Debates of Feb. 16th, 1998

Small Business Loans Act

[Jerry Pickard, Liberal, Parliamentary Secretary to Minister of Public Works and Government Services]

Mr. Speaker, at the outset I would like it known that I will be sharing my time with the member for Etobicoke—Lakeshore.

As we look at the economy of Canada and as we think about the changes that have occurred in the last four years, we can be very proud that the tremendous potential in moving forward to make our economy much better is critical.

I look at the employment figures. Some million new jobs have been created. That is a net gain. That is a very important aspect for all of those who have been looking for employment opportunities. It a very important aspect for our country's growth and country's potential in the future. There is no question the government has done a tremendous amount to move forward an agenda of job creation along with business promotion.

The Prime Minister took on the role of Captain Canada, as many have called him. He took on the role of going abroad into Asian countries and South American countries to expand our trade potential. He took our business partners and our provincial partners and made certain the message he was bringing forth was heard throughout the world. Throughout countries it was heard that we had a great potential to work with, not only today but also in the future.

We have had an opportunity to look at youth programs and move that agenda forward. The bill is looking at the important issue of the finances of small business.

I have no question in my mind that the engine of the economy is business itself. Let us not sell short big business. It is as important to the country as small business. Small business happens to be the generator of jobs in today's day and age; the niche market; the market in every town, every community and every area of our country; the fellow on Main Street who makes sure that everyone is supplied with products they need and with products they desire.

One of the biggest obstacles to business today in our society is availability of capital. There is no question availability of capital is an absolute must for business.

Why are we talking about small business loans and amending the act to make another billion dollars available in the next year? It is so vital. Small business contributed to 81% of new job creation in 1996. With four out of every five jobs being created by small businesses we must ensure they have all the tools and mechanisms in place in order for them to prosper.

We know that more than 2.5 million small businesses exist in this country today. They employ well over 50% of Canadians. Everyone who realizes these conditions knows that we must make the loans and support for those loans available to small business. Any dollar spent by the Canadian government to make certain loans are available is a well spent dollar. We are repaid in many ways.

Some have called it a subsidy to business. We have put in place charges for those services and those charges were there to cover the costs of any losses that occurred within the programs. As time goes on, any cost to that small business program will be covered by the fees that are charged for small businesses entering those loan programs.

Some were critical of the administrative costs to the federal government. We introduced fees to cover the administrative costs within the small business loans sector. Any costs that may be attributed to the Canadian government in the form of covering loans or in the form of administration are retrieved by the programs that have been put in place and the charges that have been levied according to the provisions of the act.

It is important for us to realize that as we review this program it needs to be updated. The auditor general has made suggestions that we need as a government to re-examine the whole spectrum of how the Small Business Loans Act operates. The government has taken on that responsibility. It is doing a comprehensive review of the small business loans program. While this review is going on we need a bit of time to ensure the availability of loans.

That is why these adjustments are being introduced in the act today. They are adjustments to make certain there will be capital available for small businesses, those starting up and ready to move forward. There is capital available for those that may not be quite at the point where a bank would be willing to lend them money but the potential is so great that for that community, for that group of people it is a very vital investment.

There is no question when we look at the issue it is very important to realize this is an act that supports the grassroots of our communities. This is the act that supports all those small businesses on the streets of Toronto, on the streets in Leamington in my riding, on the streets of Chatham in my riding. It is the act that supports those rural community operations that are required in order to make certain we get fair and equal treatment right across this land.

Think of the kind of supports there are. Every one of the Reform ridings has thousands of small businesses in it. Each one of those small businesses needs the support that is offered through this act. That is how important it is.

I would also suggest that we consider others who are talking about this program. The Canadian Federation of Independent Business strongly supports this plan. Why? There is no question that if these loans are available they will allow the organizations to grow. They will allow the communities which require services to have those services. These loans will allow entrepreneurs to begin businesses. They will stabilize a lot of businesses having problems with cashflow at the present time.

I suggest that the costs are horrendous for someone to get into business today. They have to buy equipment. They have to buy stock to sell to their customers. We need to have financial mechanisms in place to support those businesses. Without that support we are certainly not going to see the growth which we have seen over the last few years.

