1983-04-11

GOVERNMENT ORDERS


[Stage Direction]
The House proceeded to the consideration of Bill C-136, Small Business Investment Grants Act, as reported (without amendment) from the Standing Committee on Finance, Trade and Economic Affairs.
Mr. Deputy Speaker:: There are three motions standing on the Order Paper at the report stage of Bill C-136, the Small Business Investment Grants Act. Motions Nos. 1 and 2, standing in the name of the Hon. Member for Winnipeg North (Mr. Orlikow), should be grouped for debate but voted separately. Motion No. 3, standing in the name of the Hon. Member for Mississauga South (Mr. Blenkarn), will be debated and voted on separately.


Mr. Ian Deans (for Mr. Orlikow) moved:: Motion No. 1.
That Bill C-136, Small Business Investment Grants Act, be amended in Clause 3 by striking out line 20 at page 1 and substituting the following therefor:
"obligation for the acquisition of depreciable assets, or the financing of
research and development, or to meet operating expenses and owed by him, the
Minister may,".
Motion No. 2.
That Bill C-136, Small Business Investment Grants Act, be amended in Clause 3 by striking out line 5 at page 2 and substituting the following therefor:
"the grant is made to not less than ten per".


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, we have had the opportunity of discussing this Bill and the implications associated with it, as articulated by the Members of the New Democratic Party in particular. I want to take a moment or two to refer to the specific nature of these amendments and the reasons for them.
When one looks at the content of Bill C-136, the Small Business Investment Grants Act, one's first reaction is to be supportive, to recognize it as a positive step in the right direction. It is the Government once again recognizing its obligation to assist the small business sector. If there is a sector of our country that has been overlooked by the federal Government, it is the small business sector. If one were to examine all of the various programs that have been implemented over the years to provide some assistance for the business community, and I use the business community in the broadest sense as
including the agricultural sector, the fishing sector and the like, one would find that very few programs have been introduced to provide assistance to the small business sector specifically.
Large businesses-the corporate sector, the international business community-have a variety of programs designed to assist and encourage them, but by and large the small business sector has been overlooked, particularly when it comes to assistance that is real to them. Once again, I am afraid, Bill C-136 has missed the mark. It is a Bill that says to the small business sector that if they are interested in expanding their operation, particularly in terms of new equipment, we are prepared to assist them at this time.
[DOT] (mo)
Mr. Speaker, I do not expect that there is a single Member sitting in the House of Commons today who feels that the problem the small business sector is facing today is one of adding new equipment to their operation. The problem of the small business sector today is simply one of survival. Small business people across this country at this moment are clinging on by their Fingertips on a daily basis waiting for the banks to move in, waiting for the financial companies that they depend on to foreclose.
It is now the spring season when the small business sector traditionally begins to grow and expand its operation and new jobs are created. But I am afraid that is not occurring in the spring of 1983. If you were to sit down and analyze what was happening to the small business sector in every region of this country, the small business sector is disappearing from the Canadian landscape and being replaced by the international chains, by the corporate sector.
Now, one could simply debate in itself whether or not it is to Canada's advantage to have the corporate sector predominating and growing at the expense of the small business community. I do not think there is any question in terms of the longterm viability of our Canadian economy that we have to be paying more attention to the small, family-oriented business, the business that has a commitment to its community, the business that is 100 per cent Canadian owned and Canadian controlled, the business that has a commitment to Canada, to its Province, to its sub-region and to its community. The international corporation does not have that. Its priority is to its shareholders and more often than not to foreign shareholders and to a foreign board of directors. What we are talking about in this particular Bill, a Bill called the Small Business Investment Grants Act, is a minute step in the right direction

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Small Business Investment Grants Act
and these amendments address two of the significant weaknesses in this Bill.
Let me take a moment or two to talk about those two weaknesses. The problem is that small businesses today have difficulty obtaining funds for expansion, for buying new equipment and new plants. Small businesses today are having problems operating and just simply staying in business. Most small businesses have cut back on their employees, have cut out all of their expansion plans, have closed off whatever sectors they are able to close off, and are left with the bare bones of their small business operation.

Amendment No. 1 says that the Government has an obligation to assist the small business community during these very difficult times in two critical areas. The first critical area and the most important is assistance with working capital. The Minister of State for Small Businesses and Tourism (Mr. Rompkey) is knowledgeable about the plight of the small business community and knows full well that it is lack of working capital that is causing difficulty out there today. I am sure that if he had his way he would support amendment No. 1, so I hope he does get his way. I suspect that it is his Cabinet colleagues who are holding back.
This would cost the Government some money but there is no alternative. If this sector of our economy disappears from the landscape it will mean a further erosion of the economy, fewer revenues flowing into Government coffers and more flowing out in terms of social assistance programs. We must reverse this tide and the way to do that is to provide assistance to those businesses that are having problems with working capital and through the provision of research and development money.
The small business sector of our economy is going to perform the major part in a recovery program for Canada. That is because it is able to move quickly and take advantage of the changing times much more than the cumbersome international corporation can with its inertia of bureaucracy. The small business community is able to dodge and weave, move and twist and turn to take advantage of the changes in our society. We should encourage that, Mr. Speaker. We should encourage the small business community to come up with ideas for research, for opening up new product lines, for new marketing strategies. We should be behind it 100 per cent, but we are not, Mr. Speaker. If we could assist the community with this particular borrowing procedure then we should do so.
We are not doing that, Mr. Speaker, and that is why the Hon. Member for Winnipeg North (Mr. Orlikow) and myself have decided to offer an amendment that would provide encouragement to the small business sector to carry out aggressive policies, from research and development through to production, and to provide assistance to businesses hard pressed for operating capital. It is a step in the right direction, Mr. Speaker.
I should like now to refer to the second amendment, Mr. Speaker. We feel that there is a psychological barrier that must be broken in this country if we are to give a very clear signal to the small business community that we are on side and
expect it to lead a major effort in this recovery. That signal is the level of interest that a small business person must pay when he or she approaches the bank for operating funds or for new development lines.
At the moment, the Bill allows that the interest rate could drop to 12 per cent. That is not particularly comforting, Mr. Speaker. As a matter of fact, it is a jolt. The small business community, 900,000 strong, is waiting for an indication of how seriously the Government considers its plight, and the Government is introducing a Bill to allow it to borrow money at 12 per cent for new plant. That is not a revolutionary breakthrough in terms of assistance to the small business community. If someone went to the FBDB or the Royal Bank of Canada or any lending institution now, they could probably get that same rate.
We should give this Bill some guts, Mr. Speaker, and introduce measures that will assist the small business community. One way to do that, as the amendment suggests, is to provide that the rate be 10 per cent. To my mind that is a psychological point. If we can provide money to the small business community at 10 per cent, it will give encouragement to expand; but during these times, 12 per cent offers little incentive.
With those two amendments, Mr. Speaker, we urge the Official Opposition to support us, but, more important, we urge Members of the Government to give a clear signal to the small business community by supporting amendments Nos. 1 and 2. I know the Minister of State for Small Businesses and Tourism would accept them if he has the support of his caucus colleagues.


Hon. William Rompkey (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, I just want to make some comments on the amendments proposed by my colleague. I have a great deal of respect for his knowledge of the small business community and the concern that he has expressed not only today but in the weeks and months gone by. He knows, and I know, that we are dealing today with a Bill which was introduced on October 28 and which has had, in my opinion, and I suspect in his opinion also, a far too lengthy passage through this House. In fact, what we are dealing with is an instrument which was brought in at a time when interest rates were high, and we are dealing with it now at report stage and third reading at a time when interest rates have come down substantially from where they were when the instrument was first introduced.
I believe we must ask ourselves, is this the instrument for the future? Do we want a better instrument than this to serve the small business community? I agree with the Hon. Member that a signal must be sent to the small business community. I want to send it and I believe the Hon. Member wants to send it also. Let us send the message today to the small business community that we realize that they are the main piston in the
April 11, 1983

engine of the economy, which is private enterprise. They are the job creators. Forty-two per cent of all the jobs in Canada are held in small business. If we want to create jobs we must support them. I realize the business community wants working capital. I know they want to plan expansion now. But is this the best instrument now?
I have been speaking with my small business consultative committee from across the country and we have been consulting with other groups which represent the small business community. We hope very soon to put out a small business strategy, which would be the strategy of the Government of Canada for the support of small business. The question is, however, is a Bill which was introduced on October 28, and which is now receiving final disposition today, the best instrument to support small business for the future? I would urge the Hon. Member and the Official Opposition to pass this Bill today because, really, what we are talking about is an instrument which has served over the years. Indeed, the program went into effect without the legislation. The brochures went out very quickly. We were able to use a vote within Industry, Trade and Commerce to support some of the applications, except for those from farmers and fishermen which, by the way, totalled 62 per cent of the applications under the SBIG. Sixty-two per cent of the applications were from farmers and fishermen from all across the country.
I ask for quick disposition of this Bill because it is a measure which expired, according to the period announced in the budget, on March 31. The information was put in the brochures and on the application forms. Everyone was aware publicly that this was a temporary measure while interest rates were high and which was to expire on March 31.1 say to the Opposition now that we should deal with this because 62 per cent of those who applied will not be able to receive the money which we have committed to them. I do not know how many farmers and fishermen there are in Mississauga, but there are many across the country who will not be able to take advantage of this measure. There are 4,000 applications made under this program to date. I am urging the Opposition to accept speedy passage of this Bill so that we can keep our commitment to the farmers and fishermen and the other people who have applied under this program. As I say, it was a measure which was introduced when interest rates were high and I believe what we have to look at now is a much more comprehensive strategy for the support of small business.
While I appreciate the point raised by the Hon. Member for Kamloops-Shuswap (Mr. Riis), that working capital has to be supplied, I would remind him, and I know he knows full well, there are instruments such as the Federal Business Development Bank and such as EDP, which indeed do provide for loans for working capital. What I believe we should be focusing on is our normal lending institutions, our normal lending mechanisms and vehicles. This is a temporary measure and we should be looking now to refine our normal lending mechanisms to support small business. 1 appreciate the fact that he says that interest rates are still high, as indeed they are, for
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small business, but they are coming down. I believe we should let market forces continue to work so that they will, as I believe they will, come down in favour of small business.
I appreciate the points made by the Hon. Member, but I say to him let us pass this legislation without amendment now because it is a temporary measure which we have used, and let us look to the future for our policy towards small business. Let us refine our existing lending mechanism so that we can give a clear signal to small business that it has to be the focus, as we come out of this recession. We are for them and we are going to put in place those instruments that they need; but this is not necessarily the best vehicle.


Mr. Blenkarn:: Mr. Speaker, can the Minister advise us where in the Bill this measure is limited to March 31, 1983. I notice in his blue and green publicity document that it was limited to March 31, but where in the Bill is there any limit on the life of this grant program?


Bill Rompkey: Mr. Speaker, number one, it was in the budget.


Mr. Domm:: Which budget?


Bill Rompkey: This is a budget measure, Mr. Speaker. It was limited quite specifically in the budget to March 31. So first of all it is a budgetary item; it was also put in the regulations which we had hoped would be passed long before now, of course, and in all the literature which has been made public in connection with this Bill.


Donald Alex Blenkarn: Mr. Speaker, if it was in the budget, maybe the Minister could tell us where. I have the budget speech here and I do not see where there is a limitation on this program of March 31, 1983. Was it the intention of the Government definitely to limit the program to that date? If that is the case, will the Minister be seeking unanimous consent of the House to amend the Bill so that it will provide only retroactive approval of advances made under this Bill up to and including March 31, 1983?


Bill Rompkey: Mr. Speaker, I have to repeat the point I made. We are talking about a measure which was developed when interest rates were high. We are talking about commitments which had been made and a program which would finish March 31, with other mechanisms to follow in its place. I urge the Opposition to pass this measure as quickly as possible so that indeed we can keep our commitments. I think speedy passage would be in the interest of those people who have been seeking help and support under this program up until now.


Donald Alex Blenkarn: Mr. Speaker, the Minister's answers point out the very reason why the House should defeat this Bill. I say that because the Government has no intention at this point of using this measure as a grant program to assist small business to reduce interest costs. Indeed, the Government dillied around with Bill C-136,

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Small Business Investment Grants Act
refusing to bring it on for debate when there was a need for assistance on interest rates. Interest rates have now fallen to the point where the prime rate is 11.5 per cent, so a Bill which subsidizes interest rates to 12 per cent is not much of an assistance program. The fact is that the Government has all of the mileage it wants out of this Bill.
I want to remind the House that the then Minister of Finance, in order to curry the favour of small business, on June 28 last said:
I am announcing an important new program to reduce interest costs for small businesses undertaking new investment. $400 million is being allocated to this program.
The expansion of many small businesses has been halted by high interest rates. Grants will therefore be made to cover four percentage points of interest charges, over a period of two years, on loans extended by financial institutions to both incorporated and unincorporated small businesses.
There was nothing mentioned about limitation of the grants or anything of that nature. The budget was immediately produced and another fancy brochure was produced describing what this Government would do for small business. The small business community knows what the Government has done to small business. It has raped and pillaged small business. It has taxed and regulated it to death and has destroyed it.


Mr. Cullen:: Mr. Speaker, I rise on a point of order. I understand that unanimous consent was given to the Hon. Member to ask questions.


Mr. Deputy Speaker:: The Hon. Member has been recognized to make a speech.


Donald Alex Blenkarn: The former Minister continues to rise occasionally in the House without understanding for what purpose he is doing so.
The fact is that the Government's programs for small business have remained largely at the brochure stage. We have seen such brochures as "ABCs for Small Business" and the "Government of Canada in the Small Business Community". Other brochures have been published by DREE along with other documents from various other sources.
In order to understand what the small business community wants, I would like to refer the House to the evidence given by John Bulloch, President of the Federation of Independent Business, to the Committee on Finance, Trade and Economic Affairs on September 16, 1982. At that time he said:
You can get rid of half the grant and aid programs for small business in Canada. They were all created by bureaucrats in response to Ministers' questions. What can I do for small business, they are putting the heat on me? And up comes another program.
There has been no program in this country developed or asked for by us at the provincial level, and there are something like 800 of them. You could scrap half of them. Go back to the tax system, and you can get a lot of financing. If you want to start cutting budgets and cut into the business sector, we will give you all the support. We say you should be making absolute cuts in the cost of Government and cut into the business sector as well as all your other areas. They do not reach the people you want to reach. They are the bureaucratic response to political pressures. They are bubbling up all over the place; they never stop. And we have never asked for anything.
This was said by the President of the Federation of Independent Business and this program represents exactly that. Our colleagues in the New Democratic Party have put forward an amendment which essentially says that if the Government really means it all, then why not make these grants to subsidsize interest to not less than 10 per cent? Those modest Members in the NDP suggest only 10 per cent.
A review of the interest rates in this country shows that while the Bank of Canada rate is 9.5 per cent, the Government has permitted the chartered banks to set their prime rate at 2 per cent above the Bank of Canada rate. That differential is unheard of since the differential between the prime rate and the Bank of Canada rate used to be somewhere between one-half per cent and three-quarters per cent. The Government has permitted that differential to rise to 2 per cent and remain that way for a number of months.
The Government has the authority and responsibility to drive this country's prime rate down and direct the banks to do so. The fact is that the bank prime rates are significantly higher than they should be. There is no justification for a Government that really pretended to want to help small business to produce this Bill and ask for its speedy passage, knowing that it will do nothing for anyone. The Government refers to farmers and fishermen but it does not give us any statistics on the amount of money involved and why they were included in the Bill initially instead of being covered under other appropriate legislation dealing with farmers and fishermen.
The Government has indicated that it will not accept a proposal that would reduce interest rates for small business to 10 per cent. It is inconceivable that this Government of propaganda and puffery should be allowed to get away with it. I hope that the debate today, tomorrow and perhaps another day will allow us to point out the fraudulent and deceitful nature of the presentations we have heard from the Government with respect to small business. The amendments to the Bill call the Government to task. The amendments suggest that if the Government plans to take action, it should do something about inventory and the cost of working capital. It should strive to drive interest rates down to a level where business can begin to make a profit.
The Government does not do this because it would have to pay something for its advertising program. I suspect that the Government has spent about as much money for puffing up this program in its cross-country advertising as it will spend on grants under the program itself. There is nothing like $400 million in grants. We have not heard the Minister or the Government tell us how much money it has committed to this program. However, the committee received some figures back in December, and since they were modest at that time I suspect they will become even more modest as interest rates drop. If Members seriously analyze the advertising and puffery associated with the program, I suspect they would find almost as much money is spent on advertising and puffery as is spent on grants.
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Therefore, we are faced with a situation in which we have a Minister who purports to act on behalf of small business. He purports to be the Minister for small business and he comes to the House to ask us to pass his Bill. He does this so he may put another notch in his rifle to show what he has done for the business community. He is a Minister who does not really have any clout, power, desire or energy to act on behalf of small business. He merely enjoys issuing his brochures but does not accomplish anything. If these amendments are not passed, it is proof positive that he will not do anything.


Mr. Gordon Taylor (Bow River):: Mr. Speaker, I wish to say a few words in regard to this matter. The Hon. Minister pointed out that the Bill was introduced on October 28, 1982. It is amazing that the Minister advises us today that the Bill expired on March 31, 1983. That was 11 days ago. In other words, we are being asked to pass a Bill which has already expired. Therefore, those people who were waiting for the Bill to pass so that they could apply for grants will now be unable to apply unless the Minister assures us that applications will be accepted under this Bill for a period of three months or six months from the time it has passed. Otherwise, it is utterly unfair. The normal procedure is for people to wait for a Bill to be passed before they make application. Those who would benefit but have not made application to date are completely out of luck unless the Minister makes that change. I think that assurance has to come. Otherwise we are almost wasting our time.
If it is possible, I would like the minister to tell us how many applications have been received to date. It would be interesting to see how many people really believed the legislation would be passed and applied under the Bill. I submit again that it is utterly unfair to bar people from applying for this benefit because the Bill was not passed before March 31. I urge the Minister at least to make this reasonably fair so that people can apply after the Bill is passed. This only makes ordinary, everyday sense.
The Bill is limited. I like the two amendments introduced by our friends in the New Democratic Party. They certainly improve the Bill and they are being debated together. The real problem today is still high interest rates. The 4 per cent remains in the Bill. There is a maximum of 12 per cent, unless the amendment down to 10 per cent is accepted. This means that a person with an 18 per cent interest rate would obtain a benefit of 4 per cent but would still be paying 14 per cent. Someone with an interest rate of 20 per cent-and there are a number of people over that-would obtain 16 per cent. Those with 14 per cent interest rates under the Bill would only obtain a 2 per cent advantage. If the amendments carry, at least these would obtain a 4 per cent advantage.
I realize that it was not this Minister who introduced the Bill, but he is now carrying responsibility for it. I ask him who we are trying to help?
I have just spent a number of days mainstreeting in my constituency. The real problem faced by farms and small
Small Business Investment Grants Act
businesses-and farms are small businesses as well-is that people are locked into interest rates. They had to renew at 17, 18, 19 or 20 per cent rates; they had no choice. Back in November the present Minister spoke on second reading and mentioned that $400 million was being provided to help with up to 4 per cent of interest, and this is what the Bill indicates, $400 million.
Recently the agricultural Members of the Progressive Conservative Party submitted a proposal to the Government that would cost $100 million, by which we could buy out all those high interest rates from our farmers. We could buy out those 16 per cent to 22 per cent interest rates for less than $100 million and then have the loans refinanced so that they will pay a stable interest rate. If we do something like that, we would be doing something for small business.
This Bill will be a drop in the bucket. It is too little, it is too late; it is only a drop in the bucket. It does not tackle the real problem bothering small businesses today.
I urge the Hon. Minister to bring in amendments. He could do so with the consent of the House. He could bring in amendments that would take $100 million of that $400 million and really do a job by buying out the highest interest rates, because these people really had no choice.
I do not know how many applications have been received, but the normal procedure is that people do not apply until the Bill is passed. We will not help those who have gone into receivership or gone bankrupt. It is too late for them, but we may still help many people to stay on the land and to stay in business.
Surely, if this Bill has any objective at all, it should be to keep our businessmen, farmers, fishermen and all small-businessmen viable. It is small business upon which we depend for jobs. It is small-business people who went out of business. Sure, we lost many jobs through the big boys, those firms which employed from 2,000 to 4,000 people, but many of the two million are unemployed now as a result of small businesses going bankrupt, laying off help, bringing in their wives to help because they could not afford to pay anyone from the outside, and having their children of all ages help in the store and on the farm. That is how some of them remained viable. Some farmers have gone out and worked at other jobs just to keep their farms going.
This Bill will be of help to some, but not to very many if we do not extend the application date. It could be a great deal of help if the Minister would really do a job of buying out the high interest rates and refinancing at a reasonable level.
There are other things which should be done. As the Minister mentioned, the Bill will not solve all problems. It is too bad it was not passed back in November. I really do not know why it was not. I think there would have been unanimous consent on all sides of the House for this Bill to come in. I do not know why it has taken five months, from November to March, when we took time in the House to deal with Bills which the people do not want, such as Canagrex. We wasted two full days. One

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of those days could have been used to pass this Bill. To rush it now, I think we have to have assurance from the Minister that people will still be able to make application, those it will help. Let us help as many as we can. The more we can help, the better. If the change I just mentioned is made, it could help a lot more people.
There are many things which should and could be done to help keep small businesses, farms and our fishing sector viable. It would not cost the Government one cent to keep many farms viable. It could simply change a small section of the Western Grain Stabilization Act, where it would make a pay-out in three years instead of five years. It would put perhaps $150 million into the pockets of farmers who are part of the program involving wheat, oats and barley. It would keep them viable.
I know a farmer who on paper today is rich. He is a relatively young man. He went to college. He obtained his Bachelor of Science degree in agriculture. Now he is rich on paper but almost bankrupt because there is no cash flow. This Bill will not help him very much. These people need help.
I see my speaking time has come to an end. Before sitting down I urge the Minister to bring in some measure with real meat in it to help small-businessmen, farmers and fishermen. They need it, as the Hon. Minister knows.


Some Hon. Members:: Hear, hear!


Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, we are here today to begin debate at report stage on a Bill, as was mentioned earlier by previous speakers, that was introduced for first reading almost six months ago, Bill C-136 respecting the Small Business Investment Grants Act. It formally enacts certain measures that arose out of one of the series of budgets brought down by the Minister of Finance (Mr. Lalonde) or his predecessor to try and repair some of the damage caused by earlier budgets. To some extent it marks a departure for the Government for, like most of its predecessors, it does little good and, unlike most of them, it does little harm either. Perhaps that is a step in the right direction for this Government and one for which we should congratulate them.
As a Bill, what does it purport to achieve? Not very much that I can see. Essentially it empowers the Minister to make regulations, and that is about all it does. At the present time, it is a near totally irrelevant Bill. At a time when interest rates and the measures contained in the Government's many budgets combine to squeeze the life out of small businesses' working capital, it expressly excludes loans for the purpose of providing working capital.
As my colleague from Bow River (Mr. Taylor) mentioned, he was on the hustings during the Easter recess. I too talked to many businessmen in my riding who pointed out the crying need for working capital, asking where they could get money to stay afloat, they are that close to the line. It is no good
providing money to firms already in receivership or bankruptcy.
At a time when the Government's measures have made the purchase of new equipment out of the question for most small businesses, it expressly excludes loans for the purpose of buying used equipment. In short, it displays all the foresight and the understanding of the plight of small business that we have come to expect of this Government.
But wait. It goes even further in displaying the Government's firm grasp of the realities of life in the private sector. We on this side of the aisle have for many, many years been harping on the need for providing incentives whereby industry may step up its research and development. Lo and behold, we find that expenditures for research and development, if engaged in by small business and funded by borrowing, are eligible for inclusion in this program.
I do not want to take anything away from those small firms which have been forced to borrow to finance their research and development, but surely wherever possible a company tries to meet these costs out of earnings. Of course, it depends on the definition one applies to research and development, but for the most part it is just not the sort of thing that a company borrows to pay for.
In other words, the inclusion of research and development under the terms of this Act is not the sort of move that is calculated to strengthen and support Canadian research. Rather, it gives the impression that it is an item thrown in at the last minute so as to be pointed at later as evidence of the Government's deep and abiding concern for research and development in Canada. In short, it follows along in the new familiar Liberal tradition of not doing much good, but at least being something to crow about later. I hope, Mr. Speaker, you will excuse the pun in introducing the word "crow".
Surely the country has a right to expect better of its Government at a time like this. What else is new? The Government is tired. It is spiritually worn out and mentally exhausted. This is the best, literally, that it can come up with. How much better it would be for the entire nation if it were to shuffle quietly off to wherever mortally ill Governments, like elephants, go to die.
The classic irony of it all is, of course, that this Bill offers grants to cover interest charges on small business loans down to a limit of 12 per cent. It is all good stuff, except that the current prime rate is only 11.5 per cent. Inasmuch as small business loan rates are one to two points over prime, once again we see the Government just a little out of step with reality.
As mentioned previously, there is no question that businessmen on their own can in all probability negotiate loans without the assistance provided in this Bill. However, that really is of limited importance at the present time because the Bill has already been in effect for at least six months. I suppose that is what upsets me most about this Bill; it is not what it does, which within its limitations is good, even if it could have been done so much better. So, the most upsetting thing is the way in which it has been introduced.
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After the measures legalized in this Bill have been in effect for almost six months, we are asked to debate the legislation at report stage. To do so is a waste of time. There are many more important matters that we should be addressing. Most significantly, that it should be introduced in this fashion speaks volumes about the esteem in which this House is held by the Government.
This is the Government and the Party headed by the man who once declared that Members of Parliament were nobodies once they were 50 yards from Parliament Hill. How much more graphically can this opinion be underlined than by enforcing their writ throughout the country without bothering to legalize their actions for almost a year? Their actions tell us much about this Government. They tell us that they are disorganized almost to the point of confusion. Otherwise it would have produced a Bill better calculated to solve the problems it tries to deal with.
The Government tells us that it has an ill-concealed contempt for Parliament, the parliamentary process and ultimately for the Canadian public that this Parliament is elected to represent. Otherwise this Bill would have been dealt with expeditiously with the other budgetary measures when they were still fresh and meaningful. Lastly, it says a good deal about the Government's sense of values and priorities that it did not deal with these budgetary measures earlier, preferring first, for example, to get all the old age pensioners and Family Allowance recipients under the six and five program.
So be it. The Government has shown us its soul by its handling of these matters. It is a fait accompli; let us get it over with. However, we and the Canadian people will remember this Government's stewardship, sense of priorities and confusion. It has taken us for granted for too long. If the polls have anything at all to tell us, it is that the voters know this and are waiting.
I am well aware of the Minister's sympathy for small business. As he mentioned, there are a great many small businessmen, farmers and fishermen in his area. He stated that many applications have been submitted. I believe he mentioned 62 per cent, give or take 4,000. I wonder when they are going to be processed. Are not some being processed at the present time even though the Bill has not received third reading? The Minister can hardly say no one is able to take advantage of the Bill without it being passed.
There are many small businesses in my area of Parry Sound-Muskoka crying out for assistance to help keep them afloat and possibly to expand a bit. Needless to say, they want to do this with a more preferred interest rate than is available today. Thank goodness the rates are down considerably from a year ago.


