Debates of Nov. 17th, 1998

Canada Small Business Financing Act

[An hon. member]

Say it with a straight face.

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

I can say it with a straight face. It is the same with bank mergers. I hear today that the Reform Party is now supporting the bank mergers. Can it honestly believe that a further concentration of power for banks will be beneficial to small business?

The Reform Party is now supporting the bank mergers.

The reason we had to get into the Small Business Loans Act in this country was because the banks were not taking on the challenge of helping young people with ideas to create new businesses. That is the purpose of the Small Business Loans Act.

It is a risk loan. There is no doubt about it. But look at the loan loss in the Small Business Loans Act file for the Government of Canada. In relation to the number of jobs created and the benefits, it is minimal. Yet today we hear Reform members saying that they will stand in their communities and say to all the small businessmen and women that they do not support the Small Business Loans Act. I cannot believe it, but that is the position that party has taken.

When the Reform Party came to the House I will never forget the opening remarks of the leader. He said “We are going to bring a new sense of decorum to the House of Commons. If we see legislation that we feel is constructive, we are not going to oppose for the sake of opposing. We will get up, we will support it and we will speak about that legislation in a positive way”.

This is a piece of no-brainer legislation. It is legislation that is very much motherhood, and the Reform Party, for the sake of political expediency, is slowing down the process of putting Bill C-53 through the House of Commons. This bill should have been through the House of Commons, all three readings, a month ago, but instead we have the Reform Party slowing it down. The Reform Party is putting a drag on small business in this country.

The Liberal Party will continue to be the warriors for small business in this country.

[Roy H. Bailey, Reform, Souris—Moose Mountain, SK]

Tax, tax, tax.

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

Mr. Speaker, there is a member of the Reform Party saying “Tax, tax, tax”.

Let me say to the Reform Party that we are three weeks away from the Christmas adjournment. We are about five weeks away from the budget of Canada being locked in, which will be presented during the first part of next February.

I am a passionate believer in comprehensive tax reform. I was hoping that the Reform Party would focus and get some constructive debate going in the House on tax reform. Where have those members been? They stand up the odd time and say “tax reform”, but when was the last time they had an opposition day in the House on tax reform? When was the last time in question period they put 8 or 10 questions together on tax reform? They hit it now and again, sporadically.

Those people over there are not interested in tax reform in a substantive way. They throw it out now and again as though it were some kind of policy gimmick.

To talk about tax reform when debating an amendment to the Small Business Loans Act is a diversion and we will not be suckered by it. The legislation will go forward.

Do not mix tax reform with the Small Business Loans Act. Any day that the Reform Party of Canada wants to have an opposition day, or any kind of debate on comprehensive tax reform, I will stand in the House and support that type of debate.

To mix tax reform with the Small Business Loans Act amendment, when this is the backbone of the economy of this country, is just wrong. I stand here proudly and happily behind my parliamentary secretary in amending this act.

[Jim Gouk, Reform, West Kootenay—Okanagan, BC]

Mr. Speaker, I am very pleased to stand this morning to debate report stage of Bill C-53. I certainly had some things to say about this bill, but I now have much more since hearing the last couple of speakers.

I would like to start by addressing a comment made by the hon. member for Broadview—Greenwood that Reform supports bank mergers. The reason we have trouble having meaningful debate in this House is because hon. members across the way and sometimes down the way like to take the smallest grain of truth and twist it, distort it and re-organize it until it says something completely different than what it was clearly intended to say.

I will give them the benefit of the doubt. Perhaps instead of deliberately misrepresenting it they are just sort of buried under by the bull that comes from their own side and consequently they make an honest mistake.

The hon. member put out a blanket statement that Reform supports bank mergers. What he forgets is that there was a long, long caveat involved. We said that if the banks opened themselves to more competition and showed that there would be benefits for small business and other people, then we were prepared to look at it.

How he got from that position to the blanket statement that we support bank mergers defies imagination.

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

Mr. Speaker, I rise on a point of order. I want to put it on the record that what I said I believed to be the truth. I apologize to the Reform Party. I did not realize that its support of the mergers had a whole list of qualifications. I am sorry I did not add that list of “maybe”, “could be”, “might be able to support”—

[The Deputy Speaker]

I am sure the hon. member's comments are appreciated, but I do not believe it is a point of order.

[Jim Gouk, Reform, West Kootenay—Okanagan, BC]

Mr. Speaker, the member's comments are indeed appreciated. It is very gratifying to see that no matter which side of the House we are on we recognize the attributes of others.

Concerning the opening statement made by the Leader of the Opposition when we first came to Ottawa, I too said “I am not here to oppose for the sake of opposition. If they come with good legislation I will support it. If it is not as good as it could be I will try to offer constructive alternatives”. That is what we are here to do.

I would also like to address the comments made by the hon. member for Kamloops, Thompson and Highland Valleys, comments which must seem at first to anyone viewing this debate as a paradox. Here we have on the one side members of the Reform Party, people who are clearly on the side, amongst others, of small business, the engines of the economy of our great country, and on the other side we have a representative of the socialist workers' paradise party speaking out on behalf of business.

We would be hard-pressed to understand where he was coming from if we did not realize that he holds the only socialist seat in the interior of British Columbia. Every other seat in the interior of British Columbia, a vast province, is held by the Reform Party. He is the last holdout so, naturally, he has to align himself with those who would support Reform in his own riding because his strongest and best competition is going to come from the Reform Party.

I certainly want to address the comments made by the hon. member for Kamloops, Thompson and Highland Valleys, as well as the comments made by the hon. member for Broadview—Greenwood as to why we think, although we strongly support small business in particular, there is a problem with this bill and the whole approach that was taken to it.

Do we support small businesses having better access to money? Of course we do. We just question whether they should have access to their own money that is being taxed away from them in a variety of different ways or whether they should have to go to the bank to borrow money to pay the taxes that the Liberal government has imposed upon them.

I would like to give one specific example. I have done it before in a different context, but I would like to do it today for the edification of these members and others who might be listening to this debate.

Before I was elected to parliament I was a small business operator. When the CPP tax adjustment, the most incredible tax grab this country has ever seen, was brought in, I tried to make a comparison. How would that have impacted on me had I still been in business? I was, I think, a fairly typical small business operator.

I operated a small residential construction company. I had some people who worked for me full time. I had some people who worked for me part time, on an as need basis, as the various components of the house construction came due. I sat down and analyzed it and I decided that, realistically, I had approximately 10 full time equivalents between my full time people and the number of hours that were put in by the various part time people. Ten full time jobs. The Canadian pension plan tax increase works out to about $600 a year per worker. As the employer I have to pay my side of that, which is $600 for me. That is $6,000.

I used to build about 10 houses a year. My profit for house building was about $6,000 a house. If I built 10 houses, my profit was $60,000. Of course, I had expenses. This tax adjustment increased my costs by $6,000. It represented my profit on one of those houses. Actually, it was not even 10 houses. I built eight houses a year. It has been so long since I have told this story about the CPP tax adjustment that my business has grown, although I have not been there. It was eight houses a year. One of my eight houses I would have to build for the Liberal government. It was profit out of my pocket.

Then came the workers' side. I know my workers very well and I know that under these circumstances, had they still been working for me, they would have come to me and said “Listen, we know that the economy is not right, that you cannot give us a big raise, that you are not raising your prices to customers because, if you do, we simply will not be selling houses and we will not be working. But we cannot afford another cut in pay. So we need enough of a pay raise to cover the $600 increase in this payroll tax”.

If I did that, which I certainly would try to do for those workers, it would mean $600 per worker, multiplied by 10, which would equal $6,000. That is my second house. That is 25% of my gross profit just to pay the increase in one payroll tax. It is not even to pay the whole payroll tax, the entire CPP, it is just to pay the increase. It would cost me 25% of my gross income.

Why do we oppose this bill? Because this bill, instead of addressing those very serious problems, says to small business “Yes, we have overtaxed you on your employment insurance premiums. We are hiking Canada pension plan premiums. We are doing all kinds of other things, but we are going to save the day. We are going to come up with legislation that will make it easier for you to borrow money to pay us”. That is why we oppose this provision of the bill and in fact the whole approach the government has taken to the bill.

Should it be easier for small businesses to get access to funds they need? Yes, it should be. Any bill that does that in a realistic manner should be seriously looked at and considered. But we have to approach it with the concept of why they are borrowing the money in the first place.

If I have lost, as one small businessman, 25% of my gross income because of the increase in a single payroll tax hike, then we have a different problem. The solution to that problem is not to make it easier for me to borrow money to pay my taxes.

I hope the hon. member will consider it from that point of view. It is said to him and to all other people in the House and beyond in the most sincere manner. We have a problem in this country. Small business has a problem. Helping them to get further into debt to deal with this problem is not the way to solve it.

I hope that he will work with us in a very non-partisan way to deal seriously with the real problems that small business has and to find a realistic way out of it.

As he knows by the debt crisis the country faced and is starting to find ways out of, the way to solve our problem as a nation and as a government in whole is not to foist it on someone else, it is so that we can all do better together.

I know the hon. member is grateful for the information he has just received. I know the member has other points of view that will counter. We can go off on tangents all over the place and say this does not agree with that. We need a starting point. Today we are debating government's helping access for small business to borrow money. That is the point of view we have to start from. That is the point of view we have to stay on today. I hope all Liberals will reconsider their position in light of the facts that have just come out.

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

Mr. Speaker, I am pleased to speak to this bill, because its topic is, of course, of interest, and besides the kind of business addressed by this bill is worthy of attention.

What do small businesses mean to us in Quebec and in Canada? These are our corner stores, our hairdressers, our professionals, our dry-cleaners, our restaurant owners, our small manufacturing businesses with three, four or five employees, very small businesses. I believe it is our duty as MPs to take advantage of this opportunity to congratulate them for their labours.

Because they are so much a presence in our daily lives, we are not always really aware of them. When buying a paper, taking shirts or suits in to be cleaned, going to our dentist, we tend not to realize these men and women work very long hours and have a multitude of problems to deal with.

They are always asking themselves: How will I make the money last 'til the end of the month? How can I gain a bigger market share? Can I afford to buy out my competitor? Do I need to think about a strategy agreement with the competition? What am I going to do? Sales are not picking up enough, and the bank is pressuring me.

We all know how the banks operate these days. The six major banks are making billions in profits. As we say in Côte-de-Beaupré, when it's time to pull the plug, so long! You are reminded of your payments, and then you go belly up taking with you one, two, three or five employees with their families, parents, who do not qualify under existing employment insurance regulations. It is a one way ticket to poverty. That is the reality of small businesses.

I think we should take this opportunity to congratulate and thank them. There are some in my riding. I know because I go there regularly. Last week, we were on parliamentary recess, but we were not on holiday. Even though Parliament was not sitting, I am sure that the 301 members in this House did not treat themselves to a week of holidays doing nothing. We worked in our ridings, and I respect parliamentarians for this. I am sure all 301 MPs worked hard last week.

When we are not sitting here, we are working in our riding. Since we in the Bloc Quebecois are sure the Parti Quebecois will be returned in the November 30 election in Quebec, we took the opportunity to meet people and talk with our constituents.

I would like to pay tribute to these business people, to the SMBs in Beauport, Côte-de-Beaupré and Île d'Orléans, in the tourism sector and in all other sectors.

