Debates of Nov. 24th, 1998

Government Response To Petitions

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to seven petitions.

Committees Of The House

[Maurizio Bevilacqua, Liberal, Vaughan—King—Aurora, ON]

Mr. Speaker, I have the honour to present, in both official languages, the ninth report of the Standing Committee on Finance.

Petitions

[Steve Mahoney, Liberal, Mississauga West, ON]

Mr. Speaker, I have two petitions. The first is signed by approximately 70 folks from my riding and the surrounding area, all of whom are members of the Mississauga Gospel Temple. The petition has to do with their concerns about prostitution. They pray that parliament pass a bill which would change section 213 of the Criminal Code to make prostitution a hybrid offence and enable these offences to be prosecuted as either a summary or an indictable offence.

[Steve Mahoney, Liberal, Mississauga West, ON]

Mr. Speaker, the second petition is signed by approximately 80 members of the Mississauga Gospel Temple and deals with a request to pass Bill C-284 to ensure that the record of a sexual offence against a child for which a pardon has been given is disclosed to children's organizations when they perform a criminal record check on an individual applying for a position of trust involving children.

I am pleased to present both of these petitions on behalf of the congregation of the Mississauga Gospel Temple.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, I would like to present a petition on behalf of over 150 residents of my riding who live in a subdivision called Lancaster Ridge. The petition outlines the grave concerns they have regarding a longstanding dispute between the Gay family and the Department of National Defence concerning property known as Cannon Crescent which is situated on the Albro Lake Road.

This dispute has caused enormous problems for this community and the petitioners pray that the House of Commons will urge the Minister of National Defence to bring all parties together in this dispute with a view to finding a reasonable and equitable settlement.

Questions On The Order Paper

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, Question No. 141 will be answered today. .[Text]

Question No. 141—

[John Duncan, Reform, Vancouver Island North, BC]

Could the government indicate, for each of the fiscal years 1993-94 to 1997-98, in relation to the Pacific Rim National Park: ( a ) the cost, on an annual basis, of operating and maintaining the said park: ( b ) the moneys allocated to the park for regional and national costs: and ( c ) the revenues generated from parking fees?

[Andy Mitchell, Liberal, Secretary of State (Parks)]

(a) Figures on the cost of operating and maintaining Pacific Rim National Park Reserve on an annual basis for fiscal years 1993-94 to 1997-98 are presented in table 1.

(b) There have been no additional costs to the park for regional and national events—Oceans Day or Canada Day—other than staff time as the headquarters offfice supplies material for distribution. For a roll up of the salaries actually paid to all employees of the park, whether they worked part time or full time, see note (2) in table 1.

(c) Unlike many national parks, Pacific Rim National Park Reserve does note have gates to regulate visitation. Instead, park use fees are implemented via machines in the parking lots, which may result in some misunderstanding of the intent of the fees. This fee contributes to the maintenance of facilities and services such as visitor centres, information centres, washrooms, information exhibits-materials, day use areas, picinic sites, surf guards, film programs, et cetera. If visitors have purchased the western Canada annual pass and it is displayed appropriately, they do not need to purchase a day use pass from the machine in the parking lots. See note (6) on table 1.

[Peter Adams, Liberal, Peterborough, ON]

Mr. Speaker, I ask that the remaining questions be allowed to stand.

[The Acting Speaker (Mr. McClelland)]

Is it agreed?

[Some hon. members]

Agreed.

Canada Small Business Financing Act

[Jim Peterson, Liberal, for the Minister of Industry]

moved that Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses, be read the third time and passed.

[Steve Mahoney, Liberal, Mississauga West, ON]

Mr. Speaker, I am pleased to lead off this debate on third reading of what we in the government believe is an extremely important piece of legislation which will help small businesses right across Canada, including farming operations and any business defined as a small business with revenues lower than $5 million a year. It is not really that small a business. From my perspective and in the community that I come from $5 million a year in productivity would be seen as a fairly successful business.

It is important that the government define small business. We recognize the significance of the small business community in terms of job creation, economic growth, exports, leading technology, new IT inventions and entrepreneurship. All of the aspects of life in this great democratic country that we live in are really encapsulated in the definition of small business.

If we think in terms of what our young people are going to do 10, 15 or 20 years down the road, many of them will have opportunities to start their own small business. Many of them will work within a small business atmosphere. It could be in the insurance industry, in real estate or in the automobile industry. Small business is like the river flowing downstream. It springs out of all of the major industries that exist in our country.

There have been many concerns raised recently by members of the automobile dealers' association, for example, and we would class many of them in the small business category. Whether or not they could benefit directly from the Small Business Loans Act may be questionable since their main requirements are in the area of high ticket inventory. They need to have their own financial arrangements in many cases with either the banks or their in-house financial institution. If we think of the spinoffs from an automobile dealer as an example, they can be in parts, add-ons and after market products that are available in the community for people who want to upgrade.

The same can be said of the housing industry. We may think that a developer in a community like Mississauga may not be classed under this definition as a small business.

Granted, they deal in hundreds of millions, at least tens of millions of dollars in gross revenue. However, spinoffs occur every time there is a development approved, every time there is a subdivision approved and every time a single home is built.

It is this government's response to the spinoffs of those businesses to make capital available through new leasing arrangements, through capital lending, through various access points within the Small Business Loans Act. That is probably the number two concern of small business in this country.

The number one concern would be human capital and the lack of properly skilled individuals. For instance, if someone talks in terms of the construction industry, they would be concerned about the lack of human capital available in the trades.

People today tend to think their sons and daughters should all become doctors or lawyers, or maybe even parliamentarians one day.

I have a 23 year old at home who will be taking an apprenticeship job as an electrician. That is wonderful because he will probably save me from electrocuting myself somewhere down the road.

Being an electrician is a terrific opportunity for a young person. It could lead to the establishment of a small business or it could lead to that young person working within another small business with an entrepreneurial flare and an entrepreneurial spirit.

This bill, frankly, is designed to help those companies which will create those jobs.

We mouth platitudes ad nauseam in this place, particularly when it comes to our youth and our small businesses. However, no one can deny that the future of the workplace is very uncertain for a young person coming out of school, either leaving school before graduation or graduating from school.

If government has one responsibility, I would submit that it is to create an atmosphere that is positive for business to work in harmony with labour so that they can create the jobs and the value-added products that are needed to make this an even more successful economy.

We can do that in many ways. One way, I submit, is by providing an instrument such as a small business loan, a guarantee to the financial institutions.

We tend to indulge in the art of bank bashing with some regularity, but the reality is that 55% of the capital made available to small business comes from our main large banks. Why do they do it? They do it because it is an opportunity to put something back into the community and also because, in the case of the Small Business Loans Act, they have the guarantee of the Government of Canada.

The way it works is that somebody has a small business that they want to start up. There is criteria that must be met. There are business plans that must be filed and submitted.

Frankly, this is a process I find extremely helpful, having gone through it myself in the past. There are programs such as the former new ventures program that came out of the province of Ontario. Other provinces in Canada I am sure have had similar types of programs available to assist business.

