Debates of March 18th, 1998

Ways And Means

[Some hon. members]

No.

[The Deputy Speaker]

All those in the favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

And more than five members having risen:

[The Deputy Speaker]

In accordance with the order adopted early this day, the division of the motion is deemed deferred until 5.30 p.m.

Small Business Loans Act

[Fred Mifflin, Liberal, for the Minister of Industry]

moved that Bill C-21, an act to amend the the Small Business Loans Act, be read the third time and passed.

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

Mr. Speaker, I am pleased to have an opportunity to speak at third reading of Bill C-21. This is an important piece of legislation because it extends the Small Business Loans Act program and its funding for one year.

As members will know, a comprehensive review of the small business loans program is being done. The legislation before us today allows the program to continue while this review takes place.

Let me begin by emphasizing for those who have failed to understand that Bill C-21 is not a spending measure because the small business loans program is not a spending program. It is a loan guarantee program.

The legislation extends the funding for the SBLA program by raising the aggregate lending ceiling under the SBLA by $1 billion, from $14 billion to $15 billion. The $15 billion figure contained in Bill C-21 does not mean that the government will be spending $15 billion. It means that the government will be standing behind loans to the small business community that have a total value of $15 billion.

Members across the way have objected to this increase in the loans ceiling. I caution them that should we fail to pass Bill C-21 we will place a severe handicap on the SBLA program, which serves Canada's small and medium size businesses well and provides much needed access to financing.

In considering the desirability of this increase in the lending limit, we should recall the way the program authority works under the SBLA. The act provides a total or aggregate authority for all SBLA loans made by participating financial institutions during a specified lending period. Repayments of loans have no effect on the ceiling. Neither do the defaults nor claims paid.

The present lending period covers the years 1993 to 1998. The total loans made to date now stand at more the $12.7 billion. They are expected to reach $13 billion by March 31, 1998. However current authority to register loans is capped at the $14 billion mark for this lending period. If the House of Commons extends the current lending period to March 31, 1999, as is proposed by Bill C-21, we can expect further demands on loans.

Based on our experience during 1997 and 1998 we expect financial institutions would make an additional $1.7 billion of loans under the act in the coming year. This would increase total lending under the SBLA to $14.7 billion and exceed the SBLA's present authority of $14 billion. Therefore, for lending to continue under the program during the entire extended lending period, an increase in the aggregate lending ceiling is required.

Given that loans are registered on an average three months after being made, at the time the $14 billion ceiling is reached several hundred loans may already have been made to small businesses that the SBLA would not be able to register without the increased lending ceiling. This would certainly lead lenders and borrowers to re-examine these loans.

Without the additional $1 billion of lending authority, a great many small businesses would not be able to count on the SBLA to support their loans. This may cause major disruptions to entrepreneurs and businesses across Canada. That is why Bill C-21 proposes to raise the lending ceiling to $15 billion.

Assuming we see the same rate of lending as last year, this would leave a modest cushion of $300 million between the estimated need and the total cap. This excess is quite small when we take the range of possible fluctuations into account.

I would like to address another key issue that has been debated at length. That is the issue of incrementality.

The question has been raised as to whether these loans are well targeted or would they have been made by the financial institutions even without the SBLA program. There is no doubt that some loans have been guaranteed which might have been made otherwise.

The SBLA provides an insurance program against default, not a spending program. Under it, private sector lending institutions assess businesses and make loans. The federal government then stands behind the defaulted loans by paying 85% of losses on SBLA registered loans.

Like many other insurance programs, the SBLA pools risk across thousands of users. This of course diminishes risk; however it does not eliminate it for SBLA lenders. The applicants to which the banks made loans under the SBLA are otherwise creditworthy but tend to be start up companies or firms with low capitalized assets.

As with insurance of any kind, there are likely to be some loans that actually do not need insurance. For the most part these are loans that are less likely to default and therefore they do not cost the taxpayer. In fact a certain percentage of non-incremental loans actually help make the program affordable and sustainable.

It is extremely relevant to point out that since the government took office we have taken steps to move the program toward cost recovery. Since 1995, firms that benefit from the SBLA must pay fees that are designed to recover the cost of loans claims. Therefore any business that uses the program even if it does not need the SBLA loss insurance is in effect sharing the risk of lending to small businesses which need the program.

Industry Canada will be tracking this issue closely to measure the effect of user fees on the incrementality of the program. In the meantime our comprehensive review will certainly be examining the matter in detail. The comments made by members opposite in this House I am sure will be brought up in the Standing Committee on Industry.

That brings me to a final point. This government has been proactive in working to constantly update and improve the small business loans program.

In addition to the move toward cost recovery, Industry Canada has taken significant administrative steps to improve the efficiency and productivity of the program, such as cutting claims audit times by two-thirds and thereby mitigating costs to taxpayers.

