonderful 75 cent words to describe dead end situations.

I suggest to my friend from Vancouver South that the Liberals, when using this act along with other acts to create a financial infrastructure, to create a strong, vibrant, dynamic economy, might do well to take a look at what capital is and where capital comes from.

As far as the Liberals are concerned, and many people of that thought process, the idea of taxation is to gather in the capital so it can be redistributed as the people who supposedly know best think it should be.

I believe, as do many people in my constituency, the big banks are failing small business. There may be a good intention on the part of the big banks, and certainly they do a lot of advertising and window dressing, but the biggest single problem is there is no real competition in the banking industry as it presently sits. I would be in favour of our looking at creating a situation, not as set out in Bill C-91, but a situation in legislation that would create some real competition between banks so that we could have a pool of capital.

We know the big banks are asking to get into non-traditional banking services. Of course they have gone into brokerage and now they are asking to break into insurance. They are looking at the fact that although they have countless billions of dollars flowing through their coffers on a day by day basis, nonetheless they can extract only a very small percentage of those dollars. They are therefore looking to insurance, to brokerage. I do not know what is going to come next.

The difficulty is that the banks are not in a situation where there is real competition so that they have to go out and gain the business. I say this on the basis of what I call coffee shop common sense. If I were to walk down Baker Street in my hometown of Cranbrook, or a street in Invermere, Fernie, Creston, Golden, or any of the towns in my constituency, and walk into a coffee shop and sit down with the local business people and ask what the real problem was that they were having, almost invariably they would tell me that the real problem they are having is in getting a sufficient amount of working capital. They are constantly constrained in the area of capital.

This government should really be looking at, and perhaps it can be looked at under Bill C-91 in committee, the creation of an independent investment pool of real dollars. These would not be dollars that are extracted from business by way of a tax grab, not dollars that are extracted from individuals by way of a tax grab, not money lost under regulation harassment that businesses are under these days, but real dollars that people would put into an investment pool.

Let us look at why businesses are having difficulty maintaining a capital base. They pay school tax and municipal tax. In many cases they pay water, sewer and garbage collection tax and provincial taxes. In my home province of British Columbia if a person has the audacity to have too much money, and it can be borrowed money invested in equipment in a business, that person will be taxed on the money that is invested in the items that are actually generating the profits in the first place. There is federal income tax.

There is the GST compliance costs, which of course we should talk very briefly about as a side bar issue. This government came to Parliament telling Canadians it was going to be doing away with GST and has done nothing. Anyway, there is the GST compliance costs and regulation harassment. There are good reasons for having municipal, provincial and federal regulations, but in many cases the application of those regulations for businesses becomes a harassment.

Why do many businesses have a problem keeping dollars in the business? Let us look at the list. The dollars go out to school tax, municipal tax, water, sewer, garbage, provincial tax, federal income tax, GST compliance costs and all of those things. It is no wonder that small business is having a difficult time retaining capital. There is a tax grab by all levels of government as they scrounge to find more dollars rather than doing the obvious which is to cut down on the expenditures.

This bill is going to committee. It is excellent that this bill has come to the House and under an agreement between the government and the opposition parties will be going into committee. There is the opportunity in committee for my very competent and capable Reform Party colleagues to bring some coffee shop common sense to that committee in order to move forward in an active and proactive way to make something of this bill which quite frankly I find to be a little questionable at this time. They

could bring it forward with the provision that there is no attempt on the part of the industry committee to repeat the shenanigans of the human resources and development committee. This process has the opportunity to be open, constructive and positive. I encourage all members who will be working on that committee to be sure that process is capable of happening.

I say again, the Liberals have the idea that if it is worthwhile doing then surely the government has to do it. The Reform Party believes that the government should get out of the lives, get out of the faces, get out of the pocketbooks of ordinary citizens and ordinary businesses and let them get on with doing what they do best, which is to make profits, to reinvest them and to get this country going.