In order to determine the Bloc Quebecois' position on this bill—I think all observers recognize that we are not interested in conventional politics—my colleague, the member for Mercier and Bloc critic for industry, developed and sold to caucus a survey to be sent to small businesses to get their opinions on certain matters.

The 45 Bloc members in caucus could simply have said “We think it should be put this way”. We wanted to consult and hear from those concerned about the topic, those on the front line. We developed a survey, and in my riding of Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans we are doing the final compilations. I have received some 70 or 75 responses. I want to thank all of those who took the time to fill out the questionnaire.

It was most useful. As my colleague, the hon. member for Mercier, mentioned earlier, I think we have received more than 1,000 questionnaires, perhaps as many as 1,200 by now, and they keep coming in.

I hinted at the problems faced by business people; they do not always have the time, when they receive a letter from their MP, to immediately sit down and fill in a questionnaire. They set it aside until they have a minute available, often at the end of a long day. The owner of a convenience store that closes at 11 p.m. may get around to this kind of thing around midnight or 1 a.m. They must be commended.

Responses keep coming in. We have received approximately 1,200 so far.

Based on these questionnaires, we have been able to develop the Bloc Quebecois' position on Bill C-53. There were a number of expectations regarding this bill. One might have expected it to contain provisions to improve access to credit for small and medium size businesses in Quebec and Canada. One might also have expected a program making credit available to those who might not obtain financing otherwise. We also expected this legislation to provide business people with tools to finance their working capital in order to ensure the growth and development of their businesses.

There is nothing in this bill to improve the situation for small and medium size businesses. Regardless, given its purpose, our party will vote in favour of Bill C-53, as I think my colleague from Mercier indicated. However, we urge the government to very seriously consider the amendments put forward by the Bloc Quebecois to ensure that the legislation truly meets the needs of small business.

We do not want the good news for these businesses to be only that the small business loans program is maintained, but rather that it is maintained and improved. The purpose of our amendments is to correct the deficiencies we have detected.

There will be an opportunity for debate, at committee stage and again at third reading. We urge the government to seriously consider the amendments introduced in good faith by the hon. member for Mercier on behalf of the Bloc Quebecois.

Let me emphasize a few, starting with the first amendment, dealing with section 2 of the act, to ensure the purpose of the act is clearly stated. To some extent, insufficient financing is worse than none at all, since the business cannot grow as it should. This amendment therefore endeavours to clearly define this program to provide financing that would not otherwise be available to small and medium size businesses.

Our second amendment concerns clause 13 and is aimed at broadening the scope of pilot projects to include the financing of working capital in order to ensure the growth of small businesses.

The last two amendments we will be bringing forward concern clauses 18 and 19, and their objective is to go beyond the simple accounting vision of the small business loans program.

After hearing the witnesses who came before the Standing Committee on Industry, we realize that not only are the macroeconomic effects of the program not measured, but they are not even known. Therefore, we are proposing that employment be taken into account in measuring the usefulness of this program.

We need to do more than just tighten up the old SBLA. The Bloc Quebecois believes that the accounting review proposed in this bill cannot be made without assessing the need for economic development. These amendments are vital to economic development and to job creation.

Mr. Speaker, I know you represent an Alberta riding. Look in your riding to see what type of businesses have created jobs over the last five years. Of course we would all like to see major industrial developments creating 2,000, 3,000 or 5,000 jobs. Of course we would all like General Motors to open a plant in our own region and create 1,200 jobs. There is not one single member here who would be stupid enough to say “thanks, but no thanks”. We would all be happy about that.

But who has created jobs in Canada and in Quebec over the last five years? It is not large businesses. Just look at the numbers. I worked in the pulp and paper industry for 14 years. The number of workers in that industry has decreased considerably over the last five years because of modernization and automation.

Who creates jobs and economic development? Small and medium size businesses, and they need the encouragement of this government.

[Gurmant Grewal, Reform, Surrey Central, BC]

Mr. Speaker, I am happy to speak on Bill C-53. I oppose this bill, which I spoke to at second reading.

Government members have talked about bank mergers and the Reform Party opposing the bill for the sake of opposing. That is garbage. We are not opposing the bill for the sake of opposing. My party's leader was accused of something he did not do. That is normal practice for them. The media used to do that but have learned a lot and do not do it anymore. Canadians have learned about that and my colleagues from the other opposition parties are learning that. However, the Liberals are slow to learn. Some of the members will never learn, but let us forget about that and talk about the bill.

Motion No. 1 was put forward by the Bloc member for Mercier. The motion is similar to the motion proposed by the Bloc in committee during clause by clause consideration of the bill. The Liberal MPs in committee saw it as a friendly amendment but they voted against it anyway. We also voted against it, not because we are against increasing access to financing for small businesses but because we do not believe the way to do it is through taxpayer funded programs.

The bill is entitled an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses, but that is not what the bill is about. The Liberals have failed to change the bill to suit market needs. The official opposition would support the modernization of the Small Business Loans Act, the precursor of this bill, the Canada small business financing act.

We would like to support improvements in financing for small businesses because we recognize that small businesses are the backbone of our economy. They are the ones that are creating 96% of the jobs in this country. However, the Liberals are proposing something which is not good enough. I will give the reasons why the official opposition is not supporting this bill.

The objective of the bill is to increase the availability of loans to small businesses. We mean incremental loans. This bill does not provide significant additional loans to what is already being provided by the financial institutions.

In 1996 a study showed that 46% of the beneficiaries would obtain loans anyway even if the SBLA was not there.

This bill does not address the lack of working capital availability for small businesses. We are talking about equity of the businesses not debt financing. We need better tools for small businesses. The Canadian economy has evolved significantly since 1961 and essentially this legislation remains unchanged regarding types of assets eligible for financing.

The service sector, knowledge based sector and information sector form a much greater part of our economy today and have a high net employment growth. Their needs are not addressed in this bill.

Motion No. 1 does not address those needs. These questions require careful consideration in reviewing this legislation.

The bill does not provide for capital leasing which is important for small business. The bill does not provide adequate review of risk analysis. There is no provision for losses. The borrowers are not guaranteed. The financial institutions are guaranteed; even if they make bad decisions their decisions are guaranteed, but small businesses are not.

Another reason our party is not supporting the bill is because of the job creation record which is very bad. According to the auditor general the displacement effect is negative. The government is boasting that the Small Businesses Loans Act creates jobs but that is not true.

The bill does not put a mechanism in place to control the financial institutions not to charge an administrative fee, which they are not entitled to. They have been charging the administrative fee when the loans have been provided under the Small Businesses Loans Act.

Another important check should be that related borrowers do not abuse the system. The larger companies will form smaller companies or subsidiaries and will abuse the system because of the threshold limit. The auditor general has found 23 examples where related parties will collaborate and abuse the system. The act targets small businesses. It is meant to support small businesses, not large businesses.

Information on results provided to parliamentarians is not adequate. It is not sufficient. We cannot monitor the output. We cannot look at the results of the implementation of the act.

Industry Canada does not audit any accounts until a file becomes a claim file. When the file is a claim file it will be audited, but before that no one cares about it. No one looks into it.

Those are a number of the reasons that the official opposition will oppose this motion.

The Canadian Federation of Independent Business has been saying that if the current abuses of the Small Business Loans Act were curbed and if the parameters of the program were restricted, this program would require less of an allocation of funds while being effective in meeting the program's objectives.

The thresholds for financing are too high. The legislation defines small businesses as those firms that have up to $5 million in sales. What kind of small businesses are we talking about here? We are talking about medium size businesses. The Small Business Loans Act is targeted. Its objectives are to finance small businesses, not medium size businesses and not the large businesses.

Large businesses are getting enough subsidies from this government. Twenty-five million dollars was given interest free to Bombardier, a firm in Quebec. Does the government give interest free loans to small businesses? No. Canadians know that.

The job creation record and so many other things I mentioned will make sure that the official opposition is firm in its decision not to support this motion. I will not go into more detail. That is enough for members to learn something and to look into it.

Until suggested amendments are addressed, how can any member in this House support the bill? The department needs to clarify expectations and develop indicators of the program's performance in establishing, expanding, modernizing and improving small businesses.

The official opposition is for small businesses but in the true sense. We do not want to have legislation in place that has no teeth. We do not want legislation in place just to give the opportunity to pat the government on the back when it is not doing anything good for small businesses. Small businesses already pay high taxes. We know how employment insurance and CPP premiums are killing jobs and killing small businesses.

Those are the reasons the official opposition and I in particular will not support Motion No. 1.

[Hélène Alarie, Bloc, Louis-Hébert, QC]

Mr. Speaker, I am pleased to rise in this House to speak to Bill C-53 and to support Motion No. 1 moved by my colleague from Mercier:

That Bill C-53 be amended by adding after line 22 on page 2 the following new clause:

“2.1 The purpose of this Act is to increase the availability of financing of small businesses, which would not otherwise have access to financing.”

It is the small businesses we are concerned about, and it is unfortunate to note that, while the bill is necessary and we support it, it does not meet all our expectations. It contains no provision for further improving the situation of the SMBs as it stands.

First, Bill C-53 does not give SMBs greater access to credit. It does not make financing available to businesses that could not have it otherwise. We must understand that, in the context of this bill, SMBs unable to obtain financing from the banks at the moment should not look for anything more from this program.

No mention is made of financing SMB working capital and, as we well know, this is a major problem in most SMBs.

So the issues in this bill are quite apparent in the reading of it. It might be a good idea to remind ourselves of the importance of SMBs in our economy. In 1995, the most recent census year, SMBs with fewer than 100 employees accounted for 99% of the 935,000 businesses operating in Canada. That is huge. This represents our business employee payroll. They therefore employed 42% of private sector workers paying 38% of all salaries. There is nothing small about that.

The SMBs are also fragile. These same statistics indicate that 15% of them go out of business in the first year of operation. More than half the businesses that existed in 1989 were no longer on the market five years later, when the census was done.

Overall, the Bloc Quebecois is in favour of Bill C-53, but we are very disappointed that the revision of this bill does not pay more attention to small business loans.

We must also add, as far as issues and context are concerned, that the wages paid by small and medium-sized businesses are far less than the impact they have on employment. Average wages are therefore markedly lower than those of big business, and close to two-thirds of salaries in Quebec come from big businesses or major institutions.

The question may arise: “Do you have any proposals, do you have a position on this?” Yes, the Bloc wants to see legislation that serves small and medium-sized businesses. The amendments proposed by my colleague, the hon. member for Mercier, are intended precisely to enhance, to improve what our small businesses need.

We need provisions to improve access to credit for small and medium-sized businesses in Quebec and in Canada. In two different surveys, including one by the Canadian Federation of Independent Business, 29% of small and medium-sized business owners report that the availability of credit is one of their main preoccupations, if not the foremost. In other words, one-third of small business owners are continually struggling to find or renew credit.

In the second survey, carried out by Bloc Quebecois MPs among small and medium-sized businesses in their ridings, 89% of respondents report that it is very difficult, or difficult, to get credit at a reasonable rate. Only 10% of small and medium-sized businesses responded that they were able to find funding in their community with any ease.

Some small and medium-sized businesses—and we had proof of this when we met with the bankers and caisse populaire people—are very well known in their own little circle. The relationship of trust between the lending agent and the new or potential business is therefore a given. This is not the same when the small or medium-sized business is in a larger riding, or in an urban area.