In the case of the new ventures program, it was a top-up. It was a matching of $15,000. It was not a lot of money, but maybe enough to put that business over the top in terms of its financial requirements. That $15,000 had to be matched by the actual owner, or the applicant in this case.

The reason I bring this point up is that if someone was successful at completing the business plan required to qualify for a new ventures loan, if the person could actually get through it and still wanted to go ahead, chances were they had a reasonable chance of success.

The same thing is true with the Small Business Loans Act. Bill C-53 simply improves that situation by making access to capital somewhat easier. It is important, in my view, that the word easier be taken in the proper context. Sometimes the best loan a small business can receive is the one it does not receive. Sometimes the small business needs help in terms of mentoring, which it can get from our Federal Business Development Bank. It may need assistance in consulting. These businesses do not necessarily need an influx of cash and the added burden of additional debt. I think it is extremely important that we look at the impact of additional debt when we are talking about the success of small business.

Bill C-53 is not designed to increase the burden of debt on small businesses. Instead it is designed to meet three basic objectives: to continue helping small young businesses access financing, to increase program accountability and to move the program toward cost recovery.

I want to take a moment to talk about each of these objectives.

With respect to continuing to help small business access capital, the new rules for leasing recognize that there is a rather non-traditional way of financing the purchase of heavy equipment, perhaps trucks, tractors, trailers or perhaps leasehold improvements in a new operation to take that business into the forefront. Perhaps an entire revamp of the business premises is required.

Banks, without the support of the Small Business Loans Act, without the support of the Government of Canada, would be loath to lend money for things like these because of the quickness of the depreciation once the asset is in place. That is a very difficult problem for small business.

In reality what small businesses have to do in many cases is put up their first born male child or their first born female child as collateral before the banks will entertain the thought of lending them the money. Actually there might be an advantage to that in some instances.

[An hon. member]

Some won't take them.

[Steve Mahoney, Liberal, Mississauga West, ON]

Some will not take them my friend says.

But the fact is that at times the requirements are much too stringent and are simply not available. Generally speaking, people who start small businesses in many cases are also starting small families. In many cases they are young, energetic, full of enthusiasm and entrepreneurial spirit, but they have not built up an asset base. I think that is true in many different facets of small business.

It is a bit like the old accusation that is made against the banks, which I referred to earlier, that the minute it starts to rain they take away your umbrella. In a similar sense, to a small business applying for a loan, the bank might say that if they do not have enough collateral to ensure the bank can recover its money, if their ideas, efforts and hard work fail, then it will not lend the money. If the small business has enough, the banks will lend it to them, but if they do not have enough they probably do not need it. It is really a double-edged sword.

I am not a fan of government intervention on a large scale. I am not a person who believes that government can necessarily do it better. What we need to do is harness the creativity of Canadians to allow them to open doors that heretofore may not have been available to them.

I believe that by continuing to help small young business access capital, as point number one in this bill addresses, we will do that. We will say to Canadians that we are not here to give them a free ride. We are the government. They have to file their business plan for approval by the bank, the lending institution or the leasing company. It is not up to the federal government to approve these applications, it is up to the lender. The lender will have criteria that the business person must meet, and it is to their benefit to meet it.

If the business can qualify for the loan and the only problem is access to credit, access to collateral, then the government is willing to stand in and supply that credibility. However, the government is not willing to do that without any concern for the third point, and I will come back to the second one in a moment, which is cost recovery.

It is important that governments recognize that throwing money at a particular problem is not going to solve it. I have said in this place before, and I believe very strongly, that we should eliminate the word spending from government jargon and replace it with the word investing. The reason for that is that we are trying to tell people that we are here to invest in what they believe in. We are here to invest in their hard work and dedication as contributors to the overall economic good of the country, and to create jobs and all of those good things, but we are not just going to spend. We want to make sure we get that money back. It is a very reasonable approach to take.

Industry Canada has invested on a large business scale millions and millions of dollars in aerospace. In my riding we have AlliedSignal which is a multibillion dollar worldwide corporation. Why would a business like that need the help of government?

As an out and out grant, that is not available, and it should not be. But we will make an investment that is tied to a specific program. I will give the House an example that relates to small business in the sense of spinoffs with respect to the other businesses that would be created.

AlliedSignal has developed a new technology for de-icing that hopefully will take away from the environmentally damaging de-icing liquid that is currently used. If this is successful it will lead to safer aviation, particularly in this country where we live with eight months of winter and four months of bad skating. We know the importance of de-icing aircraft.

AlliedSignal has invented this and the government has invested $25 million to assist it in bringing the product to market, but we want it back. We want a share in the success of that program. Why should we not? The royal “we” in this case happens to be the shareholders of the corporation of the country of Canada, the taxpayers, and they deserve to see cost recovery in that instance.

The spinoffs from a company like AlliedSignal which developed this wonderful new technology, which received capital to invest on behalf of the Canadian taxpayer, will lead to jobs and greater safety in the aviation industry. It will also lead to smaller businesses which will provide products to AlliedSignal to develop the components that are necessary to put together this new technology.

Those small businesses, many of them with fewer than 50 employees, need assistance. They cannot rely on a fund from Industry Canada that talks in terms of investing $5 million, $10 million or $25 million. They could not possibly handle that kind of debt load, but they can access through the Small Business Loans Act credit or cash to allow them to grow their business and provide the products necessary to a company like AlliedSignal, General Motors, Ford or any of the larger businesses.

There is a direct correlation between government, big business and small business and it makes sense for us to have a mechanism in place that will ensure that small businesses, which are the real engine of our economy, which are the main creators of jobs in Canada, have the ability to grow and to function.

The second point is accountability.

It is extremely important, if we are providing capital funds, or guarantees as opposed to funds, through banks, credit unions, leasing companies or whatever the lender, that the accountability rest right here in this place. It is my view that Bill C-53 will indeed provide that accountability to parliament. There will be annual reports.

I serve on the public accounts committee with members from both sides of the House and they will know that the auditor general is a hawk. The auditor general is someone who will not allow a program to simply run along without any accountability. The auditor general will do an analysis of virtually every department, of every program, of every division, of every aspect of this Canadian government. In my view the auditor general functions as the guardian for the Canadian people to ensure that no government regardless of its political stripe gets carried away in simply handing out taxpayer dollars. The one thing that we have to do when we talk about accountability is come back to the fundamental premise that has been established by this government under the leadership of the Minister of Finance and the Prime Minister, that we have to pay our way.

I know members get tired of hearing this, but it is a fact, it is the truth. We have eliminated the overdraft. We have eliminated the deficit, yes with some pain, yes with tremendous help and assistance by the Canadian people. But the reality is it has been done.

We cannot take all the credit nor should we try, but clearly it is the Prime Minister and the finance minister who are at the controls of the good ship Canada to ensure that we follow that particular fiscal route, and that is being done. This bill frankly fits into that as well.

