Werner Schmidt

[Supply, February 21st, 1995]

Mr. Speaker, there are two parts to the answer to that question. The difficulty lies not so much in seniors wanting to retire at age 65, but that it is mandatory that they do so.

The important issue here is that there be flexibility and that no person would be required by law to retire at age 65. If they are healthy and willing to work beyond 65, they should have the opportunity to do so. They should also have the privilege to retire at age 65 if they choose to do that.

The second part of the answer with respect to increasing the mandatory retirement age or the age at which benefits would cut in, that it seems to me came from a meeting at which a Liberal person made a statement somewhere in Ontario. There is nothing in this document that says that we will increase the age requirement of the mandatory retirement age.

[Supply, February 21st, 1995]

I apologize, Mr. Speaker. I wanted to make it absolutely clear that I was speaking to the Parliamentary Secretary to the Minister of Industry and not transport. I am very honoured the Minister of Transport is in his place this afternoon.

There are a couple of reasons I believe the 3 per cent of the GDP as a deficit is unacceptable. First, I was absolutely amazed to think of where that 3 per cent of the GDP came from. The following question was asked in the House: "Why is 3 per cent such a reasonable goal?" The Prime Minister answered at that point, I believe it was April 11, 1994, by saying: "We have a goal that is achievable to reduce the deficit in relation to GDP to 3 per cent per year. This goal is very reasonable because 3 per cent of the GDP is the requirement for any country to qualify in Europe to use the new currency called the ECU. If it is good enough for all countries in Europe to have that goal it should be good enough for Canada".

Why is that a problem? Is is because Europe has a totally different geography. The economies of the countries making up the European community are very different. The total debt structure is very different. The demographic distribution of population is very different. Their natural resource base is very different. Why is it that should apply it to our country?

If it is good enough for them it ought to be good enough for us only if everything else is equal. Is it really relevant in that situation? I could not help but think of an analogy in our armed services. I thought about the uniforms some of our generals wear. It seemed to me it was something like going to the tailor and saying: "If you want to make a good suit for the Prime Minister, go measure him really well. If the Prime Minister fits the suit it will automatically fit the Minister of Finance". Nothing could be more ridiculous than accepting for Canada a similar goal that is set somewhere else and saying that it should be ours as well unless everything else is the same.

Why do we not have a goal made in Canada for Canadians by Canada's government? That has not happened.

Second, this goal is not acceptable because it is financially inadequate. There is a principle that all governments should observe: governments should not be allowed to spend what taxpayers are not prepared to pay for. The violation of that principle has put us into the mess we are in today. For the last 30 years Canada's expenditures have exceeded revenues. Canada's debt has risen exponentially in the last few years.

Third, foreign investors who hold about 40 per cent of Canada's debt are becoming concerned that Canada will not be able to service its debt. It is not that they are so worried about paying the principal of the debt but they are concerned about being able to service it, that is paying the interest on it.

I am sure it comes as no surprise to anyone in the House that the deficit on an annual basis is made up of the interest payments on the principal of our debt.

There may be those in this House who suggest that the debt problem is really that of more than one level of government. It certainly is.

I go back to the ECU. That 3 per cent GDP figure includes all debt of a country, not just the federal debt. In Canada we are looking at 3 per cent of the federal debt and that is not sufficient.

The suggestion is also made that somehow there is support in the economic community or in the business community for that level. I want to refer to October 18, 1994 when the Prime Minister said: "We have faced up to our responsibilities. We

were the only political party that put in writing in our red book exactly how we would achieve our objective. The financial community thinks that it is realistic and it is a realistic objective. A deficit of 3 per cent of the gross national product is the level required in Europe for all countries in the European community to qualify for the new European currency".

The justification is that our business community supports that. I simply refer to the suggestion that our credit rating will be dropped down. We have had since then a devaluation of the Canadian dollar. We have had an increase in our interest rates. Also I draw members' attention to the situation in November 1994 when foreigners took a net $2.2 billion out of our country. Foreign investors reduced their holdings of Canadian bonds by $4.9 billion, a record for a single month.

