Debates of Oct. 2nd, 1998

Committees Of The House

[Some hon. members]

Agreed.

(Motion agreed to)

The House resumed consideration of the motion that Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses, be read the second time and referred to a committee; and on the motion that the question be now put.

Canada Small Business Financing Act

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I am pleased to stand in this House today to provide some comments with respect to Bill C-53, the Canada Small Business Financing Act. This act will increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses in Canada.

At this point we are also debating the motion of the Liberal Party to cut the debate short. This is a very serious matter that the government has implemented.

We see two political parties in the House of Commons playing games.

The Reform Party wants to kill the bill. Reform Party members time after time, speaker after speaker, whether they are from British Columbia, Alberta, Saskatchewan or Manitoba, stand in this House and say that small businesses do not deserve fair financing opportunities for their progress. Reform Party members time after time from every province they represent, the four provinces in western Canada, say that this bill is bad and that they want to kill it.

This bill will affect about 200,000 businesses over the next number of years.

The Reform Party is playing what many people describe as silly games. The Liberal government in response to silly games jumps right in feet first and plays sillier games by ending the debate, closing or limiting the debate on this bill which is very important to small business owners and employees of small businesses in this country. The NDP is really quite unhappy that both of those political parties are playing games with the futures of these businesses and the families that are supported by them.

As well, we have seen the Liberal Party time after time limit or close debate on matters that are of economic importance to our country. We have seen it invoke closure so many times in this House I have lost count.

We have seen it invoke closure on the wheat board act, which was supposed to be an act that encouraged debate and provided opportunities for members of parliament to strengthen the wheat board. Instead, the Reform played its silly games. The Liberal government jumped right in and played more silly games, ending in a wheat board act that is not as strong as it should have been if it had full debate in the House of Commons.

We have seen the Liberal government opposite limit debate on very important budget bills because the Reform Party played silly games. The Liberal Party gets sucked in. It embraces these silly games and plays sillier games. We have seen it cut debate on the World Trade Organization legislation.

The World Trade Organization has handcuffed Canadians but not Americans to the detriment of agriculture in this country, to the detriment of many small, medium and large enterprises in this country. We are seeing firsthand in Canada this week the effects of limiting of debate on the very bad World Trade Organization legislation.

Today we see one more silly game by the Liberals, and the Reform Party is embracing silly approaches to the business of the nation. I believe that both parties are negligent in their responsibility to the taxpayers of the country. They are negligent to the small business community because they do not want full debate or full discussion on the bill. The Reform Party not only does not want debate. It does not want the bill. It does not want to have any small businesses left in the country.

When it comes to business people viewing the Reform Party's real agenda, its big business, anti-small business agenda, the Reform Party will pay very dearly for that come the next election. The Liberals will not benefit from that because they are the ones who are inciting the Reform Party to play these stupid games.

I am from Saskatchewan. In part I share the comments of the member of parliament for Souris—Moose Mountain, a Reform member from Saskatchewan. He is concerned about the agricultural problem in western Canada and in our country. I am very concerned about this serious matter. I have had calls from and discussions with farmers and their families over the last number of weeks. Farmers in Saskatchewan and in other parts of the country are in desperate straits.

We have seen commodity prices fall. We have seen the incomes of farm families falling. Many predict that they will fall by about 40% this winter alone. What this means is that one-third of the farmers who are basically operating on a very tight margin could potentially loose their farms.

What do we have here? We have a Liberal government and a Reform Party that are killing debate on a small business bill. They do not allow for wide-ranging debates and inputs from the House of Commons on the agricultural farm aid packages which are necessary. One of the key issues for us in the House is not just small business and financing for small business but making sure that our farm families have at least equal support from our national government.

We are the only country in the OECD that does not have a national agricultural policy or a program to assist our farmers. When the Liberal government eliminated the Crow benefit we were told that it was according to requirements of GATT and the WTO.

I went to the Council of Europe in Strasbourg, France, and raised the issue with farmers and farm members of parliament from 36 European countries that subsidize their agricultural needs and farm families. I said that the Liberal government in Canada was eliminating the Crow benefits, a farm agricultural transportation subsidy, because of the WTO. I asked whether they were to eliminate subsidies in their countries which, by the way, total about 60 cents on the dollar for European farmers from their governments. We total about 2 cents on the dollar in Canada.

They said that GATT and WTO gave them five years to address their subsidies to farmers. The Liberal government eliminated these subsidies at the first possible opportunity. We are seeing not just farmers going bankrupt in record numbers. We are also seeing the transportation system being ripped apart by the government as well.

However, these European parliamentarians and the agriculture committee of the Council of Europe said that under no circumstances would they abandon their farmers to benefit the United States of America in its need to have reduced subsidies for other farmers except its own.

It has been three years since I have spoken to these politicians in Europe. They said their subsidies were intact but their farmers were still suffering but not as much as farmers in Canada because they have a basic support package from their national government and our government does not provide one.

I believe Bill C-53 is a work in progress. It should be forwarded to the standing committee on industry for a detailed review to make sure that small businesses have an opportunity to access funding.

We have heard representations from the small business community and some of their representatives such as the Canadian Federation of Independent Business and others saying that one of the important requirements of small business is access to capital.

We are very concerned that small business continue to have access to capital. The bill will provide small businesses with an opportunity to obtain some guaranteed loans which will be totally financed by the businesses in question. This is not a subsidy program but a loan guarantee program which I feel is very necessary, particularly for the small business community.

I will raise a couple of concerns about the bill. It is basically an update of the Small Business Loans Act, the SBLA, which has been very successful over the years because businesses can apply directly to an authorized lending institution for a loan and their requirements can be met with respect to the SBLA and now the new Canada small business financing act, the CSBFA.

The basic parameters of SBLA are not changed in the bill, according to my information. There will still be asset based debt financing to businesses with less than $5 million in annual sales. The loans will remain capped at up to $250,000 per business. There will be a maximum amount eligible for financing, which is 90% of the cost of assets. There will also be a one time registration fee of 2% which is paid to the government to apply for this loan once it is accepted. The loan period will remain pretty much static.

This initiative by government is important to small business because 30,000 firms apply each year under the program. It is not $250,000 per approved application. It actually averages to around $68,000 per loan. For some people that may not sound that large, but we have to understand that there are some very interesting structures in the Canadian small business area.

For example, Thompson Lightstone & Company Limited just completed a study in 1998 with respect to small business. It found that two-thirds of small and medium enterprises report annual sales of less than $500,000 a year. Thompson Lightstone also reported that 49% of all businesses report sales of less than $250,000 a year. This is up from 43% the previous year. From 1997 to 1998 we saw an increase from 43% to 49% of all businesses with less than $250,000 a year in sales. This study also showed that small and medium enterprises employed on average only seven full time people.

The Reform Party is trying to kick the heck out of small companies that are trying to create jobs and trying to sell services and products in this country and abroad. Yet it expects in return support from the small business community. The small business community will be quite interested in its comments with respect to the bill and to small business. They will be distributed across the country by all members of parliament who support some kind of financing mechanism for small business.

Another point I want to make is that the Canadian Federation of Independent Business did a study of its membership. There are between 70,000 and 90,000 members, depending on the year. However, 27% of CFIB members believe that the availability of financing is a problem. If the bill is killed by the Reform Party 27% of all existing businesses will be concerned because there will be almost zero availability for much of their financing problems.

This figure does not quite jibe with the Lightstone statistics. Lightstone says a top of mind issue of small and medium enterprises is about 10% but that is because when the CFIB poll its members it gave them a choice of about 10 issues: which of these 10 issues are important to you and are first at mind?

The Lightstone polling is more of a cold random sample. It calls up small business people who are very busy trying to do their jobs and keep their businesses going. They are caught on the phone and have to answer these questions. The first thing that comes to the minds of most business people is that they need more customers and more revenues. This is very important, but in terms of key issues facing the viability of small business 27% is a number which has been consistent throughout the years in all the research I have seen.

