Gurmant Grewal

[Canada Small Business Financing Act, November 23rd, 1998]

Mr. Speaker, I am delighted to speak to Group No. 5.

Group No. 5 contains two motions, Motions Nos. 9 and 10. Both these motions are presented by the hon. member for Saskatchewan—Humboldt. I appreciate his vision, the way he thinks, in terms of his amendments to the Small Business Loans Act.

Motion No. 9 reads:

That Bill C-53, in Clause 14, be amended by replacing line 22 on page 7 with the following:

“subject to subsections (2), (3) and (3.1), on the recommenda-”

What this means is that two sections in the regulations under paragraph 1 shall be made on the recommendation of the Minister of Finance. Whereas under subsection (3) of the bill, the minister shall call for a copy of the regulations proposed to be made under subsection (1) to be laid before each House of parliament before it is made and the House shall refer the proposed regulations to the appropriate committee of each House.

This is a housekeeping amendment that I am delighted to put in order.

Motion No. 10 reads:

That bill C-53, in clause 14, be amended by adding after line 19 on page 9 the following:

“(3.1) No regulation made under subsection (1) shall come into force unless and until it is affirmed by a resolution of both Houses of Parliament introduced and passed in accordance with the rules of those Houses”.

Let me give our rationale for this amendment. This amendment is brought forward in order make the bill's regulatory process more open and accountable. What Canadians want from this government is accountability in Bill C-53 which deals with the Small Business Loans Act. We need the process to be more open, transparent and credible.

By tabling regulations in parliament and having the House or a committee subsequently pass them, an effective check is placed on the departmental officials' ability to arbitrarily implement changes in legislation. That is important.

The Liberals passed the following amendment at a clause by clause committee consideration:

(3) The Minister shall cause a copy of each regulation proposed to be made under subsection (1) to be laid before each House of Parliament before it is made.

This is wholly inadequate. Reform's amendment at clause by clause stipulated that the regulation itself, not a draft of the proposed regulations, be put before the committee. Also, Reform's amendment placed a 15 day timeframe on the committee reporting the regulations back to the House. There is no similar requirement in the Liberal amendment. That is why this amendment becomes important.

There is a widespread problem where departmental officials and the minister's officials will bring regulations through the back door what they would not or will not spell out in the legislation. We do not want to fool anyone here. We want the legislation to be transparent, open and accountable. We do not want a back door open to introduce these regulations. Reform is opposed to this practice, and this motion attempts to remedy that.

The Liberals voted against our motion and passed their watered down version. That is why we are trying to move this one again at report stage.

The Minister of Industry tabled with the committee, on three days short notice, the parliamentary draft of regulations for Bill C-53. It consisted of 25 separate sections dealing with changes in the approval or application process. Not one of them dealt with the most contentious issues like expanding the parameters to include pilot projects for volunteers and capital leasing.

It is very important to discuss these issues in detail but unfortunately the government has put time allocation on this so that we cannot debate and argue those issues.

While every regulation made by the government stands permanently referred to the committee for the scrutiny of regulations, that committee does not have the authority to revoke the regulations. The hon. member knows very well. It merely has the power to recommend a disallowance. It cannot revoke. It can just disallow.

In the absence of a statutory disallowance procedure, abuse of the regulatory process by officials and ministers has taken place in the past. There is the recent example of aboriginal-only fisheries. Beyond that, the scrutiny of regulations committee has a very narrow band in which it can recommend action on any regulations. That becomes the place where Canadians cannot raise their argument, where Canadians cannot discuss the advantages and disadvantages. We do not get the opportunity to debate. That is the point I am trying to make here.

In many cases there is an unfair onus to prove through legal precedent that the regulation is ultra vires of the Constitution. In such cases this is impossible to do because the regulation has never before been implemented. It cannot have been challenged before a court because it has not been tabled before nor has it been implemented.

Like an iceberg, legislation like Bill C-53 provides only 10% of the equation. Only 10% of the equation is provided by the House. The other 90% comes from the back door via regulations from the minister after the legislation is passed in parliament. What good is this debate?