There is another aspect that I think we tend to overlook at times and that is the volatility and the problems in Asia. Members will dismiss the crisis. I note this morning in the news that the Toronto stock exchange has shot up and everyone is excited. But we all know that tomorrow it can drop right down. Does that affect small businesses? They may not be publicly traded companies. In the case of companies that have lower than $5 million a year in revenue I would suggest they are not. But they can be impacted. Many of their customers are publicly traded companies and they rely on the overall health of the global economy and the overall strength of the Canadian economy for their success.

At times we dismiss it. We tend to pretend this is just in the news. What is happening in the far east, what is happening around the world, some of the instability, some of the violence, some of the problems, the potential for war, all of this has the ability to restrict our ability as humankind to grow and to prosper.

Back in 1989 I led a trade mission on behalf of the hon. David Peterson to Great Britain. It was at a time leading up to the formation of a united Europe and the possibility of a single currency in that part of the world and increased opportunities for freer trade around the globe. There were 10 people in the entourage. We arranged meetings with these folks. At the time I had the distinct pleasure of being the small business advocate for the province of Ontario. My job and the job of the officials who were with me on the trip was to try to make deals and try to put people together. I should correct myself. It was not to make those deals but to put the people together in the same room, in the same part of the country within the businesses to see if there was a possibility of a deal being made.

The reason this was so exciting was the opportunity to use Great Britain, with a common language, a common type of government, an understanding and a comfort level that Canadians could enjoy. To use Great Britain as the launching pad for these small companies to move into the European market was very exciting.

There was one business from Richmond Hill, a broom manufacturer. People would say “Exporting Canadian brooms? Surely they make those in other parts of the world”. The reality was that while they do, the quality of that product, the low cost of that product, the availability in terms of volume were such that the owner of that business was able to strike a deal to start exporting into the United Kingdom and ultimately into the rest of Europe. That was a small business, very much so. I think it was a two person operation. It would bring other people in to continue the manufacturing process as needed.

I say hello to the member from Parkdale this morning who also reminds me about the significance of women in small business. I know that member has worked diligently with women entrepreneurs. I believe it was the member from Parkdale who led a delegation of women to Washington, along with some members of our ministries, to talk about the potential for women in the area of entrepreneurship and the ability of women to come in with their energy and their new ideas to find ways to develop exportable markets.

The member knows better than I that the difficulty women have experienced is availability of capital. It has been a problem for many decades. Bill C-53 will help women entrepreneurs access capital through the mechanisms whether it be the banks or the credit unions. I note also that the member recently published a very extensive document on credit unions and their role in the small business market.

Credit unions really are an alternative to the banks if Canadians do not like the way they are being treated. Many do not. Many find the large banks are so bureaucratic. They are worse than government if that is possible. They create an atmosphere that is very frustrating. Their requirements are too stringent. There is little ability for someone who does not have the time because they are running a small business. They have employees to keep on track. They have payrolls to meet. They have sales to meet. They have equipment. They have EI to pay. Thank God they do. They pay EI for a good reason. It is to provide safety for their employees. It is to ensure that if there is a downturn and they have to lay those people off there is something there for them.

What is interesting is that members harp on what they call the EI surplus but they fail to go back to the Mulroney days when things were a little less stable. We ran a $42 billion dollar deficit.

[An hon. member]

Oh, oh.

[Steve Mahoney, Liberal, Mississauga West, ON]

I am not sure but the member used to be a Conservative, Social Credit and now Reform. The member would know from his vast experience in British Columbia that a program such as employment insurance is extremely important to all Canadians. It is important to the workers but it is also important to the employers. How could a small business survive if it did not have the insurance policy like employment insurance? How could its employees survive if it did not have that insurance policy?

I notice puzzled looks opposite. It has astounded to me to no end that from day one the Reform Party has been unable to support this bill. What does it have against small businesses? It is a puzzle. The words do not match the actions in this case. I do not want to get into a rant. I promised myself that I am going to start leaving Reformers alone as much as I can. It is difficult but I am going to suck it up, try to be a good boy and not pick on them. We know what happens. Every time I talk in this place and give Reformers a hard time there is some guy in British Columbia who phones my office and rants and raves that I am such a meanspirited person. I really am not. I have this inability to put up with nonsense that comes from across.

I will get back to Bill C-53. I want to talk about the arguments the members opposite make all the time about our being a big nasty government and we invoke something that the Canadian people know as closure. Let me give those members the history of this bill and how we arrived here. Pay attention and take some notes Get your crayons out.

In November 1997 the Minister of Industry introduced Bill C-21 to extend the lending period of the Small Business Loans Act to one year until March 31 to allow sufficient time to conduct a comprehensive review. It would take into account three considerations paramount for its continuation.

Because we were here when that happened, I was very confident that this did not spell the end of the Small Business Loans Act but more likely the modernization of it, the cleaning up of it. Any program that has been in place as long as this one, which I believe is 37 years, should be looked at and reviewed not only by the auditor, which has happened, but also by this parliament.

The points I made earlier is that it must be relevant to the needs of small business, financially self-sustaining and it must have an adequate accountability framework. Those are the three sorts of legs of the stool that I pointed out earlier that are very important.

In December 1997, to follow the bouncing ball, the auditor general issued his report on the first audit of the SBLA in a decade. That is a long time. Frankly, I hope the auditor general does not wait 10 years to do it again. I think it is extremely important for Canadians to have confidence that it is working, that it makes sense, that it is accountable, that the cost recovery is there and that it is a successful program to help small business.

In that report he expressed concerns about the lack of a clear definition about expected results, areas for improvement in the management and delivery of the program and the adequate provision of information to parliament. These are again points that I have referred to in my dissertation this morning.

In February 1998 the Standing Committee on Public Accounts had the auditor general and Industry Canada appear before it. I was there and it was very enlightening and a good opportunity to have the auditor general hold us accountable, which needs to happen more often.

In March 1998 the program was extended, again through Bill C-21, by one year which allowed us to have the time to arrive at this stage, the third and final reading of the bill.

In May 1998 the Standing Committee on Public Accounts issued a report with 10 recommendations to focus on the issues the auditor general had expressed concern about.

I want to share with the House the consultation process. When closure comes in after a full year of debate, of committee work, of auditing by the auditor general, of debates in here, of introduction and first reading, second reading, referral to committee and back here for debate on third reading, if the government did not put an end to this we would simply be here forever in a gridlock and we would have no opportunity to put in place a bill that will help Canadians. No government, regardless of its political stripes, could tolerate that.

Who did we talk to? The Alberta treasury branch. How can the members of the Reform oppose this bill when I am absolutely confident that the members of the Alberta treasury branch had a lot to say about the formulation of this bill. We would have listened to them and taken into account their concerns and their advice.

The impact on small business in western Canada is painfully obvious to everybody except those members in the Reform Party who represent western Canada or parts of it.

We listened to the Alliance of Manufacturers and Exporters of Canada. This is extremely important because small business would rely on an alliance of manufacturers and exporters. They need the assistance of the provincial governments. They need programs like this to provide capital for them so they are able to export into the world marketplace.

