Debates of Feb. 19th, 1998

Small Business Loans Act

[Walt Lastewka, Liberal, St. Catharines, ON]

How do you like it?

[The Deputy Speaker]

The member perhaps should address the Chair.

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, the answer is that the member opposite and the Reform Party are not in favour of this bill, nor are they in favour of extending the SBLA. I take it that is the answer.

[Gurmant Grewal, Reform, Surrey Central, BC]

Mr. Speaker, the hon. member seems to want me and my colleagues to support a program that is not working. That is appalling. We need to improve the system instead of asking for support for a program that is not working. It has proven ineffective for more than 36 years.

Let the government review the program carefully. Let us make the system effective and efficient for small business. We want to encourage small business and create jobs in Canada in an effective and efficient manner.

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, in the context of the exchange that has been going on in the House, I cannot help but feel that one other issue needs to be addressed to broaden the nature of this debate. We have had 38 tax increases since this government took office in 1993. There has been bracket creep, business taxes, going after people with social security benefits, CPP, EI, et cetera. I look at all these things.

It strikes me that tens of billions of dollars have come out of the pockets of Canadians, Canadian businesses, those people who create and sustains jobs in Canada. The money has come out and is now being siphoned off to create a bigger administration and bureaucracy. Once again I am struck by how tens of billions of dollars can be taken out of people's pockets every year, increased taxes, 38 new tax increases since 1993. There have been two so far and more increases proposed since the June 2 election.

At the same time we have these pittances. There is cutting in education and giving back a small amount in scholarships. There is raising taxes on businesses, people who create jobs and families and giving back a little in some sort of business loans program which most businesses do not need when they apply for it.

[Gurmant Grewal, Reform, Surrey Central, BC]

Mr. Speaker, we know there are so many ineffective government programs that are not productive. This is one of them. How can we waste another $1 billion of hard earned taxpayer money on this program? Are the members opposite saying that we should waste another $1 billion? I cannot do that. I cannot betray the trust of the Canadians who have sent me here.

This program does not only waste money, but government interference in the marketplace discourages the development of alternative and innovative financing solutions for small business. This program has proven to be detrimental to small business.

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, every time this exchange goes on I think of something else to add to this debate. One thing that glares at me from the text of Bill C-21 is the idea of subsidizing businesses. It all speaks to the lack of priorities.

I look across the way and I think about the cuts to seniors, the medicare cuts and education cutbacks. I think about the lack of priorities where prisoners get exotic foods in jail, where there are many working poor in Canada who cannot afford the meals that prisoners receive after the heinous crimes they have committed. I think of all these things, of the lack of priorities. Then I wonder how corporations can justify these subsidies when all these other programs are being cut. It does not make any sense.

[Gurmant Grewal, Reform, Surrey Central, BC]

Mr. Speaker, we are very reasonable people. We looked at the issues. We will support the bill under one condition, that whatever we invested in the past does not go to waste and if there is an amendment to the act $1 billion will not be added to the liability.

We will let the system operate for one more year, if we are promised that there will be a comprehensive review and that the observations and recommendations of the auditor general will be seriously considered so that we help small businessmen. We will support the bill if another $1 billion is not added to the liability.

We are very co-operative. We are effective. We want to make the system very productive. The other side of the House should also consider the interest of small businesses.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I am pleased to speak today on Bill C-21, an act to amend the Small Business Loans Act.

First of all, the Bloc is in favour of the bill, not because it is one that is fundamental in character, but because it at least makes it possible to extend the date of application of this act from March 31, 1998 to March 31, 1999, and to raise the total maximum credits allocated for loans from $14 billion to $15 billion.

The government could have taken advantage of the opportunity to do more than just make a technical adjustment to the Small Business Loans Act. This is the point at which time ought to have been spent on a thorough study of the amendments which should have been made to this program. Instead, the government decided to make only technical modifications, ones that merely prolong the life of a program which has been in place for a long time and which was designed at a time when economic realities were different than they are today.

The people behind small businesses in our area, the people we see in our riding offices, the ones I see in my riding, often have great difficulty in obtaining the necessary funding to start up their businesses, not because their idea is not a good one, not because they are not in an acceptable financial situation, but often because they are operating in new sectors in which the banks are not used to lending, and have no incentive to do so.