Mr. Jim Hawkes (Calgary West):: Mr. Speaker, today I have ten minutes to speak about another example of the Liberal shell game. The Minister responsible for small businesses stood in this House and said that the Bill was introduced at the end of October and, therefore, it is time to get it through the House and passed. He also indicated that the Bill is the result of a budget introduced well over a year ago. The
Small Business Investment Grants Act
last time I looked at the regulations for Parliament, it was the job of the Government to propose legislation and the job of the Opposition and Members of Parliament to dispose of it.
We heard earlier today from the Minister responsible for small businesses a public admission of this government's failure to act. It is true that we had a budget over a year ago, it is true that interest rates were very high and that small business was hurting because of those interest rates.
A Government interested in action would have brought forward a piece of legislation of this kind immediately and given it a high priority on the parliamentary agenda. It would have passed and it might have done the country some good. However, for the Minister to stand in this House a year later and indicate there is some urgency for its passage when interest rates are down to the level of 12 per cent, which is specified in the Bill, is to admit that the Government of Canada failed to act when action was necessary.
To stand in the House and castigate the Opposition for not acting when action is no longer necessary is the height of hypocrisy. What has the Government done for small business? All it has done is to advertise a set of what looks like positive public intentions. It said to the small business community over a year ago, "You are in trouble when you are borrowing money; interest rates are too high, so we are going to do something about it and aren't we nice guys." Then it did nothing about it.
In that same budget, however, the Government did a lot of damage to small business. It was as if it said: "Over here on the left-hand side is the help. We will advertise the help which we are not delivering. We will say that we care when we really do not." But hidden in the budget and not advertised were measures like the half-year convention which reduced capital cost allowance to 50 per cent of its former level and hurt every small business in this country.
In that same budget, the Small Business Development Bond was turned into a bail-out bond. The Government turned it into a Catch-22 bond where only businesses that were facing bankruptcy would be eligible for Government assistance. They could go to the bank and attempt to borrow money, but those loans were not to be guaranteed by the Government. The bank had to take the risk and, of course, very few loans were granted. There is another source of help that disappeared. The survival bond did not work and the development bond was taken away from small business.
Deferred profit-sharing helped small business people and their employees prepare for retirement and at the same time put increased cash flow into those small businesses. In that same budget the Government took that away. It increased taxes on employee benefits. In other words, in that budget it took immediate action on a number of measures which hurt small business in this country, which made their survival less likely and their profitability almost impossible. As the Government did that, it did not have the courage to advertise those

April 11, 1983
Small Business Investment Grants Act
things; it simply advertised that it was going to help those small businesses. First of all, it forced them to borrow more money and then it would help them with the borrowing cost.
The fact that we are standing in this Chamber today looking at the piece of legislation that was supposed to help a year ago tells us that the Government did not help. It hurt, but it did not help. What is particularly galling, and so common in legislation proposed by the Liberals since my time in this House, is that we get a piece of legislation and we are asked as Parliamentarians to try and amend it perhaps, but ultimately to vote for or against it. It involves the spending of taxpayers' money generally for some presumed positive social purpose. In most pieces of legislation, and certainly in this piece of legislation, you cannot find a single word about what such money is to be used for. What you find is a clause that says the Governor in Council shall make regulations. What that means is that the Cabinet shall decide who, if anybody, gets the money.
Are Cabinet decisions made in public? No. Are Parliamentarians invited to come before Cabinet and suggest what might work for the people in their riding or the people in this country? The answer to that is no. Cabinet decides on regulations in secret. Cabinet decides basically on recommendations that are put forward by civil servants, people who get a salary, who work for the Government, who do not face the threat of layoff, who do not have to meet productivity standards. They advise the Cabinet on what the regulations should be for small business. Where is the democracy in that? Where is the expert knowledge which small-businessmen represent? Who can speak to Cabinet on behalf of the small-businessmen of this nation?
If you look at some of the material which the Government has put out on this particular piece of legislation and its presumed help, you immediately spot the very first example of the lack of understanding that Cabinet and the civil service has of the world of the small-businessman. One of the small parts of this piece of legislation and the regulations which Cabinet is proposing for its implementation is to tell Canadian small-businessmen that if they buy a new piece of equipment, they are eligible for Government help. However, if they buy a used piece of equipment, they are not.
As a small-businessman who belongs to small business organizations and has done so for years, one who meets with small-business people on a regular basis, let me tell you that they are cost-conscious. One of the characteristics of the small-business people of this nation is that they do not have large amounts of money. Quite often their enterprises are sort of "Ma and Pa" operations, family operations with two, three or four employees. When true small businesses in this country of that size need a truck to deliver things in the city, they do not go out and buy a new truck; they go out and buy a used truck. That is the nature of small business. It is important that as the regulations for assistance in an Act of this kind come forward, those in this Chamber, Parliamentarians who are in touch with small business, have a say in where that money should go. It is
not right, it is not appropriate, and it is not helpful for Cabinet alone to make those decisions.


Mr. Mel Gass (Malpeque):: Mr. Speaker, today I would like to discuss Bill C-136 which will provide the legislation necessary to implement the Small Business Investment Grants Program, the SBIG, as outlined in the June, 1982 budget. This program will provide grants of up to 4 per cent to reduce interest costs to as low as 12 percent for small businesses in Canada.
Before discussing the substance of C-136, I would like to examine the current state of small business in Canada to provide some insight into the necesssity and feasibility of the proposed legislation. Based on the findings released by the Canadian Federation of Independent Business, to date in Canada there are between 700,000 and 800,000 fewer Canadians employed in the small and medium-sized business sector than there were in 1981. Small business has been hard-hit by the economic situation in Canada, which has worsened over the past couple of years. Over 50 per cent of the small businesses in the Canadian Federation of Independent Business have reported cutbacks in employee numbers during the past two years. These people have joined the ranks of the other
1,598,000	Canadians reported out of work as of January, 1983, not to mention the 500,000 Canadians no longer looking for work.
The President of the Canadian Federation of Independent Business has currently been urging the Government to adopt policies to bring down interest rates and encourage new business to be formed and existing businesses to expand. The development of small business is crucial to the country's economy and the sector's health is fundamental to any economic recovery.
Few businesses at the present time are making any plans for increasing their hiring or their investment. On a national basis 66.7 per cent expect to remain at the present employment level, 7.9 per cent reported they would hire additional people this year and another 9.1 per cent said they would rehire workers they were forced to lay off previously, while 8.2 per cent plan to employ fewer workers this year. Fully 82.3 per cent of the respondents to the CFIB survey have taken some measures of restraint, as 51 per cent reduced the number of employees and just under 30 per cent had present employees working reduced numbers of hours per week.
It is very clear to anyone, then, that the economic situation imposed on this country by our present Government has chronically damaged many small businesses in Canada and discouraged many businessmen from developing their own small businesses. The restraint placed on the small business owners and their employees has increased the already high unemployment rate and added to the dismal state of the economy.
Restraint measures, employment cutbacks and reduction of employee hours have occurred in all regions of Canada in
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varying degrees. Restraint measures are at a high in British Columbia where firms imposing restraint have reached a level of 88.6 per cent, followed by Newfoundland at 87.1 per cent. In my own Province of Prince Edward Island, the reduction in employees is at a national high of 64 per cent, with the national average being 50.9 per cent, and it ranks third in the area of employee wage restraint in the independent business sector. How can any businessman be expected to have any confidence in the Canadian economy and general economic policies.
The small business community in Canada, with its entrepreneurial and innovative capabilities which can give us new products, processes, jobs and enterprise, is being dealt a heavy blow by our current economic situation and the present Government's economic policies. The desperately awaited business recovery will not occur without concrete and substantial changes in the business environment.
In view of these worries about public policy and the risk of interest rate increases, the responding businesses are making few plans as of now for increasing their hiring or investment. The independent business universe is a quilt of many patterns and colours. It includes many new firms just starting and growing, mature firms which are growing, and businesses which are being drastically changed to meet altered product demands or technological conditions, as well as many stable and mature firms. Interest rates remain a real concern for the small-businessman and they must be assured the rates will stay down before doing any hiring or investing.
The major factors identified as necessary to hire more workers are increased confidence in government policy and consistency and assurance that interest rates will not shoot up again. Businessmen are waiting for concrete and substantial evidence of a real change in governmental direction before committing themselves. They cannot be blamed for that. The small-businessman must ask the federal Government for concrete policies which will ensure him a stable economic recovery.
The hesitation of independent businesses to expand their operations is understandable when we examine the background of cutbacks they have been made to deal with due to our recession-a recession deliberately brought about by the federal Government. Small businesses have been affected by the restraint measures through the reduction in the number of their employees and the reduction of the employees' working hours per week. They have been forced to reduce or postpone wage increases for their employees and have been restricted in growth.
Wage restraints are even more hard hitting for small-businessmen than for their employees. Owners and managers have been forced to take reductions or lower increases in compensation. The largest element of restraint in a small business is in the area of employment. A good percentage of businesses have been forced to reduce the number of employees and, according to a questionnaire issued in January, 1981 and February, 1983, the net change for the respondents was 42,479 fewer employees.
Small Business Investment Grants Act
Traditionally the public sector has enjoyed effective job tenure. Recently, however, there have been notices of hiring freezes and even a few layoffs for public sector employees. From the results of a recent informal survey, it would appear that one to two thousand Government workers have been laid off and some 6,000 to 10,000 in CN, telephone companies, hospitals etc. This does not include several thousand casual workers which Governments have not kept on, and doubtless others in the numberless Crown corporations.
A further measure of restraint is the reduction in weekly hours of work for remaining employees. It is striking that just under 30 per cent of all respondents had reduced working hours per week. Laying off workers is a last resort for most firms, both because of concern for workers and because of the cost of recruiting and retraining workers later.
The impact of recession and restraint measures on the small business sector was relatively uniform across the country, yet to the extent that there were variations, the heaviest impact came at each end of the country. The response from British Columbia, Alberta, Prince Edward Island and Newfoundland indicates that about 88 per cent of businesses had imposed restraint measures. Saskatchewan and New Brunswick were at the low end with 76 per cent each. British Columbia and Alberta had experienced more rapid economic growth for several years up to 1982, and had experienced a more rapid relative decline. This was shown in earlier surveys in 1981 and 1982 conducted by the Canadian Federation of Independent Business.
The same regional and provincial differences show up in reduced numbers of employees. In British Columbia and Alberta, 63 per cent and 59 per cent respectively of respondents indicated they had reduced the number of employees, compared to 51 per cent nationally. For Prince Edward Island and Newfoundland the percentages were 64 and 58 respectively. On the other hand, in Saskatchewan only 41 per cent of firms indicated they had laid workers off.
The small business consultative committee has raised a number of concerns in the area of small business. It has approached the present Government, concerned over the current imbalance of debt over equity in the financing of small firms and the role that the Government can play in providing an environment for entrepreneurship and investment in small business. The contribution of small business to the Canadian economy has been a large one. 1 would like to note some of these, Mr. Speaker. Some 645,000 small businesses account for 42 per cent of business employment and 25 per cent of business' Gross National Product. They demonstrate the entrepreneurial spirit and are the risk-takers to provide productivity to the economy in that some 150,000 business start-ups occurred in 1982.
There have been business failures and this is regrettable. In 1982, there were 10,765 business bankruptcies there were 410 farm bankruptcies and there were 30,463 personal bankruptcies, for a total of 41,638. In 1982, the amount of losses through business and farm bankruptcies was $2.33 billion.

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Small Business Investment Grants Act
Some of these people will make it back and some will not. But there are survivors-and this is the resiliency of small business.
In conclusion, the small-businessman has faced many obstacles in the path of surviving and expanding. The economic situation and policies of the federal Government have hindered the small-businessman and I would urge that the federal Government take steps to assist the small-businessman in any way it can.


Mr. Scott Fennell (Ontario):: Mr. Speaker, it is interesting to note once again that the Minister responsible for this Bill always leaves the House just before I stand up to speak. I notice the former Minister responsible for small businesses is in the House so perhaps he has a greater grasp of the issue than the present Minister.
I would like to comment on a few points raised by the Minister. He indicated that this Bill ran out on March 31. The final Clause of the Bill says: "This Act shall come into force on a date to be fixed by proclamation." That does not mean it runs out on March 31, Mr. Speaker. The Minister is dreaming when he comes up with that one. He said the program was in the budget, but the budget did not mean very much because it was so far off on every number that to add another $400 million does not mean anything to this Government. I am sure they spent the $400 million somewhere else.
I am delighted to see the Minister back in the House. I would like to point out to him that I believe the 42 per cent figure he gave for small business employment is quite inaccurate. Perhaps if you include all the civil servants, all the municipal civil servants and all the other government employees in Canada, he may come close to that figure, but we are talking about the people who produce products and make this country work. Right now there are 1,600,000 people unemployed. Of that number, Mr. Speaker, over 50 per cent are from the small business sector. In addition, we have
500,000	people who have lost their jobs. In my own riding, Mr. Speaker, many former one-man businesses, "Ma and Pa" businesses, with two or three people working within the organization, are out of a job and out of Unemployment Insurance. They are "out" period. I would say, first of all- and there are statistics out on this-that the small business sector provides almost 70 per cent of the total employment. Therefore, the total of the unemployed from the small business sector is probably 70 per cent of the 1,600,000 who are unemployed. This is a very serious matter.
There is a degree of blackmail when the Minister says we must pass this Bill through the House. I cannot see our passing this Bill through the House quickly because it is not a total program. It is another band-aid used to try to patch up something after the fact. They are talking about a 12 per cent interest rate. Perhaps the banks will jump in and someone who has an interest rate of prime plus one will have it increased to prime plus five, and the banks will pick up the 4 per cent from the Government coffers. Therefore, it is a bad Act presented at
a bad time. It is not doing a real job. That is the important point, Mr. Speaker.
I do not like the "grants" approach. I find it smells of partisanship. I like economic reasons for doing something. I believe the program should be managed by the banks. They are in the front line. We in Ottawa do not know what is happening in Victoria, British Columbia, or St. John's, Newfoundland. We must have people on the scene. Furthermore, the banks this year are going to show an astronomical profit because they have recovered many losses which they anticipated and which are not going to occur. They had reserves in their books and they are going to recover those reserves. I believe the banks should participate and do their share during a period of high interest rates. They encourage people to come into the market to borrow money to expand when they need to get their money out. When all of sudden interest rates shoot up the fellow they encouraged to borrow money at the beginning is hurt because of the high interest rate policy. I believe that is totally unfair to Canadians, to small businesses, to the "Ma's and Pa's", to the fishermen and the farmers of this country.
I believe the Government is doing a bad job in trying to get out of the mess it got itself into. As an example, the Royal Bank of Canada is saying they will lease the land back to the farmer. I have had probably as much experience as anyone with the problems and hardships of people who have had their land expropriated. What happens to that land when it is tenant farmed is that the barns fall down, the houses are not painted, the land is unkept. It does not work, Mr. Speaker, to have tenant farmers. If the Royal Bank is so keen on putting the farmer back on the farm, then it should give him the farm and take lease payments against interest. Whatever the bank may get is better than what it had before, and it is much better off with an owner on that farm than a tenant because a tenant is not inclined to preserve somebody else's property.
For almost four years I have spoken about this subject, Mr. Speaker. What we need is a total, comprehensive plan for the micro, small and medium-sized industry. The SBIG is only a band-aid. It is not bad legislation, Mr. Speaker, but it does not do the job. It is not meeting the need. During severe times when interest rates go up is when we need relief, and not 4 per cent. We must give stability to our small industry. It cannot afford to go up and down with the Government interest rates, because the Government prints money to solve its problems and issues more bonds and runs into deficits. We need a secure plan to give those people in small industry the security which they require so that they can solve the one major problem we have in Canada, and that is creating jobs. It is jobs that we need. The Minister of State for Small Businesses (Mr. Romp-key) knows that as well as anybody. He comes from an area which is in a tragic condition today. The unemployment situation in Newfoundland is serious and no one knows it better than he.
The Canadian Press wire had some very good points, one being that we need to restore a sound and lasting basis for real economic growth. But you cannot have a sound and lasting
April 11, 1983

basis with interest rates soaring and then dropping. This situation does not provide this country with any stability.
Second, we also must address, Mr. Speaker, the importance of the entrepreneurial spirit by individual Canadians. This is their country. This country does not belong to this House of Commons, nor does it belong to the civil servants who work in Ottawa. This is the country of the Canadian people and they must be given a chance to establish a lifestyle based on the entrepreneurial spirit which built this country right from the beginning. The intervention by the Government, the regulations imposed, among other points raised by the Hon. Member for Calgary West (Mr. Hawkes), took this away from small businessmen. They must be removed to encourage them. We must encourage youth. These youths coming out of college cannot get jobs; everyone knows that, Mr. Speaker. We must encourage them and give them the opportunity to fund their own businesses, small as they might be. For every business which is born, one out of ten will develop into something which will create numerous jobs throughout this country.
This legislation is the absolute opposite of what is needed. The Government is now trying to patch up all the tax measures which were in the budget. For instance, the 12.5 per cent on small business dividends, Mr. Speaker, is inequitable. Canadians own those businesses! If it wants to adopt the New Democratic Party policy, it should put that tax on the multinationals. I do not agree with that, either. We need those people to create jobs also. I see my time is up, Mr. Speaker.


Mr. Rod Murphy (Churchill):: Mr. Speaker, I rise to speak on Bill C-136, which is the Small Business Investment Grants Act, and on the amendments which have been put forward by the New Democratic Party.
The impact of the legislation which the Government has presented to the House is being diminished by the events which have taken place over this winter. When the business investment grant was introduced as a piece of proposed legislation, interest rates were much higher. It is necessary that the legislation the Government introduces reflect the fact that interest rates have fallen to some degree. If this legislation, which is so important to small-businessmen, is to be effective, then I think the amendments put forward by my colleague, the Hon. Member for Winnipeg North (Mr. Orlikow) must be passed by this House.
It is important to realize that there is not really that much legislation passed by this House which helps small business. One piece of legislation with which I am more familiar is the Regional Development Incentives Act. When I was the regional development critic for this Party, I found that most of the money for regional development under the RDIA was going to large businesses. In one recent year over $70 million went to businesses classified by the Government as large businesses, and $20 million went to smaller businesses. For the $70 million to large businesses, 4,690 jobs were created. For the $20 million that went to small businesses, 4,680 jobs were created. In other words, the Government of Canada spent an extra $50
Small Business Investment Grants Act
million to help large businesses and created only ten more jobs than it had with the $20 million for small businesses in this country. That demonstrates that much of Government legislation does not help small business. It also points out that small business is very important to the employment of Canadians.
A recent survey done by the Canadian Federation of Independent Business indicated that the current recession has resulted in small and medium sized businesses hiring 700,000 to 800,000 fewer people than they would have in the economic situation as it existed prior to the recession. That is 700,000 to
800,000	fewer jobs because of the recession. So when there is a Government program which is supposed to help small business, it is very important that it actually does.
The two amendments put forward by my colleague do two things. The first one allows small businesses to use this program not only for the acquisition of new equipment but for the acquisition of used equipment and the use of working capital for operating expenses. That is very important, Mr. Speaker, because 66 per cent of small businesses indicate that they are not planning expansion at the present time. Another 12 per cent indicate they will actually be reducing their production over the next little while. Those businesses are looking at economic survival. They do not want to join the 80,000 small businesses that went under last year. They want to stay in business, which means cutting operating and capital expenses. So if they can get a used cash register or scales, or other used equipment, that is a saving which might keep that business in operation. For those reasons it is important that the Government accept these amendments. I hope all Members of this House would support that.
The second amendment offered by my colleague would reduce the effective rate of interest on a loan to 10 per cent from 12 per cent. I think that is a very reasonable amendment, and it reflects the fact that when this legislation was introduced, interest rates were higher. Now, with interest rates lower, I think the Government can afford to decrease the rate so that businesses would have to pay only up to 10 per cent on a loan and still be eligible for the program. I think the Government should do this because this morning we woke up to find out that there were 1,600,000 Canadians officially unemployed in this country.


Mr. McDermid:: Over two million.


Rodney Edward Murphy: That means that in reality there are in excess of two million Canadians unemployed. We have heard from small business that they could be providing at least 700,000 or
800,000	jobs, so it is very important that we have legislation in place to help small business. Remember, small business provides about half of the private sector jobs in Canada. It is very important that the legislation we pass in this House actually assists those businesses, farmers and fishermen who qualify under the Act so that they can use this program to hire people, reduce the unemployment and welfare rolls in this country, and increase the purchasing power of many Canadians to get this economy moving again.

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Small Business Investment Grants Act
I am afraid that if the Government refuses to accept the NDP amendments, then this will be a hollow Act. It will not help very many Canadians. It may produce a lot of public relations, a lot of advertising by the Government as it promotes its program, but it really will not help the people it is meant to help. It will not help the small-businessmen, the farmers and fishermen who qualify. It will not help the 1.6 million unemployed Canadians. Those are very important considerations, Mr. Speaker, and I urge Government Members to support our amendments.
One of the concerns I have in the riding I represent in northern Manitoba is the fact that this Act as it is now presented allows for the purchase of new equipment only. Our amendment, which would allow the money to be used for used equipment or for operating expenses, would help many businessmen in remote communities, not just in northern Manitoba but in northern Ontario, in Atlantic Canada and in other parts of this nation. These are the businesses who have high costs because of transportation, because of their remoteness, because they tend to be dealing with smaller markets than business in communities like Toronto and Montreal. So for them new equipment is quite often out of the question. They are in a situation where they have to look around for used equipment that they can afford. When you have a potential market of only 5,000, 6,000 or 8,000 people in your community, you are not out to buy new equipment or build a new shop. You are there to try and make a few dollars to keep your family and your business going. For those businesses not to qualify under the Act as it now stands means that some of them will be going under in the future, Mr. Speaker. I urge the Government and Government Members to consider the small communities and small businesses who cannot afford new equipment. Remember them when this legislation is passed. Therefore, I urge all Members of the House to support the amendments of my colleague, the Hon. Member for Winnipeg North.


Mr. Alex Patterson (Fraser Valley East):: Mr. Speaker, I am very pleased to have the opportunity to participate in this discussion on Bill C-136, the Small Business Investment Grants Act. I have been in the House for quite a few years and I thought I had seen a great many absurdities perpetrated by the Government, but I must say this exercise in which we are now engaged seems to outclass them all, for a number of reasons. It was pointed out this morning that this is one of the provisions of a budget that was introduced over a year ago. Of course, we are now urged to pass it quickly so that it can become effective.
As has been pointed out, this is a measure which has already become obsolete because the circumstances which existed at that time have changed and we are now faced with a totally different situation. As well, this measure fails to engage the most pressing problem, which is the need for capital at reasonable rates to assist in weathering the economic storm until the economy is stabilized and ready to move forward. I believe that, at best, the Bill in its present form would have minimal
effect and, at worse, would be completely useless. The two amendments which have been proposed and are before the House now would have some beneficial effect if they were to be included in the measure and the Bill was to become effective. As I have said before, I suggest the entire exercise is rather futile because of the economic situation having changed so dramatically since the Bill was first introduced.
For a number of reasons I consider this sector to be one of the most important in our national economy and the most deserving of consideration by the House, not just for a few minutes as suggested by the Minister but for a considerable length of time. First, it is an area of activity that provides almost unlimited scope for the expression and productive investment of individual initiative and enterprise. We are all aware of the fact that there are business and commercial enterprises in which an individual tends to become a cog in a big machine. Possibly, these large operations are essential- which I do not deny-and may be acceptable to some because of the security which they promise. However, there are many people who believe that meaning and purpose in life is found in the establishment of one's own business, farm or fishing operation, as the case may be. Perhaps it is in an area where a service is required, where one can become an integral and vital part of the community. Such entrepreneurs have usually become participants, and in many instances leaders, in the voluntary sector of those communities. Therefore, they not only render a service as far as making a living and providing employment opportunities are concerned, but also in the broader services provided by voluntary agencies.
Furthermore, we are reminded that the small and medium sized business community is the source of possibly 60 per cent of the job opportunities in this country. I believe it has been pointed out that about 42 per cent of that could be classified as small business. It is clear that the contribution that this sector has made is incalculable in terms of personal achievement, service to the community and the nation and job opportunities provided to others.
This road has never been an easy one. From the opening up of this country by venturesome individuals up to the present time, the odds have been many, their risks great and the labour tedious. In the past few years, however, the pressures have been overwhelming and these entrepreneurs have been facing insurmountable difficulties.
As has been pointed out, in 1982 a record 10,765 businesses were forced to close their doors. Business bankruptcies in 1982 were 33 per cent higher than in 1981, 63 per cent higher than in 1980 and 91 per cent higher than in 1979. This has resulted in an ever-increasing unemployment rate, as has been underlined again by the increase in unemployment figures which were just released this morning.
A recent article states that a very substantial percentage of the unemployment roll is made up of those who had previously been employed in the small business sector. In fact, one Hon. Member who participated this morning has placed that figure at approximately 50 per cent. Unemployment is increasing not
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only because of an increasing labour force but by a decrease in the number of jobs available. These jobs are disappearing and while this situation remains, make-work or short-term work opportunity and programs will not solve the problems facing us.
I refer Hon. Members to the first page of the summary of a booklet put out by the Federation of Independent Business which points out that this country has not been overly solicitous to the welfare of the small business community. While the Government has outlined great programs and large projects, it has been pointed out in the article that small entrepreneurs have had great difficulty even to survive let alone make their way in their field of activity.
The provisions of Bill C-136 include the farmer and fisherman. We recently saw an example of what the Government thinks about those in the farming sector who, in order to pay their bills and keep their farms intact, take off-farm jobs. Operations are reclassified and moved into a higher tax bracket because they have the audacity to take the initiative and spend more time off the farm to make a little more money in order to pay the bills and keep the farm operating. In some instances, it means that a farmer must sell out in order to pay the taxes being imposed on his operation. It is no wonder that the Government is going down the drain.
There is a growing concern over the Government's bail-out assistance for the Domes, the Fergusons and Maislins, on the one hand, and the "sock-it-to-them" treatment of the little guy on the other. The question is: Is it less important to retain
2,000	employees in many small enterprises than to maintain one or two businesses that employ an equal number? The government's actions, I suggest, have spoken in favour of the latter.
A litany of programs and procedures has been given time and time again in response to charges that the Government is reneging on its responsibility to create and maintain an economic climate conducive to strong and virile business activity. The fact remains that Canada's economic performance has been much worse than practically all other industrialized nations in the world. Apparently there is something drastically wrong which no patchwork operation or band-aid approach will solve. It will eventually come to the point where the Government must introduce a fundamentally different approach that will effectively meet the challenges facing our business community today.
I was pleased to hear a proposal by the Minister this morning, perhaps one of the most interesting proposals he has made, that the Government is working on a strategy that seems to promise some over-all benefits to the business community. I do not know how long it will take to implement that strategy. I suggest that this current situation should constitute a shock treatment to the Government but, unfortunately, instead of taking the initiative in providing the encouragement required, it moves only when it is forced into action and only to the degree that it hopes will make it appear that something is being done.
Small Business Investment Grants Act
I appreciate the opportunity to have said a few words about the measure which is before us.