It is not just the growth we are seeing in the Small Business Loans Act. This growth has to do with other programs that have been put in place as well.

Today interest rates are at the point where small businesses can survive, go forward and achieve a lot of their goals. Four or five short years ago, when interest rates were three and four percentage points higher, that put a tremendous burden on small businesses. They were unable to compete. They were unable to turn a profit in the first few years.

When my son looked at the cost of getting into business, the interest on the capital he had to put out represented a huge portion of the revenues he took in on an annual basis. There are many businesses in that position.

The lowering of interest rates and making loans stable gives tremendous support to small businesses and enables them to thrive.

We know that in 1996-97, 30,000 small and medium size businesses used this program. They accessed some $2 billion in financing. That alone tells us how important those dollars are in enabling small business to move forward in this country. That alone is the key measure in why we need to increase that funding by $1 billion today to make certain those dollars are available.

I strongly support the minister's position to go forward with the view of reviewing the entire policy to ensure it is fair and supportive of business.

[John Herron, Progressive Conservative, Fundy Royal, NB]

Mr. Speaker, I have a couple of comments with respect to the remarks made by the hon. member.

As we stated earlier, the Progressive Conservative Party will be supporting this legislation. However, we believe it is incumbent on the government to react to a number of the initiatives put forth in the auditor general's report, as I outlined earlier.

I am very pleased that the Minister of Industry stated: “I am pleased that the auditor general noted that we have made considerable progress toward increasing productivity and reducing the overall cost of the program. The auditor general's report will be a very useful tool as we review the SBLA”.

However, there is one principal issue which has to be addressed and that is the issue of incrementality. The hon. member mentioned different criteria in terms of where the access to capital would be provided to certain types of small businesses. Then he went on to another aspect of it and said that loans would also be given to companies and ventures where loans would not otherwise be given.

Is it the member's understanding of the legislation that its original intent was to provide incremental loans of a smaller nature, not to compete with the larger amounts of money?

As the auditor general pointed out in his report, 30% to 40% of the loans approved by the SBLA would have been approved anyway.

I think it is incumbent on this government to actually ensure the incrementality type loans, loans for start-up ventures or for expansions that do not tie up the small business person's personal guarantee.

That is supported by the 88,000 members of the Canadian Federation of Independent Business. Is that the intent? Do they want to approve other loans?

[Jerry Pickard, Liberal, Kent—Essex, ON]

Mr. Speaker, the point I was trying to make was that most loans in most of our communities across the country are controlled by one or another financial institution.

In those financial institutions there are certain criteria. We know the criteria, depending on the security, depending on the amount of money coming in, depending on a lot of factors. Someone can borrow money for a start-up business at a certain per cent.

If they cannot get a loan from a bank, they might then go to another financial lending institution which may lend them that money. Often that money is at a higher rate, a rate that makes it very difficult for that business to operate.

Someone can have a tremendously great business plan. They may have a lot of factors involved that would make this business a go and people sitting down and analysing it can give them a tremendous amount of support.

They still may not have any reserve capital that would allow a bank to say it will lend them that amount of money.

My point in suggesting this is that I believe at the outset often businesses do need a little extra support. Government programs giving an 85% guarantee is giving that support to those businesses. The track record of the lending pattern has been very good.

We know the costs in that program. We have laid on fees that match the costs. If the bank would lend that money without the support of the Small Business Loans Act, fine. We support that very much.

All we want to do is make certain that for those folks who do need that bit of support it can be there and it can be helpful for them and it will not put them into a situation where they cannot go ahead with that small business.

The program allows a lot more people to enter the business sphere. It also gives guarantees that people need within that structure.

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, I am pleased to join in this discussion to the amendments to Bill C-21, the Small Business Loans Act which provides loans and guarantees to small businesses.

The amendments to the act would extend the current lending period, as most of my colleagues have stressed, to March 31, 1999 and raise the program's total lending ceiling by $1 billion, taking us to $15 billion.

