Debates of June 21st, 1995

Business Development Bank Of Canada Act

[The Acting Speaker (Mrs. Maheu)]

Resuming debate. The hon. member for Chambly. You have seven minutes left.

[Ghislain Lebel, Bloc, Chambly, QC]

Madam Speaker, I thank you for giving me the floor again.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Madam Speaker, I rise on a point of order. If I understood the Chair correctly, you said we would resume debate on the second set of motions. That suits the government quite well, but is it the second set or are we going back to Group No. 1?

[The Acting Speaker (Mrs. Maheu)]

I am sorry. It is Group No. 1.

[Ghislain Lebel, Bloc, Chambly, QC]

Madam Speaker, I was thanking you for giving me the floor after interrupting me so abruptly earlier. I do acknowledge your sense of fairness.

Earlier, before I was interrupted, I was saying that this new Business Development Bank of Canada will be used for patronage and propaganda purposes, including the promotion of federalism by the members opposite. I urge them not to make the same mistakes as did the former Quebec government with the Société de développement industriel. Indeed, we recently learned-with the arrival of a responsible provincial party in office-that $950 million had been wasted on all kinds of unnecessary projects, because of the intervention of some ministers who were urging the corporation to grant loans which should never have been made. However, because of the authority exerted then by the responsible minister, or the Quebec Premier, over that agency, it ran up a bill of $959 million. So, there is a real danger.

That danger also exists with Bill C-91 now before us. For example, if you look at clause 6, you will see that the minister appoints the chairperson and president.

I am tempted to say that I support this bill, because it will make the number of independentists swell. Indeed, this is the kind of legislation which explains why an independentist such as myself is here to speak on Quebec's behalf. I have seen too many measures like this one.

I read literally every bill tabled in this House and I realize that the government, although it has not publicly said it and will not do so, is currently trying to destabilize the provinces and really infringe on fields of provincial jurisdiction. I am not referring only to Quebec. The other provinces are also affected. However, the danger is greater for Quebec than for the English speaking provinces, because the infringing authority if you will is English-speaking.

Westerners and easterners recognize this government as their primary government, while Quebecers, because of their different language as well as other factors such as culture, consider the Quebec government their primary government. The fact is that the Quebec government did not only do bad things, quite the contrary. Just think of the Quebec Deposit and Investment Fund, created in 1964. We literally got rid of the Canadian capitalists who were using the pension plans of Quebec workers, both in the public and the private sectors. Some people have become immensely rich playing with the money of others like that, without our governments paying any attention to the security of the investments made.

So, the Quebec Deposit and Investment Fund was established, as well as the General Investment Corporation of Quebec. The government has created several instruments that have met their objectives. We now have before us Bill C-91, with its Federal Business Development Bank renamed Business Development Bank of Canada. When we say that there is duplication in personnel, that is what is happening. One can only wonder what changing the role of the FBDB to give it complementary status is meant to achieve.

I can remember, back in my days as a notary, when I was very involved with business financing, seeing people go to the FBDB although their investment was no less safe than others. The bank refused to lend money when it knew the project would not get off the ground. The exception, I must admit, was slightly out of the ordinary projects, where the entrepreneur wanted to set up a business in an area less familiar to traditional bankers but still had a fair chance of being successful. Then, the FBDB got involved.

We are now debating a bill to turn it into a complementary bank. We know the criteria used by banks. For instance, in business financing, you do not lend more that 75 per cent of the investment value. Does complementary mean lending the remaining 25 per cent? Will the bank lend 75 per cent and the Business Development Bank the rest? I think not. At least, I hope not, because it would be terrible.

Giving the bank this complementary status will mean that anyone who wants to market or commercialize a new product and, as a last resort after being refused everywhere, goes to the Business Development Bank will get the answer: "Sorry, friend. Your application was rejected everywhere else. Even if we wanted to, we could not help you. We are no longer qualified". I can understand giving a complementary role to this institution,

but it is a bit difficult to complement what does not exist in the first place.

I do not want to accuse the people who tabled this bill of having bad intentions, but I do have to say that this will serve only to increase political intervention in loans, which would not have been granted by any other institution anyway. Talk about political intervention-

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Oh, oh.

[Ghislain Lebel, Bloc, Chambly, QC]

I know that the hon. member for Broadview-Greenwood just yelled something, but I am not accusing him of having bad intentions, far from it. Sometimes, politicians, and especially politicians in power, feel the need to intervene in areas only because of the next election and in order to get the Canadian economy going, I think.

Ministers are people too, like you and I, and they are not impervious to lobbying. Chairpersons and presidents are also human and also have to deal with ministers twisting their arms, saying: Think about it, in such and such a sector, in such a place, will you not reconsider your decision? Will you not thoroughly review the issue, to see whether you can swing it?

