John Manley

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

moved that Bill C-21, an act to amend the Small Business Loans Act, be read the second time and referred to a committee.

Madam Speaker, I am very pleased to have the opportunity to introduce Bill C-21, an act to amend the Small Business Loans Act, in the House of Commons. This is an important bill because its purpose is twofold: to maintain an element of government framework in order to support small businesses in Canada and help them prosper, and to ensure improved operation of this element.

Small businesses play a vital role in Canada's economy. They number more than 2.5 million, including the people they employ. Half of all private sector jobs are in businesses with fewer than 100 employees, and 43% of this sector's productivity comes from such businesses. In 1996-97, small businesses created 81% of all new jobs. It is clear that Canadians see small businesses as one of the great engines of economic growth and that their importance is continuing to grow.

The business community has often said, however, that the absence of reasonable financing is a significant obstacle to the growth of small businesses. It is for this very reason that the small business loans program exists.

The objective of the Small Business Loans Act is to increase the availability of loans for the establishment, expansion, modernization and improvement of small business enterprises by encouraging lending institutions to make loans at reasonable terms and conditions. These fixed asset loans are available for such things as the purchase of land or equipment or for making improvements to a leasehold. They are not available for the purpose of financing the purchase of shares, working capital or existing debt. They are not based upon goodwill or other intangibles.

Virtually all small businesses are eligible to borrow under this program. Eligible borrowers include almost all enterprises in Canada that operate for gain or profit provided the annual gross revenue of the business does not exceed $5 million. Farming operations and religious and not for profit organizations are excluded from this program.

The small business loans program was established back in 1961 and its overall record is one of great success. Preliminary information indicates that in fiscal 1996-97 alone some 30,000 small and medium size businesses used the SBLA to access about $2 billion of financing. Clearly the small business loans program provides significant and obvious benefits to Canadians and their economy.

The program is subject to a cut-off clause and has been extended many times since 1962 for fixed periods. Unless Parliament decides otherwise, however, no new loans may be approved under the program after March 31, 1998.

The bill we are introducing today would enable us to continue to meet the needs of small businesses in Canada where long term loans are concerned. It would extend the SBLA by one year, and would increase the total loan envelope.

More specifically, Bill C-21 amends the Small Business Loan Act by extending its application to March 31, 1999 and by increasing the total envelope by $1 billion, thus raising it from $14 billion to $15 billion.

Passage of this bill will allow the SBLA program to continue beyond March 31, 1998. The extension of the program for another fiscal year is important to continue to meet the expanding needs of small business during this period of strong economic growth.

At present, lending under the program has reached $12.7 billion and has a ceiling of $14 billion. The $1 billion figure contained in Bill C-21 was arrived at because this is the amount that current economic forecasts have determined to be necessary to allow lending to continue for one year.

As I have stated, the SBLA program has served Canadians well since its adoption in 1961. The program is supported by the small business working committee which includes representatives of the Canadian Federation of Independent Business, the Chamber of Commerce and other Canadian business leaders. It was also supported by the Standing Committee on Industry in its report “Taking Care of Small Business”.

But those who support the program have also encouraged us to continue improve it, to increase its effectiveness and to lower costs for the taxpayer. Indeed the SBLA program is at present undergoing a comprehensive review with input from both private and public sector stakeholders.

Moreover Canada's auditor general audited the SBLA program and released his report in December 1997. I am pleased that the auditor general noted that we have made considerable progress toward increasing productivity and reducing the overall costs of the program. The auditor general's report will be a very useful tool as we review the SBLA and design ways to make the Small Business Loans Act even better in the future.

A one year extension of the act will provide the time needed to complete the review of the program. The extension will also allow both private and public sector stakeholders to consider the auditor general's recommendations and thus become better prepared to participate in the ongoing comprehensive program and policy review.

In 1993, the previous government made in-depth changes to the program, resulting in a heavy increase in the number of loans made. When we came into power, we saw that the program's sustainability was in jeopardy. As a result, the government made major changes in 1995 in order to move in the direction of a cost recovery program, for the first time.

We imposed annual administration fees, the purpose of which was to compensate for claims for losses on loans extended after March 31, 1995. As the auditor general pointed out, however, we inherited a heavy burden, which will weigh upon us for some years yet.

The average period before a loan defaults is about three to five years, but the major program changes were approved by Parliament effective January 1, 1996. Thus we are now living with the costs associated with the massive build-up of lending under the 1993-95 SBLA rules. We did not wait for the auditor general's report to act responsibly to address this problem. As I said before, we took necessary action in 1995 to move the SBLA program toward cost recovery.

