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.