But that is not the only thing. There has certainly been a change as far as the lenders are concerned. A few years ago, a woman wishing to get a loan to start up a small business had to face a most ridiculous situation. The first question she would be asked was: “Do you have a husband?” The second one was: “Is he gainfully employed?” The third question was: “Can he secure your loan?” I am not going back to ancient history. This is very recent.

However, some institutions were more open and lent more and more often to women. It was realized that, because women were more concerned and had a greater need for security, there were fewer bankruptcies among women than among men. We have gone beyond that first stage and women are now able to get the loans they need.

But today there are others who are experiencing the same stressful situation, namely young people. Our young technical school and university graduates are full of ideas. They are our wealth and they are prepared to start on a small scale. They no longer have this mentality of trying to get a job with large businesses or government organizations, since jobs are now very scarce in these sectors.

What do these young people full of ideas and initiative do when they graduate from university? They go to a banking institution. That institution will not ask them if they have a husband or a wife, but if they have a father or a mother. These young people go through the same process that we women went through, perhaps 10 years ago.

It is unfortunate that the process is so difficult. This is why we would like the bill to include a program giving access to credit to small and medium size businesses that would not otherwise have easy access to financing.

I referred to young people. I also want to talk about innovative businesses and ventures, several of which make it. If EDP businesses had been prevented from getting financing, we would not be near where we are now. At the beginning, it was considered risk capital, but then it was realized that, on the contrary, this was a solution for many. It is also risk capital in the case of innovative people such as weavers. Who will finance a weaver?

We want to give businesses the means to fund their working capital, so as to ensure their growth and development. Some businesses sell tires. It is a seasonal industry. They have a tough time maintaining their working capital. The same goes for the horticultural industry.

All these small and medium size businesses have fixed costs. They must modernize their operations, they have to deal with red tape, and they need accountants, legal advisors and other experts. These are all costs of doing business.

Finally, the little country girl in me would like to tell you that Quebec's Solidarité rurale has said that one job in a small rural riding is equivalent to 1,000 jobs in a city.

[Ted White, Reform, North Vancouver, BC]

Mr. Speaker, I rise to speak on this first motion, but I must say I cannot support it because the whole premise of this bill is wrong. It represents a transfer of wealth from successful businesses and workers to people who want to be successful businesses and workers perhaps even in competition with the people who are providing the funding through their guarantees for the loan program to proceed.

The auditor general in his report has already proved that it does not work to create jobs that way. We do not create jobs by trying to take away jobs from someone else by robbing them of income and capital to expand their businesses. So it is just the wrong way completely to go about the whole financing for small business.

I do not deny for a moment that small businesses are a source of most of the jobs in Canada. Like my colleague from the Kootenays who was speaking earlier, I have been a small business entrepreneur since the time I arrived in Canada in 1979. I too had to find financing to start a business and to begin employing people.

In 1980 when I was first starting up my business in Canada I had a new idea in telecommunications. Because it was a new idea that the banks had never seen before they would not lend me any money to get started. But never for a moment did it cross my mind that I should somehow lobby government to provide some sort of taxpayer funded protection for me to start my new idea. That never even crossed my mind as an entrepreneur.

I found other ways to raise the money through private venture capital and people who would grant me a lease on a new business and so on. I was able to get started without the banks. My business was extremely successful. It grew very well and I began to employ people. When it had grown to the size of about 12 employees I sold the business and I moved into another area of business which relates to this bill very well. That business was financing small home based businesses through lease programs. I actually filled through my small business one of the niches that the banks would not fill, to help small fledgling businesses with financing, in particular the ones that worked from home.

A lot of businesses these days are started at home. They have difficulty getting financing to buy their first fax machine, computer, office desks and all the equipment they need to be in business for the first time. My company filled the gap by providing financing to that area.

The problem was that sometimes in order to finance the company we would have to put a mortgage on the person's home. As soon as we did that in my company it became an investment, not a business, and we were taxed at 50%. That was 50% tax on a business. As a direct result of the government stealing away 50% of what we made by helping that small business it prevented us from investing in more businesses. The government took so much off we did not have the capital to help more businesses.

What I am illustrating here is a very effective way for the government to help small businesses to get financing. It should not tax so heavily the venture capitalists and the people providing leases and mortgages to help small business. It should cut the taxes for that group and then that group is left with more capital in its businesses to help the fledgling businesses get started. We are then not taking taxes from other successful businesses for these new ones to start being in competition.

Frankly, small businesses can always find financing if they have a good idea but it is the price of financing that becomes the issue. What happens with this type of bill is that taxpayers end up subsidizing the price by providing guarantees to the banks in order to take more risks. Is that really a just sort of thing to do, to cause taxpayers to subsidize the price of money that people want to borrow for their good ideas? I do not think it is a just way to approach the problem.

Accessing capital is the problem. It should not be done through this type of bill where we use taxpayer funded guarantees.

I think the member for Broadview—Greenwood mentioned that the loan losses were minimal. That may well be the case. I believe about 6% of the loans are in default at the moment. However, that is really not the question. The issue is not how many of these loans are in default. It is whether it is the right way to go about lending money to small businesses.

The point is who should absorb these losses. Should it be the taxpayers, the entrepreneurs, the venture capitalists or the creative financiers out there? I think it should be the entrepreneurs, the venture capitalists and the financiers. It should not be the taxpayers who absorb the losses. That is the whole point. This bill is the wrong way to go about helping small businesses with their finances. All it does is use other people's money.

As we have said hundreds of times over the past five years in the House, it is so easy for members on the other side of the House to take other people's money and hand it out to other people because it does not come out of their pockets. The question I have to ask all members on the other side is if they had to finance a small business asking for money, would they give it the money out of their pockets. That is what it comes down to in the end.

We would be much better off encouraging the private venture capitalists and small lease companies like the one I ran before I came to this House. We should help those companies by lowering their taxation in order to have more capital available to help these small businesses get started. That is certainly the way to go about it.

We talked about bank mergers a bit this morning. Government members all went ballistic that maybe Reform would support the bank mergers if we got a few conditions imposed. Why not make one of the conditions for a successful bank merger for them to provide some sort of venture capital at a higher risk management level for small businesses? We have a magnificent opportunity here to talk with the banks and start bartering some conditions without having to ever put a single dollar of taxpayer guarantee on the line. We could do it by bartering conditions with the banks.

There are plenty of good ideas out there. I hear them from my constituents all of the time. There are other ways to approach this which is really why the Reform Party is opposed to this bill. We really believe it is the wrong way to go about it. All that will happen in the long term is that the amount of guarantees and the size of the portfolios will continue to increase until we end up with the taxpayer on the hook for more and more. It could be completely avoided by approaching it from a different position.

When banks take a look at these proposals that come before them from small business it is not because they could not care less. That is a common idea that we put forward but if I use my own example in 1980 when I was trying to get financing for my telecommunications business, I could tell that the bank would have liked to have lent me the money if it could have found some way to make it fit its profile and if it had the confidence that my idea was one that would work.

I am not going to make the banks out to be ogres because they turned me down. They made a sound business decision on the basis of the criteria on which they lend. It is a loan officer's job to lend out money. That is what they are there for. They keep their jobs by lending out money. They want to lend money.

I certainly do not hold a grudge against the banks for turning me down. It actually missed out on making a tremendous amount of income because I took my business to someone else, to a private financier who made all the interest from the start-up costs as I got my business off the ground. The profit went to other than the banks.

It is not always that they could not care less. I do not believe loans officers have that attitude. I think they do their best to lend if they can.

As a member of parliament I have had people approach me from time to time who were upset that their loans were turned down or the loan applications were turned down or they had been to the federal business development bank and could not get financing. When I took a look at their situation, I would not have given them the money either.

There are some people on the other side who think that entrepreneurs starting a new business should not have to take any risk, that somehow everybody else should take the risk but not the person with the idea. We have to get a balance. Some of the suggestions I made earlier in my speech would be good, practical ways to handle the situation and that is why I am voting against the amendment.

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

Mr. Speaker, it is with great pleasure that I rise today to speak on this bill and on the amendment moved by the hon. member for Mercier. In so doing, she speaks for all would be entrepreneurs who cannot make sense of the financing assistance process for projects that may not meet traditional business criteria in our capitalist system. She speaks for the people who need a hand, a little extra assistance and special attention.

It is our duty to some extent, at the government level, to ensure attention is paid to this kind of project.

In all our ridings, we have people coming to see us with some interesting and dynamic projects, projects requiring the second generation assistance to small business that was and can still be provided through the SBLA program, but which we would like to see improved in the future.

There is a great deal of competition to start up businesses at present. Many people have been told for years to get into a different line of work. Young people are being told they ought to start up their own businesses.

The purpose of the amendment moved by the hon. member for Mercier is to go beyond technical and housekeeping changes and give those who want to start up a business a real chance to do so.

This is particularly true in regions like mine, in KRTB and the whole Lower St. Lawrence region. There are business assistance programs like the self-employment assistance program to help establish what is known as very small businesses. What is also needed is programs that help businesses grow, through tailored support and follow up, to give those who are interested in starting up a business an opportunity to do so.

This spirit, this willingness are not to be found clearly in this bill. We think it should be supported because it contains interesting provisions, but there is still room for improvement. It is possible to give it more of a social flavour to allow businesses to blossom in this country and to allow young entrepreneurs to go into business. These entrepreneurs are not necessarily young in terms of age, but there may be young entrepreneurs of 40 or 50 years of age who, after a career in a field where jobs have disappeared, see the opportunity to go into another field.

They do not necessarily have all it traditionally takes right from the start. They may occasionally be rejected by banking institutions whose approach is based on accounting. One can understand this vision that financial institutions have, but we must ensure that, at the government level, we allow more and more businesses to open. Small and medium size businesses are the ones that create the most jobs.

In my region, for example, there is a multinational, Bombardier, that has a dynamic and interesting plant that is doing well. However, when the economy slows down or when business is a little slow, we must have people ready to fill the void quickly and to submit their projects. And we must listen to them so they can launch and carry out these projects.

It is often a question of attitude in receiving the applications. To have an open attitude, financial institutions must feel the government is behind them to support this type of project.

Our first amendment, adding clause 2.1, is aimed at clarifying the purpose of the bill. In a certain way, insufficient funding is worse than no funding at all. Without sufficient funding, a business cannot develop as it could and as it should.

It is a comment we frequently hear from people who started a business and who come to see us. They often did it with a maximum of energy and a minimum of resources. They manage to survive, but they would need an extra hand, particular assistance, a specific kind of assistance. Help to really give people a hand up is not available at present.

The first amendment proposed by the hon. member for Mercier is aimed at clearly defining the program so that it will also provide financing to small and medium size businesses that would not otherwise have access to financing. The door must be open, a chance given, the idea given a chance to expand and to be realized.

Perhaps one of the ways to assess how relevant and effective the legislation has been, a few years down the road, would be to see whether fewer of the people who have set up businesses end up coming to see their MP feel frustrated because the program was not sufficiently flexible to give them a chance to get started, whether they have been getting a better reception when they go knocking at the door of the financial institutions and the development agencies because there is legislation covering financing, and whether this bill gives them more latitude.

This situation is particularly true for women. A number of women in my riding come to me saying “It is a reality that we, as women, are more used to being straightforward in our personal activities, used to telling it like it is”. They do not necessarily have the traditionally male salesman's gift of the gab, but when they come in to see their bankers they paint a very clear picture of the reality of the business they want to set up. They are not there just to “sell” it.