During this period of extension Industry Canada will have the opportunity to work in consultation with our stakeholders to review and give consideration to the sustainability of the program.

This review will investigate ways to sustain self-financing, to improve accountability and to verify the conditions stipulated in the act.

In my riding of Etobicoke—Lakeshore there are over 3,600 businesses. Many are small and medium size business. They are an integral part of the economic infrastructure of Etobicoke—Lakeshore.

The operation of these businesses cuts across the manufacturing and service sectors of the economy. To use the oft used phrase, they are the main engine of employment in my riding.

Maintaining a strong economy is vital to the success of our economy. Providing opportunities whether through financing, technology or whatever assistance we can give to small businesses will give the Canadian economy the energy it needs to grow.

Canada has more than 2.5 million small businesses. Small businesses created 81% of the new jobs in 1996-97.

In recent consultations with businesses in my riding, the one concern I heard from small business owners over and over is the difficulty they face in obtaining financing. Access to capital is their number one problem. The Small Business Loans Act addresses the problems of these constituents.

There is a history to the Small Business Loans Act. It was passed in 1961 to provide loans to small and medium size businesses which would otherwise not have access to conventional financing. In 1996-97 approximately 30,000 small and medium size businesses used the Small Business Loans Act to access roughly $2 billion of financing.

The importance of the $2 billion in financing to those 30,000 small and medium size businesses has been stressed over and over again. I can say to the House that without access to these financial resources, the small businesses in my riding would not be operational today nor would they have the success that they have had.

The program under the Small Business Loans Act is consistent with the Liberal government's commitment to assist small and medium size businesses adapt to new technologies, to produce new goods, to be innovative, to reduce costs and to increase their productivity.

Through this program we are working with stakeholders in the banking industry to foster a prosperous economic environment in Canada where businesses are provided with a chance to take advantage of opportunities in the global market.

The government has followed through on the commitments we made at the doors of our constituents. We have followed through with initiatives such as Strategis, an Industry Canada interactive web site aimed at increasing support for small businesses.

For the benefit of those of my colleagues on the other side who would question this, I think it is important that they note that the federal government shares the risk of loans to small business by paying 85% of the loss sustained by the lender. The lender is responsible for the rest. The loans are made by banks or other institutions which assess the eligibility of applicants. All businesses with sales not exceeding $5 million are eligible, except for farms, and religious and charitable organizations.

The Small Business Loans Act program is not a subsidy to business. I stress it is not a subsidy to business. In 1995 when the act was revised it moved toward covering the cost of loan losses. Lenders pay for the cost of the program through a one time loan registration fee. In short the majority of these loans are repaid. To date, loans under the Small Business Loans Act are approaching $14 billion, the total lending ceiling for the program. Very few of those loans are in default.

Changing economic conditions in Canada and global economic trends, not to mention the growing demand on the program by companies have given us some indication that this program needs to be maintained. The $1 billion addition to the program is necessary at this point in time.

Providing support to this sector of our economy will enable it to continue to support jobs and economic growth which is so necessary in our communities.

Recent studies have found that the small business loans program is one of the best programs compared to other available programs. Administrative and default costs are low. The government instituted a 2% registration fee and in 1995 legislated a 1.25% annual administration fee on lenders on the outstanding balance of loans which again were appreciated. Those fees are aimed at moving the small business loans program toward cost recovery over a 10 year period.

We have heard about the support this program gives to small businesses. At the same time we know in talking to our constituents there are other ways in which they are looking for assistance. I speak of the individuals who look to what we call micro credit. That is the very, very small seed money which is necessary for a business to start up.

Every effort is being made to ensure that there is fiscal prudence in the program and that we exercise that kind of management. Earlier one of the members made reference to the auditor general's report. The minister, as he said in his statements, is giving full consideration to ensuring good fiscal management.

Small and medium size companies do not exist in a vacuum in the marketplace. They need government and private sector assistance to expand, to remain competitive, to build a solid economic foundation and to do all the things that are necessary to sustain, to grow and to have those jobs in our communities.

