Madam Speaker, I am pleased to speak today to the motion of the hon. member of the official opposition. Yet I am sad at the same time because, as my colleague on this side of the House has just pointed out, all members of all parties worked together on the industry committee on this legislation introduced by the Minister of Industry, and I find it regrettable that the hon. member of the opposition has moved this motion.
Let us see what the motion is, and I shall then address the main points.
The member for Saskatoon—Humboldt is proposing in Motion No. 6 that Bill C-53 in clause 8 be amended by replacing line 26 on page 5 with the following:
(a) 50%, or any prescribed lesser per cent.
What does that mean? It means that under the present legislation the loans which are awarded under the small business loans program are guaranteed up to 85%. He wishes to reduce that to 50%. What impact will that have on our small and medium sized businesses?
It is quite simple.
There are two types of businesses that run into particular difficulties in obtaining financing. These are the very small businesses and the very new businesses. The current legislation helps remedy this double shortcoming. As far as size is concerned, close to three-quarters of businesses obtaining loans under the present legislation have fewer than five employees. This is a far higher fraction than for those obtaining loans from the banks in general. That is one very important point.
Research and recent experiences with this program show that the level of loan guarantee has a major impact on use of this program and the banks' interest in it. I would point out that there are 1,300 institutions using this program in Canada, via 13,000 service points. Someone on the other side mistakenly referred to 13,000 borrowers. The right number is 1,300 borrowers using 13,000 service points.
Lowering the guarantee rate given by government on each of these loans would have a negative impact on the entire sector of small and medium size business, particularly the very small and the very new.
As far as the number of years in existence is concerned, the gap is still more striking. Some 38% of small businesses benefit from a loan guarantee under the act. These have been in existence for less than one year. When we look at regular bank customers, however, only 5% of small businesses are less than one year old. It is therefore clear that the act must maintain the 85% guarantee. This is one of the main reasons I cannot support the motion of the hon. member for Saskatoon—Humboldt.
Another reason has to do with the businesses owned by members of ethnocultural communities. All the surveys tell us that members of such communities have trouble getting access to credit and capital. These are people starting small, and often very small, businesses.
If the figures show that the impact of reducing the guarantee from 85% to 50% would be very negative for small businesses in general, it would be even more negative for small businesses managed and operated by members of ethnocultural communities. The same would hold for businesses run by women.
I fail to see how someone with a certain degree of intelligence—and I have to assume that we are dealing with an intelligent individual, because he did, after all, have the trust of his constituents—cannot understand that lowering the guarantee from 85% to 50% would have a very negative impact on the development and growth of small businesses in Canada.
As for the second motion, I frankly find it a bit confusing. It asks, and I quote:
The minister will routinely conduct an audit or examination—
This motion eliminates completely the notice of several days the minister must give a business subject to an audit.
This amendment completely eliminates the notice period for audits of loans under the act and provides that they be done on a routine basis. What does routine basis mean?
I am not an accountant, but I have taken accounting classes. I also studied fiscal law when I was in law school. When we talk about audits it is very clear that notices are given when we are talking about specific legislation.
The government is proposing that Industry Canada have the power to conduct audits on the basis of lenders' application of the program. However, neither the auditor general's audit nor the sample audit which was done for the department indicates pervasive or systemic compliance problems. Only such circumstances would justify routine audits without notice. It is quite clear that the member's motion calls for routine audits, but provides no notice period.
Research has shown that compliance is sufficiently ensured through sample audits. As well, the notice period of at least 21 days was added in response to the concerns which were expressed by the stakeholders. The lenders who deliver the program originally asked for a notice period of 45 days.
Eliminating that notice period would be a reversal of a commitment made to the financial institutions which deliver this program. This was a commitment negotiated by all parties represented on the industry committee. All of the members who sit on the Standing Committee for Industry negotiated that commitment. Now we have one of those members submitting a motion which goes completely against it. Here again, without calling into question that member's intelligence, I wonder where his head is. The member obviously has a short memory.
The proposed amendments are simply unacceptable. They go against all of the discussions that took place in the industry committee. The amendments go against the very objective of the legislation. I do not understand the member. I wish the member were here in the House right now. I would like to be able to ask him a question privately, outside of the House.
These two motions simply cannot be supported. They go against the very objectives of the legislation and they go against the objective of the government, which is to assist small businesses.