The Lightstone report also provided interesting information with respect to businesses. Lightstone said that 18% of the hundreds of thousands of small business enterprises used an SBLA type of loan guarantee and another 6% used some other form of loan guarantee, be it a provincial government or a federal government loan program.

Some 26% of small and medium enterprises are rural based. The member for Souris—Moose Mountain indicated earlier that agriculture was a problem and that it would not really help the business community in his riding. He made a good point, but I do not think he understands that 26% of these small and medium enterprises are rural based.

The most important statistic I find with respect to the breakdown of businesses and where they operate from in the Lightstone report is the figure that 28% of all small businesses are home based. That is a tremendous figure. It is a huge figure which is backed up by Statistics Canada in its national registry.

The Reform Party is attacking home based enterprises and other small and medium enterprises by cutting off any opportunity they may have for obtaining loan guarantees, which I remind members are basically self-funding and self-financing from the business community that uses them.

Some may argue that the auditor general had some concerns. Yes, indeed the auditor general had some concerns with respect to the Canada Small Business Loans Act. I happen to have some comments from the auditor general in this regard. He was very concerned about the accountability of some of these loans. He was very concerned about how some businesses were abusing it with the co-operation of certain financial institutions. He had some other concerns in terms of auditing and keeping track of the numbers and the government's potential liability.

These concerns are legitimate and I think all members of the House would support them. The bill should be referred to committee so that these concerns could be raised one more time and the government could provide assurances in the bill at committee that the auditor general's concerns will be addressed and that the the very minor abuse by financial institutions and by some businesses alike will be addressed and cleaned up.

We see in the SBLA program that 177,000 new loans from 1993 to 1997 were approved with loan guarantees. The total was about $11.2 billion, a significant amount of money.

We in the New Democratic Party have other concerns to raise with the House. The concerns are more related to the pilot projects the bill is going to undertake. Two pilot projects are proposed. One is to extend the program's guarantee to cover capital leasing and the other is to improve the voluntary sector as eligible borrowers. We are concerned about the design of these projects. We would like to raise with the Treasury Board minister and the Minister of Finance our concern that it becomes a regulatory process in terms of approving these loans. They are not as transparent as they should be. The auditor general has indicated that there should be some transparency in approving these loans certainly with respect to the regulation thereof.

There is cost recovery under this program. We believe that if there is a cost recovery component in these regulations the act will be very beneficial to small business. The CFIB has some concerns about capital leasing. It is concerned that the $250,000 limit is quite high. It is concerned as is the auditor general about larger firms beating the system. It is concerned that the data collection and the monitoring are poor and should be improved. We want to see this bill referred to committee so we can raise these matters on behalf of small business and others.

We feel along with the CFIB that there may be some politicizing of this bill in particular as we are providing the volunteer sector with access to the SBLAs. The volunteer sector is a very important sector in this country. It benefits by receiving charitable donations and other donations which are tax supported through the tax system. We are concerned this is just one more way of saying to the volunteer agencies that we are not going to provide any more funding to you but we will let you borrow money through guarantees in the government.

We want to see this bill referred to committee for further study. We want to make sure home based businesses, first nation people and women are not excluded from the program. We want to make sure the banks in this country are able to discriminate between small and large businesses. We are also very concerned about the mergers of the banks and how those will affect access to capital for small businesses. The merging of the banks is economically a very dangerous situation for our country. We would like to see the mergers stopped because with respect to this bill and small business the banks have admitted they have failed in their delivery of small business financing and access to capital for small business. We want to make sure the small business community is given a fair shake in terms of reviewing capital. I look forward to discussing this bill further in committee.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank my hon. colleague from the NDP for his speech. However, I will correct him on a number of points. The hon. member suggests that we are somehow against the notion of this bill. Nothing could be further from the truth. The Reform Party has been on the cutting edge of providing constructive, effective and pragmatic solutions in order to revamp our economy and make it a nimble, aggressive tool for the people of Canada in the 21st century. It is unfortunate that neither his party nor the government has done as much as they could do on that matter.

The member alluded to what the auditor general mentioned. These were not just small concerns. They were large concerns, concerns of accountability. The auditor general said very clearly that 90% of the loans in the act would already have been made by private sector banks and that there was no need of money from the government. In other words, the taxpayer did not need to subsidize loans to the private sector. In this era of declining resources and a lack of money on behalf of all governments to provide for programs we already have, we are opposed to the taxpayer subsidizing the private sector on loans it would already be getting.

In effect the taxpayer is subsidizing the banks.

I would like to ask my hon. friend and colleague whether he will join with the Reform Party in holding the government to task to make sure this act is going to ensure the monies available are going to small businesses that would not normally get a loan from the bank and that accountability is put into the system so monies will be invested in such a way that they come back to the taxpayer and we have an ongoing replenishment of the cycle. This is what the Reform Party is very much in favour of.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I thank my colleague for this question.

One of the concerns we have in the New Democratic Party is the same concern he has and the same concern the auditor general has, to make sure the abuses that have been taken with the SBLA program are eliminated, the abuses larger businesses have been instrumental in participating in, the banks in a co-operative sense helping them abuse the system. These should be addressed and terminated. That is why we want to see the bill sent to committee, to make sure these points are raised, that there is clarification and that there is no opportunity in the future for abuse to take place such as this. I agree with the member on that.

The NDP believes that a government has to be accountable, that a government has to be responsible and that a government has to deal fairly with the people it governs. We have proven this for 37 of 52 years in governing the province of Saskatchewan.

In Saskatchewan we have been re-elected time after time on these three principles because we do not just preach but we take action and implement the programs that Liberal-Tory-Reform coalitions do not support.

Saskatchewan had 11 consecutive surplus budgets under the NDP government of Allan Blakeney, no debts at all in the province of Saskatchewan, free dental care for children 18 years of age and under, the lowest tax rate in the country, the lowest unemployment rate in the country, an almost free drug prescription program in the seventies and early eighties.

We have seen the Reform style governments of Mr. Grant Devine take all those programs, eliminate them, drive our province into $16 billion in debt for one million people. Some Reformers in the House of Commons were supporters of Mr. Devine. They are now saying they are going to be accountable and responsible. I do not think one person in Saskatchewan believes that to be the truth.

The member for the Reform Party may not agree with this. I ask the Reform Party members from Alberta and British Columbia to talk to people from Saskatchewan who have experienced the Reform style government of Grant Devine which promised and implemented the same promises they are blaming for their economic solutions and who butchered our economy.

This small business Bill C-53 deserves full debate. It does not deserve silly games that the Reform Party like to play with it. Business is business in this country. Business is serious. Business supports families. Business creates jobs. It is my view that when this bill gets to committee we will be able to discuss this fully and have the Reform Party put forward its recommendations that Grant Devine put forward which proved to be total and utter failures.

[Philip Mayfield, Reform, Cariboo—Chilcotin, BC]

Mr. Speaker, I am very interested in the comments of my hon. colleague.

I would like to tell members a little story. I was talking to a businessman who runs a small sawmill in British Columbia not far from where I live. He said that when the NDP took over the government in British Columbia he had $200,000 in the bank. He said that of course is long gone. He said that after this NDP government last year he had a really good year. He lost only $10,000. This is what the NDP has done to British Columbia.

The Small Business Loans Act is an important piece of legislation. It is to support small business people, entrepreneurs who are trying to create business, opportunities and employment in Canada. But it takes the initiative of the government, it takes the support of the provincial government and it takes the courage of the entrepreneurs to do this.

Part of the difficulty with this bill as the auditor general has pointed out is that there are too many conflicting ideas about how many jobs it is creating and the government overestimates this. He also has said that this bill is supporting the lending institutions probably more than the small business people and I believe this should be rectified.

I would like to ask the hon. member, in light of what is happening in British Columbia, how his socialistic premises are going to improve the opportunities of small business people when governments like the New Democratic Party government in British Columbia have done everything that they can to bring small business and big business to its knees.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, we have seen firsthand in Saskatchewan a Reform style of government.

