Werner Schmidt

[Supply, February 18th, 1998]

Mr. Speaker, in the interest of moving the debate to another level, may I suggest that the motion we are debating is a rather encouraging motion. At the same time it is shortsighted and really incomplete.

Would members opposite be interested in adding another dimension to the motion concerning a shift from withdrawing funds from basic research and the infrastructure that is necessary to do research? Many of the brains that are drained from Canada—

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, some very simple things could be done.

One is that the government could make sure there are no loopholes in the act that would allow companies with the same ownership to bundle their stuff together. There should also be concrete and specific measures of productivity, ability for expansion, profitability of business, things of that sort. If those things were done, then it would work. It is very simple. There are no deep secrets here at all. All the government has to do is apply some common sense and good sound business principles and it will work.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, the member who referred to me said that the Reform Party wants to kill the SBLA. That is not what we said. That is not what my hon. colleague said. That is not what I said. It is not the case at all.

I asked a series of questions about what is wrong with the act and I suggested how it could be improved. I thought I made that quite clear. If I did not make it clear then, I will make it clear now. We are talking about that section of the loans program that would have been served regardless of the SBLA. Let the SBLA do what it was intended to do. But that is not the issue. Our concern is not with what it was intended to do but rather with the abuses that exist. I want to make that abundantly clear.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, I wish to enter the debate on Bill C-21 with a series of questions designed to give direction to the government in the administration of this program.

We on this side of the House have been accused of being totally and unalterably opposed to granting capital to small business and making it available for them to access business. That is not the point at all. There has been a total and complete misrepresentation of what we are talking about.

We are talking about the 40% or 50%—in fact the most recent study says about 46%—of the loans granted under the SBLA that would have been granted in the normal course of events. I am talking about the other part and will ask questions about it.

The study on access to capital by small business asked whether the Department of Industry would do a cost benefit analysis of the Small Business Loans Act. Why is it that since 1995, when the first set of amendments were proposed by the Department of Industry, no such study has been done? That is the question.

The particular program is supposed to increase jobs. I have a question to ask that is similar to the one asked by the auditor general. He asked how many jobs were created. Is the number of jobs created simply the number that the applicant writes on the piece of paper, or have they actually been verified as the number of jobs created? How many jobs were lost because a particular loan was granted to one business and not granted to another? These are very significant questions.

The program is supposed to help small business improve. How does the act propose that the business be measured? What is the improvement? There are no statistical indicators of what constitutes improvement.

Some obvious measures could be level of sales. Has the level of sales risen? Is the profitability of the company a little higher? Is its productivity higher? Is it more competitive? What is the level of exports compared to before the loan was given and later? How many products were developed? What is the net employment impact? What is the overall business success? These suggestions ought to be made and ought to be included.

I want to raise another point which has to do with a grave injustice and grave abuse of the provisions of the program. The program was supposed to be there to help small business. My colleagues across the way have made a big point about small business. I draw attention to a paragraph found in the auditor general's report. It is a rather significant one.

The Small Business Loans Act puts a ceiling of $250,000 on an individual loan. In his sample of loan files the auditor general noted some cases in which a number of individual corporations with substantially common ownership had collectively obtained more that $250,000 in loans to operate the same business. In one particular case a group of 23 corporations obtained more than $4 million in SBLA financing.

That is a blatant abuse of the provisions of the act. Yet there was no indication as to why this was done. Nor was there any action taken to prevent this from happening. Nor was there any consequence as a result of it having happened. The least I would suggest to the Minister of Industry is that kind of a thing should not happen again.

The Income Tax Act has a provision that does not make it possible for corporations with essentially the same ownership to bundle together to get particular advantages. Why does this act not have that provision? That was well known since 1966 yet there is not even a hint of that happening.

Instead of us perpetuating the act indefinitely, the Department of Industry should have a year to study it in great detail. It should have done it already. Since it has not been done we will give it the benefit of the doubt and give it another year.

In no way should the department be given any authority to spend more money than is already in the provisions in the act, which is $14 billion. It does not need the $1 billion. We heard the minister this morning say that the commitment at the moment is $12.7 billion.

There is a cap now of $14 billion, which is a $1.3 billion difference. The government wants another $1 billion on top of that. If the pattern remains the same as it was 46% of that would be granted anyway. If we take that out, there is more than enough money left to meet the real intent of the Small Business Loans Act. I suggest that we change the act so that it does one thing and not the other. That is the gist of that provision.

There is more. We need to ask ourselves why the SBLA program has not been adjusted to be more accurately reflective of the economy around us. It is interesting that there is no change in this regard at all. The program still focuses on land, premises and equipment. Yet where is the economy going? The economy is going into high tech, into knowledge based industries. It is not going into land, premises or equipment in the first instance.

