Debates of Sept. 28th, 1998

Calgary Declaration

[Rob Anders, Reform, Calgary West, AB]

moved:

That a Humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all documents, reports, minutes of meetings, notes, memos, polls and correspondence relating to the Calgary Declaration.

Mr. Speaker, Motion P-22 requests the government to put forward all documents relating to the Calgary Declaration.

A wise man, a man of biblical note, King Solomon, said “What has been will be again and what has been will be done again. There is nothing new under the sun”. Unfortunately I have to report that I think that is the case today.

Previously we in the Reform Party, as well as others, made access to information requests with regard to documents relating to the Charlottetown accord. There was some delay and scuttlebutt with regard to the delay of those documents, some secrecy, and we all know how pernicious secrecy is.

My prediction is that the government will vote down this motion and not produce the documents with regard to the Calgary Declaration. I think that is somewhat hypocritical. On the one hand the government was talking about how open it wanted the process concerning the declaration to be. It said it did not want to do things the way Mulroney did with the Charlottetown accord. It wanted this to be a very open process, but we have secrecy.

It is worse than that. It is not just the case of secrecy, that the government is hiding something, but it is using taxpayers' money to do it. That is what I find objectionable. Polls are done to find out how taxpayers feel on certain issues, for example, the credibility of political leaders in negotiating these types of deals.

Even though it is taxpayer money that is used to find out what the taxpayers feel about particular situations, they are not being told. They are not being given the information. We have some serious problems with that.

This is very reminiscent of what happened with Brian Mulroney in 1992 when the Tories refused to release the taxpayer-funded polls on Charlottetown. It begs the question of why this taxpayer money is being spent. Why are these polls being held back? Why are we not being apprised of the situation?

It boils down to a few reasons. One of the things the government likes to say is that somehow this will taint federal-provincial relations. That was decided in court by Judge Rothstein. I will get into the quotes in a minute. In that case there was a determination that the government did not have a legitimate case to deprive the public of these documents.

I will go into some of these things that I think need to be touched on because previous information commissioners and others have made determinations with regard to this.

Government members, when in opposition and even while running in the last election in 1997, made promises which were contained in the red book. Indeed there was a violation of one of the sacred red book promises. We do not like to see that happen. There are probably others, but I will point out one which is glaring.

Information Commissioner Grace wrote that it is “passing bizarre that the public should be denied knowing what the public thinks when the public pays for collecting information about itself”.

It is passing bizarre. But it is something that is not so bizarre that I would put the Liberal government past it because that is exactly the case today.

I am going to revisit some of the comments made by government members when they were in opposition, the criticisms they levelled against the Tory administration of Brian Mulroney on secrecy.

The government House leader has in his riding the lovely town of Prescott which I have been to several times. At that time he said that the government must justify why taxpayer dollars were spent gathering information that could have benefited the party in power, the government of the day. That is exactly the same question we raise today. Why is this Liberal government refusing to allow access to documents that could benefit it in terms of its strategy and what it is doing?

If it does not benefit in terms of the strategy and what it is doing and if it is not being used for partisan purposes, then let us see the documents. The taxpayers have paid for them. It is only fair to give taxpayers access to the documents.

If the Calgary Declaration was supposed to be an open process, then let us open up these documents. Basically that is what this motion asks today.

The justice who had some serious problems with the rationale used by governments previously to withhold documents just like these was Justice Marshall Rothstein. He said that he did not see a harm to relations with the provinces, that basically those types of arguments were unfounded. He thought that disclosing public opinion surveys was indeed important.

It is not as though this is a cheap endeavour. It is not as though these are piddly sums of money. The principle is of course that the government, because it is using taxpayer dollars, should make these types of studies, these types of surveys, these types of polls available to the public which is paying for them. The government is violating that principle in terms of what it is doing with these secret deals.

More than that, it is also a case of money. We have seen this administration continually increase the amount of money it is spending on these polls. Indeed government advertising alone, used in conjunction with these polls, is over $100 million a year.

The strategic polling that we are talking about here that was done with regard to the declaration, which the government is withholding, amounted to millions of dollars. It is unacceptable.

These types of polls are also used for political or partisan purposes when they probe views on people like the Prime Minister, the Leader of the Opposition and various premiers who were involved in some of the negotiations. If the government is going to be using public dollars, then everybody should be made aware of them, including those people across the way who are the subject of some of those polls.

It is important that we include some precedents in this debate. Polling results on the Charlottetown accord amounted to 700 pages. That is a lot of polling. When we look at what it contained, the idea that the government withheld it from the Canadian public who paid for it is heinous.

Once again we have the government marching down the path to a deal with regard to the Constitution, or at least putting forward a declaration with regard to it. We know it has had some determinations on it. Certainly it has done polling. It has told me that it has done polling. I have been contacted by people who are involved with intergovernmental affairs. I have been contacted by people who are involved in the Privy Council Office. They have told me that they have these documents, but they said they do not want to release them. They said that instead I should go through an access to information request or something like that.

If the government has the documents, if it has located the documents, surely, for the taxpayers who paid for the documents, there should not be a problem producing the documents in the House.

When the government released the 700 pages of documents relating to the Charlottetown accord, it did so in an attempt to pre-empt a court ruling and avoid setting a legal precedent. If that legal precedent had been set of course we would be looking at using it today. It only released those documents to avoid setting a precedent with regard to the release of these types of documents. That is wrong.

If in principle it should be releasing these documents, as it should because taxpayer dollars have paid for them, then we should not have to wait. The government should not be hiding behind the skirts of a legal decision, trying to avoid it. It should be forthright and release these documents.

The bills that Decima and Créatec had with respect to the Charlottetown accord amounted to $306,000. I am sure these types of things are going on today, but because the government is being secretive in terms of what it is doing with these documents we are not going to know the actual figures and what polls were done until it actually comes forth and releases them.

I also note that it is not just the official opposition which is concerned about things like this, it is also people whose job it is to inform the Canadian public, namely the Canadian press.

Once again with regard to precedents, because I am laying the groundwork which is very important in this argument, the last time the journalists from the Canadian Press, Southam News, the Globe and Mail and other researchers asked the Privy Council Office to disclose public opinion research on constitutional proposals the government refused to do so.

It is not just a case of the official opposition or opposition parties in the House requesting the information. It is a case of journalists in the country who under the freedom of the press have their responsibilities to report to the public on the goings-on of the government. With secrecy like this it is very difficult for them to do their job. It is difficult for us to do our job as the official opposition, and the taxpayers are being denied the information. That is very unfair.

This points to the ideas in government circles on something like this. At the time when this was being debated sources in the government indicated that they did not want to release the polling data because they would fall into the hands of the enemies of the state. Those are the types of comments that have been used by governments with regard to secrecy. It did not want the polling results made available to the public because it worried they would get into the hands of enemies of the state.

Who are those enemies? Is it the official opposition? I do not think so. We have the best interest of Canada at heart, as does the government. As a matter of fact in this case I think it is more so because we are not the ones promoting secrecy and hidden agendas. We are not an enemy of the state. Surely it is not the people who are viewed as an enemy of the state by the government. It should not be the people. They are the ones the government is supposed serve. They are the ones the opposition serves. Certainly the people should not be viewed as enemies of the state in this type of matter. The documents should be made available.

I also touch on the fact that there are good people on the other side and I appeal to them today, those in government. Some may be backbenchers. Some may even be in cabinet but usually they are not the veterans who have a vested interest in some of these things to make sure contracts go out to long time friends of theirs. Certainly some are rookies, those who are a little more fresh to the process or a little more accountable and a little more responsible, a little more in touch with the people who elected them.

Those people have argued in the past that they want polling and advertising done by the bureaucrats and not decided by some people in cabinet and not decided by some people who have vested interests on the other side to keep the whole process secret. As a result they should be following through on that. They should be ringing true some of those words and making good on that pledge. Instead we have veteran cabinet ministers who in the past have told bureaucrats who should be included on bidders' lists. They do not want everybody to fairly bid on the process and they want to keep it secretive. There are examples of that.

We have a cabinet minister from the city of Winnipeg where I was born who awards very lucrative contracts in the hundreds of thousands of dollars to a long time friend of his, Angus Reid, who also resides in the same city.

Once again I implore members of the government that these things do not stay secret forever. When they finally come out the egg is on their face and it makes them look secretive, like they are hiding and manipulative, and all these things are seen for the fair value of what they are. They might as well come clean early and allow Canadians access to the documents because it will come out eventually; it always does. We have to end the whole practice of some would say payola, patronage, kickbacks or backroom dealing. Anyway we want to phrase it, it is wrong and we should end these types of things.

Where are the credible standards of political behaviour? I will get to the red book because it addresses some things about political behaviour and the government should be coming clean on them.

Unfortunately when the secrecy ends the government goes into damage control mode, and we have seen that. It touches on the whole controversy of the use of pepper spray at APEC. We have seen the government go into damage control mode because eventually the secrecy will not hold. Eventually it breaks. Eventually somebody talks. Whether it is a bureaucrat, a disgruntled cabinet minister or a backbencher who is underappreciated, somebody breaks. Maybe it is a new government that takes the positions of control and is able to go ahead and expose some things to shed some light on some of the evil dealings, the secretive dealings that have gone on.

Then it is very unfortunate because that party is in damage control mode and it is too late. They could rectify these positions early but they rarely save themselves that way.

Before going to the red book—I am holding the best till last—I will talk about some of the research firms that I expect will be profiting from some of these polls, these secretive deals, the ones that are not being disclosed today.

In the last couple of years they have benefited to a hefty sum from the government. Maybe somebody in those organizations will be willing to talk about the polls that have been done and the results that are not being released by the government. Ekos Research, Coopers & Lybrand, Angus Reid, Pollara, Environics, Compas, Sage, Price Waterhouse, Phase 5, Créatic and DJC Research have had very lucrative contracts from the government. Maybe somebody in those firms knows about these secret polls, these polls the government is trying to conceal and will not release with a declaration.