[Philip Mayfield, Reform, Cariboo—Chilcotin, BC]

How about British Columbia?

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

If the member will give me one moment to answer the question. He has given an example of one business that has lost $10,000 and that is very sad. I was very thoughtful and listened to his question and he does not want to do that because he knows that he has a real problem. There is an old saying in Saskatchewan with respect to what Reformers are yipping and yapping from their seats on. When you throw a rock in the dark and you hit a dog and a dog yelps, you've hit a dog.

That is what we have here. We have hit a dog because we have seen the policies of the Reform Party in Saskatchewan in 1982 to 1991. They promised fewer taxes, fewer services, less government. We have higher taxes, low services and huge debt. People in Saskatchewan were so ticked off with the Reform Party that it does not exist any more provincially. It abolished itself.

Only 18 Reform members of the legislature under the Devine Liberal-Reform coalition ended up being charged and found guilty with respect to how they governed the country. I believe that is the proof of the pudding. When we get Reform style governments governing and 18 of them are charged and found guilty as a result of their activities in delivering governments in the province they can deliver, that is the proof of the pudding.

[Ken Epp, Reform, Elk Island, AB]

Mr. Speaker, on a point of order, I believe this member is very close to imputing improper motives to fellow members of the House. That is against the rules of this House. I would ask him to withdraw that.

[The Deputy Speaker]

I did not hear the hon. member imputing motives. But perhaps he could clarify the situation for the Chair. Perhaps the hon. member for Elk Island could tell us what was imputing motives. I thought the hon. member was discussing problems with the government in Saskatchewan, not with the government here.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I am a businessman by profession. I was in business for six or seven years. There was a saying in Saskatchewan under the old Reform style government of Grant Devine. How do you start a small business in Saskatchewan under the Reform style government of Grant Devine? Every business person in the province was saying at that time you start a big business and you wait a year under the Reform style policies. That was the result of the Reform style government of Grant Devine.

These people are really concerned about being associated with Mr. Devine, but they were and they are. I do not begrudge them the fact that they want to duck that relationship that has been proven through membership cards in Saskatchewan that many of the supporters of the Reform Party in Saskatchewan held. They do not want to be associated with that. That is fair game. They can duck that as they see fit. But the record shows very clearly that the Reform style government of Grant Devine in Saskatchewan in the 1980s was clearly a bad government. I would hope that the Reform Party members have learned a lesson from that and apologize to this country for the disgraceful performance of their government in the 1980s.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Mr. Speaker, I will try not to be quite as partisan as the last two speakers who rose to speak to Bill C-53, the the Canada small business financing act. Perhaps later on I will explain to the hon. member from the NDP that there are provincial governments across this country which do have the proper policies in place to encourage small business.

Make no mistake about it. Small business is the backbone of the Canadian economy. It is the small businessmen, the small businesswomen and small businesses themselves which hire people and give them the opportunity of having employment in our economy.

It is those small businesses which have to be assisted in some fashion in order to identify and achieve the necessary working capital and the operating capital that is required to develop and start a small enterprise or a medium enterprise, referred to as SMEs.

As a matter of fact, it was the 1961 Progressive Conservative government of John Diefenbaker which introduced the first legislation concerning small business, the Small Business Loans Act. For over 37 years it has helped small businesses achieve those finances that are absolutely required to put them in place and help the Canadian economy.

Quite frankly, I should say off the bat that the critic for our party, the hon. member for Markham, obviously agrees in principle with the legislation that has been put forward.

However, there are, as there are in every piece of legislation, problem areas. At committee stage it is hoped that the amendments which will be put forward by the opposition parties will be listened to logically by the government because, quite frankly, no government has a lock on ideas on how to make legislation better.

Logical amendments that should be put in place will come forward in committee to make this piece of legislation better.

First I want to talk about small business in general. Perhaps the hon. member from the NDP, who attacked other provincial governments and policies which they have put in place, may well want to listen to this.

In the province of Manitoba small business is appreciated for what it really can do. Let me give some ideas and examples of what has happened in my province just recently in developing what I consider to be a business friendly environment, something which has not happened, as was mentioned earlier, in the province of British Columbia. In fact, businesses are being chased away and are leaving in droves the province of British Columbia to go to other business friendly environments.

Let me talk about the environment in Manitoba which now has, if not the best, one of the best economic opportunities of the last century.

Part of the business friendly environment involves taxation. Taxes in the province of Manitoba have been reduced.

Workers' compensation assessment rates have fallen by 22% since 1988, the time of an NDP government, and will fall a further 5% in 1999. A regressive payroll tax has been reduced in the province of Manitoba.

The payroll tax exemption has increased from $100,000 to $1 million. That means that small businesses which have a payroll less than $1 million will be exempt from a regressive payroll tax in Manitoba.

The payroll tax rate will decline from 2.25% to 2.15% in 1999 which means that those businesses whose payroll is over $1 million will pay less in payroll taxes in 1999 than they do currently. That is another reduction of a regressive payroll tax.

The capital tax exemption has risen from $1 million to $5 million which means there is a reduction in capital taxes to small business enterprises. That makes it much easier for those enterprises to do business in the province of Manitoba.

The retail sales tax has, since 1991, been applied alongside the federal GST. It was previously applied on top of the federal manufacturers sales tax. We do not have to go into the benefits of the GST, which removed a very regressive manufacturers sales tax and which made our ability as Canadians to compete with international markets much easier and much better. This tax was implemented by the Progressive Conservative government and then embraced by the existing government, which said “We will scrap the GST”. The GST was not scrapped and is now an unnecessary evil.

Electricity used in mining and manufacturing activities in Manitoba is now sales tax exempt. I wish the NDP government of British Columbia would listen because these business friendly improvements were made in the province of Manitoba to increase, not decrease, the economy of the province.

When we talk about small and medium enterprises it is necessary to recognize that they are the economic backbone of our country. The people who we see walking in the streets are the people who are employed by these corporations. These people pay substantial taxes to the federal government. I mention this because the government not only has an opportunity under Bill C-53 to make it easier for small and medium enterprises, it could also make it much easier for those same enterprises if it would embrace the concept of less taxation.

There is a prime opportunity before us, which is the reduction of EI premiums. Over the last two weeks in the House we have talked about what should happen to the $19 billion surplus in the EI account. We have heard from the government that the surplus is going to be used in whatever way it sees fit, for education or health care or whatever.

The government has a responsibility to look after education and health care. It has done a very poor job by reducing by $6 billion the transfer payments that should be put into those services which Canadians wish to have. That does not mean that the moneys that came from the EI fund, an insurance fund, should be used for those purposes. The law states that when there is a surplus the surplus should be returned to those people who invested in the fund.

The EI premium for employers is $3.78. The break-even rate that has been calculated for the EI employment premium contribution is $2.58. Currently $3.78 is being charged per $100 of earnings. A reduction of $1.20 could be put in place now for employers.

What are we talking about in Bill C-53? Small businesses which employ people. Reducing EI premiums would be a way to allow dollars to go back into those businesses. It would allow those same owners to hire more people, to produce more product, thus enhancing our economy. Not only does this apply to the employer. EI premiums for employees are currently being charged at $2.70 per $100. The break-even rate for employee EI premiums is $1.83.

EI premiums for employees could be reduced to $1.83. But no, the government likes to have a $6 billion to $7 billion annual surplus, raised from the taxes of not only the employees but the employers. Now the government has the opportunity to use it as a slush fund for wonderful political projects which, quite frankly, do not do one iota of good for the small businesses which are paying all those costs.

Not only is it unfair, I believe that under the act it is illegal. I am sure the Minister of Finance and the government will change that in order to use that money as a slush fund.

We have a necessity to assist small and medium size enterprises. Right now we have this piece of legislation before us. It is good legislation because it was put in place by a good government in 1961. However, legislation has to be adapted as the years go by. Things have changed over the last 37 years and we have to adapt.