Moreover, this Small Business Loans Act has contributed substantially to the financial situation of Canadian banks. Part of the profits made by banks today come from the government's financial guarantees for loans to SMBs.

I have a few ideas the government should explore for the future.

First, this act never covered working capital. More and more small businesses are going into exports. This is very prevalent throughout Quebec, and Canada as well, right now because people are realizing that the domestic market is no longer growing. If businesses want to grow, if they want to increase their share of the market, they have to look to the American market. For Quebec, for my region, this means mainly New England.

Businesses need quick access to sufficient capital to enable them to explore these new markets. Right now, such access is not readily available.

The recommendation could be extended to a business's entire working capital. Now that we are in a positive economic phase and the economy is growing, is it not high time we looked at the economic tools we should make available to our entrepreneurs in order to ensure that, when things take a downturn, we do not find ourselves in the same situation this government inherited in 1993?

In 1993, when the Liberals were elected to office, there was major criticism about the way capital was made available to small and medium-size businesses, especially in Ontario. Four years later, we could have expected the government to have done something to overhaul this sector. We could have expected the Minister of Industry to assume a leadership role and ensure that our small and medium-size businesses have access to loan vehicles consistent with the new economy, with the way markets are developing, with the way they have to keep up with international competition.

Regarding technology, does the bill as it now stands afford small business the necessary leeway to secure the funding required to put this technology in place? We have gone from a time when technology meant that machines produced higher quality parts in less time, to the new technology-oriented economy which emphasizes knowledge and advances in telecommunications. There is not enough of this in the government's approach.

A bill to help fund the small businesses of the early 1990s was finally put forward, but advantage was not taken of the fact that the act was being overhauled to give it more teeth so it could meet the demands and challenges faced by our entrepreneurs.

It is quite frustrating when we see young entrepreneurs in their late twenties walk into our riding office with a business proposal after knocking at various doors; their ideas are often very good and workable but they do not meet the criteria of any existing program. The Canadian banking system has developed this timid attitude of saying it will only lend them money after the loan has actually been guaranteed under the Small Business Loans Act. In amending the act, the government did not encourage banking institutions to promote initiative and give a chance to new entrepreneurs.

In its current form, the act will not allow these young entrepreneurs and those who come up with new ideas to implement them and get the help they need in the next few years.

It is also clear that, in the past, the availability of capital varied from one part of Canada to another. In Quebec for instance, capital money was made available through the Fonds de solidarité, the caisses populaires and various local means of assistance, bringing banks under more competitive pressure than in any other province of Canada.

When the Liberals, particularly those from Ontario, looked at this situation in committee, we were expecting a dynamic approach that would enable small and medium size businesses to position themselves better in the North American market.

Now, with the free trade agreement, Quebec and Canadian productivity will have to be competitive with that of the Americans, if we are to capture markets. This was confirmed by a study undertaken by the Privy Council, which looked at the situation in Canada. There is still a significant difference in the levels of productivity of Canadian and American businesses.

We are told the economy is doing well today, it is getting stronger, progress is being made. However, we are not looking at what will be required in future years. What tools do our businesses need? How can we manage to reduce the number of small businesses that fail to survive the first five years?

When a business is established and money is invested in it, there should be some form of assistance or support that would significantly improve the survival rate of small businesses.

This may be less impressive in political and electoral terms. However, a longer lifespan for businesses would mean the creation and maintenance of jobs. A small business with a solid core that starts up with four or five employees and survives the crucial first years to expand its personnel to eight or ten employees a few years later will reach a critical mass that will enable it to compete and create linkages with other industries.

These are the sectors where the government should have shown more originality in the Small Business Loans Act.

As regards the issue of networking, would it not have been possible to include in the legislation provisions to facilitate partnerships between businesses and major industries for specific projects, so they have access to more financing options that they would on an individual basis? Some thought could have been given to this, but the bill is silent on this whole issue.

In the end, the government decided to merely make technical adjustments. These adjustments were necessary. It was important to make the program more accessible. The bill lacks originality, as does all the legislation introduced since the last election. The government does not table new bills.