I will get to the red book, another red book broken promise. I think back to the red book of 1997. If we flip open that red book and look at page 6, “Securing our Future Together”, we see that the Liberals are making a promise: “We will ensure that any future debate which calls into question the continuing existence or unity of Canada will be characterized by clarity and frankness”. That is the promise the Liberal Party made when it went to the polls in 1997 after having governed the country since 1993.

Today we want some clarity. Today we want some frankness. We have put forward the motion for the production of papers with regard to the Calgary declaration. I am imploring the government for some clarity, for some frankness, and to make available those documents.

I have had phone calls from the Privy Council Office and from the Department of Intergovernmental Affairs. They have all told me that they have the documents. If they have them, why will they not release them? In its handwriting it is saying that it wants to see clarity and frankness with regard to the continuing existence or unity of the country. Certainly the Calgary declaration falls within the mould.

They, by their own words, should produce those documents. It is the taxpayers money. The taxpayers have paid for these polls. They have paid for these surveys. It was their money. They are owed. They deserve to have access to these things. In order to do its job the official opposition deserves access to them. Because of the right to free speech the press has a right to access to them. It should be able to do its job. It is not fair when the government does not live up to its words, conceals documents and lives by secrecy.

I will wrap up with the general pattern we have seen in this regard which I hope we do not see continued today. It is the pattern of depriving the public of the documents and the wherewithal as to what went on.

With regard to the protesters at APEC summit in Vancouver, we have seen secrecy, concealment and a disdain for democracy. A number of times we saw closure in the House of Commons. We are seeing a concealing of taxpayer funded documents. It is wrong. We have nothing new under the sun. They should come forward with these things.

[Paul Devillers, Liberal, Simcoe North, ON]

Mr. Speaker, I had a number of reasons for wanting to take part in this debate on the motion by the hon. member for Calgary West This motion calls upon the government to lay before the House copies of all documents, reports, minutes of meetings and memos relating to the Calgary Declaration.

Although this steals somewhat from the thunder of the hon. member's speech, the government agrees to follow up on this Reform initiative and I am delighted with his interest in the Calgary Declaration.

Moreover, I recall that on November 25, 1997 the members of the official opposition were the ones calling for a debate on the Calgary Declaration, and the motion making such debate necessary at that time had come from another Alberta MP, the one from Edmonton—Strathcona.

This government has nothing to hide. The Calgary Declaration grew out of the desire of nine provincial premiers and two territorial leaders to define a framework of discussion with Canadians to strengthen federation. Our government has always supported that initiative and today's motion gives it the opportunity to reiterate that support and to emphasize its merit.

The consultation process surrounding the Calgary Declaration was a transparent one. Canadians were invited to take part. The legislatures of those provinces where consultations were held adopted the declaration, and the reason behind the support it obtained throughout the country is that our fellow citizens identified with the values on which it is based.

The Calgary declaration is based on seven principles that are completely in line with our government's national unity policy. It highlights our country's diversity. It calls on Canadians' tolerance and generosity and reflects what we are, not only in our own eyes but in the eyes of the world.

The Calgary declaration is not a proposal for constitutional reform but a statement of principles that are shared by Canadians. It highlights not only the things that differentiate us from one another but also the things that unite us and make us collectively stronger.

Our government supports this message of unity, not because it is intended as a miracle solution to all the challenges facing our country, but because it clearly defines the values of the Canadian community.

We did not wait to be urged by anyone to make unity the top priority of our government. I would invite anyone who has forgotten this to reread the throne speech of September 23, 1997, with its clear illustration of the path the Canadian government intends to take to lead its citizens toward the new millennium. In a word, our government has showed leadership.

Leadership can take many forms. Let us not lose sight of the fact that unity is not merely a constitutional matter. It must be reflected in all spheres of our life as a nation. Our approach is one based on efficiency emphasizing co-operation from the provinces.

Our leadership and actions have created a climate favourable to Canadian unity. This does not mean, of course, that there is no room for improvement, but I think I can safely say that the conditions in this country are better today than they were when we came to office in the fall of 1993.

Indeed I would invite those who are skeptical to look at the figures that testify to our success in the financial and economic fields. In only a few years we have managed to balance a budget that was running a huge deficit of $42 billion only five years ago. That was a challenge that many people thought could not be overcome. However, we took on the task with determination and the efforts made by all Canadians have been crowned with success.

My reason for bringing up our economic and financial success in this debate is simple. The Calgary Declaration carries a message of unity, but our government does not believe the unity of this country to be separate from other spheres of human activity. Instead, it pervades each of these spheres. It reminds Canadians of the levels of excellence they can aspire to achieve when there is a collective will behind their actions.

Canadians may not fully realize this. However, there are many examples of our success at the international level, which show what can be achieved by working together toward a common goal.

I would like to illustrate this with figures. Let us look at the economy. Between 1994 and 1997 Canada's GDP grew by 2.9% a year on average, the strongest performance of the G-7, putting us in 14th place of the OECD countries. Average annual employment growth was 1.8%, the best performance, on a par with the United States, of the G-7 countries and in ninth place among the OECD countries.

The OECD forecast that we will have the strongest economic growth of the G-7 countries for 1998 and 1999. Canada's inflation rate has averaged 1.5% over the past five years, one of the lowest in the world.

That is not bad for a country which some claim does not work. As I said, the unity of a country as diversified as Canada does not rest solely in the hands of governments and institutions; it calls on the efforts and energy of everyone who believe in the future of Canada.

Canada's worth is not tied solely to its economic successes or its social safety net. It is more than a mere accounting operation. If that were the case, a downturn in monthly statistics would be enough to propel those advocating secession into action.

Canada is much more than that. It is a country where men and women from all corners of the community of nations come together to achieve a shared ideal. This ideal springs from values shared by Canadians in the various regions across the country and by Quebeckers. The merit of the Calgary Declaration is that it draws these values out and reminds us that what joins us together is far greater than what separates us.

In this regard, I remind the sceptics of the results of a poll released in May 1998. According to it, a substantial majority of the people in Quebec—67%—including a majority of those on the yes side—60%—supported the Calgary Declaration. In addition, 82% supported equality among Canadians, 57% favoured equality among the provinces and 61% stated that Canada offers diversity, tolerance, compassion and equal opportunity, among other things.

The Calgary Declaration is not the solution to all of Canada's challenges, but it does point out that it would be easier for us to meet our challenges as a united front. It also underscores the heritage of values and principles we share in Canada.

It was on this heritage that we built the successes we have enjoyed throughout our history, and, as the Calgary Declaration points out, we must continue to build on it in the future.

In conclusion I simply say that the government intends to comply. Inasmuch as we appreciated the opportunity to discuss the Calgary declaration once again in the House, we find it is a bit of a waste of the House's time.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, it is now my turn to speak to Motion P-22 from the Reform Party, which asks that all documentation—including correspondence, documents, reports and minutes—relating to the Calgary Declaration be made public.

In the speeches, I also heard reference to polls and public opinion analysis. At the time of the Charlottetown accord, the federal government spent millions and millions of dollars analyzing public opinion, and it is no doubt doing the same thing in this case. We can assume that, behind all of this, a lot of money has been spent on assessing the impact on public opinion of this Calgary Declaration.

Incidentally, has anyone in this House recently heard about the Calgary Declaration? That document may be one of Canada's best kept secrets. They keep it in a drawer somewhere. They figure that, at times, they can use it to make Quebeckers believe that some other minor change will eventually take place. That document is so limited in scope that they are uncomfortable talking about it, because there is so little in it.

The hon. member for Simcoe North alluded to public opinion polls. If this is what they are going to lay before the House, then it is nothing new. That information is already available on the Internet site for the Calgary Declaration.

We wanted to look at the issue more thoroughly. We did not have much faith in the kind of Mickey Mouse polls sponsored by the government. Therefore, we had our own poll conducted by Léger & Léger in Quebec, and by Comquest outside the province. Of course, we were quick to release the findings of that poll in the spring, to show how Quebeckers and Canadians were appreciative of the Calgary Declaration.

Since I could not remember all the figures, I brought the results of that poll here with me. The first finding was that no one knew about the Calgary Declaration. I will give the exact figures later, but that was when people were asked if they knew the Calgary Declaration.

Without getting into numbers, I remember a television report here in Ottawa—which is, after all, the national capital and a city where people follow politics rather closely. People on Sparks Street, not far from here, were polled and the results were broadcast on CBC or CTV. People were asked what they knew about the Calgary Declaration. It was lunch time, and there were probably many public servants around, since Sparks Street is so close to Parliament. Out of the seven or eight people interviewed at random, none knew what the Calgary Declaration was, or whether it was related to politics, sports or business. No one knew about it. Yet this was in Ottawa, the national capital, where the Liberals get all excited whenever this issue comes up. However, it generates very little interest on the streets.

I now come to the first question in our poll. People were asked whether they thought Canada had made a new proposal to Quebec since the 1995 referendum. They were asked “Have there been any proposals?”, because the Calgary Declaration was supposed to have been a form of response to the last referendum in Quebec. When all regions of Canada are taken together, 25% of those polled said yes; 56% said no; and 19% said they did not know. One person in four, therefore, thought there had been some sort of offer. No details were provided; one person in four thought that maybe something had been put on the table.

It gets even sadder when the Calgary Declaration is mentioned. People were asked if they had heard of the declaration, but they were not asked if they knew what it was. One person out of three, or 33%, had heard of the Calgary Declaration.

They were then asked if they had a general idea of the content, even if they did not know the details. This will be a big disappointment to those who think the public has any great interest in the declaration: 17% of those polled had heard it was something about the unique nature of Quebec; 6% had heard it was something about provincial equality; and 12% gave other answers. But 70% of people had no idea what it was about.

And now they tell us that a large number of people support the declaration. I heard the parliamentary secretary tell us that people throughout Canada, including Quebec, support the Calgary declaration.

[An hon. member]

They would have to know what it was about.