Unfortunately the government has not adapted quite enough with Bill C-53. Having it go to committee is the right thing to do. But the very right thing to do is to have the government listen when it goes there, to have the government listen to very good amendments from the Progressive Conservative Party so that we can make this legislation better.

Let me give one example of an area where the government does not have the vision to look forward to how business should be done in the future. I am talking about the knowledge-based industries. If members of the government or members of other opposition parties actually talked to their constituents, their businesses and the people, they would recognize that achieving working capital and operating capital for a nuts and bolts business is easier than achieving that same capitalization for a knowledge-based industry because with a knowledge-based industry the asset is intellectual.

It might be difficult for government to understand that. I can appreciate that, but I am sure that in committee we will be able to lay it out in simplistic terms so that it will understand that with the intellectual asset requirement in small businesses we have to change the way we do business.

The Minister of Industry has actually stood in this House and said that he embraces the knowledge-based industries. But there is nothing in Bill C-53 that will achieve that. What we have to do is make sure that the government recognizes that and adds to this piece of legislation the ability for intellectual properties and knowledge-based industries to be treated equally, as are other types of small businesses trying to achieve the necessary working capital for their industries.

As I said at the outset, we agree in principle with Bill C-53. However, we would like to see some of those necessary changes. There are some minor changes and there are some major changes, as I mentioned, concerning intellectual properties.

This is only one small part of what it takes to achieve success for our small businesses. I would like to suggest very strongly that it is necessary not only for the Minister of Industry to make the changes, but for the Minister of Finance to make the necessary changes to make sure that we are successful in keeping this very vital part of our society in business.

The member from the Reform Party talked about the agricultural sector. I, too, am very familiar with that as I have been very familiar with small business for most of my working life. There is no doubt and no question in my mind that the agricultural industry in this country right now is being adversely affected by a number of factors.

One obviously is the major global economic downturn, particularly in Asian markets. Agricultural industries are also being affected by an ineffectual government. We must ensure that trade deals which have already been negotiated are complied with. It is not happening, as we see now in the northern states of the United States. In fact governors, unilaterally, are suggesting that we are not complying with our own rules of trade, which is not the case.

The government of the day is ineffectual in making sure that those states comply. It is affecting my producers and our country's agriculture industry. That is only another part of how this government has unfortunately neglected small business in the agriculture industry.

We can talk about a number of other things with respect to agriculture but at this time I will suggest only one thing. We would like to see the government have an open mind when this legislation comes back to the House and when it is dealt with at the committee level. Our critic, the member for Markham, will be at the committee table. I hope the government will listen with an open mind.

[Ian Murray, Liberal, Lanark—Carleton, ON]

Mr. Speaker, I do want to thank my colleague from Brandon—Souris for support in moving this bill to committee as quickly as possible.

The one comment I wanted to make is to correct something my colleague from Esquimalt—Juan de Fuca made in response to the previous speaker. He was talking about the number of loans that might or might not have been made without the Small Business Loans Act. I believe the figure he referred to was 90% that would have been approved even without the act being in place.

All members of parliament received some documentation from the Minister of Industry on Bill C-53 entitled “Meeting the Changing Needs”. In that document there is an item about incrementality, in other words, measuring the extent to which loans made under the program would not have been made at all or would have been made under less favourable terms in the absence of the SBLA program.

I just want to quote from the document. “While incrementality is difficult to determine, studies have shown that under a broad interpretation, as many as 86% of loans guaranteed under the program since 1995 are incremental”. This means that either these loans would not have been made at all to the small businesses concerned, and that is 54% of firms, or they would have been made under less favourable terms, and that applies to 32% of firms applying.

I just wanted to have that on the record. Even recognizing it is difficult to draw firm conclusions about the subject of incrementality, the latest studies that the Department of Industry had undertaken on its behalf have shown that it is a very significant program in terms of making access to capital available to small businesses.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank my colleague from the government for his comments. I would be very interested and curious in seeing the document he presented to the House because it flies in the face of information that I have received.

I am pleased to speak on Bill C-53, the small business loans bill. At the outset I would like to say that we in this party have been very much in favour of trying to find innovative ways in which small businesses can become more aggressive in trying to meet the challenges in their need to acquire capital in order to grow and become competitive.

While we agree with the notion of this bill and its intent, we have a difficult time with parts of it. The auditor general supports our contention that there needs to be more accountability in the system to ensure that the moneys go to businesses and that there is a mechanism of determining that the money actually goes to the businesses that need it. We must also ensure that those moneys are repaid, that they come back to the taxpayers.

We found that the moneys are being disbursed to companies that would by and large already receive bank loans. In effect this bill has been subsidizing the banks. The banks do not need subsidization. They are making some pretty fat profits and have been doing so for some time in spite of the recent downturn the entire economy is facing.

On the larger issue, our legislative agenda for the next few months is about as useful as pabulum. Look at the situation in our country today. The really big issues are a plunging loonie, an economy that is in the doldrums and an international crisis the proportions of which we have not seen since the Great Depression. Our health care system is collapsing. The CPP is in dire straits. And we see issues for the House to spend time debating that have very little meaning to those grand problems that affect Canadians.

We need to get back to dealing with the large issues. We need to use this House in a way that we can find the best solutions from within Canada and around the world and apply them to the problems at hand.

The health care system is eroding. Canadians are in pain and are on enormously long waiting lists. The future of the CPP is in crisis. Our economy is falling apart. And we are looking at small, minuscule issues dealing with these problems if we deal with them at all. Let us get down to brass tacks. Let us get down to the real issues at hand.

An important issue that Bill C-53 deals with is the economy. We have seen the lowering dollar. There has been a consecutive decline in the the GDP over the last four months. We have an unemployment rate which is 4% higher than that of the United States. Our productivity has declined. Our productivity was significantly lower than that of the U.S. when our dollar was 90 cents. It is still low at 65 cents.

The public may or may not be aware of this, but our dollar is declining for many reasons. Some people point fingers at the Asian flu. Some people point fingers at the Russian meltdown. The bottom line is when we point a finger at something, three fingers point back at us. It is true that some of these things are out of our control but many are within our control. There are many constructive suggestions that we can employ. The Reform Party challenges the government to employ some of these solutions.

How can we get our productivity up? The Canadian Federation of Independent Business put out a document three days ago. It articulately and eloquently shows that youth want to work but they are unable to work for many reasons. One of the biggest reasons they are unable to work are our high taxes. The government needs to reduce taxes.

There are some specific solutions that my colleagues have spoken about. We spoke about reducing EI premiums. Let us also reduce the CPP premiums. This is a provincial responsibility, but let us also look at reducing workmen's compensation premiums which also contribute to choking off the private sector. Let us also remove the existing surtaxes that crush the private sector.

There are surtaxes such as the capital gains tax. It impedes the private sector's ability to take moneys it has invested, sell things such as real estate and reinvest that money into the business. The capital gains tax restricts the movement of capital within our system thereby reducing our productivity.

The government should work with the provinces to decrease those taxes. I challenge the finance minister to bring together his provincial counterparts within the next two weeks to discuss these issues, make a plan and institute it as soon as possible. By doing this we can make ourselves more competitive, not by reducing the loonie but by dealing with the structural reasons of why our country is non-productive.

If we look at the history of the United States, the 1920s, the 1960s under President Kennedy, and the 1980s, every time there was a reduction in taxes there was a huge increase in the effectiveness of the economy. Why? There are increased savings and increased investment. There is also a greater desire to work because we know that the more we work, we will not have more money taken away from us.

We will also see a reduction in the black market, a significant problem in our country. By reducing these tax loads we will be able to reduce the black market. In 1992 under Prime Minister Mulroney we found that more moneys came into the public coffers for the reasons I previously mentioned.

We can deal with facts. Looking back in history we can see the constructive solutions that have already worked we and can apply them in 1998 to make them work for the people of our country today. I caution that this will not compromise the people who are most impoverished. It will make them more employable and will allow them to have more funds. It will rescue our social programs by making more funds available.

