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.