[Pierre Brien, Bloc, Témiscamingue, QC]

Nobody knows what it is about. When they find out, I can guarantee you that they will not think much of it. This is a initiative that never got off the ground; nobody talks about it.

People were then asked whether they thought that the Calgary Declaration would solve the problem of national unity. We will now see whether they are as optimistic as our Liberal friends. Only 2% of people thought there was a very strong likelihood that it would solve the problem of national unity; 15% said they thought it was rather likely that it would solve the problem of national unity.

A total of 17% of those polled said that it would perhaps solve the problem and 83% said it would solve nothing. This is very revealing. I could go on. Several questions were asked and the poll results were made public at the time.

There was another question. The members opposite misled us. They kept telling us that Canadians had been consulted, that they would be given an opportunity to express their views, that there were elaborate plans for a cross-country consultation. People were asked whether they had been consulted in any way. “Do you feel like you have been consulted on the Calgary Declaration?” It was a yes or no answer: 4% said yes, 94% said no and 2% did not know. The last two categories add up to a total of 96%.

I must remind members how this consultation process took place. In some instances, it was done at little publicized public meetings. Some of it was done through the Internet. Some of it was done though toll-free lines. It was done in a variety of ways, but every effort was made to keep the consultations secret.

In conclusion, the Calgary Declaration is a constitutional initiative that is going absolutely nowhere. If the government were really serious, it would talk about the fact that, during the summer, the provinces agreed on the social union concept and discussed priorities for the future.

Among other things, they agreed that the federal government should reinvest in our health system as a priority, with a well established mechanism that would require the agreement of a majority of the provinces for an initiative to be put in place. Moreover, if a province has its own program, it should be allowed to opt out. That kind of proposal is much more promising for a government that promotes co-operation.

What is the attitude of this government, starting with the Prime Minister? “If the premiers want to run Canada, they just have to run against me in the next election”. The last one who tried that ended up at the helm of the Liberal Party of Quebec where he is having a lot of problems. That is the tactic they used. It is a message. We have not forgotten and others will not forget either.

Let us tackle serious issues. The government should focus its attention on responding to the provinces' unanimous consensus that it should put more money in our health system, allow them to administer that money, and invest in transfer payments instead of wasting its time on something that will lead nowhere.

People have not heard about it and I presume they do not want to hear about it anyway. This information can be made public, but it will be a total waste of time. However, it will help us find out how much money has been wasted so far on this constitutional circus that is turning out to be a very lucrative industry in Canada.

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

Mr. Speaker, I am happy to pick up the debate in response to the motion of the hon. member for Calgary West. He is one of the more interesting and promising of the new members of this House.

I hope he will allow me to say I had a feeling of disappointment that he offered a rather turgid complaint about a non-existent issue, access to documents. He should have been uttering a celebration, Beethoven's Ode to Joy that a distinguished western provincial premier had opened the doors to the west to understanding of Quebec's distinct role in the Canadian federal system and the merits of seeking constitutional recognition or accommodation to that fact.

Of course one of the great virtues of the Calgary declaration is that it offered the opportunity for Canadians to understand that we are one country, that we are tolerant people and that people in the west, so far from having fear of Quebec and what it represents, wish accommodation and wish for a plural Canada and a federal system that reflects that. We are all doing our best.

I sat as a member of the commission of the premier of British Columbia to implement the Calgary declaration. We went around the province. I can report that 80% of British Columbia voters saw nothing unusual, in fact everything to commend, in a comprehension that Quebec was indeed a distinct society within Canada and that the constitutional rules could and should recognize that fact. Why not?

There is a coming of age in Canada and the debate, sometimes angry but for the most part I think educational, has helped us on. Constitutional law is a dialectical process. New principles evolve. They are developed to meet new societal facts.

I wrote in 1979 that relatively minor constitutional adjustments on the part of English speaking Canada when the quiet revolution was still in its early phase would have enabled a containment and a utilization of Quebec's best constitutional drives in a new and renewed federal system. I think this is true.

One of the problems of comprehension is related to the constitutional principle of equality before the law. It rests, as the Greek philosophers themselves recognized centuries ago, on a notion that we treat equal things equally when there is a congruence of these societal facts underlying the positive law. Then the positive law must be applied in the same way. Where the societal facts are different they demand a differentiation of treatment and that is in itself a full recognition in the best spirit of the Greek philosophers of the principle of equality before the law.

This has been enunciated by the privy council in some of its better judgments on the Canadian Constitution. It has been reaffirmed by the United States Supreme Court, Justice Douglas in particular, in examining the meaning of the constitutional principle of equality before the law which we have replicated in our own 1982 charter of rights.

The Pepin Robarts commission to which I had the privilege of being chief adviser, along with Leon Dion, Dion Père, John Meisel, developed this rather complex phrase which I think was probably one of the reasons Prime Minister Trudeau buried it, asymmetrical federalism. If we get into phrases that are too technical people run away in fear, but all it was designed to show was where there are distinct societal facts, a good and subtle federal system will take account of those facts and make the changes accordingly.

I hope my friends in the Bloc will understand if I express a regret that the quiet revolution has not given birth to more bright, interesting ideas that transcend the issues of Quebec particularism. It is a privilege to have undergone a quiet revolution. But there is an absence of refreshing new ideas from Quebec, and this has been true for 40 years since the quiet revolution began, on the relations, for example, of executive and legislative power.

On the principles of the judiciary, the nature of the constitutional legitimacy in relation to bodies such as the Senate, bodies such as the supreme court and the constitution of judges, Quebec could have helped us here. It is our hope that it was not a quid pro quo in British Columbia in saying yes, we are not afraid of distinct society, we recognize and accept that. But we would have hoped, for example, that there might have been some movement on Quebec's side to say in return we like the five regions too, we will give you that concept.

There are things we could have done together and should have done together and can still do together. It is for this reason that I welcome the motion of the member for Calgary West and in its full spirit, the celebration of the fact that the west understands Quebec. The west wants to work with Quebec. It is a sign of the times that premiers such as the premier of Alberta, so far from being politically weakened by such a move, can gain a new and augmented national stature.

I think this is the good thing that has come out of the constitutional debate and it is in that spirit that we will all work to renewing the federal system. We can change a constitution by formal amendments. We can change it by practice. There are so many areas, particularly in this area of executive legislative relations, on which many members on this side of the House have strong views. Many of us would like to see the committees take on a new and dynamic role. Why have these expensive royal commissions when parliament can do the job and where historically it has done it?

The message would be come and work with us and we can build a new constitution. Constitutions are living treaties and they are intended to evolve.

[André Harvey, Progressive Conservative, Chicoutimi, QC]

Mr. Speaker, you may find that I am seated a bit too far, but we are not responsible for the situation. As you know, there was a byelection in the riding of Sherbrooke in which we lost a seat and we have come to terms with that. In fact, I want to congratulate the new hon. member of the Bloc Quebecois who will soon be joining us.

Do not worry, our priorities are elsewhere. We do not intend to quarrel over this and you can be assured that our priorities will not be over the seating pattern of the House of Commons. We thought we had reached an interesting compromise, but we were told at the last minute that it would not fly.

Too many serious issues have our constituents concerned for us to start to quarrel over this. However, it is unfortunate that a whole party had to be displaced to reallocate one seat. It seems an extraordinary measure to take to make room for one newly elected member of Parliament from the Bloc Quebecois.

Anyway, you may rest assured that we are still proud to be here, in the House of Commons, to stand for our constituents and also to represent the Progressive Conservative Party, which is the only national alternative to the government in office.

In this spirit, these days, we may be last, but you can be sure that one day we will be first. I think it is the right way to react to this massive displacement following the election of only one new member of Parliament.

I now want to deal with the motion put forward by our hon. colleague from the Reform Party on the documentation related to the Calgary declaration. It is quite surprising to see that the motion today is put by a Reform member, at a time when the people have a whole different set of priorities. No one can be against a statement of principle, the Calgary declaration, that includes praiseworthy objectives. However, we should stop constantly coming back to this issue and wanting to make this debate a priority—

I regularly go back to my riding. I have frequent opportunities to speak with my fellow citizens. The focus is on the priorities of concern to them, whether it be the development of business or of tourism, or the fact that the bulk of Quebeckers, and most other Canadians as well, have trouble obtaining quality health care. No one ever refers to the Calgary declaration.

I think that taking a frivolous approach to a debate like today's is tantamount to a lack of respect for our fellow citizens. Such is my perception. I must tell the House quite honestly that it is far removed from what our fellow citizens are concerned about.

I have no objections to a party wanting to have complete documentation on a declaration that has been made. Of course our party is in favour of that. But making this the object of a House of Commons debate proves just how far the Reform Party is prepared to go in stirring up things around the fact that by far the majority of our fellow citizens want to see constitutional peace. We hear regularly from two-thirds of Quebeckers that constitutional debate is one of their lowest priorities. I believe that we here in the House of Commons must show some responsibility and not keep coming back to this same debate.

There is a better way of casting some light on the debate and of affording people of good will in this country, and all of its governments, with the opportunity to reach agreements that will work in favour of the development of our communities.

That way is to not keep harking back to the constitutional issue, since our fellow citizens have asked us to take a breather on this. I am not fully convinced about the real intentions of the Reform MPs.

It has often been said that what goes around comes around. Judging by the focus of their campaign advertising during the last election campaign, how can anyone take this motion before the House in good faith? They say “We want the documentation relating to the Calgary declaration”. Let them get it, read it over and over, go into it in detail. They are out of touch with reality with this.

What is serious though is that after running an advertising campaign that excluded seven million Canadians—that is all of Quebec—during the election campaign, they now come up with a motion such as the one before us. This shows a blatant disregard for the issues that our fellow citizens want us to tackle on their behalf.

The Reform Party's intentions seem questionable to me. Members will remember Bill C-237, asking that the federal government be authorized to negotiate the terms of separation. We may regulate everything we want, but we will never manage to keep in the same room people who do not want to be together. Regulating the constitutional issue is the best way to destroy the country, to split it up.