Reducing taxes will allow us to deal with another important structural problem, the brain drain which my colleague spoke about earlier. In 1997 we lost 46,500 of our best and brightest people to the United States alone. Compare that with 1990 when we lost 20,500. That is a substantial difference. There has been a substantial change.

Our best and brightest, the crème de la crème of our country are going south, not necessarily because they want to live there but because they see far greater opportunities there. Comparing the tax structures, after tax a family of two in the U.S. makes 44% more than a family of two wage earners in Canada. How can we compete with that? We cannot.

Earlier this year the business community combined with the educational community to provide a number of constructive solutions to deal with another factor that could improve our economy, the educational system. It involved innovative partnerships between the private sector and the educational system that would do much to address one of the core pillars of a strong, nimble and effective economy.

In a nutshell, the business round table had many recommendations. It recommended that all students learn at significantly higher levels and that the curriculum content reflects the higher expectations we would have of students. It recommended that instructional strategies and school choices vary to ensure success for all and that the system be based on performance by using a broad range of assessment tools. It recommended that schools have a major role in decision making, which would alleviate the rigid control over schools in what they can do. Schools should receive rewards for success, assistance to improve and penalties for failure to be effective teachers of today's youth. A major emphasis should be placed on staff development.

The round table also recommended that employee unions at individual schools be required to grant waivers on certain contract provisions governing the hiring and firing of teachers and principals and on the participation of staff in academic and financial planning.

I cannot overemphasize the importance of those recommendations. If we are going to have an effective, nimble and aggressive economy, we have to change our educational system. We have to give schools some control over what they do in terms of teaching. They must have control over their budgets. They also must have the ability to be assessed.

Teachers federations have traditionally been completely opposed to an assessment of a teacher's performance. I feel this is wrong. Good teachers will benefit from the system because they will not only be keeping their jobs but they will also be rewarded for doing a good job. It would add the needed element of incentive into the teaching profession. It would remove from the system teachers who are not doing a good job.

In any system, including this one, those who are not doing a good job get turfed. That may sound ruthless but when we are dealing with the future of our youth, we must give them the best opportunities we can. We owe it to the youth of today to ensure they have an opportunity for the best education possible.

We must strive not only to help those who are among the most underprivileged and disadvantaged. We must also encourage those who are the best in our system and give them the challenges they require to become individuals who can contribute greatly to our society.

The finance minister could do a couple of other innovative things. There is presently a limit on the amount Canadians can devote to foreign investment. It is now at 20%. The government should increase that to 30%. That would go a long way to enabling people to provide for their future. As we in the House all know, the CPP will not be there for those in my age group and younger as it has been for previous generations.

The finance minister could actually expand RRSPs, have a designated RRSP amount. Those moneys could then be used to invest in the private sector, in small to medium size businesses on Canadian soil. If the finance minister were able to expand RRSPs, it would not be a lodestone around the taxpayer neck. It would also enable Canadians to invest in Canadian companies on Canadian soil and create Canadian jobs. It would be an important tool for increasing investment and innovation in the private sector by using the dollars that already exist. It would not rely on taxpayers.

This is an important facet the prime minister and the finance minister should look at to enable us to put money into the private sector and to enable the private sector to do research and development.

I would be remiss in suggesting that we not ensure the research and development system including the National Research Council have the moneys to do the very good research it does. It should be encouraged to partner with the private sector so that it will have the moneys to build another pillar of the private sector, the research and development section. Therein we would have a much more productive and effective economy for the future.

[Rick Laliberte, NDP, Churchill River, SK]

Mr. Speaker, I am delighted to address the hon. member's comments. He dealt with education. I realize he championed the national headstart program, the early childhood intervention program. Fortunately the aboriginal headstart program is well on its way and is serving a greater purpose.

I want to share with him a vision of education. One of the first obligations of the country to first nations occurred when the aboriginal people negotiated the future of their people. Education and health were major priorities. Education rights and health benefit rights are entrenched in the treaties.

In a social democratic country like Canada why do we not have tuition free education? Why do state controls stop after our children have gone through school from kindergarten to grade 12? Why can we not hold and nurture them until they become adults at the age of 21 to 25? Then they could stand up and take on their master's degrees or the Ph.D degrees to attain their careers. Tuition for university, technical schools, business schools and all trade apprenticeship programs should be supported. Youth need to be prepared a bit longer.

I wonder what the hon. member's vision is, because his heartbeat seems to be on the socially conscious side.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank my hon. colleague from the NDP. I know of his deep interest in aboriginal issues, particularly in improving the health, welfare and education systems of aboriginal people so that they have the tools to stand on their own feet.

The member's question was about why we did not have government funding for post-secondary education up to and including bachelor degrees. The bottom line is money. Unfortunately we have a limited amount of money and we have to do the best we can with the resources we have.

The leader of the Reform Party championed the concept of an income contingent loan replacement scheme in the last parliament. This is a very clever scheme that would provide for a greater amount of loans for students. Those moneys could actually go into a system that is far more accountable and more money would stay in the system.

In essence, when a student leaves school loaned moneys would be paid back on the basis of the earnings potential of the student, rather than current system where the student has to pay the whole shot back in a very short period of time, usually at a time when it is very difficult to acquire a job.

If the House and my hon. colleague in the NDP were able to work with us to champion that, we would do a great service to students by implementing an income contingent loan replacement scheme which would provide for more money for students while not extracting more money from taxpayers.

[Mike Scott, Reform, Skeena, BC]

Mr. Speaker, a few minutes ago the member for Regina—Lumsden stood in the House as a member of the NDP and tried to paint himself and his party as being defenders of small business in Canada. I have not heard anything more laughable in the last couple of months. There are comedians at work all over the place and this member seems to want to get a job doing that.

In British Columbia there is an NDP government. It is easy to start a small business in that province: start with a big business and it will not be long before it is a small business. Another way is to start a small business in British Columbia and move it to Alberta. That NDP government of B.C. has a shockingly interventionist attitude and punitive tax levels.

The corporate capital tax in British Columbia is a tax paid on the value of assets every year whether a business is making any money or not, whether one is making a profit or not. Give me a break; the NDP telling us that it is going to be the defenders of small business. I do not think so.

The Liberals would try to have us believe that they are the defenders of small business in Canada. I was a small businessman. As a matter of fact it was my time and my experience as a small businessman that drove me into the House of Commons, that got me involved in politics. I got mad enough at those clowns over there that I had to come here to do something to set the situation right.

This is my experience as a small business person: I was living on the west coast of British Columbia, minding my own business, trying to earn a living, employing people and trying to get along. What happened? The federal government continually interfered in my business. Statistics Canada sent me forms to fill out. This was back in the early 1980s. The first time I filled out the forms. I thought I could do it once. Then Stats Canada started sending them on a regular basis saying that they had to be filled out.

The time involved in filling out the forms was substantial. I reached the point where I said I was not going to do it any more. Then the people from Stats Canada said it was against the law and if I did not fill them out they could prosecute me and throw me in jail.

Next I learned that the receiver general wanted to collect his payroll taxes. He wanted them in his bank account on the 15th and the last day of every month. If the money was not in his bank account on those dates there was an immediate 10% penalty and the interest clock started ticking right away.

There are businesses in rural Canada, which a lot of these members do not realize exist, that do not have access to electronic banking so they have to pay their taxes in advance. That is the level of understanding and comprehension that the government has for small business.

Speaking of taxes, if by some fluke a profit is made in one year, the government expects the business to start paying taxes on its next year's profit before it is even made. It expects a cheque to be sent every month in case a profit might be made. That is the level of attitude of the federal government. I cannot believe that the government actually tries to paint itself as being concerned about small business.

Let us talk about lending money to small business because that is what the bill is about. I will speak about a situation that happened in my home town. Our great, wonderful and illustrious federal government back in the early 1980s decided to embark on a loans program for small business.