Some other points to observe are that by September 1994 Nomura Securities Canada Inc. said that eight of the largest Japanese life insurance companies had cut their Canadian dollar exposure by 60 per cent from the previous year's level, reflecting mainly concerns over currency losses. The Canadian dollar decreased in value while the yen increased in value.

The London based Warburg Asset Management director Tom Berger says that Canadian bonds because of the debtload no longer make up core holding in his portfolio but may be used opportunistically on a short term basis.

Further evidence comes from Michel Doucet, economist for the National Bank, who observed that foreigners sold $3.4 billion of Canadian bonds in the secondary market in November 1994 alone reflects a loss of confidence in Canadian bonds.

One of the reasons investors are worried is that the debt is rising faster than the economy. Particularly they are worried that the government will relax its hold on inflation targets and that the currency will devalue as a result.

There are serious implications of the Moody's situation. I think it was two days ago that the president of Sun Life indicated that there is enough discomfort by that sort of thing happening that we rebegin to question whether the superintendent of financial institutions through the office of the superintendent of financial institutions is inadequate to control and monitor meaningfully the financial institutions of Canada.

All we need to do here is milk the special white paper that was introduced last week by the secretary of state for finance. It is worthy to note as well that nothing has been said about the implications of the goal for our chartered banks and other deposit taking institutions of those kinds of downgradings.

Let us not forget the billions of dollars that are found in RRSPs, GICs and other debt instruments. With one stroke of the pen to decrease the value of the Canadian dollar, a lot of damage can be done to the savings of Canadians.

There is a third reason this is an inadequate target. It guarantees further indebtedness. At the rate of $25 billion per year, that means that there will be a $100 billion addition to our debt every four years.

It is already growing faster than the rate of the GDP. That means it is as if the value of one's house were going down while the cost of one's mortgage was going up, a formula for disaster.

Let us review some of the recent experiences with reducing the deficit as a proportion of GDP. In 1991 the deficit was 6.6 per cent of the GDP. In 1992 it was 9.1 per cent. In 1993 it was 7.1 per cent and in 1994 it was 6.5 per cent.

From that vantage point alone it seems a bit far fetched that all of a sudden we are going to get to 3 per cent. Canada's economy has been strong because the U.S. economy has been strong.

There are now some pretty clear indications that the prospect of the U.S. economy continuing to roll along is not going to happen but that it is slowing down. It is likely that we are nearing the end of the current North American business cycle. That will make it increasingly difficult for the Minister of Finance to reach the goals he has set.

Three years have been wasted. It should be no surprise whatsoever that business leaders and credit rating agencies have difficulty believing that the minister is serious about dealing with the deficit.

The other part of the problem is the composition of the contemporary welfare state. Our welfare state works at the present time so that deficits rise when recessions hit and fall when the economy grows. Let us look at this in more detail.

Canada's deficit soared nearly 7 per cent of GDP after the 1981-82 recession but was under 3 per cent of GDP in 1988-89 after several years of solid growth.

This time in this increase the economy has been growing since 1992 but because of Ottawa's position of inaction we have seen no improvement in the deficit and that is where the problem is. It affects the levels of all governments to borrow for their needs for capital expenditures such as roads, schools and things of that sort. There will always be a need to borrow money. If our credit rating drops down it will impact our ability to do so.

If we use our credit to finance current expenditures for education, health and welfare we will be unable to finance those projects that are in themselves revenue generating. That situation compounds a difficult situation into an escalating and worse position.

I think this particular goal is deceptive. It sounds so good to be able to say 3 per cent of GDP. It is confidence generating-they have a number, they have to be right. The result is that the number, as we have indicated previously, cannot improve the long term health of our financial position because it will increase the debt of our country.

It is illusionary. The deficit will never be eliminated by a goal where the deficit is a proportion of the GDP. It means a perpetual deficit and the accumulation of more debt.