What good is this debate if we only have 10% of the agenda before us while 90% or some significant amount is added through the regulations? That is what we are trying to stop. That is why we want the system to be transparent and accountable right here in the House where we are debating the bill. Having regulations reviewed by parliament ensures a modicum of accountability rather than just a rubber stamp of approval by the minister. We cannot have that shoved through the opposition or through the members and we cannot have that pass through this House.

Bringing regulations before parliament ensures the publication process and review of regulations is more open to the public. Witnesses can add their concerns or bring about improvements. They can do so in more of a public forum. As it is now the publication period merely allows for the opportunity to comment. Comments are reviewed by officials within the department. In many cases they are the same people who drafted those regulations. So where is the justification? As such they must be seen to be in a conflict of interest position.

With respect to changing the wording of the regulations, the prime example is the Canadian food and restaurant association. It has serious problems with the regulations that were given to committee members only last week. The regulatory process is largely unacceptable to Canadians. Putting it before committee would to some extent allow for more public input by stakeholders.

I will be supporting the motions put forward by the hon. member for Saskatoon—Humboldt.

[Canada Small Business Financing Act, November 23rd, 1998]

Mr. Speaker, I spoke to the earlier amendments and I am delighted to speak to the amendments put forward in Group No. 4, Motions Nos. 7 and 8.

Motion No. 7 was put forward by the official opposition. Motion No. 8 was put forward by the Bloc. I will be supporting Motion No. 7, but I have no reason to support Motion No. 8.

Motion No. 7 would entirely delete two pilot projects aimed at expanding the loans program to the volunteer and capital lease sectors of the economy. Capital lease ventures are those in which the major assets of the business are leased. This serves to lessen the amount of money that can be recovered from the sale of assets in the case of default. The volunteer sector is made up of not for profit organizations. The Reform Party can rightly question why the taxpayer should be guaranteeing loans made to non-profit organizations.

The Reform Party opposes the initiative outlined in clause 13 of Bill C-53 as it represents a broadening of the program that we cannot support in principle.

The Small Business Loans Act is intended to help small businesses in our economy. Small businesses are the engine of the economy. They keep the economy running. Ninety-six per cent of the jobs in this country are created by small businesses.

The Liberal government promotes bigger and larger businesses. It forgets about the small businesses. Small businesses are already under pressure. They have to pay high premiums for employment insurance. They have to pay high premiums for the CPP. They have all kinds of red tape. Government is on the backs of small businesses.

On the contrary, the government is giving subsidies, guarantees, loans and all kinds of good things to big business. Recently the government gave a $25 million tax free loan to Bombardier. The government is taking care of big business, not small business.

When the government expands the scope of the SBLA to volunteer or non-profit organizations, it deprives smaller businesses of the opportunity to get financing from this program. The intent of the act is therefore defeated. Neither my colleague nor I can support this expansion of the Small Business Loans Act.

Motion No. 8 was put forward by the Bloc. It would effectively expand the loan provision contained in the pilot project advanced by Bill C-53. This pilot project includes the ability of industry to grant loans to the volunteer and capital sectors of the economy. This would deprive entrepreneurs of the opportunity to start a business and create jobs.

The Reform Party is fundamentally opposed to expanding the loans program to include volunteer organizations in our economy. All our MPs will support the initiative or any amendment to enhance prospects to help small business. Based on that our position is very clear. We cannot support any amendment or any of the sections which will expand the scope away from small business to anywhere else.

The auditor general clearly identified in his report that larger organizations had been taking advantage, that smaller organizations had been collaborating, and that subsidies applied to other organizations that had received further loans. The system has already been abused. The auditor general has made some clear observations in that regard.

Rather than clarifying the situation, making it simpler and focusing on small business, the government intends to diversify the scope so that small businesses will have to compete with medium and larger organizations for financing. Through this amendment they will have to compete with non-profit and volunteer organizations.

If government wants to support volunteer organizations there are other means to do it. We do not mean that volunteer organizations should not be supported, but they should not be allowed to compete with smaller businesses.

