Mr. Speaker, according to the Canadian Federation of Independent Business and the auditor general, access to reasonable financing is the single biggest impediment to growth in the small business sector.
What can be done? What is the role of government? The first thing that should be done is to determine whether there is a legitimate market failure. In that regard the performance of the government is abysmal.
What has the government done to quantify the degree to which access to financing for small business is a problem? How extensively has the government reviewed the performance of Canadian banks in this regard?
Instead of answering these questions, instead of being proactive and demonstrating leadership, what do we see from the Liberal government? We see it tinkering with yet another fundamentally flawed government program.
Despite the fact the government has not quantified the problem of access to financing for small business, we can safely assume that a problem exists. Improved access to financing for small business would clearly have a beneficial effect on the economy: lower unemployment, more disposable income and so on.
How do we achieve this? What are the impediments that need to be removed in order to alleviate the underlying problems which truly inhibit the growth of small business? They are excessive employment insurance premiums, high levels of taxation and a banking system which lacks competition. They are not a lack of government programs or a bureaucracy that is too small.
What does the Liberal government do? Instead of lowering employment insurance premiums, instead of cutting taxes, instead of deregulating the banking industry to increase competition which would benefit all consumers and instead of taking those measures that would clearly have a direct and immediate benefit on every small business owner in Canada, the government is preoccupied with changing the name of the Small Business Loans Act to the the Canada Small Business Financing Act.
What insight, what vision, what incredible leadership it has demonstrated by changing the name of the program. In terms of positive change for small business, the legislation is no more significant than a dot over the letter i in the word stupid.
The fundamental flaw with the Liberal government is that it does not understand one of the most basic concepts of governing: a dollar left in the hands of a consumer, an investor, an entrepreneur or taxpayer is more productive than that same dollar in the hands of a lobbyist, a bureaucrat or a politician.
Therefore the answer is not a government program that taxes Canadians, then runs our money through an inefficient bureaucracy and then selectively redistributes it. That creates an uneven playing field. It chooses winners over losers. Inevitably mistakes are made. Businesses acquire financing which is not viable and they would not have acquired the financing had the government and taxpayers not subsidized them. The net effect to small business in Canada is a negative one.
I do not know how it can justify its concept of these programs. It can tax people, run it through the bureaucracy and then somehow have a more beneficial effect with that money than if it had just left it in the pockets of Canadian business owners and taxpayers. How it can claim that degree of interference in our economy can possibly have a positive effect is beyond me.
The Minister of Industry started in his speech to introduce the new Canada small business financing act by talking about long term life and viability of the program. Notice that he is more concerned with jobs of the bureaucrats who work and who administer the program than he is with the small business owners of Canada. He also said that the program is fundamentally sound and that it has proven itself for 37 years. Did the minister not read the report of the auditor general? It was a report that prompted him to change the name of the program. I suggest he probably did read it but he is clearly prepared to ignore some of the conclusions we must draw from the deficiencies and the problems which were cited by the auditor general and the degree to which banks are abusing this program.
I am a perfect example of that. Prior to entering politics I had several businesses. On opening one of them I went to a bank for financing. The bank said yes but I had to acquire my financing under the Small Business Loans Act. At the time I was not apprised of the criticisms that the auditor general had for the program. I was not that conscious of how disastrous and what the negative effects of programs like this had on small business owners like me. I was more concerned with meeting the day to day demands of my business. So I agreed to it. I was forced to pay a premium on my interest rate charges. I was forced to pay registration fees. I was forced to endure even more burden because the government made available to the banks a tool by which they could guarantee themselves the loan at a cost to the small business owner and at a potential cost the Canadian taxpayer. The banks are abusing their privilege or their ability to use this program, guaranteeing loans that they would have in most cases given out anyway.
The minister said the volatility we have seen recently in the marketplace shows we need stability. Therefore now would not be the time to implement any drastic policy change of the government.