Consider the facts. The SBLA at present guarantees to the SME community loans worth approximately $2 billion per year. Are we to scrap this worthwhile program because of losses that were incurred as a result of 1993 program changes as some critics have proposed? That would be throwing out the baby with the bath water.

The sensible and responsible course of action is to pass Bill C-21 and to continue the SBLA program for another year, using that time to complete our comprehensive review so that the SBLA can be made into an even better instrument for responding to the needs of small and medium size businesses.

Certainly there is room for additional improvements. That is what the review process is all about. For example an improved monitoring process could provide for a better means of tracking performance and verifying cost recovery. Likewise a better forecasting system could make the program more flexible and better able to respond to economic conditions and the changing needs of small business.

While the SBLA lays out clear objectives for the program, we do need a more detailed and updated evaluation framework. This framework will be developed as part of the comprehensive review being undertaken this year.

Those are the sort of questions being asked in the review that is under way. To date, the studies and consultations have addressed the following points: general advantages of the program; possible extension of the program; specific consequences relating to inclusion of capitalized leases among the activities eligible for financing.

Other studies are either under way or in preparation on: program costs; the possible inclusion of operating costs in the expenses eligible for loans; the consequences of improved start-up loans; possible changes to program parameters; possible changes to the regulations, and the auditor general's recommendations.

We want to make sure that the SBLA program remains relevant to the needs of the small and medium size enterprise community. The auditor general's report will help the government ensure the effectiveness of this valuable program.

The types of questions that are being asked and answered by this comprehensive review illustrate why it is both relevant and necessary to constantly consider both the costs and the benefits of the program. The government therefore is encouraging interested parties to come forward and participate in the review process over the coming year.

The private sector financial market is at present in a period of rapid change with new financial products and services being added on an almost weekly basis. The impact of these changes on the SME access to financing is as yet unclear. Therefore it is important that we keep some stability in the system by keeping the SBLA program in place. It is also important that we take this evolution of the SME financing environment into account as part of the comprehensive review process to ensure that the program remains both relevant and sustainable.

It is true that there is a wide diversity of private and public sector programs which provide financing to SMEs. However the SBLA is unique. Under it the government does not provide money directly to small businesses. The program provides private sector lenders with a government guarantee for those lenders who sustain loan losses. The lenders are the sole decision makers as to whether or not a loan is made.

Thus it enables the vast majority of SMEs to have access to fixed asset financing. It is accessible through more than 1,500 different lenders: banks, caisses populaires, credit unions, Alberta treasury branches, loan and trust companies, and other institutions.

Far from duplicating the services of other programs, the presence of the SBLA program has allowed federal and provincial programs to focus on other usually more narrowly defined gaps in SME financing.

That program bears no resemblance to a small business subsidy program. The loans that are now being guaranteed under the terms of the program are made in keeping with the principle of cost recovery.

Thanks to the SBLA, the government, the financial institutions and the small business borrowers share the risks inherent in capital loans. By pooling the risk, the SBLA is supporting one of the most dynamic growth sectors of the Canadian economy.

The Small Business Loans Program meets a need that would not be met otherwise. The average amount loaned under the program is extremely modest: in the vicinity of $65,000.

Moreover the success rate of the program is quite high. In the history of the program some 94% of SBLA loans have been repaid. This suggests that the lenders are exercising good judgment when they decide who gets an SBLA loan, since it is the private sector lenders who decide who receives a loan under the program and not the government.

The small business loans program is an integral part of our programs and services to promote growth and job creation in Canada's small business sector. By passing the act before the House we will allow the SBLA to continue to back loans to SMEs for another year, a year during which we can complete the comprehensive review of the SBLA that is under way. The debate on that review will help determine the longer term future of the Small Business Loans Act.

Madam Speaker, I thank you and I ask hon. members for their co-operation in the swift passage of this legislation.

[Multilateral Agreement On Investment, February 13th, 1998]

Mr. Speaker, there is a shipbuilding policy. It includes very generous write-offs for depreciation. It includes a very high tariff structure and it includes procurement preference for Canadian built ships.

Nothing in the proposed agreement would imperil any of those measures.

[Justice, February 13th, 1998]

Mr. Speaker, the matter has not been concluded before the courts.

[Research And Development, February 12th, 1998]

Mr. Speaker, we have heard a lot recently from some of the granting councils and their users about the crisis of funds.

I am pleased to point out that in last year's budget we introduced the Canada Foundation for Innovation, an $800 million fund to support research and development in Canada's universities and teaching hospitals. We added $47 million per year to the networks of centres of excellence, made it a permanent program. We added money to IRAP, as we promised again in the red book.

There is no doubt of the important and essential role that Canada's research granting councils are playing.

I am confident that the Minister of Finance will find a way to relieve some of their pressure in due course.