It would also have been important for the government to ensure, as recommended by the auditor general, better control over program costs. We have to make sure that this type of small business loans program is well managed and that the loans are made to the right people, so that the program will not be questioned on the grounds that too many loans go to businesses that do not deserve them.

Another important recommendation made by the auditor general is that there should be a better assessment of the program's impact on job creation. In the past, programs designed to help small and medium size businesses did not necessarily take job creation into account.

With the advent of new technologies, the current reality is different from that of 10, 15 or 20 years ago. Now, investing in technology often results in job losses. The idea is not to stop progress, or to refuse to accept the new global market. However, when defining the criteria for such a program, in which loans are guaranteed by the governments, we must act more responsibly to ensure that when banks lend money, they take into account the situation of those concerned and the actual number of jobs that will be created, not just the economic performance of the business.

It goes without saying that this requirement will not be readily proposed by financial institutions or by the businesses themselves. But the government's responsibility toward income distribution also includes mechanisms such as this act, provided it were adapted to guarantee that the small business loans will have a positive effect on employment, but there ought not to be a fall back to the arrangements of the past, such as the tax credits for regions with a particular unemployment problem.

Today, when we look at a draft bill such as this one, when we look at the employment and unemployment picture in Quebec and in Canada, it is obvious that we would like to see this tool, the Small Business Loans Act, made far more efficient and effective so as to diversify regional economies in areas with the highest unemployment levels.

The decision was made 30 or 40 years ago that there would be a division in Canada more or less along the following lines: Ontario would get the economic development, while the non-central regions such the maritimes and eastern Quebec and others would get transfer payments to ensure their survival. That model has been rejected by everyone because of its very poor results. It is bad for self-esteem.

I would much prefer it if the government would use concrete tools such as this act to carefully evaluate the way the regions could be helped to assume more responsibility for themselves, reduce their dependency on transfer payments, and have more opportunity to forge autonomy and self-sufficiency. In my opinion, each region of Canada has an underlying potential, and that potential must be taken into account. First, however, the government has to admit that people have a right to live in any region, and to have a hand in the development of that region.

There is no particular direction behind what the government is doing now. It is letting the market decide. People are sent where the jobs are and terrible vacuums are created.

I have just come back from a quick trip to the Atlantic provinces. I saw difficult situations in Newfoundland that illustrate this point. I am also seeing the same type of situation in my region in eastern Quebec. I urge the federal government not just to re-examine the Small Business Loans Act, but to come up with a series of measures to ensure that this kind of tool meets the development needs of our communities.

I would like to give one last example. The federal government has just issued a wonderful statement of principle declaring that all government programs will now be judged according to their impact on rural development in the various regions of Canada.

I urge the Minister of Agriculture and Agri-Food, who is responsible for implementing this new program, this new way of doing things, to examine the bill amending the Small Business Loans Act under this light in order to see whether in fact it does promote the growth of businesses in all regions of Quebec and of Canada. This will also allow us to see whether the bill is in keeping with the times and is really consistent with what our new businesses will need in 1999, in 2000, at the beginning of the third millennium, so that people are not working with a tool from the past but a tool for the future.

Let us pass this bill as written, so that there is no interruption, but it is essential that the government act quickly and announce a complete overhaul of the act in order to make it a genuine tool for economic development. This is what our young people are entitled to and this is what they have a right to expect.

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

Mr. Speaker, it was interesting to hear some of the comments of the speaker opposite. I want to deal with a few points.

He mentioned the lack of things being done in the small business area. The member opposite is not a new member. I am sure he knows the work the standing committee has done with the banks for the last four years as far as making them more accountable and having more SBLA loans.

I am sure the member opposite is aware of the technology partners Canada program of which there have been a number of projects in his province. IRAP has been extended across Canada and has been very valuable, especially for small businesses that are getting into some of the research and development that we need.

I am sure he realizes the refocusing of the business development bank. I am sure he has read that 39% of the loans that go through the SBLA are for start-up companies, for companies under three years. Approximately 57% or 58% of the loans go to those businesses in the under three-year period where it is difficult to get going as a business and to make things happen.

He mentioned caisses populaires. I was not quite sure of the point he was making. Is he saying that caisses populaires have not been doing their work in the SBLAs? It is the official lender under this act in Quebec and across Canada. I was not sure what point he was making with the caisses populaires.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I thank the hon. member for his remarks.

