Mr. Speaker, I am pleased to stand in this House today to provide some comments with respect to Bill C-53, the Canada Small Business Financing Act. This act will increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses in Canada.
At this point we are also debating the motion of the Liberal Party to cut the debate short. This is a very serious matter that the government has implemented.
We see two political parties in the House of Commons playing games.
The Reform Party wants to kill the bill. Reform Party members time after time, speaker after speaker, whether they are from British Columbia, Alberta, Saskatchewan or Manitoba, stand in this House and say that small businesses do not deserve fair financing opportunities for their progress. Reform Party members time after time from every province they represent, the four provinces in western Canada, say that this bill is bad and that they want to kill it.
This bill will affect about 200,000 businesses over the next number of years.
The Reform Party is playing what many people describe as silly games. The Liberal government in response to silly games jumps right in feet first and plays sillier games by ending the debate, closing or limiting the debate on this bill which is very important to small business owners and employees of small businesses in this country. The NDP is really quite unhappy that both of those political parties are playing games with the futures of these businesses and the families that are supported by them.
As well, we have seen the Liberal Party time after time limit or close debate on matters that are of economic importance to our country. We have seen it invoke closure so many times in this House I have lost count.
We have seen it invoke closure on the wheat board act, which was supposed to be an act that encouraged debate and provided opportunities for members of parliament to strengthen the wheat board. Instead, the Reform played its silly games. The Liberal government jumped right in and played more silly games, ending in a wheat board act that is not as strong as it should have been if it had full debate in the House of Commons.
We have seen the Liberal government opposite limit debate on very important budget bills because the Reform Party played silly games. The Liberal Party gets sucked in. It embraces these silly games and plays sillier games. We have seen it cut debate on the World Trade Organization legislation.
The World Trade Organization has handcuffed Canadians but not Americans to the detriment of agriculture in this country, to the detriment of many small, medium and large enterprises in this country. We are seeing firsthand in Canada this week the effects of limiting of debate on the very bad World Trade Organization legislation.
Today we see one more silly game by the Liberals, and the Reform Party is embracing silly approaches to the business of the nation. I believe that both parties are negligent in their responsibility to the taxpayers of the country. They are negligent to the small business community because they do not want full debate or full discussion on the bill. The Reform Party not only does not want debate. It does not want the bill. It does not want to have any small businesses left in the country.
When it comes to business people viewing the Reform Party's real agenda, its big business, anti-small business agenda, the Reform Party will pay very dearly for that come the next election. The Liberals will not benefit from that because they are the ones who are inciting the Reform Party to play these stupid games.
I am from Saskatchewan. In part I share the comments of the member of parliament for Souris—Moose Mountain, a Reform member from Saskatchewan. He is concerned about the agricultural problem in western Canada and in our country. I am very concerned about this serious matter. I have had calls from and discussions with farmers and their families over the last number of weeks. Farmers in Saskatchewan and in other parts of the country are in desperate straits.
We have seen commodity prices fall. We have seen the incomes of farm families falling. Many predict that they will fall by about 40% this winter alone. What this means is that one-third of the farmers who are basically operating on a very tight margin could potentially loose their farms.
What do we have here? We have a Liberal government and a Reform Party that are killing debate on a small business bill. They do not allow for wide-ranging debates and inputs from the House of Commons on the agricultural farm aid packages which are necessary. One of the key issues for us in the House is not just small business and financing for small business but making sure that our farm families have at least equal support from our national government.
We are the only country in the OECD that does not have a national agricultural policy or a program to assist our farmers. When the Liberal government eliminated the Crow benefit we were told that it was according to requirements of GATT and the WTO.
I went to the Council of Europe in Strasbourg, France, and raised the issue with farmers and farm members of parliament from 36 European countries that subsidize their agricultural needs and farm families. I said that the Liberal government in Canada was eliminating the Crow benefits, a farm agricultural transportation subsidy, because of the WTO. I asked whether they were to eliminate subsidies in their countries which, by the way, total about 60 cents on the dollar for European farmers from their governments. We total about 2 cents on the dollar in Canada.
They said that GATT and WTO gave them five years to address their subsidies to farmers. The Liberal government eliminated these subsidies at the first possible opportunity. We are seeing not just farmers going bankrupt in record numbers. We are also seeing the transportation system being ripped apart by the government as well.
However, these European parliamentarians and the agriculture committee of the Council of Europe said that under no circumstances would they abandon their farmers to benefit the United States of America in its need to have reduced subsidies for other farmers except its own.
It has been three years since I have spoken to these politicians in Europe. They said their subsidies were intact but their farmers were still suffering but not as much as farmers in Canada because they have a basic support package from their national government and our government does not provide one.
I believe Bill C-53 is a work in progress. It should be forwarded to the standing committee on industry for a detailed review to make sure that small businesses have an opportunity to access funding.
We have heard representations from the small business community and some of their representatives such as the Canadian Federation of Independent Business and others saying that one of the important requirements of small business is access to capital.
We are very concerned that small business continue to have access to capital. The bill will provide small businesses with an opportunity to obtain some guaranteed loans which will be totally financed by the businesses in question. This is not a subsidy program but a loan guarantee program which I feel is very necessary, particularly for the small business community.
I will raise a couple of concerns about the bill. It is basically an update of the Small Business Loans Act, the SBLA, which has been very successful over the years because businesses can apply directly to an authorized lending institution for a loan and their requirements can be met with respect to the SBLA and now the new Canada small business financing act, the CSBFA.
The basic parameters of SBLA are not changed in the bill, according to my information. There will still be asset based debt financing to businesses with less than $5 million in annual sales. The loans will remain capped at up to $250,000 per business. There will be a maximum amount eligible for financing, which is 90% of the cost of assets. There will also be a one time registration fee of 2% which is paid to the government to apply for this loan once it is accepted. The loan period will remain pretty much static.