I feel that Reformers want to pursue that avenue because it is a matter of survival for them. Reformers survive because of the splits between the various regions of the country. They survive in a very specific region because they make their fellow citizens believe that all other Canadians are against western Canada. I am convinced that all Canadians, including westerners, want constitutional peace, and the only way to achieve that peace is to stop making matters worse by tabling motions such as this one.

The Reform Party is adding fuel to the fire, as it did during the last election campaign and continues to do here in this House. It promotes division to ensure its own survival in the regions that it represents. Reformers have absolutely no national agenda.

Again, regulating the constitutional issue is the best way to destroy the country. If such is the objective, then let them continue down that road.

Among the issues that our fellow citizens want us to tackle is deciding what do to with an accumulated surplus of $20 billion, thanks to the excessive premiums imposed by the government. The government is about to make important decisions: should it lower taxes, reduce premiums or invest in specific areas? It is urgent that we begin a consultation process to find out what exactly our fellow citizens would like us to do with that surplus. These are the issues that people want us to tackle.

It is wrong for the Reform Party to keep going against people's will. I doubt there is a single Canadian, including in western Canada, who asked the Reform Party member to table a motion asking that we have access to all documents relating to the Calgary declaration. Westerners, like Quebeckers, like people in my riding of Chicoutimi, want us to tackle the issues that are of concern to them. These issues are employment, economic development, the creation of new businesses—

[An hon. member]

This is true.

[André Harvey, Progressive Conservative, Chicoutimi, QC]

—and growing poverty. At a time when people are demonstrating and calling for a federal strategy against poverty, we are being asked to table documents relating to the Calgary Declaration. It is an outrage. As far as I am concerned, the Reformers should get all the papers they want to amuse themselves, but in the meantime, the Parliament of Canada should be dealing with more concrete issues.

Let me repeat that we are pleased to sit in this House, even on the back benches, and it is from these seats that we will do our work in a constructive manner.

[John Bryden, Liberal, Wentworth—Burlington, ON]

Mr. Speaker, I congratulate the member for Chicoutimi for his remarks.

I like to think that the Reform Party does not have a hidden agenda by this motion which would lead to a more divisive debate in this country than there has been already on the national unity issue. I would prefer to think that the member for Calgary West really does want to lead the way in getting better access to the type of government documents, federal and provincial, that members of parliament, the press and the public should have access to.

I would assume that he would not want to open up documents that might adversely affect federal-provincial relations. He does not want to cause dissent. He wants knowledge.

I suggest to him that the problem he really ought to be addressing is the Access to Information Act. Currently under section 14 it rather broadly prevents the government from disclosing any type of documents relating to federal-provincial affairs.

If the Access to Information Act were amended so that it was not so broad, so that so much was not restricted from public disclosure, so that in this particular section it was narrowed down that governments should only withhold information that would cause problems with federal-provincial relations, then his motion would have merit.

I would suggest as it is currently framed the motion does strike with too broad a brush and has the potential of causing great damage.

We must give the federal government and the provincial governments an opportunity to debate divisive issues in privacy and perhaps give them a 30-year rule whereby these things should be reported. Right now I really do think that what the member should be doing is looking to amendments to the Access to Information Act. Then I think he would get exactly what he wishes.

[The Acting Speaker (Mr. McClelland)]

The time provided for the consideration of Private Members' Business has now expired and the order is dropped to the bottom of the order of precedence on the order paper.

Canada Small Business Financing Act

[John Manley, Liberal, Minister of Industry]

moved that Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses, be read the second time and referred to a committee.

Mr. Speaker, eleven months ago I came before the House to seek its approval to extend for one year the lending authority under the Small Business Loans Act.

I said at the time that this extension would allow us to complete a comprehensive program and policy review that was under way at that time. It would allow for thorough consultation with both private and public sector stakeholders. And that it would allow us to consider the auditor general's recommendations.

The extension also gave us the opportunity to take into account the recommendations of the Standing Committee on Public Accounts.

Today I am pleased to inform the House that the analytical phase of the review of the SBLA, the Small Business Loans Act, has been completed. The results of this review can be seen in Bill C-53, the Canada small business financing act.

As hon. members will see, the bill as well as a program evaluation framework and performance measures designed for it address the concerns raised by the auditor general and the public accounts committee. I am confident that Bill C-53 responds fully to those who support the program and encouraged us to continue to improve it to increase its effectiveness and to reduce its cost to the taxpayer.

As I told the House just a few months ago, our objective is an improved program which responds to the needs of small and medium size business.

Bill C-53 contains no changes to the major program parameters. The new provisions it does contain are aimed at ensuring the long term life, financial viability, cost effectiveness, usefulness and accountability of this program. In so doing it will continue to meet the needs of small and medium size businesses and to help them grow in the years ahead.

Why have we not proposed changes to the program's parameters? First, our analysis found that the program is fundamentally sound. It has proven itself for 37 years. Our consultations with public and private sector stakeholders showed that small business believes this program works. Our research supports the soundness of the program's current structure. Our analysis indicates we are on course toward the cost recovery goal.

Second, this is not an appropriate time for grand experiments. The recent and quite unexpected volatility in currency and trading markets that we have all witnessed, confirms, again, the importance of sound, consistent public policy.

Small business, which is especially vulnerable to the vagaries of economic gyrations, needs stability. It needs this even more so at a time when the country is about to enter into a vigorous debate on the role and structure of its financial services industries.

The House can go a long way to help establish a climate of stability for small business by giving its approval to Bill C-53, the Canada Small Business Financing Act.

Decisions related to the recommendations of the Mackay Task Force and the proposed bank mergers will have a direct bearing on the well-being of small business, which is the source of economic and job growth in every region of the country.

Like all others, the financial services sector is under pressure to adapt itself to the impact of electronic banking, E-commerce, the Internet and other new technologies that are reshaping the way business is conducted.

Small businesses continue to identify the lack of access to appropriate credit as an impediment to their growth. I think hon. members will agree that it is essential for us to ensure a measure of stability by continuing the one program which is available to all legitimate for-profit small businesses wherever they are located in Canada. Small and medium size businesses are an anchor for our national economy. In fact they make a crucial contribution to our collective economic well-being. This is one reason support for the bill before us is important.

There are more than 2.5 million small businesses, including self-employed individuals across Canada. These account for 99% of all Canadian businesses. Together they have generated 70% to 80% of all new jobs in Canada over the last three years. Businesses with 100 employees or less account for 50% of all private sector employment and 43% of gross domestic product. It is a sector of the economy that continues to grow. Growth in the small business debt financing market outpaced that of the total business market, increasing by 20% between 1994 and 1996.

Despite the increase in available capital and the increase in lending, access to credit continues to be identified by entrepreneurs as a significant barrier to the growth of small businesses. This is precisely why we are asking the House to approve the Canada small business financing act.

The objective of the small business financing program is to facilitate the availability of loans for the establishment, expansion, modernization and improvement of small business enterprises.

Loans may be made by approved lenders for terms of up to 10 years. Business will be able to borrow up to $250,000. Lenders must pay a one-time up-front 2% registration fee which can be charged to borrowers. In addition, lenders must pay an annual administration fee of 1.25%.

These asset-based loans are available for the purchase of land or equipment, or for making leasehold improvements. They are not available for financing the purchase of shares, working capital, or existing debt. These loans cannot be made to finance the purchase of goodwill or other intangibles.

Virtually all non-farm small businesses are now and will be eligible to borrow under the new program if it is approved by parliament. Eligible borrowers include enterprises in Canada that operate for gain or for profit, provided the annual gross revenue of the business does not exceed $5 million.

Farming operations and charitable and religious organizations are excluded from the current program. Parliament has established a sister program entitled the Farm Improvement and Marketing Co-operatives Loans Act to facilitate farmers' access to credit. I note also that the bill proposes the design and implementation of a pilot program for lending to the voluntary sector.

The bill before us today provides a step forward in streamlining the Small Business Loans Act. We expect that this will make it easier for the loans officers in the 13,000 points of service to understand it.

While all the key provisions of the act are contained in the bill, most of the detailed administrative provisions will be in the regulations. This means that all major control levers remain in the act while the regulatory regime provides a more complete guide to program implementation.

I will now outline for the House the key provisions contained in the bill.

The bill would provide authority for the Department of Industry to conduct audits to ensure compliance with the act and regulations. It would provide authority to create a limited pilot program on a cost recovery basis for capital leasing. It would also provide authority to create a limited pilot program on a cost recovery basis extending lending to the voluntary sector.

I am also proposing to replace the current sunset clause. Every five years Industry Canada will conduct a comprehensive review of the program using an evaluation framework and performance measurements. The resulting report on the program's performance, effectiveness, financial viability and progress toward cost recovery would be tabled in parliament and referred to committee for consideration.

As a means of maintaining and ensuring cost recovery, the governor in council through regulation would have the power to restrict eligibility criteria for access to program loans.

The crown's contingent liability under the program would be capped at $1.5 billion over five years. This means that regardless of the dollar value of the loans made under the act, taxpayers would never have to cover more than $1.5 billion on loans made in that period. That $1.5 billion payout would only happen if all loans were to default, all of them, which is a rather unlikely prospect.

Historically the rate of loan losses has been 5.8% meaning that over 94% of all loans have been repaid without incident. This contingent liability would automatically be renewed every five years. This will permit lending to continue while parliament considers the comprehensive review. I will explain briefly the rationale and thinking behind these provisions.

The bill proposes the creation of two pilot projects designed to be financially self-sufficient. Hon. members should know that I intend to call upon their advice, through the Standing Committee on Industry, when the regulations and the parameters of the pilot projects are being drafted.

The only kind of financing which currently enjoys the government's risk sharing is asset-based lending.

Capital leasing is a rapidly growing form of small and medium sized business financing. Some hon. members and the leasing industry have pressed for its inclusion under the program.

