Mr. Speaker, it is a pleasure today to speak on Bill C-21, an act to amend the Small Business Loans Act.
There are several parts to this act. The reason Reform is opposing it is primarily because the act is not living up to sound fiscal principles. The auditor general has repeatedly said that the SBLA needs revamping. It has numerous loopholes in it that waste the taxpayers' money.
One of the things which greatly surprises us is that the auditor general's reports, the independent audits of government functions, ministries and programs, are never listened to. Sound constructive principles are continually put in these very good documents of the auditor general. Does the government listen to them? No. Not only no, but virtually never.
Looking back in history the number of times the auditor general's reports have been listened to and acted upon by the government can be counted on one hand. And if it is not in the amount of thousands of dollars, it is millions and billions of dollars that these programs have cost. I find it unfathomable.
This is not neurosurgery. The solutions are there yet governments, be they Liberal or Conservative, have repeatedly and consistently ignored these constructive solutions that would enable the government to spend the taxpayers' money in a wiser fashion. Many of these ideas are not difficult to implement. They would be very cost effective and very useful not only for the public but also for the people working within these ministries.
We have a number of observations from the auditor general's report that I would like to bring up which are critical of the SBLA. He found that under the SBLA the taxpayer was on the hook for $210 million. These are moneys that were lent by lenders to people and which the government, that is the taxpayer, picked up the tab for. Why should the taxpayer be subsidizing the lenders which are the banks? The banks have made record profits recently, in the billions of dollars, and they have been subsidized in the order of $210 million by the taxpayers of Canada. Does this make sense? This is idiocy. It does not have to happen.
We approve the extension of the SBLA because providing loans in a responsible fashion to small businesses so that they can get on their feet is exceedingly important. Small businesses provide employment, not only for the people who starting them but also for the people they employ. It is a good idea.
The bad idea is that the lender is not forced to adhere to strong principles. What is worse is that there is nothing in the program to force the government to do an audit or an analysis of whether the money that is being lent is being lent properly by the lender or whether the borrowers are being assessed in a judicious fashion. The auditor general showed that under the SBLA lenders were not being audited properly. There is nothing in the program to force lenders to analyse borrowers properly.
As a result 40% of the loans made under the SBLA would have been made anyway. Taxpayers are on the hook for $210 million. It is unnecessary. That money could be used for many other useful programs or it could be applied to debt reduction. It is a waste of taxpayer money.
There is no doubt that job creation figures have been inflated as much as five times to add justification to the program. That is not useful. We are advocating that the government take the initiative to ensure that the SBLA is audited, that borrowers are audited, that lenders are audited and that there is accountability. At the end of the day this program like any program is paid for by the public. It is paid for by the hard working, overtaxed public.
We owe one thing to members of the public and that is to spend their money wisely and responsibly. The SBLA is an example, as demonstrated by the auditor general, of a program where this is simply not happening.
I would like to add some constructive suggestions to those that have already been made. First, the SBLA eligibility requirements and conditions should produce the expected results. There is no effective analysis, as I mentioned, and no cost benefit analysis.
Second, it is important to define the expected level of incrementality. Are we seeing an increase in the number of businesses that would not normally get loans other than through the SBLA program? In other words, is the SBLA doing what it is supposed to do? Again there is no analysis.
Third, there should be full cost recovery. If we manage to get full cost recovery what will happen is that the money which is lent will be returned to the program to be used to provide money to other small businesses. Obviously when $210 million are lost there will be less money to lend to other small businesses. Those who are treating the program irresponsibly are not only compromising the public. They are also compromising other small businesses that wish to avail themselves of the program.
Fourth, Industry Canada should assess whether the lender is exercising due care. The lender is the bank. Banks sometimes do not engage in good fiscal practices when lending money. The claim from the lender must be assessed. It must be shown that the lender is exercising due care.
Fifth, the interest paid to lenders is too high. Interestingly enough, while this is a loan provided by the government, the lending rate can be prime plus 3%. The banks are not exercising due care. They are saddling the taxpayer with an interest rate that is prime plus 3%. That is not fair. It is taking advantage of the taxpayer.
Therefore it is important that we decrease the interest rates being charged by lenders. I am sure that is something the government will be very interested in. Some banks look to the program as a cash cow.
Sixth, better information on the performance of the SBLA is required. Parliamentarians must have the information to assess the SBLA. That is an important criticism by the auditor general.
I would like to make some general comments about the economy. Providing loans and start-up money is very important for small businesses. It overcomes one of the obstacles facing small businesses. There are larger obstacles that all businesses face, that is the amount of red tape they have to deal with. The government has to take a leadership role and work with the provinces to cut the red tape which has managed to put more barriers between east and west Canada than north and south.
We must decrease taxes. If we visit small businesses in our community what mantra do we hear? “I can't hire. I can't train because all the money goes to my taxes. If I had less tax I would be able to hire more people, train more people, invest in my business and become more competitive, not only within the confines of our country but also internationally”.
The barriers of high taxes, the barriers of excessive rules and regulations not only compromise competitiveness within our country but compromise competitiveness internationally.
If the government would like to take one international issue to heart which is exceedingly important, there are two major fracture lines through Japan and Indonesia right now. The solutions are out there on the table from the International Monetary Fund, which have been given to both countries. They are not acting upon it because of a failure in leadership. The only way they will act on domestic changes is through international pressure.
One can argue that domestic issues are for a country to deal with. However, if Japan and Indonesia fail to deal with their domestic problems an economic tsunami will come across the Pacific Ocean and smack into Canada. It will be a significant and major impediment to our ability as a country to thrive economically.
I conclude by saying that we disagree with Bill C-21. I hope the government will take the constructive suggestions members of the Reform Party have put forward, implement them and build a better SBLA program for all Canadians.