I support the amendments put forward by the Minister of Industry. I remind my colleagues on all sides of the House that this is an important issue for the small businesses in our areas. I call on all my colleagues to support the amendments to the Small Business Loans Act.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I find it easy to agree with most of member's remarks. Previous speakers on behalf of our party have already voiced their support for this bill and we will be looking forward to doing that.

I would like to remark on some of the things that were raised in regard to the current situation that small businesses face when looking for venture capital. They lack support from the banks which leads to the need for the Small Business Loans Act. It is quite common knowledge that many small businesses that wish to grow or create jobs or to build their base have been flatly turned down by the conventional lending institutions.

In my own province of Manitoba, over 80% of all the venture capital given out last year was given out by the Crocus labour investment fund and not by the banks. In other words, small businesses wishing to access venture capital or any type of a business loan, even if they do have a good business plan and even if they do have the equity necessary, are not getting the help they need, which leads to the importance of things like the small business loans program.

What does the member think of the current situation? Banks are not meeting the needs of small businesses with the capital that they need. Does she think the merger of the major banks is going to lead to better service, or should her government be looking for ways to curtail these mergers? Maybe the member could speak to the impact these mergers might have for small businesses looking for business loans or venture capital.

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, I know my colleague supports the amendments to the Small Business Loans Act.

I agree with him that the average loan made under the act is in the range of $60,000. To many small businesses it is a large amount. We have to look at avenues and ways in which we could support the small micro businesses in their challenge to find seed money, the start up money.

In reference to the merger, the question has been answered in the House time and time again. This government has a committee which is presently at work. We are waiting for the recommendations to come forward.

The finance minister has been quite clear that at this point the merger of the major banks is a concern to us. My colleagues on this side of the House are working to find ways in which we can respond and deal with the issue when it does present itself to us. We still have a whole series of avenues, the caisses populaires, the credit unions, micro credit, community economic development. A whole series of issues has to be put in the mix as we discuss the question of mergers and other questions as to the direction in which our banks are heading.

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

Mr. Speaker, my question is why the Liberal rhetoric does not include any reference to the numerous problems that have been outlined in the auditor general's report.

I have not heard any acknowledgement from any of the Liberal speakers about the fact that close to half of the loans are given to companies that would have secured them anyway. Between 1993 and 1995, taxpayers were on the hook for $210 million in defaulted loans. The evidence is that lenders and borrowers have been abusing the SBLA program, that job creation figures have been exaggerated and that there is little accountability to parliament. Would the hon. member like to comment on any of those deficiencies of the Small Business Loans Act?

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, it is very easy in this House to throw the negatives around and it is also very easy in this House to oppose when one sits in opposition.

The positive aspects of this bill, the amendments as laid out and the initiatives as recommended provide the assistance small and medium businesses require. The minister has addressed the auditor general's report. The member is fully cognizant of the government's response in this regard.

[The Deputy Speaker]

I wish to inform the House that the announcement pursuant to Standing Order 38 is late but nevertheless I will make it. I am sure hon. members who are preparing to speak on the late show this evening will have that opportunity and will want to take it.

It is my duty pursuant to Standing Order 38 to inform the House that the questions to raised tonight at the time of adjournment are as follows: the hon. member for Halifax West, Shipbuilding; the hon. member for Calgary Southeast, Taxation.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I am very pleased to rise in the House of Commons as the New Democratic Party spokesperson for small business to debate the merits of Bill C-21 at second reading.

This bill as has been outlined increases the total loan pool offered by the Small Business Loans Act from $14 billion to $15 billion. This bill is before the House because the small business loans program is set to expire in about six weeks, on March 31, 1998.

In existence since 1961 the SBLA is a small business loans guarantee program which increases the availability of loans for establishing, expanding, modernizing or improving small business enterprises. We believe that this bill is necessary in the greater picture because the review of the entire SBLA is necessary considering what has come out of the auditor general's report.

The SBLA provides another alternative source of funding for businesses in this country. It is a program which many people in the Reform Party do not understand and actually which I do not think anybody in the Reform Party understands.