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, I want to talk today to Bill C-91, an Act to continue the Federal Business Development Bank under the name Business Development Bank of Canada, that was tabled on May 15 by the Minister of Industry. According to its drafters, over and above changing its name, the bill aims at streamlining the bank and modernizing its operations.

As we all know, the role of the Federal Business Development Bank is to promote and support companies which are starting up or at any other stage of development. It was created in 1944 under the name Industrial Development Bank. In 1974, it was incorporated under its current name as a crown corporation in accordance with a law passed by Parliament.

The Federal Business Development Bank offers three types of services to companies: financial services, venture capital financing and management consulting services, including consulting, planning and information.

This bill broadens the bank's mandate so that it will not only be a financial institution responsible for last resort financing. It will also, from now on, be authorized to offer complementary financing to other financial institutions and to set up subsidiaries.

Moreover, clause 21 of the bill allows the Minister of Industry to use the bank to promote entrepreneurship in Canada. Clause 20 gives more leeway to the bank to negotiate agreements with other federal departments and provincial and local agencies in carrying out its specific mandate and any other mandate that the minister could assign to it under clause 21.

My first criticism is that I do not see the need to change the bank's name. We are only wasting taxpayers' money.

However, the most important flaw of this bill is without a doubt the fact that the federal government is going to interfere even more in regional development throughout Canada. In Quebec alone, it intervenes through the Federal Office of Regional Development which implements all of the federal programs. The mandate of this office is to create a dialogue between federal stakeholders in Quebec. This office has already established contacts with these consultation structures in Quebec and even wants to sit at the consultation table for Montreal.

Bill C-91 constitutes another centralizing offensive from the federal government resulting in costly and needless overlaps.

This bill completely negates the role of provincial governments regarding support to small business. This goes against the declarations of the Liberal government which said it wants to eliminate overlapping and duplication with provinces.

Clause 20 of the bill allows the Federal Business Development Bank to enter directly into agreements with a person or agency, which means it will be able to sign agreements with regional development councils among others.

However the Quebec act respecting the Ministère du Conseil exécutif du Québec prohibits provincial agencies from entering into agreements with the federal government without the minister's authorization. Once more the federal government dismisses the responsibilities of the Government of Quebec and its very existence by giving itself the power to act without consulting provinces.

In the area of regional development the centralizing offensive of the Chrétien government goes directly against Quebec's regionalization policy. The federal government has always refused to recognize regional development as an exclusive provincial jurisdiction. The government dismissed this claim in all constitutional negotiations. Yet, the federal government had promised Quebec it would limit its action in regions under general agreements between Canada and Quebec. However, the regional economic development agreement expired in december 1994 and the federal government has refused to renew it.

Federal intervention in regional development is becoming scattered, without consultation with the Quebec government. It is competing with Quebec programs while trying to increase the federal government's visibility in the outlying regions and is using the Federal Office of Regional Development to establish Canadian standards in various departments.

What I find really shocking is that the federal government is financially getting out of social programs and using taxpayers' money to unnecessarily overlap Quebec structures that are dealing with small and medium size businesses. On the other hand, it refuses to get out of manpower training, as was asked by the Quebec government, labour and employer organizations, as well as by economic and social sectors in general.

In my riding of Bourassa, where there are numerous very small businesses, the Federal Business Development Bank has been involved with several projects that have created or maintained jobs. However, some business people tell me that this institution is taking too long to examine and respond to their requests or is asking for too many guarantees.

This institution should also be providing more consulting services and in particular, more consulting and training services to students who wish to operate small businesses during the summer. The government is already giving it grants large enough to allow it to carry out that part of its mandate. I hope that the FBDB will always be different from other financial institutions in that it will not try to maximize its profits, but only to recover its costs.

The Bloc Quebecois does not want the FBDB to compete with other development tools available to Quebecers, such as the Fonds de solidarité de la FTQ and the caisses populaires. Also, we would like it to have the means to support Quebec businesses.