It transfers more of our responsibility not to ourselves but to future generations, in particular our children and our grandchildren. Instead of providing them with a more promising future we are saying they are going to pay more and more for the lifestyle that we ourselves were not prepared to pay for.

It reduces the attractiveness of Canada as a place in which to invest money. Another reason why I believe this particular goal is inadequate is that it is manipulative. It creates the illusion as if something is being done when very little is being done that would instil confidence in investors and credit rating agencies.

While Canadians on the one hand are urged to plan for their retirement, their children's education and so on, it is clearly known by the Minister of Finance that in pursuing this particular course the government's inaction will erode the future purchasing power of those savings through inflation and increased taxes.

Thus what appeared to be a very well planned RRSP turns out to be a mere existence under the new economic conditions. Canada pension plan contributions were said to be deposits for the future of the depositor so they could retire in comfort, but the legislative provisions for the investment of those funds mitigated against them. Many of the returns on those invested dollars were uncompetitive.

For these reasons I believe that this particular goal is inadequate. It is inadequate because the target was chosen not for Canada but for another series of countries. The fact that it is a rolling goal over two years and so on is not acceptable, as we heard so aptly this afternoon. It is based on the goal that we are supposed to be able to continue to grow and develop when there is nothing in the history of Canada so far to indicate that will take place. It is inadequate because it is not an honest position of giving hope to future generations. It saddles them with the responsibility of paying for a lifestyle which they did not enjoy but which we did.

That is a moral question as well. I believe that I should be held accountable and responsible for the things that I enjoy and the things that I want to do. I should not go to my children and say I want to drive a new car, I want to be able to do all of these things and they are going to pay for them.

This goal is a disincentive not only for us if our taxes are going to increase, which I understand from the minister, not directly but indirectly that they will, but it is also a disincentive in the sense that it provides little or no hope for our young people who will look forward to an increasing burden of debt. Is that the legacy we want to leave them? No, that is not what we want to leave them.

Much has been said this afternoon about compassion. The greatest compassion we can have is give to our young people the hope of living a better life than the one which we have enjoyed, to give them a tax burden which is less than ours, not greater than ours, one in which they will be able to initiate their own ingenuity, their own entrepreneurship, their own aggressiveness to be able to build a life which is self-satisfying and fulfilling, better than the one we have been able to give them.

We have not been giving them the example of managing money successfully and effectively. We have given them the impression that government can answer all questions, government can do all things and government can give them jobs. The answer is that government can do none of those things. As the parliamentary secretary said so clearly, it creates the environment in which these things can happen. This goal destroys that environment. We must change that. We must stop that and bring about a deficit which will reach zero in three years. That is what our plan is. That is what our party stands for. That is true compassion.

[Supply, February 21st, 1995]

Mr. Speaker, I rise to debate the subject of whether the 3 per cent of GDP is acceptable as a target in reducing the deficit. My answer to the question is no, it is not acceptable. It is unacceptable for a number of reasons, but before getting into my more formal remarks I wish to compliment the Parliamentary Secretary to the Minister of Industry. Once again he has demonstrated that there is at least one member on the other side of the House who actually reads some of the material we present.

You are the parliamentary secretary of industry and not of transport. I am so happy the minister-

[Petitions, December 9th, 1994]

Mr. Speaker, finally, petitioners request that Parliament refuse to accept the anti-firearms proposal of the Minister of Justice and insist that he bring forward legislation to convict and punish criminals rather than persecute the innocent.

The last petition represents a number of constituencies, including some petitioners from Okanagan Centre. The other four petitions are all from constituents of Okanagan Centre.

[Petitions, December 9th, 1994]

Mr. Speaker, the fourth petition deals with not allowing the amending of the human rights code to include in the prohibited grounds of discrimination the undefined phrase of sexual orientation.

[Petitions, December 9th, 1994]

Mr. Speaker, the third petition has to do with the witness protection act. The petitioners pray that Parliament enact Bill C-206 at the earliest opportunity to provide the statutory foundation for a national witness relocation and protection program.

