John Manley

[Supply, June 1st, 1995]

Mr. Speaker, I am pleased to be able to engage in this debate, particularly after having listened to that rather enlightening rendition of creative imagination on the part of the Bloc Quebecois members. I am happy to know that Jules Verne is alive and well and writing science fiction when we hear their description of how everything can change while everything remains the same. It does challenge the imagination.

I want to speak for a few moments about the allegations contained in the motion on the floor today with respect to Bill C-88. That is the bill to implement the internal trade agreement which was negotiated and signed among the federal government and the provinces about a year ago today. I must say that the allegations contained in that motion represent an inability or perhaps an unwillingness on the part of the Bloc Quebecois to understand the plain meaning of the text in the bill.

As was said in the House before, the federal government would seldom intervene as plaintiff in a dispute that arises within the context of the Agreement on Internal Trade. If a dispute is settled in the federal government's favour and the province concerned refuses to accept the conclusions of an impartial panel, the federal government could then suspend benefits or impose retaliatory measures of equivalent effect.

Clearly, such measures would be imposed in the same sector as the initial violation or in another sector regulated by the agreement. Retaliatory measures would not affect transfer payments or social programs since these do not come under the purview of this agreement.

Bill C-88 does not make the federal government the policeman of the internal trade agreement as the official opposition mistakenly insists. Anyone who takes the time to read the bill, even the headnote to clause 9 of Bill C-88 or to read article 1710 of the agreement on internal trade can only verify the accuracy of what I have just outlined. Bill C-88 deals only with what the federal government must do to live up to its obligations under the internal trade agreement and nothing else.

As I said in the House on May 4, the agreement on internal trade is a consensual agreement. All the parties who agreed to it must act within their own jurisdiction to implement it and comply with its obligations.

So far, only the federal government and the Government of Alberta have tabled legislation to implement the agreement and comply with their respective obligations in this regard. It is probable that most of the other parties to the agreement will decide to do likewise, sooner or later.

I am sure that all Canadians are anxious to see what governments that claim to support domestic free trade will actually do to implement the Agreement on Internal Trade and eliminate the barriers they themselves created over the years.

Bill C-88 is an historic milestone. It is an opportunity for the federal government to show leadership and to do so with the governments of the other parties to the agreement, as they implement the first comprehensive domestic free trade agreement since the British North America Act, 1867.

Since 1867 the Canadian economy has grown and evolved in ways never imagined by the Fathers of Confederation. The federal government still has the constitutional responsibility for trade and commerce. Over time, provinces have assumed prominent roles as influencers of economic growth and in the regulation of trade and commerce at their level.

As a result, trading arrangements and regulations have developed in an ad hoc way often in response to a particular regional need. Many of these measures create barriers to trade as they impact on the free flow of goods, services, people and capital within Canada.

Such barriers can lead to the inefficient use of resources and limit the ability of industry to take advantage of economies of scale and to maintain competitive market positions. The result is to reduce the competitiveness of Canadian business and adversely affect the Canadian economy.

Also, in Canada we have a patchwork of regulations, standards and other barriers to interprovincial trade that have grown around us and have become an unacceptable feature of our domestic market. There has been growing concern and evidence these barriers to trade are seriously affecting our ability to remain competitive in the international trading environment.

It is urgent that we establish a new trading regime in Canada, one based on more open interprovincial trade, one that would not impede the movement of people and investment within the country and one that would allow for co-operative approaches to the resolution of domestic trade disputes. Bill C-88 is a key element in bringing to fruition the process of intergovernmental negotiation and co-operation that will produce that new regime.

This bill concludes a lengthy process to which many people have contributed and which has involved analyzing a great many issues and points of view. Ministers and officials of the federal, provincial and territorial governments took an active part in this process, as well as representatives of the private sector.

In fact, representatives of the private sector and especially members of the business community have put constant pressure on all levels of government to find ways to deal with interprovincial trade barriers and the resulting economic cost for Canada.

The Canadian Manufacturers Association, for instance, estimates that trade barriers on domestic markets cost the Canadian economy about $7 billion annually in terms of lost jobs and income.

The agreement on internal free trade signed last year by the Prime Minister and other first ministers is an outstanding example of what can be accomplished within a co-operative framework in Canada. It is also important to note that political parties of all stripes and all regional perspectives have been part of this process.

All parties that took part in the negotiations share the same view and recognize the benefits of a more open market for Canada.

