1993-05-14

Mr. Sergio Marchi (York West) moved:: That this House condemns the government for its miserable failure to offer leadership and direction to Canadian banks and other lending institutions in order to provide adequate financial resources for the growth and development of small and medium sized businesses and the consequent creation of thousands of new jobs.
He said: Madam Speaker, I would like to say at the outset that this motion and this debate are long overdue. It has become painfully evident to all members on this side of the House that the general lending practices of our major banks and lending institutions have failed our small and medium-sized businesses.
The federal government has failed to provide the leadership, the nurturing and the direction to those lending institutions which are under exclusive federal and parliamentary jurisdiction to improve and right the wrongs.
As a result, since it is well known, recognized and documented that the small and medium-sized sector is the engine of economic growth and job creation, an unfair lending bank policy for that sector complemented by a failure by this government to act on it has in my opinion undermined economic growth in Canada, dampened job creation and prolonged, not expedited, an already long and painful economic recession.
In a key address in February of this year to the Empire Club of Toronto, the Leader of the Official Opposition said:
But for many small -companies it's not just the Small Businesses Loans Act -It is some of the practices of the major Canadian banks.
Canadian banks do not operate in an unregulated environment. Over the years, they have benefited a great deal from the protection of the Bank Act-I believe it is time for the banks to give something back. The time has come for the government to exercise leadership and to challenge the banks to sit down and develop concrete ways to help small and medium sized Canadian businesses find the capital that they need.
It is time to give something back. How many times have we heard that from Canadian business people in our ridings over a cup of coffee, on the floor of their plant or in fact from workers at the gates?
We constantly hear about the banks and lending institutions pulling back loans to those small businesses, freezing and undercutting their lines of credit. All too many times those businesses cannot get to first base with their banks. Despite being a long and loyal customer for many years of a bank or despite which bank they try, often and regrettably the response is a negative one across the board.
In the last couple of years our small businesses have not needed additional pressures from our banks. There are enough pressures in the marketplace. Try to think what those small businesses and firms have had to face: the collapse of Meech Lake, the Persian gulf war, the aftermath of the free trade agreement, the consternation over NAFTA on the horizon, the introduction of the GST, a high dollar-high interest rate policy in respect of the United States for all too many years, record unemployment, cross-border shopping, a national constitutional referendum that sucked the energy and confidence of a nation, no consumer confidence, an economic recession, and I would suggest a psychological depression of Canadians.

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That is the background these firms have had to work with. On top of those burdened shoulders they cannot get the financial lending strength from the banks that they come to expect and rely on.
In my own city of Toronto, my own province of Ontario which is the economic centre of the country that produces over 40 per cent of all goods, over 50 per cent of all manufactured goods, 225,000 jobs were lost during the recession in manufacturing, most of them small and medium sized firms. There were a record 31,400 bankruptcies last year in my province alone.
The budget of two weeks ago said nothing about an economic growth strategy, nothing about a job creation strategy and not one line on what the role of our banks and the lending institutions ought to be for our country in developing that so-called new economy.
On top of that there is no hope from the leadership candidates who have embraced the economic agenda of the current Prime Minister and the former finance minister and current trade minister. They have embraced them.
The banks have an important and indispensable role in the equation of a national economy and that role becomes doubly important when the economy is faced with a serious recession such as ours has been faced with over the past several years.
I do not want to put the whole blame for the economic malaise and performance of our national economy on the doorstep of our banks and lending institutions. Not at all, because that would be too simplistic and quite unfair. I am not suggesting that.
I am asking myself, and business people in my riding are asking themselves, within that one important variable of that equation what the banks have done to help get Canada working again. What have those banks done to assist those small business people over the incredible hurdle they have faced?
We as a Parliament should be asking ourselves, given that the federal statutes give rise to a very prestigious position for banks, and some would suggest a monopoly, that it is time for us to discuss and debate as we are doing today, what is the role of our lending institutions vis-a-vis our small business entrepreneurs who create the wealth of jobs.
There are 66 banks in Canada, 58 trust companies, and over 3,000 credit unions and caisses populaires with $600 billion in assets. In terms of aggregate assets the big five have more than all the other lending institutions combined. Let us look at the profits of the six major banks alone. Last year their profits came to $1,843 billion. In 1991 their profits were $3.7 billion and in 1990 their profits were $3,567 billion. The only reason they dropped in profits in 1992 was the shellacking those loans to the large multinational commercial real estate holdings took.
One company alone in Canada, O&Y, cost the banks $2 billion. Who is paying for those sins, for those loans that unfortunately went bad? With all due respect I would suggest that it is the small business person who is being denied and who is being unfairly asked to pay the price for those bad loans. That is not only unfair, but it is not helpful to attempts to stimulate economic activity.
We have had reviews of the financial banking act. We had legislation but it was a strengthening of the lending institutions allowing banks to offer insurance activities through subsidiaries. Banks can now own real estate brokerage firms. Banks can now hold, manage and develop land holdings. Banks can now offer in-house investment counselling, portfolio management and financial planning. Our government has given us green plans, blue plans, all sorts of coloured plans about strengthening financial institutions.
Has anybody asked why there have been no amendments to serve and help the clients of those lending institutions? Why did the last revision of the Bank Act, which is supposed to take place every 10 years and which we did in 1991, silent on anything that had to deal with the small and medium-sized firms? How have those lending institutions helped Canada prepare itself for the new economy?
It is important for the banks to support small business because it is the small enterprises that are the sparkplug of our economy. Between 1979 and 1989 businesses with less than 100 employees created 80 per cent of all new jobs, 80 per cent over a 10-year period. Since 1989 that percentage has increased to 98 per cent.
When we talk about bank losses, bad loans to small businesses last year totalled $600 million. That may be a big sum, but there are 900,000 businesses in Canada and the banks have lost $600 million on bad loans for all of
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that sector. Compare that to the financial losses incurred on the big corporations, $2 billion on O&Y, and that is not mentioning the loans to South America and other faraway places.
Yet loans during the same decade to small business people have dropped 11 per cent and loans to the so-called big businesses have increased 11 per cent. In fact the Canadian Bankers' Association, which was invited recently to our caucus at the urging of caucus members such as the members for Broadview-Greenwood, Willowdale, Nepean, and others who have been active with the small business communities in their ridings, told us that the ratio between business loans to big and small businesses are 70:30.
I am giving the speaker the benefit of the doubt because in fact he told us that it was 26 per cent to small and medium-sized firms and I am rounding it off. Seventy per cent of all business loans go to big business, 30 per cent to small and medium sized firms. Yet in the same breath the Canadian Bankers' Association told us that most jobs are created in the small and medium sized sector.
Why is it that the lending practices of the banks do not go to where the most economic activities are going to be derived? Should those loan percentages not be at least better balanced, if not tilted, toward small and mediumsized firms? We have to get our loans in sync with where jobs are created.
Can members imagine how it would be if we harnessed those loan practices with the small business sector? If only half of the 900,000 small industries in Canada created one new job we would immediately put back to work 500,000 unemployed but willing Canadians; half a million jobs.
We do not have to imagine it. We do not have to dream about it. We do not have to hold it up as an ideal. I believe, as do members of my caucus, that if there is a partnership between a national government responsible for banking and those lending institutions with the small business network we can right those wrongs. We can fix those mistakes. We can reverse that trend. We can provide the financial spark that would ignite the entrepreneurial engine of our small business sector.
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In this debate I propose six recommendations which I believe the government can use to help banks move forward with what I would refer to as a small business development strategy. I know my colleagues who will be speaking after me will put other ideas on the table and by the end of the day we will, if we can, grab one, two or three good ideas. My ideas are by no means exhaustive but are an attempt to address the problem we hear first hand on Saturday mornings when we visit our constituents and at our many appointments.
I offer six ways. Recommendation No. 1 is for the government to call a national summit among the national government, the major banks and the small business network. Let us meet, sit down, become partners and talk about the short-term and long-term challenges facing small businesses and the whole question of the credit crunch. Let us talk about it now. If we bring those representatives together and pool our ideas, we will be doing justice and honour to the economic needs and aspirations of a people and a country.
Recommendation No. 2 is that the federal government immediately urge, if not demand, that banks stop withdrawing capital from small businesses that are meeting on a regular monthly basis their interest charges on loans. How many times have we heard that the banks have moved in to pull back loans or freeze credit lines and that the small business person has had to react? How? He has to either close the operation, scale down or lay off employees because he is being asked to pay the long-term debt to the bank in a very short and constrained time period.
We have a recession. After the business person pays monthly instalments on that loan, any left over capital should not be forced irresponsibly by the bank to finish the loan. It should be allowed to be reinvested in that operation so that the business can survive, if not prosper, in the economic drought.
I will give two examples. Two years ago a food manufacturer in my riding took out a loan with one of the big five for $700,000. He has paid down almost $500,000 in two years. Last week he received a notice from the major big five bank saying he has to pay the remaining $250,000 in 30 days or else.

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He has paid $500,000 during a recession and is continuing to pay it. Now his loan is being called in 30 days. What is that food manufacturer going to do? If he cannot get the money through private financial ways he is going to have to let employees go or close down.
A construction company in my riding employs 15 people. That person took out a loan one year ago of $150,000 for new machinery. He has paid back more than half. He has about $75,000 outstanding. Three weeks ago he received a notice telling him he has to pay the $75,000 off in 30 days or else.
That same business owner owns a house in Wood-bridge that is appraised at $600,000. He has an outstanding mortgage for $250,000. No one asks him any questions and it is the same bank. The bank on that loan says nothing but on the $80,000 business loan it says it is time to collect. He has 15 employees who he is worried about, 15 families that rely on the small construction company.
The practice has to stop because it is irresponsible. The banks which are entrepreneurs and have taken the risk should put loyalty, confidence and risk back into the loans they have made to those small businesses and not choke the businesses by pulling them back in the irresponsible fashion suggested in those two cases.
Recommendation No. 3 would be for the national government to encourage the banks to expand their small business loans portfolio. My colleague from Broadview-Greenwood has been a strong advocate of these small business loans. The ceiling for loans has increased over the years from $100,000 to $250,000. However the business people in my riding tell me they still cannot get access to those loans. We have increased the ceiling, but people are telling me they cannot even get $100,000, never mind $250,000.
The banks should at least double the portfolios available for those loans. They should not double the value of their portfolios. They should double the effort in selling the program and encouraging customers to take advantage of it. The banks should not put up a poster and rely on the world to take care of itself. Let us add some muscle to the program.
Recommendation No. 4 would be the establishment of a business development corporation joint venture among the major five banks. Today it is no longer the local bank manager who knows the business person and who is
making or turning down that loan. It is a faceless bureaucrat from a regional office.
The banks do not have the culture to deal with the small entrepreneur because they are driven by maximizing profit margins. Rather than taking a lot of time with the small or medium sized firms they would rather take the risk with some of the big players.
I believe a new culture can be created by establishing such a joint venture. Each can put in $150 million to $200 million capital. Then the banks will be more in sync with the concerns and needs of small business.
Recommendation No. 5 would be the strengthening of the Federal Business Development Bank because both the number of loans and the average size of those loans are going down significantly. We have to remember those are the same businesses that are being turned down by the chartered banks which are now being turned down with greater frequency by the Federal Business Development Bank. We have to reverse that trend.
The last recommendation, No. 6, is to have a joint task force made up of government, banking institutions and the small business network come together to hold public hearings with real live Canadian small and mediumsized firms. We could then have that information updated as well as the experiences they are having. They could then plug into that national economic summit. We may be on the leading edge.
Those are six ideas that I propose for debate. It is not an easy situation. I am not blaming the entire situation of our economy on the banks. I realize they have an obligation to their shareholders and the people who invest in their banks and obviously the depositor, but I believe they also have an obligation to the national economy by virtue of the federal statutes.
I believe there needs to be a better balance between the banks and small business so we can once again put wind behind the sails of our entrepreneurs and thank God for small businesses.