Hon. Jake Epp (Provencher):: Mr. Speaker, it is my intention today to put a few comments on the record regarding the Bill before us, the Small Business Investment Grants Act. I will not repeat for preservation of time some of the comments I made prior to the Easter recess when I referred to some of the banking surveys conducted by the Canadian Federation of Independent Business and its suggestion that we should have a better mix of banking. For instance, the Federation related it to the experience in the United States and the relationship to commercial banks, as well as the establishment of local banks. While the risks might be higher, the concomitant effect seemed to be that at least in smaller communities there was a larger incidence of industries established in smaller communities, whereas in our situation we have the larger national chartered banks with a very extensive branch network. We have not quite had the same experience. I know there are other factors which have to be taken into consideration, but I do not have time to get into them today.
Today the unemployment figures show that 1.6 million Canadians are unemployed. In fact, that figure could be higher. I want to put that in context with an average riding, the riding I represent. I took a look at my riding just the other day. Other than one business and one federal Government operation, namely the atomic energy research facility in Whiteshell, every other business would be classified as a small business. When I talk about business in my riding, it is small business, with the exception also of Abitibi Price at Pine Falls which is a large pulp and paper operation. I want to get into that because we deal with the forestry sector as well. By the way, the best benefit which the forestry sector has had is the exchange rate, because it has been favourable for that sector in terms of export. It has not been in terms of the Canadian climate that that sector has been able to survive, it has been because of the exchange rate. I think we should be careful about what we are talking when we talk about small business. We are talking about small-businessmen and women, farmers and fishermen along the east shores of Lake Winnipeg in my riding.
What will the Bill do? I will get to the amendments in a minute, but the Bill will bring into effect a statement made in the previous budget, namely, that up to 4 per cent of interest could be reduced to a minimum of 12 per cent; or, putting it another way, for the borrower a maximum of 12 per cent. The Government will subsidize or give a grant to a maximum of 4 per cent or reduce the rate to 12 per cent. I believe the NDP amendments reduce it to 10 per cent.
My colleague who preceded me always gives us the benefit of his valuable experience. As he indicated, I wonder whether the Bill will have any effect on the small business community. The proposal was more valid at the time it was made in the budget when interest rates were obviously at levels higher than they are today. The question must be asked: Is the Bill simply

April 11, 1983
Small Business Investment Grants Act
fulfilling the Government's promise in the budget? That might be meritorious because we have not seen the Government follow its promises in the past with that kind of keenness. In that sense I commend the Government; but will the Bill have any effect in my riding or in other ridings? The Bill indicates what one can do to be eligible. There is a $400 million ceiling, to be used for new disposable assets or financing research and development.
Last Saturday I received a telephone call from a farmer in my riding. He is trying to survive. When we talk about farmers and small business people, I guess we are talking about the most independent sector in society. They do not like to telephone their Members of Parliament and tell them that they are in trouble. It is not in the nature of these people. As was mentioned already, they are entrepreneurs and they are independent. They make their own decisions and they take their risks, but today we are receiving calls from these people. This gentleman laid out the problems he was facing as an individual farmer. Yes, he made one mistake. His mistake was that he gambled on Canada's economy and its future. That is the mistake he made. Many Canadians have made that mistake, but the difference this time is that with high interest rates he simply has difficulty surviving. In fact, this gentleman has been in farming for some period of time. I am not talking about a small farming operation. He is now on a family budget from the bank in order to retain his farm.
The Hon. Member for Ontario (Mr. Fennell) spoke about tenant farmers. In essence, this gentleman has become a tenant farmer on his own farm. I was shocked when he told me that last year-and I do not have the figure down to the penny as he did-he personally spent approximately $60 on clothing in 12 months. If we drive past his place, we see a farming business and good machinery. The fellow is working like many other farmers, not only from dawn to dusk but later. Not only did the figures hit me, but the fact that he said: "Jake, that I can handle. What I cannot handle is the instability and fear of the future". That is the situation which is being faced.
I respect the Minister as a person and as a Minister. I ask him whether the legislation before us really helps. Does it help this kind of person? If it helps or has the chance of helping a smidgen, it should be passed; I guess that is the rule of thumb around here. But I raise this case because I am sure every Member has similar cases in his or her riding. What are we doing for people who have been the risk-takers? Are we losing risk-takers? What I meant when I referred to them as being independent was that this man did not ask me for a grant. I found that interesting. I said: "Do you want a grant?" He had certain choice words to say about grants, but he said no. That was the essence or summary of what he said, but he wanted some kind of understanding that either a moratorium or a bank arrangement could be made which would allow him to continue farming, retain his dignity, and eventually pay his debts including interest charges. He was not asking for all kinds of forgiveness; he was asking for the opportunity to continue his operation.
I am one of the fellows in the House who argues for the marketplace. I have to ask what arrangements can be made in the public sector so that these people can continue operations outside the grant system. Let us face it, the Government is not in a position to give grants. With $30 billion of indebtedness, the Government is not in a position to give grants. All the Government is doing is borrowing to give grants. The argument is made that we should stimulate the economy even more. How much do we want to stimulate the economy-$30 billion of stimulation federally? How much provincially, another $10 billion? Can anyone on the other side guarantee that if we stimulated it by 10 per cent more we would have a better economy?
May I call it one o'clock?


Mr. Deputy Speaker:: It being one o'clock, I do now leave the chair until two o'clock later this day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Stan Darling: Madam Speaker, the newly released figures on unemployment show that the actual number of those out of work has officially passed the
1.6	million mark. It would be over 2 million if we included those no longer drawing or eligible for benefits. They further reveal that this includes some 620,000 young people.
I have repeatedly stood in this place and pointed out to the Minister and the Government the tremendous multiplier effect exercised by the tourist industry in Canada. I have further pointed out that, because of that industry's wide geographic dispersion, any recovery initiated in and by this sector would have a much more widespread beneficial effect that could be generated in almost any other way. Yet the tourist industry is decidedly pessimistic at the present time.
TIAC, the Tourist Industry Association of Canada, is now predicting that its industry will generate 100,000 fewer jobs in the coming year than in the previous year. What a monument to the Government's economic expertise!
There are steps that could yet be taken to encourage a turn-about in this crucial, and I mean that literally, crucial sector. A major cut back on federal gasoline taxes would be a good place to start.
April 11, 1983

A new budget has been promised us next week. The Minister should know that we all-for all of our ridings have a significant tourist industry component-are watching and waiting for what the budget will include.



VETERANS AFFAIRS


Mr. Stanley Hudecki (Parliamentary Secretary to Minister of National Defence):: Madam Speaker, in the Veterans Affairs Branch of the Public Service Commission of Canada there exists a problem which must be brought to the attention of the House and of the Government.
Apparently in the past few years promotions in the Public Service Commission have been based on the "merit principle". The important elements of career service and experience appear to have been eliminated. Decisions for promotions are now made on the basis of a competition. The competition exercise is a subjective assessment by the examiners of the candidates. In the Department of Veterans Affairs this competition takes very little account of the experience of those candidates who are actually veterans and who are in the upper age category. The ensuing result is that nominations for the important jobs of counsellors and supervisors, in the Hamilton area at least, fall into the hands of younger people who have had no history of serving in the Armed Forces and who do not have the benefit of years of experience in handling the problems of veterans.
I am all for giving young people a proper chance to establish themselves in key positions in the Public Service, but there ought to be special consideration given to those Public Servants who actually are veterans, and who can fully relate to the problems of veterans, when appointments as Veterans Affairs supervisors and counsellors are made.
I feel that there is some basic malfunctioning in the system. There is no question that the merit system is most commendable, but there is certainly a need in the Department of Veterans Affairs in particular to take into consideration-


Madam Speaker:: Order, please.



EFFECT OF PROPOSED CROWSNEST PASS RATE CHANGES ON PORT OF CHURCHILL

Rodney Edward Murphy: Madam Speaker, I rise to speak on the issue of the changes to the Crow rate and how they affect the port of Churchill. One of the rationales given for the desertion of the historic Crow rate in western Canada is that it will improve rail services in the West and help to transport more grain.
In Saturday's Free Press an official of Canadian National Railways, Mr. Doug Campbell, is reported as having told the Manitoba Legislature's standing committee that there were no plans to fix the rail track to Churchill. In addition, he said that there are no plans to prevent the shrinking of the boxcar supply in western Canada. This will result in less cars available for the transportation of grain to Churchill, Manitoba.
Since the Government has found that the only reason for changing the Crow rate is that it will improve transportation and rail services in western Canada, and given the evidence of Mr. Doug Campbell that this will not happen as far as CNR is concerned, I would ask that this House ensure that this Government does not change the Crow rate, but that it keep it there for the protection of westerners, in particular western grain shippers.



CONSUMER AFFAIRS


Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, there is something smelly about the politics surrounding the Liberal Government's imminent resolution of the prescription drug war. I am worried about a real danger facing Canadian consumers. They may soon be paying tens of millions of dollars more than they do now for the price of good health.
A critical question faces the Minister of Consumer and Corporate Affairs (Mr. Ouellet) who must make his recommendation to Cabinet this spring. Will the Government allow Canadians to continue to be protected under Section 41 of the Patent Act so that consumers may still buy generic copies of brand name drugs? Or, will the Government bow to pressure from the world's largest multinational drug companies which accuse smaller Canadian generic companies of piracy, in effect of stealing the rights to drugs which the multinationals spend years and many millions of dollars developing?
The multinationals are mounting an incredibly heavy lobby to get rid of Section 41 of the Patent Act. That is understandable, but who should emerge as key adviser to the Minister of Consumer and Corporate Affairs and lobbyist for the multinational drug companies? Why, none other than a former Liberal Cabinet Minister, the Hon. Martin O'Connell, who worked until last January as a consultant to some major multinational drug companies and also the Pharmaceutical Manufacturers' Association of Canada.
I have some questions I would like to put, if I have the chance later this day, to the Minister of Consumer and Corporate Affairs, such as: will Canadians end up paying anywhere from $ 100 million to a quarter of a billion dollars more on the cost of prescription drugs because of Liberal Party politics? How much money will Martin O'Connell be raking off-


Madam Speaker:: Order, please.

April 11, 1983



NATIONAL REVENUE


[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East):Madam Speaker, there has been a great deal of disillusion and suspicion among certain voluntary charitable groups in Montreal recently which have been refused their charitable registration numbers by the Department of National Revenue. For the most part these are neighbourhood action groups which help low income people, the poor and the aged, and work on local problems. They are disillusioned and suspicious because they know of other groups which have received charitable registration numbers and which, from all appearances are less charitable and more political than they. They are extremely disturbed with the lack of reasonable criteria to determine charitable status and the arbitrary manner in which the Department of National Revenue decides which group is charitable and which is not.
This is extremely urgent since these groups not only will not get charitable registration numbers to collect funds, but are also being refused funds by Centreaid, the United Appeal group in Montreal. I remind the Minister and the Government that it is absolutely essential that the Government be consistent in its policy for granting charitable status. I intend to pursue this at every possible opportunity.


John Horton McDermid: Madam Speaker, the Government of Canada is planning to change the Books of Remembrance which list the names of those who gave their lives for freedom in the Great Wars, the Korean War, and the Boer War. It is changing them to make them bilingual.
The planned procedure is to take the parchment, scrape off the ranks now in front of the names, and reprint them in the two official languages; scrape off the dates and replace them in the two official languages; scrape off the division numbers and replace them in the two official languages.
These Books of Remembrance are historical documents, and to alter them in any way is to desecrate our Canadian history. If we must have bilingual Books of Remembrance, then print duplicates, but leave these historical treasures as they were originally created.
[DOT] (M10)
The President of the Royal Canadian Legion, David Cap-perauld, and the Legion's 600,000 members have expressed their outright opposition to this move, as have countless Canadian citizens, not because they oppose bilingualism but because they do not want history changed, and this Government is doing just that when it alters books. I call on the Government of Canada to withdraw its plans to alter the
historic Books of Remembrance contained in the Peace Tower in Ottawa.



LABOUR RELATIONS


Ian Deans: Madam Speaker, over the course of the last 20 years on a number of occasions I have witnessed confrontations developing on picket lines during a period of time when there was a legal strike. I raised this matter numerous times when I was a Member of the Ontario Legislature, and I raise it here today in the aftermath of an event on the weekend which saw a young man who died because a picket line that had been set up legally was breached by a truck and that young man happened to be in the way.
I want to ask that the Minister of Labour (Mr. Caccia), recognizing the split jurisdiction in labour relations, take a serious look at the problem of having a legal picket line violated by strikebreakers set up in many instances strictly for the purpose of disrupting a legal strike, and look at whether or not it is possible to set an example at the federal level whereby it will be possible for a picket line to be maintained and set up in an orderly way without threat to the lives of the individuals who are there. I think that what has happened is unfortunate, and I note with interest and some degree of satisfaction that the company involved has agreed that, as a result of the accident-


Madam Speaker:: Order.



NATIONAL SECURITY


Hon. Elmer M. MacKay (Central Nova):: Madam Speaker, last month the Solicitor General (Mr. Kaplan) tabled in this House some revealing answers to my questions about the new civilian security agency. In short, the agency does not exist as yet and, I quote, "A date has yet to be fixed for the new agency to become operational".
In 1968 the Mackenzie Royal Commission on Security recommended the establishment of a new civilian agency; thirteen years later, the McDonald Royal Commission, after spending three times as much time and some 30 times as much money, came in with the same recommendation. In August, 1981, the Solicitor General announced the Government's decision to implement this recommendation and to appoint Mr. Fred Gibson as the first boss of the new service. One year later Mr. Gibson was promoted to greener pastures, and was replaced by another seasoned bureaucrat, Mr. Ted Finn.
Today there is no trace of any draft legislation pertaining to this new agency. In the meantime the operations of the RCMP Security Service suffer intolerably, in spite of the pro-forma
April 11, 1983

denials by the Solicitor General. The Government's inaction is accompanied by a discreet silence on the part of the senior security officials, although no doubt some of them will eventually step forward from the safety of their superannuated status, in the best Canadian tradition of civilian as well as uniformed mandarins. Too bad they would not do it now.
I hope, Madam Speaker, that it will not be too late for a new Government to repair the damage done to our national security by neglect and commission ever since 1968, the year in which the reorganization of our national security was first recommended and the year in which the Trudeau administration began.



ST. LAWRENCE SEAWAY WELLAND CANAL LOCKAGE FEES

Mr. Girve Fretz (Erie):: Madam Speaker, I rise today to discuss an issue of considerable importance to my riding, that of lockage fees. Although all vessels using the Welland Canal are subject to lockage fees, the fee structure is designed in such a way as to effectively cause smaller boats to pay five times the rate for full-size ones. The position of the ministry on this is that the fees, which can add S3,500 to the cost of a round trip through the Canal, are needed to offset rising costs and falling revenues.
I wonder if the Minister has considered why revenues are falling? Is it because the exorbitant fees are driving many shipowners to switch to land transportation? This sounds like the classic case of the dog chasing its tail. It is a policy which defeats its own purpose. If the authorities wish revenue and usage of the Welland Canal to increase, then they should lower the fees and watch the lakers line up again to get in.
It would appear, then, that larger boats are getting preferential treatment. Why should this be the case? The smaller vessels serve ports and markets which the larger ones cannot touch. Their versatility makes up for their small size. When these ships are priced off the lakes and into the scrapyards, rest assured that the towns which depend on them will suffer. The welders who build and repair boats, the crews who work on them, and all those who rely on the Seaway for their livelihood, will be penalized as a result of the discriminatory lockage fees.
In conclusion, I would ask the Minister responsible to reexamine the lockage fees policy, in light of its harmful effects on the economy of the Great Lakes region.
Oral Questions



ORAL QUESTION PERIOD


Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, my question is for the Minister of Finance. As he will note, the unemployment figures have been released today and they show the highest level of unemployment ever recorded in this country. What cannot be calculated is the human misery and the human suffering that are involved in those figures.
Last month when the figures came down for unemployment, the Minister of Finance responded to the slight drop in the number of unemployed by saying, "A recovery was taking place in the economy." I would like to ask him what his explanation is this month in that the number of jobless has increased again.


Hon. Marc Lalonde (Minister of Finance):: Madam Speaker, I would like first of all to indicate to the Hon. Member that what we have now is maybe the highest number of unemployed in our history but not, as she said, the highest rate of unemployment. The rate of unemployment is lower than it has been as recently as last December.
Second, I would like to point out to the hon. lady that we also have probably the highest number of employed people in Canada at the present time that we have known for a long time, if she is talking in terms of numbers. She should keep these things in perspective.
Nonetheless, the level of unemployment or the numbers of unemployed are a source of great concern to this Government. We took a number of measures in my October economic statement, and I will be addressing this issue again in my forthcoming budget next Tuesday. I hope that the Hon. Member will be satisfied with the measures that will be contained in the budget at that time.


REQUEST FOR INCENTIVES TO HELP CREATE JOBS
Flora Isabel MacDonald: Madam Speaker, it is not a question of whether or not I will be satisfied. It is a question of whether more than two million Canadians who are out of work will be satisfied.


Some Hon. Members:: Hear, hear!


Flora Isabel MacDonald: That is the question. The Minister talked about numbers. I would like to point out to him that in the area of long-term unemployed-that is, those who have been unemployed for more than three and a half months-that figure has more than doubled in the last year. It has gone up to almost a million people. These people are out on the street, they are looking for jobs, they are putting in resumes, they are suffering at home, and none of the Government's programs have been of any benefit to them.

April 11, 1983
Oral Questions
Does the Minister have any measures in hand which will provide any kind of assistance to these people through incentives to small business, or by way of wage subsidies or tax incentives that would help the long-term unemployed of whom there are now almost a million in the country?


Marc Lalonde: Madam Speaker, I invite the Hon. Member to wait for the budget next Tuesday and to find out whether there are measures of the kind she has talked about. I would like to remind her that last month Statistics Canada indicated that employment grew last month by .03 per cent but the total labour force grew by .04 per cent, thereby adding 18,000 people to the number of unemployed, but employment, that is, the number of jobs, grew last month as it grew the month before.
It is interesting in that regard that a number of statistics have been produced by Statistics Canada in the last few weeks that I am afraid my hon. colleague is not aware of, but I do not think I have time in answer to her supplementary question to give all the details.


PLIGHT OF LONG-TERM UNEMPLOYED
Flora Isabel MacDonald: Madam Speaker, the Minister does not seem to get the import of what is going on in the country. It is not me he needs to ask to wait. He is asking these two million people to wait; including the one million who have been out of work for three and a half months or more. He is asking them to wait again.
Let me give a specific example of a man who had worked for 25 years. He had a good work record, but has been laid off for eight months. He has filed over 400 applications but has been turned down again and again because his age is against him. He is 49 years of age.
I want to ask the Minister what is happening to people in this category, the long-term unemployed, who can no longer afford to wait, as the Minister says?


Marc Lalonde: Madam Speaker, I was ready to introduce a budget in March but it was the Conservative opposition that refused to pass the Income Tax Act amendments and delayed refunds amounting to $6.5 billion for over 11 million Canadians. That is what the Conservative opposition did last March. So I have not been waiting. The budget has been delayed through the tactics of the Conservative opposition-


Mr. Nielsen:: Rubbish!


Marc Lalonde: -which delayed tax refunds to thousands and thousands of Canadians. They have delayed the refunds of 6.5 million Canadians. I am glad that those refunds are now taking place in a very expeditious manner.
I should like to remind my hon. friend that in the last few days Statistics Canada has indicated that, according to the latest statistics, industrial production has known the highest
rise in more than 50 years. Second, the gross domestic product has had its highest growth in seven years. Third, according to a Conference Board of Canada survey, a record high number of Canadians indicate that they expect the economy to grow in the next six months.
That is the environment at the present time. The statistics on housing indicate that over 177,000 units are available at the current rate at the present time.
These are figures which indicate growth is taking place in the country.


THE ECONOMY
Mr. Blaine A. Thacker (Lethbridge-Foothills):: Madam Speaker, my question is directed to the Prime Minister. He is surely aware of the human tragedy caused by unemployment. He must know that youth unemployment stands at over 21 per cent. It must have been 100 per cent predictable that we would encounter these problems when one considers the policies of the Liberal Government over the last 15 years.
For example, Madam Speaker, the national debt is $150 billion. Parliament allocates $18 billion for interest on the debt, and only $1.8 billion for post-secondary education across the land, only $112 million-


Madam Speaker:: Order. Order, please. The Hon. Member knows that he should be asking a question.


Erik Nielsen: Equal time!


Marc Lalonde: I took the same time she did.


Blaine Allen Thacker: Madam Speaker, surely the young people of this country can look to the Prime Minister, who holds the highest office in the land-


Madam Speaker:: Order, please. Order. Does the Hon. Member have a question? He must ask it now. This is Question Period.


Blaine Allen Thacker: How could the Prime Minister have permitted this debt to go so high, and the interest on the debt to mount so high, to the real detriment of young Canadians coming on stream today?


Right Hon. P. E. Trudeau (Prime Minister):: Madam Speaker, as far as the question concerning young Canadians is concerned, the Minister of Finance has just reminded the Opposition that the budget will be brought down in eight days. It will be up to the Opposition to judge whether we are making enough efforts and policy initiatives in order to try to alleviate the unemployment problem.
On the matter of interest rates, as the Hon. Member knows, that was debated abundantly in the past year. It was a matter of an interest rate being set in the United States and, because
April 11, 1983

of the open market between Canada and the United States and the free flow of funds in the United States, it was unthinkable, if we wanted to maintain a reasonable level of the dollar, that we would have an interest rate that was way out of line with that in the United States.


Blaine Allen Thacker: Madam Speaker, I was not talking about the interest rates. I was talking about $18 million to service the debt when less than $100 million goes to agricultural research.


EMIGRATION OF YOUNG PEOPLE
Blaine Allen Thacker: Madam Speaker, in the last few months 40,000 young Canadians have had to leave the country of their birth, a country with fish, forests, and agricultural potential unsurpassed in the world. How does the Prime Minister explain that over 40,000 of our young people have had to leave the country in order to find a better future for themselves elsewhere?


Pierre Elliott Trudeau: Madam Speaker, that is a very general question. One would have to know where these 40,000 Canadians went to. Perhaps some of them were taking the despondent view of Canada's future-


Erik Nielsen: Following your advice.


Pierre Elliott Trudeau: -that is so prevalent amongst the Opposition these days. The Minister of Finance has just indicated that, in terms of growth potential and in the reality of the statistics in the past few months, the gross domestic product, for instance, had been growing at a rate unsurpassed for seven years.
I wish the young people would look at the reality of these statistics rather than at the gloom that is forecast by the Opposition. The Opposition talks as though it would want the Canadian economy to perform badly. It is performing well, and the Opposition is not happy about that, Madam Speaker.


LABOUR CONDITIONS
Nelson Andrew Riis: Madam Speaker, most Members of the House have spent the past week travelling around their constituencies, talking to people. What has become very clear in all regions of the country is that not only is our economic structure being stretched to the breaking point, but so is the social fabric of the country. A human tragedy is unfolding in many homes today as a result of the
12.6	level of unemployment. The Minister has stated on a number of occasions that we have to accept that 12.6 level or thereabouts for the next number of months.
Another leading industrialized nation virtually declared a state of emergency when its unemployement rate reached the unacceptable level, the crisis level, of nearly 3 per cent. When a country, not unlike Canada in many respects, declares-
Oral Questions


An Hon. Member:: Name the country.


Nelson Andrew Riis: Japan is the country I am talking about. When unemployment reached nearly 3 per cent it declared it to be a crisis situation requiring extraordinary measures.
Why must we accept 12.6 per cent for the next number of months, or the immediate future?


Marc Lalonde: Madam Speaker, it is not a question of accepting those figures; it is a question of facing reality and what can be done in a realistic and responsible way. I am afraid that my hon. friend has not addressed that in his question.
We took measures in the budget of last June and in the budget of last October, and we are going to take measures in next week's budget. I want to stress to my hon. friend, again, that there are a number of recent indicators that Canada is very much on the way to recovery. Those indicators point to a gradual reduction in the rate of unemployment in the country and a significant rate of growth in the economy. We should take all necessary steps to try to speed up that recovery, nurture that growth, and reduce the unemployement level as fast as we can.


Nelson Andrew Riis: Madam Speaker, what becomes obvious, in spite of the Government's attempts to reduce unemployment, is that the number of unemployed continues to increase month after month. No noticeable recovery is taking place.


REQUEST THAT BUDGET INDICATE GOVERNMENT POLICIES
Nelson Andrew Riis: Madam Speaker, in budget after budget, and Throne Speech after Throne Speech, the Government has indicated that it does not know where the country is going. There is no direction in the country. The people of Canada do not know what the Government is attempting to accomplish these days.
I want to ask the Minister of Finance if the budget that will come down in the next few days will give every Canadian in every region of Canada, in every walk of life, a very clear indication of where the country is going in the years ahead, for the first time ever.


Marc Lalonde: Madam Speaker, I am glad the country has not been waiting for the NDP to indicate where they want to take the country. I can tell the Hon. Member that the Government has indicated quite clearly what its strategy was and what its broad thrusts are. The former Minister of Finance tabled a document in the November budget entitled "An Industrial Strategy for the 1980s". The Hon. Member should read that document. It indicated the broad thrust that the Government is pursuing in terms of trying to equip the country with what it requires in order to grow rapidly during the 1980s and to fight the problem of unemployment and to equip the country to compete in the world.

April 11, 1983
Oral Questions
1 will address this issue again in my budget next Tuesday. I hope that the answers provided in that budget will be satisfactory to my hon. friend, although that is only a hope, a wish. I am afraid I already know the answer he will give.


Nelson Andrew Riis: Madam Speaker, I believe it would be of interest to the people of Canada to know what this industrial strategy is that the Government has in place, particularly when the Minister of Industry, Trade and Commerce says it does not exist and it cannot exist. I believe there is a real problem, Mr. Minister.


PROSPECTS FOR YOUTH
Nelson Andrew Riis: Madam Speaker, my third question refers to the nearly one million young people who, in the next ten weeks, will be entering the job market. They will be competing for jobs which simply are not there. This will make it very difficult, if not impossible, for many young people to return to their studies and training and upgrading programs. In spite of what the Minister has said about the Government's job-creation programs, I would like to ask the Minister why the Government of Canada appears to be turning its back on, and abandoning, its most obvious resource, the young people of our country.