The SBLA is a leveraging program. It leverages billions of dollars out of other sources for business people to invest in their businesses. It is only one small component of the financing requirements of the business community. It is a very unique and very important because of the leveraging factor.

If Reform members had any business experience they would know that leveraging in business is extremely important when accessing capital either to establish a business or to increase manufacturing capacity or to improve and modernize as the case may be.

The NDP has supported the Small Business Loans Act program in the past. Although we believe it is unfortunate that Canadian banks need the incentive of a government guarantee to do their job and service their small business customers, we will continue to support the program with certain conditions and with certain improvements required.

The conditions are related to the auditor general's review of the SBLA and Industry Canada's handling of the SBLA. We are concerned about a number of the auditor general's findings in last December's report about abuses by some of the bankers that are registered lenders under the act and about the tendency of bankers and the industry department to inflate the program's job creation numbers.

As a result of that audit the government has brought forward Bill C-21 as an interim measure to extend the SBLA for one year while the industry department conducts a program review. We are informed as well that the standing committee on industry of parliament will be conducting as parallel review. My NDP colleagues and I intend to be active in that process when it shows up on the order paper of the House of Commons.

Before I get into the substance of the bill I want to mention a couple of points. Reform believes that there is one engine. The Liberals believe that there are two engines, but the NDP actually believes there are three engines of our economy.

The first and most important engine of our economy is the business community. Members of the business community risk the capital. They are the ones who have the ideas and bring their ideas to fruition by investing money in them, creating jobs and producing a product or a service which is needed or purchased in Canada and in other parts of the world.

This is a very important component of our economy. They truly are the entrepreneurs that show how people can create jobs. They are the people who risk their lives in terms of their finances almost on a daily basis. We feel this is a very important component of our economy. However this component would not work very well without the other two components, the other two engines of the economy.

The second engine of our economy is the co-op sector. An example of that is the Saskatchewan Wheat Pool or Federated Co-ops. Co-ops are very important, as is the credit union sector. There are caisses populaires in Quebec, parts of Ontario, British Columbia and Atlantic Canada. There are significant co-op and credit union sectors.

The reason co-ops are an important engine is that groups of people have come together to do things in their communities or regions that business would not do or that government could not do. That is where people underestimate how important the Canadian economy is in terms of its uniqueness.

We have business as one of the major engines of the economy. We have co-ops as another major engine. The third engine of our economy is the government sector.

The government sector is obviously not supported by Reformers. They want to see the elimination of police services in our communities. They want to see the elimination of fire protection. They want to see the degradation of education and health care. They want business to run the whole shebang.

Canadians see through their very transparent policy situation. They see the Reform Party as being the party that says “Government does not work. Vote for Reform and we will prove it”.

[Howard Hilstrom, Reform, Selkirk—Interlake, MB]

Mr. Speaker, I have a question. When the member who is currently making his speech says something that is absolutely and totally wrong or false, is it allowed?

[The Deputy Speaker]

Hon. members sometimes say things that other hon. members disagree with. It is not uncommon for that to happen in the Chamber. The fact that some member may regard what the other member is saying as wrong, false, incorrect or whatever is ground for debate but not for a point of order or an interruption in the hon. member's speech.

I have no doubt the hon. member for Regina—Lumsden—Lake Centre is saying things that perhaps some members would disagree with, but in the circumstances I do not think we need to get into a point of order on it.

Members will have an opportunity to reflect on what they have said and on what he has said in questions and comments and later in debate on the bill.

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

Mr. Speaker, I rise on on the same point order. If it is a deliberate attempt to mislead the House, does that still qualify under your comments?

[The Deputy Speaker]

All hon. members are taken to be speaking of things they believe to be true. They are not taken to be deliberately misleading to the House.

If the hon. member feels something so serious has happened, he can check with the rule book to see what steps he should take. It is not appropriate to interrupt on a point of order with such an allegation without quite serious consequences ensuing.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, it is interesting to note that Reform members are standing in the House and feeling a bit touchy about the fact that people see through their policies.

There is an old saying in Saskatchewan which my colleague from Saskatchewan who just stood on a point of order that was out of order would know about it: if you throw a rock in the dark and a dog yelps, you hit a dog. That is what we have here.