Mr. Allan Koury (Hochelaga-Maisonneuve):: Madam Speaker, I have been in business for 45 years, so I have seen the ups and downs the hon. member referred to. I have seen about six or seven recessions like the one we
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are seeing today, and unlike what the hon. member says, it is not necessarily the government's fault. They always accuse the government, but they forget that the government is elected by the people. I think if anyone is to blame, it is promoters.

The kinds of comments he made are misleading and should not be said because I do not believe the hon. member is right. If he thinks that banks withdraw money just for the fun of it, that is not proper. If he was a bank manager and he saw a corporation going under he would try to salvage as much as he could, but if the corporation is paying regularly we can be sure the bank will not withdraw.
I would like him to answer. Why was the bank withdrawing from the corporation that paid over $500,000 on a $700,000 loan?


Sergio Marchi: Madam Speaker, I suppose I respect the opinion of my hon. friend and at the same time I am offended somewhat that he would have the courage to suggest I am misleading the House.
I am trying in this debate to be fair, to be practical and to live up to the experiences those business people have recounted to us. When I talked to those business people yesterday to let them know I would speak to their issues, they said: "Even if nothing happens at least we have a conversation that took place in your office some time ago and now it is offered on the floor of the Parliament of Canada".
When I asked those business people why those loans were being recalled they did not have a great explanation. They were not provided with any great explanation in the notifications. Time prevents me from talking about other businesses and other experiences. I hope my colleagues take up the challenge of talking about other experiences in their ridings. [DOT]
As I mentioned earlier, I am not castigating the banks for the entire performance of the economy. That would be irresponsible, simplistic and totally unfair. I am saying there is an important role in the national economy for
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the banks to play. When there is a recession in my opinion that role is all the more important.
I suggest there must be a balance. We know they have an obligation to the people who deposit and their shareholders. That obligation is financial. It also may be moral. I do not take anything away from those obligations. I am saying that the lending institutions, because they are governed by federal statues and are an important variable in the economy, have an obligation to a national economy and to how we can earmark lending policies, not only to make profits for banks, and to help the aspirations of people and a country as I mentioned.
I believe the banks sometimes, like all of us perhaps, want to have the easiest route to make those profit margins look better. They get into mortgages, consumer financing, Treasury bills and increasing service costs.
I will give another example that I did not have time for earlier. There is a small business person in my riding, a contractor. He has a plot of land north of Alliston on which he is ready to build 33 homes. Those homes have already been pre-sold, guaranteed. He went to his bank, a major five, where he has been a client for 15 years. The bank has told him a flat no: "We are not giving money to people who are in the industry of building homes".
I ask myself why those 33 would-be home buyers would be able to get mortgages from the same bank and the person who wants to build the homes that are guaranteed cannot get the money. As soon as the money would be guaranteed the shovel would go into the ground and there would be 150 construction jobs on that project. Does it make sense that a bank would allow 33 would-be home buyers to get mortgages and a small contractor who employs 30 people cannot get the financing to put up the project that would also create 150 jobs? I think that is insane.
I do not think those kinds of lending policies are predicated on the foundation the banks are built on, and that is entrepreneurs. They have to get behind ideas again. I believe they have to get behind people again. I believe that the banks have to take the risk again with respect to the small and medium sized firms. I stand on those words. We can prove it by showing real live Canadian examples.

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Mr. Dennis Mills (Broadview-Greenwood):: Madam Speaker, I agree with everything my colleague from York West has said.
One of the problems with the financial institutions is that the leadership of the banks seems to live in a different realm than the people on the street. We have heard vice-presidents of banks support the initiative of the minister of small businesses called the Small Businesses Loans Act. We know the minister has been promoting it, yet when we go to the local commercial officer at the branch level in all the various communities across Canada there does not seem to be the same spirit in terms of implementation.
I wonder if the member could talk a little bit about the fact that there seems to be two different realms of activity within the banking institutions.


Sergio Marchi: The member for Broadview-Greenwood who has been actively involved on this dossier is correct. There is a difference in the intent of the Small Businesses Loans Act, the new ceilings, the application and the execution. That is why in part not only did I suggest in recommendation No. 3 encouraging the banks to increase the portfolio sizes of those small businesses loans but to excite them about selling and advertising them more.
That is why I also speak to recommendation No. 4, a separate, leaner and meaner joint venture with the five major banks that can get closer to small business people. I talk to people in the banks. Off the record the banking industry tells me, because of the profit margins, that it takes longer to sit down with a small business person and take him or her through it. A yield on a small loan is a lot smaller than the yield on a big loan. The banks are not properly equipped to give maximum attention to small and medium-sized firms. Their 6,000 national branches are not equipped because of centralization and therefore there is a loss of potential when a small business person goes to the major banks.
That is why in Japan it works on a different basis. The bulk of the businesses in Japan are small businesses. They work in networks and clusters. Financing is tailor-made to the small business sector. That is why I am suggesting a smaller organization of the banks to specialize and deal exclusively with small businesses, to forge
the links, to support and encourage the small business sector which the current banking culture cannot do.
I am not saying that is something the banks should be embarrassed about. I am saying that perhaps it is a reality of the way the banks operate. If the small business sector is the engine of those jobs and economic growth then let us specialize the lending and rapport between those sectors and the banks through our structures and through our culture. Canada is changing and the world is changing. Perhaps the banks have to change with the country, with the world and with how business is being done in the international community.
This is basically a challenge. We are pushing an alarm bell and saying the situation is pretty desperate out there. Let us in partnership with government, lending institutions and small business change the way we have done business and do it better on behalf of all Canadians.


Hon. Lome Nystrom (Yorkton-Melville):: Madam Speaker, I thank the government for allowing me to say a few words before it responds to the Liberal motion moved by the member from Toronto.
The motion is a very worth-while one to have before the House today. It asks government to give the banks more direction in terms of helping small and medium sized business. All of us in the House know that the real engine of jobs is the small business sector across this country. All too often in the last 10 or 15 years we have seen many resources going into the promotion of megaprojects, be it by this government or previous governments, which tend to be very capital intensive but not very labour intensive.
We have also seen over the last number of years a lot of money going to tax breaks, grants and subsidies for large businesses. Once again I question whether we are getting bang for the buck in terms of job creation in Canada.
It is really worth while having this debate. I look forward to the minister in charge of small business responding to some of the concerns of small business people.
The main issue, and this motion addresses it, is the whole question of jobs: unemployment and putting Canadian people back to work. We now have one of the higher unemployment rates in the industrialized world. We have all kinds of people who are not working. That creates economic hardship for the country and human
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misery, which is something one cannot measure in concrete terms. That is what unemployment brings.
We have a very high unemployment rate and a very high deficit and national debt. They are really interrelated. The best way of paying down the national debt and eliminating the deficit is to put Canadians back to work. I believe Canada works as a country when our people are working. If our people were working then we would have a stronger economy. We would have more secure social plans and social benefits. We would have a much happier country from coast to coast.
At the present time when so many people are unemployed, we find the federal government is now paying billions of dollars a year in unemployment insurance, paying billions of dollars a year in sharing welfare costs with the provinces, and losing billions of dollars a year in tax revenues that would go to the federal government if a lot more people were working who are now unemployed.
It is worth while to spend a few minutes this morning just putting on the record the dire situation this country is now in economically. As of April, 11.4 per cent of the Canadian work force was officially unemployed. There were 1,581,000 Canadians without work in the month of April. That is officially unemployed. Economists and others have argued for a long time that many other Canadians are unemployed as well. They have dropped off the unemployment insurance rolls. They have given up, are living with their families, are on welfare, et cetera. Even among those who are working many are underemployed with part-time jobs, low wage jobs, job sharing. They work two or three part-time jobs.
The Canadian Labour Congress recently estimated that there are 2.6 million unemployed and underemployed Canadians. About a month ago the Canadian Conference of Catholic Bishops estimated that there are now 3.9 million Canadians either unemployed or underemployed. That highly respected organization is saying that 3.9 million Canadians are unemployed or underemployed. We have a national travesty of 1,580,000 Canadians officially unemployed and many others who are underemployed.
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That is the unemployment side. What happens when unemployment insurance benefits run out? Many people go on welfare. In the month of March how many people were on welfare across the land? There were 2,644,000 Canadians on welfare in March. In what is the wealthiest country in the industrialized world it is astounding to have 2.5 million Canadians on welfare.
Therefore there were 4,225,000 Canadians unemployed or on welfare. In a population of 26 million people including retired folks and children there were 4.25 million unemployed or on welfare. Well over 20 per cent, an astonishingly large number of our work force or our potential workers, is unemployed or on welfare.
Imagine how wealthy the country would be if these people were working in meaningful productive jobs. They would be paying taxes at the municipal level, the provincial level, the federal level. They would not be receiving unemployment insurance benefits or welfare payments from the various provinces. Imagine how strong our social programs would be and the money we would have to help our farmers and people living in poverty.
Now for the flip side. The reason our living standard is going down is that people are unemployed. For the first time since the 1930s, according to the Conference Board of Canada, we have had three consecutive years where the income of individual Canadians has dropped. Between 1989 and 1992 income has dropped an average of $1,200 per person or 5.5 per cent. That is a pretty sad picture of what has happened to our great land.
If our people work then this country will work. It will work as a country. There are going to be a lot of people on the lawn of Parliament tomorrow. Tens of thousands of people will be protesting against the government policies that have thrown people out of work. When people are unemployed the country does not work and we stand to lose our social programs. We are going to have the problem very soon of people proposing user fees in medicare and the whole issue of medicare itself being threatened.
In addition to the people on welfare and unemployment insurance we find that the number of people living in poverty has sky-rocketed in the last few years. In 1991