Marc Lalonde: Madam Speaker, I think the statement made by my hon. colleague is totally unfounded. The Canadian Government is spending more than $1 billion annually on training young people through its direct training programs, and that does not include the billions of dollars sent to the provinces as our contribution to postsecondary education. These amounts are being spent by the Canadian Government for the benefit of young Canadians. This year, considering the very specific problems facing young people who are about to enter the labour market, and I am thinking particularly of students, we have added another $70 million, thus raising the funding for this summer's Student Employment Program from $100 to $170 million, and recently, the Secretary of State announced an increase of $60 million for the Student Loan Program over the next two years. These are measures that were taken in recent weeks, Madam Speaker, and they clearly indicate our concern for young people and their position on the labour market at the present time, and I expect to be raising this matter again when the budget is brought down.
Before making accusations of the kind he just made, perhaps my hon. colleague would like to look at the facts and at what the Government has done in recent months, and if he does, he will realize that the Government has taken very substantial steps to try to resolve the serious problem of unemployment among young people.


TRUST COMPANIES
Mr. John Evans (Ottawa Centre):: Madam Speaker, my question is directed to the Minister of State for Finance. As Madam Speaker will remember, the Minister has introduced legislation into the House to raise the deposit insurance limit from $20,000 to $60,000, as was recommended by the Standing Committee on Finance, Trade and Economic Affairs some time ago. Would the Minister consider moving this legislation forward to the earliest possible date for final passage because, even though it will be retroactive back to January, many of my constituents are expressing great concerns to me, and it is causing some confusion?


Hon. Paul J. Cosgrove (Minister of State (Finance)):: Madam Speaker, I would like to repeat what I have said on many occasions. The position of the Government is that we are prepared to proceed immediately with passage of that legislation on consent of all Parties. I understand the position of the New Democratic Party is they are in agreement with it. Therefore, we wait upon the Conservative Opposition as to whether they will give consent to the passage of that legislation immediately.


LABOUR CONDITIONS
Mr. Thomas Siddon (Richmond-South Delta):: Madam Speaker, my question is directed to the Minister of State for Economic Development, who will know that unemployment among professional architects and engineers has reached almost 10 per cent. There are 12,000 of these professionals now out of work in Canada, virtually double the number of one year ago, following a dramatic increase in the month of March. This is particularly disturbing since architects and engineers, when they are working, create thousands of jobs for others.
Does the Minister recognize that there is a considerable lag of time between the initiation of new projects and the time it takes for work to trickle down to engineers, architects, contractors and labourers? Does he realize that the lack of new projects on the drawing boards right now means a crisis situation will probably confront unemployment professionals, and others, for some time? And what specific steps is the Minister prepared to take to stimulate a rejuvenation of major engineering projects across Canada?


Hon. Donald J. Johnston (Minister of State for Economic Development and Minister of State for Science and Technology):: Madam Speaker, it seems perfectly clear that, in a period of economic slowdown, all sectors suffer. I certainly appreciate the comments of the Hon. Member who himself, as I recall, is an engineer. The point is well taken. It is a matter of concern
April 11, 1983

to us and it is a matter of concern to the professional associations, which make representations on a regular basis to the Government. But all you have to do is look at the record, Madam Speaker, at the projects which have been initiated by the federal Government to date to see the jobs which have been created in those sectors. Of course, at the same time we must deplore the fact that there are many engineers and architects who are unemployed.


MINES AND MINING
Thomas Edward Siddon: Madam Speaker, my supplementary question on the problem of unemployment is directed to the Prime Minister, in the absence of the Minister of Indian Affairs and Northern Development. The Government has not yet made any decision on the future of the Cyprus Anvil Mine and the jobs of hundreds of Yukoners. Why is the Government continuing to dither on this matter, bearing in mind that the Minister responsible first pledged help over six months ago, and the latest proposal of March 3 would not require any grant or permanent bailout from the federal Government? Would the Prime Minister at least tell this House, and the people of the Yukon, where he personally stands on the request for an interest-free, fully repayable loan, which would save the livelihood of so many people in the mining town of Faro, Yukon, and, indeed, in all of the Yukon?
[ Translation]


Mr. Henri Tousignant (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: Madam Speaker, the Minister of Indian Affairs and Northern Development explained this quite clearly a few weeks ago, when he answered a question on the same subject. The problem is far more complicated than the Hon. Member is inferring. Markets must be found and the material cannot be stored indefinitely. That is why we are taking the time to look into this matter.


TRUST COMPANIES
Mr. Doug Lewis (Simcoe North):: Madam Speaker, my question is supplementary to the question raised by the Hon. Member for Ottawa Centre and it is directed to the Minister of State for Finance. The Minister will know that the Canada Deposit Insurance Bill was not on the well publicized letter of priority legislation issued by the Government House Leader. Will the Minister raise this issue with the Government House
Oral Questions
Leader in order to bring forward this legislation and to have the Government treat it with priority?


Paul James Cosgrove: Madam Speaker, what I would like to do is to indicate to the Hon. Member, and to all Canadians, that the position of the Government is that in 25 minutes we would be prepared to pass the legislation at all stages immediately in order to give the benefit of the $60,000 to all Canadians. Why are you fooling around? What kind of games are you playing? You cannot fool Canadians all of the time.


REQUEST THAT LEGISLATION BE GIVEN PRIORITY
Douglas Grinslade Lewis: Madam Speaker, my supplementary question once again is directed to the same Minister. Will the Minister make representations to the Government House Leader in order to have this made a priority on the Government House Leader's plate?


Paul James Cosgrove: Madam Speaker, the legislation to which the Hon. Member refers is on the Order Paper. The Government House Leader-


Some Hon. Members:: Oh, oh!


Paul James Cosgrove: The Government House Leader has indicated his consent and his agreement that this legislation can be dealt with by this House as a priority, with the consent of the Opposition. Why is the Opposition withholding that consent?


VETERANS AFFAIRS
John Horton McDermid: Madam Speaker, my question is directed to the Minister of Veterans Affairs. Has the Minister received a letter from David Cap-perauld, President of the 600,000 member Royal Canadian Legion, objecting to the alteration of the historical Books of Remembrance of Canada in order to make them bilingual? If so, is the Minister going to support their request not to alter recorded history in this manner and preserve the books as they are? And if not, why not?


Hon. W. Bennett Campbell (Minister of Veterans Affairs):: Yes, Madam Speaker, I have received a letter from Mr. Capperauld, the Dominion Command President of the Legion. May I say to Hon. Members that a number of months ago I was requested to look at ways and means by which the Books of Remembrance could be brought into greater conformity with the Official Languages Act.
A number of options were looked at, one of which was the possibility of varying the existing books, and in so doing I approached a number of experts in the field. I can tell Hon. Members that the initial response which I received has been

April 11, 1983
Oral Questions
negative. I can also say to Hon. Members that no decision has been made as to any option.
I can also say that it is my intention to examine the options, and I can assure Hon. Members of the House that it is not my intention to proceed with any of the options until such time as I have had an opportunity to discuss the concern of the Legion and of other veterans' organizations and have satisfied them.
I may say to the Hon. Member that I was in conversation this morning with the Dominion Command President of the Legion and we have organized a meeting at the first opportunity to discuss the matter further.


REQUEST FOR COMMITMENT NOT TO ALTER BOOKS
John Horton McDermid: Madam Speaker, that is not good enough.


Some Hon. Members:: Oh, oh!


John Horton McDermid: I want a commitment from the Minister that he will not support the alteration of these historic documents one iota.


Erik Nielsen: Just leave them alone.


John Horton McDermid: They are part of our national historic treasures and, if they are altered in any way, it will be a desecration of Canadian history. Will the Minister give us that commitment today?


W. Bennett Campbell: Madam Speaker, as I have already indicated to the House, the professional opinions we have received concerning the option of altering the existing books would suggest that is not a wise course of action. I am saying to the Hon. Member that there are other options under consideration with respect to bringing the Books of Remembrance into greater conformity with the official languages policy. Those options will be pursued, and the concerns of the Legion and other veterans' organizations will be fully addressed and met.


CONSUMER AFFAIRS
Geoffrey Douglas Scott: Madam Speaker, my question is directed to the Minister of Consumer Affairs, and it comes back to the Martin O'Connell business I raised earlier today.
Is it a fact that the Minister of Consumer and Corporate Affairs in a few weeks will be taking to Cabinet a decision, one way or the other, on whether to allow Canadians to continue to buy generic prescription drugs, a practice strongly opposed by the major multinational drug companies? In addition, has the Government received representations from generic drug companies about the propriety of the minister of Consumer and Corporate Affairs hiring a former Cabinet colleague, more
recently a consultant to the multinational commercial drug industry, to advise him on a study of revisions to the Patent Act in which the commercial companies have a strong pecuniary interest?


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs):: Madam Speaker, this matter is of course being discussed at the present time in other Government departments besides my own, and especially at the Department of National Health and Welfare and the Department of Industry, Trade and Commerce. The provinces have also made representations. I received letters from provincial premiers asking to have the Act reviewed and possibly amended. Before proceeding with recommendations to Cabinet, I thought it would be a good idea to seek advice on the various aspects of this problem. The Hon. Member will agree there is nothing wrong with asking for the views of a former colleague, Mr. O'Connell, whose experience and knowledge of the Canadian pharmaceutical industry are considerable. Mr. O'Connell is giving me his views on the matter. I intend to look at his position and I shall look at other views I shall receive before preparing representations and specific recommendations for my Cabinet colleagues.


HIRING OF MINISTERIAL ADVISER
Geoffrey Douglas Scott: Madam Speaker, is the Minister of Consumer and Corporate Affairs trying to tell this House that the hiring of a former Cabinet colleague and former consultant to multinational drug companies, to advise on matters which may benefit those companies, does not constitute a clear conflict of interest and an affront to whatever shreds and tatters may be left of the Prime Minister's guidelines? Is he really trying to make us believe that?


André Ouellet: Madam Speaker, the Hon. Member can think whatever he likes, but it is absolutely vital to consider various viewpoints before a decision is made either to amend or not to amend this legislation. There is nothing wrong with asking Mr. O'Connell to advise me on certain aspects of this question. The decision is not up to Mr. O'Connell and will, in the final instance, be my responsibility and that of my Cabinet colleagues. Asking someone who is very knowledgeable about the pharmaceutical field may appear to be wrong in the mind of the Hon. Member, but I am afraid it is so in his mind only, because Mr. O'Connell is advising me on an enormously complex matter that is very important to the Canadian pharmaceutical industry and to consumers of pharmaceutical products in Canada.
I should be glad to hear the views of the official opposition on this matter. Does it want to encourage the Canadian
April 11, 1983

pharmaceutical industry or does it have no views on the subject at all?


UNEMPLOYMENT INSURANCE
Mr. Cyril Keeper (Winnipeg-St. James):: Madam Speaker, my question is for the Minister of Employment. On a day when unemployment has reached an ever higher level the Government has issued a report on work sharing, a program which was supposed to prevent lay-offs, but the real impact of which has been to reduce people's income, including the raising of UI premiums last fall. To get on this program you have to take a lower wage, and fully 50 per cent of the people who go on the program are laid off shortly after the program ends.
Will the Minister assure this House that he will not follow the suggestion in the work-sharing report to increase unemployment insurance premiums further?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, I think it is important to point out that the evaluation indicated the work-sharing program has received wide support from both the users of the program and the workers in the program itself. Over 90 per cent of the workers and 80 per cent of the employers agreed with and support the program. In fact I should point out that 80 per cent of Canadians who were asked said they would approve an increase in UI premiums for the continuation of the worksharing program. That is the voice of the Canadians who are speaking to it, because they realize it is very important to save jobs and create a sense of security against lay-offs. That is exactly what work sharing has done in this country; it has provided very major protection for over 260,000 workers during this difficult period.


Cyril Keeper: Madam Speaker, the Minister knows full well that the work-sharing program symbolizes the Government's approach to unemployment, which in fact is to reduce workers' income. I am shocked that he has failed to assure this House that he will not raise unemployment insurance premiums.


INCOME OF WORKERS
Cyril Keeper: Madam Speaker, work sharing has reduced people's income. Going from work sharing to lay-offs reduces them further. Going onto the NEED Program reduces people's income. The policy of the Government toward unemployment has been to reduce the income of those people who continue to work. Will the Minister reject the suggestion in this work sharing report that he reduce the benefits of workers under the UIC which they have collected while on the work-sharing program? In other words, will he stop this practice of reducing the income of people who are working as his approach to unemployment?
Oral Questions


Lloyd Axworthy: Madam Speaker, the Hon. Member is very sadly mistaken. The purpose of this Government is not to reduce people's income; it is to help and protect them, and give them security in the job market. If through the work-sharing program we can help avoid lay-offs, help keep people working and keep their community stable, then that will continue to be the purpose of this Government, a purpose which has obviously been broadly endorsed by all those in the program and the broad number of Canadians who were asked that question.
I did not say we would be increasing the premiums, Madam Speaker. The Minister of Finance has indicated, as have I, that we would like to maintain stability in the UI premium increase. But we must look at the new realities in the job market and take advantage of the opportunities which work sharing provides us in order to help protect workers. I am very surprised, Madam Speaker, that a Member of the NDP would be so critical of a program which has been so helpful in the protection of job security in this country.


FINANCE
Hon. Roch La Salle (Joliette):: Madam Speaker, my question is directed to the Minister of Finance. The Right Hon. Prime Minister asked us earlier to look at the reality. I realize, in considering the unemployment statistics that were released this morning, that the Government has created 29,000 new temporary jobs between October 1982 and March 1983. However, the Minister of Finance will have to admit that Canada has lost 47,000 full-time jobs.
In that case, how can the Minister of Finance, although the indicators would have us believe that an economic recovery is around the corner, how can the Minister, when he sees these figures and these statistics referring to the creation of 29,000 temporary jobs and the loss of 47,000 full-time jobs, how can the Minister still talk to Canadians about this immiment economic recovery?


Marc Lalonde: Madam Speaker, perhaps my hon. colleague would like to look at the figures I mentioned earlier, which indicate that consumer confidence is now at its highest level, according to a survey by the Conference Board. Perhaps the Hon. Member would care to note that during the month of January, industrial production experienced its highest rate of growth in fifty years, and that during the same period, our gross national product experienced its highest growth rate in seven years. There are very clear indications that are apparent throughout our economy, including housing starts and increases in automobile sales, and if he

April 11, 1983
Oral Questions
looks at the figures published by Statistics Canada this morning, my hon. colleague will see that employment has increased. More specifically, over 75 per cent of the jobs created during the month of March were for adult male workers, which indicates thet there certainly has been some improvement in this area, where previous months had shown a substantial drop. I feel that from these indicators it is clear that there will be a recovery, and I hope that unemployment will drop in the months to come.


Roch La Salle: Madam Speaker, it is not the first time the Minister has said that indicators are encouraging. His predecessor also made highly encouraging predictions, but we all know how these turned out, and the Minister should realize that the Government has failed if he looks at the figures that were released. Today, since we are talking about reality, as the Prime Minister said, and more specifically, about the fact that we are losing twice as many full-time jobs as we are creating temporary jobs, could the Minister of Finance inform the House whether in a week's time, he will be able to give some indication and make some commitment with respect to the creation of full-time jobs and not just jobs that actually boil down to welfare or unemployment insurance?


Marc Lalonde: Madam Speaker, I made it quite clear that in March, employment increased by 0.6 per cent, with double the average benefiting adult male workers. Nearly the entire increase in jobs for adult male workers is due to an increase in the number of full-time, not part-time jobs. Of course there is always a lag between economic recovery and job creation, as there is a lag between the orders that cause production to increase and the company's decision to hire more workers. These lags are normal and understandable.
I hope that the recovery that has now become apparent will, in the coming months, produce these new jobs, as the figures for March seem to indicate. In March, more jobs were created than in February. Unfortunately, there were also more people entering the labour market than in February, and that is why we had an increase of 0.1 per cent. It is our aim, especially through the private sector, to create as many permanent jobs as possible as quickly as possible. That is the Government's position, and I hope that the measures adopted in the budget will be along those lines and that my hon. colleague will realize that as soon as the budget is brought down next week.


SOCIAL SECURITY
Ian Deans: Madam Speaker, my question is directed to the Prime Minister. He indicated earlier that he thought that people should be more optimistic about the future of the country. I agree that the future for Canada is,
in fact, great. I am always disappointed when things do not happen.
The Minister of Finance said some time ago that structural unemployment in the future would be higher than we have been accustomed to in the past. Does the Prime Minister think that it might be appropriate to review the current income maintenance programs such as unemployment insurance and the various welfare schemes that are available, and take into account that there will be significantly larger numbers of Canadians who will be seeking employment and unable to find it, but whose needs for a stable and reasonable income will be maintained, and to bring forward some proposals which concern revamping the income maintenance programs in this country as they exist today?


Pierre Elliott Trudeau: Madam Speaker, the Hon. Member raises a subject for which I have expressed concern, and I know it concerns other Ministers.
We are faced with a rather contradictory situation since some Provinces seem to be determined, at least one of them, to reduce the social benefits and social net which is available to all Canadians.
There is the problem of an aging population which is being addressed by the Government, particularly in the publication of our paper on retirement benefits. However, I think the Hon. Member correctly links the subject to the problem of structural adjustment. I want to tell him that it is a subject of concern to the Government. It is one that I addressed in my television talks last September and to which I referred again in my speech to the Liberal Convention in November, and one which the budget is very carefully examining.
Perhaps the Hon. Member's points could be expressed during the budget debate when he sees what importance we have given to the need for structural adjustment.


Ian Deans: Madam Speaker, I think that the child who is crying in the gallery is crying for his or her future.


AGE OF RETIREMENT
Ian Deans: While reviewing the problems of employment and income maintenance, which the Prime Minister has said he is already doing, has he considered that the technological change that is occurring simultaneously with the increase in structural unemployment will undoubtedly impact the greatest on younger people?
Has he considered the possibility of shorter work weeks, and earlier retirement with a more adequate level of pension, as a means of ensuring that individuals and their families will not only be able to find employment in their younger years but will also be able to find a sufficient source of income in their older years to allow them to retire and maintain an adequate level of income and standard of living?


Pierre Elliott Trudeau: Madam Speaker, the Hon. Member asks if I have considered that. I believe I have done the same type of reading on the subject
April 11, 1983

that the Hon. Member has been doing recently. He will note that there are other ways of tackling this problem. One is to forbid overtime work to the workers, and it is not certain that we would get easy co-operation from the unions in that regard. I know that the Hon. Member would help persuade them.


Ian Deans: Unions do not schedule overtime.


Pierre Elliott Trudeau: There are many avenues open to us, including some used by some countries of lowering retirement age, and increasing retirement age by other countries in order to be able to finance more easily the funds necessary for the retirement of the increased size of that segment of our population.
We are all concerned with that problem. We are all reading about it. I think it is a bit premature for me to announce any policy change. However, I repeat that we would be happy to hear from the Hon. Member during the budget debate-


Ian Deans: Will you stay and listen?


Pierre Elliott Trudeau: Well, I may not stay and listen if the Hon. Member tells me that he will beat his breast. But it does not mean that his ideas will not make their way into the minds of Canadians who are always attentive to the Hon. Member's thoughts on this subject.


HOUSING
Mr. G. M. Gurbin (Bruce-Grey):: Madam Speaker, my question is directed to the Minister of Finance. Several weeks ago the Minister of Finance suggested that he was prepared to undertake to see that Canadians who are locked into high mortgage rates would be treated in a fair and equitable fashion. CMHC has suggested that perhaps 715,000 Canadians are locked into interest rates above 17 per cent.
In the meantime a representative of one of the major lending institutions has suggested that Canadians are "SOL", simply out of luck, because there is no way they can be accommodated. Does the Minister have any specific program or plan of action to deal with this problem?


Marc Lalonde: Madam Speaker, I have indicated that, according to the figures I have seen, most of these high rates of mortgages related to rather short terms like one year. Many of them are being renewed now at much lower rates.
In addition, there are obviously standard rules about penalties which are understandable if someone wants to get out of a
Petitions
contract into which one entered voluntarily at a particular time. It is important that those penalties not be excessive, however. I have indicated what has been the general or standard practice in that regard which I found to be reasonable.
At the same time, however, there are obviously Financial institutions which are in a situation where they are getting their funds in the form of, for instance, guaranteed income certificates that they have issued and for which some people are receiving 16, 17 and 18 per cent interest rates for five years. The same institution cannot issue a mortgage at 13 per cent and pay 17 per cent on guaranteed income certificates. As a matter of fact, this can happen in the same family. I was shown a case where a father had invested in trust company five-year certificates at 18 per cent, and his son had borrowed at 19 per cent. Now the son wants to have his mortgage at 13 per cent but the father does not want to give away the guaranteed income certificates at 18 per cent. There is a problem of balancing between the cost of money and the cost it takes to borrow that money.


PETITION
Madam Speaker:: I have the honour to inform the House that the petition presented by the Hon. Member for Bow River (Mr. Taylor) on March 30, 1983, meets the requirements of the Standing Order as to form.



ROUTINE PROCEEDINGS


Mr. Bill Yurko (Edmonton East):: Madam Speaker, I rise to present a petition to the House by Joseph Ignace Riel, grandnephew of Louis David Riel. The petitioner humbly prays that this honourable House may be pleased to pass an Act for the purpose of granting Louis David Riel a posthumous pardon. Based on British parliamentary practice, a pardon can be granted by a decree by Order in Council, a Government Bill to which royal consent has been signified, a Private Member's Bill to which royal consent has been signified, or a private Bill to which royal consent has been signified.

April 11, 1983
Order Paper Questions


THE BUDGET
Marc Lalonde: Madam Speaker, pursuant to Standing Orders 64(2) and 64(3), I request that an order of the day be designated to allow the presentation of a budget speech on Tuesday, April 19, 1983.


QUESTION ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following question will be answered today: No. 4,707.


CANADIAN WHEAT BOARD-ADVERTISING EXPENDITURES
Mr. Mayer: What amount did the Government spend during the calendar year 1982 on advertisements either signed by, or quoting, the Minister of State (Canadian Wheat Board)?


Mr. Jesse P. Flis (Parliamentary Secretary to Minister of Transport):: The amount was $11,496.60.


QUESTION PASSED AS ORDER FOR RETURN
David P. Smith: Madam Speaker, if question No. 4,619 could be made an order for return, this return would be tabled immediately.


Madam Speaker:: The question enumerated by the Parliamentary Secretary have been answered. Is it the pleasure of the House that question No. 4,619 be deemed to have been made an order for return?


Some Hon. Members:: Agreed.


OFFICE OF NATIVE CLAIMS
Mr. Manly: Since the inception of the Office of Native Claims, for each negotiator named by the Office for all claims accepted for negotiation, what was his/her (a) name (b) salary (c) staff allotment (d) duration as a negotiator for the Government?
Return tabled.


David P. Smith: Madam Speaker, I ask that the remaining questions be allowed to stand.


Madam Speaker:: Shall the remaining questions be allowed to stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of Bill C-136, Small Business Investment Grants Act, as reported (without amendment) from the Standing Committee on Finance, Trade and Economic Affairs; and Motions Nos. 1 and 2 (Mr. Orlikow) (p. 24327).
Arthur Jacob (Jake) Epp: Madam Speaker, I have just a few additional comments that I would like to place on the record regarding Bill C-136. Prior to the luncheon break, the point I was making was that small business, at least in my riding, refers to everyone conducting a business. That includes commercial enterprises and farmers.
An announcement was made today about the number of unemployed in Canada. There is no doubt in the minds of most Canadians that the best way to create employment is through the private sector. One reason I suggest we have lost as much employment and therefore have such a high rate of unemployment is that, as studies show, when businesses are asked whether they cut back-


Mr. Deputy Speaker:: Order. I regret to interrupt the Hon. Member but the time allotted to individual speakers at this stage is ten minutes and his time has expired. He may continue with unanimous consent of the House. Is there unanimous consent?


Some Hon. Members:: Agreed.


Arthur Jacob (Jake) Epp: Mr. Speaker, I will not misuse the time the House has give to me. The point I want to make is that when small businesses were asked whether or not they have cut back on employment or have reduced employment, up to 51 per cent said that in fact they had.
In order to create employment we have got to get back confidence in that business community or sector. I say to the Government that its upcoming budget has to address that question; it cannot be done through grants. It should create a climate of confidence and give small businesses a tax regime which allows them to make a profit. They will create the jobs.
April 11, 1983

That is how we will restore the economy rather than through this program, which in fact time has already passed by in terms of its effectiveness.