The leasing industry says it generally does not provide financing to firms less than two years old or those seeking amounts less $100,000. A major portion of current SBLA clients fall into these categories.

That is why authority to design a capital leasing pilot program is included in the bill. It would test the need to fill an apparent but, as yet, unproven gap. As I have indicated before, it would have to be independently self-sufficient in terms of meeting its cost of claims.

The voluntary sector plays an increasingly important role in Canada. Consistent with our previous commitments, Industry Canada consulted members of the voluntary sector to determine whether the CSBFA program should be extended to this sector. Some indicated that extending the program would make a real difference to a voluntary group's ability to serve its community. A proposed pilot would test this view and it would also be designed to be self-sufficient.

An item that we had to reject was the suggestion that the program be used to provide access to working capital. The program already indirectly facilitates access to working capital through a 90% financing rate on fixed assets. This is higher than conventional lending. This provision leaves a greater portion of small business equity available to finance working capital. During our consultations stakeholders said that they did not see the program as an appropriate way to meet their working capital needs.

The sunset clause that called for the program to come to an end after specific periods of time created undue and really quite unnecessary anxiety for both lenders and borrowers. It has also led to situations where the House has been asked to provide legislative authority while facing a tight deadline. This has constrained parliamentary consideration. Further, it is not a businesslike way to manage a program which is badly needed by small business.

Under the new provisions parliament will have the opportunity to review the program's effectiveness every five years. Currently all major control elements of the program are found in the act. The proposals contained in the bill, if approved by parliament, would change this authority so that the governor in council would have authority to make regulations to restrict access to the program to ensure that it remains on a cost recovery track.

This power is restrictive only. Should a future administration wish to make changes similar to those made in 1993, for example, it would need to seek parliamentary approval for them. This protects the control of the House over appropriations while ensuring that action can be taken in a timely fashion to mitigate taxpayers' risks under the small business financing act.

The bill also proposes a number of measures which may reduce the level of program losses, thereby lowering default and claims on the program.

Earlier this year, Parliament set the program's total lending ceiling at $15 billion for the period April 1, 1998 to March 31, 1999. Traditionally, the lending ceiling has been used to control the size of the program. This has led to confusion. It has led to the mistaken belief that taxpayers are lending the entire $15 billion. This is simply not the case. Lenders are lending money they raise themselves.

Taxpayer liability has always been much less than the aggregate lending ceiling. This is because of the formula which is used to cap the limit on claims that the government must pay in the event of default. The new bill maintains this formula, but eliminates the artificial and confusing aggregate lending ceiling.

To make the government's and the taxpayers' liability absolutely clear, we are capping the contingent liability at $1.5 billion for each five year period.

Hon. members should understand that program costs have never come close to this contingent liability and that these costs are now offset by revenues on loans that have been made under the program since 1995. I would also like to point out that this contingent liability allows the program to continue guaranteeing lending of approximately $2 billion a year, which is the current yearly average.

In 1995 the government set the program on a cost recovery track. A private sector analysis of the program indicates that on loans made since 1995 the program is in fact on track. However this analysis has also shown that the program is extraordinarily sensitive to changing program parameters and may be affected by other economic conditions.

There are many factors that affect the performance of the program. Industry Canada will therefore continue to monitor the program very closely.

To conclude, Mr. Speaker, allow me to remind the House, once again, how critically important the proposed CSBFA is. Created in 1961, its overall record is one of great success. Its results demonstrate the need to make it a stable, long-term instrument of our economic policy.

Last year, it provided access to nearly $2 billion in financing. This means that close to 30,000 firms across the country, in all regions, got necessary financing that they might not have had access to otherwise. Some 9,000 of these firms were in rural communities. The majority of loans, averaging nearly $68,000, went to firms less than three years old.

The success rate of the program is quite high. Defaults have fluctuated periodically and we anticipate a rise for a period. The fact is that the loss rate on loans have been on average 5.6% over the 37 year life of the SBLA program. Private sector forecasts suggest the current fee structure is expected to offset the claims costs of the program on loans made since 1995.

The program which parliament is being asked to approve does not represent a subsidy to small business therefore, or to the banks or other lenders. As currently structured the program shares the risk of lending among lenders, borrowers and taxpayers. Loan losses now guaranteed under the program are expected to be fully cost recovered.

The CSBFA will continue to offer a way for the government, financial institutions and small business borrowers to share the risks of fixed asset based lending to smaller, younger firms.

In providing this risk pooling the Canada Small Business Financing Act will support one of the most dynamic growth sectors in the Canadian economy.

As I mentioned earlier, an important contribution that we can make at this time for this sector is to provide it with stability.

This stability is provided through the bill, which will continue to provide the small business community access to financing, even as the finance services industry continues to restructure. Maintaining the major program elements provides a stable base of financing for small business, while institutions and their product lines are under review.

Measures are contained in the bill which will maintain the program on a cost recovery track. This contributes to its stability, ensuring taxpayers long term support for this important risk sharing program.

Eliminating the aggregate lending ceiling will also enhance the stability of the program. It will reduce the periodic uncertainty which has plagued the program in the past.

Each time we have approached this artificial ceiling we have been required to return to parliament for an increase. The proposed cap on the contingent liability provides a real cap on our liability but does so in such a way that will not unnecessarily take up the time of the House of Commons.

By eliminating this periodic uncertainty we will enhance borrowers' confidence that the program will be there in the future to facilitate financing for at least a period of five years. Stability will be enhanced by eliminating the sunset clause and replacing it with a regular review during which lending will continue.

In the past this provision has created uncertainty about the future of the program. It has also constrained parliamentary consideration of the program in the past. This proposal will eliminate these features while still allowing for appropriate parliamentary reviews.

As provided in Bill C-21, authority to register loans under the Small Business Loans act expires on March 31, 1999. The authority under the current bill would commence April 1, 1999.

One of the many strengths of this program is that it is delivered by lending professionals, not bureaucrats. This, however, means that the more than 1,500 financial institutions must have the time they need to train their staff on the new legislation and regulations. With over 13,000 points of service, this is no small task. This is why lenders have asked for 90 days to prepare themselves to implement the legislation. While this may reduce the time for parliamentary consideration, I believe that effective implementation to serve Canada's small business community is important.

For this reason I urge all hon. members to support the passage of bill as soon as possible.

[Jim Pankiw, Reform, Saskatoon—Humboldt, SK]

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.

[The Deputy Speaker]

The chair finds the amendment in order.

Debate is on the amendment.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, while we in the Bloc Quebecois are extremely disappointed with this so-called review of the small business loans legislation, we do not agree with the Reform Party.

We must realize how essential the Small Business Loans Act is to small and medium size businesses, despite what I heard. Our criticism of the legislation was not to say we should get rid of it but that, in reviewing it, greater care and attention should be paid to small and medium size businesses.

I am disappointed that, while the legitimate concerns expressed by the auditor general and the Standing Committee on Public Account were taken into account, the need to assess the economic impact of small business and of the effect of small business loans on this economic impact were not.

The truth is that, in Canada and Quebec, small and medium size businesses are crucial and that, even if they sometimes fold 12, 24 or 48 months after having been set up, the economic activity resulting from the creation and growth of small businesses constitutes an extremely important factor. Studies have confirmed this.

However, in the government's logic, the economic contribution of small business is not taken into account. I find it unfortunate that, if he did not wish to amend the act immediately, the minister did not see fit to increase the number of areas where pilot projects could be conducted.

For instance, the possibility of granting loans, in certain circumstances, for working capital funds has been eliminated. In light of the fact that the studies I have come across were not conclusive, why not look at the actual impact of inadequate funding on the death of small businesses? Why not consider growth problems on the basis of inadequate funding?

One could say that, in a way, insufficient funding is worse than no funding because it does not allow businesses to develop as well as they could. The same is true of seed money: not giving enough is increasing the chances the business will not survive.

Loans are not all that is required for businesses to develop. Indeed, improvements are also required with respect to management practices and to the advice provided to businesses. As they are established or expanding, they must indeed be encouraged to visit the financial institutions before they spend all the money they had for their products, design, etc. and find themselves broke before the money lenders and thus forced to accept insufficient funding.

It is true, conditions of management in the growth and expansion of businesses must be improved, but my argument is in favour of adequate funding.

In this regard, I question the title the minister gave to his new bill. He is calling it the Canada Small Business Financing Act. I say it is not the funding act, because with a bill like this one, I know of few emerging or expanding businesses that will not need other financing. I think the title of the existing act is much more accurate. It is the Small Business Loans Act. This is one sort of loan. There will have to be other types of funding to enable businesses to start up in the proper conditions.

I must point out in passing that the minister is pleased to add the word Canada to the bill's title. I realize his attachment to Canada, but I think that there is no need for the government to add the word Canada to every program it sets up, as if it feared that Quebeckers and Canadians might forget. The effect will be quite the opposite, and that is the end of my digression.

The bill also contains a number of problems in its administration cleanup aspect. I hope the minister will deal with these issues.

For example, when the minister says in his bill that Canadians will give out a maximum of $1.5 billion in loans, he is in fact not saying everything, because this $1.5 billion should be called, in jargon, a contingent liability limit. In reality, given the costs the small businesses pay and the rates above prime, the costs of this program could reach 6.4% without costing the government's budget one cent. However, the problem is that this $1.5 billion margin may prevent, in fact does prevent, all the credit that might otherwise be given out from being given out.

I would also like to point out that the minister has given himself increased powers in this bill. The technical provisions in the act have been withdrawn, and the minister will be able to make the regulations he wishes. I agree that part of the regulations needed to be updated. However, the deletion of all of these provisions seems to me to be a major problem, especially since, as the officials in his department have acknowledged, the minister will now have the regulatory authority to reduce the scope of the legislation.

Of course, the regulations cannot go further than the legislation itself; that is normal. But by giving the minister the authority to make regulations and then by deleting these provisions from the bill, you allow him to ensure that the new legislation is not as generous as the current one.