This may have negative impacts for them at present, but it would be important for financial institutions to be more open to their needs. Women with plans to open a business set out all of the advantages and disadvantages and to put everything on the table. They must not be penalized for doing so. Knowing the advantages and disadvantages, what counts is finding a way to deal with them and how help can be given. The bill before us is one of the tools that can be used in this context.

It must be flexible, providing opportunities to women with this sort of business proposal, who do not fit the traditional mould. We are not talking about equality in presentation, in organizations deciding on these matters, on loans in financial institutions. People's attitudes need to change and we can help bring about this change by amending the law.

I think we can apply the same reasoning to young people. Special efforts have been made in Quebec, among other places, to develop job training. We have started up the machine again. Five years ago, the last Liberal government almost stopped giving people job training; today we have started the machine up again. These people we are training, who will be plumbers, carpenters, electricians and workers in new areas of technology, will need a boost to be able to start up businesses.

Twenty-five years ago, when people were working in these fields, they often worked for others. Now, these people often have to take over the business and they need the right conditions. Our bill on financing for small and medium size businesses needs flexibility.

We can make sure, for example, in the case of people who are reaching the age of 55 or 60 and getting ready to sell their business, that there is a way young people can take over and thus provide for their family and help our regional communities to achieve their full potential.

Without questioning the entire bill, I think the Liberal majority should look very carefully at the constructive amendment proposed by the member for Mercier. This amendment simply recognizes the fact that the government is responsible for more than rubber-stamping the decisions made by financial institutions. It is responsible for giving small businesses a boost.

I think the bill before us can achieve this objective in the end, and this is why it needs improvement.

[Roy H. Bailey, Reform, Souris—Moose Mountain, SK]

Mr. Speaker, I have been listening with interest to such terms as risk capital, investment and all other terms which the people in my constituency are using a great deal these days.

In the last two days and in the week previous to coming back to the House a minimum of 13,000 small businesses located across the beautiful constituency of Souris—Moose Mountain are in deep financial problems. They are not unlike other businesses in Canada. They have a huge capital investment. They also have a huge expenditure each year of operation. They have reached the point in the last year where their annual income is down 70%. The bad news is that the forecast for these 13,000 businesses is that they will be down even further in 1999.

These businesses are sitting with a minimum of $500,000 or more in capital outlay with huge taxes, tremendous taxes which have gone up some 48% in five years. The products they put on the market are literally worth nothing. These primary businesses do not qualify for the same protection as the bill is talking about. They do not qualify under this type of loan. They do not qualify under the loan guarantee. They are simply sitting there suffering and many will close up.

I go to the cities and the towns and talk to small businesses. I ask what they would truly like more than anything else. The other day I went to see the person who runs the Dairy Queen. It is great stuff; there are no calories in it or anything. The owner of the Dairy Queen asked me to send some people who had change in their pockets so they can continue their spending habits. I checked with the manager of another store and asked how were her sales this August compared to last August. That is the month when parents get their kids ready to go back to school. Her response was that it was the worst August since the business was established.

What I am referring to is directly related to the bill. Because these 13,000 small business people are currently going down the tube they will pull down a proportionate number of other small business people in towns and cities with them.

I am referring to our primary industry in Saskatchewan. It is a high investment. They vary in age. Many of them, 70% in some areas, have to work for other businesses to support their businesses. I conducted a research of three separate RMs and the lowest was 50%.

We can talk about business loans, business ventures and everything else, but if the government does not take a look at how it will support Canada's number one industry which is going down the tube it is useless to have the bill before us.

I beg the government to take another look at the situation faced by these 13,000 farmers in my constituency, many of whom will not be farming next spring without some assistance. Other businesses will go as well. They get no guarantees. They cannot draw upon money which is theirs. They cannot take advantage of similar government programs. I learned that under NISA they cannot even draw from their own accounts if they are working off the farm.

I spent three weeks trying to pacify young people of 40 years of age who are walking away and leaving what was left by their ancestors, leaving what was their dream. While the government is taking a look at the bill I beg it to remember the 13,000 small family businesses in my constituency. The bill may assist businesses but it will be an absolute failure unless it takes them into account.

[Jean-Guy Chrétien, Bloc, Frontenac—Mégantic, QC]

Mr. Speaker, we are debating Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses.

In the mind of the minister, it is just another version of the previous legislation. Several members from various parties, mainly opposition parties, have proposed amendments. Among these members, my colleague from Mercier proposed several amendments, one of which I find particularly interesting. I am talking about Motion No. 1, which was moved today, November 17, and which reads as follows:

“2.1 The purpose of this Act is to increase the availability of financing of small businesses, which would not otherwise have access to financing”.

Right now, the banks are not really interested in providing financing or lending money to small businesses that are not absolutely viable. In other words, it is a lot easier for a financial institution to lend money to Bombardier, for example, or to General Electric or to another big company like Loblaws, than to do so to a small business with assets of three quarters of a million or a million dollars. This small business often creates proportionally 10 to 20 times more jobs than these large multinationals that think more about money than about creating jobs.

In this context, I took part, with my colleague from Mercier, in a large poll in my riding. I polled more than 1,300 small businesses about the financing offered to them. I was amazed at the response rate I got and I realized that financing is essential and that it is also a concern for the vast majority of our small businesses. For example, when there is the slightest doubt, the interest rate on a loan goes up 1 to 3%.

Obviously, if a business must pay maximum interest, its survival becomes even more problematic. But there is worse. Someone phoned me last week, when the House was not sitting, and invited me to meet him and visit his small business. That person showed me a letter from a banking institution asking for additional guarantees or the institution would demand full payment of its loan within 48 hours.

The bank is putting a gun to the head of this business owner, who employs 10 people in a small rural community. This is a major cause for concern. He turned to another lender who agreed to provide financing, but at a much higher rate than was to be expected at this time.

Our small and medium size businesses have the right to expect provisions that will increase access to financing for them, both in Quebec and in the rest of Canada. They are also entitled to expect a program that makes financing available to small and medium size businesses that would otherwise have a much harder time getting financing elsewhere. Such provisions would also provide entrepreneurs with the means to fund their working capital—and that is important too—to ensure the growth and development of their small and medium size businesses. These comments were made when I polled 1,300 of these businesses in my riding of Frontenac—Mégantic.

Bill C-53, as introduced by the minister, does nothing to increase the availability of financing for small and medium size businesses. It simply changes how the government's total commitment is calculated, but there is no increase. The underlying principle that guided this review of the SBLA does nothing to meet the needs of small and medium size businesses. The government is much more concerned about figures. Bill C-53 does not help provide financing to businesses that would not otherwise have access to such financing elsewhere.

Let us not forget that small and medium size businesses currently create many more jobs than large businesses employing 500 or 1,000 people. There are fewer and fewer of these large companies, with the result that, overall, small and medium size businesses generate many more jobs.

For example, in 1994, businesses with less than 100 employees accounted for 41.2% of all jobs in Quebec. I imagine the situation is essentially the same in the rest of Canada. In Ontario, that percentage is a little lower, at 34.7%.

Over the past 20 years or so, in Quebec and many other countries, employment in small business has increased significantly, rising from 36% in 1978 to 45% in 1993. Everyone agrees, and the figures are there to prove it beyond any doubt, small business is number one in creating jobs.

Small business plays the most significant role in job creation, especially in agriculture, fisheries and forestry. We must recognize also that it adds value to regional production. The expectation is that the jobs will remain in the region.

Take hog houses for instance. What good is it to have hog houses in a given region if, once hogs have reached their ideal weight for human consumption, they are shipped by truck or train over hundreds of kilometres to facilities where they will be slaughtered, processed and shipped overseas or sold for domestic consumption in Canada?

People in the rural region where these hogs were raised, who had to live with the smell of the manure spread on the land, are not happy with just a few jobs. If the hogs could be slaughtered locally and if the carcasses could be processed locally, hundreds of direct jobs on the farm and in the hog industry could be created.

The same thing goes for the maple syrup industry, where we could do some processing locally. Instead of selling the syrup in 45-gallon barrels, we could sell maple candies in beautiful gift-wrapped boxes, and things like that.

So, throughout the country, small businesses have been the main source of job creation locally. For more small businesses to be established, they need to be able to obtain the necessary support and financing.

This morning, before I came to the House, I got a call from Lac-Mégantic, where preparations are underway to set up Place aux jeunes. As you know, we raise and educate our children. They often choose to get some training or go to university in some of Quebec's larger cities and many of them never come back to the Lac-Mégantic area.

So, Nathalie Labrecque is working with the CFDC and the Comité jeunesse de la région de Lac-Mégantic, in the Granite regional county municipality, to set up a group called Place aux jeunes. With appropriate financing, we could provide our young people with the support they need to start up their own business.

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

Mr. Speaker, it is a pleasure today to speak on Bill C-53 at report stage. Once again, unfortunately, the government is using a band-aid solution on something that is exceptionally important to Canadians. It is not getting to the essence of the issue and it is not dealing with the specific and effective solutions that could be implemented today to dramatically improve the health, welfare and economic future possibilities of Canadians.

My colleagues have and will mention the flaws in the bill, that it is a band-aid solution and that it puts on the shoulders of Canadians a $1.5 billion liability. Instead of providing these small funds to businesses what the government should be doing is creating the climate to improve the business community in Canada.

I will now talk about specific, pragmatic and effective solutions the government can do in conjunction with its provincial counterparts to improve the economic situation in Canada.

I will start at the top, with fiscal policy. The government can introduce a process for a 10% reduction in expenditures, not by putting it on the backs of the provinces but by truly reducing the expenditures within the public sector. It can do this in an effective way by making sure that the good people it has working in the bureaucracy are able to do the jobs they are trained and tasked to do. At the end of the day all the hard work they do will result in action as opposed to the situation we have now where most of us in parliament are running around in a circle because of all the work we have to do which does not result in action, as opposed to having a system where meetings, tasking and work actually result in action and outcome.

We could also enact balanced budget legislation. A balanced budget law could be enacted and I am sure the government would find a lot of acceptance on this side of the House.

We have asked for a debt reduction plan for a long time. The government has not set debt reduction targets yet. It can and should do that. By having and setting targets we have goals. If we have goals, we have objectives. If we have objectives we have something to shoot for. Right now there is absolutely nothing.

The next thing it can do is stop providing loan guarantees to businesses. We have created in North America a corporate welfare state where money is being given to the private sector, particularly big businesses, not little ones. This is not necessary.

Why should multimillion or multibillion dollar companies receive money from taxpayers? That is what we saw in the case of Bombardier and other companies. This is completely unnecessary.

The government has continued to fail in improving the taxation policy. I have gone around, as most of us have, and asked and consulted with the private sector, with small businesses. What did they say? They begged and pleaded for a reduction in taxes. They said the government does not need to give them money but it needs to give them the ability to create jobs. They cannot create jobs given the heavy tax burdens they have today.

Since we came here we have said that those tax burdens are killing jobs. If the government does not believe this, let us look at where economies have worked and where they have not. Let us look at economies where they kept high taxation and what they did after the taxation levels were lowered.

England and Ireland had high taxation rates and complicated rules and regulations but have reduced them dramatically. As a result their economies are booming.

Some on the left like to cite the example of northern Europe. We need to look at Sweden. Sweden had a very high tax policy and when it reduced those taxation levels the economy boomed dramatically. That is what is happening.

Governments and countries that pursue a high taxation policy kill their economies. Governments that pursue a low taxation policy and lower regulations improve the economy.