Mr. Bill Kempling (Burlington):: Mr. Speaker, if the actions of the Government ever equalled its rhetoric, we would probably make some progress in the House. This Bill was introduced for first reading on October 28, 1982. It had second reading debate on Monday, November 8, 1982, and there were four speakers. Here we are on April 11, 1983, continuing report stage debate.
What has happened in the intervening five months? In November, 1982 there were 961 bankruptcies, in December there were 764, in January, 1983 there were 828, and in February, 1983 there were 978. We do not have the March figures available yet, but the projected figure is 1,028 bankruptcies in that month. If we total that up, there were approximately 4,560 bankruptcies in the five months since this Bill which was supposed to help the small business sector in some way was introduced. It is deplorable that a small six-clause Bill which is three or four pages long, with not too much in it, has had to wait so long. It is an indication of the disarray in which the Government is at the present time.
When I look at the Bill I wonder just how realistic it is today. Its purpose is to give a grant in the form of an interest abatement to certain small businesses, an abatement up to 4 per cent to reduce the interest rate paid on the acquisition of assets down to 12 per cent. Thank God bank rates have dropped in that five-month period. So the value of the Bill is somewhat questionable today.
When we look at the restraint measures which the small business community has taken, they are really staggering. Eighty-two per cent of the small businesses surveyed recently have taken restraint measures, 51 per cent have reduced the number of employees they previously employed, 30 per cent of those still employed are working with reduced hours, and 66 per cent of the companies have either reduced or postponed wage increases. Most say that in comparison with what they have done, the six and five program put in place by the Government is too generous. Their action has been one of survival.
What they need now is something to assist the equity crisis they face. They have responded to the downturn in the economy by reducing their staff, cutting inventories and cancelling capital programs. That is the classical way that a small business has to react to this sort of thing.
Now they are faced with a tremendous lack of equity funds. If you talk to most small businessmen who have managed to survive, they will tell you that their earned surplus account, which is the accumulated profits that they retained in their business over the last few years, has disappeared because they needed the funds for operating. Many of them are operating today on the good graces of their bank manager. If tomorrow
Small Business Investment Grants Act
he is a little nervous about them, they could join the ranks of those either in receivership or bankruptcy.
Aside from the difficulties of the recession and the fact that they have had to cut back their staff and inventories and cancel capital programs, they are faced with a movement in the economy. While there is not too much reduction in the number of unemployed, they see a little bit of blue sky down the road. Those I have talked to do not want to analyze where that blue sky is coming from because a cloud might cast its shadow and it will disappear. However, they feel there may be some light at the end of the tunnel.
When they look around, they feel that if they do make a profit they will be faced with a small business dividend distribution tax of 12 per cent. If they apply to buy capital assets, they still have the capital cost allowance that was included in Bill C-139. That has a disastrous effect on their cash flow. If they try to retain their employees by giving them deferred profit-sharing, that will be wiped out for new plans. They still face a great deal of difficulty in trying to operate their business.
We need an equity program. For too long the small business community has had to rely on the banks. I am not decrying the banks; they have shareholders and they have rules and regulations they have to live by. The fact is that ever since the capital gains tax was introduced, the alternate sources of equity financing for small businesses have disappeared. They have dried up. Consequently, the only place the small-businessman can get term funds today in order to operate his business is pretty well from the banks. That is one change that has to be made.
When the Minister brings down his budget on April 19, I hope he will recognize that fact. I hope he will include in the budget a provision that will allow the small business sector to acquire equity funds from other sources.
The Minister might be wise to look at what the Province of Ontario has done with the small business investment corporations. It gives a 30 per cent tax credit to people wishing to invest in small business as a small business investment corporation. There could be something along that line. A dozen different proposals have been put forward by various small business associations, such as the Canadian Federation of Independent Business. They put forward a number of suggestions for equity planning that will get the small-businessmen out of the banks and into another type of investment funding.
To some extent the small-businessman today is being held hostage. He has to go to his bank. The banks are faced with bankruptcy statistics. They become nervous and do not want to put their shareholders and their operations in jeopardy any more than they are at present. They become nervous and tend to keep a business on a month to month basis. The bank manager says that they will take another look at it next month or the month after. You cannot plan a business on a month to month basis. You need time, projections and many other things.
24354

April 11, 1983
Small Business Investment Grants Act
In the past the banks have traditionally supplied short-term funds. They financed the accounts receivable, giving shortterm financing where required. In the normal course of events they were not long-term lenders or suppliers of equity funding for the small business community. That is the area we must move in.
Looking at this Bill, I would venture to say that it could have passed in one day or a day and a half had the Government put any priority on it. Five months after its introduction, we are still dealing with it today and probably will be tomorrow. It will pass and go to the Senate where it will pass in one day because they are told it is a priority Bill. It laid around for five months. Another 4,000 to 5,000 bankruptcies have been recorded by Statistics Canada in that five-month period.
I hope that some of the high-blown rhetoric the Minister used when he introduced this Bill in the first instance and some of the press releases surrounding it will translate into action. We could then go forward with other legislation which would address the problems I have mentioned.


Elmer MacIntosh MacKay: Mr. Speaker, while this Bill means well, it is another rather feeble and consequently ineffectual attempt to help small business in a very selective way, without assessing the root cause of the difficulties affecting the whole spectrum of our economic activity. The lack of a proper economic climate, caused by the intervention and manipulative actions of this Government over the years, means that band aid measures are of doubtful value, even though I must say they are welcome.
Before proceeding further in my remarks, the attention of this honourable House ought to be directed to a very important point made by the Hon. George J. Mcllraith in the other place on Wednesday, March 30 of this year. He asked the Leader of the Government about the legitimacy of what was being done in continuing this present session without a Speech from the Throne. Personally, Mr. Speaker, like yourself, I have always had great respect for Senator Mcllraith and I believe that what he says deserves serious consideration in this Chamber. I am going to put on the record a few of the remarks which he made on that date in the other place. He said:
Honourable senators, I want to ask a question of the Government in connection with this matter.
Assuming, as appears to be possible and perhaps even probable, that the delivery of the budget on April 19 is based on the continuation of this session beyond that date, could the Leader of the Government please arrange to explain to the Senate, when it reconvenes on the afternoon of the nineteenth, by what right the government is authorized to deliver a budget for the consideration of the House of Commons without having a throne speech?
The Senator was referring to the long established practice of having a reasonable duration of time to outline the parliamentary program. One can only imagine and reflect upon the changes that have been made in the Canadian economy, partly through the intervention and manipulation of this Government since April 14, 1980, and the advisability of struggling along in the same session with this kind of change, without doing the House and the country the courtesy of bringing in a Speech from the Throne. Senator Mcllraith went on to say:
My understanding of the long-established, traditional practice-established well before Confederation and continued ever since-is that the government must submit a throne speech at the opening of a session of Parliament, and then,
when it has the vote of confidence from the House of Commons that is required-we are not involved in that procedure here-it is enabled to submit its program for the consideration of that body, and, of course, by us following upon that.
Now, we are dealing with a measure to help small business and we are all looking forward to the introduction of a budget. The whole thing in many ways seems to be putting the cart before the horse. To be dealing with select measures which, as pointed out by the last speaker, really are already partly out of date because interest rates are falling and because of other measures that are perhaps not truly indicative of what has to be done, is really an unacceptable breach of what I would consider this Parliament's sense of order and dignity to be. I just want to put this on the record because I believe that Senator Mcllraith has done the country and the House of Commons a great service in demanding some explanation from the Government Leader in the Senate for what he considers, on the basis of his long and distinguished parliamentary career, an unacceptable practice by this Government. I note that Senator Olson in the other place has promised to supply Senator Mcllraith with an answer on April 19.
Getting back to this particular measure, it is pretty obvious that it does not do very much for the average small business person. It is also clear that the goal of most small businesses today in this economic climate is to survive and not necessarily to expand. This Bill does not address the question of survival. For one thing, sir, it applies only to new equipment. Many small businesses and farmers very wisely buy used equipment. They do this for different reasons. Sometimes, as you know, sir, used equipment is of better quality and more suitable than new equipment. I have seen, as I am sure many Members of this House have seen in the past, small businesses lured by programs, whether under the Department of Regional Economic Expansion or under previous programs of the Department of Industry, Trade and Commerce, to invest to a far greater extent than really their businesses permit because they are under the illusion that they are getting something for nothing. Therefore, they spend far more money than they had originally intended to spend. As a result, the viability of the businesses they are attempting to improve sometimes goes down the drain. Simply because the Government is so preoccupied in trying to sell new equipment, they forget the very obvious truth that there are many, many businesses in Canada which have large inventories of used equipment which they would be very happy to sell and which in some cases, as I say, would be far more suitable to the aspiring business people who want to use them than the more expensive and sometimes inferior new equipment.
This Bill is also very vague and provides for far too much discretion to be granted to the Governor in Council to make regulations concerning the operation of the program. The only details specified in the Bill are the 12 per cent ceiling and the 4 per cent maximum grant. Also, the right of the Government to
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get back money that was granted to those not entitled to the money is there, and the authority to make these regulations is there. My colleague from Mississauga South (Mr. Blenkarn) is proposing an amendment that would require parliamentary approval of all Orders in Council governing the operation of the program. It seems to me that this is a far more advantageous way to go about it than to leave so much uncontrolled discretion in the hands of the Government.
Mr. Speaker, I suggest that while we are waiting for the budget to come in and hoping that the Government will have done something for a change to encourage Canadian businesses, we should look at ways to do something far more imaginative to help small businesses than is encompassed in this rudimentary and very unimaginative piece of legislation.
In the United States of America, I think there are 17 or 18 duty-free ports. Just imagine, with a little bit of initiative, what we can do with a duty-free zone in Nova Scotia, one in New Brunswick and one on the West Coast, where we could establish assembly plants, and also use some of the techniques that the Americans have used with their DISK program. We could export these components, the parts of which we could bring in duty-free. We would not sell them domestically, of course, but we could export them to countries which in many instances would be only too pleased to buy them and it would improve our balance of trade. But this Government does not seem to be interested in taking any fundamental initiatives. It has the idea that you can just continue to put forward band-aid approaches and subsidize people, tell them what to do and manipulate them and hope that something will happen that will cause things to improve.
This Government and the Liberal Party have come a long way from the days when they followed the advice of Adam Smith, when they believed in free enterprise and individualism, when they believed in reform. Now, they have gotten the whole spectrum of our economy so tangled with their interventionist and manipulative strategies and their suffocating regulations that they have defeated the very purposes for which they once stood. This Bill does nothing really except provide some filler for the House of Commons to debate and raise a very few hopes in a carefully selected and very narrow area of business without really addressing some of the causes or offering much hope.
My colleague who just spoke pointed out that it is the banks which are the primary source of funds and they still require a tremendous amount of extra collateral and security for small business. There is nothing in this legislation or in any legislation to help or encourage banks to be a little bit more forthcoming with the kinds of collateral requirement that they need.
Mr. Speaker, I am sure you know many businessmen in your constituency who are sound, who are well set up and financed, and yet whose houses and businesses and inventories are covered by some sort of floating charge or mortgage that really constricts these people if they want to take a chance and get into some kind of related enterprise based on their own good training and business experience.
I do not understand why the Canadian banks are so preoccupied with covering their collateral again and again rather
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than allowing businessmen to have a little bit of flexibility, particularly when they have built up a good track record. The history of our country is just full of instances where, because of the ultra-cautious nature of Canadian banks and the shortsighted policies of various Governments in the past, Canadians have had to go abroad to develop and prosper. I know of one instance where a prominent businessman was asking a major Canadian bank to finance his initiatives in offshore oil development. The bank studied his proposal and they said to him: "Yes, sir, we will, but you will have to sell your house in Canada and establish a residence in Bermuda, and you will have to do it offshore. On that basis, we will finance you."
Mr. Speaker, I do not know how you feel about it but as a Canadian it makes me sick to see the kind of evasions and manoeuvres that have to be taken by a Canadian who wants to get involved in developing his own country but has to go offshore, with the co-operation of Canadian banks, to do it because of the unimaginative tax policies and the business constrictions that this Government keeps imposing.


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, I am pleased to be able to speak this afternoon on the Small Business Investment Grants Act. It provides for an interest grant of up to 4 per cent per annum for two years to be paid to lending institutions on behalf of the borrower by the federal Government on loans made to eligible small businesses for specified purposes.
This temporary program, which has a ceiling of up to $400 million, is designed to reduce the cost of borrowing for the acquisition of certain new depreciable assets or for the financing of research and development.
I think the foregoing is the key to the Act and is important when discussing the amendments we have offered. The Bill was placed before the House in October 1982, when it was sorely needed.
Our first amendment would have the effect of allowing the grants to be applied to loans for operating expenses and other requirements. The second amendment would reduce the interest rate to 10 per cent, rather than 12 per cent. These two amendments were placed before the House on November 23, 1982, when they were sorely needed to help small business to survive. They are needed even more today.
At the present time, in April of 1983, 5,000 bankruptcies later, the need for the Bill has been reduced considerably. A lot of small businesses and farms have already gone down the drain. The need has also been reduced considerably because interest rates have come down. Instead of the 4 per cent reduction provided in the Bill, 2 or 3 per cent would probably be sufficient. Very few of the businesses that are still around hope or intend to expand.
There is still a need for our amendments, however. The events that have occurred in the economy since last October prove the validity of those amendments. The money is not

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needed for expansion but for survival, and therefore should be provided to the small businesses at a rate as low as is possible.
What we have here is another case of the Government failing to act when action was needed. Now it is ready to act when the cost will be less. But even if the Government decides to act now, it has not taken cognizance of its own research and studies which have cost the taxpayer two years of time and approximately $2 million. This was the cost of the small business financing review which indicated the need for financing small businesses and the need for lower interest rates if they are to survive.
The Government assures us that the Bill will solve the problem of small business. It has not defined the problem as survival, however, but only as expansion or research. If the problem is survival, let us remember that during this recession small and medium-sized businesses have released 700,000 or
800,000	employees. That is a major portion of the number of unemployed people in the country. The Government offers small business slightly reduced interest rates for expansion and research and, by those terms, has excluded over 66 per cent of the small businesses which may need money but cannot get it at a reasonable rate as things stand. These figures come from a survey conducted by the Canadian Federation of Independent Business.
The amendment put forward by the Hon. Member for Winnipeg North (Mr. Orlikow) would provide money at a more reasonable rate. The philosophy behind this kind of assistance needs to be examined. For instance, in Saskatchewan a Tory Government has been in office for one year. Recent Statistics Canada figures show that in Saskatchewan there are now 40,000 registered unemployed people. That is not counting the 12,000 who have returned to the farm and claim that they are farming. It is an increase of 14,000 people over the number unemployed a year ago, or a jump of 54 per cent in one year. This is the situation in a Province where the Government promised to bring the children home to good jobs and prosperity.
Other Provinces have not fared quite so badly, but the Governments of Saskatchewan and Alberta and the federal Government are adopting the same kind of philosophy-to help out the big corporations by reducing royalties and inviting them to invest, while giving very little important help to small business, farmers and fishermen. They are given only token support, Mr. Speaker.
That is exactly what this Bill offers-token support in an area where more than 66 per cent of businesses cannot use it. Unless the Government accepts our amendments, the value of the Bill is negligible. Why is it that when the Government claims it is going to do something for small business or to assist people, it throws in conditions which make it impossible for them to take advantage of the offer?
For instance, over the last year there have been a number of programs designed to help people in dire straits. However, if a small businessman wants to apply for a Small Business Bond, a bank can claim that he is not a good risk and refuse to lend the money. If he is not in dire straits and the bank would lend him the money, then the Government says it would not advance
money because he is not in dire straits. Obviously, if the bank would lend him money, he is not in a bad enough condition to need the money.
Until a few months ago, farmers who tried to get money from the Farm Credit Corporation faced the same dilemma. If they were not in dire straits they could not get money; if they were in dire straits, they could not get the money because they were not considered a good risk.
Could it possibly be that the Government is incompetent? Let us hope that if the Bill passes with our amendments, it will work well to support small businesses through the recession.


Flora Isabel MacDonald: Mr. Speaker, Canada is a nation of small business. There are well over 1 million such enterprises in the country. They are the lifeblood of the nation and employ in the vicinity of 2.5 to 3 million Canadians. That is approximately one-fifth of the labour force.
These businesses account for something like 25 per cent of the Gross National Product, so when the Canadian small business sector thrives, the whole country thrives; when the small business sector falls upon hard times, so do hundreds of thousands of individual Canadians. That is what we see at the present time. In fact, it is what we have seen for the past couple of years. No sector of our society has been hit harder by recent ill-conceived and ill-timed economic policies initiated by the Government than has the small business sector.
I say that because I think it is unfortunate that this has happened. The Government, having no consideration for this sector, having no forethought about what might happen, did not foresee the blows it would hammer upon the small businesses of this country. Its misguided high interest rate and its disastrous budget of November, 1981 dealt devastating blows to the small business sector of this country. About 80,000 small businesses have either gone into bankruptcy, into receivership or into insolvency as a result of these measures, Mr. Speaker.
Just recently the Canadian Federation of Independent Business carried out a survey on what kind of impact these measures have had on the small business sector. They found that roughly three-quarters of a million Canadians-roughly one-half of the total of those who are out looking for work today-were laid off by small and medium sized businesses in the last year. That was reported, Sir, in the Ottawa Citizen of March 23, when the details of their survey were released. In The Globe and Mail business supplement of March 25 there was further comment about the survey which had been carried out by the Canadian Federation of Independent Business. They had this to say, and I quote:
The survey showed that 51 per cent of the responding businesses had reduced the number of their employees since early 1981. Few had plans for increasing hiring or investment. Nationally, 66.7 per cent expect to retain present employment levels, 9.1 per cent would be rehiring laid-off workers, and only 7.9 per cent would be hiring additional people.
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The picture on investment intentions was similar: 61.2 per cent planned no change, 8.8 per cent planned to bring investment back to pre-recession levels,
11.2 per cent planned decreases, and only 11 per cent planned increases.
In other words, Sir, what the Canadian Federation of Independent Business was able to establish very clearly from the data of this survey was a reflection of the doubts and suspicions which the business sector has toward this Government, doubts and suspicions, which, I may say, are very well founded. I have talked to a great many business people, both in my own riding and elsewhere in the country, about their concerns, about the pressures and the tensions and the worries to which they have been subjected as a direct result of this Government's high interest rates policies, of the reluctance of the chartered banks to provide any kind of relief to those who find themselves in difficulty, and of the continuing uncertainty which they face as to what blows the Government will be aiming in their direction next.
The budget of November, 1981 and its regressive tax measures has deeply scarred the business community of this country, not just businesses as such, not just the business sector, but the individuals who work within that sector. The budget of June, 1982 followed. It did very little to reassure the small business community that this Government knew where it was going. Oh, yes, it did impose a six and five restraint program on certain Government spending programs, but really that was nothing compared with the restraint which the small business sector had already disciplined itself to abide by.
The Bill which we have before us today, Sir, Bill C-136, the Small Business Investment Grants Act, comes out of the budget of June of last year which I mentioned. Anything which proposes to improve the position of small business operators in this country is welcome and, indeed, this piece of legislation is welcome, but in reality it will have very little impact. It offers a 4 per cent reduction in interest rates for the acquisition of certain new depreciable assets or for the financing of research and development, but it applies only to grants which are above a 12 per cent interest rate floor. It does not apply to used equipment and, as my colleagues on this side of the House have said, so many small businesses deal in used equipment. They do not always want to lay out the cost of new pieces of machinery. It also does not deal with the needs of businesses which are desperately in need of funds simply to survive.
One can say, I suppose, that this Bill is designed to encourage expansion, but if that is the case, Sir, it underlines very clearly the fact that it would have done absolutely nothing for the 80,000 businesses which went bankrupt or which went into receivership in the last couple of years. Nor will it really be of any help to the great majority of businesses which are unable to contemplate any expansion in the next year. As the survey of the Canadian Federation of Independent Business shows, they are not planning or contemplating any expansion, they are hoping just to be able to retain the status quo. Of course, these businesses, or the great majority of them, will not be able to avail themselves of this particular piece of legislation.
One of its major deficiencies, as has been pointed out on a number of occasions, is that this Bill makes it mandatory that
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much of the operation under its legislation will be carried out by as yet unknown Government regulations and by Orders in Council. My colleague, the Hon. Member for Mississauga South (Mr. Blenkarn), has addressed himself to this very issue, that is, the ongoing tendency of Government to do everything in secret. He addressed himself to this particular aspect of the Bill by putting forward an amendment which would require Parliamentary approval for all Orders in Council governing the operation of the program, and that, Sir, is a much needed improvement to the Bill. I hope the Government has taken very clear note of it and that it will accept the proposal which my colleague has put forward.
The Canadian Federation of Independent Business has declared that more confidence in Government policy and consistency is really necessary before a full recovery of the economy can begin. Nothing is more important, Sir, than that we have a climate and environment in which the business sector can flourish. Certainly, if that were to be so-and it is not so at the present time-no group would avail themselves more of opportunities to develop and to expand than would the small business sector.
It was very interesting to look at this morning's insert in The Globe and Mail. Their complete report on business referred or directed itself to small business only, and the major headline read, "Independent Entrepreneurs are a Developing Force". Well, they have been a force in this country throughout its history, and they will continue to be a force if the climate and environment permit them.
It is in that spirit, Mr. Speaker, that we on this side of the House are not only urging the Government but praying that the Government help provide that climate and that environment when the long awaited budget of next Tuesday is brought forward.


Mr. Fred McCain (Carleton-Charlotte):: Mr. Speaker, unfortunately, as in so many instances in this Government's programs, this Bill addresses only part of the requirement of small business. It is to be hoped, of course, that when the Minister of Finance (Mr. Lalonde) brings in his budget, he might then address the balance of the problem, and I would like to address part of that problem this afternoon.
The tax structure of this country has mitigated against the family business, whether it be the farmer, the garage man, the manufacturer or the fisherman. It started out, of course, with the inheritance tax. Later came the capital gains tax. Now we have the reduction in the capital goods depreciation allowance. As a result of these moves, the little business guy has found himself in considerable difficulty in attempting to perpetuate his business. Small businessmen are the backbone of their communities, big or small. To supplement the figures of the Hon. Member for Kingston and the Islands (Miss MacDonald) let me say that when you include the farmer, fisherman, the serviceman and small manufacturer, you find that small business provides between 60 per cent and 70 per cent of the total employment in Canada. I do not contradict her figure

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of 25 per cent because I think that refers primarily to businesses other than those in the primary sector. I merely supplement what she has said. I wish to address those facts to the Minister responsible for this Bill as well as to the Minister about to be responsible for a new budget, because small business must be given some consideration.
I can well remember Mr. Lewis, the Leader of the New Democratic Party, referring to "corporate welfare bums". He said that they were leaning on the Government for subsidies and assistance of one kind or another. Let me point out that they did not, either then or now, get into that position through their own choice. They are there because of the burden of taxation imposed upon them. That is why they fell into that category so aptly described by Mr. Lewis. When are we going to get to the point where there is an incentive for business, small or large, to produce and employ? When are we going to realize that overtaxation creates unemployment? When are we going to realize that by reducing taxes we assist in the accumulation of working capital and stimulate demand which, in turn, will cause business to expand production and employment? We have long since reached the point of diminishing returns through taxation. Until we address that problem, all the Supplementary Estimates and legislation we may introduce are not going to succeed.
Under the current economic situation this kind of legislation should be compulsory. It does in fact lend some help to small business in all spheres of activity. But, again, it is dependent upon the public purse for assistance, which then entails regulation and interference in the small business world.
I accept the fact that there is an element of urgency in this Bill, because my constituency has a multitude of fishermen and farmers who have not been eligible for Government benefits. Therefore, I subscribe to the idea that this Bill should go through, but I also subscribe to the idea that it only partially addresses the probem. When we talk about tax consideration for individuals, not necessarily incentives but a reduction in taxes, this is the greatest stimulator of employment. If small businesses had a more favourable tax structure, how many thousands more would they employ? Yes, they might not pay as much to the Government, but then how much less would the Government be paying out? How many hundreds of millions of dollars are being spent in Government programs to provide temporary employment, and how many tens of millions of dollars might be spent to stimulate employment in the small business area, employment which is so badly required in this country? For example, our Party recently released an agricultural program in which it agreed that there should be a tax consideration for that industry of not less than 20 cents per gallon of gasoline. I submit to you, Mr. Speaker, that this tax reduction would make a major contribution to the farming industry. When this Government decided it should tax gasoline to the extent of roughly 80 cents per gallon, it imposed on the farmer, fisherman and forester a massive increment in costs. Then we turn around and pass a Bill which will pay grants to those same people who, if they could get tax considerations from this Government instead of tax punishment, would
probably never use this legislation unless it were to create much greater employment.
How badly has the Government interfered in these spheres of endeavour? Well, let us first discuss the fishermen. In the fishing industry, we have interfered in licensing, in the qualifications of people who, in many instances have been in the industry for 10 to 40 years. They are told they are not fishermen, they should not have a licence, they cannot get a new licence. However, if they get a licence, the size of their boat is regulated, and after that the size of their catch is regulated. In other words, the fishing industry is strangulated by regulation.
With regard to the forest industry, we recently had a new commission appointed, which has in turn been placed under the jurisdiction of the Minister of Industry, Trade and Commerce (Mr. Lumley). It is another fragmentation of the administrative function of this Government. It is rather interesting to note that in the makeup of that commission, which is to study the forest industry in some fashion or other not particularly clear to me from the news release, there is not a single member of the Department of Forestry of the Government of Canada who is to be present at meetings and therefore who will be cognizant of the statements which will be made for the betterment of the industry. It just cannot be, Mr. Speaker, that we should have under Industry, Trade and Commerce a committee which is going to make recommendations with respect to the forest industry when we already have a Minister who is responsible for forestry. This does not make much sense.
When are we going to recognize the requirements of the small-businessman in the forest industry? When are we going to return to him the tax structure under which he developed his industry and without which he probably cannot continue to function? When are we going to extend to these primary industries those things which would eliminate the necessity for grants and create the opportunity for employment so badly needed?


Blaine Allen Thacker: Mr. Speaker, once again I see it is only Members of our Party who are rising to speak on behalf of small business in this country. No one on the Government side or the NDP side is rising. That is typical, Mr. Speaker, because this is another Bill which does not really do much for the small business community. The Government makes announcements across the country: "Look, folks, we are doing this, and this and this", and yet it is five months since the Bill was brought forward, and the Government has not given it any priority at all. In the meantime, hundreds of companies, which means men and women like you and me, Mr. Speaker, have lost a fortune because of broad Government policies which have bankrupted the nation as a whole.
I know the Bill is going to mean an interest abatement of some 4 per cent to bring the real interest rate on loans to 12 per cent, but that is not really going to help most companies these days because it does not really address the fundamental
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problem affecting small business across this country, that of a loss of confidence. It is a loss of a good business climate so that men and women will not even invest their dollars and take a chance on a small grocery store. Why could anyone put his or her money into a venture like that and work 18 hours to 20 hours a day when they will simply be taxed and hounded to death by regulations at both the federal and provincial level?
That brings me to the major point I want to make in the ten minutes that I have. The unseen battle which has been occurring in this country of which most people are not aware is the federal-provincial battle over tax jurisdiction. This battle has meant that ordinary Canadians, and small businessmen in particular, have been hurt. This battle relates to the enormous growth of Government since the Second World War, and certainly during the last 15 years under this Prime Minister (Mr. Trudeau) and the Liberal Government.
There are over 400 federal Crown corporations. Those Crown corporations have subsidiary corporations and subsubsidiary corporations. As well, the Provinces have Crown corporations with similar subsidiaries. The federal-provincial battle has ensued in this area because there is no cross taxation between the different levels of Government. When the federal Government establishes a Crown corporation that is not subject to real provincial tax, the provinces respond by setting up their own Crown corporations. The over-all result is that the tax base has been reduced so that individuals are paying an enormously enhanced rate of tax to enable the federal Government to raise the $88.9 billion that it needs. We know that it will only raise approximately $50 billion since its yearly deficit for which it will have to borrow is over $30 billion.
Part of the solution to this problem is to create a business climate in which there is a proper balance between the federal and provincial Crown corporations. I argue that they should be forced to operate in the marketplace and pay their fair share of taxes, rather than escaping them and having them foisted on individual Canadians and small-businessmen. Naturally, I would prefer to see far fewer Crown corporations and more genuine private enterprises conducting these businesses presently run by Crown corporations. I believe in this approach because when Crown corporations are established and are made responsible to a certain Minister, that Minister will assume the responsibility for that corporation. Therefore, it will succeed if it takes every tax dollar and every subsidy that can possibly be obtained since it is a reflection on the Government if it fails. Therefore, whenever any of these 400 federal Crown corporations experience difficulty, they simply go back to the public purse and they are protected by various means, including a direct influx of tax revenue.
An example of this is Petro-Canada. There was $6 billion or $7 billion of national wealth poured into that corporation, not for it to create anything new, but simply to buy existing corporations which were paying taxes. Is Petro-Canada paying tax? While they may funnel in a few dollars each year, when one looks at the Estimates it can be seen that Petro-Canada receives again this year almost $400 million in spite of the fact that even the dummies in the oil industry have been making
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profits and paying taxes to the nation. Petro-Canada is still into our pockets and we are facing a lower standard of living in order for that corporation to succeed, because it is ours. So the first step should be to create a proper balance between private enterprise and Crown corporations.
Another drawback of Crown corporations is their size. Normally, when a new technology emerges, there are dozens of corporations and individuals who are competing for that technology. Once an individual or corporation secures that technology and adapts it, it then becomes the normal mode of operation for that particular industry. Although some corporations go bankrupt in the process, they are small and those who are employed in those corporations can easily be absorbed elsewhere. However, when a Crown corporation is established, it becomes larger and larger. It cannot face failure because tens of thousands of people are put out of work and must fall back on Unemployment Insurance. As a result, a greater amount of our tax revenue is poured into the corporation even though the technology has changed.
I will cite a classic example of this technological change, one which will never be permitted to happen again. Only a few years ago there were service stations on practically every street corner, and on the four corners in certain areas. Due to the technological change in cars, the industry was forced to adapt and to reduce to approximately a quarter of its original size. Since these service stations were owned by private individuals and competing corporations, a reduction process was evolved and self-serve stations were established.
Would this change have been permitted to occur if they were all Petro-Canada stations which were owned by the state as a whole? Of course it would not because the Crown corporation would have been able to come to us, politicians, and since it was a state-trading corporation which could not be allowed to fail, we would have had to kick in a large amount of tax dollars.
Another example concerns CNR for which we have to write off over $800 million every few years. Air Canada has to be given all kinds of special and privileged regulatory positions such as monopoly lines. As well, it receives low interest bonds. I recently read its annual report which indicates that Air Canada still has some bonds outstanding at 5 per cent interest. That is an enormous subsidy which we do not get as individuals when we go out to borrow. But our Government is not helping us a bit.
It is evident therefore, that the tax base has injured us rather dramatically. I wish to talk about the solution because the real solution lies in the business climate. There are two practical steps the Government could take to help the small business with which I deal mostly, that is, the farming community. It concerns gas taxes. Since the introduction of the National Energy Program approximately six new gas taxes have been levied on a gallon of gasoline. In western Canada particularly there are millions and millions of acres which have to be traversed at least five times a year. In the spring the

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farmer must go over the land to prepare his seed bed, then go over it once again to seed. He then must go over it to spray chemicals, and often once again to spread fertilizer. The land must then be swathed in the fall, then harvested, and finally gone over again in before the winter. In my Province of Alberta, the federal taxes and royalties are almost 60 per cent of the price of that gallon of gasoline. If the federal Government wished immediately to help small business, it could remove that 9 per cent sales tax, which would represent 20 cents on a gallon of gas. This would be an enormous help to small business in that area.
A second major step would be to abolish the capital gains tax. As we know from our past discussions here, the increase in value of farmland and small businesses has nothing to do with real gain. It is solely the result of inflation, which we know is the result of deficits, which in turn lead to inflation, high interest rates and ultimately to a collapse. I see that my time has expired, Mr. Speaker.