There is no question that the Bank of Montreal is taking a lot of hits these days. Mr. Barrett and company are under a lot of pressure but he announced that they were prepared—the jury is still out obviously—to establish a new bank that would be dedicated to small business lending and funded with some $40 billion in capital that would be made available. That is an initiative we should pursue. It is not a done deal.

There is the decision on whether or not the mergers are allowed to go ahead. I come from a riding that has a very substantial number of bank employees who are afraid for their jobs if the mergers go ahead and are afraid for their jobs if the mergers do not go ahead. It is a double-edged sword and we have look at it calmly and rationally.

We talked to the bank. We talked to Boreal Assurances Incorporated. We talked to Canada Trust on the role of trust companies as a lender in this particular situation. We talked with the Canadian Advanced Technology Association on the potential impact and the possibility for small business to work in advanced technology, in IT and all of that which is extremely important. We talked with the Canadian Bankers Association.

There are the chambers of commerce and the boards of trade. The Mississauga Board of Trade represents thousands of small businesses. In fact it is predominantly small businesses that make up chambers of commerce and boards of trade. Sometimes they take a hit because they are accused of being too right wing. That is a somewhat myopic viewpoint. The board of trade in my community takes on social issues. It looks at issues of concern to the municipality, to the province and to the federal government. It has an extensive review process in place. It is mostly small business people who volunteer their time to serve on boards of trade and chambers of commerce.

Young executive boards of trade exist in many communities. Young people have an opportunity to get involved in aspects of business and can volunteer to assist business, particularly small business.

The Canadian Federation of Independent Business is a group which I worked very closely with when I was at Queen's Park. At times it puts out reports that would make one wonder if they were totally representative of the viewpoint of all members of that association. In fairness, I say to Catherine Swift and others involved in that organization, they serve a tremendous purpose. They serve a purpose of having a link to government, an opportunity to reach out and survey the federation's members and find out how important something like Bill C-53 is in terms of a small business loan to that community. Is it something that is just government fluff or is it something that the business community is taking advantage of? I would suggest businesses are doing that.

The Canadian Finance and Leasing Association is a new twist. Before this bill businesses could not access with the protection and the backing of the Canadian government finance capital from leasing companies. It is a big part of business. It can at times be a little expensive. I would caution all small businesses to take a serious and close look at the rates they pay for leasing. There are real advantages.

One of them is in terms of leasing computers. In two or three years the hardware may be obsolete and certainly in two or three months the software will be obsolete. A computer can be leased for two years and then returned and refurbished. There is a very active program in Canada to sell those refurbished computers and hardware abroad in markets that can use them. Then the small business can renew the lease and get up to date state of the art hardware. This is one of the few ways small businesses can ensure they are compatible with the marketplace in terms of competing with larger businesses.

Municipalities do that. The city of Brampton, for which I worked for some time as a consultant, has adopted a program through the Association of Municipalities of Ontario. It leases all of the computers. There are hundreds of them in a corporation the size of the city of Brampton. The city of Mississauga has a similar type of leasing arrangement. When the hardware is obsolete, it is turned back in. It gets brand new up to date state of the art equipment from the leasing company.

If for no other reason, this is a reason to support this bill, I say to members opposite. This is a reason to share with the small business community. This is a new window, a new frontier, a new opportunity where the government will give a guarantee that will back the leasing arrangement.

On the CIBC, once again we have talked to the banks and the Canadian Restaurant and Foodservices Association, which is extremely important. The cost of leasehold improvements for a restaurant can be very large. We could be talking hundreds of thousands of dollars. This bill will provide up to a quarter of a million dollars for such a project.

It is important to note that we are not talking about financing restaurants all over the country. We are talking about leasehold improvements that will add value. That is why we as a government wanted to hear from the Canadian Restaurant and Foodservices Association. We do not want to be the sole source of financing of leasehold improvements which include the cost of freezers, cookers, et cetera, but we want to be there to help.

The Canadian Taxpayers Federation should be near and dear to the hearts of Reformers so I will let them talk about those individuals.

I mentioned the great work done by the member for Parkdale—High Park in relation to her report on credit unions. Their role has expanded tremendously. Canadians should go to their credit unions. They are not customers. They are owners. They become shareholders and partners in credit unions. We should be using credit unions more.

GE Capital is one of the big leasing companies involved. The list goes on and on of the many financial institutions we have talked to.

This bill is a classic. It shows the government has consulted. We extended the old bill to ensure the program would be safe and that it would carry on. We have not modified the end result. There is still a quarter of a million dollars available in terms of a loan. We will still guarantee 85% repayment on behalf of the borrower to the lender. The bill gives confidence to the lending institutions, the credit unions and leasing companies, all the organizations in the financial sector, that they will be able to support small business.

Make no mistake. This bill is not there to help lending institutions. This bill is there to help small businesses. It is there to help ensure their future. It is there to help ensure they will be able to compete in the incredibly competitive global economy. They will be able to manufacture and export their goods, create jobs and continue to make this economy one of the most vibrant in the entire world.

[Jim Pankiw, Reform, Saskatoon—Humboldt, SK]

Mr. Speaker, would you please confirm that I have the unanimous consent of the House to split my time with the hon. member for Calgary East.

[The Acting Speaker (Mr. McClelland)]

The member for Saskatoon—Humboldt has requested the consent of the House to split his time with the member for Calgary East, which would be 20 minutes each with no questions or comments. Is there unanimous consent?

[Some hon. members]

Agreed.

[Jim Pankiw, Reform, Saskatoon—Humboldt, SK]

Mr. Speaker, I am pleased to speak to Bill C-53, the Canada small business financing act at third reading. It is clear that the government's passage of this bill has been driven by its need to have the regulations in place by December 1. That is why the bill was rushed through committee, faulty regulations and all. That is why the Liberals moved time allocation and limited debate at report stage and third reading.

This bill has many faults which Reform MPs were willing to help correct. The principled amendments concerning the regulatory process that we brought forward will not be dealt with. Efforts to stop the program from expanding into the volunteer sector will not be given due consideration.

The government has shown a willingness and is all too eager to ram through legislation at the expense of reasoned debate. Its rationale seems to be that there is no need to hear what anyone else has to say, that it knows what is best and pass the legislation as is. It is typical Liberal arrogance.

I wonder if the irony of this situation is not lost on Liberal members of this House. After all they were the ones who cried foul every time the Progressive Conservatives used closure during their nine year reign of error. To date, after five years the Liberals have used this procedural hammer twice as often as their Conservative counterparts ever did. I never thought I would see the day when the Conservatives would look more democratic than the Liberals, but there it is. Another example of the Liberals saying and doing one thing in opposition and then doing quite another once in power.

Indeed the Liberal government has entirely failed this House. By moving time allocation it has once again shown its utter contempt for the democratic process. It has once again moved to limit debate and consultation. In doing so the Liberals have failed Canadians once again.

In relation to Canadian small business, the government has also failed miserably. Within this legislation which will replace the Small Business Loans Act, the Liberals are using a band-aid approach when what is really needed is major surgery.