If this were to happen, it could very well have unfortunate outcomes. I would have suggested that the chairman and the president be appointed by the House of Commons, by the government and not by the minister himself. Then, you and I would have to assume responsibility for the appointment. Then, in the future, if it did not work out, if we did not have a good president, we could blame everybody, not just a certain minister or hon. member. This was the issue I wanted to speak about.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup, QC]

Madam Speaker, it may be the first time since I have been a member of this House that we have actually been critical of name changes. Usually, this is a mere technicality. A name will be changed to make it a little more modern or more precise, but in this case, when we see the Federal Business Development Bank being renamed as the Business Development Bank of Canada, it is clearly all part of this vast strategy of a federal government that has decided, in its wisdom, that it is going to run the show.

I would put this on a par with the agreement on internal trade in Canada, where again, a bill is being used to let the federal government penalize the provinces that do not comply with the agreement by cutting funding in their social programs, and I am referring to Bill C-76, where in any case it wants to intervene in sectors that are not its responsibility. In the case of the bank, which is going to be the Business Development Bank of Canada, if the House ever passes this bill, personally, I think the name is rather pretentious.

Canada has quite a few financial institutions that are involved in development. There are other banking institutions that may be involved in a positive and occasionally in a negative way in development and which are very much part of the process. There cannot be just one business development bank of Canada, unless there is more than meets the eye here.

I am also somewhat amazed at the direction in which this bill is going. During the first few months I was in the House, I was a member of the industry committee. At the time, members from Ontario were looking for ways to make the banks more sensitive to the problems of small entrepreneurs. They were interested to see what Quebec had in the way of institutions that provide complementary financing. I am thinking for instance of the Centre d'aide aux entreprises, the Mouvement Desjardins, the FTQ Fonds de solidarité-the CNTU is about to develop a similar fund.

It was clear Ontario had had a difficult time during the last recession and there was this feeling of hostility towards the banks.

Now with this bill, this feeling seems to have disappeared. Does it mean that the bank lobby was successful? Does the fact that they contribute very generously to the Liberal Party of Canada make a difference? I do not know for sure, but there is something strange going on here.

This decision also seems to be part of a broader strategy I would like to explain very briefly. When the Liberals came to power, there was a network referred to as business development centres. It was decided to amalgamate these with the community futures committees. Now that these two bodies have been amalgamated, they are attached directly to the Federal Office of Regional Development.

Therefore, the whole community development element set up by the community futures committees will, in my opinion, lead to the systematic and progressive dropping of the community development mandate over the next few months, since the transfer to the FORD takes place on September 30.

There was already one regional office per administrative region, but the Federal Office of Regional Development will try through the Business Development Bank of Canada to set up a network of branch offices to catch bigger service points across Canada in the web.

What is particularly sad is that two networks are being set up in parallel, one beside the other. Neither Quebec nor Canada has the means to pay for a double network. A choice has to be made. Quebecers will have the opportunity this fall to decide once and for all who they want to serve them.

Do they want Canadian banks-like the Royal Bank, for example? Is this the network we want to look after our interests in the future? Or do we want a network that belongs to us much more and that is under our complete control? We must not forget that Quebec has found itself in a very bad situation in relation to the federal government on a number of occasions in the past.

What about the time they wanted to limit the number of CN shares that could be purchased. Each time Quebec capital tried to get in, it was foiled. This seems to be very much the approach of the Business Development Bank of Canada.

Another rather paradoxical element in the current bill is that the government, which claims to be in favour of a free market environment, is directly infringing on the Mouvement Desjardins, among others, and the banking institutions. All of a sudden, the government takes a step backward and decides that there will be an additional competitor.

Just what is this complementary loan? It is not very clear and we are not sure of the result which will be achieved. How will it be integrated into the Canadian banking system? One can understand the concerns of those who already corner the market.

Before changing the mandate of an agency such as the Federal Business Development Bank, we must take a close look and see if we can afford more duplication. I doubt that there is a single Quebecer or Canadian who thinks so.

If the federal government dismisses the solutions which will avoid such duplication and wants first and foremost to ensure its presence in every province and in every sector when there are already other stakeholders involved, it will only follow the pattern set a long time ago, particularly during the Trudeau years. Remember the sign war, when the federal and Quebec would each claim to have made the largest contribution to a given project.

There was some kind of blackmail going on at that time, which we all paid for in a way. Today, answers are sought much more in terms of guidelines and comprehensive solutions. In that regard, this bill will not solve anything as it only increases duplication. What is happening here is the same thing that happened to the Federal Office of Regional Development a while ago. The FORD's mission was changed by taking away the resources that allowed it to play an active role in the Quebec economy, while at the same time increasing the number of service points, when services were already available from the Quebec ministries of tourism as well as Industry, Commerce and Technology.