When the Reform policy is exposed Reformers start yelping, whining and hissing from their seats. In their dictatorial, philosophical unbending drive to eliminate government from people's lives, they feel any criticism based on fact and on thousands of examples is not something they want to debate. They do not want to talk about the truth or things that are accurate. They prefer to talk about things that are fictional and perhaps less important to people.

There is an important situation in Canada with respect to the SBLA. I just went over the three engines of the economy which are very important and which the New Democratic Party and millions of Canadians believe in with all their hearts.

I remind my colleagues in other parties about the importance of small business. The NDP is very supportive of small business. The small business community in Saskatchewan supports the NDP in a very broad way. Many small business people are active in my executive and in my campaign. There are about 1,200 businesses in my constituency. There are approximately 39,700 small businesses in Saskatchewan that employ about half of the population of Saskatchewan, a very significant number. The New Democratic Party Government of Saskatchewan would not be elected or re-elected if it did not have small business community support. I am grateful for the support of the small business area over the years.

About 98% of the businesses in Saskatchewan employ 50 people or less. That is the same as the average. About 98% of small businesses in Canada area actually employing 50 people or less. That means there is a large number of small businesses in Canada. The SBLA is one very important component of their equity and debt to acquisitions for business purposes.

Members of the House might not know, although some on the government benches might, that 98% of the approximate 975,000 business in Canada employ 50 people or less. That is a very significant number. About 861,000 or 90% of that figure employ 20 people or less. This is the type of business that looks for alternative financing in Canada. This is where the SBLA is very important.

In 1995 small business represented 43% of GDP in Canada. In 1997 one out of two Canadians were employed by or owned a small business. In 1997 paid employment actually declined by 0.4% while self-employment and business ownership grew by 11.5% from January to August. One in five of the labour force is now self-employed, which is up from about 12% twenty short years ago. In the province of Saskatchewan, as I indicated, over half of the people who are employed are employed in a small business or own a small business.

The small business loans program has been around since 1961 but assumed growing importance with these new trends in the early 1990s. It provides a government guarantee of registered business improvement loans which have been approved by registered lenders to qualified small businesses. Some two-thirds of the approved loans go to businesses less than three years old. The default rate of 4.5% is among the lowest of similar programs in OECD countries, compared with 19% in the United States and a high of 40% a few years ago in the United Kingdom.

In 1993 a number of amendments were made to the program, including an increase in the loan cap from $100,000 to $250,000. The concern was that during the height of the recession it would be particularly important to promote new sources of employment within the small business sector, especially given the loss of tens of thousands of manufacturing jobs that followed Canada's signing of the free trade agreement and the NAFTA, which by the way was supported by the Reform Party.

Some recent studies indicate a slightly higher default rate on the higher value loans. A few critics have suggested that the higher loan cap may have enticed some banks to skirt the rules and allow related businesses to assemble several quarter million SBLA loans into a government backed financing package of up to $4 million each, as the auditor general has discovered. This is an abuse by the financial institutions which must stop or the SBLA program will die.

It has also been pointed out that Industry Canada does not review loan applications but only claims submissions. On the one hand this has allowed the banks to charge user fees not permitted in the act and to get away with other abuses. On the other hand, as some of my constituents in Saskatchewan credit unions have complained, it also means that Industry Canada has rejected lenders' claims for occasionally quite picky reasons which may be viewed as being contrary to the spirit of the act.

These are all issues that we will want to see reviewed over the next year in anticipation of some major amendments to the legislation governing the SBLA.

While my party supports the speedy passage of Bill C-21, it is without prejudice to views that we may express on how the program might be improved on the next round of amendments.

The Small Business Loans Act is not the only element of government policy which affects small businesses in Canada. My colleagues on the government side are rather selective when they trumpet the government's record in the field. It is because they are too embarrassed to remember what they said in opposition about issues affecting small business.

Here are a few quotes of Liberals in opposition on one business issue. I ask all members and people of the country to guess what small business issue the following quotes concern.