[Petitions, December 9th, 1994]

Mr. Speaker, the second petition deals with assisted suicide.

The petitioners ask that the prohibition of assisted suicide be enforced vigorously and that Parliament make no changes in the law which would sanction or allow the aiding or abetting of suicide or active or passive euthanasia.

[Petitions, December 9th, 1994]

Mr. Speaker, I have several petitions to present this afternoon. The first petition asks that the protection enjoyed by born human beings be extended to unborn human beings.

[Department Of Industry Act, December 7th, 1994]

Madam Speaker, it is my pleasure to participate in the debate. I did not reckon to stand to debate this bill. I want to recognize the chairman of the Standing Committee on Industry with whom it was a pleasure to work during the last number of months. I look forward to continued work with him. There are times when we need to recognize good work that is being done.

We also want to recognize that this bill is probably one of the most significant pieces of legislation that has appeared before the House.

It has been interesting to watch the progress of the bill. I am pleased to acknowledge and to recognize that Reform was able to achieve certain amendments in committee. This shows there is a role for the opposition even though we do not have as much influence as we would like to have. However sometimes good sense does prevail and even the government side recognizes common sense.

It has been a pleasure to address the House on several occasions on different parts of this bill. To date, I have spoken more specifically to its particular aspects. This afternoon, I wish to look at certain other aspects. For example, I have spoken in the past about the need to curb the power of the minister to dispense public funds with impugnity, to intervene in the economy and to pick winners and losers.

I have spoken of the need to eliminate regional development as an economic tool of not only this minister and his department but of the government as a whole. I have spoken of the need to curb the powers of centralized economic planning that the bill imparts to the minister and to the cabinet. I have spoken about the disappointment, and even to this day, the lack of efficiencies realized in the amalgamation of the four departments that came together last year to form this new industry department.

I have spoken of the lack of vision that the bill represents because in reality it is nothing more than a rubber stamp of Tory policy set by Prime Minister Campbell last year.

I have spoken about the confusion created by having responsibility of aboriginal economic matters in this department and not in the Department of Indian Affairs and Northern Development.

I have spoken about the need to provide for interface between departments, for example with Heritage Canada and the Department of Communications.

I have spoken about the confusion over technical and spectromanagement and who is really in charge. I have spoken about Heritage Canada and neighbouring rights and the questions of overlap and jurisdiction.

I have spoken about this and more in the time I have had, only to scratch the surface. Today we will look at some of the fundamentals, the principles and the challenges that are involved with this department and the future that it faces.

Where are we now? Bill C-46 puts into effect the machinery for the new Department of Industry. In my opinion this is the most important department in government. Why? Because in effect it constitutes the engine that will bring about the economic growth and development of our country.

By that I mean it is the department that is directly responsible for shaping the way businesses, both large and small, function in our economy. The department is responsible for science and technology. It is responsible for directing research and development. It is responsible for shaping a good chunk of the regulatory field under which business operates. It is, in conjunction with the Department of Finance, responsible for establishing the banking environment, both public and private.

In short the department influences most of the important economic levers in Canada and for that reason I call it the most important department in government. It allows Canadians to achieve their most fundamental goals, that is the acquisition of food, shelter and clothing. It helps to structure the economy so that we can work to provide ourselves with these things.

Under the new law this department is both powerful and weak. It is powerful because the authority granted to the minister under the bill allows that minister the opportunity to intervene directly in the marketplace through various instruments and actually have the power to pick winners and losers.

It is powerful because of the financial consequences of some of its actions. It is powerful because of its control over small business through the various programs that are geared to that sector.

Yet under the bill the department is also a weak one. For example, the department has a very poor record of success when it comes to its more famous interventions on behalf of certain businesses and sectors, Canada's well known corporate welfare recipients such as Bombardier, de Havilland, SNC, MIL Davie, and others.