[Rural Canada, February 6th, 1998]

Mr. Speaker, the government committed in the Speech from the Throne to making Canada the most connected nation in the world. It entails a very direct, active and aggressive campaign to ensure that Canadians in rural and remote communities are able to have access to the modern information technology and telecommunications systems that are available.

Through the community access program we have established the objective of connecting 5,000 rural and remote communities by the year 2000. We are about half way there now.

Communities in every region of Canada are experiencing the advantages both for social as well as for economic reasons of having direct access to the new technologies.

[Ice Storm 1998, February 4th, 1998]

Mr. Speaker, I will be sharing my time with the member for Charleswood—Assiniboine.

I am very pleased to join my colleagues this evening in this special debate arising from the ice storm and how Canadian it really is to have a special debate based on the weather.

Noted journalist Robert MacNeil of the famous MacNeil-Lehrer Report wrote in a short article on his native country: “Unconsciously Canadians feel that any people can live in a land where the climate is gentle. It takes a special people to prosper where nature makes it so hard”.

This January Canadians were reminded of the challenges that we face as a nation in mastering living in this harsh environment. In this time of need for a country and for its people, Canadians have responded with courage, generosity and determination.

At the peak of the blackout, more than 2 million users in Ontario, Quebec and Atlantic Canada were without power. Property damages resulting from the storm have been estimated to be in the range of $500 to $700 million and the economic costs of lost production run as high in estimates as $5 billion.

Economic impacts are only part of the story. It is harder to measure the discomfort, stress and pain of the tens of thousands of people who were forced to abandon their homes and businesses for days and weeks.

I want to talk briefly about the people in my riding and how they were challenged by the storm.

The community of Ottawa South was hit by the storm in much the same way as were others in cities across eastern Ontario, Quebec and parts of Atlantic Canada. Many experienced the loss of power. Many spent nights sleeping in front of fireplaces to keep warm or sought refuge in shelters. Many lost branches and trees to the thick, heavy ice.

In my riding the area of Alta Vista was particularly hit hard, with many trees in the neighbourhood falling victim to the storm.

Of course, we consider ourselves to be lucky, especially in comparison to those in rural communities who have suffered extensive damage to their homes and properties. Our hearts and thoughts continue to be with them as they start the process of attempting to salvage their livelihoods. I encourage everyone to continue to do their part to support our rural neighbours.

I had my own firsthand experience seeing the level of damage in the rural areas across eastern Ontario in a Department of National Defence helicopter with my colleague, the Minister of National Defence. I visited several rural and urban communities to survey the devastation in my region.

During the fly-over in eastern Ontario I was struck, in particular, by the sight of broken telephone poles, trees bent to the ground, branches strewn across the snow.

We went to several towns and cities, including Metcalfe, Brockville, Kingston and Perth. In every community, we were welcomed by the local MP, the mayor and the city councillors, and everywhere we went, representatives of the Department of National Defence briefed us on the situation in the area.

In Metcalfe, I met an employee of the National Research Council, which comes under my department. He was working as a volunteer, cutting firewood alongside members of the Canadian forces. In Kingston, where the storm really wreaked havoc, the city hall had been turned into a shelter and the council room into a communications centre.

During our helicopter tour, we saw one of the most upsetting scenes at dusk, where only a few lights glimmered here and there in the dark, while whole communities were getting ready to spend another night without any heat.

Anyone who passed over or through eastern Ontario or Quebec could see the enormity of the problem we were facing, but I was heartened during my trip by the evidence of the different levels of government working together to solve problems. I want to thank, in particular, Bob Chiarelli, the regional chair of the municipality of Ottawa-Carleton, for his quick action and decisiveness in acting on this issue.

At the regional headquarters of the Red Cross I observed the volunteers and staff undertaking a number of different tasks. There was a Radio Net centred there which allowed the Red Cross to keep in touch with people working in the field throughout eastern Ontario. The headquarters was also acting as an inquiry centre, taking requests for firewood, for food and for generators.

During the first four days of the ice storm they distributed over 1,500 blankets and fed 3,600 people each of those four days.

The Red Cross also acted as a match-making service of sorts, linking people who needed things to people who were able to donate them. They made over 500 of these matches. They found people willing to provide shelter for others, cook meals for people, and even those who were willing to provide milking cows and hay for horses, or take strangers into their homes.

People in this community have also helped financially. The Red Cross has raised locally in Ottawa around $500,000 from third party contributions. Money was raised separately from a 1-800 line. Money was raised by people taking contributions at Senators games, at local malls and at community centres.

I want to thank and acknowledge the volunteers and the staff for their hard work during this period of crisis.

During my visit to the Red Cross headquarters I was struck by the number of people who were volunteering their time to help their fellow citizens.