In a way, he shares my objective. He said that the Standing Committee on Industry has made a lot of representations to the banks over the past few years to make them more aware of the need for loans. We can see, however, that this voluntary action is not enough.

I do not know how the Standing Committee on Industry failed to come up with amendments. I believe the Bloc Quebecois presented a dissenting report with amendments. The industry committee was aware of the situation of bank loans to small and medium size businesses, but the bill does not provide the necessary tools.

The member said legislation on the Business Development Bank of Canada was rewritten. It is true, changes were made. However, why was the same approach not taken with all the banking institutions? Caisses populaires and banking institutions work with the existing program, but the government must lead the way and define in the legislation the conditions that would provide the right tools for businesses at the start of the 21st century. There is nothing like this in the legislation.

There is also the issue of the new export market, the arrival of new technologies, the changes to all the transportation networks in North America. These conditions totally change the way business is conducted in Quebec, Canada, the U.S., North America and the world.

Do we have up-to-date tools? Will they serve our businesses, the people who come to our riding offices, business people in contact with banking institutions. Will they enable these caisses populaires and other financial institutions to provide loans to these individuals and help them get started?

I gave the example of working capital, of lending money to permit exports. Work needs to be done in this area. There is nothing original in the legislation. Business people in the regions want something new.

More use should be made of the expertise of those already in business, those who have had a business running for 10, 12 or 15 years and who know what it takes to make it work. What is needed is some incentive. Financial institutions are not displaying a lack of goodwill. We simply cannot require them to do things that are not included in the act.

Financial institutions must comply with the existing legislation, but Quebeckers and Canadians are concerned about job creation.

If we took a real close look at this legislation, we would see whether or not it meets the job creation requirement that is in effect in Canada. Does the bill promote job creation? I am not just talking about jobs that are automatically created in a thriving economy, but also about hiring people who may not have been so lucky and about finding ways of using everyone's potential.

Fewer and fewer people are prepared to say that the economy is doing well just because the gross domestic product is good. What Canadians really want is a society that allows the largest number of people to realize their full potential. The bill is not the perfect tool to this end, but it is a useful one, even though it is not as innovative as we had hoped.

It simply extends the application of the act for one year, and it adds $1 billion to the fund, so that, technically, the money will be there to guarantee the loans. The government should have a vision that goes beyond 1999. It should ask itself what instrument should be put in place to support our businesses all the way to the year 2005 or 2010. Should there not be some gentle pressure on our financial institutions to ensure that their loans have a positive impact on job creation? The government still has a lot of work to do in this respect.

[Dale Johnston, Reform, Wetaskiwin, AB]

Mr. Speaker, I listened to my colleague for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques talk about the need for investment capital and start-up capital. He must recognize that it is also necessary to have leasing capital and working capital.

Whether you apply for this money through the regular lending channels or whether we go through the Small Business Loans Act, one of the first requirements is to present a business plan in which you project where your market will be, what your expenses will be and what you expect your bottom line to be.

I would ask my colleague to comment on how he sees taxation, both income tax and payroll taxes, affecting the business plans which have to be put forth by the people who require capital and in which areas he would support tax reduction.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, this does go slightly beyond the scope of the bill per se, but connections can still be made. The Bloc Quebecois has put forward a five point proposal regarding the upcoming budget, which reflect part of what the hon. member just said.

For instance, we suggested that employment insurance premiums be significantly reduced. There is a very large gap between the current rate of $2.70 per $100 of insurable earnings and the $2 rate that would ensure the plan's self-sufficiency while turning acceptable surpluses. There is this 70 cents gap.

We think that one half of this amount could be used to improve the quality of life of those who find themselves without work, and the other half to reduce EI premiums substantially, which would have an effect on job creation. I think that would be a significant and appropriate measure.

A similar philosophy applies to the budget. At any rate, I do hope that what we are hearing about it is not what we will find in it. The federal government's approach is somewhat short on originality. For the time being, all we are hearing, regarding the upcoming budget, is about the government's plans to invest money in the area of education by sending cheques with the Canadians flag on them to ensure visibility, when it has been known for quite some time that, in Quebec in particular, we look after the whole financial assistance program ourselves and what is needed is for money to be given back to the provinces so that they can fund their programs.

