Rahim Jaffer

[Canada Small Business Financing Act, September 28th, 1998]

Mr. Speaker, I think the hon. member hit it on the head when he said that 94% of those loans were actually successful. My question throughout my whole discourse is why is the government involved in that process if in fact the private sector can do it itself. That is the key.

The hon. member even mentioned the fact there is scrutiny placed on these businesses going through the process of applying for these loans. That can be done without government intervention as well. He reaffirmed that.

The hon. member also mentioned that it is not a perfect world. I would say that it is not a perfect world especially for small business in this country because of all the obstacles this government has placed in front of them. What the Reform Party is trying to do is stand up for small businesses in allowing those small businesses to create opportunities for themselves and not try to create this false impression that wealth and jobs are created by governments. As we have seen, there is a limited growth when it comes to that. The taxpayers' money is unfortunately recycled.

One thing the hon. member mentioned which I would like to address was the issue I had brought forth earlier. The program has been in place for 37 years, yet I continually hear from the members opposite that the single most important concern from small business continues to be the access to credit. If the program has been so successful, why are there still so many small businesses that are not achieving the financing for their enterprises or their businesses?

As a small business person myself, one of the biggest problems I had looking for financing was not because the government had created a program that was going to secure financing for me, the biggest problem was the fact that there was not enough competition willing to lend to me and other small businesses across the country. This is why we cannot confuse the issue, as the Liberals have done, in this debate.

It is not an issue of not supporting small business. That is exactly what we want to do in the Reform Party. We would like to support small business. We would like to support the free market. We believe that can be well achieved by getting government out of the regulation that it continues to create and which continues to put obstacles in front of small business.

Let us create an atmosphere of positive competition in this country where real entrepreneurs have the choice through the access to capital. Let us work with businesses to do that not in a way that creates more regulation and unfortunately keeps some entrepreneurs out of the loop, but let us try to widen that so everyone has an equal chance in achieving financing.

[Canada Small Business Financing Act, September 28th, 1998]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-53 with my hon. colleague from Saskatoon—Humboldt.

Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small business is the government's attempt to put a band-aid solution on the problem of small business access to financing, a problem the Liberal government has helped to create.

The mandate of the Small Business Loans Act is to facilitate debt financing to small, young businesses that would likely not obtain it otherwise. This mandate, which will be maintained intact under Bill C-53, essentially dictates that the government and therefore the taxpayer should take on more risk than private lenders are prepared to incur. Even with the changes contained within Bill C-53 the taxpayer still covers 85% of any small business loan defaults.

I do not think any member of the House can ignore this point. Whether the members choose to support or oppose this bill, it must be remembered that the essential aspect of Bill C-53 is to provide high risk loans that the private sector cannot or will not provide.

If members of the House believe this is a fair risk to place on the shoulders of Canadian families, they should support this bill. If they believe it is an unfair risk to place on taxpayers, they should oppose the bill.

Two questions immediately came to mind after reviewing Bill C-53: Why should the taxpayer take on more risk than the banks? Is there no other way to ensure that small businesses have access to much needed investment capital?

It is widely understood in economic circles that government intervention leads to a misallocation of resources. This is not free market sophistry, it is the thinking of Nobel laureates like Milton Friedman, James Buchanan, Gary Becker and Frederick Hayek. We can trust the opinions of some of the greatest economic thinkers in the world or we can trust a government that continues to put obstacles in front of business in the form of more government regulations at the cost and peril of Canadian business.

The intervention by the government maintained by Bill C-53 will remove important market forces from the lending processes and will lead to the funding of less viable business ventures. This may help to garner political support for the Liberals, but will continue to do nothing to foster a healthy economy.

To return to my first question about why the Canadian taxpayer should be expected to accept such high economic risks, the answer provided by the Liberals seems to be so they can win political favour. This government seems to have no concern for the average Canadian families who struggle every day under the highest tax burden in the G-7.

In fact, clause 5 of Bill C-53 illustrates the government's indifference to the fact that it is playing politics with the paycheques of Canadian people. This clause refers to the minister's liability should a loan not be repaid. However, it is clear that the liability is that of the Canadian taxpayer. It is not the industry minister's problem if high risk loans are defaulted on, it is the taxpayers'.

The issue of risk should be examined more closely. Risk is a key element in the proper functioning of a free market. If it is artificially lessened or eliminated from market interactions, it leads to a misallocation of scarce resources. That is, lending institutions will be less inclined, despite the provisions for due diligence contained in Bill C-53, to evaluate the long term viability of a business venture.