According to the Canadian Federation of Independent Business and the auditor general, access to reasonable financing is an impediment to growth in the small business sector. The other major obstacle is high taxes and this government's irresponsible approach to economic planning.

What the Canadian Federation of Independent Business and every small business owner will also tell us is that entrepreneurs need access to equity, not more debt. Let me see if I can make this any clearer for the Liberal members of this House even though they are usually not prepared to listen anyway.

Let us say that a Canadian wishes to open a small business. The problem is, like many other hardworking Canadians, they do not have the capital resources to do so. If they do manage to open a business on their limited resources, tax and spend Liberal governments will ensure that it is not a profitable venture.

The point I am trying to make is that in addition to killing jobs, taxes also kill business ventures. High taxes reduce the opportunity for existing small businesses to expand. High taxes kill individuals' dreams to open up a business. High taxes, not access to debt, are the problem.

What do the Liberals offer as a solution? One would think they would offer to cut personal income taxes so that individuals would have access to more of their own capital equity. One would also think that the government would cut payroll taxes such as employment insurance or CPP. A reasonable person might also believe that a government interested in stimulating growth in small and medium size enterprises would cut capital gains taxes. But no, rather than tackling the fundamental economic problems inherent in this economy, Liberals instead choose to apply a taxpayer guaranteed loans program, the result of which is to skewer the playing field in the marketplace.

What is the legitimate role for government? The first thing that should be done is to determine whether there is a legitimate market failure. In that regard the performance of this government is abysmal.

What has the government done to quantify the degree to which access to financing for small business is a problem? How extensively has the government reviewed the performance of Canadian banks in this respect?

Instead of answering these questions, instead of being proactive and demonstrating leadership, what do we see from this Liberal government? We see it tinkering with yet another fundamentally flawed government program. Despite the fact that the government has not quantified the problem of access to financing by small business, we can safely assume that a problem does exist.

Improved growth of small business would clearly have a beneficial effect on the economy, lower unemployment, more disposable income, et cetera. How do we achieve this? Again we need to ask ourselves what are the obstacles which truly inhibit the growth of small business?

Once again, in case the Liberal and NDP members of this House missed it, the obstacles to growth are excessive employment insurance premiums, high levels of taxation and a banking system that lacks competition. It is also a regulatory burden that hinders the growth of small business. The obstacles to growth are not a lack of government programs or a bureaucracy that is too small. Unfortunately this Liberal government has been unable to recognize this very simple fact.

Instead of taking measures that would clearly have a positive impact on every small business owner in Canada, the government is more preoccupied with changing the name of the Small Business Loans Act to the Canada small business financing act.

The fundamental flaw with this Liberal government is that it does not understand the most basic economic principle. A dollar left in the hands of a consumer, investor, entrepreneur or taxpayer is far more productive than that same dollar sent off to Ottawa to be dealt with in the hands of a lobbyist, a bureaucrat or a politician. I rather doubt that the Liberals and their socialist NDP allies will ever figure that out.

I also want to comment on how the government has shoved the bill through the House so rapidly. It has had due process, introduction, second reading, clause by clause, report stage and now third reading. However the Liberals do not care what knowledgeable criticisms there are. They just want to get the bill passed so that they meet the December 1 deadline to have the regulations published in time. The government needs the regulations in place by January 1, 1999, so that the banking industry can have the requisite 90 days to implement changes.

The government never really cared what stakeholders and opposition parties had to say on the bill. The only thing that mattered to the industry minister was getting it passed to meet his own deadlines. In fact witnesses that appeared before the committee explained the inherent flaw in the approach the government was taking. They explained the distorting effects that government interference in the marketplace has on the economy. They explained that the proper approach was to cut taxes and reduce the regulatory burden on business. The minister was not present to hear any of that. During all the debate on the bill he has not been here once either. The significance of that should not be lost.

The regulations were just as hastily conceived as the legislation. Indeed we saw proof of that in committee three weeks ago when it came to life that the draft regulations were flawed. That is pretty much par for the course when it comes to the legislative agenda of the government.

The government needs to think about its approach to the economy and to small business in general. The bill does nothing to improve the economy or to reduce the burden placed on small business by government. As such the bill is fundamentally flawed.

In closing I urge my colleagues on both sides of the House to take time to consider the flaws in the legislation carefully before voting to support it at third reading.

[Deepak Obhrai, Reform, Calgary East, AB]

Mr. Speaker, we have been asking the government to keep its hands off the UI premium. My colleagues on the other side seem to be getting a little worried about it and have started dreaming about premiums. All of a sudden they started mentioning Mr. Premium. That is a good sign.

I listened to my colleagues on the other side. Before discussing the reasons we oppose Bill C-53, I heard my colleague on the other side talk about the business plan, how small businesses are creating jobs and leasehold improvements. Another member talked about helping women entrepreneurs. I agree with it. That is right.

I commend the member who referred to the business women's delegation. Women play a very important role in businesses, but she is not the only one. Across the country there are organizations working to ensure that women have access to capital and become entrepreneurs.

From my own personal experience, I have been in business as a small entrepreneur with my wife for the last 16 years. My wife has been the backbone. She is a woman entrepreneur. I have supported her wholeheartedly. She has made a tremendous success. From one store she eventually expanded to four stores.

As well, I have been involved in international investments. Talk about a business plan and talk about leasehold improvements are nothing new to me. I have dealt with banks. I have dealt with business plans. My experiences in accounting also gives me insight into reading balance sheets and how to present a proper business plan.

In reality we have had small business financing for many years in the same act that is now before us. All my colleagues on the other side, and I hope my colleagues in the NDP, know that there are still problems with accessing financing. They hear from their constituents, from small businesses. They still cannot access financing, which would tend to indicate that the approach the government is taking by creating the Small Business Loans Act is somewhat flawed. The government may think of a program to assist small businesses, provided the risk factor is carried by all equally, so in principle I would agree that there should be a mechanism for that.

We have another attempt by my colleagues on the other side, by the government, to look good and to feel good. Time after time I have heard in the speeches made by my friends on the other side that they are the supporters of small business. They are relying on this little program and calling themselves the great supporters of small business. Let me say that small businesses do not see it that way.

The Liberals keep standing up and saying the Reform Party is anti-business and that the Reform Party is not a supporter of small business. I was a little amazed when my colleague from the NDP said that a couple of days ago. I tell him that we are for small business. We have had experiences like many of his colleagues and supporters have had. We understand the mechanism of small business, but we do not feel that the bill is the solution.

There are two reasons for that. First let us talk about the banks. If a program like this one is implemented and given to the banks or private organizations, to a degree they will do a better job than it being given to a bureaucracy. Giving this program to the banks is fine.

Where the problem comes and where most Canadians and most small business people have difficulty is that the banks have a monopoly. The banks have been protected in the past. They have been given all the tools to make them a strong partner in the economy. They have become very strong partners in the economy. They are so strong that today the majority of Canadians now see banking as a vital service, putting them next to utilities.

Because the banks have been protected so much and have become a vital service to Canadians, they also carry a social responsibility. They also carry a burden to ensure that in return for getting the protection they have achieved they have to address the concerns of Canadians, of small businesses.