We intend to continue this work under the comprehensive review. The valuable ideas and suggestions of all members of the Standing Committee on Industry will be carefully considering the total review.

In summary I remind hon. members that the statistics indicate the program is working well. It is a good program with broad support among the business community.

In 1995-96 more than 30,000 firms used the SBLA to improve their businesses. They created an estimated 73,000 jobs according to the loan applicants themselves, the people who should know best.

I would also reiterate that Bill C-21 does not make further spending requests. The amended lending ceiling and the one year extension are necessary to continue the valuable loan guarantee program while the comprehensive review takes place.

As I have mentioned over and over, this comprehensive review will be done in an orderly fashion. Hopefully we can get it to the standing committee early this fall.

I do not believe that this House wants to leave our small business community in the lurch by cutting off this very useful and necessary means of access to financing.

For these reasons and for the benefit of Canada's small business community, I would ask all members to support this bill so that we can pass it in the House and forward it on to the Senate. Then we can get on to the comprehensive review as we have discussed over and over in this House.

[John Herron, Progressive Conservative, Fundy Royal, NB]

Mr. Speaker, it is with pleasure that I rise today to debate the conclusion of Bill C-21 which is known as an act to amend the Small Business Loans Act. We found out during the previous debate last month and on review of the auditor general's report that the bill would be better identified as the small business loans act with need of substantial review and improvement.

The bill was labelled by many as a bill that lacked performance indicators and a bill excessively responsive to lending institutions rather than responsive to the lending needs of small business. This legislation has always operated with a sunset clause to ensure periodic review for improvement and assessment on whether the bill is meeting the needs of small business, not merely renewal.

On our assessment as well as the auditor general's, the bill is in need of improvement and the return to its original focus. This government has yet to make up its mind on what it wants to do with the act in the first place. As a result of its indecision it has requested that Parliament renew the act as is for another calendar year while it continues to review the program.

It is with regret that we support this legislation only because without it as of March 31, 1998 the current lending period would cease and SMEs, small and medium enterprises, would not have access to capital under the SBLA, the Small Business Loans Act.

However this government should not expect the support of my caucus colleagues or for that matter the small business sector unless this government begins to review, improve and update this act to ensure that appropriate access to capital is afforded to the real engine of job creation, that being the small business sector of this country.

I would hate to sound cynical but I am really worried given this government's reluctance to establish specific debt reduction targets. As well as its reluctance to reduce taxation, broad based tax reduction for both consumers and small business, the government's plan to create more small business is to continue to tax us to death so that more large and medium size businesses become small companies.

The government has missed a real opportunity to show SMEs that they are indeed serious about the concerns that SMEs face today. In fact they are not alone as the auditor general has pointed out in his recent report on this piece of legislation. In section 29.87 he states that new lending under the program will end as of the 31st of March, 1998 unless the government decides to renew it.

This presents an excellent opportunity to review the program's contribution to filling current financing gaps and stimulating economic growth and creating jobs. The auditor general goes on to say the review would also enable Industry Canada to assess whether the program meets the needs of the small business sector in a rapidly changing economy.

We should not have wasted this opportunity to improve the act. This government was criticized for the very fact that this red book promise was broken by its own rank and file in the preamble to a priority resolution at the October 1996 convention: “The banks and other financial institutions have not yet taken any concrete steps to alleviate the hardships faced by the small and medium sized firms in obtaining investment capital”. Those are the words of the Liberal Party of Canada, not ours.

In my previous statement at second reading, I outlined a number of observations and recommendations within the Report of the Auditor General. I was pleased to hear during the debate that the industry minister agrees with the observations of the auditor general's report. I would like to take this opportunity to reiterate the minister's statements.

The minister stated “The auditor general's report would be a very useful tool as we review the SBLA and design ways to make the Small Business Loans Act even better in the future. A one year extension of the act will provide the time needed to complete the review of the program”.

Before we further discuss the necessary initiatives required to improve this bill, it would be useful for us to remind ourselves, in particular those on the opposite side of the floor, the impact the small business sector has.

More than 98% of all businesses in Canada are small businesses with employees of less than 50 in number. Half of Canada's workforce is employed by the small business sector. It is widely recognized that the small business sector has had the greater proportion of new job creation in recent years, as the auditor general pointed out.

Small businesses play a very significant role in our economy. They are the heart of economic activity and community development. In addition they sometimes develop into large firms of the future, as long as they are not taxed to death and there is more disposable income in Canadians' pockets.

Small businesses contribute 43% of Canada's private sector economic output. With this in mind it is imperative that as legislators we ensure that small businesses have access to reasonable financing to ensure the growth of this critical sector of our economy.