As a result of the work done by the committee of ministers on internal trade and by the chief negotiators, we achieved a comprehensive agreement. It provides for a rules based system for trade within Canada, a dispute settlement mechanism to resolve issues on internal trade matters, a standstill on new barriers, commitments to future negotiations to broaden and deepen the agreement, a code of conduct to prevent destructive competition for investment, increased labour mobility and a commitment to reconcile standards related measures. These are significant achievements.

Dispute settlement is a key component of this agreement as it is of any trade agreement. This agreement represents a unique response to circumstances that are uniquely Canadian. The agreement is based on rules which, in turn, are based on certain concepts and agreements that are well established in international trade but adapted to the Canadian context.

Well known examples include the GATT agreement, the European Union and NAFTA. There have been suggestions that we in Canada should just use one or other of these models in the Canadian situation. However, these suggestions overlook the important issue of the sovereignty of the parties to an agreement as well as the degree of political control the parties themselves are willing to give up to the compliance mechanism which is in place in the accord.

The agreement on internal trade sets out the framework and basic underpinnings for a dispute resolution mechanism approach that is unique to the Canadian context and provides for open access to the settlement process. This approach commits all parties to the use of conciliation to address problems arising from the provisions of the agreement, including its principles, its rules and its individual sectoral agreements.

The mandate of the committee on internal trade is to "assist in the resolution of disputes arising out of interpretations and applications of the agreement". The working philosophy of the committee and of the agreement is to use consultation and conciliation in dispute resolution.

Disputing parties will be encouraged to make every attempt through co-operation, consultation and other forms of dispute resolution to arrive at a solution. If consultation fails, governments or governments on behalf of individual persons or persons directly can ask to have matters raised with a panel. The panel will consider the facts and make recommendations for changing policies or behaviour, but it will not assess damages. The underlying objective of the process is to seek to change inconsistent behaviour and policies and not apply penalties or award damages.

Under the agreement, retaliation is only possible at the end of the dispute settlement process. Only in cases where the federal government was a complainant in a dispute and only where a province has refused for a year to change a measure found by an impartial panel to have violated the agreement could the federal government consider taking retaliatory action.

Such action would first have to be discussed with the committee on internal trade. Even then it could only be such as to have the equivalent economic effect to the measure that had originally violated the agreement and it would have to be taken in a sector specifically covered by the agreement. This is what the Bloc Quebecois is complaining about as an undue intrusion of the federal government into provincial affairs. I ask you, Mr. Speaker, if you have ever heard anything so ridiculous.

In addition to dispute resolution procedures, the bill also presents amendments to a number of other federal acts which need to be changed in order that we meet our obligations to the provinces and territories to make the changes to federal legislation and regulations necessary to implement the agreement which we signed last year. All parties to the agreement were informed on April 12 in Calgary that the federal government would be introducing these amendments in the near future.

Our work to date has emphasized the value of the co-operative approach to solving trade problems internally in Canada. Our work in the future will do so as well. That is the very reason the agreement on internal trade has been criticized by members of the Reform Party for not going far enough fast enough. Other members opposite would have had the government act unilaterally. They have suggested under sections 91(a) and 121 of the Constitution to impose free internal trade on the provinces. That is the very thing the other opposition party accuses us of having done. Both criticisms are purely and simply ill founded and wrong headed.

The government tried to resolve this country's problems in collaboration with the provincial governements. The process leading up to the Free Trade Agreement bears witness to this. It has been our approach in the past, it is our approach now and it is the only approach that any responsible Canadian government can take in the future. It is the only way to govern and that is what real power is.

Cases where the federal government is the grievor in a disagreement under the Free Trade Agreement will be few. If a dispute were settled in favour of the federal government and if the province in question were to refuse to respect the conclusions of the impartial panel, the federal government would have the right to withdraw equivalent benefits.

Such retaliatory measures should be taken in the same sector as the initial violation or in another sector covered by the accord.

Retaliation could not involve transfer payments or social programs because these things are not covered by the agreement. Bill C-88 does not make the federal government a policeman of the internal trade agreement as the official opposition has claimed.

Bill C-88 only covers the federal government's obligations under the interprovincial trade accord, nothing more. The interprovincial trade accord is a consensual accord. All parties to this accord are responsible for applying it in their own jurisdictions and for meeting its requirements.

What we have heard over this day of debate is a series of allegations founded on misapprehension, perhaps wilful misunderstanding of the contents of bills before the House.