Also, the bill authorizes the minister to launch pilot projects. In fact, the minister has already announced two such initiatives in very specific areas. I think we could and should have pilot projects in other areas.

Although it may be helpful for people interested in capital leases and loans to the voluntary sector, I do not think the new spirit of the legislation can be found in these provisions. In fact, the only good news borrowers will find in this bill is that the small business loans program, where the loans are to some degree guaranteed by the government, is maintained. That is the only piece of good news.

The rest of the bill raises fears that once the banks realize that government officials will now be able to assess their use of the programs, they will start to ask a lot more from borrowers, who unfortunately will go bankrupt. Since the government will not cover more than two years of interest, the banks will be forced to repatriate personal assets more rapidly.

Of course, the principle of self-financing is nowhere to be found in the bill. This could be seen as a means of allowing the minister to factor in the conditions of the economic cycle. But because the bill does not specify current conditions, and it is left to the minister to make regulations, we are left with some concerns.

I must, however, say that the fact that funding does not have to be approved every year, but runs for five years subject to a comprehensive review, meets with our approval. There will thus not be worries about the program coming to an end.

We have questions, however, about the comprehensive review. It should be conducted by a House committee, in this case, the Standing Committee on Industry, and it should look at the cost benefits from a budgetary as well as an economic point of view.

What has perhaps not been brought home often enough is that it is much better for an enterprise to be created, even with difficulty, and to employ X number of people for a few years, to generate wealth in the community, and not just wealth but economic activity as well, even if it unfortunately goes bankrupt two years later for lack of sufficient expertise. This is infinitely preferable to the entrepreneur just working for himself. As often happens, he might recover and get back on his feet without the right advice at the right time.

But, for the economy in general, for the economy of a particular region, it is far better for such economic activity to have taken place than for people to continue receiving the normal and necessary support of social programs, which would serve a much better purpose if these people could contribute themselves to greater economic activity.

Despite what certain economists thought less than one year ago, it would be very surprising if recessions had disappeared from the economic world, and I can now say that they clearly have not.

On the contrary, many of the people claiming a year ago, more than ever, that there would not be a recession are now the ones bringing up the spectre of a world-wide recession. Although the crises being experienced in Southeast Asia, Russia and South America do not all have the same cause, nevertheless the globalization of markets can provide conditions for such a spread. As we know, Canada is not immune, nor are the United States or Europe.

Those in the west are well aware of the heavy impact there of the great difficulties being experienced by individuals and businesses in Southeast Asia.

Under the circumstances, the Small Business Loans Act ought to have sufficient flexibility to allow the minister to inject more money into business loans in times of recession, particularly since we know this $1.5 billion figure for guarantees will never come close to being reached. I invite my Reform colleagues to examine this clause.

I regret that the revision has been done merely from an accounting point of view. It was necessary, but the Small Business Loans Act—which is what I would prefer it to still be called, because once again it will not be a “financing act” for small businesses since this program is insufficient—is an important piece of legislation, but far from sufficient. One need only re-examine the repeated complaints from the Canadian Federation of Independent Business to know that this is so.

The more small businesses are denied credit, as they set up or expand, the greater the risk they face. We know how frequently they go bankrupt and at times it is very clearly because of a lack of credit.

This is what forces the provinces, and especially Quebec, in both the private and public sectors, to develop complementary programs. Once again, according to what I hear from the small and medium size businesses that, in search of help, turn to their member of Parliament as a last resort, there is not enough money for unsecured loans.

And what about the fact that there is no provision for businesses in the knowledge sector? The government makes a big fuss about the knowledge economy. The knowledge economy needs a lot of capital. The only thing the government has done was to announce in the spring that $30 million would be available over five years for products, for content. That is not nearly enough. Canada has expended considerable effort on infrastructure and on electronic highways, but, in the area of content, there is no help for local artists, artisans and industrialists and no provision for these areas in this revision to the Small Business Loans Act.

It is therefore unfortunate that the old SBLA was not tightened up more and that the government felt only an accounting review was necessary without a thought to economic development.

This act is vital to economic development and to job creation. It must serve this objective. When it fails to do so clearly, it fails in its primary goal, and we will continue to go after the government on this point.

[Nelson Riis, NDP, Kamloops, BC]

Mr. Speaker, it is a delight to have the opportunity to represent the federal New Democrats and to make some opening remarks with respect to Bill C-53, the Canada Small Business Financing Act. This is a new form of the old SBLA, the Small Business Loans Act, that we have been debating in this House for 20-some years, or perhaps even a bit longer than that.

I am delighted to have a chance to participate in this debate for a number of reasons, not the least of which is that I have recently been appointed by the leader of our party to be the business spokesperson for the federal New Democrats.

I have been, in a sense, lobbying for this for quite some time and I have often asked myself why I felt this was important. Then I realized that one of the reasons is that most people I know today are either in some kind of business, have been in business or plan to be in some form of business. They tend to be small businesses, small enterprises, young firms.

I started to think about this and realized that one of my senior staff persons on Parliament Hill has been with me since the beginning, more than 18 years. Her partner runs a small contracting business in the city of Ottawa.

The partner of one of my other staff members who has been with me for 14 years also runs a small consulting business in Ottawa, working for the private sector as well as government.

The father of the newest addition to my staff, a young man recently out of Queen's University, has run a large cement contracting business in my constituency for many years. Once he leaves Parliament Hill, he and his partner plan to open a printing firm in Winnipeg.

Therefore the people around me are used to the notion of working with business on a personal level.

Then I started to reflect on the people who play a close role in our lives, our campaign workers, our campaign teams, the executives of our organizations.

The president of my federal executive is an interesting man. He is a member of the carpenter's union, but he also runs a construction company. When he is unable to find work as a carpenter, he goes out and does small enterprise work for individuals, various firms and so on.

My last campaign chair was a retired manager of B.C. Tel. He runs a honey-producing business these days.

I reflected back on some of the people over the years who played key roles in my campaigns. My sign chair was the owner and manager of a retail postal outlet and the publisher of a magazine in British Columbia. The deputy sign chair in my campaign now runs a fairly large contracting business in the construction sector.

The media chair was an individual who owns and manages a community newspaper. The deputy media chair in my last campaign owns a media consulting firm and has done that successfully for a number of years.

Fundraisers tended to have a relationship with business. One was a partner in a large law firm. One was the owner-manager of a health food store. One ran an insurance company. One was the owner-manager of a recreational vehicle outlet. One was the owner-manager of a restaurant and pub. There were others, but these were people who played a central role in my election campaign.

The campaign advisers were interesting. They included a person who owns and manages a hunting and fishing lodge in central British Columbia. Another was a pub manager-owner. Another was the owner and operator of a bowling alley and trophy shop. Another individual was a financial adviser. He runs a private business as a financial adviser.

Canvass organizers included a person who owns a trucking company. Another is the owner-manager of a small retail outlet which sells children's wares, toys and that sort of thing. One owns an electric contracting company. One runs a recreational vehicle outlet. One is an owner-operator of a hair salon. Another is a manager of a body shop. One person runs a tour company. One owns and runs a mining exploration company. A number are in the silviculture business and many are small farmers and ranchers.

There are just under 300,000 farmers and ranchers in Canada and a good percentage of those individuals have incorporated businesses. I think it is fair to say that farmers now, almost by definition, have become business operators because of the complexity of the art and science of farming these days.

While we often refer to people as being a rancher or a farmer, in essence they are running a small business, often incorporated for a whole variety of reasons.

When I made soundings in terms of this legislation being proposed by the federal government it was not difficult to get reaction from people. Many of them have used the program in the past. Many of them wanted to use the program but were not eligible. Particularly interesting were the number of women entrepreneurs who have started businesses and have had a difficult time accessing various types of financing. They often referred to the frustration they have experienced with their bankers.

I want to say first that, in my judgment, this has been one of the better federal government programs in terms of actually helping small business. There is a great deal of rhetoric in this House, and probably in legislatures across the country, announcing programs that are designed to assist the small business sector, but they often do not seem to go anywhere.

There might be a program, but after two weeks the funding is all used up. It is on paper, but I think there is very little assistance to the small business sector when it comes to government programs. I am not even certain that the small business sector often wants government programs to help them.

I refer specifically in our area to the community futures program which has done an amazingly positive job in creating hundreds and hundreds of small businesses that otherwise would not have been created simply because they were able to access capital up to a maximum of $75,000.

We are talking about people who want to create enterprises in this country and create jobs. I think all of us feel that there is an important goal for our country, and that is the goal of full employment.

Ideally, if everyone was working at a decent job, a whole lot of problems that we face as a country would simply evaporate overnight. A lot of societal problems exist because people do not have jobs. Or if they do have a job, it is not a decent paying job.

If we are serious about creating employment for Canadians we have to acknowledge that most of the employment that is being created today and certainly most of the employment that will be created in the next number of years is going to be created by the small and medium size business sector of the country. These are the people who will actually create the jobs. They will be able to move rapidly to take advantage of changing markets and changing opportunities, whereas the larger firms simply will not be able to respond so quickly and so well.

It seems to me that it is our obligation to find ways and means to support, encourage and nurture that sector of our society in which jobs will be created in the next decade or two if we hope to bring this country to the level that we know it ought to be in terms of full employment.

I will say that the SBLA, the Small Business Loans Act, which we are about to change, has probably been one of the most effective programs we have seen. It certainly is one of the most used federal programs in assisting business, and it is well understood. For those reasons I think we ought to be careful as we proceed with this new legislation called the Canada Small Business Financing Act.

I want to say that federal New Democrats support this legislation in principle.

We have some serious concerns, which I will get to. We particularly want to see it advanced at this stage for three reasons.

One is that it is a continuation of a program that has been relatively effective compared to other federal programs. It has been constant in its purpose as a program to assist young and small firms in obtaining debt capital because of gaps in equity and capital for this end of the market particularly.