The government always gets things wrong. It has been supporting larger businesses. I gave an example the other day of being on the verge of an storm. When the storm comes the bigger trees will fall and the smaller plants such as the grass will remain green. Small organizations have this ability because they are grassroots organizations run by between two and five individuals, but they will only survive the storm if we support them. We need to nourish the small business sector of our economy if we want the system to work.

In summary, government should set things right in terms of how the economy works. The government should look at employment records to see who creates the jobs. Many times the government pats itself on the back because it has created jobs. It is not government that creates jobs. It is the small business sector or its entrepreneurs that create jobs.

I have been an entrepreneur. I have been involved with small businesses from time to time. I understand as many other small business entrepreneurs understand. Small businesses are independent organizations. The small business organization, the CFIB, has 90,000 members. It has been pleading with the government to ensure small businesses can take advantage of the act.

In a nutshell I ask government members to look into the effectiveness of the program to ensure that it achieves the objectives for which it was intended. With these observations in mind I am hesitant to support the amendment made by the Bloc, but I will support Motion No. 7 put forward by the hon. member for Saskatoon—Humboldt which highlights the withdrawal of that clause.

[Canada Small Business Financing Act, November 23rd, 1998]

Madam Speaker, I was leading into the debate but I wanted to show my disappointment that the Liberal government has used time allocation or closure 44 times since it came to power. We have more speakers. I was sitting here waiting for my turn. More speakers are coming up and they will be disappointed.

Getting back to the bill and the group of amendments, I have read the bill very thoroughly. I attended the auditor general's briefing on Bill C-53 and the Small Business Loans Act.

From the beginning I have been addressing the issues on Bill C-53 and the particular amendments. I addressed this bill at the first stage. I proposed right from the beginning certain amendments or recommendations and I am very delighted to speak on those recommendations.

Group No. 3 contains two motions, Motion No. 6 and Motion No. 11. Motion No. 6 deals with clause 8 and Motion No. 11 deals with clause 15. I will go over these clauses separately. These amendments are put forward by the official opposition. I am very delighted to speak on them and I will support them.

Clause 8 deals with the liability of the minister. We are proposing that the liability should be reduced to 50%, or any prescribed lesser percent. The rationale behind that reduction of the liability of the government is that lowering the percentage of the government's liability for a defaulted loan means that the lender must also assume a larger portion of any loss. By lowering the government's liability from 85% to 50%, the lender also assumes a greater risk in making the loan. In fact the risk would be equally shared.

The default rate under the old Small Business Loans Act was nearly 10 times higher than that in the private sector. This bill does not provide an adequate review of risk analysis. There is no provision for losses. Borrowers are not guaranteed but financial institutions are guaranteed. If bad decisions are made by the financial institutions, they are guaranteed.

Furthermore the bill does not put a mechanism in place to prevent financial institutions charging administrative fees when small businessmen go to them for loans. They should not be charging a fee in the first place but the auditor general has reported that they have been charging a fee in the past.

By lowering the government's liability from 85% to 50%, it will be the lenders who will be given more responsibility to share the risks.

The auditor general has noted various cases where major borrowers were able to obtain numerous loans with totals exceeding certain limits because they were operating the same businesses. In one group, 23 related corporations obtained more than $4 million in loans.

This practice are contrary to the intent of the act. Currently there are no provisions under the Small Business Loans Act to prevent this practice, even though such rules exist under the Income Tax Act. That act has provisions designed to limit access to the corporate tax rate for small business and to prevent abuse by the creation of a number of related corporations. The government needs to address that issue more rigorously in the bill.

I am delighted to support Motion No. 6.

In Motion No. 11 we are making an amendment in clause 15 which deals with the audit or the examination of various files. We are recommending that lines 20 to 22 on page 9 of the bill be replaced with “the minister will routinely conduct an audit or examination of the” files.

Industry Canada does not audit any account until the file becomes a claim file, which is absolutely wrong. It should audit files that need to be audited.

