Mr. Speaker, from the very start of the debate, I have been hearing our Reform colleagues say that if taxes and wages were lower, small businesses would be doing just fine, and that in any case government guaranteed loans were not needed when businesses were sound.
With all due respect, unless the situation out west is very different from that in Quebec, what they are saying does not fit in with the needs of small businesses.
In a number of sectors, start-up or expanding companies represent a risk. Members who were with me when bankers appeared before us know that, every time we asked them about start-up companies, they said that there was indeed a risk, that a new venture is always a risk. An expanding business needs room to grow and this also represents a risk.
I believe that the thrust of the bill is to ensure that, when a small business which is considered a risk but has a reasonable chance of being successful cannot get a loan, the government steps in to guarantee the loan. This is the intent of the bill.
I might have been the first one to say that small businesses should pay lower EI premiums, but I will never say that lowering them means that start-up or expanding companies no longer need the Small Business Loans Act.
The same thing goes for lower wages. We are not looking to create an economy based on lower wages. What we want is an economy where small businesses about to start up choose to operate in sectors where work is highly paid and people can earn a decent living. You can be sure that developed countries and nations enjoying stronger growth have not relied on low wages.
Although I feel I need to defend this bill against the attacks of my Reform colleague, I also want to tell my Liberal colleagues that they could have done a much better job of it. In fact, this bill is supposed to help small businesses, but what we have seen is some kind of negotiations with the banks and the big franchisors.
It is important to understand that we need the banks to lend the money and to compel them to meet a number of conditions, that the loan guarantee cannot be seen as their chance to get some bad loans paid back, which is why the spirit of the legislation has to be clearly stated. Unfortunately, nowhere can it be found in this bill.
Nowhere in the bill before us is the spirit of the legislation mentioned. The regulations previously included in the legislation have been withdrawn. The committee agreed to ensure that the regulations would not be changed without prior consultation of the parties and the committee. We hope things will stay that way. The regulations really reflect the spirit of the legislation.
Here are some of the points we, in the Bloc Quebecois, want to make about these amendments. The first point that we will continue to make is that the purpose of the act must be stated in the act. We will also make the point that, in assessing the act, we must not only ask ourselves if the total cost of the loans will be paid by the borrowers.
There are fundamental questions that must be asked. What is the effect on the economy? What is the effect on employment as well as on the survival and the growth of small and medium size businesses?
When a loan application is denied, when a prospective business is denied access to a loan and cannot start up as a result, how much does it cost to our economy? How much does it cost in terms of money that is not being injected into our economy? How much does it cost in terms of social spending for the person who is unemployed? We must take into account the costs of a business not being able to get off the ground as well as the risk of problems for small and medium size businesses.
We will make that point. We will also make the point that pilot projects must include working capital.
Everybody knows that the financing of working capital is almost an essential requirement for a business that wants to start up or to grow. We agree that it is not appropriate to use this general program to finance working capital. However, we think there should be at least a pilot project where working capital would be guaranteed, but the business receiving the loan would also receive management counselling.
A number of my colleagues and I sent out simple questionnaires to our small and medium-sized businesses. One of the things we asked was: “In your opinion, if credit were easier to get, would the growth of your business be better, and would the risk of bankruptcy be lower?” Many of the respondents said “Yes”. The reason we asked this is that, in our experience, small and medium-sized businesses often do not manage to hang on for more than a year and a half, two years, two years and a half, because of administrative problems, yes, but also because they often have financing problems.
The Canadian Federation of Independent Business had good reason to say that this is a very significant problem for more than 29% of businesses. This is why we are going to defend these points which will help advance the financing of small and medium-sized businesses.
It is worthwhile pointing out at this time that loans for equipment account for 73.4% of the total, loans for land, 12.8%, and loans for commercial space, 12.8%. It seems to me that this should help our colleagues beside us understand the importance of this bill, because equipment is what enables the company with some commercial space, whether or not it owns the land, to get started up.
Sometimes the business also needs to finance its working capital. Businesses which have to purchase products for use in their production, to purchase raw materials to be manufactured, and then sell their products perhaps without any return for three months, may fail, despite all their spanking new equipment, their employees, because they lack the working capital.
We ask that all this be looked at in order to improve the bill, and not to make it unworkable, as my colleagues next to us would like to do.