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.