The program has been accountable. In other words, a regular revisiting of this program by parliament tends to focus on areas that need to be changed. This is one of the shortcomings in this legislation we worry about because it will not be coming back to parliament for periods of time.

An area that has been identified as causing difficulties in terms of financing for small business in Canada has been the recent move to leasing equipment. Under the SBLA leasing equipment or leasing materials was not something that would be financed so this had to be change.

Another area was the non-profit sector. I think we are all appreciative that increasingly businesses in the non-profit sector need to find ways and means of supporting themselves. I am thinking here of something like a child care centre. Under this new legislation it will be able to use this program to go to the banks and other financial institutions to get a loan so they can improve the service they provide.

In terms of the move to leasing which on balance is a positive move, the opportunity it opens to the non-profit sector is also a positive move.

Those are the two fundamental reasons we feel that this should be advanced further. Once it gets to committee obviously some of the fine tuning will take place.

I have to muse at this point as to where this notion of leasing requirement originated. In my discussions with the Canadian Federation of Independent Business I was told that its members have not been crying for this. I wonder if it is not the banks who maybe are trying to use this legislation because they want to get into the leasing business. They want to move into auto leasing first but pretty soon they will be leasing television sets and goodness knows what else if they get their way in this bank merger and the changes they are seeking to the financial legislation before us these days. I am a bit worried about that. I am going to flag it right off the top.

When I look through all of the briefing material for this new legislation and after speaking with a number of government officials who are in involved in this, there was one sector which I think was obvious by its absence. That is the sector dealing with women entrepreneurs. If there is one thing we acknowledge today it is that the growth in the small and medium size business sector is being led by women, yet financing is a major problem that women have.

I am approached regularly by women who are so frustrated because the banks say “Yes, we will lend you the necessary money to start your enterprise but you have to get your husband to sign the form”. They say “My husband is not in the business. He does something else”, and the banks say “That is just the way it is. We would like to have your husband's signature”. This is a terrible situation to accept. One of the fundamental weaknesses of this legislation is the absence of dealing with this problem.

Another area is that of aboriginal business. As Canada moves toward more self-determination and self-reliance for our First Nations people, one of the problems they have is getting into business and creating job and employment opportunities for themselves and others. Financing is a crucial matter and again it is not being addressed by this legislation. Hopefully it will be in some other sectors.

Another area is what we might call knowledge based business, the information technology business. Someone wants to borrow some money from a bank or a financial institution and his only asset is himself. He is wearing his cap sideways and an odd T-shirt and goes into a bank to borrow some money. Even if he is a brilliant individual who wants to start a knowledge based business and everyone knows he or she is going to be successful, well, the bank is not used to lending money to people who wear their caps sideways and T-shirts. But that is the new reality.

One of the more interesting businesses I was at on the opening day was that of a couple of young people who were opening up a tattoo parlour. They had a business plan laid out and had demonstrated that this was going to be a money-making effort. I guess most people in Kamloops will be wearing a tattoo one day if these people are going to be successful.

This is the way the world is. These are small businesses, often home based. They are not addressed adequately in this legislation. Most people these days, the self-employed individual starting out in business are starting from that home based business. They are not being adequately considered in this legislation. I see this as another shortcoming.

There is also the equity issue of financing. I realize this legislation is not the place to address this issue but I feel that I have to wave the flag. When it comes to equity capital, parliament has to take this more seriously. I may be wrong but I do not recall that there has been any real effort to address this problem which is faced by small and medium size businesses in our country. I hope we can use this as a heads up and conduct some serious examination of the problems associated in this area and ways and means to overcome them.

There are many concerns about this legislation.

I am curious about maintaining the upper limit of $250,000. Under this type of legislation, the average loan today is about $86,000. It has come down from about $90,000 in 1997 and is up from $50,000 in 1994. It is fair to say that people are using this program to access financing for their business when they have difficulty doing it otherwise. These are small loans. There is a ceiling of $250,000 and hardly anybody uses that. Should we not visit that?

This legislation applies to firms that have over $5 million in sales. When we look at the number of firms in this country that have sales in that category, do they need help under this legislation? Is this the best place to show support for those types of firms?

These questions are more of the musing kind than critical comment. On balance, we support this program with some qualifications.

There is the fact that it does not seriously address the whole issue faced by women who are starting businesses today. They are growing young businesses and are entering the market with entrepreneurial ideas that they want to see in place through production to sale, not export. There is the whole issue of aboriginal funding. Home based business is crucial for increasing numbers of Canadians. This is not addressed adequately in this legislation. We have concerns that these sectors are not being properly addressed under this kind of legislation. We need to be reminded of these problems.

I also want to use this as an opportunity to find ways and means to support the small business sector. This is one of them. It has been successful in the past.

Today we cannot overlook the fact that small businesses are not very positively inclined toward the bank mergers. As a matter of fact if the bank mergers as proposed are allowed to proceed, the two resulting banks would have 75% of the number of loans under this legislation. By any definition that is real concentration. The small business sector is concerned about the ability of competition in the financing marketplace.

I do not think I have run into a single person who runs a small business who likes this bank merger issue. Not a single one, although there might be one whom I have not yet found. In my judgment there is universal condemnation of this initiative. The Canadian Federation of Independent Business would largely substantiate that in terms of the work it has done with its members.

In closing, we will support this legislation at this principle stage. We will be raising some of our concerns in committee to see if they can be addressed in this legislation through amendments.

Perhaps other more appropriate initiatives can be taken by the federal government to acknowledge that the jobs of the future will be created not by the large corporate sector nor on balance by government, although government has a role to play in job creation in critical sectors. I am thinking of education and health care, child care, elder care, pharmacare, home care, those particular sectors.

A goodly number of jobs will be created by the small and medium size business sector in our communities. They are the people we know best. They are the people we live with and see every day on the streets of our communities. They are the people who should be receiving our support. I believe that this piece of legislation, Bill C-53, is a step in that direction.

[Jim Jones, Progressive Conservative, Markham, ON]

Mr. Speaker, I am not sure you can hear me from way down here, but the positive of being down here is now we can always look right instead of having to look left.

Today I rise to speak on Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small business. For the purpose of brevity, this bill seeks to replace the Small Business Loans Act with the new Canada small business financing act. In essence parliament will be attempting to guarantee that the principles of the success story known as the Small Business Loans Act will continue into the next millennium.

Since 1961 the Small Business Loans Act which was implemented by the Progressive Conservative government under John Diefenbaker has helped over a half million Canadian businesses. In the 37 years that have followed, parliament has shown its resolve to assist small business by continuously updating and innovating the act to ensure that it remains responsive to the needs of Canadian small and medium size enterprises.

By and large this duty has been discharged with commitment and diligence. I remind the House of this because the same hand that passes this torch on will be expecting much of us. Since its inception the Small Business Loans Act has experienced a successful repayment rate in excess of 94% of all loans. When we consider that during this period the program has guaranteed loans worth $22 billion, the numbers become all the more impressive.

In 1997-98 the Small Business Loans Act borrowers reported that they would create 74,600 new jobs. This is even more significant when we understand that over 50% of all loans made under the provisions of the act would never have been made under conventional lending practices.

This is easy to believe when we note a 1996 study entitled “Economic Impacts of the Small Business Loans Act”. The study found that approximately 45% of the borrowers in the sample were companies that were less than one year old. In comparison, only 5% of non-SBLA loans went to start up firms.

Much has already been done to facilitate the work of this House as well as the industry committee when it begins its in-depth examination of Bill C-53. To date, a comprehensive review of the financing needs of small business has been completed with special emphasis on the following areas: the economic impact studies; the compliance and default studies; the stakeholder consultations; the cost benefit analysis and future evaluations; and the capital leasing studies. As well, our hon. colleagues in the other place finished the committee report entitled “Review of the Small Business Loans Act”.

In dealing with this bill, I would like to stress both what has been included and what has been excluded. As for what is in this bill, many provisions of the Small Business Loans Act have remained unchanged. The loan loss ratio remains at 85% of the cost of claims for loans in default. This is the same rate that it has been since 1995. Lenders remain responsible for the remainder.

Members of this House will recall that the Liberal government reinstated this ratio in 1995 after the Conservative government had reduced the risk to lenders in 1993. The Conservative government did this to encourage a greater participation by the financial sector in the Small Business Loans Act.

When a government sets up a program like the SBLA which guarantees loans for small businesses, it does so for one very obvious reason. Without such an act, loans would be labelled too high risk by lenders and they simply would not be given. Therefore I have to question the judgment used by the government when it increased the risk to lenders.

At the risk of attributing motives, this appears to be an instance where good politics took precedence over good policy. I say this because since the Liberals did this, we have studies which show that small and medium size enterprise lender dissatisfaction has been steadily increasing. Rather than pointing fingers at lenders or borrowers, this legislation should be focusing on improving the environment for both.

A few other program parameters which have not changed should be noted. The maximum loan size remains at $250,000. When this issue was reviewed it was found there was very little support for increasing this figure. Until recently the Canadian Federation of Independent Businesses was arguing for a reduction of the loan threshold. One notable exception to this is the tourism industry where many have called for a doubling of the $250,000 threshold. This has been due in part to the significant capital investment required for facilities. The percentage of the costs of eligible capital assets accepted for financing remains at 90%. This is a reasonable figure and there is no need to review it.

However, there is a shortcoming with this bill that lies in its failure to come to grips with the issue of the lack of access to the Small Business Loans Act that currently exists for knowledge based industries. The minister raised hopes when he asked for a report that asked for the Small Business Loans Act to be expanded to target knowledge based industries. Unfortunately when the answer comes back that something definitely needs to be done, he chooses to ignore it.

Knowledge based industries are among the most dynamic job producing companies in Canada today. The problem lies in the fact that their major assets are intellectual and thus are not capable of being financed under current criteria. So what are we to do, ignore them? Based on the industry estimates which I read this year, the same estimates which place so much emphasis on the importance of thriving as a knowledge based economy, I am more than a little surprised that we have no firm plan from the minister.