The department is weak because it has not been successful in achieving its goal of revitalizing regional economies through its regional development programs. It is weak because of the inefficient path it sets for science and technology investment. It is also weak because it has great difficulty resisting the urge to micromanage Canada's economy on a sector by sector basis.

It is also confusing in the number of responsibilities the department carries. May I just give a brief list of what some of those are. It is not a complete list.

Based on this bill and what is in the main estimates, this department is responsible for a variety of quasi and independent agencies and tribunals which include the following: the office of the federal chief negotiator, internal trade negotiations; the office of the chief scientist; the Canadian aboriginal economic development program; Canadian Workplace Automation Research Centre; the Defence industry productivity program; the Canada scholarships program; the Information Highway Advisory Council; the National Advisory Board on Science and Technology; the Industrial research assistance program; the remnants of Investment Canada; the Canadian Network for the Advancement of Research Industry and Education, commonly known as CANARIE; the Natural Sciences and Engineering Research Council; the Federal Office of the Regional Development-Quebec, which requires an order in council to pass these responsibilities to yet another minister, the Minister of Finance; regional development in northern Ontario under FEDNOR; the network of centres of excellence, the National Research Council; the Social Sciences and Humanities Research Council; the Standards Council of Canada; the Canadian Space Agency; the Communications Research Centre; Statistics Canada; Emergency Preparedness Canada; the Bureau of Competition; the Copyright Board of Canada; and more. It is pretty clear from this admittedly incomplete list that the minister has a wide range of responsibilities which makes it difficult for the department to develop and keep a clear focus.

What is the bottom line? The bottom line is a challenge to create a Department of Industry for the end of the nineties and into the next century that is efficient; that makes the right decisions for the economy when needed; that is administratively sound; that is co-ordinated properly and carefully with a concerted focus on providing the best service for the least cost as its private sector clients are required to do; and most important and above all, that is fiscally responsible and uses available dollars in a way that produces maximum possible return for the taxpayer while exposing that same taxpayer to the minimum possible risk.

This fiscal emphasis must recognize the fundamental tenet that the marketplace is the best equipped to do something and to help business operate. The marketplace should be allowed to proceed without undue interference from government.

In short, the role of government should be to set the department in such a position that its mandate is to establish and maintain a culture which rewards entrepreneurship, innovation and research, and that it ensures a level, competitive and honest marketplace. That is the way in which the department should be organized.

Where do we go from here? In terms of small business we should recognize that it is probably the single most important sector in the Canadian economy. Why? It is because it creates the lion's share of new jobs in the country. We all know that when people are working, the country and taxpayers benefit most.

The government's approach to small business should be based on sound fundamental principles. The government's own recently published paper by its small business working committee stated a set of principles for growing small businesses. It said that the government should have the following priorities.

The government should be removed from the market to let it function freely rather than seek to influence or distort it. The government should restrict its own activities to fulfilling gaps not currently served by the private sector. It should do so on a temporary basis until the private sector can take over. It should redesign the taxation system as a vehicle for economic development rather than its current narrow role as a generator of tax revenues. It should focus on helping small businesses access the information and intelligence they require. These are four very significant foundation setting principles given to the government by one of its own committees.

I have spoken before in the House about the report of the Standing Committee on Industry entitled "Taking Care of Small Business" in which the government could find much in the way of directing its activities to actually influence our economy to reach the goals that need to be reached.

I focus now on the other sector of business, large business. Government can rely on the same principle enunciated just a moment ago. I would encourage government to refrain from undue interference through grants, contributions, subsidies and bail outs of large and small businesses.

It may seem harsh to some on the government benches, but if the free market decides that a company should fail as a result of its own activities then the government has no business intervening to save it. It is just that simple.

We have too many examples of corporate welfare in Canada which highlight how wrong a policy of intervention can be. Certain names in the corporate community are synonymous with government largesse. For this past taxation year alone, based on the public accounts, we are reminded of how extensive the problem is. I want to give some examples.