The agreement on internal trade we want to see broadened, deepened and strengthened. There is a lot more work to do. I call on the official opposition, since the Government of Quebec has claimed to be a free trader, not to put up roadblocks to a real free internal trading market within Canada but to begin to support it with actions instead of protestations.

[Gasoline Prices, June 1st, 1995]

Mr. Speaker, as the hon. member knows, there has been a series of investigations by the director of investigations and research under the Competition Act with respect to this issue. Prosecutions have been launched. Some have been before the courts. As she knows, it is my belief that competition is the best way to control prices.

I know it is part of NDP dogma to regulate prices. Perhaps in her next five-year plan she will explain what she sees for fuel prices over the next five years. I do not think that is the way to get the lowest prices for Canadian consumers. We need very tough and effective enforcement of our competition laws, and that is what we propose to deliver.

[Regional Development, May 31st, 1995]

Mr. Speaker, the hon. member does not understand this bill at all. It establishes a new mandate for the Federal Business Development Bank, among other things.

I can tell the hon. member that the excellent co-operation between the bank and the federal regional development agencies will help small and medium businesses throughout Canada, particularly in Quebec.

[Regional Development, May 29th, 1995]

Mr. Speaker, Canada's constitution clearly states that banks come under federal, not provincial, jurisdiction.

[Business Development Bank Of Canada Act, May 29th, 1995]

moved:

That Bill C-91, an act to continue the Federal Business Development Bank under the name Business Development Bank of Canada, be referred forthwith to the Standing Committee on Industry.

Mr. Speaker, I am very pleased to begin debate on the motion to refer Bill C-91, the Business Development Bank of Canada Act, to committee before second reading.

I have every confidence that the members of the committee will bring their ideas and convictions to bear on this legislation, which establishes a new mandate for the Federal Business Development Bank under the name of the Business Development Bank of Canada.

The objective of Bill C-91 is to make government assistance in the area of commercial financing more efficient, effective, and relevant to the needs of small business.

The bill reaffirms the bank's mandate, which is to provide management, consulting and training services to Canadian entrepreneurs. Small business is faced with a variety of challenges, ranging from the tax burden and deregulation to skills improvement and technology acquisition. But the most pressing need certainly remains sufficient financing and adequate consulting services in commercial management.

Without financing and adequate consulting services, small business cannot set out to conquer either the national or the international market.

It is essential that small businesses have access to financing through debt financing, as well as equity financing at every stage of their development, but especially at the initial stage.

Let us look at the challenges small businesses face when seeking debt or equity financing, in terms of four weaknesses in the services currently provided by Canada's financial markets.

First is the risk factor, as several lending institutions are reluctant to grant loans to certain small businesses, even at rates that take into account the higher risk associated with such loans.

Second is the size of the loan. Whether the loan requested is for $1 million or $50,000, the cost to the bank or venture capital holders to prepare and assess business plans and financial proposals as well as to monitor the progress of the venture generally remain constant.

Third is knowledge. Often financial institutions are not familiar with the nature of industries emerging in the new economy. They do not have any tried and true method to assess the risk associated with granting a loan to new industries or investing in them.

Fourth is flexibility. Lenders are often reluctant to provide financing to potential winners on flexible terms. Traditional lenders usually require payments to spread over the term of the loan. This type of financing can prove overwhelming for businesses at the product development stage, as these businesses have not yet reached the point where they can generate enough sales revenue to offset their debt.

These four problems arise from the fact that our economy is changing rapidly. In meeting the challenges of a knowledge based market, small business has modernized much more rapidly than traditional financial institutions.

The small business community in Canada must move swiftly to innovate and to secure a share of emerging business opportu-

nities. The Canadian economy as a whole relies upon their abilities and entrepreneurship to sustain economic growth and to create jobs.

Here is an instance where government can make a difference to the marketplace. No one is suggesting that governments can replace private sector financial institutions in meeting the needs of the marketplace, but it is in situations such as those I have described where government can provide leadership. We need leadership to demonstrate that it is possible to address the needs of small business in the knowledge economy. One government institution has experience and skills to provide that leadership: the Federal Business Development Bank.

Members may be aware that the bank is approaching its $3.2 billion statutory ceiling for capital and liabilities. With no change to this ceiling, the bank would have to ration credit, turning away qualified entrepreneurs who otherwise are positioned to create jobs. Under this legislation the bank's capital and liability ceiling would be removed and the bank would be subject to a 10-year legislative review, which is similar to the requirements imposed on chartered banks under the Bank Act.