Look at our case. My province of British Columbia is the worst place in North America to do business, bar none. Premier Clark likes to point his fingers to the far east and say it is the Asian flu. Our economy was in trouble long before the Asian flu hit. The statistics are there to prove that all across the resource sector and many others.

Let us look at Alberta and Ontario where they have lowered taxation rates, where they have lowered the rules and regulations. As a result those provinces are improving dramatically in their provincial economies.

Why does British Columbia not do that? More important, why does the federal government not do that? Why do the feds not take it upon themselves to intelligently look at this taxation system, to look at what has worked before and lower the taxation levels that are weighing like a huge rock on the shoulders of Canadians, be it in the public or in the private sector?

We need a 20% reduction in personal income taxes, which can be done. A marrying and harmonizing of the PST and the GST could lower this. Also, why not look at a flat tax or a simplified tax system?

I was having meetings last week in my riding, as most of us were. People asked repeatedly why we cannot simplify the tax system. As individual citizens, many people require a tax specialist to do their taxes. That is absolutely insane.

Why does the Minister of Finance not work with the minister of revenue to put some of their people together to see how to intelligently simplify our tax system to make it fair and applicable?

Our party has repeatedly suggested that we increase the minimum taxes somebody pays, lower the tax rates for everybody. We have proven that those in the lowest socioeconomic groups would improve dramatically. We have to make sure they, most of all, are taken care of.

More important, because taxation rates would be lowered all the way through, including the business sector and the upper levels, they would then have the ability and the tools to create jobs.

The left likes to talk about hitting the rich, hitting the businesses. What happens when taxes are increased for the business sector? They leave.

Comparing our taxation system to that of the United States, our primary competitor, a family of two income earners will earn 44% more in the United States than in Canada. That in part is contributing to the brain drain. We are losing our best and brightest. It is also contributing to the loss of businesses.

Clearly the government can see that and it can act. If the government were to act and consult with other parties, it would find agreement in pursuing this common agenda. Why the government does not do this is beyond me. I think it is beyond many Canadians who see what is going on try to understand why this is happening.

Other things can be done. There are the regulatory policies. We have a great ability to institute regulations. We have to analyze whether those regulations are actually working and if they are not, to remove them. Every government department should look to see whether regulations which have been implemented previously are necessary.

Right now we are piling regulations on top of other regulations rather than trying to determine whether or not a regulation is necessary. There would be widespread approval if this year the government took it upon itself to rapidly develop a task force to look at these regulations, eliminate the ones that truly are not necessary, and then set up an ongoing process to evaluate the necessity of the rules and regulations that we have.

The federal government needs to work with the provinces on labour policy. Many rules and regulations in labour are not very effective. I would like the government to look at the U.S. experience with right to work legislation because where it has been employed there has been a dramatic increase in employment. There has been a dramatic increase in the order of $2,000 to $3,000 per person who is working in a state with right to work legislation.

I strongly encourage the government to work with the provinces on the issue of education. Our education system needs to be revamped radically in order to provide our young people with the opportunities they will require in the future. I could go on at length about the education system. I hope I will have an opportunity later in the day to talk about that.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, this bill replaces the Small Business Loans Act in order to reform the Small Business Loans Program. The purpose of the program is to increase the availability of financing for businesses with gross annual revenues of up to $5 million.

This bill is aimed at increasing the availability of financing for the establishment, expansion, modernization and improvement of these businesses by allocating, between the minister and lenders, portions of eligible losses incurred by lenders in relation to loans of up to $250,000 to such businesses for those purposes.

The government will continue to be liable for 85% of the losses on loans not repaid, with the rest being the lender's responsibility. The financial conditions regarding the loans remain the same, that is 3% above the prime rate for variable rate loans, and 3% above the mortgage rate for fixed rate loans.

The bill provides for the continuous operation of the program subject to a comprehensive program review every five years. It limits the minister's aggregate contingent liability to $1.5 billion for each five-year period. As for the department, it does not have to compensate lenders for losses incurred when its total contingent liability for the loans exceeds $1.5 billion in a five-year period.

The bill also authorizes the minister to conduct compliance audits and examinations. A whole new series of measures are included in the legislation to provide for the audit and examination of various reports to verify that this act and the regulations are being complied with in respect of a loan, including that the lender has exercised due diligence, as provided in the regulations, in the approval and administration of the loan.

The bill before the House authorizes the establishment and operation of pilot projects to determine whether the program should be extended to include loans to the voluntary sector and capital leases. The minister's maximum aggregate contingent liability in respect of each project is provided by an appropriation act or another Act of Parliament. The pilot projects have a maximum duration of five years.

Also, the bill reforms the offence and punishment provisions. Anyone found guilty of an indictable offence is liable to a fine not exceeding $500,000 or to imprisonment for a term not exceeding five years, or to both. However, anyone found guilty of an offence punishable on summary conviction is liable to a fine not exceeding $50,000, where it was only $1,000 previously, or to imprisonment for a term not exceeding six months, or to both.

The bill also provides for a comprehensive review of the program every five years, in consultation with Parliament.

After this brief overview, I would like to address the crucial issues underlying Bill C-53. The Small Business Loans Act is crucial to small and medium size businesses. Since these businesses are the engine of our economy, Bill C-53 deals not only with issues directly related to small business, but also indirectly with the issues of job creation and productivity.

We all know how important small businesses are to our economy. A few figures tell all there is to know: in 1995, when the most recent recession hit us, small businesses with fewer than 100 employees accounted for 99% of the 935,000 businesses in operation in Canada. These small businesses employed 42% of wage earners in the private sector and paid 38% of all wages and salaries.

However, small and medium size businesses are fragile. As a matter of fact, nearly 15% of them shut down during their first year of operation, and more than half of the businesses that existed in 1989 were no longer in operation six years later.

Fortunately, the annual rate of new business start-ups exceeds that of closures, allowing the renewal of this pool of employers and jobs. In many cases, this high rate of closure of small and medium size businesses is caused by insufficient credit. That is why governments, particularly the Quebec government, are forced to develop complementary programs.

Therefore, the Bloc Quebecois supports Bill C-53. However, we are still disappointed by this review of the Small Business Loans Act.

We had the right to expect certain things in this review of the SBLA. For example, we had the right to expect provisions that would give small and medium size businesses in Quebec and Canada increased access to credit.

According to a survey conducted by the Canadian Federation of Independent Business, 29% of small business owners say credit availability is one of their main concerns. Moreover, according to a survey of small and medium size businesses conducted by members of the Bloc Quebecois in their ridings, 90% of them said it was very difficult or difficult to obtain credit at a reasonable cost. Only 10% said it was easy.

We also had the right to expect a program that increases credit availability for those small and medium size businesses which would not otherwise have access to financing.

In the same survey by Bloc Quebecois members, just over 50% of businesses feel that the small business loans program ought not to guarantee loans except those to small and medium-sized businesses which would not otherwise have access to credit.

Finally, we would have been justified in expecting this new legislation to give entrepreneurs the means of financing their working capital so as to ensure the growth and development of their businesses. In fact, 80% of small and medium-sized businesses responding to our survey feel that the small business loans program should also cover financing for working capital.

And what is there on this in Bill C-53? Unfortunately, nothing that will make any further improvement to the situation of small and medium-sized businesses.

Bill C-53 does not improve small and medium-sized businesses' access to credit. There is merely a change in the way the total government commitment is calculated, but in actual fact no increase. The main reason behind this revision is not the needs of small and medium-sized businesses, but the accounting concerns of the government, unfortunately.

Bill C-53 does not make it possible to provide funding to businesses which would not otherwise have access to funding. By focussing its reform on accounting concerns, the government has not included in its assessment the macroeconomic effects of the loan guarantee program. It is in fact taking a step backwards in terms of the Small Business Loans Act by strengthening the requirement for diligence by the banks in according loans under this program. In fact, small and medium size businesses that cannot find financing with the banks should not expect things to be better under this program.

There is also no mention of financing of working capital for small and medium size businesses. There is no provision on this in the bill, not even in what has been called the pilot projects. However, small and medium size businesses have clearly expressed their needs in this area. For these reasons, the Bloc Quebecois has proposed amendments to make a law that truly serves small and medium size businesses.

We want the good news for these businesses to be more than just the fact that the loans program is extended, we want it to be the fact that it is improved too. This is the aim of the Bloc Quebecois amendments, which attempt to respond to the major shortcomings we have noted.

More is needed than simply tightening up the old legislation. The Bloc Quebecois considers that the proposed changes in accounting require an examination of the need for economic development. These vital amendments are being proposed for reasons of economic development and job creation.

We are proposing an initial amendment to clearly establish the aim of the bill. Insufficient funding, in a way, is worse than none at all, because the business cannot develop as it might, and, more importantly, as it should. This amendment therefore is intended to clearly define the program so it may providing financing to SMBs.

We have other amendments as well, and I will leave it to my colleagues to tell the House about them.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I am pleased to rise in debate today on Bill C-53 with respect to Motion No. 1 which was put forward by my hon. colleague from Mercier, that the purpose of this act is to increase the availability of financing of small businesses, which would not otherwise have access to financing.

Let me make it perfectly clear at the outset what my caucus colleagues have already said. The official opposition strongly supports small business, the principal job creator and generator of economic activity in this country. There is simply no doubt about that.

I suspect that probably a majority of the members of our caucus have had direct involvement in small business or are small business people and understand the kinds of challenges that small business people face. I think it is something members of all parties in this House share. We all understand that small and medium enterprises without a doubt over the past 20 some years have been by far the major creators of jobs, prosperity and incomes.

The question we must really ask ourselves is what is the most effective policy that the government can adopt to promote the growth of small business. There are really two basic approaches that can be taken.

The first approach is for the state to intervene and to take money away from people through taxation and in so doing to destroy their profit incentive, to destroy their efficiency and to destroy the potential creation of jobs in order to finance government support schemes like the Small Business Loans Act loan guarantees. That is one approach. It is an approach which the Liberal Party, the government opposite, generally supports.

The other approach is to say that government ought not to be in the business of picking winners and losers but that business people ought to be allowed to do business without extensive interference by government by means of taxation, regulation and legislation.

That is essentially the approach that we in the official opposition support. For that reason we oppose the amendment and the bill because they go in exactly the wrong direction.

What we need rather than sarcastic comments from colleagues opposite is a vigorous policy which will unleash the unrealized dynamism of small and medium Canadian entrepreneurs. There are hundreds of thousands of jobs waiting to be created in Canada today if only federal and other levels of government would get out of the way of people who are struggling to create employment through small business but are unable to because we face some of the highest tax rates in the developed world.

We face them in payroll taxes, in capital gains taxes, business taxes and property taxes. Canada has among the highest property tax rates as a percentage of our GDP in the entire OECD. We face them in income taxes. We face them in sales taxes.

Ask small business persons in the country and they will say they have become for all intents and purposes unpaid tax collectors for the government. They have to collect the GST. They have to fill out endless forms for the same GST which the government said it would abolish.

Give them tax relief so that small business persons realize benefits after having spent their entire lives risking capital, their life savings, pouring endless and incalculable value of sweat equity into their businesses. The government at the end of the day tells them that after all they have poured into the businesses, all the jobs created, all the risks taken it will take one third or more of the capital gains of small businesses through the pernicious, destructive, job killing capital gains tax.