The Red Cross registered 1,200 people to volunteer to help in just the first two days of the storm. I am happy to say that my own teenagers and their friends joined in this effort.

I would also like to mention the individuals, businesses and other organizations in our community and across Canada who contributed to the relief effort. From individual acts of kindness to neighbours, to cash or in kind donations they have all been instrumental to the effort that has gone into helping Canadians through this crisis.

I also want to mention the few, and it is a very small number, who used the crisis to take advantage of others. Through Industry Canada's competition bureau consumers who believe they have been victims of price gouging have been calling and reporting their experiences. We will provide consumer organizations with the intelligence gleaned from this phone line so that consumers can be better informed of who to look to for support and who to avoid giving their patronage to.

I am proud to say that my industry portfolio worked on many fronts to help Canadians meet this challenge. Throughout the state of emergency Industry Canada, along with other federal departments, provincial authorities and the telecommunications industry, contributed to the support of telecommunications operations and to maintaining the telecommunications infrastructure. This effort included co-ordinating the deployment of generating sets, including four giant generators transported from Vancouver to Montreal, enhancing the reliability of vital cellular sites and supplying fuel for telecommunication systems.

In addition to authorizing the use of microwave links by Hydro-Quebec, Industry Canada authorized more than 50 radio channels for use by DND, the Sûreté du Quebec and the Montreal urban community police.

Industry Canada worked with utilities and Revenue Canada to expedite the passage through Canadian customs of essential equipment imported from the United States, for example telephone poles coming in from Alabama. Industry sector branches monitored the storm's impacts on their industry clients on a daily basis and provided support by tracking sources of essential equipment.

In Saint-Hubert, the head office of the Canadian Space Agency became an emergency shelter where people could spend the night, get a warm meal and take a shower. All in all, the agency welcomed about 4,500 people, 350 of whom slept there and more than 4,000 people showed up to warm up, take a shower or get a warm meal.

The Canada-Ontario Business Service Centre and its Quebec counterpart called Info-entrepreneurs used their 1-800 numbers to provide businesses with information about the help available to them.

Today, my colleague, the Secretary of State for the Federal Office of Regional Development-Quebec, or FORD-Q, announced a series of measures to help things get back to normal in the areas devastated by the ice storm. Businesses who deal with FORD-Q will be able to postpone the reimbursement of the contributions they received as part of the department's programs.

The Business Development Bank of Canada announced flexible repayment arrangements for small business clients in eastern Ontario, Quebec and the Atlantic provinces who experienced severe ice storm damage.

Four weeks later we continue to see the images on the news of significant challenges, in particular in Quebec on the south shore where there remains much to be done and there are still many people without electricity.

The examples that I have given today and those that I have heard from members who preceded me in this debate demonstrate a very positive story, a story of Canadians from coast to coast rallying to help their neighbours in a time of dire need. It is a story of individuals, businesses, communities and governments pitching in to help Canadians through a very difficult time.

Modern technology has brought many benefits to humanity. It has made life in this harsh northern climate comfortable if not easy. But the events of the past month have afforded us a salutary reminder of the power of nature and our vulnerability in relying on technology for our most basic needs.

I am happy to add that the difficulties we have endured together have also reminded us that we are members of a large and generous family. Like any family, we have our share of differences, squabbles and jealousies, but when times are difficult it is good to be part of a big family whose members are willing to come to one another's aid.

[Year 2000 Problem, February 3rd, 1998]

Mr. Speaker, earlier today the task force on year 2000 issued its report entitled “A Call For Action”. It has highlighted the importance of this pressing issue as a national issue for Canadian business, as an international issue as it affects transactions across the border, and indeed as a global issue. It has given a number of recommendations for business to follow.

I am going to ensure that this report is considered by the Standing Committee on Industry at its earliest possible convenience. I am making it available to my counterparts both federally and provincially. Together we need to see that Canadian industry is ready for January 1, 2000.

[Technology Partnerships Canada, December 10th, 1997]

Mr. Speaker, in accordance with Standing Order 32(2), I have the honour to table, in both official languages, the Technology Partnerships Canada annual report for 1996-97 entitled “Investing in Jobs and Growth”.

[Canada Co-Operatives Act, December 9th, 1997]

moved that Bill C-5, an act respecting co-operatives, be read the third time and passed.

[Ship Building, December 9th, 1997]

Mr. Speaker, I find myself confused. I thought at first the question was for the Minister of Industry.

We have looked very carefully at all the suggestions but I have yet to consult my colleagues on them. I point out to the hon. member, as I have done privately as well, that the tax breaks constitute a subsidy, that special tax rules constitute a form of subsidy, and that we are endeavouring in each industrial sector to create sectors that are competitive and therefore able to win in international markets without subsidies.