Hon. members will recall that in the 1995 budget the finance minister said that the bank and regional agencies will forge new strategic alliances to ensure co-ordinated delivery of business financing. The bank's new mandate will encourage stronger partnerships and increased cooperation with the regional agencies and other federal financial institutions such as the Export Development Corporation.

Mr. Speaker, I would like to address the issue of regional development by showing how important the Federal Business Development Bank is in Quebec. Its head office is located in Montreal, and nearly twenty per cent of its offices are in Quebec.

Over the course of 50 years, the FBDB has provided more than $4.5 billion in loans to small and medium size businesses in Quebec. At present, the loan portfolio for Quebec totals $1.1 billion, shared among 3,600 clients. These past five years, FBDB clients have created 8,500 new jobs and more than 9,000 entrepreneurs in Quebec have benefited from management consulting services provided by the bank.

A similarly impressive story can be told elsewhere in the country. The arrangements we are making with regional agencies, in co-operation with the provinces and territories, will avoid costly overlap and duplication.

Finally, I want the House to understand that Bill C-91 is a key element in our commitment to provide leadership in creating a business climate that promotes small business growth, innovation and job creation. I believe that the innovative approaches the Business Development Bank of Canada will take after this legislation comes into effect will show the chartered banks in Canada that there is a profitable future for them in the service of Canadian small businesses.

[Gasoline Additives, May 19th, 1995]

Mr. Speaker, I am not sure whether the hon. member has thought of a different use for the product we all buy at the pumps. Perhaps he has. I am not sure what it is. The last time I checked, most of it goes into motor vehicles.

He will know that Canada has benefited very well from the fact that there is a very strong continental market in motor vehicles. We produce about 17 per cent of the North American production and we only consume about 8 per cent. That benefits us very directly in terms of jobs and economic growth.

The vehicles that are being produced use the product at the pumps. It should have come to his attention that the new cars require fuel without MMT. If he would like to have his constituents purchasing vehicles that either cost a lot more or have their diagnostic systems unplugged, then he ought to be in support of keeping the MMT in the fuel. But until we find some other use for it-and perhaps he breathes it, I do not know-we have to have continental standards in fuel.

[Pensions, May 19th, 1995]

Mr. Speaker, I think one point needs to be made very clearly. I made the point in the interview I gave based on that speech. I really do not have any particular interest in what any CEO is paid. I am not a shareholder of any of the companies.

However what is clear is that Canada stands poised to succeed very well on issues of competitiveness in the world. Now is the time for us to continue to save and invest.

This man wants to talk about pensions. That is all they really think about. I will tell him something. When we deal with issues of compensation in the House, let us talk about what it costs many people to be here as well. Let us cost out what the forgone opportunities are. Then we will put everybody on an even footing.

At the same time let us also recognize that members come to Ottawa to serve their constituents often at great cost to themselves and their families. We are looking for a recipe for continuing competitiveness in the world. In that way we will benefit all Canadians.

[Pensions, May 19th, 1995]

Mr. Speaker, I would like to explain exactly the point I made in a speech I gave to the Canadian Association of Family Enterprises last week.

At this stage in our economic cycle when corporate profits are recovering, which is a very good sign, it is time for Canadians to continue to invest in further productivity gains and further competitiveness as we had through the economic cycle.

We have been very successful in gaining competitive points vis-a-vis the rest of the world although much of it has unfortunately been based on our exchange rate. We need to continue to save and continue to invest.

Canadians from coast to coast have lived on no increase in family income on average over the past 10 years. They will be asked by their corporate leaders to continue to keep their belts tight as federal public servants have and as all members of the House of Commons have by not taking a wage increase in over five years. The time is not yet to start raising wages. The time is now to continue to invest and save.

[Sega Company Of Japan, May 16th, 1995]

Mr. Speaker, I take note the question. I will provide an answer to the hon. member as soon as I get it.

[Business Development Bank Of Canada Act, May 15th, 1995]

moved for leave to introduce Bill C-91, an act to continue the Federal Business Development Bank under the name Business Development Bank of Canada.

Mr. Speaker, on a point of order, I wish to inform the House that it is my intention to propose that this bill be referred to committee before second reading, pursuant to Standing Order 73(1).

(Motions deemed adopted, bill read the first time and printed.)