As the minister stated, the original Small Business Loans Act was introduced in 1961, as I said before, even before I was born. However since then the objective and the focus of the bill has been greatly distorted. The bill no longer serves as a loan guarantee for small business; rather it serves as a loan guarantee program for banks.

The intent of the act was simple: to provide small business with access to capital for loan requirements that would not be considered under normal lending circumstances. The federal government would in turn guarantee these incremental loans. That is the issue in play here, it is a loan guarantee for incremental loans.

Over the years nearly 40% of the loans that fall under the SBLA are loans that would be granted anyway by lending institutions. Those are not my words, they are the words of the auditor general.

The original intent of the legislation was to ensure that incremental loans to small business were approved in exchange for the business sector being willing to pay a higher rate of interest and even a fee for the access to incremental financing.

As mentioned, the two amendments we voted on just the other day relate to the continuation of the bill as well as to increase the ceiling of the total amount of the loans from $14 billion to $15 billion. Four times the federal government has had to increase the ceiling on the total amount of loans. One would think with this kind of exponential increase that small business would actually have access to financing and that small business financing would no longer be a problem. I know the member for Kings—Hants would actually put that logic into play.

However, I would like to state to my colleague that the Canadian Federation of Independent Business stated that the rejection rate of loan requests was actually 2% higher in 1997 than it was in 1987. Who was in government in 1987? It was the Progressive Conservative Party of Canada.

The CFIB also indicated that 29% of business owners surveyed in 1997 said that availability of credit is still the most serious business concern they have. This is double the concern they expressed in the late 1980s, according to the CFIB. These are not just my words.

I challenge the government to return to the original intent of the SBLA in providing incremental financing to small business when they re-enter the bill as the Progressive Conservative Party advocates, as do the CFIB and the auditor general.

The overall theme of the auditor general's report and my principal concern is that Industry Canada does not have the performance indicators and benchmarks to properly assess whether the act is actually accomplishing its original objective, that of providing incremental financing.

The program's raison d'être is to help fill existing financing gaps for business. Without true financial support and adequate financing for growth of our small business sector, growth will be stunted within our economy and the future prosperity of Canada can be threatened.

As I earlier indicated, the principal problem with the act is that it lacks clear objectives and performance indicators and benchmarks to measure the success and effectiveness of the legislation. The government could benefit from the old adage, what gets measured gets done.

As I stated earlier, the bill was first passed in 1961 yet the type of business that would likely have been started back then was either retail based or perhaps light manufacturing. The Canadian economy has greatly changed over that period of time. Now we have different sectors such as the service sector, the knowledge and information sector which form a much greater part of the economy today, with the latter sector having a high net employment growth. It is imperative that when the act is reviewed the government ensures there are innovative solutions and commitments from lenders that address this need.

The greatest concern that we have today is that the original intend of the program was to provide incremental financing and access to capital to start-up ventures or small firms that would not otherwise have been granted a loan from today's lending regulations. The relative size of the loans was intended to be small so borrowers could handle a higher rate or a fee in exchange for a loan that did not tie up their leverage of their personal guarantee.

The result today is that given the expansion of the program it is now beginning to displace traditional lending rather than enhancing marginal loan volumes and filling gaps where small venture loans are required. Given that 90% of the loan was to be guaranteed, the lending institution would then consider engaging in that loan.

Now we are getting to a situation, instead of having small size loans, where some of the loans are actually teetering on over a quarter of a million dollars. I am not advocating that we necessarily hamstring the SBLA in terms of actually having a smaller cap, but the emphasis has to be on more marginal financing, incremental financing, as opposed to getting into these larger type loans. At the end of the day these are the kinds of loans the banking institutions would actually approve.

I will take this opportunity to discuss a lot of other things which affect the small business sector and the SBLA. Unlike the Reform Party yesterday, I am not necessarily interested in tying up a entire day of speaking time on an issue. I would rather talk about issues that Canadians are actually concerned about.

I want to talk about small business. One of the Reform Party's founding principles is its members are here to represent their constituents. If one asks the CFIB whether the small business sector likes the SBLA, it will state it is a program it is very much aware of. It believes it is key to financing within the small business. It is very important. This is whether you are in Atlantic Canada, Quebec, Ontario or the west.

If the Reform Party is truly representing its constituents I suggest it actually votes for the SBLA amendment tonight so we can continue on with the process of this bill. Otherwise one of its founding principles of representing its constituents has been thrown to the wayside.

There are some other initiatives in terms of what this government has to do in order to make the small business sector more competitive. The Canadian economy is very overtaxed. After the budget was tabled the Canadian Chamber of Commerce tabled a press release in response to the budget. In the press release it challenged the government to draw up a detailed fiscal framework for the new millennium based on clear criteria for growth, competitiveness and opportunity rather than arbitrary commitment to allocate half the surplus to spending and half to debt.

