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.