The current Minister of Public Works said in 1989 “It is a burden on all small businesses in this country”.

A current Liberal senator who was a former member of Parliament, Shirley Maheu, in 1989 called it “a nightmare for small business and Canadians don't want it. The message is loud and clear”.

The current Minister of Western Economic Diversification, the hon. member for St. Boniface, claimed in 1993 that it was particularly onerous for small business. He said that some of his constituents told him daily that they felt like giving up their businesses and finding another job in order to escape the heavy burden imposed by government.

The then member for Parkdale—High Park reported that it was “killing his small business constituents with red tape, the paperwork and the taxes”.

The current Minister for International Trade said that it had deflated businesses and marketplaces in his constituency.

What were they talking about? Were they talking about the SBLA or other issues? They were talking about the GST, the read my lips campaign of the Liberals in the last two elections. “We hate it and we will kill it” they kept saying. They said that in the 1993 election and ever since they have been trying to defend breaking their word.

However they are still collecting it. They have even worked out with their Liberal friends in Atlantic Canada, Nova Scotia, New Brunswick and in particular Newfoundland, to harmonize it. They are calling it the BST, the blended sales tax. That shows us how trustworthy Liberal government commitments are to small business.

Another government policy which has hurt small business is high interest rates. The SBLA charges floating interest rates that are pegged to the prime or fixed rates which are pegged to prevailing mortgage rates. When the Bank of Canada needlessly raises interest rates, it immediately hits small business owners that are struggling to meet their loan payments, as well as their payrolls and all the other expenses of keeping their businesses afloat.

As if small business owners did not have enough to worry about, there are always the banks, the good friends of the Liberals and of course the Reform Party.

Business loans under $100,000 account for just 3% of business loans made by the big six. A recent CFIB study says that small business loans are now more expensive and harder to get. Furthermore, it estimates that service charges to small businesses have increased on average, 12% over the past year alone.

Some 44% of small businesses were forced to use credit cards to finance their operations in 1996 but the government refuses to regulate the exorbitant credit card interest rate being charged by the banks. Of course, the government is very heartily cheered on by the Reform Party.

There are plenty of challenges facing the small business sector in Canada, one of the three engines of the Canadian economy I referred to earlier. They need all the help they can get.

That is why, although we have some questions that should be addressed in the forthcoming review of the small business loans program, we are anxious to ensure that the program does not expire on March 31, 1998, jeopardizing literally thousands of businesses in this country.

We have agreed to co-operate with the government to pass Bill C-21 and to extend the program at least for one year until March 1999.

I take this opportunity to thank all the business people I have met with over the past number of weeks with respect to this bill. I would also like to thank the auditor general's department and the CFIB, Credit Union Central, Professor Alan Riding of Carleton University, and Keith Nixon of the Saskatchewan Credit Union Central who advised me on all issues with respect to the SBLA.

[Walt Lastewka, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I listened to the last message very clearly. I agree with a lot of what the member said, except for a few parts he probably went off script for.

There have been some comments made about the banks and about lenders. I remind the member that in addition to the six or seven banks there are 1,490 members who are lenders on SBLA, whether they be credit unions, caisses populaires, credit societies and so forth.

This bill basically is an extension of the SBLA for one year and the addition of $1 billion, from $14 billion to $15 billion.

I understand my colleague supports the bill. Could he expand on items? In addition to the banks, he has I am sure in Saskatchewan other lending institutions that are very key. They use the SBLA but perhaps they have not been mentioned here today. They are part of the SBLA program.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I thank the hon. parliamentary secretary, the MP for St. Catharines, for that question. Of course, the credit union system in Saskatchewan is quite significant with respect to agriculture, small business and personal financial matters.

The credit union system in Saskatchewan has been involved with about 25% of the SBLAs that have been provided. They have approved somewhere in the vicinity of 300, which is about 25% of the 1,200 SBLA loans outstanding in Saskatchewan.

The average coverage for the credit unions across the country is about 20% but in Saskatchewan it is much higher than that.

[Leon Benoit, Reform, Lakeland, AB]

Mr. Speaker, the member has just spoken in favour of this bill and in favour of increasing the potential taxpayer liability of this bill.