If the government were really concerned about creating a growth environment for small business and job growth through small businesses it would stop playing around the margins with this kind of state intervention, this kind of $1.5 billion taxpayer liability through the small business loans guarantees. It would stop bureaucrats picking who are going to be winners and losers in the marketplace and it would let entrepreneurs be entrepreneurs, invest in their businesses and reap the rewards. Imagine that.

Let me utter a word which may be unparliamentary, profit. It is a good thing. I know my colleagues opposite think it is a dirty word. They do not like the words profit driven. That sounds like an American concept. We in Canada do not like profits. We like the bureaucrats absorbing those profits because members opposite think they know better how to spend those profits accumulated through taxes than do the small business people who pay them.

This is the choice we face in the bill and in all the fiscal decisions we make here. It is whether the bureaucrats and politicians know better how to pick and choose winners and losers among the hundreds of thousands of small businesses in the country or whether consumers and business people themselves know best how to create the conditions for growth.

We say unequivocally and unapologetically that we like the profit motive. It creates wealth, businesses and jobs, and we know that the kind of tax burden imposed by these tax happy, tax and spend Liberals is exactly what destroys the conditions for growth.

I would like to speak to many of the interest groups that represent small business and various associations that appeared before committee in support of Bill C-53. Let me be honest. It is a constituency I am very sympathetic toward. Many of them appear before committee and parliamentarians and say they want tax relief but they also want all these loans, grants, guarantees and diversification programs.

My message to those advocates of small business is for them to make a choice. Do they prefer tax relief as the principal policy for small business or government intervention?

After all my experience and after having spoken with thousands of small business people, I believe that ten times out of ten the majority of small entrepreneurs will say they prefer tax relief to government intervention, the kind contemplated in this bill. There is no doubt about it. We cannot have both.

The small business community and its institutional voices need to choose which direction they want to take. The only way parliament and the government will deliver the meaningful, creative and dynamic tax relief we need is if we get government spending under control. The place to start and the first element of government spending which should be reduced or eliminated is direct government support for business, whether it is through grants or loans or guarantees. Maybe it is radical but I believe that a dollar left in the hands of a small business person is several times more effective, efficient and productive than that dollar taken away, circulated through a costly bureaucracy and spent by a bunch of politicians.

We have to look at the experience in the country to see which basic policy option works. We need to look at the experience of my home province of Alberta where we have maintained the lowest tax rates, no sales tax, the lowest small business tax rates and the lowest income taxes. We have unbelievable economic growth there. Let us cast our eyes to some of the eastern provinces where there have been very high degrees of government intervention, subsidies, loans, grants and guarantees for businesses. What we see are stagnant growth rates and high levels of unemployment.

The economic record is there for all to see. That is why I call on all my colleagues to oppose this motion and this bill.

[Suzanne Tremblay, Bloc, Rimouski—Mitis, QC]

Mr. Speaker, I rise today to speak on the amendment moved by my hon. colleague for Mercier during debate on Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses.

My colleague's proposed amendment reads as follows:

That Bill C-53 be amended by adding after line 22 on page 2 the following new clause:

“2.1 The purpose of this act is to increase the availability of financing to small businesses, which would not otherwise have access to financing.”

To be better prepared to speak on this bill, I asked that a poll be conducted in my riding of Rimouski—Mitis. Nearly 300 small and medium size businesses responded, answering a dozen or so questions to help us get a picture of their situation on a day-to-day basis.

Certainly, we would have hoped for a rate of participation higher than 25%, but we must understand that, generally speaking, small businesses and extremely small businesses often do not have enough staff available to respond to all such inquiries. Much of their time is apparently taken up by mandatory paperwork; so, more often than not, when they want to participate in a democratic process like this poll, they do not have the time or staff to do so.

Something interesting came out of the information we gathered. More than 55% of the small businesses in my riding have been in operation for over ten years; 15% have been in operation between six and ten years; 25% between two and five years, and about 5% less than two years.

It is also interesting to note that 50% of these businesses are managed by men, 20% by women and 30% jointly by men and women.

The number of small businesses started by women keeps growing. In fact, where previously 14% of small businesses had been in operation for more than 10 years, nowadays 32% have been in operation for less than 2 years. What this means is that women are setting up more and more small businesses, which in turn create jobs.

Small businesses are a major source of job creation and economic development in our regions.

Respondents were asked how easy it was to get financing, based on their opinion or experience or that of their neighbour. Eighty-five per cent of them stated that it was difficult or very difficult to get financing at a reasonable cost, based on their own experience and that of other small business operators.

For those that said it was difficult or very difficult to obtain credit at a reasonable cost based on their own experience, we checked to see if there were striking differences between their perception of their own situation and their perception of the situation of others. Ninety-one per cent of respondents thought the situation of others was the same as their own or worse.

Moreover, 68% of business owners who said it was easy to obtain credit, based on their own experience, thought it was more difficult for other owners.

We were intrigued by one thing in particular. Knowing the importance of small business to the economy of both Canada and Quebec, the government is now proposing to amend the existing act. Unfortunately, 70% of respondents to our survey—naturally we do not want to make any generalization—said they did not know the act that is being amended.

Three questions dealt with the credit needs of small business owners. Question 6 sought to determine if the act should be accessible to all small businesses or only to those which could not otherwise obtain credit.

In the first instance, the legislation would apply universally, whereas in the second instance, it would be a last resort. Question 7 dealt with the notion of risk associated with the type of business or the type of project that needs financing, which has a direct impact on the level of risk guarantee provided under the act.

Should the act help businesses without taking into account the level of risk involved or apply only in cases where the level of risk is considered reasonable?

Finally, question 8 asked the opinions and the needs of entrepreneurs regarding the purpose of the loan guaranteed under the act.

In this connection, ought the bill to guarantee only loans on equipment, real and personal property, or ought it to also include the working capital of a business?

Sixty-two per cent of our respondents felt that all small and medium-sized businesses ought to be able to avail themselves of the legislation, regardless of whether or not they could borrow money in other ways, or fund their projects in other ways, unlike the present situation, which limits access to only those which would not otherwise have access to funding.

When we see that a sizeable number of women are launching businesses of this type, one is entitled to expect a degree of openness in this area, since it is without a doubt almost universally recognized that women generally have far more difficulty than men in obtaining credit.

On the other hand, 91% of owners believe loans guaranteed under the act should be made only if the risk presented by the company or its plan is a reasonable one. This shows how wise the people in my riding are, as they call for a more universal opening-up of credit, as well as for guidelines and for only reasonable projects to be funded.

In this research and in the responses that came from our constituents, we also found out some very interesting things about the reasons small and medium-sized businesses succeed or fail.

I will probably have a chance to speak again in this debate in order to provide more detail on the points of view expressed by the men and women in my riding.

[Deepak Obhrai, Reform, Calgary East, AB]

Mr. Speaker, it is a pleasure to rise today to speak to Bill C-53. My colleagues mentioned some relevant points earlier as to why we are opposing the bill, especially my colleague from Calgary Southeast.

Members of the Bloc have been talking this morning about the survey they have done and the feedback they have received from small businesses. Those are the bases of their argument. I have been running a small business for the last 15 years and what I will say is based on experience.

Small businesses, as we have heard constantly, are facing financial crunches. Access to credit for them is very difficult. Bankers present an opposite view, that they are working very hard to give access to small businesses.

On one hand we have constituents complaining. On the other hand the financial institutions are saying that they are doing a great job. Something is not right. Let me tell the House why it is not. From my experience banks do not understand small businesses. That is the bottom line.

For the last 15 years I have been in business I was afraid to go to the banks to ask for money. This fact has been recognized, but we cannot stop entrepreneurial spirit. That is the strength of Canada.

What have they been doing? They have been using other means. Even the banking industry admits that they are accessing credit cards at high interest rates. They are accessing from their friends at high interest rates. Why? It is because banks have not fulfilled their needs, irrespective of what promises they have given.

As usual, the government that wants to say it is doing something comes up with a program for giving guarantees so that small businesses can access funds. The program has been there for the last 25 years. Why are small businesses still complaining that they cannot access credit despite the fact that the same legislation we are talking about has been in existence for the last 25 years? It makes us wonder. Obviously there is something wrong. My colleagues have already mentioned what is wrong. The high cost of doing business is killing small businesses.

In the last 15 years I have been a small businessman I identified two costs that have been rising. Profits have not been rising. Competition is coming, but two costs have been rising. One is anything to do with the government, the bureaucracy. That is one of the single highest costs that is rising: taxation, user fees and government paperwork.

The second is the cost of doing business with the banks. Banks have many means of raising their charges to small businesses. There are straightforward service charges. They come along and tell them the service charges, but there are costs associated with overdraft privileges and high costs associated when cheques bounce, which is not their fault in any event. This is a huge burden. The economic climate of high taxation, bureaucratic interference and paperwork is killing the spirit of entrepreneurship. As my colleague said, it hits directly at profits.

The government said that it would abolish GST and we are still waiting for it to do it. I know from experience that small businessmen are paying GST from their profits. It comes out of their profits. The government may want to say that the consumer is paying it. Yes, the consumer was paying it, but businesses had to reduce their profit margins in order to accommodate that.

In principle I feel the bill is a great bill. It is there to help small businesses. It sounds excellent. The government says “Here is the money. We will guarantee it and the banks will run it. You can access it”. As I mentioned, we keep hearing that small businesses are having problems and the government is doing the same thing again. We have a problem.

In his report the auditor general identified the problem. It is abuse by both borrowers and lenders. Lenders look at it as another way of making money without taking any risk. Who is at risk here? Small businessmen are already at risk when they apply for loans and the Canadian taxpayer is also part of it. There is a double risk. The banks are have absolutely zero risk.

When banks look at applications that come before them they ask why they should take any risk and they transfer it to the government program. They are fine; the chapter is closed. Once in a while they will take care of it. If they do not get it from the program they can get the money from the bank. That is a very simple statement. There is no initiative. There is no incentive for banks to work in co-operation with small businesses when taxpayers' money is at risk.

While the bill in principle may be right, it is not the way to go. The way to go is to create the environment, economic conditions for small businesses to succeed, and they can succeed without government intervention. Canadians have far more entrepreneurship and are far more willing. They do not need the government telling them what to do.

In talking to people outside this country time after time they make the point that they do not want to come to Canada to invest because our payroll taxes are very high. The business climate is not here. Instead of coming forward with band-aid solutions, the first priority is to work toward creating an economic climate in which small businesses can thrive, an economic climate where even the banks will understand that they have a role to play.

I appeal to the banks that will be running this program to take the interest of small business people into account. They have done a terrible job in the past. They should improve.

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, I will read the intended purpose of act and then tell the House its real purpose:

The purpose of this act is to increase the availability of financing small businesses which would not otherwise have access to financing.

That gets to the whole point of it. If its purpose is to increase the availability of financing to small businesses, should it be done by legislating it or by regulating it? Maybe some members across the way or other colleagues in the House think it works that way, but just because it is legislated or regulated does not make it so.

The problem for small businesses is not that they do not have the ability to acquire more debt. Their problem is that they do not have enough equity. The government continues to raise their taxes. It likes to talk about how small business is the backbone of job creation, but since it took office in 1993 there have been 40 tax increases. The government is breaking the backbone of business. The Liberals are taking baseball bats to the backbones of small businesses.

Let me talk about how many different baseball bats the Liberals have brought in. I will use the example of my home town of Calgary, Alberta. Alberta has about 1.62 million workers. Alberta pays into employment insurance to the tune of about $1.8 billion per year and only takes out $500 million. That leaves $1.3 billion in the finance minister's coffers.