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there were 4.2 million Canadians living below the poverty line according to Statistics Canada. This is a before tax figure. Now, two years later, the number is certainly much higher.
Look at bankruptcies in terms of small business. That is the motion before the House today. We find in the month of March there were 6,531 bankruptcies. Personal and business bankruptcies have climbed for the second straight month. When a business goes bankrupt or people go bankrupt there is more unemployment and welfare in Canada. We have a very serious problem.
We also have the problem of interest rates. Last November in 1992 the bank rate was at 9 per cent. Thank goodness the bank rate is now down to 5.39 per cent and the prime rate is sitting at 6 per cent. The inflation rate is at 1.9 per cent.
The real interest rate, if we take the prime rate and subtract the inflation rate, is still sitting at 4.1 per cent. There is still room for the bank and prime rates to go down. If that happens it will further stimulate the economy and help put Canadians back to work.
If we go back the last few years and look at the monetary policy of the government and the Governor of the Bank of Canada, John Crow, we find a deliberate policy to force interest rates up and strengthen the Canadian dollar. This has brought down inflation, but this tight money policy has thrown hundreds of thousands more Canadians on welfare or unemployment insurance.
When the bank rate goes up the economy slows down, businesses cannot expand, farmers cannot expand, people are not buying and building new houses, people are not repairing their houses or expanding their small businesses, and people are unemployed. That is a deliberate policy of the government across the way and the Governor of the Bank of Canada, John Crow.
As a result of that policy our problem with the national debt becomes worse because every single point on the bank rate means the interest on the national debt is going up by hundreds of millions of dollars each and every year; not just the federal debt but the debts of the provinces across the country as well.
We now have one of the biggest debt and deficit problems of any country in the industrialized world. The deficit this year as announced on April 26 was $35.5 billion. The government was out by $10 billion on the projection of a year ago. Where it said the deficit would be around $25 billion, it is now $35.5 billion.
Meanwhile the national debt, the accumulation of years and years of deficits, stands at $458.6 billion. When the Conservative Party was elected some eight or nine years ago it was about $150 billion. It has gone from $150 billion to $458 billion.
One of the reasons for this is the deliberate policy of the former Minister of Finance, John Crow and the Prime Minister to have a high interest rate policy. It has thrown people out of work, increased the interest payments on the national debt and created a deficit situation that is much worse than it should be and much worse than it is in most countries that are our trading partners around the industrialized world.
We are now left with a crippling debt which means we lose a lot of our independence and sovereignty as a country to deal with the things we want as a nation. That is the situation we are now left with.
The government has been saying recently that there is a minor recovery out there. We see a little bit of this once in awhile, but that recovery is export driven because the Americans are now buying more goods and services from us. They are doing it because of the American recovery and because we have had a drop in the value of the Canadian dollar.
Yesterday we had some disturbing news. The American growth rate slowed down to 4.6 per cent in the last quarter of 1992. In the first quarter of 1993 it went down to 1.9 per cent. The Americans are buying fewer goods and services. If they buy fewer goods and services, we will be exporting less and less to the United States and we will find our recovery will also slow down.
That is the situation we are in today. It is probably the worst of any country in the industrialized world. After some nine years of Conservative government we find that 4.25 million Canadians are on welfare or drawing unemployment insurance. Many other Canadians are partially employed working at part-time, low income jobs.
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That is the Conservative legacy today. The government's response has been a free trade agreement with the United States that sold out our sovereignty and our independence and transferred hundreds of thousands of jobs from Canada to the United States. We are seeing that every day in this country, particularly in the province of Ontario where jobs are moving south of the border. Now the government wants to expand free trade to include Mexico in the North American free trade agreement.
We say abrogate the FTA, do not proceed with NAFTA, strengthen Canada's economy, and maintain our sovereignty and our independence.
There is no plan whatsoever by the government across the way to create jobs. Instead we now have leadership candidates, the Minister of the Environment and the Minister of National Defence, going around the country saying: "Well, we have a debt and deficit problem and maybe one way to deal with it is not through a comprehensive jobs plan to put Canadians to work. Maybe one way to deal with it is to bring in user fees on medical care". User fees on medical care are a violation of the Canada Flealth Act.
Our present minister of health to his credit has been saying to the leadership candidates that user fees are wrong. We do not fight the debt and deficit problem by bringing in user fees which are really deterrent fees or taxes on the sick. It is really a form of double taxation because people have paid for medical care through general taxes and now, if they are sick, they have to pay again with user fees. That is taxing the sick. I say no to the Conservative Party. I say no to those leadership candidates who are saying: "Let's take a look at user fees and deterrent fees".
The Conservative Party is putting a tax on the sick. It is the same old Conservative Party that back in the 1930s brought us the Great Depression with R. B. Bennett. It is all happening once again in the 1990s. What we have had is not really a recession but a depression.
Our party is suggesting that the solution is a jobs plan. We have announced our jobs plan in detail. We are talking about investment in infrastructure, investment in research and development, investment in training people
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for the new technologies and new jobs, spending more money on agriculture and resources, adding value to our resources, helping our farmers and helping small business people.
This detailed plan is all written out in several pages which announce what our agenda is. I ask the government across the way: What is its plan in terms of job creation? The government's whole fight against the deficit is to cut back on services, cut back on medical care, cut back on health, cut back on education and cut back on transfers to the provinces. That is not a solution.
The Liberal Party across the way can criticize the government but it does not have a plan. Where is the jobs plan of the Liberal Party? I say it is very well hidden. Because people are upset with the Conservative Party it is hoping to coast to victory without telling us what the alternative is.
The time has come to be honest with the Canadian people and go out there with a program and a platform on where the government stands. The Conservative Party has destroyed this country economically. We have 4.25 million people on welfare or unemployment insurance. We have hundreds of thousands of others working in part-time, low paying jobs who underemployed. That has brought all kinds of human misery and human disaster that cannot be measured.
When that happens the economy is destroyed. People are not paying taxes. They are collecting UI benefits and welfare. Eventually we start to see the erosion of our pension plans, our unemployment insurance plan, our medical care and our hospitalization. Less money is going into investment in education, universities, research and development. That is the Conservative legacy. That is what they are going to have to answer for to the Canadian people when they screw up the courage to draw up those writs for an election some time in August, September or October.


Madam Deputy Speaker:: It being eleven o'clock, the House will now proceed to statements by members pursuant to Standing Order 31.
We will proceed with questions and comments after Question Period and Routine Proceedings.

May 14, 1993


STATEMENTS PURSUANT TO S. O. 31
Mr. Marcel R. TVemblay (Quebec-Est):: Madam Speaker, we read in the media yesterday that budget cutbacks apparently did not affect employment in the Public Service. I wish to point out that yesterday, Robert Giroux, chairman of the Public Service Commission, explained that the commission did not calculate the number of government employees according to the same criteria as Treasuiy Board.
Cuts are expressed in person-years, but the commission goes by the number of employees on the payroll. If two employees are hired for six-month terms, they count as two for the Public Service Commission but as one for Treasury Board, because two six-month terms equal one person-year.
When the headlines announced that the number of employees had increased by 6,000, that is just because the media did not do their homework.


BELL NORTHERN RESEARCH
Mrs. Beryl Gaffney (Nepean):: Madam Speaker, yesterday George C. Smith, president of Bell Northern Research and senior vice-president of Northern Telecom, officially dedicated BNR's 600,000-square foot Lab 5. This is Canada's newest and largest telecommunications R and D facility at the BNR world headquarters complex in Nepean, Ontario, Canada.
In today's new transnational economy, information and knowledge-based industry such as telecommunications are providing the foundation for industrial renewal and growth. Leading the Canadian communications sector that is the envy of the world is Bell Northern Research.
Every major telecommunications system BNR has designed is ranked number one in the world in its respective market segment. Its research labs are Canada's largest single contributor to internationally coveted
R and D employment. BNR is Canada's leading employer of university graduates in engineering and science.
Yesterday Mr. Jean Monty, president and CEO of Northern Telecom, remarked that the BNR labs provide strong evidence that when R and D endeavours are pursued in a fertile environment and directed to an outcome wonderful developments can and do happen.
It was my privilege to be there and offer my congratulations.


Madam Deputy Speaker:: The hon. member's time has expired.


LEADER OF THE OPPOSITION
Mr. Rod Murphy (Churchill):: Madam Speaker, yesterday the Leader of the Opposition tried to remedy his reputation as yesterday's man by reminding Canadians about the good old yesterdays of Liberal governments.
"Yesterday Chretien" forgot to tell Canadians about the high interest rates of 20 per cent when he was in government 12 years ago which provoked 100,000 Canadians to march on Parliament Hill.
"Yesterday Chretien" forgot to mention high unemployment, the elimination of the Department of Regional Economic Expansion, wage controls, and cutting back transfer payments for health and post-secondary education, all of which happened when the Liberals had a majority government.
"Yesterday Chretien" forgot to mention his white paper which would have assimilated native Canadians.
"Yesterday Chretien" did mention medicare but forgot to mention the father of medicare, NDP Tommy Douglas.
"Yesterday Chretien" forgot to mention that medicare, the Canadian Pension Plan, Petro-Canada, training and employment programs were started when Liberal minority governments were forced into these programs by the NDP.


HELICOPTER PROGRAM
Mr. Stan Wilbee (Delta):: Madam Speaker, after a day of special hearings on the EH-101 helicopters by the standing committee on defence I believe it is obvious
May 14, 1993

there is no other machine capable of doing the jobs it is being purchased to do.
Some significant points that were made yesterday include that there is and will continue to be a threat from foreign submarines off our coasts with many subs still being made and sold to large and small nations.
Second, the EH-101 is not too heavy for the frigates that are being built and anything less than the EH-101 grossly reduces the effectiveness of the frigates. The reporter who first made that claim now admits he was wrong but has declined to write a second article admitting his error which has severely damaged this program.
Third, the wash from the propellers is not too strong to permit rescue if the procedure is carried out according to operating guidelines.
Obviously the EH-101, like our peacekeeping troops in Somalia, is taking a bum rap from grandstanding opposition politicians who are taking cheap political shots which do nothing but confuse and demoralize our citizens.


