Mr. Speaker, it is certainly a pleasure to rise today and speak in this debate on Bill C-53. I will be splitting my time with my colleague from Prince George—Bulkley Valley should we have time left.
The title of this bill is a real mouthful in itself. Bill C-53 is an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses. It sounds like we are going to be all things to all people here.
In every area of economic activity we find taxpayer sponsored programs whose objectives claim to be that they will help people work more or expand their businesses or make more money. The problem is this is precisely what people naturally want to do with their businesses in the first place. What we see is that many of these government efforts are actually taking resources away from people in taxes who would otherwise prosper on their own.
Some members of this House may accuse me of preaching some form of economic Darwinism, that the government should disappear and let the strong survive at the expense of the weak. I do not believe this would be a formula for success right across the board. There are many situations in which incentives can be provided to encourage certain outcomes but clearly we cannot be all things to all people and we have to let small businesses make many choices on their own.
As I said, people naturally want to succeed. That is the direction that many small businesses like to see.
There are a variety of things a government can do to encourage business success, just as there are many things it does to defeat that success, and this bill does little to address either side of those conditions.
At the moment we have many questions about government participation in small business financing. The auditor general raised several of them in his spring report. His figures indicated that 46% of loans under the SBLA could have been handled privately through normal financial channels. We have to wonder if a moral hazard is not at work here. By that I mean because the banks have a way to deflect risk on to the taxpayer through this program, are they inclined to get on the SBLA bandwagon because it is there?
We have no hard numbers to say this program is the difference between success or failure at getting that financing. We know that the CFIB places a high priority on access to financing as a major factor for business success, and I do not question those numbers, but do we have in this bill the best or most effective way of doing that?
Recent figures indicate that 80% of small business loan applications are successful but we have no figures to indicate whether that is an optimum level or not. Is 100% a healthy level, for example, or would that expose lenders to extraordinary risk? In other words, should the government step in and drive that loan approval rate up to 100% as a policy objective using taxpayer money to subsidize it?
As a small business owner in a couple of different fields, I have a great deal of sympathy for people who want to go into business and need that first boost of capital to get them going. Of course that does not mean that everybody with the same dream is equally qualified to pursue it, so there are bound to be rejections for a variety of reasons.
If we look at where those applications ended up we see that 68% went to the chartered banks, 27% went to other financial institutions, credit unions and such, and 11% went to the small business loans program. No one on the government side of the House can say that the 11% would go without financing if the SBLA were not there. As we know from the principle of moral hazard, people choose the easy route only if it is available. Without the vast web of bureaucratic programs paid for by an equally vast web of taxation, factors in the financial services sector of this country could behave in a different fashion.
As it is, the number of high risk loans has been increasing along with the default rate and bankruptcies, although Industry Canada has so far kept that report very close.
Speaking of missing documents, we also have to wonder about the cost benefit of this program. This is one argument that pops up to try to legitimize many government programs, particularly when taxpayers see those billion dollar bottom lines starting to add up.
As the finance minister often reminds us, governments have to make tough choices. What we rarely see is this government making a choice to give up on a cherished boondoggle when it is shown that money is not being spent in a way that has a clear, positive return to the taxpayer.
Often we see good money chasing bad in a futile effort to prove that a program is working, not because it was wrong or unnecessary in the first place, but because not enough money has been poured down that sinkhole. This kind of thinking is epidemic in government and never leads to good choices.
We should be looking at innovative new ways of making financial support more available to our small and medium business sector. In many countries around the world, and I understand even in certain regions of this country, there is a system of micro lending. Loans as small as a few hundred dollars show a tremendous return on the dollars placed.
There is a system in the U.S. where lenders are required to commit 6% of their profits to the communities in which they are located. Of course there are hundreds of banks in the U.S. versus a dozen in Canada, so the locality does not have the same relevance. But perhaps there is a way to implement such a requirement in Canada, as long as it does not lead us back to the same situation we have now where the government seeks to force choices on its lenders.
I think more important than inventing new government programs, however, is taking a good look at the environment that exists for business in Canada. Should we be rushing to enact this kind of legislation when this government has yet to digest the Mintz report on business taxation? The professor warned that governments were relying increasingly on profit insensitive taxes; taxes and charges that were not related to whether the business was succeeding or failing, but were demanded of the business owners regardless.
We have seen in recent years an explosion of user fees, which are not by themselves a bad thing. That is, they are not bad if the fee goes to the service being charged in the first place. This government is not alone in preferring to pour all of its revenues into one basket, but it has a lot to answer for in many areas.
Gasoline taxes are outrageously high by themselves, but we see very little of this windfall going toward transportation infrastructure that would assist businesses of all kinds. Worst of all are the payroll taxes that are a direct and undeniable killer of jobs and entrepreneurship in Canada.
Not only does this government insist on imposing ridiculously high rates, it also raises rates such as the CPP under the auspices of what I mentioned earlier. Is the program not working? Pour money down that sinkhole.
The case of employment insurance premiums has already been broached in this House and by no means are we done with that topic. Yes, the premiums have been reduced from the highs under the former government, but this government's own experts are declaring that they must go lower. Under the law they are supposed to go lower, but the finance minister, instead of returning money to employers and employees, threatens to change the law and keep the money for choices that have nothing to do with the original tax.
Canadians should take note that the finance minister has in fact already taken that money to apply against his deficit last year, so it is actually part of the Liberal smoke and mirror budget plan to argue about where else to spend money that is already owed to another program.
My point is that this bill is a questionable necessity and fails to address the real needs of the business constituency that it claims to help. What entrepreneurs in Canada need is the ability to keep more of the profits they generate. Capital gains taxes need to be at least minimized and at best eliminated. Payroll taxes need to be kept low and directed where they were intended.
There has to be a serious study of the burden of paperwork and overlapping regulations that exist in this country.
The GST regime should be overhauled for one thing, but the layers of bureaucracy between federal, provincial and municipal administrations have to be examined as well.
Employers need a flexible, well educated, motivated labour force. Workers obviously need to keep more of their money as well.
Finally, this government has to take a serious look at the flexibility and competitiveness of our whole financial services sector. We have the MacKay task force report to look at. We should take the opportunity, use our combined imagination and innovation in reforming the regulations of this industry to provide real access to reasonable cost financing for business.
It is unfortunate that this government is in such a hurry to push through Bill C-53 without answering some of the problems that have been mentioned here today. What Bill C-53 represents is not a helping hand to business but the hand of a government stuck in the past with no new ideas.
I certainly commend and agree with my colleagues on their motion earlier today to send this bill back to committee for more study.