The small business sector is still way overtaxed. In our election campaign we wanted to move the small business tax rate from 12% down to 8% which would make some marginal business plans into more profitable business plans and actually put more money back into small business pockets.

We need to lower EI premiums for small businesses. Right now the EI program has a $7 billion surplus annually which actually belongs in the pockets of employees and employers. What this actually does is taxes every new job is created.

In this same communique the Canadian Chamber of Commerce stated that if the EI premium were reduced to $1.95 instead of the present $2.70 per $100 of insurable earnings, every medium size company across Canada would be able to hire at least one additional person.

We know that all taxes kill jobs but payroll taxes at the end of the day are actually more punitive than any other tax initiative.

What we challenge this government to do, when it is reviewing the SBLA, is to review all the issues that affect the small business sector. People may ask if the fund is sustainable if we lower the EI premium from $2.70 down to $2.00. The chief actuary for the government stated that if it were lowered from $2.70 down to $2.00 it would be able to withstand a severe recession. That is an initiative that the Progressive Conservative Party clearly advocates.

We also know that the only economies which have any kind of consistent growth are those economies that have less debt and less tax. In order to reduce the overall tax burden of our country, we need to lower the debt. That is why the Progressive Conservative Party advocates lowering the debt to 60% of GDP by the year 2000 and to 50% by the year 2005. It goes back to my adage of what gets measured gets done. By saying we will put half on new spending, half on new debt and half split between debt and tax reduction, at the end of the day I get very worried about that. Canada will not have a surplus if that kind of approach is taken because at the end of the day we will end up spending it.

We need less debt and taxes. We recently had a budget where the government raised the personal exemption from $6,500 to $7,000. That took 400,000 Canadians off the tax rolls who should not have been there in the first place. What we advocate is that is not nearly enough. We want to raise the personal exemption to $10,000 which would take two million Canadians off the tax rolls overnight who simply should not have been there in the first place.

Budgets are more than just about numbers. They are about values we share as as nation. By that I mean that it is very troublesome from the standpoint that we actually tax individuals who earn $14,000 less than the poverty line.

We challenge this government to develop a plan for growth in this country based on less debt, less tax and putting more disposable income back into the pockets of Canadians.

Mr. Speaker, I know as the fiscal conservative that you are, you can actually understand that Canadians are poorer today than they were approximately eight years ago. I know the hon. members over here will understand that the disposable incomes of Canadians has gone down 6% since 1990.

We need to ensure that we put more disposable income back into Canadians' pockets so that more individuals can have an opportunity to participate in the economy in general. The only way to do that is to provide Canadians with broad based tax relief.

It is with regret that we are voting for a bill because the government did not take advantage of the last five years to seriously look at the SBLA.

The government knew it had to be reviewed, but all of a sudden it came to a stage and said “oops, the bill is coming up for renewal, what are we going to do about it?” Instead it said it would wait for the report of the auditor general.

I find this kind of perplexing because yesterday the finance minister wrote a letter to the auditor general saying that they are not so keen on some of his work. On the other hand right now, they are saying they want to wait for the report of the auditor general.

The member for Kings—Hants made a comment that I will address later. What I am trying to say is that if there is one credo this government can be described by, it is that sometimes it makes it up as it goes.

This Small Business Loans Act really is an example of that. It is oops, do you mean we actually have to review a bill? What we are going to do is ask for another year.

I believe that the government, in good faith, is going to take a serious look at the auditor general's report and act on some of those initiatives as opposed to making it up as it goes. We saw that in Kyoto. Sadly, we also saw it in the unity issue in 1995 during the referendum.

We need more planning and less improvization. We also saw it again with a provocative approach regarding the supreme court reference. It comes down to exactly what the member for Kings—Hants states, brinksmanship.

The supreme court reference kicks a hornets nest. It does not tell us anything that we do not know. The government has chosen to play Lucien Bouchard's game of getting this kind of issue back on the national agenda.

The reason the government is doing that in the absence of plan A is that it tried to come up with a kind of plan B. There is no such thing as plan B. There is no Canada unless we have our territories and all 10 provinces.

I challenge this government to do two things. The first is to develop an approach or a plan for growth for our country based on less debt, fewer taxes, more disposable income into Canadians' pockets so that more Canadians can participate in the economy.

Second, have more planning and less improvization as we saw in Kyoto, as we saw in the unity issue and as we see here in the SBLA or even in the postal strike.

I am looking forward to the bill being tabled in its new form in the coming days.