A concrete company in my home town of Kitimat poured ready-mix, made concrete slabs and so on. On rainy days when there was nothing else to do, it used its little block plant to make concrete bricks. It was rainy day work and a good fill-in for employees rather than the owner of the company sending them home during inclement weather. A fellow in Terrace—they were both good business people—decided to go into the block plant business. He got a loan from the federal government and the new block plant put the block plant in Kitimat out of business.

Let us think about that. The guy who was already in business and paying his taxes for years and years saw his tax dollars going to provide a loan to a potential competitor to set up business and drive him out of business. Also the employees that were able to work during times of inclement weather were sent home. Those were net effects of the government's policy with respect to lending money to small businesses.

I do not mean to criticize either one of these businesses. It is just an obvious contradiction. The private sector ought to be providing capital for small business, not the government. If the government would do the right thing, set its own house in order and get the fundamentals right, we would not need to be concerned about whether small business had access to capital.

There are some matters we would like to see the government consider. It has not as yet. One of these days there will be a government on that side of the House that will do these things. It should reduce bureaucracy, reduce red tape, reduce payroll taxes, reduce personal income taxes and quit meddling in the private sector. Let the private sector get on with what it does best. The government should get out of its way.

I cannot believe the government believes it has some way of helping small business in Canada without addressing these fundamentals. The government has shown its willingness to continue a rip-off of the EI fund which is hurting small business and rank and file Canadian taxpayers, workers, and which will take $7 billion in excess out of the economy this year. How can it suggest, with any sense of credibility at all, that it has somehow managed to come up with an idea that will help small business in Canada?

It is nothing more than mother Ottawa trying to devise another interventionist government directed policy. It is a government that, to solve the problems of small business, sets up a program, sets up a ministry, sets up a bureaucracy and, by the way, lends money.

Why does the government not try just leaving small business alone? Why does it not try reducing punitive tax levels? Why does it not trying reducing red tape? Why does it not try leaving people alone? If the government would listen and would be willing to consider those ideas, small business in Canada would be a lot better off than it is right now.

Mr. Speaker, I do not know how much time I have left.

[The Deputy Speaker]

The hon. member has lots of time left, but unfortunately it is 1.30 p.m. and we have to proceed with Private Members' Business.

When the House resumes consideration of this bill, the hon. member will have 11 minutes remaining in his allotted time. I am sure we will all look forward to the resumption of his remarks.

Royal Canadian Mint

[Ken Epp, Reform, Elk Island, AB]

moved:

That an order of the House do issue for copies of all documents relating to the Royal Canadian Mint building a coin plating plant in Manitoba.

Mr. Speaker, I am absolutely delighted that finally we have a venue for an open and parliamentary debate on this issue.

Those who have been following this story know that it has been almost a year now since this story hit the fan, so to speak. It is a situation where approximately 100 jobs in my riding are being jeopardized by a decision of the government to build a coin plating plant in Winnipeg, the back door of the Minister of Foreign Affairs.

I might also give another quick little political plug here because I think it is very appropriate. I have a strong suspicion that if the plant I am talking about, the private enterprise plant Westaim Corporation, were in a Liberal held riding we would not be discussing this right now. I do not think the issue would have gone this far. That is just a suspicion I have, based on my observations of the way this place works and what I have seen happen around here in the last few years.

Let us get down to the actual issues. The motion is for the production of papers. The motion specifically says that we want to have the papers released that will finally show the truth of the decision making process on this issue.

I have in my speech, which will be taking place in the next few minutes, a number of questions which I would like to have answered. I am just conjecturing here but I believe there is probably already a canned speech ready for the parliamentary secretary. My hopes of getting these questions answered is somewhere between zero and nothing. I want to pose them anyway and then I am going to urge members of this House in the interests of truthfulness, disclosure, openness of government to support the motion since if there is nothing to hide then the government should be eager to have everything out in the open so that the truth can be known.

If they vote against it, we can only conclude that the motivation must be that they want to deal in innuendo and in half truths or non-truths in order to justify their actions.

That is a big challenge for these Liberal members. I think they need to very seriously consider what the implication of their vote is. If they say no, it is really equivalent to the shredding of papers in the Somalia affair. It is a possibility that we can have the non-disclosure of all this information. That is really all we are after. Let us have the facts.

The other thing which underlies this question is that government decisions, especially as pertaining to the expenditure of money and the operation of the business of government which includes crown corporations, the mint, should be made prudently and be based on true facts. The decisions should be done wisely.

With all due respect, humbly I submit that some of the facts of the case here have been quite systematically ignored. I want to see what those facts are.

Very briefly, the government proposed last year to build a coin plating plant in Winnipeg. The cost at that time was projected to be around $30 million. Since then there have been two other numbers that have been publicized, $31 million and $38 million. We do not know at this stage exactly what the final cost of the plant will be. However, we do know that it is a plant of about 56,000 square feet with a capacity for producing plated coin blanks of approximately one-third of the capacity of the Westaim plant in my riding which is at issue here.

The other issue is the question of savings. In a press release last October it was said this would also lead to savings. The first number touted was a saving of $9 million per year and the second figure given was $9.5 million per year for a total saving of between $18 million and $19 million in a two year timeframe.

This is not a saving at all since moving the job from one location in the country to another at the expense of one and giving it to another is not a real saving. Furthermore, the savings could have also been achieved simply by continuing at the original location.

I believe this decision was based on the incorrect answers to three questions. First, is there security of supply? The government said no. I and the people in my riding and the Westaim Corporation emphatically say there is security of supply.

Second, are there cost savings? As I indicated in my introduction, I will talk more about the real and perceived savings and how they can be achieved.

Third, should the government be in business competing with existing businesses and threatening them? This is a philosophical question. I am not sure we will get the answer from the papers but it is one which also demands an answer. Should government be in an industrial process business?

To the question of security of supply, Westaim Corporation has been a major supplier to the mint since 1961, albeit at that time under a different corporate name. It is the same plant, the same organization and it has evolved over time. Now it runs under the name of Westaim.

In 1961 the corporation began producing nickel strip for the 5 cent coin. We call them nickels because they are made of nickel which came from the Westaim plant in my riding. In 1968 it began supplying the blanks for the dime, the quarter and the 50 cent piece. We all know what high quality coins Canadians have, so there is no question about the security of the supply and the quality of the supply. The coin blanks are pressed into actual coins by the mint which is a proper function of that crown corporation.

Westaim Corporation has subsequently supplied all the blanks for the loonie. Everyone who has a loonie in their pocket is dragging around metal that was produced in my riding. I want everyone, especially Liberal members, every time they look at a loonie or spend one to think of the wonderful riding of Elk Island just out of Edmonton, Alberta because that is where it originated.

The nickel strip portion of the two dollar coin is made at Westaim in my riding, so we have a large contribution to the coinage of Canada. Westaim in its coin production has been a solid business for over 30 years. It is doing just fine. For anyone to imply that the security of supply is at risk is totally incorrect. This is an international company. It produces coin products for markets all around the world, including recent large contracts to China and Brazil. Besides supplying Canada's domestic market it is a large exporter, thereby helping greatly in Canada's economy. It also does high tech research and production.

What really intrigues me, since my uncle died in a fire accident, is that Westaim produces a very high tech biomedical, totally sterile dressing for burn victims. It markets this all over Canada and the United States. It is an expensive but very effective product. It is very good at it. It has a research department in advance display technologies.

Recently it announced a breakthrough. We all have these little desktop computers. It could be that very soon computer manufacturers will be buying these thin screened, multicolour displays from Westaim Corporation in Fort Saskatchewan. It has excellent surface engineered products.

It recently announced a breakthrough regarding some fine powder materials which are used in the production of these high tech rechargeable batteries that all of us have in all our electronic equipment.

Does that sound like a business that is not able to give a secure supply? I guess not, so my contention is the decision was made based on less than perfect facts.