The rationale in putting forward this recommendation is that as presently worded Industry Canada officials must give written notice to a lender before conducting an audit of the lender's records or documents. This change would allow officials to conduct an audit routinely. Moreover, they could do so whenever they desired. It would ensure federal accountability in the process.

The December 1997 auditor general's report highlighted examples where lending institutions have not exercised due care in making a loan. In short, better auditing provisions need to be in place and it becomes very important that we deal with these issues.

Industry Canada introduced a policy of full cost recovery for loans issued after April 1, 1995. The department reduced its loss sharing ratio from 90% to 85% and imposed on lenders a 1.25% annual administration fee. According to Industry Canada projections, these modifications to the program should result in full cost recovery over a 10 year period.

The auditor general has reservations regarding the department's ability to move toward full cost recovery, noting an increased proportion of riskier loans in its guaranteed loan portfolio.

An internal study undertaken in 1997 by the department confirmed a significant increase in risk in the program's loan portfolio, stating higher default rates which are occurring earlier in the life of a loan. As a result, the auditor general urged the department to undertake greater efforts to develop systems and practices to better evaluate program performance in order to assist in monitoring loan portfolio risk so that smaller businesses get the benefit from this whole program.

The auditor general recommended that industry take steps to ensure that lenders have complied with the regulations of this act. It was found that some loan files did not contain the information necessary to perform a total credit risk analysis.

This bill does nothing to address the shortcomings of the audit process outlined above. It is likely that the same criticism levelled by the auditor general in this regard will continue. As a part of its review, Industry Canada does not assess whether the lender has exercised due care when making a loan.

The amendments would make the process more accountable. The auditor general's recommendations would be in place. Small businesses would be getting the advantage, not the large businesses.

[Canada Small Business Financing Act, November 23rd, 1998]

Madam Speaker, I am delighted to lead the debate on the Group No. 3 motions. Before I do that, I would like to show my disappointment and that of other opposition members. We had an agreement that we were going to move to Group No. 3. The government knows there are more members who want to speak on this bill, however the government has put time allocation on this bill.

[Apec Inquiry, November 20th, 1998]

Mr. Speaker, let me quote from page 91 of the Liberal red book:

There is evidence today of considerable dissatisfaction with government.... some have to do with the behaviour of certain elected politicians, others with an arrogant style of political leadership.

This is not a headline from today's papers. This is right from the Liberal red book.

When will the Prime Minister stop the arrogant stonewalling and fire the solicitor general?

[Reform's Anti-Profiteering Act, November 19th, 1998]

Madam Speaker, I listened very carefully to the comments made by the members who spoke. I sincerely thank all members who took the time to prepare their speeches to support this bill, because I know that those who support this bill must have taken the time to read it very thoroughly.

I also thank those who have taken the time to oppose this bill because they have actually spent some time on it. But I would urge them to look carefully at it. Then they will probably support it.

There were some pretty good ideas from those who opposed the bill. I am very flexible. I am flexible enough to accommodate some reasonably good ideas. Therefore, I urge members to allow this bill to go to committee where we can look at those good ideas to make this and even better bill.

I originally said that my intention was to make this a non-partisan bill. I did not bash Liberals at any time, which I could have done very easily. But one thing I would like to point out is that on the government side of the House the well is completely dry. As far as talking about benefits for Canadians or values for Canadians, the well is completely dry.

Unfortunately, members on the government side have no vision. Some of them have a blurred vision. They put on glasses, and the glasses they look through have the lens of political stripe. They only have one type of glasses.

Some members have another problem. They have something obstructing their vision. They have blurred vision. They have a cataract. The cataract is that they do not know what the problem is. Let me tell them what their problem is. They do not know that they do not know. That is the problem with them. There is an old saying that goes, he who knows not and knows not that he knows not can never learn. That is their problem.

On the other hand, they have a long hierarchy list that says how not to do the right thing, which they follow.

The hon. member from the government side said that discussions had taken place. After their discussion they will forget what their discussion was and then their discussion will start again. This process will continue until they reach a point where there is no action taken.