Committees Of The House

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Mr. Speaker, I rise on a point of order. There have been discussions among representatives of all parties on a matter of authorization to travel. I wonder if you might seek the unanimous consent of the House for the following motion. I move:

That the members of the Standing Committee on Transport and the necessary staff be authorized to travel to Europe from April 20 to 27, 1998 to gather information in relation to their study on the national passenger rail system.

(Motion agreed to)

The House resumed consideration of the motion that Bill C-21, an act to amend the Small Business Loans Act, be read the third time and passed.

Small Business Loans Act

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, why is it so rare for a government program to shrink as opposed to grow? I have only been here a short while. I am tender in my years. Some would say that I am chronologically challenged. However, having been here for as long as I have, I have noticed that things rarely tend to shrink around this place. They generally tend to get bigger as opposed to getting smaller. That is exactly the case with the Small Business Loans Act which we are debating today.

I ask myself why that is. I look at the department which I critique. It is a $57 billion monster that started off very small, but then grew and grew over time to become the biggest department in government. The Department of Human Resources Development now has a budget of $57 billion. It is the biggest monstrosity of a department there is within the federal government.

We could document this process with other departments, but let us take a curious look at what has happened with the Small Business Loans Act.

First, the government started with the intention that small businesses in Canada are a major job engine and that they should be helped. Everybody agrees that small businesses are a job engine in this country, but let us look at what type of help the government has actually stepped in with, at what benefit its intrusion has provided.

We always ask the question: Who wants it? Do they actually want the help? There are many small business owners in this Chamber. Mr. Speaker, you may be one of them. If we were to ask small businesses what—

[An hon. member]

He makes bread.

[Rob Anders, Reform, Calgary West, AB]

That's right. Making bread is a good idea. There is nothing wrong with making bread. Bread is not a dirty word.

We ask ourselves if small businesses want the Small Business Loans Act.

I asked some of my friends who I went to high school with about this. I will tell the story of Mike Nyhus, a fellow who I went to high school with. He started a very successful construction company. Mike was never a Reformer when we attended high school together, but he has changed because he is now out in the workforce making money and paying other people's salaries.

I asked Mike how we could change things to make them better for him so he could employ more people. He told me that his biggest problem was the red tape and the administrative nightmare he has as a small business person. He said that his biggest problems were looking after the GST and all the paperwork, as well as the payroll taxes, including the Canada pension plan and employment insurance.

The last time I heard word of him, Mike said that he could hire five people, but he did not do that. His business could afford to hire five more people, but he said that the administrative nightmare was preventing him from hiring them for his business in my riding of Calgary West.

When I look at that I say shame on the government. Its whole idea behind this is that it can toss more money at a problem and make it go away. That is exactly what it wants to do with Bill C-21. The government hopes that by increasing the taxpayer liability from $14 billion to $15 billion it will magically create more jobs and help taxpayers and small businesses.

If we look to the businesses that this loans program is aimed at, 40% of the businesses that receive loan guarantees under the Small Business Loans Act actually did not need to have the loan guarantees.

[An hon. member]

Do you mean it's a subsidy?

[Rob Anders, Reform, Calgary West, AB]

It's a subsidy. That's right. I hear other members across the way and within the Chamber who are finally realizing that this is actually a subsidy. I thank other members for pointing this out, for noting it and for being concerned.

It is actually a subsidy. They do not actually need it. It is a case of profitable companies which could go ahead and find the resources and the guarantees they need through other mechanisms. They are getting these things and they do not actually need them. Government is trying to solve a problem where a problem does not exist.

The real problem is that small businesses have an administrative nightmare, red tape, payroll taxes and high taxes generally which prevent them from hiring more people. That is the obstacle to more jobs in this country.

I remember during the last election campaign that I heard “jobs, jobs, jobs” from the Liberals.

I was a young lad at the time of the 1993 election, but if I think back I heard something then, and it was jobs, jobs, jobs. If I think about it again—

[An hon. member]

They said that for two elections?

[Rob Anders, Reform, Calgary West, AB]

The member is right. It was the same people. It was the Liberals. They said jobs, jobs, jobs in both elections. Yet, instead of creating jobs, instead of actually lowering EI premiums in this country—and I would like to point this out because I am getting some cat calls from across the way—

[An hon. member]

A million new jobs. We gave you a job.

[Rob Anders, Reform, Calgary West, AB]

That's right. I am going to stick it on him, because it looks good on him.

The Liberals have milked $14 billion out of businesses in this country in overpayments on EI. As a matter of fact, if we take how much Albertans overpay in EI taxes—and I want Mike Nyhus and other people in Calgary West to pay attention—they are paying $833 million more per year than they are actually collecting in EI premiums. That is their overcontribution. It is not how much they are paying.

If we broke that down for every single worker in Alberta, which has a workforce of roughly one million people in a province of about two and a half million to three million people, it represents about $833 per individual. Everyone who is working in the Alberta workforce is being milked hard by this government by over contributing to employment insurance. That is what this is coming down to.