Today I will be meeting with the senior vice-president of Toronto-Dominion Bank in charge of small businesses who will explain what his bank is doing. I have met with the CIBC small business vice-president who indicated what they were doing.

My friend on the other side alluded to to the fact that the Bank of Montreal and the Royal Bank have come up with a plan to create a small business bank. I am a supporter of the small business bank. It is an extremely good idea. It is an excellent idea. I am a little sad that it has come forward just because they are putting a case for merger. They should have done this before. These are good initiatives.

Where is the responsibility of the banks? I have mentioned to the banks the areas where I feel they have not addressed the needs of small businesses. Examples are rapid change of their managers, high cost of doing business and extremely stringent rules for collateral. At some stage it has become ridiculous, where even I was told by one loans officer that if he had the opportunity he would also mortgage my dog. The banks carry responsibility in addressing this issue.

If a small businessman walks into a bank, I am not saying the banker should blindly give him a loan. Banks have a responsibility, as does the small businessman, to ensure that the business plan is sound. Perhaps the banker could sit down and show some compassion and work with the individual to ensure that his idea becomes successful. Bankers should help such people and not sit in their chairs saying yes or no.

The Federal Business Development Bank has small business weeks which target small businesses and students. It provides a very successful initiative for them. Students come to those banks by themselves; the government does not send them.

Government wants to be business friendly and comes up with this program so that it can tell Canadians that it is the friend of small business. That is fine. If government wants to do that, it is its prerogative.

In reality the problem is that the climate for successful entrepreneurship, for the success of a business in Canada, is becoming more and more difficult. Why is it becoming more difficult? What do small businesses face? Let me speak from experience. They face the high cost of EI, the severely high cost of CPP and government bureaucracy which has now started charging user fees.

Let me give an example. I received a letter a couple of years ago from the government when it introduced a $20 fee for the registration of corporations. I sent in my $20. It was the first time the government said it had to recover the cost. It was the usual rationale for user fees, a tax on the other side.

The letter was from the government agency thanking me for my cheque. If I wanted a receipt, I had to write to them and a receipt would be sent. Why should I write? They have already written me one letter. I needed to write a letter back to tell them that I needed a receipt. Then they would write back and send me a receipt.

Let us talk about the tax burden on a small business. As every small business that leases property knows, first we pay property tax which is part and parcel of the leasing of property. The landlords tack it on to the businesses.

Then we have what is called a business tax. Small businesses pay property tax, business tax, user fees, high cost of fuel and other high costs. Then our friends opposite introduced the GST despite the fact that they said they did not want to do it. The GST came with a tremendous amount of bureaucracy and paperwork attached to it. It is another huge burden to small business.

Now the government talks about harmonization, harmonization which we understand the people in the Atlantic provinces are not happy with. We do not know what my friends opposite will come up with next. They may come up with some new idea to take the money from small businesses. We will keep an eye on them and not allow them to take the EI surplus.

We will be fighting on that. Time after time Canadians have told us. Canadians are also constituents of government members and hopefully they are telling them that as well. We are going to make sure Canadians know if the government tries to go after the EI fund.

This legislation brought in by the government has a lot of flaws. It is not well thought out. If it wants to help small businesses there is a way. First, create the climate to help by reducing taxes, allowing families to come up with ideas, to work and to get the reward for their thinking.

People in small business do not put in a nine to five day. When we take all the time put in, owners of small businesses are probably earning $3 to $4 an hour so that they can realize their dreams and hopes.

The government trots in and says no, the owner has to do this and that. He or she has to pay this tax or that tax. Hopes, dreams and hard work go down. That climate is what the government should be creating, not introducing a bill like this.

The banks looked at it and said “We will also look nice. If there is a default we will get our money from the government, the taxpayers. What is the problem?” They do not take the risk. It is not important for them. Come on in, fill out the paper. Who cares?

Of course they are supposed to follow criteria but they have been guaranteed, guaranteed of making money. What is wrong with the banks? Why should they address them? Where is their social conscience? In the meantime we have given banks the tools to be stronger. We have given them the monopoly.

This two way approach is what small businesses are looking for. That is why I am having difficulty supporting this bill.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, I have been listening patiently to all the speeches since the beginning of the debate, and I must say that I am disappointed. As you know, the Bloc Quebecois supported the principle of this legislation and tried to have some amendments passed. Not only did the government party not bother to consider these amendments, it did not even take into account the work conducted by one of its own departments.

I listened to the comments made by our colleagues from the Reform Party, who were against the bill at the beginning, and I read their amendments, with which I disagree. They made many interesting remarks, but there is one fundamental thing I cannot accept.

They contend that, as flawed as it may be, such a bill is essential but that, with lower EI and pension contributions, small and medium size businesses would no longer need government guarantees to secure equipment, rental and leasehold improvement loans. But these are two completely different matters.

The Small Business Loans Act, which was passed back in 1961—no party can therefore claim it as theirs—has served Canadians well.

In preparation for this morning's fascinating meeting, I read three brochures, including one from Industry Canada.

When I was young, my first job was in the field of economic history. It is most interesting to note how much this program has been used by successive governments to stimulate the economy after hard times. That is normal.

Governments are not the ones that create employment, but it is true that they can make it either easier or harder for businesses to create jobs. Governments—and by this I mean all governments—are always faced with the challenge of deciding which types of incentive programs would best help the private sector, companies, banks or other lenders, to create jobs. That is what I want to address. I shall try to be equal to the challenge of explaining to the two or three people listening in Canada a bit of what is going on here.

[An hon. member]

Not in Canada, now?

[Francine Lalonde, Bloc, Mercier, QC]

Yes, because television goes everywhere.

This program was used, particularly during the 1981-82 crisis when we had a very marked increase in interest rates, coupled with a slowing economy. In Quebec, within the space of one year, 200,000 jobs were lost, the highest number in both absolute and relative terms of all the provinces.

Then in 1980, some reforms were tried. Finally, in 1983, the program was liberalized in order to help small and medium size businesses get off the ground, or improve their situation. And what was the result of these reforms? Two years later we could see that there had been some success, but that it was time to impose restrictions because there might have been some abuses of the system. Restrictions were therefore imposed, starting in 1985. I could have gone further back in time, but I have stayed with the relatively recent past.

From 1985 to 1993, no changes were made. Why did we make them in 1993? Because the economy plunged once again in 1990-91. So, this program was again used to stimulate and promote job creation by the establishment of small businesses.

Here again, the government played with the parameters of the program. In two years, the loans tripled. Naturally this was not noticed at the start, but it was later on. The federal treasury had to provide guarantees to clear up the debts resulting from various problems and bankruptcies. In the early years, when the program was starting up, these negative consequences were not apparent.

I would point out that this type of program cannot be frozen forever. It must be regularly submitted to parliament and regularly evaluated against approved indicators.

It seems to me that after this experience, there should necessarily be a consideration, which should not just examine the recovery of costs, but also the effects on employment, effects that could be called macroeconomic. There could be times when it is appropriate to stimulate the economy by promoting job creation in the knowledge that an increased number of bankruptcies will follow. On the whole, it is better to have small business people moving the economy than staying at home collecting employment insurance.