With respect to the security of supply and an answer to some of the things the minister said, even in this House as a response to questions that I raised and also that members of the other parties raised, Westaim has offered to the mint, if it is really concerned about it, to actually sign a contract, to dedicate the production from one line to the mint.

In other words, it is ready to say if at any time the mint wants to run the same kind of production it will be able to get out of its Winnipeg plant it is available right here and right now. That is because there is a worldwide oversupply in this market.

It just boggles the mind when one wonders why the government is trying to get into a business in which there is a present oversupply and in which there is not a foreseeable future of increase since we are moving more and more to electronics, credit cards and soon we will probably have cash cards. Coins are not an ongoing growing industry. They are level at best, with peaks admittedly.

When the Europeans bring in the new Eurocoin, zippo, there is a big demand for large coins. Canadians decided to have a $2 coin. Suddenly there was a demand because from zero the whole country had to be supplied with all the coins needed in that denomination.

Now that the loonie is in production and has been for over 10 years, the $2 coin now for a few years, the amount of production required to replace the coins that are lost or hoarded is not anywhere near what it is when a new coin is introduced. It is not a matter of the government getting into a business for which there is a huge ongoing and increasing demand. It is one where really what it is doing is upsetting the market and intruding into a business that is currently totally adequately covered by Westaim Corporation in my riding.

I say parenthetically with respect to the offer of the one of the three lines in the Westaim plant, the minister made a false statement in the House on March 24 this year when he said that the president of Westaim refused this offer. That is wrong. The president of Westaim made the offer. Again, I think we need to deal with actual facts when making these decisions.

Let me get to my second question, cost savings. They claim there will be a saving of around $9 million to $9.5 million per year. The fact is that only a small portion of that saving can be attributed to the fact that they will be producing their coin blanks in-house instead of purchasing them from Westaim. The largest component of that saving is due to the fact that they are changing from a nickel base to a steel base for their coin blanks.

Just the change in material and the cost of the process would produce this change and if they were to simply enter into a long term arrangement with Westaim, that saving could be achieved, just as with their new plant in Winnipeg they are proposing. There is only one difference, that the saving could be achieved almost immediately instead of waiting for two years until this plant is in full operation. At least we hope it will be in full operation.

It will be a brand new untested plant and, as with all new plants, it will have start-up pains. Therefore instead of saving $9 million to $9.5 million per year starting in the year 2000 or later, we could save that right away. There is another $18 million.

The minister in the House said this is not going to cost the taxpayer anything. That is not true. The mint is a crown corporation. If it makes money that money accrues to Canadians. If it looses money that is money that is lost to Canadians. If it reduces its total net profit that comes essentially and eventually from the pockets of the taxpayers of this country.

I submit that if we take the price of $38 million for the plant and $9 million a year for two years in savings, we are looking at a total of $56 million that the mint is expending when if it simply stayed with the present set-up there would be $56 million less to spend which is money saved and equivalent to money in the taxpayers' pockets. When the minister says this is not going to cost the taxpayer anything, it is not so.

This comes to my next topic which I am not up to yet but these things overlap a bit. They claim to be making money but the fact is they will not be making very much money if they are not going to compete internationally. The minister said we were not going to compete internationally. If they are not going to I do not know where they will get the money to provide all the domestic needs in this country. Unless we get into the business of issuing a new coin and a new denomination every other year there will not be that big domestic demand. Either they are going to contradict what the minister said and compete internationally or they are not going to make any money.

Furthermore, if the claim they will be making money it is inevitable that they will be making it at the expense of an existing corporation, a taxpaying corporation in this country. Any business they get which will allow them to make money will be money taken directly away from Westaim Corporation in my riding. I think that is wrong.

I have already spoken about the premise of increasing demand. Frankly, the documentation available shows that not to be so. That is not correct information. There is of course a present peak in demand for coin production because of the Eurocoin but when that passes it is expected to level off and, as I said before, the excess of supply in both plated and non-plated coin products is somewhere in the neighbourhood of between 30% and 50% which is the excess of supply right now. It is absolutely foolish to be getting into this business.

Let me address my third question. Should the government be in the business of competing with business? My answer is a hearty no. It may not do this. It is an affront to our concept of justice and decency for the government to use its clout to compete directly in a business with private enterprise. Would we allow if it were to say let's start a factory to build cars and compete with the car manufacturing places? What about a used car lot? Would anyone buy a used car from our Prime Minister? I do not know.

What kind of businesses is the government going to get into? It may not compete directly. Furthermore, a recent bill in this House proposes to give the mint not only additional borrowing powers but additional borrowing powers from the consolidated fund. It is terribly unfair to have business A run by the government being able to use taxpayer money directly borrowing from the consolidated fund in order to compete with a private enterprise firm that is doing very well, thank you, as long as the government butts out and keeps out of this business. It has no business intruding there.

There is also a very great contradiction. It is the policy of this government to not compete with business. We have noticed how it has been privatizing. NavCan is an example. All the airports in the country are being privatized. Even some components of the military operations are now being put out to contract for private involvement. We also have the government printing operations.

There are many examples of it. It is getting out of the business of being in business in order to let private enterprise do its thing. We already have private enterprise being very successful. The government is incorrectly intruding in it, in violation of every decent principle that we could possible think of.

I strongly urge the government to vote in favour of this motion of the production of papers. When the facts are disclosed and truly known, and when we look at the contradictions in the debate so far, because there are some real sincere questions, hopefully we can rationalize this and even at this late date we can stop the government from this inappropriate intrusion into private business.

[Carolyn Parrish, Liberal, Parliamentary Secretary to Minister of Public Works and Government Services]

Mr. Speaker, I consider it poetic justice that Mr. Epp and I face off once again. We are no longer on private members' together selecting—

[The Deputy Speaker]

I know the parliamentary secretary would want to refer to the hon. member for Elk Island. I know she will want to comply with the rules in that regard.

[Carolyn Parrish, Liberal, Mississauga Centre, ON]

Mr. Speaker, my apologies.

I found the machinations the member for Elk Island went through interesting. He knew we were going to vote for his motion. I guess it gave him an opportunity to rent his clothing and rail against the winds for his constituents.

Motion P-16 requests that the Royal Canadian Mint produce documents concerning the construction of a new coin plating facility at the Royal Canadian Mint location in Winnipeg.

As the hon. member for Elk Island already knows, the Standing Committee on Natural Resources and Government Operations asked for these documents last June. The Royal Canadian Mint complied and sent the documents to the clerk of the committee. The committee will soon reconvene and the documents requested will be available for review. We are on division going to vote for this today. We are going through the exercise, but it must be completed.

I ask the House why we are using our valuable time and resources to debate a motion when its goal has already been achieved, except for the opportunity for Elk Island to get up once again and state his position.

Let me address the benefits of the new plating facility to all Canadians. The initial guarantee is that it is a secure cost effective supply of plated coinage. Plated coinage is the technology of the future. Plated coins are less costly to produce and are just as durable and attractive as the coinage used in the past.

By building this facility, the government will achieve quite a large saving. The mint will pass on savings to the government of approximately $10 million per year. This is extremely important to a government that is counting each one of its pennies very carefully.

The mint is the only corporation mandated for the production, sale and distribution of coins in Canada. It supplies Canadians with coins that are of high quality, are cost effective and are delivered on time. The mint must also generate a profit for its shareholder, the Government of Canada, by successfully marketing its minting services in coinage products worldwide.

The Royal Canadian Mint is not an appendage of the government as was the implication of the member opposite. It competes in a global environment. Business fundamentals such a market analysis, sales, competitive positioning, leading edge technology and investment in human resource development are daily essentials, as they are with any corporation.

The mint does not receive government subsidies. All its operating costs are paid through its revenues or by securing financing from private financial institutions. The member opposite knows this. Making coins for other nations keeps the mint presses running at high speed and around the clock, which is the most cost effective production technique available. In 1997 the mint produced over one billion coins for 16 foreign countries. This year it will have upped that number to two billion.