If we divide those numbers it is about $750 per average working Albertan. That is money that is not in their wallets. That is money that is in the finance minister's mountain high overpayments in terms of the EI fund. That type of thing hurts small business. I do not think that legislating and regulating banks to try to give out more money is the way to do it. Why not do a favour for small business rather than try to regulate and legislate the banks? That is what small business wants.

If I were to knock on the doors of small businesses in my riding I can bet dollars to donuts they would not say that the number one thing they want from the government is more legislation and more regulation telling them how to run their shops. They would say they want lower taxes. That is what those Liberals across the way do not seem to understand. They do not hear that.

This government said it was going to cut the GST. The government said it was going to scrap, kill and abolish the GST. But no, this government has left that type of shackling on businesses in this country. This government said it would do something about it and it did not do it. It was a broken promise. The government does not like hearing about it, but it is the truth, and the truth hurts.

If the sting and the venom of my tongue hurts the Liberals' virgin ears, that is too bad. They need to hear the truth.

The GST was supposed to be scrapped, killed and abolished. The Prime Minister promised so. The Prime Minister is on tapes right across the land saying that he was going to do that if his government was elected. But this government did not deliver. This government fell short on that promise to small business people in this country.

This government brought in 40 tax increases and its members pride themselves on having balanced the budget. This government does not like talking about the $24 billion more that it brings in in taxes in this country. Taxes have gone up. The GST has stayed. The government has raised CPP premiums and other payroll taxes.

The Liberal government is milking small business people dry and it talks about legislating and regulating banks. Shame on this government. That is not the answer and this government knows it.

Why does this government not give taxpayers and small business people in this country a break, rather than regulating them? That is not the solution and this government knows it is not the solution. For those members across the way who own small businesses, they should know that is not the way to cure the ailments of small business in this country. Small business is not asking or begging for more regulation.

Let us talk about priorities. This government says it wants to increase the availability of financing to small business. What is this government doing about corporate welfare in this country? Is corporate welfare somehow less important?

The government spends $4 billion a year on corporate welfare. It gives money to its friends. I have certainly talked about that with ACOA and other programs that go on under this regime. It gives money to people who have given campaign donations. There seems to be an interesting if not spurious correlation there.

This Liberal government can find money for those things, but to lower taxes we would have to twist the finance minister's arm and break it at the wrist and the elbow.

This government does not talk about corporate welfare very much. This government does not talk about the funding it gives to special interest groups. Somehow that is more sacrosanct than cutting taxes for small businesses. I do not think so.

The government gives money to crown corporations. It believes that is more important than cutting taxes for small business.

Do members know that the CBC receives close to $1 billion a year? It has been cut down a little, but at one point it was $1.1 billion. Somehow that is more important than cutting taxes for small business.

I see that some members are turning their tails and running.

The government has never come clean on this, but there are some in this country who are questioning whether Canada Post is using the money it gets from taxpayers for regular mail to cross-subsidize its courier services, e-mail and other things that it does in direct competition with Purolator Courier and other courier associations and businesses in this country.

When we have the public sector competing with private sector businesses, driving them out of business, eating up their advertising, their revenue dollars and their clients, it is a shame. This government happens to think that those types of things are more important.

I would like to go through the 40 tax increases and the types of things this government has brought in. It does not want to cut taxes. This government wants to regulate and legislate instead of getting to the whole problem of equity.

This government wants to give businesses more debt. We can bet our bottom dollar on that. We are asking for a little more equity. When people pay taxes they are incurring debt. If they have a debt already and they are paying more, they have to take on more debt.

I bet this government would like to give them more rope to hang themselves by. I bet the finance minister gloats over the $24 billion more he has taken in since 1993. The finance minister and the rest of the Liberals love lining the government's pockets and building up hordes of money.

I am going to go through some of these tax increases that seem to be more important and more sacrosanct than cutting taxes for small business. Instead, the government is proposing legislation and regulations so that businesses have more rope to hang themselves by.

The government put a tax on life insurance premiums and extended it. What has that brought in? In the 1994-95 budgetary year it brought in $120 million. It then got worse. One would think $120 million in terms of tax on life insurance premiums and the extension was bad enough, but it went up to $200 million, $80 million more.

This government is all about taxing life insurance premiums. It is not about cutting taxes for small business.

What else is the government into? It is into income testing for age credits. One might ask how much money that has brought in. In fiscal year 1994-95 it brought in $20 million. In the year after that it brought in $170 million. By the time we got to 1996-97 it brought in $300 million. Taxes keep going up and up with this Liberal administration, but I do not hear about it cutting taxes, lessening regulations and legislation. That is the way it knows how to solve problems.

This government also went ahead and made changes to the tax treatment of securities. For every single one of these five years it has brought in $60 million more per year, for a total of $300 million.

I realize that my time is up. I could go on and on. The solution is not to legislate and regulate to provide capital to businesses, it is to cut their taxes.

[Gary Lunn, Reform, Saanich—Gulf Islands, BC]

Mr. Speaker, I am pleased to speak to the Bloc's Motion No. 1 and also to defend the interest of small business for the business people of Saanich—Gulf Islands and all of British Columbia.

I too will read the proposed motion:

The purpose of this Act is to increase the availability of financing of small businesses, which would not otherwise have access to financing.

Obviously they are at considerable risk.

I want to talk about the business climate in British Columbia. It is in an absolute crisis situation. No matter who I talk to, people are losing their homes and their jobs by the thousands every day in Prince George, Cranbrook, Duncan, Lumby, Terrace. Mills are shutting down. Every other day on the news we see another mill shutting down. Some have suggested we will lose another 10 by the end of the year. No matter who I talk to in these communities, they feel the largest single contributing factor for these job losses and their lives being devastated is government regulation.

Yes, there is provincial government regulation, but there is also federal. As these whole communities are being devastated, the small businesses are being driven out of business as well. That is what this government needs to focus on. It has to create an economic climate in this country and in British Columbia for these businesses to be competitive and to succeed. That is not happening.

This program is not helping small business. When I speak to the small business people in these communities, they tell me that they are overburdened by government regulation. Small business people in my community tell me they get government forms every other day in the mail. If it is not a GST report they have to fill out, it is a report from the Workers' Compensation Board for premiums, or a report for Canada pension plan premiums. The list goes on and on and on. It never ends.

These small businesses are absolutely burdened with bureaucracy. That is what we should be focusing on to help these small businesses.

As my colleagues have said, it is the responsibility of this government to create an economic climate so that small businesses can succeed. It should not be raising taxes 40 times over four or five years. It should not be raising payroll taxes.

Government members like to stand and say “We have reduced EI premiums more than the Conservatives did”, but they do not tell us that they doubled Canada pension plan premiums.

This is choking the small business community. What does the government do? It says “We will bring in $1.5 billion. We will be out there to champion the small business community. We will make this money available”. Government is not telling us that this is a huge liability for the taxpayer.

The purpose of this legislation is to help businesses which would not otherwise have access to financing.

If we ask anybody in the business community what that means they will tell us that these are high risk businesses which probably will not make it.

Why is that? There are probably some poor business plans that are not going to succeed, but a lot of them could if this government would tackle the real problem instead of just trying to put a band-aid on it, thinking it will go away. That real problem is reducing government bureaucracy and creating an investment climate for people to come in and take hold. That is not there.

I cannot emphasize this enough. I speak to small businesses in my community. They employ two or three people. They show me the government forms they receive. They have to hire a full time accountant just to look after their bookkeeping, to handle the government bureaucracy and all the different forms from all of the different departments.

They are not just getting them from the federal government, they are getting them from the provincial government. The list goes on.

It was ironic. I did a radio talk show in my riding. A representative of the federal Liberal riding association came in and said “Mr. Lunn is against small businesses. He does not support the Small Business Loans Act”.

What a pile of hogwash. They do not understand the problem. They think that if they throw money at it the problem will go away.

After spending a year in this House the one thing I have learned from this government is that it thinks that if it throws money at a problem it will go away by itself, without it having to attack the real source of the problem.

I would like to emphasize what is going on in British Columbia. It is in a crisis situation. If we go to any of the interior communities we will see people losing their livelihoods. They are losing their homes. Why is that? It is because governments, both federal and provincial, have created a climate through government bureaucracy and policies in which these companies cannot survive.

The spinoff, the rippling effect, the number of small businesses that are closing is staggering.

Let us take the example of the softwood lumber quota. The province of British Columbia has lost it through government regulations. It is struggling to export its product. It is forced into quotas by this government because of more bureaucracy, more government regulations, more paperwork.

Members opposite can shake their heads, but these are facts. I invite any member of the government to go out to British Columbia, go to the small communities and to talk to these people. Hear it from them. Look at the devastation that is happening out there and then come back here and say “We need more than just $1.5 billion to throw at people with business plans who otherwise could not get financing from anywhere else”.

We have to do something for these people. What we see is absolutely not acceptable.

I think it is a disgrace that I have to look at this legislation in the House and then go back to the people of British Columbia and say this is what the federal government is doing for you. They will say that I am their federal member. I shake my head because these people are so frustrated. What are they going to do? There are real problems out there. We need to start attacking the root of the problems.

I will repeat that the government's responsibility is to create an economic climate in which businesses can thrive, profit and provide employment without government subsidies and taxpayer liability. We are not doing that, although it is our role in this House to do so.

[Darrel Stinson, Reform, Okanagan—Shuswap, BC]

Mr. Speaker, I rise to discuss Bill C-53 and Motion No. 1 moved by the Bloc. I will continue on from where my hon. colleague from Saanich—Gulf Islands left off in regard to what is happening today with small businesses and so-called small business loans.

The government is trying to infuse more money into a very bad situation. I have listened to some of the speeches today. Some members across the way have said how much they have done for small business, yet in the history of Canada the small business bankruptcy rate has never been so high. How much help has this government given small business? Why is our system not working?

This program is already in place and the Liberals want to throw more money into it. They know full well that it will not create a better climate for small business, that it will not help the entrepreneur go ahead. Canadians are overregulated and overtaxed.

Last winter between Christmas and New Year's Day, I had a chance to get away with my wife for a few days. We decided to drive down to the coast of Oregon. A small business conference was going on there. I met a couple of mayors and a bunch of council people from Lincoln, Oregon. We got talking about the difference in business attitude between down there and up here in Canada. They told me of six new companies that had started during a two-week period. They were started by Canadian entrepreneurs who had been chased out of this country by this government.

Members on the other side ask about the American economy. It is coming from our Canadian entrepreneurs who have been chased out of this country. They have been chased out by those people, the government and its overtaxation and overregulation. Do Liberal members think those entrepreneurs are happy there? Do Liberals think those people want to invest $50,000, $100 million or $200 million in this country? They do not. They have no confidence in the ability of this government to help them survive in this economic climate.

Liberals stand up day after day to say how great they have been to Canadian businesses. Let us take a look. There have been 40 increases in taxation since the Liberals have been in power. I will say it very slowly for those on the other side. That is a four with a zero at the end in tax increases. And the Liberals say they are the great saviours of the Canadian business climate. Shame on them. Shame on them for even standing up and saying that. It is total hypocrisy.

This government is like any government before it, like the Conservative and Liberal governments before it: “We will throw more money out there to make us look good. We will have something to throw out there so we can say this is what we tried to do although it did not work. We are so sorry it did not work”. Governments have been trying this from day one in Canada and who has been paying for it? The taxpayers, those who are sitting outside this House, those who are sitting up in the gallery. They are the ones who pay for it.