This situation will lend itself to the financing of unsustainable market ventures and it is the taxpayers under this regime who will inevitably be the losers.

This is supported by the government's own statistics which show that the default rate under the SBLA was about 6%, while the private sector was at approximately 1%. This is substantial when we consider the amount of money at stake.

The Minister of Industry proudly claims that the taxpayer has only a $1.5 billion liability. This is not an insignificant sum of money. The Canadian taxpayers are at their breaking point and someone has to say enough is enough.

Everyone in this House understands the vital role small business plays in the Canadian economy. Both my colleague from Saskatoon—Humboldt and I are small business operators. We both understand the difficulties small business owners face. High taxes and regulations come first to my mind when I think of how tough it is to survive in a small business. If payroll and income taxes were lower, life would be easier for all small business owners. But the government does not care enough to do anything about these problems.

The impact of small business on the Canadian economy is substantial and Reformers have always supported the needs of small business. However, Bill C-53 is not a debate about whether small business is valuable, it is a question of whether small businesses can get access to financing without the government intervening in the economy.

High risk small business ventures can be financed in a competitive banking system provided the lenders are not unnecessarily restricted from conducting their affairs in a manner that allows them to incur risk without incurring losses. The Reform Party is committed to getting government out of the business of doing business and out of the pockets of average Canadian families.

This bill further entrenches the government's role in the banking industry. Bill C-53 and its predecessor, the Small Business Loans Act, allow the government to ignore the real obstacles to small business financing. No more taxpayer dollars should be placed at risk until the government has deregulated the banking industry to create real competition. At this point small business access to financing can be reviewed and new legislation can be tabled if the government can demonstrate a legitimate market failure.

This government just cannot seem to get the fundamentals right. It has tinkered with the Small Business Loans Act and has made improvements recommended by both Reform and the auditor general. However, if the government really cared about small business access to financing it would create more competition in the banking industry, it would lower taxes and reduce the regulatory burden faced by small businesses which now consumes the equivalent of almost 12% of GDP.

Bill C-53 plays politics with the taxpayer's paycheque. It demands that the taxpayer take on more risk than the banks by guaranteeing loans. Let us get the government out of the business of doing business and off the backs of the Canadian taxpayer.

Bill C-53 does not address the problem of small business access to financing and places a financial liability on the taxpayer that is higher than the level deemed acceptable to the private sector.

Now, for a recap in French of the main thrust of my speech for those Canadians whose preference is for that language.

According to the present object of the SBLA, which will be maintained with Bill C-53, the government and consequently the taxpayer are taking greater risks than the private lenders. Even with the changes proposed in Bill C-53, the government covers 85% of any unpaid amounts.

There are two important questions. Does the Minister of Industry think it is reasonable to use tax dollars in such a risky manner? And why should the taxpayer take more risks than the banks?

In economic circles, people are very much aware that government intervention always goes along with poor resource allocation. The government intervention set out in Bill C-53 will do away with important market forces, in the process of making loans, in favour of loans to less viable businesses, and this will do nothing for economic prosperity.

Clause 5 of Bill C-53 demonstrates the government's total lack of scruples about playing political games with the Canadian taxpayers' dollars. This clause addresses the minister's responsibility if a loan is not paid back. It is clear, however, that responsibility falls to the taxpayer.

As for the matter of risk, when a risk is eliminated—one of the key elements of a properly functioning open market—a moral danger is created. In other words, the lending institutions are less inclined, despite the obligations for reasonable diligence imposed by the law, to assess the long-term viability of businesses. As a result, non-viable businesses will end up receiving funds.

Under such an arrangement, the taxpayer is inevitably the loser. Government statistics support this thesis. In fact, the default rate under the Small Business Loans Act is 5.6%, compared to 0.8% in the private sector.

Small and medium sized businesses play a vital role in the Canadian economy, and the Reform Party has always supported the needs of that sector. The purpose of debate on Bill C-53, however, is not to determine the value of small and medium sized business, but rather to determine whether these can access financing without government intervention.

I would like to point out that the importance of small and medium sized businesses in the Canadian economy cannot be under-estimated. The question we need to ask ourselves is the following: Is it possible to use deregulation in Canada to create a framework that will provide financing in a more efficient way? I believe the answer is yes, and that is why I cannot support this bill.

[Canada Small Business Financing Act, September 28th, 1998]

Mr. Speaker, I would like some enlightenment on the issue of revising Bill C-53. I have heard a few comments from members in the House that specifically the revisions to the Small Business Loans Act would increase the ability of small businesses to attain financing within Canada.

