Mr. Speaker, I appreciate the opportunity to speak to the House of Commons on Bill C-21, an act to amend the Small Business Loans Act.
There was a great deal of debate over this legislation during the second reading stage. There was more debate than we might otherwise have thought for a bill whose purpose is simply to give time for a comprehensive review of the Small Business Loans Act. The intensity of the debate demonstrates that all parties have strong beliefs about the best way to encourage small business financing in Canada. I hope that all those interested will take the opportunity to contribute to the comprehensive review.
I trust today I can set the record straight and clear up some of the questions hon. members might have on the timing of the comprehensive review.
I begin by saying a few words about chapter 29 of the auditor general's report. During the debate at second reading we heard a great deal of information that was not correct. Some members for example alleged that it was only because of the auditor general's report that Industry Canada is conducting a comprehensive review. This is not the case.
Under the Small Business Loans Act, the lending authority expires after a set time period. This feature of the act provides Parliament with regular opportunities to review the program. The last comprehensive review was conducted before the act was amended in 1993. The government had committed to another comprehensive review before the expiration of the current lending period on March 31, 1998.
Why will this review not be completed before the end of the lending period? This is where the auditor general's report comes in. And perhaps this is where some hon. members became a bit confused during second reading.
When the auditor general announced that he would look at the SBLA program, the government decided it would wait until receiving his recommendations before commencing the comprehensive review. This was a prudent decision. It avoided the duplication of effort of having two reviews of the act taking place at the same time. It allowed the comprehensive review to take advantage of the recommendations made in chapter 29 of the auditor general's report. I do not think that anybody in this House would want to have it any other way.
As a result of waiting for the auditor general's report, the comprehensive review will not be completed by the time the current lending period expires. Chapter 29 was only tabled last December. That left the government with very few options.
One would be to rush the comprehensive review in light of the concerns raised in the debate, the recommendations made by the auditor general and the issues raised by the stakeholders. I do not believe that anyone would want this review to be rushed. There are many complex and far reaching issues that must be addressed.
Another option would be to let lending expire on March 31 as scheduled and let the comprehensive review proceed. Again, I do not believe anyone who has looked at the importance of this program to small businesses across this country would want to follow this course.
The third option is the one that the government has taken in introducing legislation to extend the current lending period. In that way the comprehensive review will take place without disrupting the program. There will be no inconvenience to the many small and medium size businesses that will be looking at the program for help in securing finances in 1998.
When it was tabled last December, the auditor general's report was welcomed by the government. Some of the recommendations the report made had already been acted on by this government. Others will help form the discussion in the comprehensive review.
In replying to the issues raised in chapter 29, Industry Canada prepared a tabling document for the House of Commons Standing Committee on Public Accounts. The auditor general appeared before the public accounts committee in February 1998. He was questioned very closely on the conclusions and recommendations made in his report.
I think it is very useful for hon. members to recall three points he made in the course of his presentation. First, he said that the SBL program is a generally well run program. He maintained that it would benefit from more precision in its objectives.
Second, he said that he would not require another audit in the customary two year period following the tabling of the report. He will consider giving the department more time to respond to issues raised in the comprehensive review.
Third, he acknowledged that the question of how many jobs are created as a result of the program is very difficult to quantify and there is a large range of estimates.
I would like to briefly respond to some further issues raised during the second reading. There seems to be a great deal of confusion about the proposal to raise the lending ceiling by $1 billion. Some suggested this was an expenditure item needed to cover the potential liability of loans that are made during this extended period.
I would emphasize that Bill C-21 does not make further spending requests. The amended lending ceiling is necessary simply to permit the lending period to continue while the comprehensive review takes place. The total loans made for the period ending March 31 are expected to reach $13 billion. Current lending on registered loans is capped at $14 billion. On the basis of the 1997 spending levels, Industry Canada expects financial institutions to make a further $1.7 billion in loans by March 31, 1999. That number exceeds the $14 billion authority by some $700 million. Bill C-21 includes a modest cushion of $300 million to take into account possible fluctuations in the economy.
Given that loans are registered on average three months after being made at the time the $14 billion ceiling is reached, several hundred loans may have been made to small businesses under the SBLA that will not be registered and therefore will not be honoured by lenders. This may cause lenders to call these loans, causing major disruption to entrepreneurs and businesses. This is exactly what Bill C-21 is trying to avoid. This is why we need to support the $1 billion increase in the SBL program.
Let me also mention another key issue that has been debated at length during second reading. It is the incrementality of SBLA loans. These loans are being guaranteed that the financial institutions would have made in any event.
There is no doubt that there are loans that have been guaranteed that do not fall within the intent of the act. Like insurance of any kind, there will always be some individual loans which do not actually need insurance. For the most part, these loans are less likely to also default and therefore are of no cost to the taxpayer.
In conclusion, I want to emphasize that the SBLA is a good program. It has broad support among the business communities. I think we owe it to the small business community across this country to continue it for one year while we conduct a comprehensive review by all parties and all members of this House. That is why it is important for Parliament to pass Bill C-21.