The minister set up a toll free number. Why did he set up a toll free number for victims to expose those who gouge prices during emergencies? He had a reason. He wanted to give them sugar coated medicine. He just wanted to console them.

There is another problem in relation to what I said earlier. I was misquoted two times by my Progressive Conservative colleague. He who knows not but knows that he knows not can learn. That is the problem with them. I do not want to go into the details. The hon. parliamentary secretary said there is little evidence of price gouging although he confessed there has been price gouging.

There are tons of media reports. I have 25 media reports that state there is a problem. The Better Business Bureau is supporting this bill. So many organizations are supporting it. Insurance companies will not insure businesses or individuals who will be affected by Y2K computer problems. Insurance companies refuse to cover them if there is damage resulting from a computer problem.

We on this side of the House do not want to interfere with competition, we do not want to interfere with the free market but we do want to fire a warning shot that prevention is better than cure. We know the value of the shade of a tree when the tree is not there.

The hon. members should have looked into the details of the bill and they should have supported this bill. I would like the unanimous consent of the House for the subject matter of this bill to be referred to the Standing Committee on Industry so we can look into this and take some effective action for our constituents and for all Canadians.

[Reform's Anti-Profiteering Act, November 19th, 1998]

moved that Bill C-442, an act to prohibit profiteering during emergencies, be read the second time and referred to a committee.

Mr. Speaker, I am proud to have the opportunity to rise on behalf of the people of Surrey Central and all Canadians to debate my private member's Bill C-442, an act to prohibit profiteering during emergencies.

The purpose of the act is to prohibit persons or businesses from engaging in profiteering in respect of essential goods, services or resources during emergencies that seriously endanger the lives, health, safety or property of persons in Canada.

During the ice storm we heard reports of increased prices for gasoline, diesel fuel, batteries, water, generators, candles, salt, firewood and other materials needed to fight the circumstances being dictated by natural causes.

We want to stop prices on essential goods from being unnecessarily increased during emergencies. Bill C-442 is submitted to provide rules of conduct to be followed during future calamities or disasters. I have had this extensive piece of legislation drawn up on behalf of Canadians who were victims of the last ice storm, Canadians who suffered during Manitoba's flood and the Saguenay flood in Quebec.

The constituents of Surrey Central and all of us who work and live in the lower mainland of British Columbia know that some day there will be an earthquake which will affect all of us in British Columbia. Scientists have predicted with great certainty that there will be an earthquake but they can not tell us when.

An emergency can occur anywhere within a second. For example, the day before yesterday our planet was showered by meteors. Scientists say it could have been devastating.

If enacted into law my bill would come into effect within 60 days from the date it receives royal assent. We may be lucky that Bill C-442 is enacted into law before the next disaster hits us. It would not be too late for the coming disaster of the year 2000 computer bug that is threatening the world.

Canadians know what happens during crises situations. Ice storms, floods, earthquakes, even the millennium computer bug problem all have certain things in common. Water ceases to flow to our homes. We may lose electricity. Everything can virtually stop. None of the appliances in homes will work. We cannot take everything for granted. The stores where we do our shopping will be closed or inoperable. We may not be able to travel. There may not be gasoline available in the market.

Hospitals have difficulties during normal times due to the drastic cuts in federal transfer payments. Maybe our hospitals will stop working during emergencies. Hospitals can run into serious problems because there will be more patients than they can accommodate. The horrors of the situation are not easily forgotten.

Canadians are very generous and very good natured people. We can all be proud of the contributions made by our business community and our citizens during emergencies. Right now we are helping people in Nicaragua deal with the devastation of floods from the recent storm that hit their country. At home in Canada when there is an emergency we see our firefighters, police, hospital, municipal, hydro and telephone workers, volunteer organizations, and many other groups working around the clock for days and weeks at a time to deal with the emergency.

The year 2000 millennium computer bug is threatening everything from operation of our airlines to bank tellers. The people of Surrey Central want the House to act with a vision. Canadians want the government to be proactive in preparing our nation for the challenges we may face in the future.