Stanley J. Hovdebo: Mr. Speaker, I rise on a point of order. I am sure that the Hon. Member for Lethbridge-Foothills (Mr. Thacker) did not mean to mislead the House when he suggested that the NDP was not putting up speakers. We had a speaker from Kamloops-Shuswap (Mr. Riis) and another one from Churchill (Mr. Murphy).


Mr. Deputy Speaker:: The Hon. Member is not making a point of order. The Hansard record will plainly disclose those who have spoken.


Mr. Howard Crosby (Halifax West):: Mr. Speaker, in speaking at report stage of Bill C-136, the Small Business Investment Grants Act, let me begin by saying that it is very difficult to develop a critique of the legislative provisions contained in this Bill in the short time that is available to us.
It should be pointed out that these provisions are largely academic. They were brought forward to the House of Commons in the form of Bill C-136 at a time when interest rates were much higher than they are today. Therefore, the measures that were intended to benefit small-businessmen might be largely lost as a result of a reduction in interest rates. Hopefully, those small businesses which are now seeking to borrow funds for investment purposes will find an available interest rate that is not too far above the minimum permitted by this Bill, namely 12 per cent. Nevertheless, what is important is the spirit that, hopefully, is evident in the provisions of Bill C-136. That spirit is an indication that the Government is finally looking toward that sector of the economy known as the small-business community to build for the future. It goes without saying that those of us who embrace the Progressive Conservative Party philosophy of support for small business welcome any measure which will encourage the small-business community in Canada.
It is difficult to develop any particular theory with respect to the development of small businesses in Canada over the next decade, in the time available, but let me begin by considering what is the greatest economic problem in Canada today, that is, unemployment. We learned today that unemployment has
again risen to a level of 1.6 million unemployed Canadians and a rate of 12.6 per cent. That is only part of the story because, in addition to the many thousands who are unemployed, there are those Canadians who have given up looking for work and those Canadians who are employed at jobs much below their level of qualification or employed only part-time. When we put all those numbers together, we have over three million Canadians with an employment problem. I want to look at this great economic problem in relation to the small-business community.
We must be aware, as other speakers have pointed out, that the Canadian small-business community accounts for employment of almost 42 per cent of the working force. When we include in that statistic medium-size businesses, the percentage of persons employed in Canada rises to 66 per cent. If we are looking for a method of relieving the unemployment problem, which as I said is our greatest economic concern, then we are right to look to the small and medium businesses across Canada to relieve that problem and to create the employment necessary to eliminate or at least minimize the problem.
In order to find answers to what will help the small-business community generate the jobs which will allow us to reduce our unemployment problem, we should consult with persons engaged in the operation of small businesses. It is interesting to note that organizations like the Canadian organization of small businesses and the Canadian Federation of Independent Business have looked at all these problems and have made presentations which in part provide answers to the question of how we in the Parliament of Canada can help small business in its future undertakings. Basically it comes down to the fact that we have to advocate and embrace in our economic system the principle of free enterprise. We have to acknowledge that it is essential in Government, as in business, to balance the budget, that is to say, to relate Government expenditures to Government income to ensure that there is not a drain on the financial resources of the private sector in Canada.
This means that in endorsing these principles we will create an atmosphere in Canada which will be conducive not only to small businesses but to business activities at all levels. That is the first message which these organizations bring to Parliamentarians: that we must embrace the principle of free enterprise and recognize the economic fact of the necessity of a balanced budget. If we adhere to those principles, we will create an atmosphere in which it is possible for small businesses to be established and to succeed. As one Member of Parliament I want to endorse those principles and to ask and beseech the Government to give full recognition to them when it establishes its economic policy in its forthcoming budget.
The importance of establishing those principles is that they are far-reaching. They mean that a person who makes the effort to invest in and to establish a business or a business activity has a right to the profits of that business or activity and that profit ought not to be taken away by a taxation system which deprives a business person of the incentive to establish a business and to carry it on even through difficult
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times. When we talk about basic principles, we must recognize at the same time that they have far-reaching results.
There is an aspect which business organizations representing small-business operators across Canada bring to Parliament which I would like to underline-they fully recognize their ability to create jobs in Canada. Let me give the downside of that statement, because the Canadian Federation of Independent Business reported that in the year which elapsed between January 1981 and January 1982 there was a loss of between
700.000	and 800,000 jobs in the small and medium business sector. This gives us an idea of how this small-business sector reflects on the over-all picture with respect to unemployment and in turn the over-all status of the Canadian economy.
What can we do to help small business reverse that trend and not have a job loss in its activities in the country but have job creation throughout its activities? It is very clear-and we have been told time and time again-that the Government has to provide financial assistance to start small businesses in Canada. The Canadian Federation of Independent Business pointed out, in a presentation which was provided to Members of Parliament, that notwithstanding the difficult times we have experienced in Canada in the last few years, small-business operators have continually come forward as entrepreneurs to start new businesses. In fact, in 1982 there were 150,000 formulations. This organization pointed out that with a potential upturn in the economy in 1983 we could expect some
200.000	formulations, that is, entrepreneurs across Canada who will attempt to start small businesses. Also it was pointed out by the Federation that if these 200,000 formulations were to start up and in each case hired one or two persons, as many as 400,000 jobs would be created.
What is necessary and required from Government to encourage the start of small-business formulations is financing. It is as simple as that. Does the Government have the ability to provide financing for small-business start-ups? That is a difficult question. We are looking at a Government which has piled up a budget deficit of some $30 billion. That in itself has made difficulties for business because it raises the rate at which one can borrow funds for business purposes from every lending institution across Canada.
My answer to that is a very simple one. We cannot afford to deprive small businesses of the kind of financial assistance they need to start because if we deprive small-business operators of that financial assistance, we will simply sink into the abyss of economic depression. We have to build and rebuild the Canadian economy. We have no choice. Our only choice is to do it with the co-operation of small business.
We have seen in the House of Commons and across Canada in the past year or two the collapse of project after project, such as the Alberta tar sands project which would have employed 10,000 people directly and many more indirectly. On the East Coast we see offshore development failing to yield the kinds of jobs we thought would be yielded through energy developments in the 1980s. While I would not negate the possibility of large scale development across Canada, the hard economic fact is that we have to look to small and medium size businesses to create activities which will generate jobs and
Small Business Investment Grants Act
correct the unemployment problem in Canada. If financial assistance is needed to start these businesses, that is what the Government of Canada must provide.


John Horton McDermid: Mr. Speaker, I rise to speak on Bill C-136 and the amendments we are discussing at the present time. I, as I would imagine a number of Members of Parliament who do not have suntans, have spent most of the holiday in my constituency visiting small businesses and those who are experiencing certain problems in today's economy. The small-business sector is one which is extremely hard hit by what we are going through at the present time. Probably the greatest single deterrent to small businesses today is the fact that they lack confidence. They lack confidence in the Government. They lack confidence in the economy. In many instances they lack confidence in themselves because of the position in which they have been put over the last number of years, specifically in the last couple of years, by this Government. Some of these businesses have money to invest, expand and hire more people, but they do not trust the present administration. They have a very real concern.
The question they ask me is what the Government is going to do to them next. They want to know what rules are going to be changed next in the middle of the game. Confidence will not be restored unless on April 19 we have a commitment from the Minister of Finance (Mr. Lalonde) and the Government, as much as that will be worth, to leave the small business sector alone. They want to be promised that the tax regime now in place will not change and that the rules of the game will not be changed part way through without proper notification and consultation. Right now they are gun shy of this Government after the three budgets that came forward in a year and a half. I believe there have been 65 or 70 changes since the infamous budget of the then Minister of Finance, now Deputy Prime Minister and Secretary of State for External Affairs (Mr. MacEachen).
Small businessmen want to be assured that the rules of the game will not be changed come April 19, 1983, 1984 or 1985. If they had this assurance, they would be prepared to invest and expand. I am hearing far too much about those looking south of the border to invest. They are being invited to expand in that country, to set up a plant or move their operation to the United States where they will receive certain guarantees that there will be no interference in their business.
This bothers me. It concerns me greatly. I have to hear businesses or individuals talk about leaving this country or moving their business elsewhere. The April 19 budget must restore some of that confidence to Canadian businesses, especially small businesses which are the backbone of our economy, which hire the people and produce for Canadians.
I now want to talk about the amendment of my colleague from the New Democratic Party. The Act now clearly states that these loans can only be made for new depreciable assets or

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Small Business Investment Grants Act
for the financing of research and development. As I travel around the communities of Brampton and Georgetown, I see more and more vacancies in plants and small operations in the industrial sections of the community. For the life of me I cannot understand why these loans would not be available there.
I questioned the Minister as to why these loans were not available for older, second-hand, used equipment as well as for buildings. I know they are not eligible for land, but they are for buildings. I asked why these moneys were not approved under this program for used buildings. I cannot see the sense of erecting new buildings to take advantage of a plan like this when there are so many vacant buildings across this country. Therefore I, along with my colleagues, support the amendment brought in by our colleague. I urge everyone to support that amendment.
I now want to talk about the closing date of this program. It is not mentioned in the legislation, but the regulations state that this Act is null and void as of April 1, 1983. It is now April 11, 1983, so we are debating a Bill that has run out of steam. We are talking about a few loans that must be made to those who have applied and are waiting to receive them. We will not hold those loans up unduly.
This Government continues to say that the Opposition holds up this type of legislation when it in fact controls the timetable of this House. To blame that on the Opposition Parties is heresy. It is completely untrue. This Bill could have been put through well before Christmas and the loans made. There is no excuse whatsoever for debating a Bill that has run out of time. It is after the fact.
We will be introducing an amendment later that I hope will be supported by this House. If the Bill were to be passed as it is now, it would not serve any real purpose. On loans to small businesses, they cannot charge any more than 1 per cent above prime. Prime is now 11.5 per cent. Therefore, loans under the Small Businesses Loans Act would be at 12.5 per cent. This Act, with all the bureaucracy, forms to be filled out and everything else, would not make much sense. It would be much smarter to go under the Small Business Loans Act.
We understand that the applications that are before the Minister and have not been approved must be approved. We support that. Now that interest rates have dropped, this Bill will not have any real effect. It will be a duplication of the Small Businesses Loans Act.
I am sure the Minister has received input into his April 19 budget. I encourage him to give confidence to the business community, especially the small business community. Let him assure them that the rules of the game will not be changed when they are part way through trying to expand, trying to create employment and getting Canada back on the road to recovery.


Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, I am glad to have the opportunity to take part in this debate on Bill C-136, the Small Business Investment Grants Act, as it applies to operators of small businesses in Canada. It has been widely
ascertained that neither the federal nor provincial Governments have ever agreed upon or accepted an economic definition of small business. What is more amazing is that people all across Canada who profess to be proponents of small business have not agreed on a clear definition either.
When talking about the size of business, Governments emphasize the size of assets, the size of sales, the number of employees and so on. I believe that size is less important in defining small business than many other factors. I believe that small is a relative term. What is small in one industry could be termed medium or large in another sector.
I believe that a small business definition is one in which a business is independently owned and managed and has at the most 500 employees. This definition of a small business is the law in the United States, and many other countries around the world have adopted it. The 65,000-member Canadian Federation of Business, the largest business organization in Canada, has also adopted this definition.
This Government, on the other hand, has not been able to reach a consensus on a general definition. The Government has resisted the concept of owner-management, preferring to use a much more vague one which allows employee-managed plants to be classified as small businesses. Hopefully this problem will be resolved in the near future to the satisfaction of everyone concerned.
The substance of Bill C-136 will provide the necessary legislation to implement the Small Business Investment Grants Program outlined in the June, 1982 budget. This program, as we already know, will provide grants of up to 4 per cent to reduce interest costs to as low as 12 per cent. This Bill also has a ceiling of up to $400 million and is designed to reduce the cost of borrowing for the acquisition of new depreciable assets or for the financing of research and development. Those eligible to receive such a loan include farmers and fishermen, small businesses and corporations eligible for the low corporate tax rate, and also partnerships and proprietorships. However, those engaged in a profession or those wishing a loan for the purchase of land, automobiles and certain other passenger vehicles and leasing do not qualify for such loans. In order to qualify for a small business investment grant, a loan application must be for an amount not less than $10,000 or greater than $500,000.
One of the problems with Bill C-136 is that since this Bill was first considered about six months ago, the interest rates have fallen to the point where the 12 per cent ceiling really means that very little assistance will be available. As well, this Bill does not address the question of the survival of small businesses, which is the most immediate concern of many small businesses today. Another concern is that this Bill applies to new equipment only. Many small businesses and farmers buy used equipment in an effort to keep cost to a minimum, and this Bill will not help in this regard. This Bill is also very vague and provides that far too much discretion be granted to the Government to make regulations concerning
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operations of the program. The only things specified in the Bill are the 12 per cent ceiling, the 4 per cent maximum grant, the right of Government to get money back which was granted to those not entitled to the money, and the authority to make regulations.
Small businesses, as we all know, are generators of employment and income in every region and virtually every community in Canada. Small businesses provide important goods and services that might otherwise be unavailable or limited in type and quality. They are the mechanism for much of the innovation and the risk-taking that is essential to our economic system. They are also the source of new materials, concepts, production techniques and goods that larger enterprises would perhaps not be forced to develop. As well, the owners of small businesses are usually the backbone of the community in which they live, contributing to it in many ways at a personal level. In the case of Canada, the contribution made by the small business community is indeed impressive. The one million small businesses in Canada provide 42 per cent of the private sector employment in this country. They offer a rich diversity of projects and services and have been a major factor in industrial growth, innovation and job-creation.
While we are happy to see that interest rates have fallen somewhat in the past few months, we must be aware that the ceiling of 12 per cent spelled out in Bill C-136 will now mean that little or no assistance is provided to the small business people and farmers forced to resort to this type of borrowing. I suggest, therefore, that consideration be given to lowering the ceiling of 12 per cent, which would indeed be a step in the right direction. I would also suggest that this Government immediately work on de-regulating the business and farming communities in Canada and leave the business and farming communities which have the necessary expertise and experience to run their own businesses and enterprises. Let them do the job that they are both capable of doing. This is something which is totally lacking in Governments which have an abundance of theorists but totally lack practical and business-oriented people who know what it means to meet payrolls. This country was built on the sweat and toil of free entrepreneurs with little or no Government interference. Motivation, incentives, and the desire to better oneself were the key motivators toward the goal of success. Government intervention only serves to stifle those goals, and I believe the Government has interfered long enough. The results have been disastrous, to say the least. I believe it has had its turn and has been found wanting. I believe it is time for industry to remove the shackles of Government, assert their independence, and thus get our country back on track again to improve our economy, to reduce unemployment, and to eliminate and discourage inflation.
Small Business Investment Grants Act



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: Order, please. It is my duty, pursuant to Standing Order 45, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Victoria (Mr. McKinnon)-North Atlantic Treaty Organization-Request that Minister report on meeting in Portugal-Request that Prime Minister make statement; the Hon. Member for Mississauga-South (Mr. Blenkarn)-The economy-Investment in corporate sector- Request for measures to promote investment; the Hon. Member for Carleton-Charlotte (Mr. McCain)-Canadian National Railways-Reported purchase of Cast Corporation-Query respecting role of private enterprise.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of Bill C-136, Small Business Investment Grants Act, as reported (without amendment) from the Standing Committee on Finance, Trade and Economic Affairs; and Motions Nos. 1 and 2 of Mr. Orlikow (p. 24327).
Mr. Pat Nowlan (Annapolis Valley-Hants):: Thank you, Mr. Speaker. I am, I think, happy to speak on Bill C-136 but I am really not that overjoyed. While I agree with the thrust of what was originally contained in the budget of many moons ago, back in 1982, I want to say to the House most seriously that if there ever was an example of morass and stagnation in Government business, this simple little Bill, which is high in principle and very short in pages, is to me one of the best examples that we could find. I have no intention of involving the Minister who introduced the Bill in first reading on October 28 and second reading on November 8, 1982. The Minister of State for Small Businesses and Tourism (Mr. Rompkey) is a very honourable man. I gather that this was his initial baby in the House since he obtained his new portfolio, and he was congratulated on the day the Bill was introduced.


Some Hon. Members:: Hear, hear!


John Patrick (Pat) Nowlan: I must say, Mr. Speaker, compared to a multitude of Bills that we have had in this House which actually give you a tendon problem in the elbow because they are so heavy and multi-faceted and contain many subjects, this Bill C-136 was quite unique. It has two and one-half pages and

April 11, 1983
Small Business Investment Grants Act
six Clauses. It does all the things that other Members here today have said that it was intended to do, and it came at a time, of course, when interest rates were unconscionably exorbitant and in fact was to provide a base, a ceiling, of 12 per cent, giving a subsidy in effect, as I understand it from the very brief provisions of the Bill, of up to 4 per cent to reduce interest rates to 12 per cent. That is very commendable. No one objected to that. What I really cannot understand, as some Members have pointed out today, is why in the name of common sense are we debating this Bill today just one week and one day away from another budget. Today, other Hon. Members have asked what is going to happen in the budget of April 19 and whether small business, big business, individual taxpayers and the unemployed will get the help and assistance they so richly deserve from a Government that has been incompetent.
I do not know what is in the budget, and I do not think the Minister of State for Small Businesses and Tourism (Mr. Rompkey) knows either. Small business and tourism are two areas which can do more to promote jobs and build the substructure for the country, which provides the sinews of the economy in taxes and jobs, than almost any other factor or feature of Government operations.
I am glad the dean of the House is with us today but I do not know whether he is going to be greatly excited about what I have to say. This matter was touched upon by the Hon. Member for Central Nova (Mr. MacKay) and I think it is something that is of increasing concern to Members of the House. Like Old Man River, this session just goes on and on. Today is the 487th day of sitting of the first session of this Parliament which started on April 14, 1980. Is it any wonder that the life has gone out of the Government and a lethargy has taken over that is suffocating any interest in regenerating the country? When a Government that is supposed to control its own business goes on and on like Old Man River with no focus, no direction and no definition, then things are serious.
I am not going to argue matters of procedure but today the Senate is supposed to give an answer to Senator Mcllraith who was a well respected House leader for the Government years ago. On Wednesday, March 30, he asked the Senate what the legal status was for the Parliament of Canada to consider anything, let alone another budget, when a couple of budgets had already been considered in this session but there had been only one Speech from the Throne. There have been budgets and financial statements and other statements of exculpation-they might even get up to five financial statements in this session as it drags on.
Bill C-136 is just two and a half pages and six clauses long. It was introduced for first reading on October 28, 1982 with only four speakers, taking a total of seven and a half pages in Hansard. The debate started at 7.25 p.m. and ended at 8.30 p.m. the same night. The Bill was then referred to Committee where it was debated in one session for an hour and a quarter
and was disposed of on November 23, 1982. Then, low and behold, it lost its priority. Interest rates started to change.
Frankly, Mr. Speaker, I think the House is wasting time debating this Bill until we know what will be in the budget of April 19. That will do more to restore confidence than anything in the Bill. Although the Minister spoke in glowing terms about the $400 million provided in the Bill, I understand that he has reduced the amount to $60 million now. Perhaps he or someone else will be able to tell us the amount in the applications that have been approved or are still in front of the Minister at the present time. I venture to say that we are not dealing with $400 million or $60 million now.
I should like to know how necessary it is that we deal with this piece of legislation today. It has just been sitting there since it was dealt with in Committee on November 23. I surmise that the reason it has not been pushed ahead is that it has lost its relevance. Interest rates have come down. There may be a good psychological argument that because it was there, it helped bring interest rates down. I will give credit where credit is due, and if that factor, amongst others, helped bring interest rates down, I am pleased.
The report of the Canadian Federation of Independent Business shows that today 700,000 or 800,000 fewer Canadians are employed in small and medium-sized business than were employed in January 1981. The Bill would not have much effect on that situation anyway.
It is ironic, Mr. Speaker, that according to the terms of the Bill, it has already expired. As I understand the Minister's explanation, the Bill does not apply after March 31, 1983. The Bill was started with some fanfare, and it was not held up in the House. It has been kicking around since the budget of 1982 but was not pushed ahead. The Minister did not approach the House to get it through because there was a need for it. Interest rates went down.
Frankly, Mr. Speaker, it is a great example of stagnation in the legislative program of the Government that we take the time of the House to deal with a Bill that is no longer relevant. I should like to know how many people are directly affected by it. If there are any, the Bill could have been passed by some type of House order and agreement with the Opposition. In principle, we are for the Bill, but the factors have changed so fundamentally that the whole thing is a farce.


Thomas Edward Siddon: Mr. Speaker, I should like to make a contribution to the debate on Bill C-136, not to cover old ground but merely to recognize that we are being asked to pass, almost retroactively, a measure that is quite unnecessary at this time and which will do nothing for small business in the months and years ahead. The costs and the burden of the various Government programs make it difficult for people to remain in business in Canada, and the Bill does not address those serious problems.
The Government has bungled its priorities once again. When this Party and the Party to my left from the end of 1979 until late last winter called for assistance with the high interest rates that affected home owners and small businesses, the
April 11, 1983

Government was preoccupied with finding ways to bail out its big corporate friends and totally ignored the plight of the small business sector.
With a lot of pushing from this side, the Government finally begrudgingly agreed to implement the Small Business Development Bond Program which was introduced by the Hon. Member for St. John's West (Mr. Crosbie) in his budget of 1979. Had that program been adopted immediately, many of the small businesses which no longer exist in the country might have survived the worst economic depression since the mid-1930s.
We dragged the Liberals into the 1980s, screaming and kicking, and tried to get them to realize the plight of the small business sector. Today, in 1983, we are about to adopt legislation which is applicable only to March 31, 1983. It is designed to help people whose interest rates exceed 12 per cent, although the prevailing market rate is 12 or 12.5 per cent. The Bill is practically worthless.
The Government has failed to deal with the fundamental problems that have been crushing small businesses and leading to an unprecedented rate of bankruptcies. The small business sector employs more than 70 per cent of people who work in private agencies in the country. We have seen a massive and phenomenal rate of bankruptcies amongst those businesses which are the mainstay of our economy, and this has evolved from measures such as the National Energy Program which has destroyed the climate and the enthusiasm for investment in this country. It was compounded by the budget introduced by the former Minister of Finance on November 12, 1981, which was subsequently corrected and adjusted in December of that year, then replaced by another budget on June 28, 1982, then corrected by another economic statement in the autumn, and finally the residual measures were adopted in this House a few weeks ago by way of the amendments to the Income Tax Act, the Ways and Means legislation.
Then the new Minister of Finance (Mr. Lalonde) introduced 26 new amendments to the Income Tax Act to enact measures which he did not want to accept as amendments to the principal Bill, Bill C-139, I believe it was, because he would have to admit that the Opposition had been right in much of their criticism of those various tax measures. But he introduced the changes retroactively after the Bill was passed, Mr. Speaker.
The point I want to make, Mr. Speaker, is that all of this turmoil and confusion, this talk of taxing the imputed benefits of employees of small businesses, and the taxation of automobile allowances, the imposition of a regime of taxation on fuels, oil and gas and other energies which are used in the manufacturing and production of goods by our small business, all of these measures have imposed a punishing burden upon the small businesses of Canada.
Then there were the Statistics Canada experts who went around to many businesses with long and detailed forms which this Parliament never approved, with a myriad of complex and often very personal and penetrating questions, and these
Small Business Investment Grants Act
businessmen were told that they must comply under the threat of imprisonment or major fines. That, of course, takes away from the time they have to service their customers, to service their deficits and to make the financial and management decisions which are important to keep those businesses viable.
There is also the Metric Commission and the impact it has had on the retail sector, which consists of small businesses primarily, and the hassling of people who would sell gasoline by the gallon, carpeting by the yard and lumber by the 4 foot by 8 foot sheet size. We now have this very confused situation where you can still buy two by four lumber and four by eight sheets of plywood and three inch nails in building supplies, but you are not allowed to buy gasoline by the gallon if a merchant chooses to sell it that way, even though many Government agencies still dispense gasoline by the gallon and oil by the quart.
Therefore, Mr. Speaker, we have this morass of costly and confusing burdens which this Government is imposing on the small business sector of this country. Then it asks us to come into Parliament and pass retroactively a piece of legislation which cannot have any benefit to the businesses of the country beyond this day. So we ask what the Government is doing about all of this other nonsense, the offshore purchasing policies, for example Mr. Speaker, where a number of semisubmersible lifeboats are to be purchased to supply the coastguard of Canada. Small business in my riding has produced such vessels satisfactorily, not only for the Canadian coastguard but for the coastguards of other nations and the major oil companies, the multinationals which are operating in the Arctic and off the East coast of Canada. These boats, which are produced in Richmond, British Columbia, are being used very successfully in those cases, but when the Minister of Transport (Mr. Pepin) decides to buy a new lifeboat, he goes offshore to purchase it because certain people within the search and rescue service have decided and predetermined that there is only one type of vessel which will meet their needs. It is not so bad to have a specific type of design in mind, but when you rule out the right of Canadian small businesses to bid competitively for the right to supply such systems, then there is something drastically wrong with Government policy in the purchasing areas. That, again, is another example of the tremendous imposition of costly burdens on the small business sector.
Certain provisions of the Official Languages Act are imposing costs indirectly upon small businesses which must compete with Government-run or Government-regulated agencies which do provide services in both official languages, even in some parts of the country where it is not necessary. Small businesses which are trying to provide competitive services are forced very often to print and to publish in both languages at a considerable additional cost to them even though there is no additional return at the sales counter.
We could well spend more time reviewing the banking practices within this country. I know that this Parliament, and the Committee on Finance, Trade and Economic Affairs, has

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just gone through a major revision of the Bank Act, but, Mr. Speaker, if you had had occasion to visit your banker to borrow money, as I have had recently, you might be astounded at some of the extra costs which are being tacked on over and above the basic interest charge. For example, if you want a short-term loan for a couple of weeks, many of the Canadian chartered banks now charge you not only a set-up fee, and not only straight interest, but an additional service charge because you are not borrowing the money for long enough, which pushes the effective interest rate up to near usurious levels.
All of these measures and initiatives which have frustrated and hamstrung the small businesses of our nation have contributed to the present high levels of unemployment, which we learned about in the recent Statistics Canada figures which were debated earlier today in this House. To waste the time of the people of Canada in this Parliament in an attempt to enact legislation which is no longer effective, which is not going to be retroactive except with respect to certain applications which were entered into prior to March 31, 1983, just seems to be a ridiculous and foolish illustration of the total misdirection of priorities by this Liberal Government. As the Gallup poll indicated last week, I believe the people of Canada have had enough. They would like to throw this Government out and we would like to also.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


An Hon. Member:: Question.