ROYAL CANADIAN SEA CADET CORPS BACCALIEU
Mr. Fred J. Mifflin (Bonavista-TVinity-Conception):: Madam Speaker, on May 9 I attended the annual inspection of Royal Canadian Sea Cadet Corps Baccalieu in Bay de Verde in my riding. Its performance provided clear evidence of why it won the coveted top sea cadet corps in Canada award among 220 corps in 1992.
This extraordinary achievement reflects great credit on the communities involved: Bay de Verde, Grates Cove, Old Perlican, Lead Cove, Sibley's Cove, Browns-dale, Gull Island and Red Head Cove.
It also demonstrates a great spirit of co-operation and leadership among the parents, teachers, sponsors, commanding officer, officers and the 123 superb cadets involved.
This is the second time this honour has been won in my riding. Royal Canadian Sea Cadet Corps Matthew in Bonavista won this outstanding distinction in 1988.
My colleagues join me in offering our heartfelt respect and congratulations.


GOVERNMENT EXPENDITURES
Mr. J. W. Bud Bird (Fredericton-York-Sunbury):: Madam Speaker, when this government introduced Bill C-56, the Spending Control Act, last year it set an absolute limit on program spending by law.
It is encouraging that actual spending has been more then $1 billion below that limit in the first year and is estimated to average almost $2 billion annually below the limits in the ensuing four years.
As a result the government has reduced the legal control limits accordingly and the legislation will be extended by an additional two years. The major contributing cause of present deficits has been undisciplined spending, especially in good economic times by our Liberal governments for the 15 years before 1984.
Government action to control spending by law is unprecedented in Canada. Thus it is imperative that the Spending Control Act remain in place indefinitely, certainly until a balanced budget has been achieved and we have commenced to reduce the national debt.
For years to come, perhaps decades, a strong conservative approach to public finance must remain a hallmark of government administration in Canada.


MINISTER OF NATIONAL DEFENCE
Mrs. Marlene Catterall (Ottawa West):: Madam Speaker, if we ever doubted the Tories, a Tory is a Tory.
The Minister of National Defence last night put herself squarely in the Mulroney mould by lashing out at those who disagree with her and calling them enemies of Canadians. I want to tell madam high and mighty minister that the 1.5 million Canadians who are out of work and out of hope because of her government's policies are not the enemies of Canadians.
The millions of seniors who have been politically and economically abused by her government are not the enemies of Canadians. Those seeking equality who have had their voices stifled and their right to challenge and

May 14, 1993
justice suppressed by her government are not the enemies of Canada.
Those who believe that health care is for the sick and not just for the wealthy are not the enemies of Canadians. Those who believe in a Canada for all Canadians and a future for our young people, an economic prosperity that benefits the many and not just the privileged, we are not the enemies of Canada.
The current Prime Minister learned at his peril that Canadians will not stand being bullied and branded as traitors for disagreeing with him-


Madam Deputy Speaker:: The member's time has expired.


CHILD PORNOGRAPHY
Mr. Greg Thompson (Carleton -Charlotte):: Madam Speaker, yesterday the Minister of Justice introduced legislation in the House to deal with child pornography.
Under the bill possession of child pornography would be a crime punishable by up to five years in prison. Distribution of child pornography would be punishable by up to 10 years in prison.
The legislation contains many of the measures suggested by three federally commissioned studies dating back to 1984. It is necessary legislation and, quoting the minister, "the message is that child pornography should not be tolerated in this country".
I am confident that the bill will be supported by all members of the House.


FOREIGN AID
Mr. Ross Harvey (Edmonton East):: Madam Speaker, yesterday in a keynote speech to the African Development Bank a U.S. representative announced that President Clinton was ready to help relieve Africa's poorest nations of their "crushing debt burdens" by writing off half their U.S. owed debt.
Two weeks ago Oxfam International opened a campaign to bring a kind of Marshall plan to Africa. The plan would stop the present slide of sub-Sarahan Africa that will drive half of the continent's 600 million people below the poverty line by the end of the decade and
doom the many precarious democratic movements that have brought real hope to that region.
How has the Canadian government responded to the grinding poverty in Africa? As a result of the latest round of cuts, aid levels as a percentage of GNP are projected to fall to .39 per cent by next year, back to the levels of the early 1970s. Virtually all bilateral aid to seven sub-Sarahan African countries is being cut, and all but one of these nations is on the list of the 20 poorest countries in the world.
Meanwhile during his recent trip the Prime Minister offered Russians another $162 million in assistance. Canada is already the second most generous contributor to Russia in per capita terms-


Madam Deputy Speaker:: The member's time has expired.


JUSTICE
Dennis Joseph Mills: Madam Speaker, on behalf of Women of Courage, the coalition of women survivors of violence and their supporters, I call upon the Prime Minister to explain the imprisonment of a mother for trying to protect her child.
The mother, a resident of the Prime Minister's home town of Baie Comeau, Quebec, was resentenced to two more years in jail for refusing to allow her three and a half year old daughter to see her father alone. The mother gives a graphic account of the father's sexual and physical abuse of the child.
I call upon the Prime Minister to direct the Minister of Justice to look into this situation immediately and take the necessary action to alleviate the suffering of this mother and child.
We must reform the Canadian Criminal Code and family law code to provide more flexibility to deal with instances such as this one.


FOOD AND DRUG REGULATIONS
Mr. Murray W. Dorin (Edmonton Northwest):: Madam Speaker, recently I have received many letters and phone calls from my constituents who are concerned about proposed amendments to the food and drug
May 14, 1993

regulations dealing with herbs and botanical preparations.
Since there has been increased use by Canadians of herbs and botanical preparations, the Department of National Health and Welfare Health protection branch is concerned that some herbs and botanical preparations with potentially harmful properties could be marketed to the public.
While the proposed amendments will establish cautionary labelling requirements for some substances, it is important to note that many preparations have no history of causing adverse effects on the general population.
Since 1989 the Department of National Health and Welfare has undergone an extensive consultation process on the issue. While it is a necessary function of the department to ensure protection of the public, it is important for officials to recognize that the proposed amendments will have a major impact on the sector.
I urge the department to listen to the concerns of those involved and use caution in banning or unnecessarily restricting products which have long been used as herbal remedies.


SECOND LANGUAGE TRAINING
Mr. Mac Harb (Ottawa Centre):: Madam Speaker, a report by the Canada Employment and Immigration advisory council entitled Immigrants and Language Training states:
The lack of a national standard is the single most important shortcoming directly affecting the quality of immigrant language training services and affects the efficiency with which the millions of taxpayers' dollars are expended on immigrant language training.
We agree. Second language training policies of this government discriminate against the youth of Canada. For example, a 17-year old youth immigrant who requires second language training is not eligible to receive language training under present government policies.
This week I met with representatives of over 15 different organizations and school-boards to express our concerns over this and other issues relating to language training. I join with these organizations in calling on the government to immediately establish a joint federalprovincial committee to ensure that national standards for immigrant language training are in place and to eliminate any discrimination against the youth of Canada.


PEARSON INTERNATIONAL AIRPORT
Mr. Harry Chadwick (Bramalea-Gore-Malton):: Madam Speaker, a new high school was recently built in my riding under the existing north-south flight path at Pearson International Airport.
In order to get final permission to build this school the government dictated that over $50,000 must be added to the cost in order to protect the occupants from the noise of those so-called quiet aeroplanes. Now the government has decided to build three new runways over existing schools and homes in my riding.
Can the government ensure my constituents that there will be no double standard here? Will the government give assurances to my residents that the same standard for noise reduction will be applied to the many existing schools and homes in our community? If so, is the government prepared to pay for it or will the local taxpayer once again be called upon to pay for the down side of an airport that benefits all Canadians?


WESTERN GRAIN TRANSPORTATION ACT
Mr. Ken Atkinson (St. Catharines):: Madam Speaker, the government's response to the transport committee's report on the St. Lawrence Seaway stated again that the reform of the Western Grain Transportation Act was being pursued.
Grain markets have shifted to the far east to a certain extent, but it is my opinion that the WGTA creates a certain directional bias in favour of the west coast in the transportation of grain. Reform of the WGTA should help solve this problem, but it appears it will take a number of years to occur. In the meantime ship owners and the seaway are suffering. Their very existence is at stake.
I would again call on the government to provide interim relief to the ship owners and the seaway until the reform of the WGTA is completed. If this is not done there will be no infrastructure or ships to move grain in

May 14, 1993
Oral Questions
an easterly direction when the directional bias is eliminated and the seaway is required.


MINISTER OF NATIONAL DEFENCE
Lorne Edmund Nystrom: Madam Speaker, yesterday in Vancouver the Minister of National Defence referred to the opposition parties as the enemies of Canadians.
I wonder what the government really thinks about it. When the minister talks about opposition parties being the enemy of Canadians, does she really mean that Lester Pearson was an enemy of Canadians, that John Turner is an enemy of Canadians, that Tommy Douglas was an enemy of Canadians, that John Diefenbaker when he sat in opposition was an enemy of Canadians, or that Stanley Knowles who sits at the table here is an enemy of Canadians?
The Deputy Prime Minister or the government House leader owes this House an explanation today whether or not the government supports the Minister of National Defence when she called the opposition parties enemies of Canadians.
We have had a lot of people from different political parties in the opposition make great contributions to the country. We deserve an explanation.


UNEMPLOYMENT INSURANCE
Mr. Jim Karygiannis (Scarborough-Agincourt):: Madam Speaker, I would like to bring to the attention of the House and the people of Canada a matter that strikes me as being in need of examination.
There exists in the unemployment insurance regulations provision for persons residing in the United States, Puerto Rico and the Virgin Islands who have worked in Canada to collect Canadian unemployment insurance.
The number of those who have taken advantage of this little known program has grown by over 44 per cent from 1989 to 1991 and is probably considerably higher at the present time.
The largest number of recipients of this largesse live not surprisingly in the sunny climes of Florida and California as well as a few in Hawaii.
The administration of these claims is given over to the state in which the claimant lives, which of course has no vested interest in cutting off fraudulent claims as it would result in an economic burden not paid for by the Canadian taxpayers.
I waited almost a year for a response from the minister in regard to this question, which brings me to ask: What is being hidden?