Bombardier received from the federal government a little over $21 million; SNC Lavalin received over $1 million; Boeing received $3.7 million; Litton Systems, over $4 million; Pratt & Whitney, $36 million; Canadian Marconi, $10,750,000; Apotex Pharmaceuticals, $3.3 million; and de Havilland, $81,350,000. That is just a short list; the list goes on for pages. It is the tip of the iceberg and is only for last year.

It is easy to understand why companies would take advantage of government largesse. They would be crazy not to do so. If we are dumb enough to give it to them, they are smart enough to pick it up. The point is that government should not offer it in the first place.

Big business also must reverse its attitude that government's role is to pay to ensure its survival and must stop reinforcing that notion. A good product or service, a sound knowledge of the marketplace and an efficient business plan will ensure survival and jobs on a permanent or long term basis without an expenditure or burden on the taxpayer. Let the marketplace decide.

I focus now on the area of science and technology which requires a very significant and comprehensive overhaul. The Auditor General cited in his report this year how poorly the government had done with respect to spending $7 billion. He made several useful recommendations in this area.

He said that priorities needed to be established, including what is the need, what is the opportunity and what is the potential payback. This will require co-operation among all stakeholders. Overall performance must be monitored, according to the Auditor General, to measure success and provide a framework with indicators for that performance. When that is established the program can go ahead with some success.

Then he went on to say that our science and technology strategy should be appropriate, should be balanced and should be workable. He then said that parliamentarians-that is those of us in the House of Commons-have no basis under the present arrangement on which to assess whether the government's expenditures on science and technology reflect Canadian needs and opportunities and to hold the government accountable for results. Implementing his recommendations as soon as possible should therefore be a critical priority for the government.

These are some of the items that need to be looked at in terms of getting the department to work at the cutting edge of economic development in the next century.

Some members of the government respect and appreciate these approaches. The minister's parliamentary secretary, for example, is forward thinking in many ways. He is the leading proponent of some very positive changes in Canada's taxation system. His flat tax proposals have generated much interest with academics and economists alike. Many of my colleagues including myself on this side of the House find his ideas intriguing and worthy of considerable study with likely implementation. We hope he can convince his colleagues that it is the proper way to go.

In addition, there are two ministers for whom I have a lot of respect: the ministers of industry and finance. They both seem to have a good grasp of what needs to be done and what the direction should be for the future. I believe their personal philosophies tell them we cannot continue with business as usual. We require some radical shifts in our fundamentals. Unfortunately the two ministers appear to be having some difficulty with their cabinet colleagues, some of whom are still pursuing the thinking of the past that put us into the mess we are in today. This is reflected in the strategies released by them.

What is the government attempting to do now? I would like briefly to look at this point on a couple of fronts. First is the orange book that was delivered on Monday morning. The minister released the government's new industrial strategy in an orange coloured book. The report was praised by the Globe and Mail and others for its sound forward thinking principles. However many business groups have said that it is short on detail. The content seems to be based on the old thinking that we know does not work any more.

An example is the government's proposed increase in the ceiling for the loans it guarantees under the Small Businesses Loans Act. It is well known that some of the banks are using this program to grant loans to businesses that would otherwise qualify. That is not the purpose of the act.

If the free market were allowed to operate and prevail, as I have suggested, there would be no need for such a program. Businesses that were sound would be considered a secure risk by the banks and receive their loans. Those that were not would not get a loan and would not require the subsidy. This is as it should be. The government should not be encouraging the banks to lend by assuming most of the risk on the taxpayer's back rather than the operation of the market forces.

Banks in Canada show a profit of over $4 billion, referring to the big chartered banks, for this year. They should be accountable for the risks they make and not depend on the taxpayer to underwrite their small business loans.

Moreover the orange book fails to address the most pressing problem identified time and time again by businesses, that is the business of overbearing taxes. We are overburdened with taxes and that is true of business. The way to address the tax burden problem is to reduce spending which in turn will allow us to curtail the deficit, begin to deal with the debt and in turn reduce onerous tax levels, interest rates and the cost of doing business. That creates jobs.

