Mr. Speaker, I assure the House that in Saskatchewan farmers do know the name of the agriculture minister but their faces are not glowing or smiling when they think of his name.
I rise in the House to indicate the Reform Party's support for Bill C-75. The program is being used by an increasing number of farmers. As we enter into the sunset phase of direct subsidies, it is imperative that farmers have access to proper financing. Excess cash flow that had been previously freed up from government subsidies is all but non-existent, and that is not bad. Farmers are now relying heavily on the banks and credit unions to provide them with the necessary cash flow to expand, diversify or maintain their operations.
However, as is the case with small business operators, farmers have had and continue to have a number of difficulties securing loans with financial institutions, whether for buying land or covering operational expenses.
Reformers believe farmers and farm marketing co-operatives have access to financial assistance not through government administered programs like the Farm Credit Corporation and its provincial counterparts but through chartered banks and credit unions.
The intent of the Farm Improvement and Marketing Co-operative Loans Act is: "to increase the availability of credit to farming operations and farmer owned marketing co-operatives to improve farm assets and strengthen production and financial stability". We are talking for the most part about farm improvement loans when we talk about FIMCLA.
Increasing the aggregate amount available to farmers and farmer owned co-operatives from $1.5 billion to $3 billion will continue to fulfil the objectives set out by the Farm Improvement and Marketing Co-operative Loans Act. Farmers have utilized this program from across Canada. The program has been extremely popular, with the number of loans issued in the past five years increasing by over 1,000 per cent. Increasing the levels of moneys available under the program to $3 billion will enable a greater number of farmers to secure loans.
There is some concern, however, with the reluctance of financial institutions to provide loans to farmers without some sort of guarantee from the government. This is not to say these financial institutions will not provide loans to farmers; they will, but with an arm's length of preconditions and unfavourable interest rates.
Why are the banks so reluctant to provide loans to farmers and farmer owned marketing co-operatives? Possibly it is because governments are so willing to get involved in financial guarantees, from megaprojects right down to small business entrepreneurs.
The program over the years has had a default rate of only 1 per cent. A 1 per cent default rate is quite impressive when we compare it with other sectors of the economy. That speaks very well of our farming community and tells us about the quality of the people involved in the agricultural industry.
The banks over the past couple of years have lost incredible amounts of money in defaulted loans to the likes of the Trizec Corporation and the Reichmanns. However, with individuals like the Reichmanns the banks are willing to bend over backward to provide financing for their risky ventures. The chartered banks appear to be prejudiced toward small business and farms or else do not care so much about the smaller accounts even though they likely compose the most reliable sector of bank customers. Farming can be risky as well, but looking at past performances farmers have been a very credible risk.
Farmers see this bill as the lesser of two evils. Ideally we would like to see the government get out of the business of guaranteeing loans to farmers and to farmer owned marketing co-operatives. We do, however, see it as an important step in the transition from a subsidy based industry to an entity able to compete on its own feet.
We have stated in the House a number of times that farmers can compete globally. This can be accomplished with government's getting out of the business of telling farmers or related industries how they should run their businesses.
Unfortunately Liberals have a long history of interfering in places they do not belong. All I have to do is say three letters and members will recognize them immediately, NEP. The blood begins to boil in my fellow Reformers and Canadians right across the country, particularly in the energy producing areas, when they think of the national energy plan. That is an instance where government got involved in business. It should not have done so. It got involved in industry when it should not have done so and messed it up. It is very important the government not get involved directly in business but that its members be the legislators who allow businesses to carry on in a fair and equitable environment.
It is sad to say the government continues to perpetuate the myth that it knows what is best for business. For the remainder of my speech I will address some of the areas the government must remove itself from. One is the lending business.
The Farm Credit Corporation, the FCC, seems to have outlived its usefulness in its present form, a dinosaur that should be put out of its misery. The FCC provides services duplicate to those services already provided by banks and credit unions. As pointed out by the member for Moose Jaw-Lake Centre, there are private lenders willing to do the job and they see FCC as a publicly financed competitor where borrowing money to lend money is not right.
It is ludicrous that a government in debt as much as this government is guaranteeing loans to farmers. The FCC is also in the business of loaning money to farm related industry. How many ways do we approach this? Certainly we are putting
ourselves as government in a compromised position when we are the legislators of the lending industry. We are guaranteeing loans and we are also providing loans. The waters are indeed muddy.