If the minister were really concerned about meeting the needs of small business, he needs to do not only the things that have been discussed already with regard to tax reduction but to make money available in those areas that will bring forward our competitiveness as a nation. I think that needs to be addressed as well.

I also want to ask the minister if his officials have projected the possible risk of new failures. About 75% of the defaults of the loans under the SBLA come from businesses that are new enterprises. Three-quarters of the defaults are in new enterprises. Has that been figured into the risk situation? We have no indication that is in fact the case.

The auditor general goes so far as to say there is no figure that we as parliamentarians can look at to say what is the projected default rate or cost in terms of actual dollars of this program. The auditor general's estimate stands at $210 million. That is a figure of cold, hard cash which he believes the taxpayers of Canada will have to fork out.

Why does the Department of Industry not come clean and tell parliamentarians that Canadian taxpayers are on the hook for a minimum of $210 million in predicted defaults in this area? That says nothing about some other areas that could come into question.

Another thing really bothers me. Does the department have enough information? What happens if a lending institution, say one of the big banks, says that a loan is in default? The auditor general makes a rather interesting observation in section 29.64:

Industry Canada does not request access to the complete loan file when it receives a claim.

This means that the department does not know whether the lending institution observed all the requirements of the act. There is some indication that some lending institutions did not. They charged the borrower fees, which was contrary to the provisions of the act. These very serious questions have to be addressed. That is why we are not prepared to give to the Department of Industry one cent more than it already has.

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, maybe the hon. member did not understand my question. I will put it very simply and very quickly. Is the SBLA a subsidy to the banks?

[Small Business Loans Act, February 16th, 1998]

Mr. Speaker, I listened with interest to the member's statements about Bill C-21. I think he made a point in the remarks to the effect that this is not a subsidy.

I could not help but think about who it was who might be receiving this subsidy or for whom it was not a subsidy. It could not very well be for the applicant of the small business loan but it could be the bank.

It seems to me that one of the discoveries that the auditor general made was that somewhere between 30% and more recently up to 46% of the loans actually granted under the SBLA program would have been granted without the provisions of the SBLA.

If that is the case, that means 46% of the loans actually granted to business were guaranteed by the Government of Canada, loans that these institutions would have lent to the individuals anyway. Therefore, rather than the bank being on the hook and taking the risk, it is the taxpayer who is taking the risk up to 85% of the principal value of these loans.

I ask the member whether he could please clarify for whom this is not a subsidy.

[Canadian Wheat Board Act, February 9th, 1998]

He is supposed to listen to the board on the one hand and he is supposed to listen to the minister on the other. So he will sit on the fence and will get cut right down the middle. He will not know what he is. If he does not side with the minister, the minister will say “Sorry, we do not need you any more”. That is a critical point.

What about if disciplinary action has to be taken? Who will do it? Will the board do it or will the minister do it? These things are not clear.

What about the release of information? What kind of information will be released by the board to the farmers? What kind of information will be released by the board to the minister? What information will be released by the minister to the board? What information will be released by the board to the president, to the minister, by the minister to the president, and so on?

There are all kinds of opportunities for misinformation, not enough information and selected information in order to produce a particular result.

These are some of the things which are wrong with this bill.

Let it be known that the farmers are good people and that the Canadian Wheat Board needs to be amended in terms of the amendments which have been presented to Bill C-4.

[Canadian Wheat Board Act, February 9th, 1998]

The president is accountable not to the board; the president is accountable to the minister. He has a divided personality.

[Canadian Wheat Board Act, February 9th, 1998]

Mr. Speaker, I was so thrilled when the hon. member for Crowfoot asked you to throw him a bun. I was hoping you would be able to do that because I wanted to catch it before it reached him. I understand they are extremely delectable.

This afternoon I want to commend you, Mr. Speaker, for recognizing the significance of agriculture in Western Canada. But before I go into the details of the Group No. 4 amendments, I wish to pay a tribute to the farmers of Canada.

Farmers are among our most productive people. They are also among our most reliable people. These are the people who understand ethics probably better than anyone else. These are the people who recognize the difference between controlling your environment or having so much of what you do controlled by the environment itself.

How many farmers have you seen, Mr. Speaker, who have suffered from the ravages of nature as it cuts across their crop with a hail storm or a wind storm or whatever the case might be? These people are humble people. They recognize the difference between what they can do and what the creator can do.

It is time that we recognized that our agricultural community, that community which produces the food all of us need to eat and sustain ourselves, this community and this economy is supported to a large degree by the farmers who till the land, who bring the various plants into production and who carefully nurture what it is that needs to happen.