I would like to take this opportunity to highlight the accomplishments of the FTQ's Fonds de solidarité over its ten year existence. I took part in the last annual meeting, during which the fund's 10th anniversary was celebrated. This fund has invested in, and helped, hundreds of businesses and has created or saved over 25,000 jobs in Quebec. I would like to pay tribute to its leaders, Louis Laberge, Fernand Daoust and Claude Blanchet. I would not like to see the Federal Business Development Bank duplicate the exceptional work already being done by the Fonds de solidarité.

The potential impact of Bill C-91 on the bank's role as an instrument of economic development is very worrisome.

Firstly, the bank is no longer restricted to its role of a last resort lender and will be able to offer complementary financing. The danger lies in the fact that the bank is moving away from its mandate of last resort financing and more towards complementary financing.

The bill must clearly stipulate that the bank's primary role is to offer last resort financing. Clause 21 gives the minister the discretion to involve the bank in initiatives which have nothing to do with its primary activity. Such a measure is unacceptable, because it could prevent the bank from concentrating on what it does best, which is providing last resort financing.

Clause 36 of the bill restricts access to information regarding the bank's clients. This practice is normal for a financial institution. It would be useful, however, to add a provision stipulating that Parliament could access this information for a parliamentary inquiry.

Like the other Bloc Quebecois members who preceded me, I would like to state that I do not support this bill.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, it is a pleasure to speak to Bill C-91, the motion to refer the bill to committee prior to second reading.

I know other members before me including my colleagues the member for Edmonton Southwest, the member for Okanagan Centre and the member for Kootenay East have spoken to the contents of the bill and what they hope to accomplish in committee, the weaknesses and strengths of the bill regarding the Federal Business Development Bank.

I will take a slightly different attack. This motion refers the bill to committee prior to second reading. As members know, this is a new process which has just been implemented in this 35th Parliament. We are doing some experimentation with regard to how we pass legislation.

The Reform Party agreed with the procedure of sending bills to committee prior to second reading because the Liberals had promised that under this new process there would be ample time for substantive amendments to be debated and discussed in committee before the bill was approved in principle as it is during second reading debate.

I will read what the standing orders say with regard to referring bills to committee prior to second reading. Bill C-91 falls into this category. Standing Order 73(1):

Immediately after the reading of the order of the day for the second reading of any public bill, a minister of the crown may, after notifying representatives of the opposition parties, propose a motion that the said bill be forthwith referred to a standing, special or legislative committee. The Speaker shall immediately propose the question to the House and proceedings thereon shall be subject to the following conditions:

In the case of Bill C-91 these requirements were followed. The minister did make a request that the bill go to committee prior to second reading and there had been consultation with the other parties.

Standing Order 73(1)(b) says: "the motion shall not be subject to any amendment".

That means as we debate this motion today we cannot implement any amendments. I can understand that because we are not dealing with the substance of the bill. We are dealing the

procedural matter, whether the bill should go to committee prior to second reading. The standing orders preclude any amendments to this motion.

Standing Order 73(1)(c) states no member may speak more than once nor longer than ten minutes. Standing Order 73(1)(d) states that after not more than 180 minutes of debate, three hours, the Speaker shall interrupt the debate and the question shall be put and decided without further debate.

We are not having a second reading debate right now. We are debating a motion to refer Bill C-91 to the Standing Committee on Industry. The committee will be challenged with the task of reviewing the bill, listening to witnesses, proposing amendments and having a vigorous debate on the value of Bill C-91; whether it is a strong and good piece of legislation, whether it needs to be substantially changed or whether it should be defeated. I am sure when the bill goes to committee these issues will be looked at.

I am really concerned about whether we can take the government at face value when it says it will permit open and complete debate in committee prior to second reading. When we agree to this process we forego debate at second reading.