Our nation has already seen natural and man-made disasters. We should learn from these disasters and prepare for the next. During the ice storm we heard many reports about exploitation, of unreasonably increased prices for various products needed to fight the circumstances being dictated by the natural disaster.

Let us look at some of those reports. A Quebec garage advertised gas at 51.4 cents a litre and then charged 79 cents at the pump. A wood seller upped his price for a cord of wood from $50 to over $100. It was a 100% increase. One hardware store broke open packages of batteries and sold them individually for triple the normal price. That was a 300% increase in the price. Some businesses told employees living in emergency shelters they would be docked pay if they did not show up for work.

There are many examples. I will read a few more. A depanneur charged $1 extra for a bag of rock salt which people needed to get rid of ice from their driveways. A tree nursery hiked the price of a cord of wood by $10. A gas station upped its price at the pumps by 3 cents a litre. A traffic officer did not even spare devastating people. He slapped an $82 parking ticket on a frozen car.

It looks mean but it is true. When disaster hits it does not always bring out the best in people. Whether it is opportunism, price gouging or overzealousness, some people did their best to take advantage of the people in dire straits. There are many other examples I could quote from the newspapers. These price increases were not technically illegal but they were morally wrong.

Other countries have anti-profiteering laws in place. We encourage competition but we need to prevent the negative impact of free marketing which can result when things like electricity, clean water, heat, medicine, hardware tools or even food are scarce or non-existent. My bill is submitted to provide rules of conduct to be followed during future calamities or disasters.

I have letters from the Better Business Bureau and the Consumers Association of Canada supporting my bill. Clearly the bill does not speak to a matter that can be deemed trivial. My bill is extremely important in terms of addressing the protection of consumers. Bill C-442 is both timely and proactive in terms of protecting Canadians from unscrupulous persons or businesses during times of emergency. It is important to note that it is a non-partisan issue and should be treated that way.

Canadians want all of us in the House to look at Bill C-442 through the lens of issue and not through the lens of political stripes. Canadians want our elected representatives to demonstrate that the business of the House has vision. Bill C-442 exhibits vision. The legal drafters found no other laws with which Bill C-442 conflicts. No other law accomplishes what the bill proposes.

I have found nothing on the government's legislative agenda to deal with profiteering during emergencies. However there was a full-fledged debate in the House on the ice storm. Many references have been made in the House to the flood in Quebec and the flood in Manitoba and the many inadequacies we can face.

I cannot think of another way for the House to deal with the matter. Only laws that are on the books will deter profiteering during emergencies.

I have collected news reports from January 1998 quoting the Liberal industry minister's reaction to the ice storm. During his press conference on January 17, 1998 the Liberal industry minister commented on the problems of profiteering during the ice storm. On January 18, 1998 the Edmonton Journal quotes the minister as saying “Consumers will take care of ice storm profiteers”. During the ice storm consumers could only take care of themselves by paying for whatever necessity. They traded in their innocence and their confidence and were victimized and exploited.

In the Montreal Gazette the federal industry minister was quoted as saying “Price gougers beware: Minister urges consumers to expose businesses that overcharge”. In this headline the minister is turning the matter of dealing with unscrupulous profiteering completely over to innocent Canadians. That is not good enough. The people of these communities will be vulnerable again and will be at the whim of the unscrupulous businesses or people who exploited their needs.

Bill C-442 is a private member's bill. The issue is non-partisan, but if it were not non-partisan I would trash the minister and expose his weaknesses. I am not doing that.

I introduced Bill C-442 to encourage all sides of the House to put more thinking into the problem of profiteering during emergencies. Many members have congratulated me outside the House for introducing the bill. The members of parliament from Ontario and Quebec who were involved in the ice storm know very well that something has to be done.

We must not shirk our responsibility to our constituents and particularly to all Canadians in the path of natural disasters. By acknowledging that a problem exists and by admitting that there were incidents of profiteering during the ice storm and other disasters, the minister set up a toll free number for consumers to report overcharging. That is not enough.