Regarding employment, the private sector had made a significant contribution these past few years. But in the public sector, at least in Quebec, for every $1 in cuts to health and education made since 1994, 75 cents had to be cut because of cuts made by the federal government. That is why the Bloc Quebecois believes that, among other major job creation measures, giving their money back to the provinces that contributed to the deficit reduction effort would enable them to maintain quality services and ensure a sufficient level of employment in the public sector to meet demands.

I will conclude on this. I think that there are indeed innovative approaches that could be put forward. We cannot find any such approach in the bill on small business loans but hope that the government will wake up in the weeks to come.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I am pleased to rise to speak on this very short bill which basically increases the limit of loans under the Small Business Loans Act by $1 billion.

While we may think that another $1 billion to help business might be a good idea, I would have thought the government would have given us some real information on how well the program is doing.

We now have improved reporting to parliament documents. Industry Canada has put one forward under the pilot project. I looked at the improved reporting to parliament to find out exactly what is happening with the Small Business Loans Act which is being administered by the Department of Industry.

On page 5 under the title “Industry Sector Development” it states that in this overall context the department also has several specific activities directed toward small businesses such as the small business loans administration. It continues, but that is the sum total of the reference to the $15 billion program offered to small business.

When we take a look at the numbers, page 43 of the same document tells us the amount of the fees collected. In 1995-96, $18,742,000 were collected. The following year, 1996-97, $23,448,000 were collected. Page 42 tells us that there is a $44 million liability.

That improved reporting to parliament is the sum total of the information the Department of Industry is prepared to provide to us. It names the act, tells us how much revenue it has collected, tells us the liability is twice the revenue and that is it. We are supposed to make our decisions based on that.

I doubt that parliamentarians are getting very much improved reporting here and the department has a long way to go in its reporting to Parliament if it wants to call it an improvement. This to me is a shocking disgrace.

However, I do have some other information regarding the program. Coincidentally the auditor general did report on the program in his December 1997 report. It is a whole chapter. He managed to get 25 pages on the program, whereas it just gets a mention by the Department of Industry.

One of the things I notice quite alarmingly when I look at exhibit 29.5 on page 29-12 of the auditor general's report is that the value of claims paid to lenders is going up astronomically. In 1994-95 it was about $30 million. In 1996-97 it is up to $150 million and I understand it has continued to grow from that point on because the claims are far in excess of what the government expected.

We have a program that is now going to on the face of it cost us $150 million to $200 million a year based on the fact that the government has to pick up the cost of the bad debts under the Small Business Loans Act. That is the philosophy. Financial institutions lend the money, the debt goes bad and 85% to 90% of it is picked up by the taxpayers.

Why did this happen? Why did the write-offs rise astronomically? It is all in the auditor general's report. If we take a look at exhibit 29.1, it tells us that in 1993 we changed the maximum percentage of financing for equipment from an 80% maximum to 100% maximum which means that if individuals wants to buy a $100,000 piece of equipment they do not even have to put $1 down. They can go to the bank and say, “Under the Small Business Loans Act I would like $100,000 to buy a $100,000 piece of equipment. Thank you very much. I am going to go out and use it and make some money”. But if it does not turn out too well the borrower can walk away from his investment which was the maximum of $1 and the taxpayer is left on the hook.

Therefore it seems to me that Industry Canada was not thinking it out very well when it approved this change to go from 80% to 100% financing and the borrowers get off the hook because they have no money. They have no risk involved. They have nothing to say they have to make this project work.

If that is helping small business, I think it is helping small business people who perhaps are less ethical than they otherwise should be to obtain financing under very high risk procedures. That is the type of thing that should not be happening.

I have to give the government its due. By 1995 it realized that perhaps it had made a mistake and changed it. It reduced the amount of the maximum level down to 90%, which is still 10% higher than before. However, the losses continue to grow and the write-offs continue to grow.

The report by the auditor general would suggest that rather than asking for another $1 billion, as the government is doing, the government should go back and review the auditor general's report and perhaps fix the program first before asking us for another $1 billion.