We are not really having a full blown debate right now because we are limited to 180 minutes. We cannot make amendments because we are dealing with a motion, not with the bill. It is critical that if we also lose our second reading debate we have a committee that functions well, is open to amendments, takes time to consider the bill and will not rush the bill through committee stage without proper analysis, without enough witnesses being called and without time taken at the clause by clause review of the bill.

I am concerned, not because of Bill C-91 and the industry committee, but about what happened in the human rights and disabled persons committee which also received a bill through this process. The member for Kingston and the Islands said that bill was before the committee for five months. Let me tell the House what the committee did for five months.

I think members of the committee allowed only four witnesses Reform suggested to appear before the committee. All others were government witnesses. That does not sound like a very open process. Maybe the Bloc had a few, I am not sure. Certainly the appearance of witnesses before the committee was restricted. That does not sound like the spirit of Standing Order 73. It certainly does not fall under the spirit of the red book. We are having some real problems with the credibility of the red book in light of all the broken promises we see amassing at a rapid pace. Almost on a daily basis we see new broken promises.

The bill came before the committee and it refused to hear our witnesses. We were let to sit a simmer for a long time. Suddenly it was time for clause by clause debate. Our members brought forward amendments, some prior to the clause by clause debate and some on the day of the clause by clause debate. These amendments were refused contrary to Standing Order 62 because the chairman said they were only submitted in one official language. I hope that does not happen with Bill C-91.

I understand the industry committee functions a little better than the human rights committee. It almost sounds like an oxymoron to use the term human rights when we are talking about the actions which transpired in the committee the other day.

The chairman ruled contrary to Standing Order 62 and refused to even consider debating amendments put forward by my Reform colleagues. Initially the committee refused to accept amendments from the floor, saying they had to be submitted ahead of time. It is contrary to the rules and spirit of the motion to submit these bills to committee prior to second reading.

There were some other problems. Suddenly a motion was passed limiting debate per clause to five minutes. I hope this does not happen with Bill C-91 because this makes a sham of the committee process. That five minutes included reading the clause; some clauses were a whole page, some clauses were difficult to complete in the time limit. After reading a clause all three parties had far less than five minutes to comment on each clause. That is not meaningful debate. It is not in the spirit of Standing Order 73. It is not why Reform supported this change to the committee process.

I trust this will not happen with Bill C-91. If this reoccurs it will indicate the government did not bring the changes to the standing orders forward in good faith. It was using this as a mechanism whereby the debate on bills could be shortened, particularly on contentious bills such as C-64, and therefore prevent the House from dealing with the bill at a second reading debate. This is a very serious matter and why I bring it to the attention of the House.

Furthermore, in the committee the chairman refused to hear points of order. I know, Mr. Speaker, you have never in the Chamber refused to hear points of order; neither have the Deputy Speaker nor any of the acting speakers. The standing orders indicate points of order must be heard. The chairman in the human rights committee refused to hear points of order, again a breach of the standing orders and the common procedures we follow in the House.

Therefore I hope Bill C-91 when it goes to committee prior to second reading will not face this type of abusive procedure on the part of the chair of the committee. I am sure it will not because I understand that committee works quite a bit more co-operatively.

In this committee the chair, if challenged on a point of order, said: "Do I have the agreement of the committee to proceed? Is my ruling sustained?" The Liberal members would jump up and say "sustained", and there was no debate on the issue.

The debate on the Federal Business Development Bank is important. It could be equally as important as the debate on employment equity, although the employment equity bill is certainly a more emotional issue. However, all bills are important. If they are brought to the House we expect them to be dealt with in a serious manner. We expect the rules of the House and the rules as they apply to committees to be followed.

I implore the government to review whether it is really open to honest debate in committee prior to second reading. When we use Standing Order 73 and refer bills to committee prior to a second reading debate, I challenge the government never again to implement draconian measures which would restrict debate on a particular clause to five minutes or less. That cannot happen. That takes away all credibility from the legislative process. It is demeaning to members of Parliament and, most important, it is absolutely wrong.