Instead of giving taxpayers $1 billion in liability in the Small Business Loans Act, creating a bigger hole in my pocket, a bigger hole in my wallet, creating more administration and giving out more loans and loan guarantees to businesses that do not actually need loan guarantees, why does the government not do what businesses are calling for and cut EI premiums, cut CPP taxes, cut taxes generally and help businesses that way? That is what businesses are calling out for. It is not just me. I am not delusional over here.

The Canadian Federation of Independent Business, a business lobby group, an organization that represents small businesses in this country, is calling for these changes. It is calling for a lowering of taxes. It is not just me calling on this side of the House, it is the CFIB which represents businesses from coast to coast to coast in this country which is calling for those reforms.

There is also another fundamental question. One of the first questions I asked was: Why is it so rare for a government program to shrink? The other question I asked was: Who wants it? Not the small businesses. Forty per cent of them are eligible to get loans in other places and do not need the loan guarantees. The government is trying to solve a problem that does not need to be solved for those businesses. It basically amounts to a business subsidy.

The third question is: Who is going to pay for it? This is the real travesty. Other businesses are going to have to pay for this increase in taxpayer liability to help out their competitors.

Why is the government always meddling in banking like this?

I am going to tell members another story because the government needs to know some of its other foibles. If it knew more it might not pass these things.

The Federal Business Development Bank has billions of dollars in assets. Once again, when it first started this noble concept, the concept that warmed the cockles of the government's heart, it was to help invigorate and open new businesses and set up avant-garde enterprises. It would be the cutting edge. But politics got in the way. It realized that it actually had to make safe investments. As a matter a fact, it started making safer investments than what the chartered banks in this country make. Why? Because it was worried about the political ramifications, that it would be smeared with making bad loans. Goodness knows, the government has all sorts of experience in making bad loans. It would not want any more of that, would it?

There are billions of dollars of taxpayers' assets with the Federal Business Development Bank. What does it do? It intrudes into what other private sector institutions would be able to lend out. It goes ahead and takes taxpayers' money, sweat-soaked dollars, and it gives it out to businesses through the Federal Business Development Bank. It is intruding on loans that private sector institutions, the chartered banks in this country, would be able to make. It is so conservative with its loans that it does not come close to serving the original mandate of giving out that money to entrepreneurial, avant-garde, cutting edge businesses.

Once again, who is going to pay for it? The businesses that receive these loans are going to be subsidized by their competitors who are paying these high taxes and they themselves, if they become profitable, will be the ones who will be anteing up money for this poncy scheme. It is a joke.

We have asked four questions. Surely if I was to ask five or six questions the government would tuck its tail between its legs, walk out of this place and forget that Bill C-21 was ever raised in the House.

But I am going to press on. I am going to hope.

Question number five is: Does it actually solve the problem? No, it does not. If the problem is that there are not enough jobs in the country, then surely Bill C-21 is not going to solve the question of the high unemployment rates this government has been pregnant with for all of its time in office, after promising jobs, jobs, jobs. No, it has not realized the problem.

The problem is that it has this red tape, this bureaucracy and high taxes. Even its own members have admitted that taxes are too high in the country. It hushes it up now, pulls its foot out of its mouth and buries it. But, indeed, people across the way admit that taxes are too high in the country. The Liberals know it and they know they should be lowering taxes.

I wish, I pray, that during my time in the House I will see it happen in a real substantive way, as opposed to seeing just lip service.

Does it solve the problem? No, it does not solve the problem. The government is not creating more jobs by going ahead with this. Indeed, it overinflates. This is not the first time. It is not the only time and it probably will not be the last, sadly enough. But it overinflates for every single job that may be created as a result of the Small Business Loans Act.

If I have to come down to trusting the credibility of the auditor general or the credibility of the government, some of its spokespeople and ministers on this subject, I will take that of the auditor general. Call me a skeptic, but I will trust the auditor general before I will trust the government.

Even the auditor general admits that the government over reports the success five times, not twice. For every single job created it reports five. That is how embarrassing the track record is. It over reports five times the success of any type of job creation program.

That was question number five.

Surely by now the government argument on Bill C-21 is full of holes and the taxpayer will have to pay more money. All of this is bleedingly obvious, but I am going to go on to point number six. This one will severely Swiss cheese the government's argument.

Question number six is: Would it pass the judgment of fellow businesses? Once again we look at the CFIB survey of businesses in the country. The CFIB is not calling for an expansion of the Small Business Loans Act or a hike in CPP premiums. That federation is not calling for the government to continue taking $7 billion a year more in employment insurance contributions than it needs. The CFIB is not asking for more regulation. It is not asking for the 38 tax increases brought in since this government came to office in 1993. The CFIB is not begging and pleading for any of those things, yet the government keeps on delivering.