ORAL QUESTION PERIOD


Mr. David Dingwall (Cape Breton-East Richmond):: Madam Speaker, in 1984 when this government came to power economic growth was 4.7 per cent. In 1992 economic growth was 0.9 per cent. In 1984 the public debt was $167 billion. Today after eight and a half years of Tory administration the public debt is $458 billion. Today over 1.6 million Canadians are unemployed.
I am certain that all Canadians do not agree with the government's monetary, fiscal or social policy.
Could the Acting Prime Minister explain to the House whether the official position of the Government of Canada, the cabinet inclusive, is to classify all these persons as enemies of Canada?


Hon. Tom Hockin (Minister for Science and Minister of State (Small Businesses and Tourism)):: Madam Speaker, the hon. spokesman for the Official Opposition compares this year with a previous year. Let me compare this year with a previous year.
Let me take 1982 when interest rates were 19 per cent. One could not get a bank loan for under 22 per cent. The unemployment rate was much higher than it is today. The growth of the country had slowed down to almost nothing. This was the kind of performance we inherited.
What we did from 1985 to 1991 was create more jobs per capita than any country in the OECD. In the last year we have lead all forecasts of the OECD and the IMF for potential for growth in the industrialized world, for potential for getting unit labour costs in line, and for potential for dealing with inflation. In fact Canada has done a better job in dealing with inflation than almost any other industrialized country.
May 14, 1993

That is what this government has brought forward and we are very proud of it.


David Charles Dingwall: Madam Speaker, the minister refused to respond to the question concerning the 1.6 million Canadians and those of us in the opposition parties and the official position of the Government of Canada, namely that they are enemies of Canada. That was a shameful response by the minister opposite.
I want to ask the government House leader another question. The intent of the government to ram through the NAFTA legislation, the largest bill of its type in the history of Canada, without visiting Toronto or Montreal is totally unacceptable.
Will the minister explain to the House why the government is proceeding with this legislation when it knows full well that Mexico and the United States want to renegotiate essential elements of the trade agreement.
Will the government finally agree to set aside the NAFTA legislation until all Canadians have an opportunity to express their views on this subject in a general election?


Thomas Hockin: Madam Speaker, of course we are not going to set aside the NAFTA legislation. There are a number of Canadian interests already-


Some hon. members:: Oh, oh.


Thomas Hockin: I would like the opposition to listen to this. Do they want to listen to the answer?
There is a number of Canadian interests that very much want to know what is going to happen with investment potential in the United States and Mexico. They want this agreement to be concluded.
Also people who are concerned about access to Mexico are very concerned. Mexico has effective tariffs of about 20 per cent against Canada. It has huge quotas against Canada. We have some unfinished business that we want to do to improve our access to the United States.
This agreement gets rid of these Mexican tariffs. It gets rid of Mexican quotas. It improves the U.S.-Canada
Oral Questions
Free Trade Agreement. Under a Liberal government we had already put in place a context years ago whereby our tariffs against Mexico were pretty well gone. Why would we not negotiate the NAFTA which gave us access to Mexico, gave predictability for Canadian investors in Mexico?


David Charles Dingwall: Madam Speaker, what a pathetic response from a pathetic government. It is absolutely terrible.
The government has failed to create economic growth. It has failed on trade policy. It has failed on deficit reduction and its most demonstrable failure has been its failure to create jobs.
The minister sits there with the keys to the car, the chauffeur driven limousine, and he tells Canadians this when we have an unemployment rate of 11.6 per cent nationally, when the regions of this country are in a crisis. For instance, in Cape Breton the unemployment rate is 29.6 per cent.
Why does the minister and the government refuse to assume a national leadership role and put in place programs which will create jobs for communities across the country and bring dignity and hope to the thousands of Canadians who hope for meaningful work?


Thomas Hockin: Madam Speaker, the hon. member knows that under the previous Liberal government unemployment was just as high in Cape Breton as it is today. He also knows that unemployment in the early 1980s was higher than it is today.
He probably does not know, but he should, that there is a world-wide recession and even in the middle of the world-wide recession the government, with its trade framework legislation, has put in place record exports for this country which have created new jobs.
We have also put in place a context for small business where 82 per cent of all the new jobs are created. Last year we had 320,000 new jobs created through small business in the middle of a difficult period of economic growth world-wide.
These are the things the government is doing. These are the things that it is doing to give economic leadership. The hon. member is afraid not only to recognize this but he tries to denigrate it by making allegations.

May 14, 1993
Oral Questions
He knows we have had the best trade framework agreement of any government since Confederation. Ete knows that everything we have tried to do to decrease the deficit they have been against. He also knows that we have saved the taxpayer-


Some hon. members:: Joe, Joe, Joe,


Some hon. members:: Leader, leader, leader.


Madam Deputy Speaker:: The hon. minister, quickly.


Thomas Hockin: Madam Speaker, they are more interested in the arrival of a member of Parliament than they are in listening to an answer of their own question.
What this government has done is put in place the best framework for economic growth of any country in the OECD. That is acknowledged by the OECD and the IMF.


EMPLOYMENT
Mr. Maurizio Bevilacqua (York North):: Madam Speaker, Canada is presently in the grips of an unemployment crisis which will not let up.
Last month the unemployment rate rose to 11.4 per cent, largely as a result of the loss of 51,000 full-time jobs. Officially there are now almost 1.6 million Canadians unemployed, including 420,000 young people.
I ask the Minister of Finance, with so many Canadians out of work or living in fear of unemployment, why this government will not introduce the type of programs that will get Canadians back to work.


Thomas Hockin: Madam Speaker, the question is asked in a slightly different context, but it is the same allegation we just heard and the answer is essentially the same.
Let me give him some employment statistics. Employment has increased in 10 of the last 12 months. I just finished talking two weeks ago with industry ministers across the G-7. Economies across the world are shrinking. Germany's economy shrunk last year. Britain's economy shrunk the year before.
What about Canada? Employment has increased in 10 of the last 12 months. Since August 151,000 full-time jobs have been created. These are real jobs that have been created. Plus the small business sector is creating net jobs.
Nobody believes that an 11.8 per cent unemployment rate is appropriate. We do not believe it is either, but when we compare our stewardship of the economy with governments in other industrialized countries, we have shown more job creation than any other country in the G-7.


Maurizio Bevilacqua: Madam Speaker, it is clear the minister is really out of touch with reality.
If the government needs an illustration of how severe the unemployment crisis is, it need only venture out on to the front lawn of this building. In the level playing-field cemetery we can see some of the casualties that died in the government's war on inflation. Tombstones have been erected to mark some of the hundreds of thousands of lives which have been devastated as a result of the government's economic policies.
Since rampant unemployment is an extremely serious issue, why will the minister not adopt a more balanced economic policy and help the unemployed? Why is he still focusing only on inflation?


Thomas Hockin: Madam Speaker, we have all seen the props out on the front lawn. The hon. member referred to them as tombstones. If he is going to be balanced in his assessment of what is happening to the Canadian economy, on the other lawn should be cradles, new businesses that have started up, new enterprises that are growing.


Jim Karygiannis: Name them.


Mr. Gagliano:: Which ones?


Thomas Hockin: Also, on another lawn-


Some hon. members:: Oh, oh.


Thomas Hockin: Madam Speaker, do they want to listen to the answer or do they just want to ask the question?
May 14, 1993


Madam Deputy Speaker:: Order, please. A question has been asked and the minister should be given the courtesy of people listening to him when he answers.


Thomas Hockin: Madam Speaker, beside the cradles should be walls with stars and stripes on them, American barriers against Canadian exports, against Canadian investments that have been removed as a result of the free trade agreement, which has allowed us to have record exports every year into the U.S. It has given us a trade preference in the U.S. whereby we now have a $18 billion record export improvement as a result of the removal of American trade barriers.
Also there should be other walls with Mexican flags on them. Its 20 per cent tariffs, its quotas against Canada, are going to be removed through the free trade agreement to allow us to export and create jobs in Canada.


Mr. David Barrett (Esquimalt-Juan de Fuca):: Madam Speaker, my question is for the minister responsible for responding to international trade questions today.
Earlier in Question Period my colleague from the Liberal Party pointed out that there would not be any hearings on NAFTA in Montreal or Toronto. On that part I agreed with him. What he did not point out was that 38 Liberals did not show up to vote to kill the bill on NAFTA. They would have killed the bill on NAFTA-


Some hon. members:: Oh, oh.


Madam Deputy Speaker:: I am certain the government cannot be held responsible for that. The question should be to the government.


David Barrett: I want to ask the minister, along with his reason why 38 Liberals did not show up to kill the bill, why it is that when he talks about exports of jobs he forgets to mention that the greatest export we have had from Canada is jobs. Over 400,000 have gone since the free trade agreement, and now on the lawn with the tombstones there is going to be added Mack Truck to Pennsylvania, General Motors van plant to Michigan, and Nestle is threatening its workers to work like Mexicans at 80 cents an hour.
Oral Questions
Does the minister think we can compete with Mexican workers at 80 cents an hour? What are they going to buy in Canada with their left over wages?


Some hon. members:: Cradles, cradles.


Thomas Hockin: Madam Speaker, the hon. member never learns. He knows that about 15 per cent of the cost of most manufactured goods is labour. The rest is all sorts of other components.
Canada almost leads the world in our productivity, our competitiveness and our efficiency. He wants to denigrate Canadian competitiveness by saying that labour is everything. In fact in the automotive sector labour is about 15 per cent of the cost of the product.
I would ask my hon. friend why move to Mexico to get lower labour rates when in fact it is only 15 per cent of the cost of the product we are making. Stay in Canada where we are more efficient and everything else.
The hon. member wants to know what happened to the Liberals, why they were not there to vote on the NAFTA bill. I am not the Liberal Whip and I am not going to apply to be the Liberal Whip. I suggest the reason the Liberals were not there is they do not know where they stand on the NAFTA.


David Barrett: Madam Speaker, I thank the minister for his explanation of why the Liberals did not show up to kill NAFTA. I appreciate his assistance in this matter.
The part of the question that the minister did not answer is the question of productivity and wages. To this moment not one government document has been tabled in this House on a sector by sector cost vis-a-vis Canadian and Mexican workers.
There is however one document available for all done by Professor Harley Shaiken of the University of California in San Diego. In a five-year study he showed that Mexicans were 90 per cent as productive as Canadian workers in the automobile industry and were paid $4.60 an hour U.S. while Canadian workers were paid the equivalent of $32.60 an hour.