However, my question goes to the fact that I have heard this program has been in place for 37 years. If we are actually trying to allow companies to have access to capital and if we are trying to make it easier for companies to have access to capital through this program, why has the program been carrying on for such a long period of time and now finally, after 37 years, we are introducing changes to the program?

Is that not an indication there is a problem with the small business financing approach of the government? Maybe we need to look at an option of creating more competition among lending institutions and allowing them to go that route rather than to continue with a program like this one. Maybe the hon. parliamentary secretary could clear that up for me.

[Employment Insurance, September 28th, 1998]

Mr. Speaker, the Minister of Finance does not understand. The employment insurance fund is not his personally, and amending the law would change nothing. The Minister of Finance cannot use this money to build up his slush fund.

How can the Minister of Finance justify pocketing the money of Canadian workers and employers?

[Competition Act, September 23rd, 1998]

Mr. Speaker, I am pleased to rise again on Bill C-20, an act to amend the Competition Act and to make consequential and related amendments to other acts.

My predecessor and colleague from Kelowna has given the bill substantial consideration and has deemed the legislation to be worthy of the support of members of this House. As the bill has been on the table since 1996, I look forward to being a part of facilitating its long overdue passage.

Given the bill's broad support within this House and among the members of the business community, I do not consider it necessary to use my full allotted speaking time.

The most important element of this legislation deals with telemarketing. It is the protection of consumers against telemarketing deception that has captured my interest in this legislation.

As telemarketing fraud is so often directed at seniors and other vulnerable members of society, it is imperative that the government act to provide the legal framework for dealing with fraudulent telemarketers.

This bill provides very clear guidelines for professional telemarketing conduct. First, telemarketers must identify who they are representing. Second, they must disclose the price of the services or products they are selling. Third, they must tell why they are calling. Without these provisions a telemarketer is given complete license to mislead the consumer.

By providing these guidelines legitimate telemarketers can be given some protection against those deceptive telemarketers whose conduct has brought their industry into disrepute. The telemarketing business in Canada is a billion dollar industry. Without adequate protection against fraud this industry will not continue to grow. Legitimate telemarketers will not continue to operate in an environment ruled by outlaws and frauds.

While I support the initiative to create a civil and criminal law framework for telemarketers, I am very dubious about the Competition Act. The Competition Act rests on the assumption that the government can meddle and regulate its way into a free market.

In his recently published book entitled

The Myths of Antitrust

author Armentano wrote that trades of private property are either voluntary or they are not. One cannot legislate the free market or create competition. To have a free market, the government must leave the markets alone. To have the state make markets free is again a contradiction of terms.

Leaving the markets alone does not mean that the government should ignore its duty to create laws that protect against fraud, for instance as Bill C-20 does with regard to telemarketing. It does not mean that the government should not work to build a criminal and civil law framework that protects private property and to ensure the integrity and sanctity of contracts. That is exactly the role that government should play in a free economy.

Only if the government entrenches property rights in the constitution will Canada's business environment strive. Only when the cost of the regulatory burden is lifted from business will new players be able to enter the market, creating more competition. Only when the banking industry is deregulated will new and innovative companies be able to find the financing and the challenge those companies with substantial market share. Only when the tax burden is reduced will companies think of innovating and expanding.

These are some of the very fundamental problems that must be addressed if Canada is going to foster a competitive marketplace. These problems should be addressed before the government creates more cumbersome and costly regulations.

I am reminded of the Nobel prize winning economist Dr. Friedman who wrote that a monopoly can seldom be established within a country without overt and covert government assistance in the form or a tariff or some other device.

This government is a disease on the economy masquerading as its own cure. It is the cause of uncompetitive markets, not the solution. For instance, the government has created an environment in Canada that has encouraged the creation of a banking oligarchy. Instead of deregulating the banking industry to allow for competition, it meddles further into the banking industry with the Competition Act.

When Canadian small businesses cannot get adequate funding for new innovations that will foster competition the government justifies the need to create another government program called the Small Business Loans Act. We can see how one government intervention leads to many more until we are so far removed from the free market that we cannot begin to understand the potential for market based solution to public policy problems.

If the government ran a house cleaning service it would bill us for air fresheners when all it needed to do was take out the trash. If our house was cold the government would subsidize the costs for new sweaters when all it needed to do was close the door and shut out the draft.

The funny thing is the minister actually expects a pat on the back every time he sprays around a little air freshener or buys a few new sweaters. I will start patting the minister on the back when he starts taking out the trash and closing the doors. I will start patting him on the back when he starts understanding the fundamentals of a strong economy.