Farmers are imaginative people. They are innovative people. They have produced things that it was not possible for us to create many years ago. They have brought into the world a wheat production in particular that is the object of great envy from a lot of other countries which do not have the weather, do not have the land, do not have the technology to do what our farmers can do.

We have created the Canadian Wheat Board, a board which was to rationalize the marketing of the commodities wheat and barley. But we are going to talk about wheat or at least that is what I am going to do. This is a very significant part of our agricultural community.

There are four principles which must apply if we are going to have a sound board that is going to manage the affairs of something that is not only important to Canada, not only important to a major sector of the Canadian economy, but has international significance. It has a significance to other countries of the world whose sustenance depend upon the proper production of wheat in this country of ours.

These are the four principles: Whatever management has done must be done according to the interests or in the interests of farmers. It must be based on sound governance and principles of sound governance. It must be based on principles of sound management. Finally, the decisions and operations of such a board must be clear, be auditable and be governed by the principle of prudence both in the management of the money given to the board and also in terms of the commodity it administers. Let us examine each of these principles in turn.

First, is the board operating in the interests of farmers? A fair return for the product they produce is what the farmers want. They do not want an exorbitant high price. They do not want a diminished price that is excessively low. They want a just price, a price that can be defended wherever they go and with whatever land is involved. They want that to be the case within Canada and internationally.

They want something else. They want a sustainable income. They want some idea as to what will be happening to the price of wheat and how they will be able to manage the planting, harvesting, storage and marketing of wheat in such a way that their income is sustained.

They want something else. They not only want to sustain their incomes, they want to be able to have some kind of predictability.

Mr. Speaker, you know in the business you operate that you prepare a business plan to start the business. Then you prepare a cash flow statement and you prepare a marketing plan which probably goes five years into the future. It outlines cash flow for the initial year. Then it is moved forward to the second year, the third year, the fourth year and the fifth year. You begin to build the cost structures, the increases, revenues and the profitability of your business into the plan.

That is what the farmers are looking for. It is a lot more difficult to do that in the farming community. Nevertheless that is in the interests of the farmers. That is the first principle which needs to be observed by this board.

The second principle is one of sound governance. The primary issue is that of democracy. In a democracy the outcome of an event, to decide who is going to do what or to rule what, is in the terms of a franchise, a vote. The person or group that gets the most votes is the group that carries the day. That is not the case with the wheat board.

For some reason or other the governing structure here is one of appointment. The determination of what happens in this board is the subject of determination by the minister of agriculture. That may at one very abstract level be considered to be a form of democracy but that is dictatorship within a democracy which is somewhat contradictory. It is not only somewhat contradictory but I suggest that it is contradictory.

For that reason all of the members of this House should carefully examine the amendment presented by the member for Prince George—Peace River. I believe he has a very sound statement to make.

When a bill is presented to the House, as Bill C-4 was presented, and there are 48 amendments, that should give cause to everyone in this House to ask what is wrong with this bill. Forty-eight different things that are found to be somewhat in error or to have a shortfall. If nothing else, we should think about that.

I have just covered the first two principles, the interests of the farmers and sound government. I do not think the board acts in the interests of the farmers. In terms of sound government, the board is not determined by democratic principles or by vote.

The third principle relates to the application of governance. This has to do with looking at the policies and the principles that are involved. If they are going to do this properly they will do it in terms of fairness, justice, transparency, accountability and responsibility. All those things need to be there.

Wheat board policies must guide the action very clearly. Regulations should be such that they allow farmers to recognize fairness and justice in the way permit books are issued, in the way there is access to storage, in the way there is access to transportation and so on.

We also need to recognize that there need to be clear lines of responsibility. There is no such indication in Bill C-4. There is no clear line of responsibility.

If a company hired a president, and if the company was not responsible and the president was not accountable, we would say “What kind of deal is this? We are not having anything to do with it”.

To whom is the CEO responsible? In this case it is to the minister.

I do not see how any self-respecting farmer would allow himself to be appointed to this particular board. In effect, they have no power. All the power rests with the minister in the final analysis.

[Ice Storm 1998, February 4th, 1998]

Mr. Speaker, it is an honour to rise in the House today to talk about the issues that have arisen as a result of the ice storm.

It was my privilege to go to the county of Lanark, south of this city and a little east of Ottawa, and look at the devastation the ice storm had caused in the maple sugar bush country. It was heart rending to see what had happened to the trees in that area. In some cases the tops of the trees were broken off and in other cases huge branches had broken off. The extent of the damage was absolutely phenomenal in certain areas. It was tree after tree after tree. I compared it to some of my experiences and observations in Alberta when a tornado went through and the tops of the trees were broken off. In this case the ice had broken off the tops of the trees.

