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.