May 14, 1993
Oral Questions
Can the minister, in the face of these statistics, explain why there are more General Motors workers now in Mexico than there are in Canada since we signed the free trade agreement?


Thomas Hockin: Madam Speaker, can the hon. member explain why General Motors is making increased investments in Windsor, why Ford is going to make a $2 billion expansion in Oakville and why Chrysler opened a third brand line a month ago in Windsor? Can the hon. member explain that?
Can the hon. member explain why we have increased our market share of automobile assembly in Canada within the North American market in the last three years?
Can the hon. member explain why our unit productivity has been growing in a very impressive way in the last three years? With the cost of capital, the cost of technology, the level of our management-85 per cent of the cost of a product-we are more competitive than the Mexicans. That is why people want to produce in Canada instead of Mexico.
When it comes to companies that are going to be hurt by NAFTA the member makes some hypothetical suggestions. I have to tell him that McCain foods has forecasted $25 million worth of exports into Mexico. In Nova Scotia Jacques White Foods, the same. In Quebec Roche and Company has signed a huge consulting contract for work in Mexico. We have Smith Industries in Ontario and Lagill Industries in Leamington which are going to expand into Mexico. These companies are looking forward to NAFTA being completed so that they can take advantage of these export opportunities.


Madam Deputy Speaker:: The minister will certainly be able to continue.


David Barrett: Madam Speaker, there are now 1,581,000 unemployed people in Canada. There are now 2.6 million Canadians who are on social welfare. There is a total now of 4,225,000 people who are either unemployed or on welfare in the country today. There are two million people going to food banks for enough food to sustain themselves and their families week by week.
Does the minister really believe that ramming through a NAFTA bill, giving away jobs as was done under the
free trade agreement, is going to help any single one of these record numbers who are on relief, at food banks and unemployed today?


Thomas Hockin: Madam
Speaker, that is precisely why we are doing the NAFTA. It is in order to create jobs in Canada and give ourselves export opportunities in Mexico that we do not have today.
They have effective tariff rates of 20 per cent on telecommunications, for example. The other day I saw a figure that 8 per cent of Mexicans have telephones. In five years close to 40 per cent of Mexicans will own telephones. We would like to sell telephones to the Mexicans. We would like to make them in Canada as we do with all the switching apparatus.
What we are doing is removing Mexican quotas and tariffs so we can export into that country. Years ago we gave up our quotas and our tariffs against Mexico. Who would not negotiate a trade agreement with the country when its access to one country is just catching up with access that we have already given to them?


MONTREAL ECONOMY
Alfonso Gagliano: Madam Speaker, my question is directed to the Acting Prime Minister. In November 1988, the unemployment rate in the Montreal region was 9.5 per cent. Today, it is over 13.5 per cent. Today, 70,000 more people in Montreal are unemployed than in November 1988. When will this government get its priorities straight and alleviate the human suffering it has caused in the Montreal region?


Hon. Pierre H. Vincent (Minister of Consumer and Corporate Affairs and Minister of State (Indian Affairs and Northern Development)):: Madam Speaker, although the hon. member has frequently mentioned Montreal in this House, he never said that since May 1988, the department responsible for businesses in Quebec has funded 107 projects in Montreal, to help businesses in Montreal create and maintain jobs in that region. This is good news, but it is not something the hon. member mentions very often.
May 14, 1993


Alfonso Gagliano: Madam Speaker, the minister said there was good news. Is it good news that Montreal has more than 770,000 people on welfare? Instead of quoting statistics, why does he not show some concern for people who are living in poverty? The government's role should be to take care of people in need, not quote statistics that are meaningless when poverty is still on the rise in the Montreal region.


Pierre H. Vincent: Madam Speaker, the hon. member says he does not want statistics, while he keeps quoting figures himself.
I would say that unlike the Liberals, this government does take care of people, and one of the ways it does that is by ensuring that jobs are created. Look at the money invested in the Montreal region: $150 million for the development fund, followed by $50 million and another $35 million. All this money was invested in the Montreal region to help people and businesses get ahead and look foward to a better future.


EMPLOYMENT
Hon.   Chas. L. Caccia@Davenport: Madam Speaker, only a few years ago governments and most economists defined unemployment levels above 4 per cent as unacceptable. Yet the Minister of Finance calmly states that double digit unemployment will continue until the end of 1994.
Since job creation was not the focus of the budget, are Canadians to conclude they are to fend for themselves and that double digit unemployment is inevitable for the next two years?


Thomas Hockin: Madam Speaker, my hon. friend poses a very real problem for all industrialized countries. The level of unemployment is very high. It is higher than we would like in Canada. This government has never said anything opposite.
Oral Questions
What we are trying to do is to put in place a level of confidence so jobs will be created and investment will be created. I have some good news for the member on that.
We have had real a GDP increase 3.5 per cent in the fourth quarter. A trend in unemployment is heading down. As I have said employment has increased in 10 of the last 12 months. Our exports are very strong. Consumer confidence is improving. The Conference Board of Canada's index of consumer attitudes increased 5 per cent in the first quarter. Business confidence is up. Construction spending is also up.
All these are signs that we can get our unemployment rate down and start to create the kinds of jobs that all members of the House would like to see us create.


Hon.   Chas. L. Caccia@Davenport: Madam Speaker, many economists and many Canadians disagree with the finance minister's obsession with inflation.
Will the minister agree with a growing number of economists and Canadians that the real economic crisis facing Canada today is high unemployment afflicting Canadians in small towns, in large towns and cities across the nation?


Thomas Hockin: Madam Speaker, I would say that high unemployment is a major regional problem in all industrialized countries, including Canada.
What we are doing is building this kind of confidence in the statistics that I have just noted. We are also doing things in a very pointed way regionally, lake our FED-NOR program, for example, in northern Ontario where over 4,000 jobs and over 400 businesses have been created in the last five years through that program. Our regional programs for economic diversification have also helped certain regions that are in difficulty.
I was asked a question about Cape Breton at the beginning of Question Period. Our support for Devco has been strong. Even when we are having to cut back subventions and contributions, we are maintaining our commitments to Devco.
Through our Aboriginal Economic Development Program, which all members of the House respect, we have created over 1,600 businesses on and off reserves. This is

May 14, 1993
Oral Questions
how we are trying to get at regional economic expansion as well as doing these large scale macro things which are building consumer confidence and business confidence, not at a level as high as we would like to see, but it is now positive.


HELICOPTER PROGRAM
Mr. John Brewin (Victoria):: Madam Speaker, my question is for the Minister of Supply and Services.
Yesterday at the Standing Committee on National Defence there was some shattering evidence on the government's decision to spend $5.8 billion on the EH-101 helicopters. First, there was a minimally acceptable alternative or option put forward by DND costing less than $1 billion that was rejected by the government. Instead it went for this Cadillac version.
Second, Boeing Canada is able to modernize the search and rescue helicopter fleet for less than $200 million, a fraction of the cost of the model being foisted on the people by the Government of Canada.
In the face of this evidence, will the minister agree the time has come to cancel this $5.8 billion helicopter deal?


Hon. Paul Dick (Minister of Supply and Services):: Madam Speaker, I thank the hon. member for putting that question.
I believe there were six or seven witnesses yesterday before the committee. Only one witness said that the Boeing Labrador helicopter would be anywhere near comparable to the EE1-101. As a matter of fact, outside in a scrum afterward he was asked by reporters: "Are you trying to tell us that the Labrador is as good as the EH-101?" He ignored the question. The fifth time it was asked, he said: "No, it is not".
We cannot compare a 40-year old aircraft which does not even have the airframe built anywhere in the world any more because it is so old to a brand new aircraft. We cannot say that it is equal. It just is not equal.
The fact is it would cost us $600 million to refurbish those in a way that we need to refurbish them in this country as was expressed yesterday. He is talking in American dollars of a refurbishment that they did a few years ago for the Americans who are using those helicopters for a second-line helicopter. They do not put on de-icing equipment.
I am sorry, we live in Canada. We cannot take those helicopters off the ground 38 per cent of the time now because we do not have de-icing equipment on them and because of the winds. They cannot be fitted with certifiable de-icing equipment. We need a better helicopter to do search and rescue in this country. It will cost about the same amount.


John F. Brewin: Madam Speaker, first, every single dollar used for the remodelling and modernization under the Boeing proposal would be spent in Canada; not in Italy, Britain or elsewhere, but in Canada.
Second, the minister persists as does the Minister of National Defence in raising the false point about comparability. The issue is not comparability. If the government simply understood that the issue is which helicopter can satisfy the requirements for search and rescue, it would see we do not need the Cadillac version. We need a helicopter than can serve at the least cost to the Canadian people.
Surely the government must recognize that the proposal to upgrade the Labradors is the most cost efficient alternative in front of the government.


Paul Wyatt Dick: Madam Speaker, I think the hon. member is comparing apples with oranges. He knows and has been informed that it would cost about $339 million to do an up-fit on the present Labradors in Canadian dollars using a Canadian package in order to get them to a standard which we feel we would be a very minimal standard.
They still would not have the power to take off in winds over 30 knots instead of 60 knots. The hon. member is wrong. He will not listen. Yesterday there were seven or eight witnesses. Every single one of them, except the one executive who is employed by Boeing and does not fly helicopters, said that he was wrong.
I want to tell the hon. member that Canadians deserve better than having 1957 helicopters in the year 2000. We want a year 2000 helicopter to help do a better job on search and rescue in this country. Our people deserve it.
May 14, 1993


FISHERIES
Hon. William Rompkey (Labrador):: Madam Speaker, my question is for the Minister of National Revenue or whoever is answering for him today.
The departmental regulations issued recently exempted from the tax on diesel fuel all fishermen in the Atlantic except those who fish in the Gulf of St. Lawrence. In other words, those who fish off the east coast of Newfoundland are exempt from the tax on diesel fuel. Those who fish in the gulf, and there are five provinces that fish in the gulf, are not.
There is a clear discrimination on the part of the Department of National Revenue. I simply want to ask the minister if he will revise the regulations. Will he build some fairness into the system to treat those who fish in the Gulf of St. Lawrence equally with those who fish off the Atlantic coast?


Paul Wyatt Dick: Madam Speaker, I did not have notice of this question. It deserves a very good answer. There should be fairness in the system. We will look into it and get back to the hon. member as soon as possible.