The Acting Speaker (Mr. Blaker):: I remind Hon. Members that Motions Nos. 1 and 2 were combined for debate, but are to be voted on separately.
Is it the pleasure of the House to adopt Motion No. 1?


Some Hon. Members:: Yea.


Some Hon. Members:: Nay.


The Acting Speaker (Mr. Blaker):: All those in favour will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mr. Blaker):: In my opinion, the nays have it. I declare the Motion negatived on division.
Motion No. 1 (Mr. Orlikow) negatived.


The Acting Speaker (Mr. Blaker):: We will now deal with Motion No. 2. Those in favour of the Motion will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mr. Blaker):: Those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mr. Blaker):: In my opinion, the nays have it. I declare the motion negatived on division.
Motion No. 2 (Mr. Orlikow) negatived.


Donald Alex Blenkarn: Motion No. 3.
That Bill C-136, Small Business Investment Grants Act, be amended by adding immediately after line 21 at page 2 the following:
"5. (1) An order of the Governor in Council under section 4 shall be laid before Parliament not later than the fifteenth sitting day of Parliament after it is made.
(2)	A motion for the consideration of the House of Commons to the effect that an order referred to in subsection (1) be confirmed, signed by a Minister of the Crown, shall be filed with the Speaker of the House of Commons not later than the twentieth sitting day of Parliament after the said order has been laid before Parliament pursuant to subsection (1).
(3)	Where a motion for the consideration of the House of Commons is filed as provided in subsection (2), the House of Commons shall, not later than the sixth sitting day of Parliament following the filing of the motion, take up and consider the motion.
(4)	A motion taken up and considered in accordance with subsection (3) shall be debated without interruption for not more than three hours and, on the conclusion of such debate or at the expiration of the third such hour, the Speaker of the House of Commons shall forthwith, without further debate or amendment, put every question necessary for the disposition of the motion.
(5)	If a motion described in subsection (2) is taken up and considered by the House of Commons in accordance with subsection (3) but is not adopted by that House, the particular order to which the motion relates shall stand revoked.
(6)	If a motion described in subsection (2) is taken up and considered by the House of Commons in accordance with subsection (3) and is adopted by that House, the particular order to which the motion relates comes into force immediately on the adoption of the motion by the House of Commons."
and by renumbering the subsequent Clauses accordingly.
He said: Mr. Speaker, far too often this House of Commons is presented with legislation such as is represented in Bill C-136, and it is with that in mind that Motion No. 3 was introduced.
Motion No. 3 requires that when an Order in Council is made, under the provisions of this Statute, the Order in Council must be put before Parliament and that there be a three-hour debate and a vote on that matter if it is required by Parliament. The concept here is to make sure that, when we have legislation which implies massive numbers of Orders in Council, somewhere along the line the people of Canada, by their elected representatives, should be able to say something about that type of legislation. This particular Bill in its definition, and the definition section is the kind of definition section that you are always concerned about, speaks about the word "prescribed". And what does "prescribed" mean? It means prescribed by regulation. Then when you get to the main granting section of the Bill, that is Section 3, it says, "On application to the Minister by a person who establishes .. . " what? In a form prescribed:
April 11, 1983

-that he is, pursuant to the regulations, eligible to receive a grant in respect of interest payable by the person on a prescribed small business investment debt- the Minister may, subject to the regulations, make a grant-
Well, the fact of the matter is that Section 4 of the Bill says:
The Governor in Council may make regulations prescribing anything that by this Act is to be prescribed and providing for all other matters and things as he deems necessary to carry out the provisions of this Act.
One begins to wonder what happened to legislation by Parliament if this type of uncontrolled regulatory power is allowed to exist. Yet it does, and it is a most dangerous type of precedent. Here we have a Bill which in no way controls the kinds of grants a Minister may make, other than that it cannot be for more than 4 per cent of the interest amount of the loan and cannot reduce the rate of interest on a loan to below 12 per cent. Other than that, there are no terms and conditions. The grants can be for anything. The grant could be to blueeyed Liberals. It could be to people engaged in raising marijuana. It could be to anyone engaged in any kind of business the Minister decided to prescribe. There is no control. The Minister could authorize a loan to what he describes as small business, which is not necessarily a small business under the Income Tax Act. It could be a small business like Canadair or de Havilland. They are small businesses. As a matter of fact, their profits are small. As a matter of fact, their profits are non-existent. Massey-Ferguson could qualify because they could be described as a small business under the regulation. If you think about it, as long as the subsidy is only 4 per cent and the interest rate is reduced to not less than 12 per cent, there is absolutely no limit to what could be granted under the terms of this Bill. It is open all the way.
It is with that in mind, Mr. Speaker, that we introduce this kind of amendment. I say to you, Sir, that it is absolutely essential that when legislation that must perforce give the Governor in Council power to make regulations is brought before the House, it must also curtail the power of the Governor in Council to bring forth those regulations. We have seen this problem in metric conversion where we have people raising before the courts of this country the issue of whether regulations made under the Weights and Measures Act are proper. We have that kind of section in this Bill where the Governor in Council may make regulations prescribing anything. When we pass legislation of that nature, what we have really done is say to our constituents that we are here for no purpose other than to give the Government power to do what ever the Government wants to do. In a very serious and real sense we have abandoned our responsibility to the people of Canada. We have left the door open for any kind of dictatorship the Party in power wants to impose upon the country. When we had before this House legislation concerning metrication, there was no suggestion at all that metrication would be compulsory. But it was compulsory because of the provision which allowed the Governor in Council to make regulations which were never contemplated by anyone in this House when the legislation was dealt with. The same possibility exists here.
The Minister says, quite properly, that he is not going to make any grants under this Bill unless they were applied for
Small Business Investment Grants Act
with respect to loans made prior to April 1. We will take him at his word and we may have a further matter to bring before this House later this afternoon in that regard. But as the Bill stands now, there is the possibility that a Minister of the Crown could come forward, maybe a year or two years from now, and decide to make grants to small-businessmen carrying on business in Corner Brook, Newfoundland, and only them. That would be quite proper under this Bill. There is no requirement that what was said in a budget debate in June, 1982 need apply. The Bill becomes a statute of Canada, and that allows the Minister to make regulations to allow any kind of a grant as long as it is not in excess of 4 per cent and it does not reduce the interest rate on a loan to below 12 per cent. So a Minister of the Crown-the current Minister, and he is a good Minister-may piously say that he would not do that type of thing, but this legislation does not tie the hands of any future Minister. No one else is bound by that. This Minister may not be the Minister responsible for small business a month or two down the pipe. Some other Minister may have a new jolly green program with new jolly green brochures for jolly green grants. He may want to, as my colleague, the Hon. Member for Annapolis Valley-Hants (Mr. Nowlan) says, hand out some jolly green dollar bills to his jolly green friends. And, Sir, he can do it. All he has to do is to get the Governor in Council to pass the regulations, and away we go.
So I say to this House that when this type of provision is included in the statute, this House must insist on an amendment in the form that I have presented to this House this afternoon, a provision that these regulations may be tabled before Parliament and that there be a debate-not a long debate, but one of three hours-and it be brought to a vote so that Parliament has an opportunity to express itself with respect to regulations. It is on that basis, Sir, that this amendment is presented.


Nelson Andrew Riis: Mr. Speaker, I am very pleased to have this opportunity to speak to this amendment put forward by the Hon. Member for Mississauga South (Mr. Blenkarn). There is no question that the amendment is a good one in that it identifies once again one of the major weaknesses of Bill C-136. Section 3 of that Bill reads as follows:
On application to the Minister by a person who establishes in the form and manner prescribed that he is, pursuant to the regulations, eligible to receive a grant in respect of interest payable by the person on a prescribed small business investment debt obligation owed by him, the Minister may, subject to the regulations, make a grant to the person or his agent of such amount, not exceeding four per cent per annum of the principal balance outstanding from time to time of the debt obligation, as would reduce the effective rate of interest on the debt obligation for the period in respect of which the grant is made to not less than twelve per cent per annum.
In a nutshell, what that says is that the Minister may decide to target certain groups for particular incentive programs. It is possible that the Minister would identify under the terms and conditions in a set of regulations that this particular Bill ought

April 11, 1983
Small Business Investment Grants Act
to apply to certain sectors of the small business community. Perhaps it would be small businesses involved with tourist services, perhaps those which are involved in the high-tech industry or those which are emphasizing the fishing industry or certain service industries.
What is important is that we must realize that it is open-ended. This amendment attempts to bring some accountability to the Government benches. If the Government wishes to target certain groups in the economy for some special assistance, then the purpose of this amendment is to have the Government come forward to Parliament and present the issue in such a way that Parliamentarians have an opportunity to react to this selective incentive program.
Quite frankly, I have little quarrel with that procedure. I like the idea of seeing the day when the Government of Canada will have an economic and industrial strategy in place which will enable it to target particular sectors of the economy for special encouragement and support. After all, this is not a particularly new concept. Many other countries spend a good portion of their budgets on the encouragement of certain industries. As a matter of fact, if we examine the Canadian Government's estimates carefully, we will find that this is already taking place today. There are complete sets of incentive programs for certain kinds of enterprises.
The problem concerns the fact that these programs lack any direction. They are not part of any particular strategic program and do not strive to obtain a particular goal. It is simply an ad hoc and random approach to whatever business is able perhaps to lobby most effectively or to whatever enterprise might bring a particular advantage to a selected region of Canada. These particular enterprises are being provided with certain incentives today. However, it is in the absence of a comprehensive industrial recovery program that these incentives are taking place. That is one of the major weaknesses of the program.
I am in favour of the concept of regulations being drafted that would provide encouragement for certain selected sectors of the economy which Canada sees as sectors that perhaps would bring some strategic advantage to the Canadian economy, which would provide us with a greater opportunity for world product mandating, or sectors of the economy that would give Canada a particular edge in world markets. Consequently, it is to those industries we should be giving some special attention.
As I indicated earlier, other countries do this and there is no reason why Canada should not do so as well. I am particularly concerned about this issue as a result of the information which has been provided to us lately with regard to the level of unemployment in Canada. We are presently facing a seasonally adjusted unemployment rate of 12.6 per cent. The Government of Canada tells us that this level of unemployment will be with us for some time in the future. It is saying that this is essentially a level of unemployment that Canadians must accept and consider to be a reality in the months ahead. I want to say that there are many of us who do not accept that and do not accept the premise that Canada is faced with a 12.6 per
cent seasonally adjusted unemployment level, a fact which must be accepted. I believe that we can see a slow economic recovery occur in our country with an economic strategy that recognizes that certain Canadian industries possess a strategic advantage which can be developed.
I suspect that the Minister whose Bill we are debating today, the Minister responsible for small businesses (Mr. Rompkey), has identified the tourist industry as one of the critical sectors where Canada has some advantage. The tourist industry is a sector which I believe ought to be receiving a great deal more attention than it is today. It is largely a sector of small enterprises and one which caters to the family business. It is a sector that is essentially Canadian owned and controlled and from which the profits of the enterprises remain in the country for further investment. It is the type of industry in which Canada obviously has a contribution to make in terms of world tourist markets. At the moment it does not receive particular encouragement from the Government of Canada nor, I suspect, from most of the provincial Governments.
If this particular Clause were part of Bill C-136, it would provide a mechanism for the Government of Canada to target tourism as an industry that it would like to encourage, support and nurture in a number of ways. For that reason I support what Clause 3 is attempting to accomplish in principle. However, the amendment of my colleague, the Hon. Member for Mississauga South, would provide an opportunity for Parliament to debate those special regulations and initiatives that the Government may be taking. For that reason, I hope the Minister responsible for small business gives some consideration to the amendment at present before the House.
There is no reason for being hesitant about the regulations. One becomes somewhat skeptical when Members opposite on the Government side say that they are not prepared to come to Parliament to disclose the new set of regulations as they change from time to time. While that may be expedient in terms of Government business, in terms of Parliament being able to provide its support to economic initiatives provided by the Government I suspect that there is no reason for this amendment being supported not only by Members of the Official Opposition and the NDP, but by Government Members as well.


Frederick James (Jim) Hawkes: Mr. Speaker, it would be nice if the Government Members opposite occasionally supported an amendment that made common sense. It has not been the practice of the House very often but perhaps this is one occasion when we can look for a few independent spirits on that side of the House to support us on an amendment which I suggest does make common sense.
I spoke earlier this day on the NDP amendment and mentioned the fact that an amendment would be moved later that dealt with something that is of considerable interest to me. In the course of my previous remarks, I ran out of time and forgot to draw to the Minister's attention how much more pleasant it would be to be standing in the House today dealing with a
April 11, 1983

piece of legislation which would be helping small business in a meaningful way and assisting small businessmen in this country. It is a tragedy to be standing here today when that type of legislation is not before us.
I hope that the Minister would know that the greatest problem facing Canadian small businesses today is that, first, far too many small-businessmen do not have equity financing and, second, they have trouble competing in the marketplace because the markets, to a large extent, have dried up. The small businessman is quite often at the mercy of the large multinational corporation which can ride out a period of economic difficulty much easier since it has a much wider asset base to draw upon.
If we were presently examining a piece of legislation which would provide equity rather than debt financing to small business, I am sure that Members on this side of the House- certainly those from the Progressive Conservative Party- would give such a sensible piece of legislation speedy passage, because it would be helpful to the small business sector. If we were standing here today to examine a piece of federal legislation which dealt with the purchasing policy of the federal Government, we would have to remember that it spends something in the order of $90 billion per year. The United States, our major competitor just to the south of us, has had in place for years and years a small business set-aside provision which encourages the development of small business by providing a protected share of market on federal Government purchasing for that small business sector. If we were to see a common sense piece of legislation which increased the market potential of the small business sector, it would obtain speedy passage from this side of the House. That is not the piece of legislation before us today. The one before us today is more than a year old in the sense of its promise and several months old in the sense of when it saw the light of day.
This is a Bill to provide up to 4 per cent relief to small businesses that have to borrow money. As soon as we deal with a Bill to provide some amount of interest relief to some segment of Canadian society, it forces us to consider the fact that it has been in a large measure the federal Government, its borrowing habits and its $30 billion deficit, that have caused interest rates to rise historically.
It is the federal Government or the Liberals opposite who over a period of years have competed in the marketplace to borrow money. They have competed against people who want to borrow money to mortgage their homes. Interest rates shot way up for people who wanted to obtain mortgages to purchase their first homes because the major competitor for those funds was the federal Government. With an unlimited chequebook, the federal Government went into the marketplace and bid with increasingly high interest rates to borrow funds. Thus every home owner in the country who had to mortgage his home was required to pay higher interest rates, or if he wanted to purchase a car or finance a small business. We have the villain, the Liberal Party of Canada represented by its Cabinet, driving up the costs of borrowing money over a period of years, and then bringing in a piece of legislation which says,
Small Business Investment Grants Act
"Are we not the good guys because we will give back some of that money?" This sounds attractive to many people, but when we look at the legislation, we must ask ourselves whether it tells us to whom the money will be given back or under what conditions it will be given back. The answer to these questions is no.
In this piece of legislation Members of Parliament really have no say on who is to benefit from this expenditure of tax dollars. We find in Clause 4 that the Order in Council shall decide. When we see those words, we know they really mean Cabinet, a select group of 30-odd Members opposite who meet in secret and decide what the regulations will be. It is through regulation that one gets control. I mentioned earlier today one regulation which the Cabinet opposite wants to include, that is, if small businesses in the country buy new pieces of machinery which meet the qualifications it decides, they will be given interest relief, but if they purchase used ones, they will not be given relief. In other words, if a small-businessman, who is cost conscious and has a business which is borderline and may go under, finds a bargain in terms of a used piece of equipment and borrows money to buy it, the federal Government is saying that he will pay the whole interest charge. Let us say that the piece of equipment can be purchased for $10,000. Then he pays the whole interest shot. But the Government is saying that if he goes out and purchases a new piece of equipment, perhaps no better but simply because it is new, and he pays $20,000 for it, then the Government will give him some help. In other words, if he drives up the cost of doing business, the Government will help. It will help feed inflation and help inflation to grow, but if he is cost conscious, it will not help. If he tries to keep costs down, and therefore the cost to consumers, and tries to help a small business compete against multinational organizations, the Government will not help. But if he is wasteful and buys more than he needs, the Government will help. It is like a carrot to increase inflation and ultimately the bankruptcy rate of small business.
This is not something which Parliamentarians in their wisdom decided to do. This is something which Cabinet decided to do, an appointed body, appointed by one man, the Prime Minister (Mr. Trudeau), which meets in secret and issues regulations. The powers are enormous. This type of clause in such a piece of legislation is at its most basic level anti-democratic. The voters of the country vote for the people they want to come to this Chamber to represent their views and perspective. Then what are we given a chance to do? We are simply given a chance to vote to give Cabinet more powers, to give that appointed body more powers.
I come from Calgary. The unemployment rate, the vacancy rate and all such indicators of economic difficulty, have risen enormously in the last year or year and a half. They have had the highest rate of increase in the country. Why is that? It is because the federal Cabinet took unto itself the power to regulate far too many industries, but in particular the oil and gas industry. It was done with such understanding that half the jobs and half the economic spin-offs around the country were

April 11, 1983
Small Business Investment Grants Act
killed. Today we have a Minister of Energy who will roll back prices when they are already less than 75 per cent of the world price. That takes money out of the hands of businesses. It forces them into the marketplace to borrow. Then we will have a piece of legislation like this one. As the interest rates rise, the Government will help, but it will not produce any more oil or any more jobs. The situation comes about because it is not Parliament which decides, in all its collective wisdom. It is a small group called Cabinet which takes too much power unto itself. Approximately 3,500 Cabinet-type regulations a year mean that none of them are looked at with the kind of care and attention they deserve.
I hope Hon. Members opposite will rise later in the House on this amendment, take that power away from Cabinet and put it back in Parliament where it belongs so that fewer mistakes will be made in the future.


Thomas Scott Fennell: Mr. Speaker, first of all I would like to say that I support this amendment very strongly because it really brings back into the House the responsibility which belongs here, rather than allowing it to float through an Order in Council without any reference back to the House.
There are too many things which the Government has done without our knowledge. There is a great deal that we cannot know about because it is a diverse economy and we cannot know everything about everything at all times. It is very important that legislation concerning small business be referred back to the House. I believe an over-all overhaul should be implemented immediately. Once that comes in and there is self-monitoring and perhaps private funding for a portion of it, we will not need to bring it back to the House.
The only reason legislation has to come back to the House is because of the spending of taxpayers' money. I do not think we should spend taxpayers' money. Instead we should encourage industry to survive on its own. That is really the thrust of my remarks.
I think this is a stopgap Bill. I am sure the Liberals will come up with a total, encompassing small business policy. I really believe they will do it some day. It may not be in time because we may be the Government and we will have the opportunity to put it in. Believe me, we will put in broad small business policy.
Talking about the problems in Canada, an interesting paper was put out by the University of Western Ontario giving an analysis of Canadian banking and the problems with the branch bank system, the lack of trained people to help the individual, help the corporation, assess what is required and possibly to implement.
In the United States there are many small banks, although fewer than there used to be. They are getting more into central banking because of the demand for dollars. The small bank in each town, the owner, who happened to be the banker, knew what was going on. He knew the business. He would get monthly statements and regular quarterly statements. He knew exactly where they were at. He would find people who in
a true pioneer spirit, would invest capital into a company so that he could provide additional borrowing.
That is one of the areas where we in Canada have failed. The Hon. Member for Kamloops-Shuswap (Mr. Riis) brought out that we should have an edge in world trade. I agree with him totally. There are a great many things on which he and I agree.
What happens to us in this country is that we have to borrow so much money and pay interest on that money to try to get a business going. We do not have enough equity money coming into the market and risk capital that may make a bit more money in the future. As Members know, at the beginning it is hard to make money. It takes seven years for an industry to get under way. That is what is really addressed in this piece of literature from the University of Western Ontario.
Relating to this, I am fairly aware of what happens in Japan and the reason for their success. A great deal of it relates to the "assist export trade". In many ways the Government gets involved. In the pure financing of businesses in Japan, there are ten separate organizations. They have city banks, local banks, long term credit banks and trust banks. There are ten that split this up. It is not a monopoly they are dealing with.
An independent small entrepreneur in Japan has a variety of sources from which to get money. In addition, many of the small businesses in Japan, unfortunately, are dependent upon some of the majors. Some of the majors assist them at times when growth is not that great or when they are over-supplied. They assist them in financing their inventory. Some do, some do not, but it makes a tremendous difference.
These Japanese banks not only lend money on debt but on equity. There is a variety. I am looking at a comparison. In Canada we have four sources, of which 74 per cent are the chartered banks. The balance is split between mortgage loan companies, trust companies and local credit unions.
Germany has a much broader spectrum, as do most of the European countries, because they have merchant banks that really go into venture capital. Then they carry on. They put so much in through equity, and the balance through debt. We do not have the same facility for small business in this country. We have lost the entrepreneurial spirit. It is very difficult to get a business going. It is very difficult to raise equity capital, no matter how good the idea.
I know there is an exception. The Minister knows about it. The exception now is high technology firms. That has sex appeal. It has the possibility of a balloon, of really growing rapidly. Strangely enough, Canadians believe it has the possibility of failing. That is free enterprise, the right to succeed and the right to fail. That is why we should not step in and try to prop up marginal operations.
We have to provide something to give them a base to work from. With the tremendous rise and fall of interest rates, industry and business cannot operate. They cannot live with it. They cannot budget for it. When we have those high interest rates, we have a reduction in sales. You get a double-whammy.
April 11, 1983

While I am on sales, I will put in another dig. They hit the salesman twice as hard in the year that sales go down by charging him twice as much for standby charges on his car. That was unfair during 1982, one of the worst periods we have gone through.
In Canada we do not have incentives to get people to invest in small business. There are no incentives. One of our plans was to remove capital gains on private business. Perhaps that would attract more money. I would rather see Canadian pension funds putting some funds into small business rather than buy more preferred shares in Massey-Ferguson. I have nothing against Massey-Ferguson. I think it is great to keep that organization going, but it may be an industry of the past. Hopefully, something can be resolved for them, but we should provide a proper financing vehicle outside of Government. That is where we are failing. The individual really does not need the Government to be involved if we have a proper financial system or if we had a mini stock market to cover small businesses trying to go public.
Part of the trouble with that is that brokers take such a large piece of a small deal. Perhaps there is a way around it through the banks. I do not know. We have to address this whole problem.
In our amendment we say that we want to vet this in front of the House. Then we could make some suggestions. We could all think about creating jobs and bringing something forward. That is what it is all about. We are talking about the people of this country, Canadians. I am talking about Canadian business.
The Liberal Government is nationalistically inclined. I agree that Canadian ownership is good. Young people should be given an opportunity to own their own business. We should do whatever we can for them. Again, this Bill is a stopgap, a bandaid. It will not solve the critical problem because business cannot operate on 12 per cent interest rates. That is too high.
Not so many years ago if a man in industry could get a 15 per cent return on his investment, he was doing extremely well. Then it went up to 20 per cent. At 12 per cent it is very marginal, a potential of at least 3 per cent.
Let us look where we are going. We will not come out of the recession quickly. It will take a long time. Thank heavens it will be gradual. Possibly this time we will come out with a better economic base than we had in the past. I hope it is not a sharp turn-up. I hope the Government does not come out with gimmicks to push it straight up and then it will come straight down. If we go up too quickly, and we have seen this happen, interest rates go up. To prove my point, if interest rates go to 20 per cent, this Bill will be of little help to the man paying 20 per cent interest. If he gets only 4 per cent off that, he still has 16 per cent, and that is far more than any small business can afford.
1 speak very highly of the amendment. I support it. I wish the Government would consider it. Members of Parliament deal with small business people in their constituencies. We
Small Business Investment Grants Act
want to give them answers. We want to know the problems. We do not know them when everything is done by Order in Council. I ask the Government to accept this amendment. Please allow us to review what is happening so that there are not so many regulations, so many powers, and so many changes to be made by the Government without its having to come to the House of Commons.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some Hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Those in favour of the motion will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Some Hon. Members:: On division.


The Acting Speaker (Mr. Blaker):: Accordingly, I call the motion lost on division.
Motion No. 3 (Mr. Blenkarn) negatived.