What does the auditor general have to say? On page 29-16 he states: “Industry Canada does not assess whether the lender has exercised due care when making the loan”. On the next page it states: “Some loan files did not contain information necessary to perform a thorough credit risk analysis”.

On the same page we found a number of cases where, contrary to the Small Business Loans Act, the lender had charged administration fees. Carrying on, on page 20, there are no provisions in the Small Business Loans Act to prevent a group of related entities from gaining access to loans beyond the maximum amount allowed.

Finally, on page 22, parliamentarians do not have the information necessary to assess whether the small business loans program is managed efficiently and it is achieving its objectives. Here we are, as parliamentarians, being asked to give them another billion dollars when the auditor general says we do not have the information in this House to make a proper assessment.

That is why the Reform Party says not at this time. The government should do its homework. It should clean up its act and make sure the act is working the way it was intended to work before it comes here asking for another billion dollars.

I am critical of the way the department managed this act. As I say, the lenders, the banks and the financial institutions give out the money and have the government's guarantee to fall back on. However, I understand that the Department of Industry does not audit one file until such time as the loan goes bad, is a write-off and it all lands on the department's desk. Do we think these financial institutions are so good that they are not going to make any mistakes and are going to follow the law to the letter?

In a small statistical sample, the auditor general finds that not to be the case. Therefore why does the government not audit the financial institutions to ensure that the law is being followed? It makes simple sense to me yet it is not being done. That is the type of thing we would like to see rather than being asked to put up another billion dollars.

I talked about the taxpayer being on the hook for these things. Actually the government's intention is to alleviate the responsibility of the taxpayer and make this a full cost recovery program. I scratch my head when I say full cost recovery because here we have the government saying it wants to help small business so it has a program to help small businesses borrow money so they can get the business up and going and be more prosperous. Then it says it wants to recover all its costs. Where is it going to get the money back from?

First, when a businessman goes to the bank and tries to borrow money under this program he has to pay a 2% fee right up front. If he wants to borrow $100,000 he has to pay a $2,000 application fee. Then every year the bank has to pay to the government a 1.25% administration fee which it can recoup from the borrower through interest rates. Now we have a 2% application fee and a 1.25% annual administration that the borrower pays. This money goes into the government coffers and then, when the government has a bad debt, it hopes to be able to have enough money in this pot so it can pay back the financial institutions.

Who is left holding the bag? It is obviously not the government because it is on a cost recovery program. It is obviously not the financial institutions because they turn around and claim back from the government. Therefore the only person who can pay is the successful businessman who borrowed the money, paid his application fee, paid his annual administration fee, paid the interest to the bank, tried to make a go of his business and maybe did so with reduced profitability of course because of all these front end charges, and he ended up having to subsidize and reimburse the government for the bad debts it ended up paying for.

Here we have the idea of helping small business which turns out to be a tax on small business. It is a tax on the successful small business people who end up having to reimburse the government to pay for the bad debts and they did not even have a say on who received the money. That is why I scratch my head. It gets a little convoluted when the government stands up in the House and says it wants another billion to help small business. When we analyse the program we know that small businesses are helping themselves despite the government being on their back. That is what is amounts to.

The auditor general confirms that by telling us that it is a poorly run and poorly administered program.

It gave the financial institutions the right to lend 100% to buy equipment and the losses went sky high. Therefore the taxpayers are on the hook to some degree and the successful businesses are on the hook for the rest.

We call this help for small businesses. My God, they would be far better off if the government said “we will stay out of your hair and you go ahead and make money”.

The other thing we found out was this concept of what is called incrementality. It is a little complex to deal with, but the concept is that the banks only accept a bit of risk and if there is a bit more risk they say they do not even want to lend to these people because they have all these profits to make. The government says with the government guarantee they will accept a little more risk.

What the auditor general found was that 40% to 50% of all the loans granted under the Small Business Loans Act would have been given by the banks anyway. But they just wanted this extra piece of protection so they can get reimbursed either by the government and taxpayers or by the successful borrowers.

Shareholders are not at risk. Bank profits are not at risk. They just want to get the extra piece of protection, and surely that was not what the program was designed to do, to protect the banks so they can increase that $6 billion or $7 billion profit up by a hint more. I did not think that was the idea.