The federation is asking for a cut in EI premiums. It is asking for a cut in taxes that is long overdue and well deserved. That is what it wants. That is what will pass the judgment of fellow Canadians and fellow businesses. That is what is going to create jobs. That is what will deliver on Liberal election promises, instead of the pandering and dribbling and “drabbling” out. That is where the real success story lies.

Shame on the government. By increasing the liability for taxpayers with Bill C-21 the government is not solving the problem which it intends to solve. It is not speaking to the issues it would love to actually be able to say it is addressing. It is actually creating a higher, larger liability for taxpayers. It is growing a government program and it is not doing the service it should be doing for Canadian taxpayers. Shame on it. Bill C-21 should go back to the drawing board and be reformed. Shame on the Liberals.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, it is my turn to take part in the debate at third reading on Bill C-21, an act to amend the Small Business Loans Act. This is the final debate before the vote that will allow us to dispose of this bill.

This is a relatively brief bill, containing only two clauses. What do these two clauses say? First, that the existing legislation, which would normally cease to apply on March 31 of this year, should be extended for one year. Second, that an additional $1 billion should be made available for other loans.

The auditor general reported on this and we read his remarks very carefully. He suggests changes, and I will come back to this a bit later on.

An in-depth review of the program is required. The Minister of Industry undertook to have one carried out, so that it would not be necessary, as in other years, including last year, to come back to the House each time in order to add another $1 billion and to extend the existing program for another year. The Minister of Industry agreed to allow the Standing Committee on Industry and experts from the department to review the program.

I hope that the business community, people representing SMBs in all sectors of Canada, will be consulted, and that people from Quebec and elsewhere will be able to come and testify.

We have already heard from the Canadian Bankers Association and the Canadian Federation of Independent Business. These organizations recommend a formal review of this program. It will soon be the year 2000. As everyone knows, the economy is in full transition and, unfortunately, the transitions are occurring with greater frequency.

In the past, we saw transitions perhaps every 25 years. Now, economic cycles are much shorter in length, seven years they say. In the era of globalization, high tech equipment, and so on, people are realizing that SMBs are undergoing transitions even more frequently.

The questions asked by the auditor general are extremely important ones. Of course he wants to see more control over what it costs the government to compensate lenders, because a certain number of borrowers, approximately 5% when it comes to small and medium-sized businesses, do not pay back their loans. The auditor general feels that the auditing procedures for these requests for compensation must be tightened up.

He also says that the interest the government would have to pay on compensation must be reduced to a minimum. This needs to be reviewed. I would point out that, with respect to student loans, the Quebec Minister of Education tried to avoid taking anything for granted and decided to renew annually all procedures and mechanisms relating to loans from the caisses populaires and the banks. He succeeded in the end in saving money.

I believe there is always a way for governments to save money, and this money of course belongs to the taxpayers.

In my opinion, the most important element in what the auditor general says is that there must be a more stringent assessment of the program's impact on job creation.

Those who have spoken before me have addressed this point a little, but I would like to take a different tack than the Reform member. I feel this review is worth a serious effort. In the final analysis, if we want small businesses to have access to guaranteed loans, we must remember that what everyone really wants is to see as many jobs created as possible.

The jobs created must be quality jobs. It is all very fine to create jobs, but the statistics are often misleading or incomplete. The type of jobs created, the salary, and whether these are permanent or part time jobs must all be looked into.

We also have to consider whether these jobs are in sectors that will last, because, as you know, a lot of small businesses are failing. Most bankruptcies occur in the first year of business. However, in 75% or 80% of the cases, they happen within the first three years. This is where we must pay particular attention.

Given all the good that this bill can do for business, and I think we must not lose sight of this fact, we are obliged to support it. In the past fiscal year, 34,000 SMBs across Canada benefited from the program. This means that over $2 billion in loans were guaranteed by the government, including $732 million for businesses in Quebec.

How was this $732 million distributed? The caisses populaires loaned out $321 million of it, while the other banking institutions in Quebec provided $385 million. For Canada as a whole, the 34,000 SMBs created, according to the inadequate figures available, 73,000 jobs, of which an estimated 25,000, at least, were in Quebec.

So this is why we in the Bloc Quebecois feel obliged to support this measure. If the bill is not passed by April 1, we could not use it to help small and medium size businesses.

I will digress a bit further here. In 1995, the figures showed that SMBs contributed 43% of Canada's economic activity. That same year, in Quebec, 45% of all jobs, not just the new ones, depended on SMBs. So they account for nearly half of the jobs in business.

