Dennis Mills

[Small Business Loans Act, November 28th, 1995]

Mr. Speaker, I hear from the Reform Party that we need more banks. I could not agree more. We need more competition in the banks. The problem is how we do that. If they know of a way or have a formula to create more competition for major financial institutions without putting the treasury of Canada at any greater risk we would be the first to listen. The minister responsible for financial institutions is in the House. He would love to hear how to create more competition for financial institutions within the framework of ensuring the financial exposure of the treasury is not put at greater risk.

The minister responsible for financial institutions is from the banking community but he is not from the establishment. He has always been a reformer-

[Small Business Loans Act, November 28th, 1995]

The member asks why we are doing it. It is because we realize that small business represents our greatest hope for taking people off unemployment insurance, taking them off welfare and getting them back into a productive state in life where they have dignity and are paying taxes. When we get this fiscal framework together small business represents our greatest hope. The greatest difficulty of small business is getting access to capital.

We are urging, hoping and coaxing banks to get into the small business game, but it is not easy. We have to be a catalyst along the way. I am being very candid in my belief that we must have a heads up on the issue because we are essentially making the work of banks a lot easier by increasing the float to such a large amount and giving that guarantee. We had to do it to spark small business loans activity. It was not happening. What else are we to do? Are we to bring back the Bank Act and dictate to the banks to whom they should lend money? We cannot do that.

[Small Business Loans Act, November 28th, 1995]

Mr. Speaker, it is important for people to understand that to be eligible for a small business loan under the current system the loan has to be applied toward certain conditions. For example, it is not to be used for working capital; it is to be used for the purchase of equipment, leaseholds, things that have true and sustained value.

If a loan is in default under the Small Business Loans Act, that equipment has a value. It can be sold. When the value of that equipment or leaseholds that have been sold has been realized, the

amount that is left over is subject to a 25 per cent personal guarantee.

For example, if you have a loan of $100,000 for equipment, under the Small Business Loans Act you have to have a minimum of approximately 15 to 20 per cent. The amount of exposure right off the bat is $80,000. Of course, you are in the process of paying it down almost immediately because it is always part of a programmed return. If your business goes bad and you at least realize half of the value of the equipment, then your exposure on that $100,000 is approximately $30,000. Then, from a personal guarantee you are only exposed to 25 per cent of that.

Because of the way banks have been dealing in Canada traditionally, there is this mindset right now that when you go to get a loan they want your home, they want your RRSPs, they want your life insurance as security. They want four and five times security for the loan. That is not what we are talking about here.

We are saying under the Small Business Loans Act the personal guarantee is limited to 25 per cent of the amount that is left over after everything has been liquidated. From a normal commercial business point of view I do not see that as a bad thing. It is a big improvement over the traditional type of security that banks would want on most other small business loans.

We are not going to support this motion. The bill is designed in a way that gives much greater flexibility. Once the loan repayment reaches a certain level, where there is security in the assets to cover the exposure, under the current act the personal guarantee, the25 per cent, can be released. Once their exposure was reduced most banks would release the personal guarantee. I believe that is fair and that we should not change that aspect of the bill.

The member for Trois-Rivières has put forward good ideas and thought provoking points. However, on balance the design of the bill is quite solid and will probably do the job we intend it to do.

As this is the last motion, I should like to say that the industry committee is very good. It has had a very tight focus on the issue of access to capital by small business. This is the third time in less than three years the bill has been through the House of Commons. It was amended three years ago by the then Conservative government. By the way, it went through all three readings in the House in one day. We supported the Conservative government in amending the bill three years ago because we believed in the importance of the issue of access to capital and some kind of instrument that would act as a catalyst to sensitize the banks and to push the banks forward.

As much as I support the bill, I am becoming a little concerned that we are creating too much of a crutch for the banking institution. I listened to the critic from the Reform Party this morning. He mentioned that the float capacity in the last two years under the legislation had gone up from $3.5 billion to $12 billion. The total small business float last year for all financial institutions and small businesses in Canada was $28 billion. Now we are suddenly letting the small business float go up to $12 billion, and this is the one the crown guarantees.

In my judgment we are doing the work the banks should be doing. We are taking all the risks of decision making away from banks.

[Small Business Loans Act, November 28th, 1995]

Madam Speaker, I rise on a point of order. I would like to humbly correct the member because I did not in any way, shape or form say the elected people in the House do not have an influence on the way bills are designed and approved.