This is that sort of program. I think it is with this sort of consideration in mind that we parliamentarians should have pushed and should push for continued analysis of the effects, not only in terms of the recovery of costs—the auditor general wants that and that is understandable—but also the effects on job creation. Let us ask them about the real effects and about the effects on the economy.

The program worked and needed reviewing because, in 1993, the machine was opened up further and then in 1995 it was closed down somewhat. Nobody knew exactly where it was all leading. So, when the auditor general sounded the alarm, not only did he recognize the importance of the legislation, because of the great need of small and medium size businesses for credit, particularly for start-up and expansion, but he also said that the program had to be tightly run, that unscrupulous individuals could not be allowed to take advantage of the system and stick taxpayers with the bill.

But it is not just the auditor general who is calling for a review, because the Canadian Federation of Independent Business, which, as we know and should point out, represents over 90,000 small businesses throughout Canada—the very active Quebec branch of this federation represents over 16,000 small businesses—was also heard from. At the time of the review early in the year, the president of the Quebec branch said that 29% of SMB owners consulted in 1997 cited the availability of credit as one of their most pressing needs or concerns. That is almost one third.

The president concluded as follows “This means that lending institutions still have some way to go to meet SMBs' needs”. She added that the amount of credit available had increased for the group, but that these so-called gains had benefited primarily businesses with 20 or more employees. This means that businesses with fewer than 20 employees are still in dire need of credit.

This press conference was held in English and I will quote from it in that language:

“Economic growth is compromised when businesses do not have access to a sufficient financial lifeline. The fallout hurts everyone”.

As for the Canadian Federation of Independent Business, it insists on the glaring need for credit. It stresses that some small and medium size businesses do not even dare go to lending institutions, because they know these institutions are not always receptive to their needs.

Surely, there are members here who have had entrepreneurs, both men and women, come to them because they have major credit problems and do not dare go to lending institutions, because they do not want to tarnish their reputation. They are hesitant.

The entrepreneurs who start a business do not all have easy and free access to advice that they can follow with confidence. Starting up a business is no easy thing. The business world is merciless. If one is not big and do not have support, one's application may be turned down flat. Alternatively, they will take one's shirt by demanding collateral such as one's house, one's pension fund, everything one owns.

It is only normal that Mrs. Swift would ask for improvements to financing for very small businesses, which are the emerging businesses and which are responsible for economic renewal in several communities. Naturally she adds that governments must be concerned about the effect of the various payroll taxes, especially on small and medium size businesses, which are often in service and non-capital-intensive sectors.

The Canadian federation knows it needs a program, a sound law on loans to small businesses. There is an interesting letter from the Canadian federation, calling for loans, written to the Minister of State for Small Business in 1993. I mentioned that the strings were loosened a bit in 1993.

The federation said “The federation expressed its concern about one point early on. The modified program may likely encourage financial institutions to simply shift the figures to another column, in other words, to move the highest risk accounts into the government guaranteed loans folder”.

Like my colleagues, I have heard them a number of times. They want a program available to businesses most in need of it—specifically for them, they say—but one that is neither a subsidy nor a gift—a program that permits businesses to develop at reasonable cost.

Another passage dates from 1994. It was shortly after the November 29, 1994 election. The federation wrote to the Minister of Industry that “According to international statistics on this type of program, no more than 5% of the total number of term loans to small businesses should be given under this program”. So the target is businesses that would not otherwise have access to credit.

The federation added “When this percentage is exceeded, it is because the banks are manipulating things considerably by including in the program loans that do not require a government guarantee. The program as designed at the moment is overly generous to the banks, which draw maximum benefit from it, because they try to appear to support small business at taxpayers' expense”.

I stress, and I will probably do it again since the learning process is based on repetition, that it is not a coincidence that the Bloc Quebecois proposed that a clause be added to the bill dealing with small and medium size businesses that would not otherwise have access to credit. We could have seen, in the regulations, what this meant.

If we do not try somehow to target businesses that would not otherwise have access to financing by helping them in any way that we can, we may create a situation where banks could conceivably grant loans that are more risky, without really meeting the needs of new and growing small businesses.

The Canadian Federation of Independent Business made representations on the bill itself. However, to follow the outline I made for my speech, I must go on to say that there was a need for a reform. That reform was dictated by two considerations. The first one was to correct the magnitude of the flaws in the legislation as amended in 1993 and again in 1995, or at least to see whether it was possible to better ensure cost recovery for the Department of Industry and to control spending. This is what I call the accounting component, which is looked at by the auditor general.

But there was also an obligation to see under what conditions we could ensure that small and medium size businesses with credit needs have access to financing. These two considerations had to be dealt with together.

This is where the disappointment occurred. The disappointment is the bill. It is, of course, a new version of the SBLA and the general framework is still the same. In a financial package I look at with young entrepreneurs—and I am sure members come to the same conclusion when they do it—we look for a small business loan, because such a loan is needed for buying or renting equipment. This is one component of the financial package.

I regret that it was not improved, that the government concentrated only on cost recovery and did not concern itself with the second component, except through a pilot project that I supported but whose success I am not sure of. Since we will certainly be in this House for some months still, we will have an opportunity to raise this issue again.

Instead of being a new version of the Small Business Loans Act, this bill is called, and I quote:

An Act to increase the availability of financing—

That caught my attention when I read the bill. Great, I said, they are going to meet needs. It goes on:

—for the establishment, expansion, modernization and improvement of small businesses.

It says “small businesses” not “small and medium size businesses”.

The problem, and it is a big one, is that there is no provision for this in the bill. This is quite a problem. The minister may have had good intentions, but they are not borne out anywhere in the bill. Yes, availability should be improved, but how? We are told by officials that the funds available will be largely the same, $15 billion over a five-year period.

So we find ourselves with a bill that is supposed to be a reform, but that is really, given all the consultations, a big to-do about nothing. If the Small Business Loans Act were left essentially intact, we could at least be sure that SMBs that needed financing would have access to it. But I am not sure that those most in need of financing will qualify.

I am not sure that others who do not need such loans will be excluded. I am not sure of this, because the bill, to my knowledge, contains no provisions for such exclusion.

There are other very tiresome aspects to the bill. Of these really quite unacceptable aspects, the main one is that the minister, or the department, has removed from the body of the bill the criteria for identifying eligible lenders. A few indicators remain, but the type of loan is not mentioned.

The contract as it were that used to be in the legislation has been removed from the bill. Right now, we cannot tell. In fact, since regulations depend on him, the minister could come out and say that, from now on, under the Small Business Financing Act, loans on equipment are excluded. And, legally, there is nothing we could do about it.

Of course, when the members across the way hear opposition members suggest that this is illogical, that it makes no sense, that the core message of any legislation ought to be stated in the body of the act, and not in its regulations, they respond by saying any odd thing.