It is expected that the mint's new plating technology will continue to be in high demand around the world. The mint estimates the new facility will enable it to generate an additional $300 million in annual profits. Construction of the plating facility began in April. Construction is on schedule and on budget.

It is also important to note that the entire project has been financed by the mint through commercial financial institutions. One hundred to one hundred and thirty construction jobs were created over the three years of the construction period. On completion it will add 25 to 30 new permanent full time staff to its Winnipeg workforce.

The hon. member for Elk Island is understandably concerned about the well-being of a company in his riding, Westaim Corporation. Let me assure the House that the Royal Canadian Mint does not compete with Westaim. Westaim has been a supplier of the Royal Canadian Mint for many years and will continue to be one of several suppliers that provide the Royal Canadian Mint with the materials it needs. Westaim is the sole supplier for the 1$ coin blank because it holds the patent for this project. Suppliers from Canada, the United States and Europe provide the mint with metal strip and coin blanks for the other coins.

Throughout the world there is a growing demand for lower cost circulation coinage. There will be many opportunities for both Westaim and the mint to work together to compete against foreign mints which are also expanding to meet the growing demand for lower cost coinage, in particular plated coinage.

As early as 1991 Westaim informed the mint that it wanted to get out of the coin business and we had to make other plans. Westaim wanted out of the business and it is not considered to be a secure supplier for the mint.

The mint's coins are preferred by vendors who require two years to retool their machines, so let us look at what the cost would be to private enterprise. The mint's process is environmentally safe and produces high integrity coins. The mint needs the plating facility to fulfil its mandate and to meet the expectations of its customers at home and around the world. The mint is a totally independent crown corporation charged with the task of making money, both coins and profit. The plating facility is an essential tool that will enable the mint to fulfil its mandate to produce secure top quality but cost effective coins for Canada and profits for Canada through marketing its coinage expertise around the world.

The plating facility is essential for the mint to succeed in the international coinage business in which it is an active and extremely successful player. It is a dynamic and innovative organization in a highly competitive international market. For now and in the future it will continue striving to be the world leader in minting.

I remind the House that the Royal Canadian Mint has already produced the documents requested by Motion P-16 in response to a similar request made by the Standing Committee on Natural Resources and Government Operations last June. These documents will be available for review as soon as the committee reconvenes. Any member of the House may obtain a copy of those documents from the clerk of the committee.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I am pleased to rise today in the House in support of the motion moved by my colleague, the member for Elk Island.

The government should comply with such a request. It is a request for clarity. Parliamentarians should be clearer in the requests they routinely make of the government. When constituents tell an MP there is something odd, it is important that people can finally say that parliamentarians and MPs are really there to stand up for their interests.

Earlier, the Parliamentary Secretary to the Minister of Public Works gave us the history of the Royal Mint, and of this new project. This is why I am supporting the motion. She did well to give the background, but I support a motion for greater clarity. That is something I find very important.

We live in a very fast-paced world, and a project of this sort involves more than $5 million. As the Reform Party member says, perhaps it is bigger than they think. We are talking about a project involving over $30 million.

I strongly urge the House to support the Reform Party member's proposal and motion, and tell him that he has the support of Bloc Quebecois members.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, I thank my colleague, the hon. member for Tobique—Mactaquac, for giving me a chance to speak on this motion today.

I want to thank the member for Elk Island for pursuing this very important matter in the House.

From the beginning our party has opposed the construction of the Royal Canadian Mint's new plant which will manufacture coin blanks. We believe the mint has not been forthcoming with Canadians on this new facility.

The motion the member has proposed today would give taxpayers and members of parliament the opportunity to examine in detail the decision making process at the mint which has led government to support the decision which will have very terrible consequences for Westaim, for its employees and for taxpayers as well.

Let me review a few of the facts and arguments that our party has talked about in this particular case.

Through Bill C-41 the Liberal government has moved to increase the borrowing authority of the Royal Canadian Mint, allowing it to build a coin plating plant, another patronage plum, incidentally, in the Minister of Foreign Affairs' backyard.

That facility would put the mint into direct competition with Westaim of Fort Saskatchewan, Alberta. Because the world market for coin blanks is going down, either Westaim will be forced out of the business and 110 employees will lose their jobs or the Royal Canadian Mint's new venture will go down in flames and taxpayers will be on the hook for a minimum of $30 million.

Why should the deal be stopped? Westaim is a legitimate Canadian business which has supplied the Royal Canadian Mint with coin blanks for 35 years. It employs 110 people in Fort Saskatchewan and the entry of the Royal Canadian Mint into the industry would jeopardize the Westaim division and its 110 employees.

Industry experts agree that the market for coin blanks will experience a slight blip in demand as the newer European currency starts up and then will continue on a steady decline as electronic transactions become more popular and the need for coinage and paper money decreases.

The new coin plating plant will not only replace Westaim as the source of supply of coin blanks, but will compete against Westaim in the world market.

The costs of getting the mint into the coin blank business are enormous. The $30 million announced is only to build the plant. Start-up costs are substantial for a new competitor in a mature to declining market.

The mint will be required to compete against established, experienced, well-entrenched competitors who have had years to build their expertise and economies of scale.

Not only will the Royal Canadian Mint have to contend with a high cost structure, but like any brand new business it is going to make many mistakes as well.

There is currently a 30% to 40% oversupply in the world coin blank market. The entry of the mint into that market will likely either drive Westaim and its 110 employees out of business or it will spectacularly go down in flames and take millions of taxpayer dollars with it.

Even though there is no direct subsidy being proposed in that venture, because all money spent by a crown corporation reduces dividends paid to the government, ultimately the taxpayer is the one who pays.

Parliament has not approved Bill C-41 that would give the Royal Canadian Mint the authority to borrow the money for the new plant. Westaim still has an unresolved lawsuit against the mint involving the softening process necessary to make these coin blanks. The mint cannot legally proceed with that venture unless it settles both of these outstanding matters, yet construction of the plant started in March.

Getting government right is a Liberal government policy that has been around since 1993. Among other things it stipulates that where the private sector can provide a service equal or superior to a government department or agency, then government should not be in that business. This venture violates that Liberal government policy.

The only reason this is being allowed to happen is because it is a patronage plum for the foreign affairs minister's backyard. The Westaim plant is in an opposition-held riding. It is as simple as that. If Westaim were in a Liberal riding this venture would never have made it past the cabinet table.

We do not have to look any further than the fiasco that the Liberal government created in the oil industry in the 1970s to know that it does not make sense for the government to take over part of an existing industry to compete with private companies.

Back then the Liberals nationalized Petrofina and created the national energy program. That hurt the industry. It cost jobs and taxpayers ended up paying out millions and millions of dollars. All that money was paid out quite unnecessarily. The same problem will happen with the Royal Canadian Mint.

In June of this year my colleague, the member for Tobique—Mactaquac, had the pleasure to meet with the master of the mint, Mrs. Danielle Wethrup, and her vice-president of finance and administration. The meeting was an opportunity for our party to exchange views and information with the management of the Royal Canadian Mint.

They made some very convincing arguments concerning security of supply. But when we asked them to show us their business plan, they refused. When we asked them to show us their market projections which they claimed indicated a healthy growing demand, they did not do that. When we asked them to show us any piece of evidence that could reassure us that the $30 million of taxpayer money that was on the line would not be a risky venture, they said “You are just going to have to trust us because we cannot do that as well”.

We cannot trust them in that regard. As I have indicated, every bit of information we have seen on this matter reinforces our view that this scheme of the mint's will put Westaim and its employees out of business. It will put 110 people on the unemployment rolls and possibly on the provincial government's welfare rolls. It is going to cost millions of dollars.

I am happy at least that government members are going to vote for the motion to give access of information to the opposition. The motion will give our party access to the information that we need to determine the advisability of this proposed venture, and specifically if we should support Bill C-41.

I call on the mint to make public all relevant papers on the coin plating facility. I am very pleased indeed that all members are going to support that part of the process.