The Acting Speaker (Mr. Blaker):: The Hon. Member for Mississauga South (Mr. Blenkarn) rises on a point of order.


Donald Alex Blenkarn: Mr. Speaker, on a point of order. I believe there is disposition in the House to allow a further amendment to the Bill to be presented to the House at this point with the unanimous consent of the House. On that basis I move:
Motion No. 4.
That Bill C-136 be amended by adding, immediately after line 16 on page 2, the following:
(3) The Minister may only make grants under subsection (1) in respect of
small business investment debt obligations that are incurred prior to April 1,
1983.


The Acting Speaker (Mr. Blaker):: May I inquire of the Hon. Member for Mississauga South, who was kind enough to provide the Chair with a copy of his motion, as to whether the reading should be April 1 or March 31, 1983. It was not clear.


Donald Alex Blenkarn: The concept, Mr. Speaker, was that April 1 would be more appropriate because it has to be prior to March 31. The undertaking that the Government gave to the business community was that they would accept loans made up to, and presumably including, March 31, so the words "prior to April 1, 1983," solves that problem.


The Acting Speaker (Mr. Blaker):: Fine. I simply wanted to make sure that the copy of the motion in the hands of the Chair accords with what the Hon. Member is seeking. I will proceed on the basis of the date of April 1, 1983.

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Small Business Investment Grants Act
Then by unanimous consent, Mr. Blenkarn, seconded by Mr. Rompkey, moves:
That Bill C-136, Small Business Investment Grants Act, be amended by adding immediately after line 20 at page 3 the following new Clause:
(6) The Minister may not make a grant under Section (3) unless an
application for that grant is made on or before April 1, 1983.


Bill Rompkey: Mr. Speaker, we certainly accept that amendment on this side of the House. I would want to point out as well, because the point was raised by the Hon. Member for Red Deer (Mr. Towers) this morning that he would want to make-


An Hon. Member:: Bow River.


Bill Rompkey: -I am sorry, the Hon. Member for Bow River (Mr. Taylor), that he would want other people to apply and that indeed this amendment allows that. There is no prohibition on other people applying, but they would apply to have the Act support loans that were made prior to the first of April, 1983. In other words, the contractual arrangements between the individual and the banks before April 1, 1983, would be appropriate given this amendment, so we support that amendment on this side of the House.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the motion?


Donald Alex Blenkarn: Mr. Speaker, just briefly to speak to it, I believe that it is good that we have finally come to a conclusion on this particular portion of the Bill. The original concept of the Bill was that grants would be made to reduce interest rates by up to 4 per cent and reduce them to 12 per cent for business.
As has been pointed out in the debate so far today, interest rates have very much ameliorated since the budget of June 28, 1982. There have, however, been a number of people who have made application thinking the Bill would go through in accordance with the brochures issued by the Government. The concept of this amendment is to allow those people to continue to receive the benefit of the grant. The Government at no time suggested to people that they could continue to take advantage of this Bill after March 31, so nobody has been harmed. It is our view that it is imperative, though, that the Bill not have any validity after the end of March or the first of April, as you pointed out, Sir, simply because to do so would leave an open-ended piece of legislation that could be used by some subsequent Minister or some subsequent Government to enter into a rather extensive loan or grant program, and it is on that basis that we are happy with this amendment.
We feel the amendment solves the problem. It looks after those who have been involved and made application under the Bill. It allows the Bill to be completed and wound up, but it leaves this whole possibility of further grants under this legislation not available. It also solves the problem of the amendment that I spoke on earlier that was negatived on division, the amendment with respect to reviewing Orders in Council that provide for grants and the like. Since the effect of the Bill will now be terminated as of April 1, 1983, by virtue of
the amendment I hope this Parliament will accept it. Should we pass it, then I suspect we will have solved the problem. On that basis, Mr. Speaker, I think we should perhaps move to the next stage of this Bill.


The Acting Speaker (Mr. Blaker):: Before I recognize the Hon. Minister may I point out that the Chair was put in possession of a proposed amendment. The Hon. Member has in fact read into the record a slightly different amendment. I want to make sure that all the Hon. Members agree to the same wording so I can dispense with any great complexities of procedure. This is the motion which is before the House, moved by Mr. Blenkarn, seconded by Mr. Rompkey. It reads:
Motion No. 4.
That Bill C-136 be amended by adding, immediately after line 16 on page 2, the following:
(3) The Minister may only make grants under subsection (1) in respect of
small business investment debt obligations that are incurred prior to April 1,
1983.
Is it the wish of the House to adopt the motion?


Gordon Edward Taylor: Mr. Speaker, I do not want to delay the debate, but I do want to make abundantly clear that any small-businessman who contracted a loan prior to April 1 but who did not apply to the Minister will now have that application considered if he applies.


Nelson Andrew Riis: Mr. Speaker, we are certainly planning to support this quickly before the day is out, but I do want to mention one point. While this particular amendment will bring to an end this particular granting program, I wish to make it very clear that while the debate today has articulated why this particular Bill will have minimum impact in terms of assisting the small business community, the real needs of the small business community today are not encouragement and incentives for expansion and development, but quite frankly for survival. With the difficulties facing the small business sector today and what is likely to be ahead for them, I do hope that with the termination of this program the Government will give serious consideration to bringing in a program that will help the small business sector that is ailing much more than the Small Business Development Bonds that are, by and large, unavailable to the small ailing business sector, and that the Government will do something in terms of bringing some support for small businesses requiring working capital during these very difficult times.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.
Motion (Mr. Blenkarn) agreed to.


Donald Alex Blenkarn: Mr. Speaker, I submit that the appropriate way of handling the Bill would be to proceed to third reading stage at this point. We would give consent.


Bill Rompkey: that the Bill be concurred in.
April 11, 1983


[Stage Direction]
Motion agreed to.
Bill Rompkey: that the Bill be read the third time and do pass.


Gordon Edward Taylor: Mr. Speaker, I want to say a few words on third reading of the Bill. I appreciate that the amendment offered by the Hon. Member for Mississauga South (Mr. Blenkarn) was accepted by the Minister of State for Small Businesses and Tourism (Mr. Rompkey). It will add a little common sense to the Bill. It would have been ridiculous to spend a day passing a Bill with its application limited to March 31. The amendment at least makes it a sensible Bill.
There is one thing that I would like to say in connection with the Bill and legislation in general. The Bill is a typical example of procedures that ought not to be followed. It was introduced on October 28 for first reading. On November 8 it was presented for second reading and four Members spoke. It then went to Committee, and today it is before us for debate at report stage and third reading. Between November 8 and today, April 11, businesses were going bankrupt and into receivership. Some closed their doors, yet we took five months to bring the Bill back to the House. Something has to be done about this procedure, Mr. Speaker, because it does not make sense.
A few weeks ago the Hon. Member for Ottawa Centre (Mr. Evans) and I had the pleasure of attending a seminar in England which was also attended by people from 18 Commonwealth countries. No one there could understand why we started a session in 1980 and are still involved in it. A number of them said this would not be tolerated in their country.
This is supposed to be a smart manoeuvre, but not as far as the people of Canada are concerned, Mr. Speaker. There should have been at least three sessions of this Parliament, but we are still involved in the first. There should have been three Throne Speeches, but there has only been one. Does that mean that the Government has no programs to offer for the future? Was everything included in the first Throne Speech in 1980? The country needs new material and new programs, Mr. Speaker. It has been denied the right to a Speech from the Throne for two years.
To some degree this Parliament is modelled after the Mother of Parliaments although in the last few years we have ignored many of its traditions. In September or October every year the Queen goes to Westminster to read the Speech from the Throne. The only exception to this is when an election falls in the middle of the term. Otherwise there is a session every year, a Speech from the Throne every year, a budget every year and Private Members' time every year. That has been denied to the people of Canada.
We should not tolerate this type of thing, Mr. Speaker. It ignores the basis of Parliament where people have the right to speak and debate programs. Under our parliamentary system, Members have the right to raise any subject at all during the
Adjournment Debate
debate on the Speech from the Throne. We have been denied that since 1980.
We have had three budgets. The country would be in a much better shape if we had done without two of them- especially the budget of November 12, 1981. It ruined a great number of our industries. It sent the petroleum, oil and gas industries right down the tube, and hundreds of people became unemployed as a result. It touched almost every sector of industry. The next budget tried to correct some of the wrongs of the first but it only added to our difficulties.
If the Prime Minister (Mr. Trudeau) had called a new session in 1982 and in 1983, budgets would have been introduced as a matter of course and would have received attention. Instead, the Government has brought in mini budgets which were largely prepared by bureaucrats who wanted to get something through the House. The Minister did not even have a chance to go through them, otherwise they would never have introduced some of the nonsense that was in them.
Some of the items in the Bill prevent farmers and businessmen from retiring today. People who spent 40 or 50 years for their lives building a nest egg so that they could retire in dignity find that they cannot. The Government did away with annuities. In the first budget it said that people would have to pay a capital gains tax and that even though they received instalment payments, they would have to pay on the whole thing. This made it impossible for a farmer to sell his land to his son or daughter or his hired man or anybody else. It just about stopped the movement of land in all parts of Canada.
That was part of a budget that was brought in without thought for the people who pioneered this country. That could not happen in the Mother of Parliaments because a budget comes down regularly there. Her Majesty The Queen would have been available to read the Speech from the Throne in the fall of each year and it would have outlined the programs so that people would know what was going on.
The whole situation has been confused by the actions of the Government in carrying one session on month after month after month. This Bill is an example. Were it not for the attitude of the Minister, it would have been almost worthless. It would have expired before it was passed. It was limited to March 31 and today, on April 11, we are debating third reading.
Mr. Speaker, may I call it six o'clock?



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 45, deemed to have been moved.
[Stage Direction]
April 11, 1983
Adjournment Debate

Hon. Allan B. McKinnon (Victoria):: Mr. Speaker, I rise on the adjournment debate in relation to a question I asked the Prime Minister (Mr. Trudeau) on March 23, two or three weeks ago, concerning a meeting that the Minister of National Defence (Mr. Lamontagne) was attending in Portugal, at which time, according to the United States press, Caspar Weinberger, was "to consult the allies on controversial NATO plans to deploy United States Pershing II and Cruise missiles in December". My question which appears at page 24067 of Hansard reads as follows:
Can the Prime Minister assure the House that, on his return, the Minister of National Defence will make a statement on motions to inform the House and the country what Canada's current position is on this very important subject?
The Minister went on from Portugal to China, and circumnavigated the world during the Easter holidays. He is now back and the Canadian people are to be no wiser for the trip.
In a second answer that very day the Prime Minister, in response to my supplementary question, said, as reported at page 24067 of Hansard:
I repeated it this morning to Vice President Bush, that there has been no Cabinet decision to test the Cruise.
By that, of course, he meant the Cruise missile.
This is the position in which the House finds itself; that we have conflicting statements from two Members of Cabinet, in this case one from the Prime Minister and one from the Minister of Justice (Mr. MacGuigan). The conflicting statement by the Minister of Justice when he was Secretary of State for External Affairs was given in a disarmament debate which is recorded at page 16741 of Hansard of April 29, 1982, as follows:
Following the decision of 1979, President Carter requested some 18 months ago that we allow one of the proposed missile systems, the Cruise Missile system, to be tested in Canada. It is the Carter request, which was subsequently adopted by the Reagan administration, which has been accepted by the Canadian cabinet.
The Prime Minister, of course, has said there has been no Cabinet decision to test the Cruise. I would like to point out that this quotation from the then Secretary of State for External Affairs was not given in the "hurley-burley" of Question Period. This statement was made during an Opposition Day. The Minister would have had at least 24 hours' notice of the subject matter of that debate. His Department would have prepared a speech for him, in all probability, and it would have been gone over carefully by several other people to make sure there were no errors or omissions. There is no excuse for a Minister to say something that is not true and factual in the middle of a prepared speech.
On March 24, 1982, over a year ago, the Standing Committee on External Affairs and National Defence records that the Minister of Justice said, referring to two questions, and I quote:
The first one really is dealing with the testing of the Cruise missile system. This was a proposal that was put forward to Canada not by the Reagan
administration but by the Carter administration, some 18 months ago. As I indicated, it was considered by cabinet during 1981 and we agreed to proceed with it at that time, to proceed to try to negotiate an agreement with the United States, a framework agreement, which would cover not only this kind of testing but other kinds of testing as well.
He is saying that the proposal which was agreed to by the Cabinet was the one on testing of the Cruise missile.
Again before the same Standing Committee of External Affairs and National Defence on May 4, 1982, the then Secretary of State for External Affairs said:
We have made a decision in principle in favour of the testing of the Cruise missile. That is, we have accepted it in principle. We have not accepted it in the context of a particular subagreement, nor have we even finished the negotiation of the overall agreement.
So it affects Cruise missile testing; no doubt about it.
Then on July 23, 1982, in the House of Commons, in reply to a question by the Hon. Member for Edmonton South (Mr. Roche), the then Secretary of State for External Affairs said:
Madam Speaker, a decision on principle on this matter was reached by the Canadian Government last year, that we would enter into negotiations with the United States with a view to having such testing, and also with a view to having a large agreement-In fact, not only have we not proceeded with that, but negotiations have not been completed on the over-all umbrella agreement.
On February 14, to bring it much closer to the present, we find the Prime Minister starting to back away. In answer to a question in the House of Commons as reported at page 22804 of Hansard, he said:
-whether the reference to tht by the former Secretary of State for External Affairs was not based upon an inaccurate memory of what President Carter had requested ... I cannot say ...
So he is intimating that the current Minister of Justice has an inaccurate memory and does not know what has happened.
On February 15, the following day, he had this to say in answer to another question:
It is not a matter of getting out of the agreement to test the Cruise. There has been no agreement to test the Cruise.
That is exactly the opposite of what his Minister was saying.
On March 15, 1983, in answer to a question in committee by the Hon. Member for St. John's West (Mr. Crosbie) as to whether there has been a request by the U.S. to permit them to test the Cruise missile guidance system in Canada, the current Secretary of State for External Affairs (Mr. MacEachen) said:
No. There has been no request.
That is a flat contradiction of his predecessor.
We have been led up the garden path by three different Cabinet Ministers going in three different directions. Would the Government please tell us what its position is on this vital matter and quit making fools of its members in the process?


Stanley Hudecki: Mr. Speaker, as the Hon. Member is aware, the Minister returned from his trip only this morning,
April 11, 1983

and it was his intention to report to the Standing Committee on External Affairs and National Defence on April 19, on matters relating to the nuclear planning group meeting in Portugal. At this time I cannot answer all the questions of the Hon. Member, but I can make the following statement:
The Minister attended the semi-annual meeting of NATO's nuclear planning group just prior to proceeding to the midEast, Asia and Australia. At that meeting the defence Ministers reaffirmed the position taken by heads of state and Governments in June, 1982, that deterrence and defence, together with arms control and disarmament, are integral to the main purpose of the alliance. That is, to prevent war, safeguard democracy and to build the foundations of a lasting peace.
As expected, the deployment by NATO of intermediate range nuclear missiles dominated the proceedings. It was widely agreed that the Soviet Union had only been brought to the negotiating table at all as a consequence of the two-track December, 1979 decision. A strong consensus emerged that the governments of the alliance should continue to support implementation of both tracks of that decision. It was also agreed that, although the zero option should be maintained as a desirable goal, the time was right for taking an initiative in Geneva on an interim agreement on ceilings which would not in itself prevent deployment of NATO systems later this year. NATO ministers considered that the Soviet Union had not made any proposals which recognized the legitimate security interests in the West, and that the Andropov proposal, based upon compensation for British and French strategic forces, was completely unacceptable.
Apart from the intermediate force discussions, the Minister's attention was drawn to the continued build-up of Soviet strategic nuclear forces, including sea and air-launched Cruise missiles. The United States provided a brief account of the status of strategic arms reduction talks.
During the discussion the United States Secretary of Defence and NATO Secretary General Luns acknowledged the visible contribution made by Canada to NATO solidarity in approving the umbrella agreement under which Cruise missile flight testing could be authorized.


The Acting Speaker (Mr. Blaker):: Order. I am sorry to interrupt the Hon. Parliamentary Secretary. The rules relating to time allotment to Hon. Members during the adjournment motion are extremely strict. Neither the Chair nor the House itself has the option to permit more time. Accordingly, I believe I must recognize the Hon. Member for Mississauga South (Mr. Blenkarn).


THE ECONOMY-INVESTMENT IN CORPORATE SECTOR-REQUEST FOR MEASURES TO PROMOTE INVESTMENT
Donald Alex Blenkarn: Mr. Speaker, on March 22, 1983, I asked two questions of the Minister of Finance (Mr. Lalonde). Those questions involved the necessity
Adjournment Debate
to provide greater incentives in this country for equity investment in order to get the country rolling again.
It is abundantly clear from the debate today that most Members who went back to their ridings discovered that both large and small businesses are desperately short of real capital. This does not surprise me since our tax laws as they exist today make it more advantageous for a person to lend money than to subscribe money to a company in capital.
Equity investment is hard to come by, by virtue of the fact that our tax system, in almost every instance, treats those who lend money more favourably than those who put their money at risk by buying shares in a company or by the common stock approach. Consequently, businesses all across the country do not have the freedom to move.
During the past few years, the last two or three in particular, we have seen an entire series of bankruptcies, insolvencies and receiverships which have largely been caused by the fact that businesses have been borrowing money. That borrowed money has had to bear interest. The reason businesses have had to borrow money is that they have not been able to encourage people to invest money as a solid capital investment.
When one examines the tax system, one finds, as the Lortie Commission found, that when corporate tax and personal tax applicable to dividends on equity investment are combined, the total tax paid on that money, that is at risk and earning in a company, is greater than the taxes applicable if a person simply loaned the money to the company in the first place. That being the case, there is really no incentive in the system to encourage people to invest and put their money at risk.
One suggestion made in the Lortie Commission Report was to somehow index capital investment so that indexed capital investment would be treated on the basis that if and when a capital investment is withdrawn from a company it would have the same purchasing power as when it was put in. The reason for that proposal is, of course, that most capital gains, or alleged capital gains, in this country are not that at all, but really a reduction in the purchasing power of the dollar.
Let me give an example. If one invested $1,000 in 1973 and was able to sell that investment in 1983 for what one would think would be 100 per cent profit, $2,000, that $1,000 would not have in fact been made. In fact, expressed in 1973 terms, that individual would have lost $228. Under our tax system one would be taxed on the basis of having made a $1,000 gain when in truth one lost $228. This kind of thing goes on day after day in our marketplace, so that people who have any sense at all refuse to put their money at risk unless the hope and dream is that that money at risk will do far better than 100 per cent in ten years. In fact, one would have to make something in the neighbourhood of 150 per cent over a ten-year period. This is not always practical. Indeed, one begins to wonder whether such investors have been tasking the hemlock of optimism far beyond what is realistic.
In the new budget to be presented by the Government on April 19, it is essential that it do something with respect to

April 11, 1983
Adjournment Debate
capital gains tax. In my view capital gains tax is anti-productive, discriminatory and unfair. We would be far better off as a country if we abolished it. We have to put into the investment community some sizzle, some hope, some drive. That sizzle, hope or drive is the possibility of making a profit. When one puts money at risk, one is behind the debt instruments-the debt has to be paid, the interest to the banks has to be paid. Whether or not that debt money in the company is really earning profits for the company, it has to be paid. The investor in a company only receives what is left after expenses, the bottom line. Profits and losses are not far apart because we are talking about the bottom line. Surely in a growing country we must make it possible in our budgets for those who invest to have an opportunity to make a profit and be well rewarded, or far better rewarded than those who just lend money.
Our present tax system militates in favour of the lenders of money, banks, trust companies and guaranteed investment certificate holders, but does not do anything for the risk taker, the person we really need to go out and create the jobs we so badly demand. As of today, 12.6 per cent of the population has been statistically determined to be unemployed. In truth there are well over two million Canadians either unemployed or so under-employed as to not really be treated as employed. They want to work and should be working. We must change the system to encourage growth, production, new investment and new opportunity.


Jesse Philip Flis: Mr. Speaker, the issue raised by the Hon. Member is one on which there has been very valuable consultation with the public, based upon discussion papers presented by the Government. In June of last year, the discussion paper entitled, "Inflation and the Taxation of Personal Investment Income" was released. The Lortie consultative committee, to which the Hon. Member referred, reported to the Minister of Finance (Mr. Lalonde), supporting the concept of a registered shareholder investment plan. The Minister of Finance has indicated agreement in principle with such a plan but, as the Hon. Member for Mississauga South (Mr. Blenkarn) knows, its details are a budgetary matter, as are measures that might be taken to support new equity investment in the corporate sector.
The broader issue, the adjustment of business taxation for inflation, was addressed by both the discussion paper to which I referred and the Lortie committee. The Committee suggested a study of comprehensive inflation accounting, recognizing the major issues which would arise in any such inflation accounting system. The discussion paper referred to the complexity of such a system, possible redistributions of tax liabilities among sectors, and international complications as important unanswered questions.
Accounting groups in Canada and elsewhere have been debating these points for several years, and as evidence of their complexity there is no consensus on the best approach. In Canada, larger companies are beginning to provide inflation adjustment on an essentially experimental basis, but the methods are not sufficiently developed to serve as a basis for a
tax system. Whether it is desirable to undertake such a major modification of the tax system deserves serious reflection, and is to be determined by the Minister of Finance.
The Hon. Member for Mississauga South appears most concerned about equity investment opportunities. Interest rates have fallen, as has inflation. Equity markets have been performing well and the basis has thus been laid for new equity issues. The Government is very aware of the importance of a sound equity basis for Canadian business, and the need for building on the recovery which is evident in equity markets. The budget speech is the appropriate place to learn of any new initiatives. The Hon. Member will naturally have to wait for the speech to know about any specific actions intended.
Finally, I would note that the Lortie committee addressed one approach suggested by the Hon. Member, elimination of capital gains tax. The committee indicated that it seriously considered the desirability of this course of action, but concluded it would not be desirable.


CANADIAN NATIONAL RAILWAYS-REPORTED PURCHASE OF CAST CORPORATION
Fred Alward McCain: Mr. Speaker, on March 25 I raised a question with respect to the CNR purchase of Cast and the contemplated purchase of Sofati, container operators, both centred in the city of Montreal, and the impact of the decision of the Crown corporation to act in this fashion.
I also raised the issue of whether the CTC had in fact held its public hearings-it has not-in respect to the Crown corporation's purchase. The Minister said that CTC had considered the matter. It became very obvious that if it had, it was in private, behind closed doors or in camera. The decisions are not publicly known. It was for that reason I initially asked the question.
The Minister said it was not a philosophical decision, not a socialist type of decision. I somewhat disagree with that. I feel that the tendency of this Government is further presented to the public by the inclination of the Crown corporation, CNR, to get further involved in shipping structures as they relate to Canada and its international trade. I am not at all sure that that necessarily puts it under the best management or that that is the best place for CNR to spend its money.
It goes further than that. It indicates that CNR is a free wheeling organization which does not have to comply with regulations that would be imposed on the private enterprise structure. It is in fact a free wheeling, go-ahead deal, similar to many other Crown corporations to which we have extended the use of the public purse without any necessity of getting approval for the use to which they put the money.
I want to point out to the House and the Minister that if we continue to centralize, CNR, Cast and the general shipping of Canada by water to the international world in the city of Montreal, this will have a serious detriment on the rail services
April 11, 1983

for freight into Atlantic Canada. The further this service declines, the more expensive it will become. The more expensive it becomes, the less attractive it will be to customers, national or international. When we moved Cast out of Halifax, we reduced the volume of traffic on the CNR. With that reduced volume, the unit cost has to go up.
The general policy of the Government had been that in the port system of Canada there should be a user pay situation. Is this going to apply in Montreal? If, for instance, a shipment came into Montreal in winter, or to any of the St. Lawrence; the Strait of Northumberland, Gulf of St. Lawrence ports, then ice breaking service is available to those ports at no cost. This puts the year-round ports, particularly that of the city of Saint John, in a position of very serious disadvantage. If there are free ice breaking services for the St. Lawrence area, it certainly will be detrimental to the user pay system which is imposed on the port of Saint John. This should be addressed. Ice breaking should either become a user pay service or compensatory steps should be taken to restore the port of Saint John to its historic position.
I also draw attention to the fact that National Harbours Board ports, including the Saint John port, are on a user pay basis. That is not the case with the commission ports or the other ports not under the National Harbours Board. Is it to be the continuing policy of the Government of Canada to make investments in the ports in the St. Lawrence and the north shore of New Brunswick which will be competitive with installations already bought by the Government of Canada in the port of Saint John? This is something of very serious concern.
I earlier cited in this House that the Port of Rimouski was built up and improved for the handling of wood products from Canada. That was after the four-term structure in the City of Saint John had been built with provincial help, and it went directly into competition with that terminal. That terminal is one of the most efficient in the world; its efficiency cannot be duplicated in other ports.
Are we then going to have Government pressure to expand other ports in the St. Lawrence Valley, in the north east of New Brunswick, to come into competition with already paid-for Government construction? Are we going to get DREE or other grants which will not be capitalized? Are we in fact going to capitalize them and impose upon them the philosophy of user pay?
Adjournment Debate
I must say that I think the transportation structure in general has mitigated against the best interests of the Port of Saint John, and against Atlantic Canada, both in relation to freight rates and to the preferences which have been extended to the Commission Port in conflict and in competition with the user-pay National Harbours Port.


Jesse Philip Flis: Mr. Speaker, the Hon. Member is dead wrong when he says that the CN Crown corporation is not subject to the regulations to which the private sector companies are subject. The whole philosophy behind Crown corporations is that they must compete with private member companies, and they are treated as private companies and must compete on that basis. He was wrong when he said that Crown corporations are treated differently by the Government.
The Minister of Transport (Mr. Pepin) clearly indicated to the Hon. Member in his answer of March 25 that whatever decision is arrived at with respect to CN and Cast, it will be subject to Government and CTC approval. Discussions have indeed taken place between these companies but no approval has been granted to a specific proposal by CN.
Faced with such a proposal, the Government would have to weigh several considerations. One is the competitive position of CN. As the Hon. Member knows, CP recently entered into an arrangement with Dart and Manchester Lines to provide an integrated Trans-Atlantic container service. Containers represent a healthy source of revenue for CN, and the company is obviously looking for ways of preserving this traffic.
Another aspect the Minister would have to look at is that of multi-modalism. There is a trend in transportation today toward door-to-door service: goods may move with one carrier, a development that is efficient and to the client's advantage. Cast was a pioneer in this area and CN, even with its minority interest, was able to benefit and better serve its customers.
The Government would also, of course, take into account the impact of any proposal by CN on ports in Atlantic Canada, such as Saint John and Halifax.


The Acting Speaker (Mr. Blaker):: Order, please. The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 a.m.
At 6.31 the House adjourned, without question put, pursuant to Standing Order.

Tuesday, April 12, 1983