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.