I would like the hon. member to comment on what history has shown us about this type of lending. In particular, if he could think about the Farm Credit Corporation in Saskatchewan and the kind of liability that taxpayers took on so that farmers who could not otherwise get loans would be able to get loans.

There was an impact of that program on taxpayers through the amount of money they had to pay to support loans that were defaulted, which were unbelievable in proportion. Also there was an effect on agriculture.

When loans were defaulted on, the impact on agriculture in his province of Saskatchewan was indeed incredibly negative.

Therefore not only did the taxpayers take a huge hit with defaults on thousands of loans through the Farm Credit Corporation, but the agriculture industry was actually in worse shape than it was before the loans were made. A large portion of the farmers who took these loans that they apparently could not get from the banks, although in some cases that was not the case, were worse off than if they had never received the loans.

I would like the member to comment on that because the record in his province on this type of program is clear. The record is very poor and, in the case of a decline in the economy, we are setting ourselves up for a huge hit with this legislation as well. The expansion in this legislation will allow for an even larger liability on the part of taxpayers. I do not believe the demonstration of the benefit from this legislation, which has been talked about by other members in the House, is really there.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I am pleased to have the question from the MP for Lakeland with respect to the Reform style government that we had in Saskatchewan between 1982 and 1991. By the way, one of his colleagues is a former member of that Reform style government right here.

For the record, let me make two points. First, if Reform opposed and killed this bill there would be $14 billion in loans to small business people in this country that would be in default. They would have to pay back that money. It would put tens of thousands of businesses out of business right now. It is in support of putting small business people out of work, having its big business friends take over all the equity and jobs and send the money down to the States to their friends the Republican Party.

The second point is with respect to the FCC and the debt. We have the Reform Party of Saskatchewan that instituted a $16 billion debacle. It bankrupted the province of Saskatchewan in nine years under the Reform style government of Devine who promised the same thing the Reform Party has been promising for the last two years, less government, less tax and more jobs for people.

There was less tax and fewer jobs in Saskatchewan all right. The province is bankrupt because of the bloody policies of the Reform Party.

I say to the member who just asked the question that if we undertook in this country to follow Reform style policies with respect to small business there would be no small business. We would just have the Wells Fargo, the Cargills and the huge international conglomerates like Exxon running this country without any kind of opposition whatsoever.

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

Mr. Speaker, the member suggested at the opening of his speech that Reform members of Parliament have no business experience.

The popularity of Reform stems from the fact that we are in touch with ordinary Canadians and with small business owners. We are in touch with the people who take risks and are burdened by big government policies. Many Reform members have a lot of business experience. Prior to entering politics I owned four businesses and employed over 20 people.

How many businesses has the hon. career politician from Regina—Lumsden—Lake Centre operated?

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I have operated two businesses, one a Dairy Queen brazier store which employed about 29 people full time and part time. I also had a consulting business on two separate occasions. I made my livelihood from those two businesses, unlike certain acupuncturist claims that members of the House might make from time to time.

[Howard Hilstrom, Reform, Selkirk—Interlake, MB]

I apologize to you, Mr. Speaker, for rising on a point of order. I am new to the House and I do not understand the rules fully. As a result, I apologize.

I suppose that a statement calling an hon. member a liar would also be out of order.

[The Deputy Speaker]

Very much so.

[Howard Hilstrom, Reform, Selkirk—Interlake, MB]

It would be out of order and so I will not do that.

I would like to ask the hon. member for Regina—Lumsden—Lake Centre just where in Reform policy, where in the Reform meetings that he has maybe attended or spoken to Reform members about has it ever been said that the Reform Party does not want the police services and the fire departments run by government? That is specifically what he said to this House and I would like to have him clarify whether he is telling the House the truth on that matter. Does he stand by those statements?

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, the Reform member who just intervened comes from a district that probably has not had a history of Reform style politics.

In Saskatchewan, for the member's benefit, we had a Reform style government under the name Grant Devine. Many of those people who were involved with the Reform style government of Grant Devine—