Bill Rompkey: Madam Speaker, I want to thank the minister for that answer, but I want to remind him this is a time of diminishing resources on the Atlantic coast. It is a time of increasing costs. All fishermen surely must be treated fairly whether they fish in the Atlantic or they fish in the gulf. There are five provinces that fish in the gulf.
I ask the minister to consider this seriously and quickly and change the regulations to make it fair for those who fish in the gulf.


Paul Wyatt Dick: Madam Speaker, I am not saying that equality necessarily means fairness. I am saying that we will try to make sure it is fair. Sometimes those things are different. We will take a look at the problem which has been raised and will get back to the hon. member as soon as possible.


PUBLIC SERVICE
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Madam Speaker, my question is for the minister answering for Treasury Board.
Oral Questions
When the Conservative government took office in 1984 it boasted of its managerial skills and said it would make the Public Service efficient, but yesterday the public accounts committee was told that 2,500 public servants are still on the government payroll even though their jobs have been declared surplus and no reasonable job offer has been made to them.
I ask the minister to explain why people are being paid to come to work when there is no task to be performed. Where are the government's skills in managerial matters?


Hon. Harvie Andre (Minister of State and Leader of the Government in the House of Commons):: Madam Speaker, the hon. member is right. We have been downsizing. Faced with limited resources there have been cutbacks. We are also doing that within the context of treating employees fairly and within the context of agreements we have with the unions, for example in terms of offering alternatives, relocation and so on.
It is within that context that as we downsize at any one point in time we may find there are surplus persons still on staff. The trend is there and we are trying to do it in a fair manner for the employees concerned.


Jean-Robert Gauthier: I wish to ask a supplementary question, Madam Speaker. Yesterday, we also saw the annual report of the Public Service Commission of Canada and learned that the number of public servants rose by 5,780 in 1992, for a grand total of 223,598 in Canada.
Why did the government hire 5,780 more public servants when we know that there are 2,500 paid fulltime public servants whose positions have been declared surplus and for whom suitable employment has not been found?


Harvie Andre: Madam Speaker, it is a question of where the jobs are, what the qualifications are and where they are needed. Those do not always match the people who are declared surplus as a result of a change in government operations.

May 14, 1993
Oral Questions
Yes, with the kind of operation the Government of Canada has at any one time, people are leaving and people are coming in. For example, because of tax changes there has been a considerable increase in the number of people employed in administering the GST. Because of changes to UIC as well as the tremendous pressure on the department of immigration there have been substantial increases there. Therefore there are increases but the capabilities have to be matched with the job required. A person cannot necessarily be taken from a job declared surplus and be forced to fit into a job opening.


FORESTRY
John Williston (Bud) Bird: Madam Speaker, I have a question for the Minister of Forestry.
In March 1992 the minister was a party to the signing of the Canada forest accord. That accord contemplated close consultation among the federal government, the provinces of Canada and the territories in pursuit of the practice of sustainable development in the forests of our country.
The accord recognized provincial jurisdiction but it also identified the federal role in terms of science and technology, the environment and international marketing. In effect it identified the federal-provincial partnership that is really required to bring about sustainable development in our forests.
I want to ask the minister if the Canada forest accord is being implemented as it was intended. Is the Canadian Council of Forest Ministers meeting regularly to advance its purposes? Is the federal government playing a lead role?


Hon. Frank Oberle (Minister of Forestry):: Madam Speaker, I welcome my colleague's question.
He knows that the accord was the product of a broadly based coalition and consensus including the provincial ministers, industry, conservation groups and others. It is coupled with the new national forest sector strategy which is under the trusteeship and custodianship of the Canadian Council of Forest Ministers. It has put in place
a monitoring and auditing process so that we can be assured that progress is being made.
These two documents will guide us to a better defined role for the federal government in forestry, one that would allow us to emphasize the issues my colleague has mentioned. These include the strengthening of our efforts in science and technology, our international trade efforts, the management of our international obligations pertaining to the environment and the management of federal lands including Indian lands throughout Canada.


THE ECONOMY
Rodney Edward Murphy: Madam Speaker, my question is for the Acting Prime Minister.
Twelve years ago on Parliament Hill 100,000 Canadians protested the high interest rate policies of the then Liberal government. Tomorrow we know that tens of thousands of Canadians will be here to protest this government's policies on free trade, high unemployment and high interest rates.
Would the Acting Prime Minister not agree that these people, whether they are the Catholic bishops, NAC or the Canadian Labour Congress, are not enemies of Canada?


Thomas Hockin: Madam Speaker, the hon. member speaks of high interest rates.
We have a prime rate now of 5.7 per cent, the lowest it has been in 30 years. If people are going to come to Parliament Hill and talk about historically high interest rates, there is something wrong with their arithmetic. They can talk about unemployment. I agree that unemployment is a problem in all industrialized countries, Canada included.
However I have to tell the hon. member the OECD and the IMF both forecast that Canada is going to lead the G-7 in growth in 1993 and 1994. They expect us to have the highest growth rate of employment.
We are winning the horse races with other industrialized countries. We can keep winning every race. It will never be enough for us until we get unemployment down to 4 per cent, 5 per cent or 6 per cent. We are doing the best job of any industrialized country and we are going to continue to keep the course so that we can create jobs. In
May 14, 1993

the 1980s, under this government, we were the largest creator of jobs per capita of any industrialized country.


Rodney Edward Murphy: Madam Speaker, the minister is right that interest rates have gone down over the last few years.
The reality is however that for the majority of years this government was in power it was a deliberate policy to keep interest rates high to beat inflation. That caused more people to be at food banks and put more people on welfare. It created high unemployment across the country. In some regions of the country unemployment is over 24 per cent. Young people are unemployed. Women are unemployed.
Tomorrow when those people come to Parliament Hill, are they or are they not enemies of Canada?


Thomas Hockin: Madam Speaker, it is quite appropriate for people to come to Parliament Hill to talk about the unemployment rate in their regions. I quite understand that.
However, those who believe in the government's policies should put props on the lawn as well. These would be cradles of the new businesses bom and created in the last nine years under this government.
As a matter of fact we had a net business creation in the small business sector of over 150,000 a year from 1986 to 1990. Even during the recession we have had net job creation and small business creation. Those cradles should be out there too because small business is creating 82 per cent of all new jobs in this country.
Also with the cradles, as I have said, should be those barriers against Canadian exports, against Canadian jobs that we have removed. Those barriers existed in the United States and we hope to remove them in Mexico.


ABORIGINAL AFFAIRS
Mr. Jack Iyerak Anawak (Nunatsiaq):: [Editor's Note: Member spoke in Inuktitut.]

My question is for the Minister of Indian Affairs and Northern Development. There is a housing crisis in the
Oral Questions
Arctic. In the Northwest Territories severe overcrowding is causing serious social, educational and health problems for aboriginal people. Yet this government has systematically slashed social housing funds. By 1994 this government will provide no new social housing assistance to the Northwest Territories at all.
Why is this government refusing to help provide basic shelter to the aboriginal people of the Northwest Territories?


Pierre H. Vincent: Madam Speaker, I disagree with my colleague. Since 1984 this government has doubled the funding for native communities across Canada in all areas, including housing. I think the evidence is there and the money is there. Again this year, in the departmental budget, despite all the cuts, there was an increase in the amounts given to native communities across the country.


Jack Iyerak Anawak: [Editor's Note: Member spoke in Inuktitut.]

The money that this minister is talking about is for housing on reserves which does not help the aboriginal people of the Northwest Territories who do not live on reserves.
Last December the Standing Committee on Aboriginal Affairs recommended that the government provide the funds necessary to meet the desperate housing needs of northerners.
Will the minister tell northerners today that he intends to implement this unanimous all-party recommendation and that he will reverse these devastating cuts?


Pierre H. Vincent: Madam Speaker, we know that native housing in the north is a complex issue and I understand my colleague's concerns. That being said, the committee did an excellent job, as well as the 40 individuals and organizations that participated in it. We are now reviewing the committee's report and the

May 14, 1993
Oral Questions
department and the government will make the necessary decisions in due time.


IMMIGRATION
Mr. Stan Keyes (Hamilton West):: Madam Speaker, my question is for the minister who is answering for the Minister of Employment and Immigration.
A Russian woman, Irina Aoucheva, and her Canadian-born daughter face imminent deportation. The minister has been painfully slow to intervene. Experts at External Affairs concur with Irina's fear of persecution and the possibility that her Canadian daughter might be taken from her.
After waiting a heart-wrenching four months for an answer after her original deportation order, I want to ask why the minister is giving Irina and her daughter the runaround. How much longer is it going to take?


Pierre H. Vincent: Madam Speaker, I must remind the hon. member that under the Privacy Act, I think, individual situations cannot be freely discussed in the House of Commons. That being said, the Minister of Employment and Immigration has already made known his positions and I think that a final decision on this subject will be made soon.


Stan Kazmierczak Keyes: Madam Speaker, that is exactly what the problem is. The minister has not made a decision yet.
I have raised this issue with the minister in letters. I have sat beside him in the House of Commons and discussed it with him. I asked the question in the House of Commons three months ago. In fact I gave notice today, well in advance of Question Period, and this is the pathetic answer that my constituent, Irina Aoucheva, and the people of Hamilton West get.
Irina has two choices. Either she returns to Russia herself and leaves her Canadian-born daughter behind,
or they both return to Russia where her daughter could be taken from her. In any case her daughter's fate becomes of great interest to Canada. If the deportation-


Some hon. members:: Time.


Madam Deputy Speaker:: Could the question be put
now?


Stan Kazmierczak Keyes: Why is the minister stalling? Why can we not get a decision in the case of Irina Aoucheva and her Canadian-born daughter?


Pierre H. Vincent: Madam Speaker, the Minister of Employment and Immigration has already pointed out that a claim for refugee status based on sex or family violence was being considered under the new directives of the Immigration and Refugee Board. Based on that, absolutely nothing will be done until the review is complete and the final decision is rendered. I would ask my colleague to be patient and wait for the decision.


HEALTH USER FEES
Mr. Jim Karpoff (Surrey North):: Madam Speaker, I have a question for the Acting Prime Minister.
Yesterday the Liberal minister of health in the province of Quebec again advocated the use of health user fees. The Liberal governments in Quebec, New Brunswick and Newfoundland have continuously advocated health user fees.
Does the government stand by the sanctions under the Canada Health Act, and will it enforce these sanctions if Quebec or any other province implements user fees?