They should consider this suggestion on the face of it, so that the department is not left with all the power. I have nothing against this minister in particular. I knew the human resources development minister fairly well, and if he knew anything at all about what was going on in his department, that in itself was something. This apparently is an advantage of this government from coast to coast to coast. I rather see it as a disadvantage.

While regulations used to be included in the act, they no longer are. I want to tell the House what impact this has had at committee. First of all, I would say it was a major source of embarrassment for the parliamentary secretary; bank officials who declined to testify until they had had a chance to take a look at the draft regulations.

Then they showed up in a panic, saying “Look, if passed as they stand, these regulations will preclude lending to such and such small business category”. A franchiser came and told us “This would spell the end of our line of business”.

As members can see, the new draft regulations caused a great deal of trouble. We also found ourselves in a rather embarrassing situation as parliamentarians. We suspended our proceedings and asked the department to go back to the drawing board. But instead of slowing things down, things happened fast.

We in Parliament found ourselves faced with a fait accompli. Representatives of banks and franchise holders—and not of small and medium size businesses—met with department officials. We parliamentarians got a letter stating that the bank representatives were satisfied with the assurances they had received. It is not reassuring to parliamentarians to see a bill where the most important part, called for by the Canadian Federation of Independent Business, is not in the bill itself but in the regulations. For me, this is the most significant problem with the bill. It is even rather surprising to see such a thing happening with a piece of legislation.

There are two types of legislation we pass. In a former life, I worked a lot on legislative texts such as labour codes.

A labour code is the type of text where every word, every comma, every colon, counts because it affects the hiring or laying-off of an individual, determines an entitlement or a non-entitlement. The text of the law itself must be substantial and detailed. That is the type of legislation I am accustomed to. But the latitude being taken with the law and with what has to be done in this case is unacceptable.

Some legal experts may feel offended, but I have no bone to pick with them.

The type of law we are dealing with here is a form of governmental decree announcing policies that do not always reflect the utmost of care, the utmost of concern for democracy. In reality, even if the policies are hard to read, citizens' rights are covered. What kind of small and medium size business can say that it is entitled to a loan under the act? This is not possible, because it is not stated that capital or equipment loans are included. This kind of information can be found in the regulations.

I moved an amendment in committee, and it was of course swept aside. “Just an opposition member trying to stir up trouble”.

There is another clause I want to address, one that I see as favourable and one we supported, while trying to get an addition made to it. It is the one which states that the minister may establish a pilot project to guarantee loans to the voluntary sector and capital leases.

If this is done as a pilot project to see where the difficulties and advantages lie, I believe this is good. I would have liked to see a third element brought in, about capital funding.

I am in favour of the fact that the voluntary sector, what is called in Quebec and elsewhere the sector of the social economy, is included in those able to benefit from this legislation. I think, moreover, that there will be fewer problems with this sector than with the small and medium size businesses in sectors where the risk is higher.

This sector of the social economy, a growth sector for some time now, has some highly competent and eloquent spokespersons in Quebec. This sector is part of the market economy, and therefore financially autonomous, but its goal is not to generate profits but to create employment and deliver services.

A typical example of this is a work co-operative. A work co-operative is designed to be part of the market economy, to produce and sell products. The money it receives goes to salaries and business development, not to profit. The job co-operative sector is a growing one, and we have seen some of these co-operatives, these different types of businesses, come through the crisis and provide their workers with a very different environment.

This does not mean there is no authority in these co-operatives, but that the workers themselves own the business. Therefore, it is in their interest to make it a successful venture and to share the duties and responsibilities accordingly. It is their security, their business. There are also housing co-operatives, whose members are co-owners.

There are other types of socioeconomic businesses that can provide services. For example, there are co-operatives or non-profit organizations that provide services to the elderly.

Funeral co-operatives have recently been developing very quickly in Quebec. This is a steady business. In fact, it is growing, given our demographic realities. Funeral co-operatives help fight the invasion of American multinational companies in the funeral service sector.

We agree with having borrowers from the voluntary sector—as mentioned in the bill—or in the social economy, as we would say in Quebec, be part of the pilot project that could eventually make them eligible under the new Small Business Loans Act.

Why was working capital included? When I read the background document prepared by the Department of Industry, I realized that, after 1983, there was very strong pressure to include in the act the authority to guarantee the working capital of a business. I can understand.

I introduced this amendment attaching a condition that I saw in a board of management regulation because, in this life and my former life, I have seen all too often businesses that had everything they needed for success run out of money. I have seen business owners borrow from a brother-in-law, a sister-in-law, and so on, and find themselves unable to survive the two or three months before money came in from sales to businesses or individuals when they had to pay their suppliers. I am sorry this amendment met the same fate as the others.

Finally, there is one last provision I would like to mention even though it is not in the legislation either. In this regard, parliamentarians must renew their attack in committee and elsewhere. I am talking about the provision that does not require the examination of the application of the law take job creation and macroeconomics into account. In other words, up to now, there has been interest only in cost recovery, in expenditure control but no interest in the effect on the economy of the businesses created, even if they are bankrupt within two years. Every effort must be made to prevent them from going bankrupt after two years, because there has been too much pain, too much sweat, too much effort, too much investment and too much everything. But even if they do go bankrupt after two years, even if we have lost $50,000, was it still not amply worth the effort in economic terms? It seems to me we must introduce this approach in the analysis of the new law. I add one final concern.

The minister plans a review within a year, and then not for another five years. As I read the history of the SBLA last night, I said to myself we could be facing another recession in a year or a year and a half. This Parliament or this government will want to use this legislation again, as it has done in the past, in a countercyclical fashion in order to stimulate a weak economy. When things are tough, are the bankers prepared to make it easier to obtain credit, as would be a reasonable thing to do economically or macroeconomically? No. They do not do that, they do the opposite. They limit credit and make it harder to obtain.

Hence the importance of a loan guaranteed by the government, which says that, even if the banks tend to be tight fisted at present, that is not what is needed. The economy still needs help to recover.

In this part of the bill, therefore, I think that the minister and the department ignored their own experience. Although it is well drafted, the bill may well have to be reviewed further before the anticipated date of 2004.

The front page of the last issue of The Economist , an extremely serious and not at all left-leaning publication—I imagine that some of my colleagues must delve into it from time to time—featured a balloon showing the rise in stock markets. For some time now, The Economist has been saying that the greatest short-term risk is not Asia, but the United States, whose inflated stock markets could take the same dive, with serious consequences.

Canada was not mentioned. As members know, The Economist is a British publication, but it is interesting to hear these experts draw comparisons with the situation that led to the 1929 stock market crash. I do not wish to scare anyone, just to say that the minister was unwise not to provide for a more periodic review of the legislation, given its past effect in counteracting cycles, even if the purse strings subsequently had to be tightened each time.

The Bloc Quebecois is in favour of the bill because it nonetheless gives SMBs access to loan guarantees that they would otherwise have greater difficulty obtaining. But this is not a good enough reason for changing the title of the bill which, I repeat, used to be the Small Business Loans Act. The new short title is the Canada Small Business Financing Act. The Small Business Loans Act was much more to my liking.