In the press conference I referred to earlier the industry minister went as far as to say that price gouging appeared to be in the minority. The fact it exists is enough. The federal government has to do something about it. There is no excuse to ignore this.

Perhaps the minister was looking for an initiative from one of us in this House. Maybe he was looking for Bill C-442, which I have introduced. I am looking for support from all members of this House before an earthquake hits us or before the Y2K computer problem or another disaster hits us.

If an earthquake occurs in B.C., look at what will happen. If it is a serious earthquake we have virtually no emergency preparedness. CFB Chilliwack has been closed by this Liberal government. There is no military base nearby. The lower mainland is connected to other communities by various bridges. Those bridges will collapse. We do not know how long it would take before the bridges could be restored.

The community of Richmond, which is on the edge of the earthquake line, may be submerged under water. There may be fires. There may be injured people to take care of. There may be dead people as well. At a time when food and medicine are in short supply, it is hard to imagine what would happen if someone increased prices.

Bill C-442 is a comprehensive bill. It has been carefully drafted by our legal staff in the House of Commons. I thank them for doing a good job. The legal staff has very carefully looked into the various definitions of emergencies, offences, punishments, proclamations of emergencies, revocation of those proclamations, jurisdictions and many other things.

The legal staff also looked into how profiteering affects people, how we can control it and how can we outlaw it. I cannot believe that the Minister of Industry would throw away all the work which we have done.

When we are hit by one disaster we should learn to prepare for the next disaster. We the politicians cannot give anything else to the victims. We cannot change mother nature, but we can enact an appropriate law and this is the time to do that. We should put the law in place before the next disaster hits us. We need to prepare our communities for serious disruptions in everyday life.

I will give two options to members of the House. Either give Canadians a guarantee that the next disaster will not hit us or support this bill so that we can prepare to protect innocent Canadian victims.

[Business Of The House, November 19th, 1998]

Mr. Speaker, on behalf of the official opposition of Canada I shall be delighted to put Thursday's question to the government House leader.

What is on the agenda of the House for the remainder of this week and for the next week?

[Liberal Government, November 19th, 1998]

Mr. Speaker, the Liberals are not giving Canadians want we want in terms of health care, tax relief, democracy, parliamentary reform and tougher penalties for criminals. The list goes on.

As we see in question period, the arrogance of Liberal ministers goes too far. They ridicule members and frequently confuse the public regarding opposition positions on issues. They often pretend they know what Canadians want but actually they do not. They fail to learn.

This attitude is best shown by the following quote. “He who knows not and knows not that he knows not can never learn. Shun him”. They are the Liberals. “He who knows not and knows that he knows not can learn. Teach him”. They are the PCs and NDP. “He who knows and knows not that he knows is asleep. Awake him”. That is the united alternative. “He who knows and knows that he knows is a prophet. Follow him”. Here we are, the official opposition. We speak for all Canadians. We know what Canadians want.

[Canada Small Business Financing Act, November 17th, 1998]

Mr. Speaker, I pleased to speak to Group No. 2 which contains Motion Nos. 2, 3, 4 and 5. The bill is about small businesses. If there is a big storm the big trees fall. Only the grass remains green and survives a big storm. It is very important that we take care of small businesses at least as much as big businesses.

I have no difficulty in supporting the motion, but one thing that is clear is that the Liberal government has had all the opportunities. Some amendments were brought forward from 1993 and so on, but nothing significant was addressed or taken care of to enable small businesses to get the benefits the act intended, not to mention that medium and big businesses borrow money from it.

The rationale behind Motion No. 2 which we are dealing with is that it is designed to prevent one family member who is part owner of a small business from taking out a loan if another family member has already done so. The idea is that the system should be more equitable. It should be fairer and should not be subject to abuse as it has been in the past according to the auditor general.

According to the Small Business Loans Act each borrower has been limited to a maximum loan of $250,000. The auditor general detected a few cases in the sample loan file where certain individual corporations with substantial common ownership managed to collectively obtain numerous loans far in excess of the stipulated maximum loan amount of $250,000.