If the government really wanted to lay out a comprehensive, coherent, industrial strategy for the coming century, it would focus its energy on creating a climate for entrepreneurship. It would create an environment in which the free market could work and would stay out of it to the greatest degree possible.

Some positives in the orange book include the government's commitment to reduce the paper burden, that is to get businesses off the government payroll and back working for themselves as they should be. The paper also recommends expanding our foreign trade horizons, a natural for building more business.

Now I come to the restructuring which was also a positive part of that book. The minister has indicated in the House that his department faces up to a 50 per cent reduction in its overall budget inside of the next two years. I wish him much success in his endeavour and will help in whatever way I can.

Coming back to the Auditor General, I have a few more words about what he said. The government spends $7 billion each year on science and technology research, $6 billion directly and $1 billion in tax credits. The Auditor General concluded that there was a lack of overall government-wide leadership, direction and focus on results and accountability for implementing desired changes. It is gone; it is not there. Then comes his most shattering statement. He said that Industry Canada, the department, was not well positioned to provide effective leadership among departments with science and technology responsibilities. That is the Auditor General's conclusion. I fail to see in this reorganization how that will be resolved.

The science and technology consultations that were conducted under the Department of Industry produced nothing but the regurgitation of the same problems identified 30 years ago. The orange book industrial strategy shifts the money around and increases the government's liability in favour of the banks. The reorganization was dreamed up by Kim Campbell and others. It

does nothing to deal with the problems identified by the Auditor General.

In conclusion, I return to the principles enunciated earlier. We know the foundation needs to be an efficient, administratively sound and fiscally responsible department that encourages a sound environment so that business can build and support itself. Our science and technology policy must have an eye to the needs and opportunity for potential advancement.

I encourage the minister to move ahead with aggression, courage and success as he reduces his department, as he makes it fiscally responsible, and as he gives it the direction to meet the needs of business and the needs in terms of science and research so we will become the economic leader in North America that we could be. We have tremendous talent in our people. We have tremendous resources. This department could marshal the resources and bring it together so that all of us benefit. I wish him good luck and Godspeed.

[Job Creation And Economic Growth, December 5th, 1994]

Madam Speaker, it is a privilege and very exciting actually to be participating in response to the minister's statement. I think there were some very positive things said by the minister and I want to commend him for those kinds of things, particularly for the fact that he recognizes that there is a problem. The difficulty is that I am not quite so sure that he has a solution to the problem. This is where I think we have to focus our attention.

It is very interesting the way this particular paper has been presented to us. The first omission I find that really bothers me a lot is that there is no particular and no direct reference to the recommendations that were contained in the "Taking Care of Small Business" report by the Standing Committee on Industry.

There were many recommendations in that particular report that gave direct impetus to the kinds of strategic planning that ought to be done in the Department of Industry and in the government at large.

It became very clear during that particular discussion that there was a major gap in the recognition of the contribution that small business makes to the creation of jobs in Canada. It is true that there have been a number of new jobs created in Canada but for the government to take credit for this is not correct. The jobs were created by entrepreneurs and those people want to develop themselves.

I commend the particular suggestion that there is going to be a particular place for small businesses to enter into government procurement contracts, contracts that are $125,000 or less but larger than $25,000. It raises all kinds of interesting questions that my hon. colleague raised not so long ago when he spoke about a particular department other than the Department of Industry in which certain contracts were divided up into smaller components so that indeed they would not have to meet certain regulatory provisions.

Is this a possibility now that certain procurements may be made so that larger procurements will be broken up into $125,000 ones, or will that not be the case? Will others be combined? This not clear.

I want to pay particular attention to the Small Businesses Loans Act. That ceiling was increased from $4 billion to $12 billion. The Canadian Federation of Independent Business says that particular program is not working so well. This morning I heard the hon. minister say on Canada AM that small businesses liked it so much that they used it up right away, within 18 months of it having been increased.