If we examine it carefully, the mandate of the Competition Act is a little strange. The entire purpose of being in business is to drive your competitors out of business. Every entrepreneur wants to capture more and more of the market share by providing a better product at a better price than his competition. This according to the Competition Act is illegal. It is called anti-competitive pricing and dumping.

Entrepreneurs eager to obey the minister should not try to outdo their competitors by providing consumers a better price. They should keep their prices and services at the same levels as their competitors. Sorry, that too is against the rules. It is called collusion.

Entrepreneurs should raise their prices far above their competitors so that they are not guilty of anti-competitive pricing or collusion. Wrong again. It is called price gouging.

Our competition laws are an unenforceable mess of contradictions. I think if the members of this House give these laws some honest consideration, they too will come to this conclusion.

The Reform Party believes that the creation of wealth and productive jobs for Canadians is best achieved through the operations of a responsible, broadly-based, free enterprise system in which private property, freedom of contract and the operation of a free market are encouraged and respected.

Economic competition and the resulting prosperity will come only as a result of a deregulated market and cannot be achieved by government intervention.

As the critic for industry, I will be working with the private sector to identify those obstacles to business being successful and will not let this government continue to get the fundamentals wrong with impugnity.

The minister will tell us that he is just trying to protect Canadian consumers. This is simply not true. The minister refused to remove the 6% tariff on imported automobiles and parts despite the unfair burden this places on Canadian families.

He has helped to create a regulatory burden in Canada that costs the equivalent of 12% of our GDP. That is money that comes directly out of the pockets of average Canadians in the form of higher prices for goods and services. The minister is an old friend of the Canadian consumer.

I would also like to touch briefly on the amendments to merger regulations. Again, while I question the legitimacy of the Competition Act as it currently stands, I do support this bill insofar as it simplifies the process by which uncomplicated mergers can be processed.

This aspect of Bill C-20 makes a bad piece of legislation better and it therefore has my qualified support. In fact, Bill C-20 achieves its goal of working to modernize the Competition Act. I think this should be the starting point for reforming the act rather than an end point.

I would like to conclude my remarks by reminding this House that there are real people outside these walls who are affected by what we do. There are consequences, seen and unseen, that these people will have to contend with if we do not engage in thorough and thoughtful debate.

It is the standard of living of Canadians that I will keep in mind throughout my term as opposition critic for industry. I will never remain silent while this government uses the pay cheques of Canadians to play politics. I will never remain silent while this government solely creates an environment in Canada that is stifling and suffocating for small and large businesses.

Bill C-20 makes some very important amendments to the Competition Act and, while I have some very serious concerns with the act itself, the amendments put forth in this legislation deserve our support.

[The Senate, September 23rd, 1998]

Mr. Speaker, it is obvious the Prime Minister is not serious about Albertans' concerns at all. I guess he expects Premier Klein to snap to attention to all his pet issues while Albertans' dreams go down the toilet.

I ask the justice minister, the so-called minister for Alberta, what concrete steps is she taking to respect the wishes of Albertans and create real Senate reform?

[The Senate, September 23rd, 1998]

Mr. Speaker, we know the Prime Minister has done nothing since he was elected to bring us closer to a triple E Senate. When Premier Klein tried, the Prime Minister insulted him and the whole province of Alberta. The Prime Minister's excuse is he wants to reform the Senate but elections just are not enough.

If he really does support Senate reform then where is the Prime Minister's plan for a triple E Senate? Our plan is up there in the gallery.

[The Constitution, September 22nd, 1998]

Section 24 of the Constitution explains how senators may be appointed. The Constitution does not mention the Prime Minister at all. It does not mention golf partners. It does not mention hockey players and it certainly does not rule out elections. All it states is that the governor general will call qualified people to the Senate.

I would like to ask the justice minister, the so-called minister of Alberta, just what part of the Constitution she thinks would stop the Prime Minister from respecting Alberta's Senate election?

[The Constitution, September 22nd, 1998]

Mr. Speaker, section 24 of the Constitution explains how senators may be appointed. The Constitution does not mention the Prime Minister. It does not mention golf partners.

[The Constitution, September 22nd, 1998]

Mr. Speaker, can the Prime Minister tell us exactly what constitutes a clear majority for a referendum in Quebec? I ask this because the will of 91% of Albertans for an elected Senate was ignored last week.

Now that we know what the Prime Minister thinks about a clear majority in Alberta, how in the world can Quebeckers believe he is going to respect a clear majority in Quebec?