That is what happened to the FORD. The same thing is now happening to the Federal Business Development Bank, and I think this is a bad move on the part of the government. It reflects the old belief that Ottawa provides, that it has the answer to whatever problems the people of Quebec, British Columbia, the maritimes and elsewhere may have, when the fact of the matter is that tools are already in place in many regions.

Therefore, the federal government should review its bill to make sure that it will not result in the interference that the implementation of the Business Development Bank of Canada Act will bring about.

[Nelson Riis, NDP, Kamloops, BC]

Madam Speaker, I am pleased to have an opportunity to speak in the debate this evening. I listened with interest when the hon. member for Broadview-Greenwood, the Parliamentary Secretary to the Minister of Industry, made his presentation.

I must say from the outset that for many years I have listened to my hon. colleague from Broadview-Greenwood and I have learned from much of what he has had to say. I have appreciated the sincerity he has always brought to the debate. I appreciate his personal commitment to small business and the funding plight it faces. I have never heard a more pathetic explanation in terms of why the government has done something.

First I want to take him off the hook. I cannot imagine that what he was saying was his own idea. I can only assume that he has been given marching orders from cabinet. As an advocate of small business funding he has stood in the House for years urging the previous government and encouraging the present government to take action. He has led the way on a number of initiatives in terms of support for small business. He has been actively involved in the development of the report called "Funding for Small Business" which had a whole set of recommendations. To make this proposal is not the kind of initiative he would take.

When I first saw Bill C-91 I was elated. I was encouraged because after years and years of the Liberals saying we had to take dramatic action to provide funding for small business here was the opportunity. I read the bill. I suggest we should make another name change.

The bill at the moment is entitled "an act to continue the Federal Business Development Bank under the name Small Business Bank of Canada". Probably a more accurate title would be an act to continue the Federal Business Development Bank with an inadequate mandate, with a pointless mandate, with a wimpy mandate. We could use whatever word we like because in my judgment we have missed a real opportunity, looking at Bill C-91.

At the moment we are talking about the name change. Most members of Parliament were elated when they saw that the government had listened to the committee and had decided to call the Federal Business Development Bank the Small Business Bank of Canada. We could hear cheering from coast to coast to coast. We could hear small business organizations, chambers of commerce and boards of trade saying that finally the federal government had acknowledged the fact that something needed to be done in the country to provide funding for small enterprises.

I am talking about the kind of enterprise that requires a $10,000, $20,000, $50,000, $75,000 or $100,000 loan. All of us have countless cases on our desks that we have worked on over the years. We know small enterprisers, small entrepreneurs or small business people have a difficult time obtaining capital for their operations, to start a new venture or to expand a venture. If they need $20,000 they might as well forget about it because they just cannot go to the traditional lending institutions, the big banks.

We are not here to assist the big banks. Headlines the last few days read: "Banks on track to record profits. The earnings for the first half of 1995 exceed even last year's $4.25 billion pace". In other words, the chartered banks are doing just fine. As a matter of fact they have never done so well. They can take care of the large enterprises, traditional enterprises and so on.

However, we are not here to facilitate the chartered banks. They make profits for their shareholders and that is it. We understand their mandate. We are here as members of Parliament for something else. We are here to provide opportunities for that job creating sector of the economy called the small business sector.

In my judgment, having looked at Bill C-91 for many days, clause by clause, we have missed an incredible opportunity. Part of the opportunity we have missed is betrayed by what the government is now asking us to do. It said it first came up with a winning idea based on the recommendations of the committee to call the FBDB the small business bank of Canada. I say, right on, government. It has done the right thing. However, it now says: "Hold it, we want to change that. We are going to call it the development bank of Canada". What does that mean? What kind of a signal does that send?

By changing the name of this bank, a tremendous cost will accrue to change every bank sign across the country, every letterhead, envelope, and all kinds of other things. It is going to cost hundreds of thousands of dollars, perhaps even millions, to call it the development bank. We do not need another development bank. We have the large chartered banks. We have other federal lending institutions that are able to provide that kind of capital. We need something to assist the small business sector. The name the small business bank of Canada would indicate a new initiative or a new direction or a new mandate for the FBDB. God knows it needs it.

However, according to the legislation this is the purpose of the bank. It reads: "The purpose of the bank is to provide Canadian entrepreneurship by providing financial and management services-in carrying out its activities. The bank must give particular consideration to the needs of small and medium size enterprises".

I have read wimpy legislation and legislation that meant absolutely nothing and this legislation says absolutely nothing. It states that the bank will give some consideration to small and medium size businesses. Well big, bloody deal. What does that mean? What kind of a mandate does that give the bank? What requirements does it give the bank? Absolutely none.

