Mr. Speaker, I will be sharing my time with my hon. colleague from Calgary Northeast.
I would now like to recap the key elements of Bill C-53. According to the purpose of the existing Small Business Loans Act, which will be maintained with Bill C-53, the government, and therefore the taxpaying public, take on more risk than private lenders. Even with the changes proposed in Bill C-53, the government will still cover 85% of any defaulted loan.
We must ask ourselves two important questions. Does the Minister of Industry think it reasonable to use tax dollars in such a risky manner? And why should taxpayers take more risk than the banks?
It is widely understood in economic circles that government intervention leads to a misallocation of resources. The intervention by the government maintained by Bill C-53 will remove important market forces from the lending process and will lead to the funding of less viable business ventures, which will do nothing to foster a healthy economy.
Clause 5 of Bill C-53 illustrates the government's indifference to the fact that it is playing politics with the paycheques of Canadian people. This clause refers to the minister's liability should a loan not be repaid. However, it is clear that the liability is that of Canadian taxpayers.
As for risk, which is a key element in the proper functioning of a free market, eliminating it creates a moral hazard, in that lending institutions will be less inclined, despite the provisions for due diligence contained in Bill C-53, to evaluate the long term viability of a business venture. This situation will lend itself to the financing of unsustainable market ventures and, under this regime, it is the taxpayers who will inevitably be the losers. This is supported by the government's own statistics, which show that the default rate under the SBLA is 5.6%, compared to 0.8% in the private sector.
The impact of small business on the Canadian economy is substantial, and Reformers have always supported the needs of small business. However, the debate on Bill C-53 is not about whether small business is valuable, but about whether small businesses can get access to financing without government intervention.
I would like to point out that the importance of small and medium size businesses in the Canadian economy must not be under-estimated. The question we need to ask ourselves is the following: Is it possible to use deregulation in Canada to create a framework that will provide this financing in a more efficient way?
I believe the answer is yes, and that is why I cannot support this bill.
What we have heard from all sides has been interesting during the course of the debate on Bill C-53. Members from all parties have said how much they care about small business. In summarizing their comments on Bill C-53, my colleagues outlined how important small business is to this economy and how important it is to them as members of the House. Many of those members actually were small business people prior to becoming involved with the House. No matter where members stand in the House, no one is against small business.
The fact remains that we all have different views as to how to support small business and as to what should be done in providing that support. As I outlined in my brief address, the suggestion of members opposite has always been to implement various programs in order to intervene in the economy which can cause an unfortunate obscurity in the economy. Members on this side of the House have always argued that we should leave the business of business to the business people. I am sure the solutions will be found.
Government members have a responsibility to create a framework for a positive business environment. That is what many of us from this side of the House have argued. We have said that Bill C-53 is a sort of band-aid solution for the problem of small business financing. We have encouraged members opposite to look at the fundamental problems in relation to access to financing for small business and to look at ways to reduce taxes and other burdens on small business as opposed to implementing other government programs that will only add more paperwork and put taxpayers and small business people at risk in the sense of liability. This is the basis of our argument. It is the basis of what this side of the House has been offering as a suggestion. It is an alternative approach to what we believe has been a flawed direction on behalf of the government.
I commend all members of the House on their input as to how to help small business. Let us really look at ways to reduce the burden on small business. Let us reduce taxes. That is one of the reasons my colleagues and I oppose Bill C-53.