I did not think that banks fell under the qualification of small business, and I do not think that Canadians think that banks are small businesses and that we have to help them make profits. That is not the idea.

I come back to my original point. Why is the government asking us to increase the guarantee by another $1 billion when we know the program is poorly managed? We know that it is a tax on small business. It is not helping small business. We know the Liberals need to clean up their house and get it in order and they are supposed to make these improved reportings to Parliament a real improvement rather than more paperwork that does not mean anything to us. They are supposed to give us the real information for us to make an intelligent decision rather than just endorse the request by the government.

We have a long way to go in building accountability into the Small Business Loans Act, into the Department of Industry, into the way this government spends taxpayer money.

Next Tuesday the Minister of Finance is going to bring down a budget. And he is going to stand up in this House and tell us what a wonderful job the Liberal government is doing. He will have platitudes and one will think this country has to be the best run country in the world.

But scrape away that very thin veneer and what do we find? We find reports such as the auditor general's which say this program and every program he reports on need dramatic improvement. We find that the improved reporting to Parliament is no improvement at all.

We find that money is being spent frivolously. There is no control on the management of programs. That is the story and it is the taxpayer who gets to pay the bill, and it is the small businessman who gets to pay the bill. As government members stand up in the House and tell us what a wonderful job they are doing, when we look underneath, when we look at the actual programs being delivered, we find they are woefully inadequate.

Here is an opportunity for the government to listen to the opposition, listen to the auditor general and say “we hear what is being said, let us go back to the drawing board, let us keep this $1 billion request on the table at the moment and wait until we have this program running efficiently”.

If that is the case and if we have the proper information, I am sure we would have a much better debate in this House. We would not be so critical of the government in its poor and inadequate attempts to help small business.

When we look at this program, helping small business is the name of the game according to the government, but small business is succeeding in spite of the government. Small business is creating jobs in spite of high taxes and overregulation. It is creating jobs in spite of the fact that CPP premiums are going up 73%, in spite of the fact that we are carrying a $45 billion a year interest on our backs that is paid for by the business and economic activity of this country. Yet we are still able to compete and succeed to some degree.

We must take our hats off to the business people in this country. In spite of all the pressure this government has imposed on them, they are still able to compete in the world marketplace. They are still able to create jobs and maintain some level of prosperity for the citizens of Canada. Again, let us take our hats off to small business people. They are doing a great job in spite of this government.

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, I may have heard the member say that he does not want us to increase the loan money available to small businesses by a billion dollars. Could he confirm that he does not want that additional help available to small business.

He told us we should improve the program but he did not specify how. One of his Reform colleagues who spoke earlier suggested government should stay out of the business of providing loans to small business, that we should not have a small business loans program. Could the member tell me the position of the Reform Party on loans to small business and a government program for loans to small business? Do Reformers want it or not?

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, it is very simple. We have this improved reporting to Parliament that tells us absolutely nothing. We have the comment by the auditor general that parliamentarians do not have the necessary information to assess whether the small business loans program is managed efficiently and is achieving its objectives.

The intention of my speech was to tell the government to give us that information in order that we might have an opportunity to assess the benefits or otherwise of this program. Then we can make an intelligent decision. In the meantime we have no information. We are being asked to approve a billion dollars in extra lending for businesses under the act and we have nothing to base an opinion upon.

The deputy whip has posed a rhetorical question. I would ask the deputy whip on the government side to bring that information to us and let us have an intelligent debate in this House with the information before us. The auditor general is specifically telling the House that we need more information. His assessment is that this program must be fixed before it is expanded.

[Gordon Earle, NDP, Halifax West, NS]

Mr. Speaker, the hon. member mentioned in his comments that we should take our hats off to small business. I agree 100% with him on that statement. It is very important for us to recognize the contributions being made by small business to our social fabric.

In my riding of Halifax West there are numerous small businesses. Many are experiencing difficulties. All we can do to try to offset those difficulties should be welcomed. We must do more than just take our hats off to small business. We must be sure to support measures designed to assist small business because that is very important.