This initiative by government is important to small business because 30,000 firms apply each year under the program. It is not $250,000 per approved application. It actually averages to around $68,000 per loan. For some people that may not sound that large, but we have to understand that there are some very interesting structures in the Canadian small business area.
For example, Thompson Lightstone & Company Limited just completed a study in 1998 with respect to small business. It found that two-thirds of small and medium enterprises report annual sales of less than $500,000 a year. Thompson Lightstone also reported that 49% of all businesses report sales of less than $250,000 a year. This is up from 43% the previous year. From 1997 to 1998 we saw an increase from 43% to 49% of all businesses with less than $250,000 a year in sales. This study also showed that small and medium enterprises employed on average only seven full time people.
The Reform Party is trying to kick the heck out of small companies that are trying to create jobs and trying to sell services and products in this country and abroad. Yet it expects in return support from the small business community. The small business community will be quite interested in its comments with respect to the bill and to small business. They will be distributed across the country by all members of parliament who support some kind of financing mechanism for small business.
Another point I want to make is that the Canadian Federation of Independent Business did a study of its membership. There are between 70,000 and 90,000 members, depending on the year. However, 27% of CFIB members believe that the availability of financing is a problem. If the bill is killed by the Reform Party 27% of all existing businesses will be concerned because there will be almost zero availability for much of their financing problems.
This figure does not quite jibe with the Lightstone statistics. Lightstone says a top of mind issue of small and medium enterprises is about 10% but that is because when the CFIB poll its members it gave them a choice of about 10 issues: which of these 10 issues are important to you and are first at mind?
The Lightstone polling is more of a cold random sample. It calls up small business people who are very busy trying to do their jobs and keep their businesses going. They are caught on the phone and have to answer these questions. The first thing that comes to the minds of most business people is that they need more customers and more revenues. This is very important, but in terms of key issues facing the viability of small business 27% is a number which has been consistent throughout the years in all the research I have seen.
The Lightstone report also provided interesting information with respect to businesses. Lightstone said that 18% of the hundreds of thousands of small business enterprises used an SBLA type of loan guarantee and another 6% used some other form of loan guarantee, be it a provincial government or a federal government loan program.
Some 26% of small and medium enterprises are rural based. The member for Souris—Moose Mountain indicated earlier that agriculture was a problem and that it would not really help the business community in his riding. He made a good point, but I do not think he understands that 26% of these small and medium enterprises are rural based.
The most important statistic I find with respect to the breakdown of businesses and where they operate from in the Lightstone report is the figure that 28% of all small businesses are home based. That is a tremendous figure. It is a huge figure which is backed up by Statistics Canada in its national registry.
The Reform Party is attacking home based enterprises and other small and medium enterprises by cutting off any opportunity they may have for obtaining loan guarantees, which I remind members are basically self-funding and self-financing from the business community that uses them.
Some may argue that the auditor general had some concerns. Yes, indeed the auditor general had some concerns with respect to the Canada Small Business Loans Act. I happen to have some comments from the auditor general in this regard. He was very concerned about the accountability of some of these loans. He was very concerned about how some businesses were abusing it with the co-operation of certain financial institutions. He had some other concerns in terms of auditing and keeping track of the numbers and the government's potential liability.
These concerns are legitimate and I think all members of the House would support them. The bill should be referred to committee so that these concerns could be raised one more time and the government could provide assurances in the bill at committee that the auditor general's concerns will be addressed and that the the very minor abuse by financial institutions and by some businesses alike will be addressed and cleaned up.
We see in the SBLA program that 177,000 new loans from 1993 to 1997 were approved with loan guarantees. The total was about $11.2 billion, a significant amount of money.
We in the New Democratic Party have other concerns to raise with the House. The concerns are more related to the pilot projects the bill is going to undertake. Two pilot projects are proposed. One is to extend the program's guarantee to cover capital leasing and the other is to improve the voluntary sector as eligible borrowers. We are concerned about the design of these projects. We would like to raise with the Treasury Board minister and the Minister of Finance our concern that it becomes a regulatory process in terms of approving these loans. They are not as transparent as they should be. The auditor general has indicated that there should be some transparency in approving these loans certainly with respect to the regulation thereof.
There is cost recovery under this program. We believe that if there is a cost recovery component in these regulations the act will be very beneficial to small business. The CFIB has some concerns about capital leasing. It is concerned that the $250,000 limit is quite high. It is concerned as is the auditor general about larger firms beating the system. It is concerned that the data collection and the monitoring are poor and should be improved. We want to see this bill referred to committee so we can raise these matters on behalf of small business and others.
We feel along with the CFIB that there may be some politicizing of this bill in particular as we are providing the volunteer sector with access to the SBLAs. The volunteer sector is a very important sector in this country. It benefits by receiving charitable donations and other donations which are tax supported through the tax system. We are concerned this is just one more way of saying to the volunteer agencies that we are not going to provide any more funding to you but we will let you borrow money through guarantees in the government.
We want to see this bill referred to committee for further study. We want to make sure home based businesses, first nation people and women are not excluded from the program. We want to make sure the banks in this country are able to discriminate between small and large businesses. We are also very concerned about the mergers of the banks and how those will affect access to capital for small businesses. The merging of the banks is economically a very dangerous situation for our country. We would like to see the mergers stopped because with respect to this bill and small business the banks have admitted they have failed in their delivery of small business financing and access to capital for small business. We want to make sure the small business community is given a fair shake in terms of reviewing capital. I look forward to discussing this bill further in committee.