However, I would suggest just the opposite. Would the volatility in the marketplace not suggest to the minister that the program is not fundamentally sound, as he said, but that it is fundamentally flawed? How can the government sleep walk through the currency crisis that we have endured in this country over the past couple of months and that it not occur to it that maintaining the status quo is exactly the problem that got us into this mess in the first place?
The minister also went on in some detail to quote some statistics about how many small business owners there are in Canada and how much small business contributes to our economy. It is good that he understands and recognizes the importance of small business. However, what I do not understand is why he would not be trying to support business. Why is he tinkering with a fundamentally flawed program when the government should be reducing employment insurance premiums?
What would have a greater effect on every small business owner in Canada, not just the ones who apply for a guarantee of their loan under this program? Every small business in Canada would benefit by a reduction in the employment insurance premiums to a much greater degree than any bureaucratic program administered from Ottawa could possibly hope to achieve.
What about the GST? Why is the minister preoccupied with changing the name of the Small Business Loans Act instead of eliminating the GST which this government once promised? It once said that it would scrap, eliminate and abolish the GST. The GST is probably the single largest burden on small business owners. The amount of paperwork that a small business owner must deal with, effectively acting as a tax collector for the government, is preposterous.
If the minister were really concerned about small business he would be targeting those kinds of things, not trying to rejuvenate a fundamentally flawed program.
What about deregulating the banks? If access to financing is indeed a problem for small business, why is the government not addressing that issue. Rather than solving the problem, the government is trying to deal with it by coming up with another government program. Its answer is not to fix the problem but to create a government program that will in the end cost taxpayers even more money to try to paper over the real problem.
What about cutting taxes? This government has implemented 37 tax increases since it came to power. It is choking the life out of ordinary average Canadians who face a tax burden that is difficult to meet. Why? So it can fund all its programs like this.
The minister mentioned that this does not apply to farmers in Canada but there is another program for farmers. Again this is a clear illustration that the government's answer is just to create more bureaucracy and more government programs because it does not understand the simple concept that it cannot possibly tax Canadians, send that money to Ottawa, run it through the inefficient bureaucracy that everybody knows exists here and come out with a more positive impact than if it had just left that money in the hands of Canadians in the first place.
Another thing the minister discussed was the registration fee of 2% to qualify for a loan under this program and a 1.25% annual administration fee. Does he not understand the extra burden that would place on a business that is already considered marginal in the first place? In theory this program is supposed to provide access to capital that would not otherwise be there, access to financing that small business owners could not normally get. The banks would look at it, evaluate it and say this is not viable, you cannot meet the interest payments. What is the answer? The taxpayer is going to subsidize the loan and they are going to pay even higher interest rates. Does the minister not understand that the viability of that business has now decreased even further, the chance of that being a successful venture?
The minister said that some of the changes he has implemented are a step forward in streamlining the Small Business Loans Act. That may be true. When we compare the old SBLA to the new CSBFA it may be that he has tinkered and improve some deficiencies. But what has that accomplished? What is the point in tinkering and improving an act that is bad, that in the end is harmful to business?
One of the tinkering things that the minister has implemented is to replace the sunset clause with a regular review. I would like to suggest that the sunset clause remain and that it be dated September 28, 1998, today's date, and that the sunset clause not only apply to this legislation but to the government.
Bill C-53 does not deal with the underlying barriers to growth of small business in Canada such as excessive employment insurance premiums, high tax levels and a highly regulated banking system. Further, it does not fix the problem of small business access to reasonable financing which both the Canadian Federation of Independent Business and the auditor general note is the single biggest impediment to growth in that sector.
I initially was going to move a motion which stated that this House decline to give second reading to Bill C-53 at this time because the government of the day has done nothing to alleviate the underlying problems which truly inhibit the growth of small business such as excessive employment insurance premiums, high levels of taxation and a banking system which lacks competition.
However, I am informed that for technical reasons I have had to change the wording. Therefore I move:
That the motion be amended by deleting all the words after the word “That” and substituting the following:
Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses, be not now read a second time but that the order be discharged, the bill withdrawn and the subject matter thereof referred to the Standing Committee on Industry.