[Small Business Loans Act, November 28th, 1995]

If they are refusing to see the member, he should go to the minister. They do not refuse to see the lobbyists so I cannot imagine a public servant refusing to meet with a member of Parliament. I find that crazy.

If a member tells me of any public servant who refuses to meet with an elected person I will stand up in the House and we will talk about it. Even before I will, the Prime Minister will go berserk. As someone who has been in nine different government departments, the Prime Minister understands the public service is there to implement the political will of the approved legislation in the House. If there is resistance to it, it is our fault to allow the resistance.

I appreciate the comment from my colleague from Trois-Rivières that we should be ever vigilant as we deal with the public service in the way it manages some of these pieces of legislation we approve in the House. However, I do not share his view that members of Parliament cannot have a substantial role in amending and designing legislation. For that reason we will not be supporting this motion.

[Small Business Loans Act, November 28th, 1995]

We cannot simply convince the Minister of Finance. This is where we go to the member for Trois-Rivières' point about the technocrats, the bureaucrats. What we really should be doing is lobbying as elected men and women. We should lobby the finance department.

How many members have taken the time to go to the finance department, sit down with a senior bureaucrat and talk to him or her about their ideas for tax reform? Those public servants cannot refuse to see elected members of Parliament.

[Small Business Loans Act, November 28th, 1995]

The judge is out on whether he ignored rural MPs or whether this situation will succeed in gun control. That is a fair example. It was a tough decision.

By and large on ideas not as controversial, when we get a consensus ministers tend to listen.

It is very important that we take notice of the Bloc's point on the control the bureaucracy has in this community. I have been working around this town since 1979. I came here as a young political assistant, not a bureaucrat. I was amazed at the way the bureaucrats, the public servants, operated and managed departments within government. We call it the machinery of government.

I had a terrific experience working in the Prime Minister's office for almost four years. I was amazed even in that office when we

wanted things done the public service had this capacity to actually control the tempo of implementation. I coined an expression back in 1981 called the MAD treatment, maximum administrative delay. They were good public servants. It was just part of the culture. It was part of the thought process that even though the political will wants a particular policy implemented, before we actually put it into the factory and implement it we must do further analysis. We must check this, we must check that. The delay was enough to drive one nuts.

The member for Trois-Rivieres has given us a very important point on which we must be ever vigilant. Those of us who are elected, who are accountable, have to make sure the things approved in the House are implemented and not steered off and done in a way the bureaucracy thinks should be done.

I do not share the member's view when he says we do not have an opportunity for input. I think we do. If we are passionate about our ideas and we get support from other colleagues usually they can be implemented.

It is not always easy. I could give a personal example and pass it on to the members opposite on the whole issue of tax reform. I have been working on the issue of tax reform for six years, the single tax system.

I was hoping that with 50-odd members from the Reform Party who apparently believed in tax reform we would have much more energy in support of the notion of comprehensive tax reform, but that has fizzled. Obviously I have not done a good enough job on that issue in convincing other colleagues we need comprehensive tax reform. We are not talking about it enough, debating it enough or selling it to the rest of the decision makers in the Chamber.

[Small Business Loans Act, November 28th, 1995]

I presume the hon. member is talking about gun control. The Minister of Justice did listen. This was a balancing act he had to perform. He had to make a very tough decision. Do we think for a minute the Minister of Justice did not balance in his decision making process the difficulties rural members were having versus the concerns urban members had?

[Small Business Loans Act, November 28th, 1995]

Madam Speaker, I have always been an advocate that members of Parliament can play a meaningful role in amending or designing legislation in the House of Commons. Therefore, I do not share the view of the Bloc member for Trois-Rivières. It is important that we explain to Canadians how as individual MPs we can have an impact on the system.

If I have a particular view of how the Small Business Loans Act should be amended, then I should sit down with colleagues on both sides of the House and develop a consensus. Quite often when we can get a consensus it has always been my experience that unless it is something that really upsets the fiscal framework of the country most ministers accept good ideas from their parliamentary committees.

I have never experienced a situation in which a minister who had constantly ignored the advice of his political confreres on a constant basis whether in the House, in committee or in caucus still succeeded as a minister. I have never known ministers to succeed if genuine requests from MPs to their departments are ignored. If they are ignored it is the MPs' fault.

[Small Business Loans Act, November 28th, 1995]

That is right. We can have input, but that is the way we are governed in this country and that is the way it will have to stay.