In one case, according to the auditor general, a group of 23 related corporations managed to collect more than $4 million under the SBLA. This is a gross abuse of the system. Although Industry Canada had already notified lending institutions in writing that such loans would not be covered under SBLA after July 1996, detection of such cases by the department is difficult because of the lack of complete access to loan file information during review of submitted claims. These practices are contrary to the intent of the act.

The auditor general also noted that while the Small Business Loans Act specifically defined the eligibility conditions of those who may borrow under the program, there were no provisions designed to prevent a group of entities with substantial common ownership from gaining multiple access to loans under the program.

The auditor general recommended a clarification of this issue to ensure the SBLA program meets the goal of providing financial assistance to smaller businesses within the acceptable risk exposure of the government.

These practices are contrary to the intent of the act. Currently there are no provisions under the Small Business Loans Act to prevent this even though such rules exist under the Income Tax Act, which has provisions designed to limit access to the low corporate rate of tax for smaller businesses and to prevent abuse by the creation of a number of related corporations. More rigor is needed to address the issue.

We would like to support Motion No. 3. We know that the government is slow in learning, but I am the one who brought forward the issue in Motion No. 2 and No. 3 in the first debate we had on the bill. I am glad that it is learning but learning slow and I am glad to support Motion No. 3. The rationale is that the amendment lowers the maximum amount of a small business loan from $250,000 to the pre-1993 level of $100,000.

Groups such as Canadian Federation of Independent Business made presentations before Senate and House committees which called into question whether the ceiling of $250,000 was too high. Industry officials concede that the average size of loans made under the old SBLA was only $65,000. In view of this, present levels could be trimmed. I am glad the government has learned that.

The problem of column shifting appears to be more pronounced in loans over $100,000. This could mean a number of things, but most likely there is an inverse relation: the larger the size of a loan to an SME, the smaller the bank's willingness to underwrite the loan. There is an inverse relation between the amount of the loan and the willingness of the bank.

From its inception to March 31, 1993 the program made $339 million in net payments to lending institutions over a 32 year period. Following amendments to the Small Business Loans Act in 1993 the program considerably broadened eligibility criteria and increased the maximum loan amounts per borrower from $100,000 to $250,000. The auditor general noted it and it has been addressed. I am glad that it has been addressed in the bill.

The Canadian Federation of Independent Business which has over 90,000 members has been saying that if the current abuses of the Small Business Loans Act were curbed and if the parameters of the program were restricted, the program would require less of an allocation of funds while being effective in meeting the program's objective. The thresholds for financing are too high in the old SBLA. The legislation defines small businesses as those firms that have up to $5 million in sales. That is not small.

The CFIB says that we are not talking about small businesses in this case. What we are talking about is medium or large size businesses. That becomes an alternative source of financing for medium and larger businesses, depriving smaller business of the facilities which are intended for them. Small businesses are not being given any advantage compared to what medium and larger firms are getting from Bill C-53.

If the size of the loan and the size of the annual sales of the business were reduced, we would have a system that serves smaller businesses. We would also have a system with a drastically reduced rate of abuse, which is important.

As I said in the beginning the government cares about larger businesses, not about smaller businesses. When the storm comes, the government will remember that smaller businesses which are supporting our economy can survive any type of storm but the big firms are subject to falling.

The government has been giving big businesses all the big benefits it could give. We know that Bombardier got $25 million worth of interest free loans. We know that Bombardier or some other businesses like it have been getting all those facilities. Bombardier also got sole source contracts of $2.85 billion from NATO through the government.

Smaller businesses have been subject to abuse. They have been subject to high taxes by the government. CPP and EI premiums have been so high that smaller businesses could not cope. Even the government knows that $350 per employee and $500 per employer are being paid too much by the smaller businesses.

I summarize by saying that I am happy to support Motions Nos. 2 and 3. Motions Nos. 4 and 5 are more of a technical nature rather than of any significant legislative importance. We will be supporting Motions Nos. 4 and 5 along with Motions Nos. 2 and 3.