The interesting thing is that banks have to a large extent used the SBLA to cover their particular risks, so that it became a subsidy to the banks. It is small wonder that with this kind of help the larger banks in Canada can show a combined profit of something like $4 billion. Is this the kind of thing that small business is supposed to be supporting, so that the big banks can

make big profits like that? The Small Businesses Loans Act had no small contribution to that particular sector.

That is not all. The other part of this is that there seems to be a suggestion that subsidies and grants to businesses create jobs. I submit to you, Madam Speaker, and to the minister and to this House that is probably false, that in fact when you have a subsidy which may create a job over on this side, it loses a job over on the other side because this business over here has to pay larger taxes, has to pay increased interest rates in order to subsidize that particular business over there. That is misleading if nothing else.

There is another thing that happens when you do this sort of thing. You divert investment from those businesses that are solid to those businesses that have some kind of artificial government support and shoring up.

Business should be allowed to stand on its own feet. Where I commend the minister is where he says that the government should create an environment so that private businesses can succeed. I endorse that 100 per cent. I commend him for that statement. Now may he go ahead and prove that he believes that by taking away subsidies and grants for small business.

Much was made about trade and much was made about the imbalance in trade when it comes to tourism. There is a suggestion that some $100 million is going to be spent in the tourism industry, approximately $50 million for the setting up of a tourism commission, another $50 million from $15 million, so it is not quite the $50 million in addition, for a promotion budget that has been increased from $15 million to $50 million. That suggests more than a triple amount of dollars spent in promotion.

I ask the minister and the House whether they really believe that spending three times as much money will result in three times as many tourists coming to Canada and spending three times as much money than if that promotion budget were not there.

Madam Speaker, I suggest to you that there may be an increase but it will not be in direct proportion to the increase of public spending in that particular sector.

The minister said not too long ago and he states in his orange book that the solution is not in throwing dollars at a problem but rather to solve the problem. The best people to solve the problem are the entrepreneurs. They understand the business. They understand the marketplace. They know the value of the dollar. They know how to efficiently deploy those dollars. They know how to employ people. They know how to get good work out of people. Throwing dollars at the problem is not the answer. We need to recognize that applies in the tourism industry as well as in every other industry.

There has been a suggestion that the infrastructure program is a major innovative development in this particular strategic document that has been presented to the House. The infrastructure program that currently exists, I believe it is $6 billion on the one side and that is going to be matched by the provincial government and the municipal government, is a beautiful pot of money. It has become known in many quarters as boccie Canada, and builds boccie courts.

The infrastructure program needs to be recognized for what it is. It is a program that benefits particular places. I want to really commend the British Columbia government. So far I know of no instance, and there may be some since I last looked at the list, when the money has not been spent on bona fide infrastructure programs such as highways, bridges, water systems, sewer systems, things of that sort. That is significant but building boccie courts is not. Building canoe museums is not. These are the kinds of things.

I want to move into another area which has to do with the science and technology program. We have had a review this spring of the science and technology program all across Canada and we had the hon. secretary of state go across Canada holding various discussions with business people, interest groups, looking at what should be done in this particular area.

Three things became very clear. When they put together the summary forum which took place here in Ottawa in mid-October they came up with a bunch of round tables with some very high powered, highly trained, highly developed and intelligent people who made some beautiful statements. When I examine those particular conclusions and compare them with conclusions of 1940, 56 years ago, there are in many instances very few substantive differences between the problems articulated today and the problems articulated some 50 years ago.

When a noted journalist put things together and compared the two he recognized, in particular when it came to the industrial application of the technological and scientific studies and R and D research that had been done primarily through government funding, that the minimal effect was industrial application.

Some $6 billion is being spent in that area plus $1 billion being spent on tax credits. That is a total of $7 billion. In this fall's statement the Auditor General said that we were not getting an effective resolution and application of those dollars. We were not getting the kinds of results we should be getting.

The time has come for us to do some new thinking, not to go through the old thinking and do it all over again. We know what the problem is. It is time we build a new innovative economy

that provides for the private entrepreneur the ability to make money and to give everybody jobs.