We will in good faith agree to send the bill to committee prior to second reading. I expect the discussion will be of a far higher quality than was the case in the human rights committee. Not only would I expect it, I think the House should demand it. Members of Parliament deserve to be heard and deserve to have their positions adequately expressed so there can be a vote taken after full and free debate. I recommend that for Bill C-91.

[The Speaker]

My colleague for Abitibi will have the floor immediately after Question Period.

It being 2 o'clock, pursuant to Standing Order 30(5), the House will now proceed to Statements by Members pursuant to Standing Order 21.

Emergency Personnel

[John Maloney, Liberal, Erie, ON]

Mr. Speaker, I have grave concerns respecting the current status of infectious disease notification in Canada. Without regard for their personal safety firefighters, police and ambulance workers routinely provide emergency medical treatment in unsanitary field conditions on patients they know nothing about. As a consequence they can be exposed to an increasing variety of dangerous, contagious and sometimes deadly diseases.

Is it asking too much that these brave men and women be entitled to notification about possible exposure to an infectious disease? Is it asking too much that our emergency response personnel themselves be given the right to early treatment? Is it asking too much that their family, friends and literally everyone they come into contact with be protected from further transmission?

The answer is obvious. I implore the government through Health Canada to set the standard for uniform notification protocols in conjunction with those provinces that have endorsed national guidelines. The confidentiality of patients can and will be protected. The health of our emergency response personnel can and must be protected.

Canadians are entitled to nothing less.

Jacques Villeneuve

[Benoît Sauvageau, Bloc, Terrebonne, QC]

Mr. Speaker, racing driver Jacques Villeneuve won a brilliant victory at the 79th Indianapolis 500 on the weekend.

Overcoming a two lap penalty, Jacques Villeneuve made up his time, caught and then passed all the other drivers, moved into the lead, and stayed there to the finish.

This was the twenty-four year old driver's second time only at this American racecourse and his first victory. Quebecers will remember his father, Gilles, a Formula 1 driver and his brilliant victory at the Montreal Grand Prix. They will also remember with sadness his tragic death in 1982, during race trials in Belgium.

Quebecers will now be keen to follow the exploits of Jacques Villeneuve who, this weekend, reached the first milestone in a motor racing career that we hope will be long and happy.

Immigration

[Randy White, Reform, Fraser Valley West, BC]

Mr. Speaker, the Minister of Immigration says he is going to fix the refugee system, so let us look at a typical case.

I have the selection criteria he has laid out for fast-tracking refugees into Canada from Colombia. These are the people the Liberals say are at risk in Colombia: the police, military, judiciary, peace and human rights activists, political activists, former guerrillas, union leaders, peasants thought to be guerrillas or having perceived political affiliation, women, homeless youth perceived to be involved in criminal activities, journalists covering political or criminal issues, homosexuals, deserters from criminal organizations, members of wealthy families and prostitutes.

Tell us dumb Canadians, Mr. Minister, will there be anyone else in Colombia after you have opened the floodgates, or should Canadians apply for immigration to Colombia? By the way did the Liberals not leave Juan Valdez, the coffee man, off their list?

Child Abduction

[Ronald J. Duhamel, Liberal, St. Boniface, MB]

Mr. Speaker, child abduction is a serious problem in Canada. Each year thousands of our precious young loved ones are reported missing. They are either lost, runaways, or have been abducted by parents or strangers.

Child Find Canada gives us hope in recovering our cherished children and preventing the disappearance of many others.

The month of May has been designated the Green Ribbon of Hope Campaign to stimulate awareness across Canada about the serious nature of child abduction.

On May 25 National Missing Children's Day acted as a reminder of the children who remain missing and the work that still needs to be done.

Our children are important for the future. We must protect them. The Missing Children's Network is vital in safeguarding our children. However, the responsibility for finding children and protecting them rests with the community as a whole. Let us take our children to heart.