Mr. Speaker, I rise this afternoon in opposition to this particular amendment which is being put forward. I want to rise in opposition as the small business critic for the New Democratic Party.
I look at this proposal and I see that the amendments they are putting forward in many ways do not bode well for small business. Small businesses have a lot of challenges right now. They are faced with the pending increase in interest rates. Small business people have always had challenges with respect to capital acquisition.
We are also looking at the huge increase in profits by the banks year over year. The only conclusion one can draw from that is that not only are they receiving a huge amount of increased profits and revenues from consumers in this country, but also from the small and medium size businesses which employ the vast majority of Canadians.
Business is also faced with the challenges of the GST collection on behalf of the federal government. This is a burden the government has put on them.
Finally of course the issue that we will be dealing with this afternoon is the payroll taxes as they are called. They are basically programs which assist small business owners to provide some level of support in terms of a pension plan, or unemployment insurance plan, or disability plan for their employees. By the way, a vast number of businesses and owners of small businesses employ those who own the businesses so this is something that is very important to them.
What the amendment outlines in terms of this particular bill is it proposes that any increase in the contribution rate with respect to the CPP for the years 1997 through 2000 shall not come into effect unless the cumulative increase in anticipated revenues under the Canada pension plan resulting from the changes in the contribution rate after December 1996 are offset by at least a cumulative decrease in anticipated combined employer and employee contributions under the Employment Insurance Act for those same years.
I have some information which I would like to share. The Canada pension plan has been a very helpful program for small business. If small and medium size businesses did not have such a plan, they would be forced in many ways to commit greater resources, which are limited to them, to establishing their own type of pension plan. As we know, establishing a pension plan for a small number of employees on their own would be very costly and prohibitive. There would be less pension coverage for employees who work in the small and medium size businesses.
I want to share with members in the House today some information which was provided and accumulated by Statistics Canada on self-employment. Self-employment grew rapidly both in absolute and relative terms between 1989 and 1996. During this period self-employed workers accounted for more than 75% of total job growth. Seventy-five per cent.
Throughout the period 1989 to 1996 the number of business owners increased by 25%, by a margin of 457,500 compared to an increase of 1% or 132,700 in the number of employees. In essence small business has employed more people over the years. Most of those who became self-employed during this period worked alone and did not hire other workers.
We are concerned about the rapid increase in CPP premiums. As the small business critic and spokesperson for the New Democratic Party caucus, we believe that contributions should be increased at a slower rate over a longer period of time to allow self-employed people to adjust their businesses and to allow small and medium size businesses to adjust their forecast and financial analysis to meet these increased payroll taxes.
I believe the majority of business people want to continue in the program. That is the information I have received. But the information I have also received is that they want more time to ensure that they are able to adjust their revenues.
As we know, small business cannot announce a 25 or 50 basis point increase in the charge for their services like the banks can. If they do, they just do not seem to stay in business very long. Whereby the banks are large businesses and are basically oligopolies and can do whatever they want with respect to charging these very same small and medium size businesses increased rates at the drop of a hat. They do this on a fluctuating basis without a lot of rationale, far too often costing small business and self-employed people a great deal of anxiety, anguish and concern, not to mention the fact that it jeopardizes their business and their way of doing business.
Saskatchewan registered the highest proportion of self-employed workers in 1996. Saskatchewan is the province I represent. If we exclude agriculture from these numbers, actually British Columbia had the highest incidence of self-employment in 1996.
It is extremely important to us in Saskatchewan as in other parts of the country, but more in particular because of the agricultural economy. Many farmers have incorporated and they are paying their own contributions. They are self-employed. In many cases family members work in the incorporated partnerships, farm operations or agricultural operations and they pay their Canada pension plan premiums as well.
People who are self-employed pay not just the employee share, but the employer share. It is a very big concern for Saskatchewan business people in terms of a quick increase in premiums in a short period. This underscores our position in the NDP that we should take lower increases over a longer period of time.
According to the most recent data available, average earnings among self-employed individuals in 1995 were 91% of average wages and salaries. The distribution of earnings among the self-employed is more polarized than the earnings of paid workers.
In 1995 approximately 23% or 392,800 self-employed workers earned less than $10,000. Almost one-quarter of self-employed workers earn less than $10,000 a year. That means they are very restricted in terms of discretionary revenues and discretionary income to meet these higher increases in Canada pension plan premiums.
About 45% of self-employed workers in Canada earned less than $20,000 a year. At the other end of the distribution, only 4% of self-employed workers earned in excess of $100,000. In 1995 the average earnings of self-employed women were slightly higher than one-half of their male counterparts.
Underlying the distribution and earnings of self-employed workers is the amount of time self-employed individuals work. Compared to paid workers, self-employed workers are more likely to work either short or long hour work weeks. But part of the earnings gap between male and female self-employed workers is undoubtedly attributed to the fact that male self-employed workers worked a longer work week. In 1996 male self-employed workers worked an average of 13.3 hours more per week than their female counterparts.
This particular proposal in my view is also detrimental to women, whether they are in small business or not. The increases and changes in CPP will affect women most in a very negative way.
Most of the growth in self-employment between 1989 and 1996 was voluntary. It is estimated by Statistics Canada that only 12% were pushed into self-employment because there was no other work available. This particular statistic means that we have a trend in our country whereby more and more people are being frustrated in terms of finding employment and therefore are going into small business. We also have a trend where more people are interested in working for themselves because they have not had a proper deal with respect to their employers.
I have a number of things I want to raise but the final thing I will talk about is this. I want to agree with the Liberal member for Mississauga South when he said that these increases are of concern to him. They are of concern to us in the NDP. We agree with him on this point, that we should not put the EI surplus into the Canada pension plan benefits. That jeopardizes the employment insurance program which was set up to insure workers who are unemployed. We feel that is not only a cross-subsidization but really a wrong way to deal with it.
In ending my remarks, I want to say on behalf of the small business community in Canada that we oppose this amendment. We would put forward lower increases in CPP benefits over a longer period of time to meet the needs of a very important program.