I support this bill. Although much more needs to be done, this is certainly a step in the right direction. Like my hon. colleague, I too take my hat off to small business people who are working very hard to create the kind of society we need. They are employing people and struggling against many bureaucratic obstacles while still maintaining a very important function.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I tried to make the point that we should take our hats off to small business and we should give them the assistance that we can. We should not tax small business even more, which of course is always the NDP philosophy, to bury them under a mountain of taxation.

I pointed out in my speech that because the government has a full cost recovery policy on this program, it is the intent of the government that it be totally financed by the successful small business people who pay the 2% application fees and the 1.25% annual administration fee. From those moneys, the government is going to pay the banks back for the bad debts the banks make.

Remember, it was not the successful small business man who made the decision to give it to the unsuccessful small business man. It was the bank's decision and the small business man has been asked to underwrite that, hence a tax on the successful small business.

The member said he wanted to support this bill. If he wants to support this kind of additional taxation on successful job creating businesses, and I take my hat off to businesses, but I have to really wonder about the policy of the NDP if its members cannot see that.

Surely, if we want business to be successful then we get taxation off their backs, we get rules and regulations off their backs. We give them every encouragement to go out there and do what they know, do what they can do best. That is to create profits, which pays taxes, to create jobs, which is what this country needs, and that improves our prosperity for everybody. Surely the NDP could understand that.

[Elsie Wayne, Progressive Conservative, Saint John, NB]

Mr. Speaker, if the government takes the steps to correct what the auditor general has stated with regard to the fact that they have not brought forth the proper recommendations, review and so on and so forth of the program, would the member and the Reform Party be in favour of the increase in the small business loans program as recommended by the government?

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, again I refer the hon. member to the auditor general's report saying that we do not have enough information.

We find that there has not been appropriate analysis of this program. We do know that the intent is a full cost recovery for the government. Therefore they are in it and it will not cost them anything. I explained how the successful small business person will end up having to carry the can.

At this time, I am not in any position to say I can support the program until I have that information. We need to do a complete and full analysis of the program as it is currently devised, full cost recovery by the government and so on. They have set the lending limits far too high, in some cases 100%, and I have explained how ridiculous that was. That caused the losses to rise astronomically which are now going to have to be paid by successful small businesses.

Until we have the proper analysis of the program as it is currently run, we cannot support this bill. There is a real chance we may find that this program is actually a deterrent and puts a greater onus on the successful small businesses than if they had borrowed the money without the government guarantee.

That is the information I thought this government would have brought to this House along with the request. The government did not and therefore I oppose it.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Mr. Speaker, I want to remind the member of the Reform Party that successive NDP governments in Saskatchewan going back to Tommy Douglas, Allan Blakeney and Roy Romanow have always been very friendly and very positive toward small business.

I think the success of those governments over the years electorally from that community is proof that has actually been done. I just wanted to unplug that left ear of his so that he could hear a little from that side of his ideological head.

I want to ask him a very specific question, because I know he is a very thoughtful member of the Reform Party.

[An hon. member]

That is a contradiction.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

A contradiction in terms of being a thoughtful member of the Reform Party.

Back in October one of his esteemed leaders from Calgary, the Revenue Canada critic, said in this House that he thought millionaires are overtaxed and specifically agreed that Conrad Black was overtaxed. Does the member agree that millionaires are overtaxed, that Conrad Black is overtaxed? I certainly do not think they are. I think they are undertaxed.

Does the member support his esteemed leader, the revenue critic of his party, or does he not?

[The Deputy Speaker]

I do not mind saying that I have grave doubts as to the admissibility of this question in terms of its relevance to the bill before us. Perhaps the hon. member for St. Albert will find some way of tying it in.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, his earlier comment regarding the success of the NDP governments in Saskatchewan and so on perhaps may have some merit. I am not going to debate that under the SBLA.

The point I want to make is that the Liberal government has changed the policy of the SBLA to a full cost recovery program. It just wants to take the money in and pass it out and there is no cost to government. How can that be a benefit to small business when there is no cost to the government? The successful small business carries the full cost of this program. It is a tax on small business.

Regarding his other point, Mr. Speaker, your point of relevance is very true. We are dealing with small business, with maximum sales of $5 million and a maximum loan of $250,000. I am not sure Conrad Black would waste his time making applications for that small of an amount. So it is totally irrelevant.