We often think that big business creates jobs, but we note—and this is true in all countries, all the OECD reports confirm it—that big business is no longer really creating jobs. It creates some, but others are lost. Often government efforts, and this is true for a business in my riding in Quebec, are aimed at maintaining jobs. Frito-Lay is one example, and there are many others.

On the subject of big business, the challenge is not to create jobs, but to maintain existing ones. The Lévis shipyards come to mind. Barely seven or eight years ago, when things were really booming, 2,500 people worked there. Now they have a hard time keeping 500 to 700 people employed. So SMBs are an area for the future and where most of the jobs are created.

They often represent the only option for someone without a job, who is unable to find one in the public service. We know that neither the federal nor the provincial public service creates jobs anymore. So SMBs are the only option for young people or those who have experience in the labour market, but find themselves unemployed.

I heard the Reform member criticize the Minister of Human Resources Development. But some good came out of the program, including the SEA initiative, the self-employment assistance program, which helped many jobless people, for a period of up to a year, set up their own businesses. Many of these businesses survived. If these people had not set up such businesses, they would have remained unemployed.

We must do our utmost to help them. I do not doubt that all the members here, from all parties, can work so that, in the end, the largest possible number of jobs will be created. The Liberals even made job creation their slogan in 1993, with their “jobs, jobs, jobs”. As we saw, their approach was based on macroeconomics, in that they concentrated on economic indicators and let things sort themselves out.

Contrary to that approach, I think governments still have a very specific role to play to help businesses create jobs. At the same time, we must be careful and make sure public funds are not wasted. The fact is that setting up a business is risky. This basic program allows thousands of businesses to take the necessary risks to create jobs. Members of this House can never make job creation too much of an obsession, too much of a daily concern.

I see that I have some time left. When we review the program, we will have to see which sectors are doing best, which ones are providing quality employment.

For example, in the Quebec City region, socio-economic stakeholders noticed that the number of jobs in the public service was the same, because of a freeze, if not diminishing. This led a number of them to try to devise a strategy geared to the new economy. I want to point out in particular the efforts of the technological park, in Sainte-Foy. There are also other sectors in the Quebec City region that are interested in developing projects that will create quality employment.

I can never repeat it too often: there are sectors where investing makes less and less sense. In the context of globalization, our businesses must be the best in the world, if they are to survive. They must also be in fields that have a promising future.

I will conclude by saying that Bloc Quebecois members will support the bill at third reading, because until a more comprehensive reform is done, it is the only way that other businesses can get a loan from banking institutions in the next fiscal year.

[The Acting Speaker (Mr. McClelland)]

Order, please. Before we go to questions and comments, it is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Halifax West—Immigration; the hon. member for Dartmouth—Post-Secondary Education; the hon. member for Verchères—INARI; the hon. member for Kamloops—Child Poverty.

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

Mr. Speaker, I listened very carefully to the member opposite. I have one question to ask him.

The member emphasized how jobs are changing and how important it will be during the comprehensive study to understand who is creating jobs and what the future will be.

Would the member agree that passing this bill and then spending extra time on the comprehensive review taking into account the auditor general's report will be helpful to all of us in the House as we discuss this bill in committee and take our time to establish the new SBLA for the future?

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, the hon. member said he agreed with what I said. It is hard to say anything more, except perhaps to add that, while sovereignists, the members of the Bloc Quebecois make a full contribution to parliamentary committees, including the Standing Committee on Industry.

In that particular case, we make as positive a contribution as possible because, as long as Quebec remains part of the federal system and Quebeckers pay their share of taxes to the federal government, we are perfectly justified in taking advantage of this process, since it benefits Quebec businesses.

Of course we feel the Quebec government and every region in Quebec should be involved. There are 16 economic regions in Quebec and each has a separate strategic plan. Realities vary from one region to the next, be it geographical realities, distance or what not. Some natural resources may also be found in one region but not in others. Hence the need for regional microeconomics.

This bill dealing with small business loans of up to $250,000 directly concerns the type of businesses we find in all regions of Canada. This is a basic program but it should be pointed out that similar programs already exist in Quebec. Take the FTQ workers' fund for example. This is a Quebec initiative, which the CNTU recently imitated. Funds are generated to help small and medium size businesses and promote their sustainability. This also allows for the establishment of new businesses.

Consideration in committee of this bill should focus on assessing existing programs at other levels to make sure they are complementary and useful. Other programs will need to be created.

Entrepreneurs often come to see me at my office. They tell me there is not always enough time to compare the benefits of all the programs available. I was told—and did not get a chance to check—that credit and loans are available from at least 50 sources. Checking them all is a time-consuming process. I think it should be simplified.

This is a time when the federal government should work in co-operation with provincial governments to prevent duplication and competition. This would allow us to develop business assistance programs that meet the particular needs of businesses in a given region.