We went through this area and asked ourselves what was so significant about what happened there. The tops were broken but was that all that had happened? The sap flows up and down the trunk of the tree, of course. It became clear to us as we went through the various tours. We went to one sugar bush farm, right to the trees and began to look at the branches.

The operator told us very clearly there were tiny little branches on which the leaves form that were broken off. Fifty per cent or more of the crown of that tree was gone and if the branches do not generate leaves, then indeed the life of that tree is in jeopardy. Nobody knows at this point how many of those trees will survive this storm.

We looked at the trees but what really hit home were the people. We saw the people meet at a place called Wheeler's Pancake House. We met in a big assembly room. About 75 or 80 maple syrup farmers were there.

It became painfully obvious that these people are suffering. They are suffering today. There were many who were inconvenienced. There were many who suffered while the electricity was off but these farmers are suffering now because their livelihood is in jeopardy.

We ask ourselves what is being done. What can be done now? I want to pay tribute as well to the armed services and other personnel who helped to bring the power back into the lines. The issue now for these farmers is what do we do now to take care of the problem they have.

There are three kinds of problems identified. Many of these farmers have a network of pipes along which the sap is collected to a central spot and there the water is boiled off and the syrup or sugar is made.

Many of these pipes are covered with ice and snow. Because they froze and the ice is there it is very difficult now to take it off these pipes. These people need help to get the pipes out of the ice and snow and there may not be enough manpower to get this done before the sap starts flowing within the next three or four weeks.

Also, they need money to put the taps into the trees and to make sure it is possible to get that sap when it comes. They need to get to the trees. When we looked at the way the branches had fallen down between the trees, it became very obvious it was almost impossible for the farmers to get to the trees in order to tap the trunks and to do the work that had to be done without removing the branches that were in the way.

Clearing needs to be done. There are three problems with this. There is money needed along with machines and manpower to do the job. What will happen to these people?

We need to go beyond this as well and ask ourselves how long it will be before the income they are losing this year will be replaced. In some instances, if the trees die, it will be between 40 and 50 years before they are restored to the stage they were at.

We need to look at this and ask ourselves what happened, what has been demonstrated as time goes forward. This illustrated that people get together. We saw 75 or 80 people come together in a group, not asking the government to help them but what they could do to work together to solve the problem.

I forgot to mention that I am splitting my time with the member for West Kootenay—Okanagan.

The Ontario Maple Producers Association was represented at this meeting, the local chapter. The one thing that impressed me with this group was that its members clearly articulated the problem. They took responsibility for trying to solve that problem. They knew what should be done. They had asked themselves what should be done, what the cost would be, who was the most in need and how they could go about solving the problem.

Of particular significance was that they said they had all kinds of administrative creations done by federal governments, provincial governments, municipal governments and so on but wanted to distribute the funds and assistance given to them themselves.

They felt they knew who the people were who were applying for this assistance, who needed it the most. They were not going to use this money for administration. It was going to go to the people, the farmers who really needed the help.

I commend these people at the grassroots level who came to us with specific reasons why this should be done this way. They told us what needed to be done, how much money it would take and how best to solve this problem. They came up with a rather creative solution, one which I wanted to pass to the minister of industry just a moment ago.

This farmer said “We need the money now. We haven't got time to go through all the red tape that is necessary. We need that money today and tomorrow. How would it be if we got an indication from the government that this kind of help will be available through various disaster funds and between now and then some bridge financing might be created as an interest free loan for that time period?”

These are the kinds of suggestions these people came up with. They do not want a handout. They are proud people. They want to help themselves.

What have we learned from this disaster? I think we have learned that Canadians care. People care for each other. There is compassion. There is a love for one another. That has been demonstrated clearly and powerfully.

The other thing that has happened that I am proud of is that these people have demonstrated very clearly, without a shadow of a doubt, that the strength of Canada does not lie in its ability to generate electricity or its ability to apply the various technologies. What it has demonstrated more clearly than ever before is that Canada's strength lies in the willingness of the people to care for one another from one end of Canada to the other.

In Kelowna, for example, the Flightcraft people donated a huge Purolator courier service aircraft filled with containers of relief goods for the people in Ontario. That is what happened. A bond developed among Canadians that will make Canada stronger. There was a strong demonstration of intellectual ability, skill and the ability to be motivated as well as a spiritual quality that binds us together.

I hope this disaster which hurt all of us, some very much more than others, will bind us together and make us a strong nation.