Mr. Speaker, I would like to add some observations about Bill C-91 before the legislation is sent to the Standing Committee on Industry.
This new bill will enable the Business Development Bank of Canada to expand its activities and to provide programs and services to meet the changing needs of Canadian small business, particularly with respect to improved access to financing.
It has been 20 years since the current Federal Business Development Bank was established by legislation. At that time the hon. member for Windsor West spoke in the House on the incorporation of the FBDB saying it would further encourage and assist the establishment and growth of Canadian small business and indeed it has. The bank has lent over $4 billion to Canadian entrepreneurs at no cost to taxpayers. This amount is estimated to have created more than 30,000 jobs in the past six years alone.
Hon. members are well aware of the important role small businesses play in the new knowledge based economy that has emerged in the 1990s, an economy characterized by rapid technological change, intense global competition and innovation.
As the economy becomes global the smaller players are becoming more influential. Small businesses have the flexibility to respond quickly to niche market opportunities; they can keep up with change and innovate aggressively. This was summarized by the Standing Committee on Industry in its report last October entitled "Taking Care of Small Business". The committee wrote: "The smallness of these firms is a clear advantage. It makes it easier for them to sustain innovation and an entrepreneurial spirit. Indeed, several of the most prosperous and competitive economies in the world today are based on small firms."
Canada now has about two million small businesses, an increase of one-third since 1982. Today, 99 per cent of all registered businesses have fewer than 100 employees. Since 1992, in the last three years, small businesses have created virtually all of the net new jobs in Canada. Canadians will continue to look to small business for new jobs and economic growth. Small businesses, including the self-employed, now account for almost two-thirds of private sector employment and 60 per cent of our economic output.
However, small businesses face unprecedented challenges. In the face of intense global competition, small businesses need to upgrade their management skills, find employees with the right skills mix for their market niche, develop or acquire technology that helps them to innovate, and develop very quickly the ability to tap into foreign markets.
The government has addressed small business issues in a variety of ways. I will point out that this government has placed a high priority on responding to the challenges faced by small businesses. We made small businesses the centre of our economic platform in the red book. We published a position paper entitled "Growing Small Businesses" to accompany the 1994 budget. Since that time we have received valuable input on small business issues from a wide variety of informed sources from within government, the private sector, and parliamentary groups.
We have had numerous combined discussions within our federal Liberal caucus, a working group set up under Industry Canada with the private sector and leadership from within Industry Canada. Throughout these various studies several recurring themes emerged. One message was that small business has a vast untapped potential for creating more jobs and more wealth. Another theme was the government role must be to facilitate the efforts of those outside government to build an innovative and entrepreneurial economy. Finally, the various
studies brought home the point that government programs must become more efficient, effective and relevant to the needs of small business.
This government has responded through initiatives announced in the 1995 budget and in the report, "Building a More Innovative Economy". This legislation is not in a vacuum; it is in the context of a whole series of initiatives to allow small business to do what business does best, which is to grow the economy, grow new opportunities and new jobs for Canadians.
The Federal Business Development Bank has from its inception been designed to help tap the potential of small businesses to create jobs and wealth, and it has done so in a way that is self-financing. This legislation has been drafted so the new Business Development Bank of Canada can become more efficient, more effective, more relevant to the needs of small business.
The Business Development Bank of Canada will not compete with private sector lending institutions but it will provide complementary services.
The private sector banking community still faces many challenges in adequately serving the needs of small and medium-sized businesses. Four gaps particularly exist in the financing of small business. The first is the so-called risk gap, the unwillingness of lending institutions to provide certain small businesses loans even at interest rates that reflect the higher risks associated with those loans. The second is the size gap, the high transaction costs associated with smaller loans and investments relative to larger ones. Third is the knowledge gap, the reluctance of lenders to provide financing to knowledge based, soft asset firms. Finally, the flexibility gap, the unwillingness of lenders to provide flexible financing to promising businesses that have yet to reach cashflows sufficient to service debts.
The FBDB has been one of the government's primary policy instruments for responding to these gaps as well as to the need of small business for management services.
It is important that we move quickly on this legislation. I do not think there is a member of Parliament in the House who does not regularly hear from and meet with small business constituents who say consistently that lending, financing, dealing with their bank is a major problem for them. There has been a substantial change in that relationship. Whether it is an existing small business that has been going for many years and suddenly finds itself in a different situation because of a changing economy or whether it is a new entrepreneur wanting to start up and needing the foundation to get started, the problems we hear from our constituents, and certainly I do from many small businesses in Ottawa West, all focus around the problem of financing, either start-up or continuing or expanding business.
The initiatives being taken to give the Federal Business Development Bank more flexibility under its new name to allow it to seek out new partnerships will allow it to ensure that small business can continue to drive the Canadian economy forward into the 21st century. By supporting small businesses through the evolving stages of their development, the FBDB helps them create jobs and succeed. Now as the Business Development Bank of Canada it will have greater flexibility to respond to the changing needs of Canadian entrepreneurs.
I look forward to the range of debate that can take place in the industry committee on this bill and to seeing it reported back to the House of Commons quickly so that we can get on with the task of helping small business in this country grow the economy and grow prosperity for Canadians.