It is not my intention here to cast aspersions but in the past the Minister of Industry has indicated his willingness to encourage the development of our knowledge based economy. My party stands ready to assist with this. Perhaps Bill C-53 is the vehicle we can use.

I turn my attention to the specific changes that will come about if Bill C-53 is implemented. First, there is a mandatory program review provision. If passed, this would mean the end of the current provisions that require an automatic ending of lending authorities if a new bill is not passed as we saw last year with Bill C-21. While we are still a little short on the details that would constitute this review process, in general terms it appears to be a good idea.

I say that for the following reasons. Under the current system, the government is in a situation where it must present a bill to parliament in order to keep the program alive. This bill could potentially contain clauses the government of the day would like to slip through while at the same time keeping the opposition handcuffed by the inherent time constraints. After all, who wants to be the party that takes the blame for the demise of such an historically important and successful act? With this in mind the review process is a better way to deal fairly with any necessary changes.

Under the proposed process the review would see data collected over a five year period prior to the review used to give parliamentarians and policy makers the tools needed to evaluate where changes need to be considered. At the end of the five year period, currently designated as March 31, 2004, the minister would have 12 months in which to cause a comprehensive review. At this point we are not prepared to comment on the reasonableness of these time constraints as we look forward to reviewing them at the committee stage.

Bill C-53 proposes a new component to the act, the idea of pilot projects both for capital leasing and for the voluntary sector. Capital leasing has been an ever growing and popular financing option for small and medium size enterprises. This particular type of lease ensures that the lessee will own the equipment at the end of the lease. A provision of this nature serves to protect the interests of taxpayers as the equipment will become an asset of the company at the end of this lease. Or so one would believe if one were to read the memorandum that was distributed by the minister to all parliamentarians. However, Industry Canada's report “Access to Financing for Small Business: Meeting the Changing Needs” is not so definitive in its treatment of capital leases. I refer to page 17: “Capital leasing is the leasing of equipment for the major part of its useful life, with the expectation that the lessee will obtain ownership of the equipment”. If the intent of the bill is to guarantee that all capital leases under the program will be lease to own agreements the wording should be carefully considered.

At present the leasing industry does not approve leasing for firms under two years old seeking less than $100,000. This typically excludes the majority of present Small Business Loans Act borrowers. Parliamentary committees will be consulted for the implementation of such a pilot project. In doing so, I trust we will come up with a program which is responsive to the stated needs that exist.

The other proposed pilot project deals with the voluntary sector. The document “Securing Our Future Together” makes a commitment to reviewing federal small business programs with a view to extending their mandate to the voluntary sector. This program raises many questions. In recent hearings conducted into this issues witnesses generally were opposed to extending provisions of the Small Business Loans Act to the voluntary sector.

Some of the reasons cited included costs as well as instability of revenues. These are legitimate concerns and I also would be concerned if we were to put in place a program which would allow non-profit or voluntary organizations to unfairly compete with other business interests. This is something that needs to be more thoroughly explored at the committee stage.

Contingent liabilities are a new addition to the act. The claim being made is this is somehow necessary to shield the taxpayers against incurring more than $1.5 billion liability should all loans default. Based on the fact that the program as it stands is only experiencing a 5.6% default rate coupled with the fact that the program would have to be five times larger for such a large payout to be made, I am suspicious of this clause.

A cynic might suggest that this is merely window dressing and marketing to make the government appear fiscally responsible. The reality is the threshold is set so high it will never come close to being tested but it does sound nice.

Cost recovery is a worthy goal of the program. Toward that achievement, Bill C-53 seeks to allow the government the ability to restrict access to program loans or guarantees. Too little has been released on this clause to discuss it with any depth and I would caution that any legislation covering this area must be generous in scope with allowance for various contingencies. We have a heavily regulated financial services sector already. If any abuse of process is suspected other avenues may exist to achieve compliance.

The next area I wish to address is that of the proposed accountability framework. This proposal by Price Waterhouse will access the Canadian small business financing act over the next five years. Several criteria will be used, including the visibility of the program to potential borrowers, its impact on creating and maintaining jobs and the performance of the borrowers. The auditor general in his report on management of the small business loans program points out that claims audit procedures need to be strengthened. This is an area that will have to be dealt with with great sensitivity to the viability of the program as a whole.

I remind the House that the reason this act exists is due to the undeniable fact that a problem exists. The problem was the unwillingness of banks to lend to small and medium size enterprises. Any attempt to change the program so as to put greater compliance demands on lending institutions will only result in fewer small businesses getting the financing they desperately need. While I am not opposing the provisions at this time I am suggesting that we tread carefully.

Finally, I would like to address a clause in the Industry Canada review of the Small Business Loans Act. Specifically in the booklet “Meeting the Changing Needs” on page 17 there is a reference to asset transfers.

Included in this is a reference to non-arm's length transfers of assets of going concerns.

The issue I raise is that specifically itemized as being excluded from the CSBFA act guaranteed loans would be the sale of a business from a parent to a child. This needs to be reviewed and for very good reasons. We no longer live in a time where the purchase of family businesses is financed by long apprenticeships, that is to say children working at below market value with the understanding that some day the businesses will be theirs.

Rather, the inherent value of small businesses represent the equivalent of an RRSP to many business owners. This provision would result in children being unable to secure the proper financing. What would happen then? I suggest that parents who are facing the insecurity of retirement would be forced to look at selling their business to a non-relative who would not know the ins and outs of the particular company and would have access to the Canadian small business financing act loan guarantees.

Is this fair? I think not. At a time when high taxes and a lack of opportunity are leading to brain drain and breaking down the family unit, we do not need to make the situation worse with punitive anti-family legislation.

Once again I look forward to working at the committee level to see if we can change this.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I am pleased to offer some comments on the debate today because it concerns a subject that is very near and dear to my heart, small business. Having been in small business for over 20 years, when I had a real life before I became a politician, I was aware of many things that were lacking in what it took to run a successful small business.

I cannot let this debate go by without revisiting a couple of things that this government has failed to recognize. At the top of that list is the level of EI premiums.

Small businesses and the people they employ are currently being overcharged by some 33% on EI premiums that are necessary to not only sustain the program but also to provide a reasonable rainy day fund in case we have a downturn in the economy.

Not only do we have that rainy day fund available but the finance minister has decided that he wanted to create a hurricane fund. We now have a surplus of $20 billion in EI premiums for this year. Let me clarify that. There are many workers who think there is $20 billion in the fund but in fact all that is there is an IOU from the finance minister who has scooped the entire pot and it looks like he is intending on defying or changing the law that governs EI surpluses so he can continue to scoop an extra $6 billion per year.

I know members want me to conclude but I cannot stop without talking about the high taxation level. Canada is the highest in all the G-7 countries. Small businesses are stressed under a burdening tax regime that makes us uncompetitive. I would like the member from the fifth party to elaborate. I know this is the Reform issue but I am sure the Tories can try to elaborate on it.

[The Acting Speaker (Mr. McClelland)]

Just before the hon. member for Markham responds, I make the point that this is a small business act. We are allowing a fair amount of latitude in the questions and comments and debate but let us try to touch every once in a while on the touchstone of the bill that is on debate.

[Jim Jones, Progressive Conservative, Markham, ON]

Mr. Speaker, I could not agree more that there is a virtual surplus of over $20 billion. We know a tax on unemployment insurance is really a tax on small business and other employment. The government should be reducing that. Also we are too highly taxed in this country . It was interesting to see over the summer when the Asian flu was starting to impact the dollar in Canada that all the money that was leaving those countries was not coming to this country but was going to the U.S. I think a good reason for that was that investors viewed the risk they saw in this country as not being worth the payback. Maybe our taxes are too high, both our personal income taxes and also the way the government is milking the employment insurance fund.

[Nelson Riis, NDP, Kamloops, BC]

Mr. Speaker, I want to join my colleague to my left who raised the issue of the EI fund.

On the weekend I saw a fellow on the street with a huge sign that said “Paul the pirate”. I approached him to see what on earth he was up to and he said “The Minister of Finance is pirating funds that working people and small entrepreneurs have put into the EI fund for the last number of years. He is stealing $5 billion this year”. How can he do that?

My friend from Markham made reference to the changes in the legislation that would result in a five year opportunity to review the success of the program, particularly the pilot studies, and that the minister would have significantly more room in terms of regulatory change. I know there has been a change in government policy, perhaps in every department, where more emphasis is being given to providing responsibility and authority to the minister to change regulations having to do with certain pieces of legislation.

Does my hon. friend from Markham not have some concern about this area in terms of ministerial influence, in terms of adjusting or changing legislation, in terms of where that might take us?

Second, does he feel, as I do, that there is a crucial area in the field of financing for tourism related projects? I do not think this legislation meets that area of the economy in any way and it is something that we should be looking at as parliamentarians.

[Jim Jones, Progressive Conservative, Markham, ON]

Mr. Speaker, I thank the hon. member for his question.

With respect to legislation on tourism, I am not aware if funding is adequate in that area.

The area I am concerned about, which this act does not address, is the knowledge based sector. I believe that at least 10% of all funding should go to the knowledge based sector because the knowledge based sector is the future of this country. We should be willing to take a risk and look after that industry too.

The five year timeframe is something that we will be discussing in committee, so I will comment on that later.

Business Of The House

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

Mr. Speaker, there have been discussions among all parties and if the House will give its consent I move the following:

That the membership of the Standing Committee on Procedure and House Affairs be modified as follows:

Gurmant Grewal for Ken Epp; Lynn Myers for Mac Harb; Joe Fontana for Carolyn Parrish; and Gar Knutson for Rey Pagtakhan.

And that the following Members be added to the list of Associate Members: Joe Jordan, Jay Hill, Garry Breitkreuz, Grant McNally, Deborah Grey, Elinor Caplan, Steve Mahoney and Mac Harb.

[The Acting Speaker (Mr. McClelland)]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)