What was going to be called the small business bank of Canada and not called the business development bank of Canada will be just like the Royal Bank of Canada or the Canadian Imperial Bank of Commerce. It will be lending to the very secure borrowers, the larger businesses and so on. Those small entrepreneurs and small business people will still have to be scraping and searching to find capital for their new enterprises. This is wrong. This is a missed opportunity.

I wonder if there is any sensitivity to the fact that we have to encourage the bank to carry out a fair lending practice across Canada so that one region does not benefit over another. Acknowledging that 85 per cent of the new jobs in the future are going to be created by small businesses, will that same business be created in the eastern, central and western part of Canada? No, not with this legislation. Every single cent of this new bank could be put into one province, into one region, into a few cities. Is that the kind of bank we want? Absolutely not. It is a disgrace and a disappointment.

I do not hold my hon. friend from Broadview-Greenwood responsible for this wimpy initiative. I hold the government and the cabinet responsible. I am pleased to see that representatives of the cabinet are here because they have not only done a disservice to the small enterprises of Canada, but they have done a disservice to the incredibly excellent work done by that committee which worked hard for months on end to incorporate diverse points of view and had an excellent set of recommendations. Then the cabinet and the minister said: "We don't care about the work you have done. We don't care about the research that has been done. We don't care what the witnesses said. We want to simply put our stamp on this legislation". That is wrong.

I do not think this is a good piece of legislation. I do not think this is a good amendment. When I vote later tonight I am not going to be voting to do away with the name the small business bank of Canada and replace it with the business development bank of Canada. It is wrong and bad. It sends the wrong signal. It says we do not care about those enterprises that create jobs, that

we want to continue to support the GMs, the Nova Corporations, the big corporations.

I know my friend across the way, the member for Broadview-Greenwood, was making a valiant attempt to explain the government's initiative when he said that the small business title limits and restricts loans, that the government wants to encourage the leading edge technologies to seek funding through this federal bank. So they should.

The fact that small business does not exist in the present name does not preclude small businesses from seeking loans. Calling it a small business bank does not preclude a medium size business from seeking loans. We will do the entrepreneurial sector of Canada a disservice if we pass this amendment.

I call on my colleagues from all sides of the House, from the Bloc, from the Reform and particularly those members of the government that have some sensitivity to small business and some respect for the work of the committee, to give some respect to the people that come into our offices day after day seeking capital to assist their small business enterprises. In other words, listen to the people just once.

[The Acting Speaker (Mrs. Maheu)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mrs. Maheu)]

The question is on Motion No. 1. The motions have been declared read. In Group No. 1 we are covering Motions Nos. 3, 4, 6, 26 to 33. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Mrs. Maheu)]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker (Mrs. Maheu)]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker (Mrs. Maheu)]

In my opinion the yeas have it.

And more than five members having risen:

[The Acting Speaker (Mrs. Maheu)]

Pursuant to Standing Order 76(8), a recorded division on Motion No. 1 stands deferred and the recorded division also applies to Motions Nos. 3, 4, 6 and 26 to 33.

In Group No. 2 pursuant to an agreement made earlier Motions Nos. 7 to 11, 14, 15 and 19 to 25 are deemed moved.

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

moved:

Motion No. 7

That Bill C-91, in Clause 4, be amended by replacing lines 1 to 8, on page 3, with the following:

"4. (1) The objects of the Bank are to promote and assist in the establishment and development of business enterprises in Canada by providing, in the manner and to the extent authorized by this Act, financial assistance, management counselling, management training, information and advice and such other services as are ancillary or incidental to any of the foregoing.

(2) The Bank in carrying out its objects shall give particular consideration to the needs of small business enterprises."

[Ian McClelland, Reform, Edmonton Southwest, AB]

moved:

Motion No. 8

That Bill C-91, in Clause 14, be amended by adding after line 23, on page 6, the following:

"(1.1) The total amount of all loans made by the Bank shall not exceed $18 billion."

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

moved:

Motion No. 9

That Bill C-91, in Clause 14, be amended by replacing lines 2 and 3, on page 7, with the following:

"are offered to a person only if such services are not otherwise available to that person on reasonable terms and conditions."

[Ian McClelland, Reform, Edmonton Southwest, AB]

moved:

Motion No. 10

That Bill C-91, in Clause 16, be amended by replacing line 22, on page 8, with the following:

"made or given by another person, other than a Crown corporation, if".

Motion No. 11

That Bill C-91, in Clause 17, be amended by replacing lines 31 to 35, on page 8, with the following: a ) business planning services; and b ) management counselling and training, including seminars, conferences and meetings.''

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

moved:

Motion No. 14

That Bill C-91, in Clause 22, be amended by deleting lines 25 to 27, on page 10.