What is next for the Farm Credit Corporation? About the only thing the FCC does not do is provide long term loans at reasonably fixed rates. That was the original concept under which the FCC was created.
If this is not possible, why do we keep the FCC around? A related issue to the FCC fiasco is the amount of money being given to the western economic diversification program and the prairie farm rehabilitation administration, the PFRA, with regard to the farm machinery industry in Saskatchewan.
As a Saskatchewanian I see the importance of a home grown agricultural manufacturing business. I am in favour of creating new agriculture technology in responding to the desire for increased efficiency and diversification and creating jobs in a stable economy. If the government is involved in financing these ventures, it is of concern to us and taxpayers alike; often we are the same people.
There is no reason the farm machinery industry should be propped up either in the short term or the long term. Many of the Liberal hair brained short term financing schemes have turned into long term drains on the public purse.
In the past eight years over $34 million has been approved for loans or grants to Saskatchewan farm industry manufacturers. The agreements are a combination of grants and interest free, non-repayable and conditional loans. Although the $34 million is a combination of federal and provincial governments, the federal government through western economic diversification and the PFRA have provided a substantial amount.
It appalls me when the president of the largest agricultural machinery manufacturer in Saskatchewan makes the following statement: "A company has no choice but to look at what is there and to take what is offered if you are to remain competitive". This is from the Western Producer on June 1, 1995.
Flexi-Coil has received over $19 million in closing grants from the federal and provincial governments since 1987. Dale Botting, executive director of the Canadian Federation of Independent Business, commenting on the grants and loans given out states that the days of government giving money to a chosen few has to stop.
A recent survey conducted by the Canadian Federation of Independent Business members shows that most are opposed to business subsidies. Members who have received grant money in the past would have proceeded with their expansion without the grant by a margin of three to one.
Another farm machinery manufacturer, Bourgault Industries, is competing head to head with Flexi-Coil. Bourgault Industries has not received a single government dollar yet it has become a successful business, with sales of over $50 million each year.
In an article in the Western Producer Gerry Bourgault, president of the company, stated: ``Refusing government loans and grants shows up in a healthy bottom line. When sales are down the company is forced to reassess its equipment and make changes that farmers want. Government money clouds the financial picture. If you do not run your business properly, government grants are not going to make up for that. Governments should not be in the business of giving money away to businesses. In most cases it is just squandered''.
The Liberal government should be in consultation with the likes of Gerry Bourgault. There is no doubt the Liberals have been and continue to consult the wrong individuals. The Liberals must stop interfering in agriculture and business. As stated by Mr. Bourgault, refusing government loans and grants shows up in a healthy bottom line. Propping up business with loans and grants does nothing more than create a greater dependency on government. Reformers believe the economy should be market driven and not skewed by government interference and intervention.
The small business loans program should probably be merged with the farm improvement loan program. They are both attempting to do the same thing. They are both supposed to be financially sound and we as members of Parliament must insist both programs be actuarially sound and that all costs with respect to the program should not come out of the taxpayers' pockets but should be paid for by the users of the loan guarantee program.
I understand the farm improvement loans are not subsidized by the taxpayers. We as legislators must insist on proper accounting and it be maintained. The administrative costs must be covered by the users and the default rate must not become so high that the moneys are taken out taxpayers' pockets to subsidize any industry, whether it be my industry, farming, or any other small business or megaproject. We all have to operate by the same rules.
The Reform Party sees Bill C-75 as a small step in the right direction with respect to private sector lending institutions making capital available to viable farm operations. The government still has a long way to go in removing itself from the grants and loans to all areas of the economy.
FIMCLA must be made self-sustaining. It must not be a burden on the taxpayers and governments. Governments must get out of the business of being in business and they must provide fairness and equity to the business sector.
The government must set some priorities. I cannot enunciate this strongly enough. The first priority is to get out of the grants business 100 per cent; no more grants, period. Second, there should be no public financial lending institutions. They provide a conflict for the government with the private sector. Governments should be in the business of making sure business operates fairly and is honest. It should not be in the business.
Third, there should be no loan guarantees to megaprojects and there should be no political patronage. Fourth, there should be no guarantees to small business and there should be no loan guarantees to farms, and we should not treat them differently.
To reverse the order-