The Liberals sit on the other side and think they have money. They think they have their own money but they do not. The Liberals have the people's money. They have the workers' money. Look after it for a change. It is total hypocrisy.

The Liberals campaigned that they would get rid of the GST and they would help businesses. They said they would scrap the GST. What did they do? They came along with a better idea, a bigger scam on the people of Canada. They would harmonize the GST. The cost went up another 3% through harmonization. Nice going Mr. and Mrs. Government on the other side. Shame on them. They cannot justify the 40 tax increases, so they will not mention them. They cannot justify any of them. They would sooner have a bill like this one which adds $1.5 billion more to try and address the problem.

The problem has been there since the day the program started. People come to my office time after time wanting to know how they can access the money that is supposed to be there for small business loans. It is not there. Most of them would be far better off going to their families and keeping the government and its regulations out. What kills business is taxes and overregulation.

If this government really wants to do something for the entrepreneur, for the business minded people, if it really wants to keep them in this country and not chase them across the line or to other countries like it is doing today,—it is called the brain drain—then start cutting the taxes. Get out of their faces and let them go ahead and compete. Get rid of the interprovincial tax barriers. Start treating Canadians as human beings instead of digging into their pockets and taking their money any time it feels like it.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Mr. Speaker, I am so pleased to follow my colleague now that he has the attention of some of the members opposite. Hopefully they will listen to the continuation of the well reasoned arguments that our party has put forward.

I am troubled by this motion as I know many constituents are. It is such a sad reflection on the lack of leadership on the other side. The best the government can do is to put forward a bill that puts the struggling small businesses further in debt and offers them no possible relief or hope. This is not the way to increase the viability of small businesses in Canada. If they were more viable, lenders would be lining up to make sure money was available to them. This kind of motion makes it all that much more difficult.

Why are small businesses having such a hard time? A number of small businesses in Calgary Centre have spoken to me over the past year and they have listed their concerns. Never have they come to me to say that they need more access to loans to get them further in debt. Every priority they have presented to me has related to taxes, taxes and taxes. They listed the property tax they pay and how high it is. They listed the provincial taxes and the income taxes. The most painful of all is the payroll taxes. It is particularly painful when they see, hear and read about a surplus they and their employees have paid into but they will not be given any relief in that arena by the finance minister.

Particularly troubling to me was one small business owner, an elderly fellow. He and his wife ran an electronic shop. He showed me on paper that he could actually make a profit but after paying taxes, he was in a losing position. He lost money because of his taxes. It is tragic especially when we sing the praises of small businesses being the engine of our economy and then we tax them into bankruptcy. It is tragic.

We have heard previously from members today about the rate of bankruptcy in this country. Is this the best solution we can come up with for businesses that are going bankrupt? We are going to make the availability of more financing that they would not otherwise have access to drive these businesses that are carrying the tax burden further into debt through government loans. Is that the best we can do?

Certainly that seems to be the best members on the other side can do, but that is not why we are here. We are here to see that these small businesses become successful and to give them some tax relief. This component of our business community should be the first to receive tax relief.

The president of the Restaurant and Food Services Association in my riding has come to me more than once. He has written to me. He has never asked for access to more financing. Each time what he has asked for is relief from taxes. He has pointed out to me that the restaurant business is where many young people in our country get a start. They learn how to work within a company, serve and build their job skills. Yet restaurateurs are so burdened by payroll taxes that many of them are limiting the number of young people they hire and this is where our young people get a start.

At the other end of the spectrum, many professionals and people trained in our universities who venture out in small entrepreneurial enterprises carry the weight of a mountain of bureaucratic red tape and the tax burden. That is one of the factors why this country is faced with a brain drain. Educated professionals look at the options and ask do they stay in Canada or do they go somewhere where their efforts are going to pay a dividend. It is not here that they choose to stay.

We are asking that we get serious about some real solutions for small business. It comes from a climate that allows small businesses to succeed, not to get further into debt, a climate that allows them to make a profit. Some members in the House do not like to hear the word profit. Allow small businesses to make a profit, to reinvest it back into their companies, to expand, to employ more Canadians. Keep more Canadians here, young Canadians, instead of driving them across the border because of the heavy burden of taxes and government red tape.

No, that is not the answer. We need to show leadership in that area and it is leadership that is sorely lacking. That is why we are so concerned about this particular motion today and this bill. It so typifies that lack of leadership.

Let me also point out that our country has the highest tax rate in the G-8, which is something we have mentioned before in the House. Canadians are starting to hear it. We hear the finance minister talking about surpluses, yet he is refusing to give Canadians the tax relief they deserve.

We have seen the vibrancy in Alberta. Why? Because Alberta has one of the most positive climates in Canada for entrepreneurs and business people to succeed. People are moving to Alberta and they are succeeding in Alberta. But the Liberal government refuses to take that as a lesson and allow for that kind of an environment to flourish in the rest of the country.

I refuse to accept the statement some would make that the success of entrepreneurs and businesses somehow means that those who are underprivileged or who are in need would be left out. My very own riding of Calgary Centre, the vibrant community of Calgary, in some ways is becoming the new business capital of Canada. I would say that the charities, the concern and the caring in that community is second to none in Canada.

It does not follow that just because there is business success somehow that means the underprivileged are forgotten. I put forward the strong example of Calgary Centre, my own riding where just the opposite is true. When there is success in business and the economy is strong, the needs of the underprivileged are cared for that much better than when business is struggling and under a heavy burden of tax.

We are so concerned about the lack of leadership on this issue shown by the government. It is so important. That is why we have made mention of this. We are making a point to bring this to the attention of the people in the gallery, those watching and hopefully the few members opposite who are listening.

My closing appeal for the young people of the country, the families that want to have a future, stay in Canada and have an opportunity to grow, raise a family and be strong contributing Canadians is that on their behalf instead of a weak approach of putting businesses further in debt that the government, parliament and all of us be committed to strengthening the economy through lower taxes, less government regulation and let the Canadian people flourish and build a stronger country.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, it is a privilege to follow an as erudite and eloquent speaker as the member for Calgary Centre. Was that not a thrill to listen to him advocate on behalf of our young people, small businesses and to encourage the entrepreneurship of those who are aspiring to become big businesses? That is tremendous. I congratulate my hon. colleague who presented a very balanced view of what is happening in Canada.

I will talk about the entrepreneurship that is so characteristic of small business people. The people who start small business are entrepreneurs in the absolute and best sense of the word because the entrepreneur is someone who takes his own initiative, motivation, ideas, learning, skills and abilities and applies them in a way that will make him some money, that will allow him to express himself, to get that self-actualization to the fore so that he can become that respected member of the community.

Entrepreneurs are the very people who are the most charitable in giving their time, money and skills to the community. Recently we had a fundraising dinner for the cancer clinic in Kelowna. The fundraiser was populated by primarily small business people.

What did they do? Ninety of these small business people raised $90,000 in one evening for the Kelowna clinic cancer centre. Is that not something to be proud of? I think that is wonderful and we should congratulate them. Those are the very same people who stand behind the United Way and have helped build the social conscience among the members of the community. Those are the kinds of people who have that have the spirit and drive that says I want to help myself and I want to show the aggressiveness and the way in which I can build a better community. That is what those entrepreneurs and small business people do.

That is not all they do. They are the source of most new jobs, with 85% created by small business people. Is that not something we should reward?

If that is the case perhaps this is a really good amendment because it is supposed to help small businesses. The interesting thing is that it says the purpose of the act is to increase the availability of financing of small business which would not otherwise have access to financing.

If that is the purpose then I want to ask what has the experience been. There was a Small Business Loans Act which had a purpose very similar to this one but how did it actually work its way out? In many instances the financial institutions recognized that if they would grant a loan under the provisions of the Small Business Loans Act they would be able to collect a better interest rate and besides that they were absolutely assured that the loan would be repaid regardless of what happened to the business.

If that does not sound, smell, taste or look like a subsidy to the financial institutions I would like to know what it is. I think we had better really look at this carefully and say what are we really doing here. Are we subsidizing those big banks that had profits last year of $1.5 billion for one bank? They do not need the subsidy. But the small businessman needs a break. He does not want a subsidy. I have not heard a single small businessman say to me they want me to get them a subsidy.

What they say is “Give me a fair break so that I can compete fairly, that I can compete honestly and so that I can apply my skills in the best way possible. Reduce my taxes. Reduce the intrusion of government in my work and do not give me subsidies. If you give me a subsidy you are probably going to give my neighbour a subsidy. But worse than that, you are probably not going to give a subsidy to me and give it to somebody else and that person is going to compete with me”.

I will give a specific case of a business that was doing very well. It wanted to expand and did. It borrowed $250,000 to expand the business, put a new product line in place and to make it more efficient. What did the business discover? It discovered that in another community that had the same market area as it did, the government came in with a subsidy for exactly the same business. Here we have an honest entrepreneur trying to compete with this big mammoth, giant government which gave this person an interest free loan. Is it any wonder that both those business had problems? That is the kind of thing we want to avoid.

Small business is also the centre of most new ideas and innovation. If we look back on the communication industry and how it has flourished, where did it start? We can look all the way back to Alexander Graham Bell. Where did he start? In big business? He started as a tiny little business. We can go back to the computer industry, back to the chips, back to virtually any of these things that are happening today. Where did they start? They started as small businesses. They did not start with the Small Business Loans Act. They started not with a special subsidy. They started because they had a good idea, they had a few dollars and they put their enterprise to work. That is how it works.

Does this mean I am opposed to small business? It is the exact opposite of that. It gives small businesses the courage, the enthusiasm, the support, the level playing field so that they can compete fairly and squarely with other businesses so that the best person can win. Let us face it, that is what we want.

It is government's responsibility to create a playing field that is level, an environment that encourages distribution and advancement, that builds on the talents and skills of the people. That builds a nation. The strength of a nation does not rest primarily on its natural resources. It rests on the motivation, on the skills, the abilities and the knowledge of the people. Because that is where it rests, it finds its greatest application in small business. That is where we need to look.

This government should be ashamed that it gets in the way of small business with its bureaucracy, gets in the way of small business by not giving it the opportunity it should.

Let us encourage this government. It has done wonderful things but there are some things it is doing that are wrong. That is what has to be taken care of.

The GST should go. The government said once it was going to go. There are all kinds of members over there who said it should go. Did it go? No. It harmonized the GST, which costs even more money. That is a disgrace.

What is it that we now need to look at with regard to small business? New jobs. If there is one thing that would encourage our young people, the graduates, more than anything else it is to recognize that their skills, their abilities, their training will result if a job.

Last summer I met with two university students, bright young people. They came up with a truck and a trailer. On the truck they had wheelbarrows, rakes and other tools. On the trailer they had some lawnmowers and other gardening equipment. I asked them what they were doing. They said they got a little loan and bought this equipment and were in business. Guess what happened. At the end of the summer they had paid off the loan, paid for the equipment and saved enough money to pay for their next year's tuition. They were so proud of being able to build the business. They were so happy and they are now putting that equipment to work during the winter, getting ready for the winter clearing of snow and things of that sort.

This started because these young people had some skills and ability and could not find another kind of a job and so decided they could help themselves. That is what this government should be doing. It should encourage our young people.

It is a great world. Canada is a great country and that is what we need to build on.