Harvie Andre: Madam Speaker, as was said repeatedly in reply to several similar questions yesterday, the Government of Canada stands by the Canada Health Act.
May 14, 1993

Routine Proceedings



ROUTINE PROCEEDINGS


Mr. Charles A. Langlois (Parliamentary Secretary to Leader of the Government in the House of Commons):: Madam Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to 15 petitions.



HOUSE MANAGEMENT


Charles A. Langlois: Madam Speaker, I have the honour to present the 95th report of the Standing Committee on House Management, concerning changes in the list of members at large in the Economics envelope. If the House agrees, I intend to move the adoption of this report later today.
[Editor's Note: See today's Votes and Proceedings.]


Charles A. Langlois: Madam Speaker, if the House agrees, I move the adoption of the 95th report of the Standing Committee on House Management, presented to the House today.


Madam Deputy Speaker:: Since the report has just been tabled in the House, I will ask that it be read.
[Editor's Note: The Clerk of the House read the report.]


Madam Deputy Speaker:: Does the hon. parliamentary secretary have the consent of the House to move this motion?


Some hon. members:: No.


Madam Deputy Speaker:: Consent has not been given to make this change to this committee. Are there other motions? The hon. parliamentary secretary has the floor.



POVERTY


Charles A. Langlois: Madam Speaker, I move:
That on behalf of the Subcommittee on Poverty of the Standing Committee on Health and Welfare, Social Affairs, Seniors and the Status of Women, one staff person be authorized to travel to Toronto, Ontario, and Fredericton, New Brunswick, in relation to the committee study on poverty measures.


Rodney Edward Murphy: Madam Speaker, we think the money can be better used by being given straight to the poor or those who have to go to food banks. If the Conservative chair of the subcommittee on poverty needs to be educated about poverty and the need for food banks in the country, I think the Conservative caucus might try to educate her.
We say no.


Madam Deputy Speaker:: I conclude that unanimous consent is not granted. The hon. parliamentary secretary has the floor.
>k *	*



DEVELOPMENT AND HUMAN RIGHTS


Charles A. Langlois: Madam Speaker, I move:
That four members of the Subcommittee on Development and Human Rights of the Standing Committee on External Affairs and International Trade, and one staff person, be authorized to travel to Vienna, Austria, from June 14 to 19, 1993 in order to take part in the United Nations World Conference on Human Rights.


Mr. Alex Kindy (Calgary Northeast):: I rise on a point of order, Madam Speaker. I cannot give consent to this travel. We see the holocaust that is taking place in

May 14, 1993
Routine Proceedings
former Yugoslavia and the government does not act upon those human rights violations. I think we have studied those problems enough. We should now be acting.
I do not give consent.


Madam Deputy Speaker:: Unanimous consent has not been given.



POINT OF ORDER


David Charles Dingwall: rise on a point of order, Madam Speaker. Earlier this day the Minister of State for Small Businesses and others were in breach of the Standing Orders. I make reference to Beauchesne's sixth edition, page 141, citation 479.
A Member may not speak against or reflect upon any determination of the House, unless intending to conclude with a motion for rescinding it.
As we know, votes do take place in this House. It is entirely inappropriate for members of any particular political party to make reference to that either in Question Period or in debate. I would hope the Chair would be so advised by the Clerk that this is indeed a violation of the Standing Orders, the precedents and traditions of this House, and I would hope that conduct will not be carried on any further.


David Barrett: I rise on the same point of order, Madam Speaker.
I need clarification. Is it against the rules of the House to point out that 38 members of the Liberal Party did not show up on a vote against NAFTA? Is that against the rules of this House, to point that out?


Madam Deputy Speaker:: It may be a surprise to the hon. member, but it is.


An hon. member:: Well, he will do it again anyway. It doesn't make any difference; he never understands the rules anyway.


Madam Deputy Speaker:: I imagine the hon. member is seeking the floor to apologize and withdraw.


David Barrett: No, I do not apologize. It is a matter of record in the House.


Sergio Marchi: Apologize. You should apologize.


David Barrett: Why should I apologize? You should apologize for not showing up to kill NAFTA. You could have killed NAFTA in the House and you did not show up.


Mr. Blackburn (Brant):: Right on.


David Charles Dingwall: Madam Speaker, I want to thank my colleague from the New Democratic Party who has always been known in the House for courtesy and for being a member who wishes to follow the substance of the rules as well as the intention of the rules.
I would hope that the Chair, today and on subsequent days, will be reminded by the Clerk of the provisions of the Standing Orders and the tradition of the House that kind of mistake, innocent or otherwise, will not be allowed to continue.
I am certain the Chair is now seized with the matter and will act accordingly. I thank the Chair for hearing my intervention.


David Barrett: Madam Speaker, if there is a suggestion that I have transgressed the rules of this House deliberately then that suggestion is incorrect. But I have not changed my opinion on the behaviour of that party.


Ross Harvey: I rise on the same point of order, Madam Speaker.
I believe, if reference is made to the Standing Orders and Beauchesne's, the Speaker will find that the prohibition is on the naming of particular members as being absent. If no particular members are named then no transgression has been committed.


Madam Deputy Speaker:: I think all members, including the chair occupant, will brush up on this particular article and hopefully we will not have to refer to it in the hours of debate to come.
On a point of order, the hon. member for Surrey North. If it is the same point I think it has been solved for the time being.


James Capsey (Jim) Karpoff: I rise on the same point of order, Madam Speaker. I find this very surprising because the Liberal Party actually had a member of that party from Hamilton West prepare a written statement regarding voting records and read it in the House. The Liberal Party is now saying that should not be done.
May 14, 1993

My understanding of the rules, and I think that the previous speaker is correct, is that we cannot refer to individual members, but the fact that 38 Liberals did not show up to vote is not within the terms of the procedures and it can be mentioned when it is collective. It is only the voting records of individual members.
I think the House leader of the Liberals should speak to his members whom he had get up and read prepared statements.


Madam Deputy Speaker:: I would like to proceed with presenting petitions at this time.


PETITIONS
Dennis Joseph Mills: Madam Speaker, pursuant to Standing Order 36, I have the privilege to place before Parliament petitions signed by many of my constituents.
They are humbly calling upon Parliament to accept legislation designed to eliminate violence against women and children. They encourage and support women to report incidents of assault or abuse.
They also want the government to concentrate special effort on the training of court workers and judges to become knowledgeable about women and child abuse and to focus public attention on this very important and long ignored problem.


Mac Harb: Mr. Speaker, it gives me great pleasure to rise in order to introduce a petition signed by Canadians. These Canadians are calling on the government to establish in consultation with the provinces a national education standard.
The reason is there are concerns about the high illiteracy rate which is approximately 38 per cent. As well they are calling on the involvement of all business, labour and student groups as well as parent and nongovernmental organizations to work collectively for the best interests of Canadians and to establish a national education standard.
Routine Proceedings REFUGEES


Mac Harb: I have a second petition dealing with the question of refugees in Canada.
Many of these refugees are suffering as a result of the tremendous backlog that presently exists. These petitioners call on the government to exercise compassion when it comes to refugees, in particular those who have been in the country for over three years.
I join with these constituents to call on the government to take action to ensure that fairness and compassion is exercised.


James Capsey (Jim) Karpoff: Mr. Speaker, I have the privilege of filing two petitions pursuant to Standing Order 36.
The first one points out that the two drug bills, Bill C-91 and Bill C-22, have resulted in higher costs of drugs by banning no name generic drugs. It calls upon the government to repeal those two bills.


James Capsey (Jim) Karpoff: The second petition deals with the same subject but it points out that Bill C-91 was required under the North American free trade agreement and that if the North American free trade agreement is passed we will not be able to reinstitute generic drugs in the countiy which will result in higher costs to our provincial governments and to citizens.
Therefore they ask that the North American free trade agreement not be proceeded with.


Mr.   Brian@: Mr. Speaker, I have the honour pursuant to Standing Order 36 to present two petitions on behalf of a number of people in the province of Alberta.
The first petition is from a number of people in the Edmonton area who call upon Parliament to urge the government to act unanimously on the motion of the House of Commons on September 27, 1991 to settle the acknowledgement and redress issues to the mutual satisfaction of the Ukrainian Canadian community and the government.


Mr.   Brian@: Mr. Speaker, my second petition is from a number of people in the

May 14, 1993
Routine Proceedings
Edmonton region, including people from the communities of Elolden, Camrose, Westlock, Onoway, St. Albert and the Edmonton area.
They ask Parliament to change the Young Offenders Act to make young offenders more accountable for their crimes. They ask that it either be strengthened or replaced with an updated juvenile delinquents act.
of November 1,1991 to May 15,1992. From that number, the Atlantic region completed 257 notices of appeals.
The notices of appeals and determinations are not necessarily related to the rulings referred by CEIC. Applications for determination of a question or appeal may be brought to resolve questions arising from rulings claims for benefits.
*
*


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Charles A. Langlois: Mr. Speaker, the following questions will be answered today: Nos. 328, 506, 517 and 518.


Mr. McGuire: Since November 1, 1991, for each riding in Atlantic Canada with respect to insurability rulings made by Canada Employment Centres to Revenue Canada Taxation, (a) how many requests have been made and how many were made because the applicant responded yes to one of the questions on the insurable employment questionnaire (b) how many rulings were negative under section 3(1) and/or section 3(2)(b) of the Unemployment Insurance Act (c) were any decisions appealed to the deputy minister and, if so (i) how many (ii) how many appeals have been completed to date (d) how many decisions have been upheld (e) have any decisions been overturned and if so, (i) how many (ii) how many are appealing to the Thx Court?


Hon. Otto Jelinek (Minister of National Revenue):: Revenue Canada, Taxation does not segregate data from records by federal electoral riding with respect to insurability rulings, rendered under different sections of the Unemployment Insurance Act or for the disposition of appeals. Data can be provided for the total number of rulings and notices of determinations and appeals received and processed in the region of Atlantic Canada from November 1, 1991 to May 15, 1992.
A total of 1,701 questionnaires on insurable employment containing a yes answer to one of the questions were referred to Revenue Canada, Taxation. The deputy minister of National Revenue, Taxation received 683 notices of appeals and determinations during the period
The following chart represents the results of the decisions rendered on the 257 notices of appeals completed for the period in question and provides for the number of cases where an appeal to the Thx Court of Canada was filed.
Atlantic Region Notices of Appeals (November 1, 1991 to May 15, 1992)
Results
Confirmed Allowed in part Withdrawn Reversed Total
Tax Court of Canada
Number of cases
31
47
26


Mr. Lee: With respect to the sale of real estate assets owned by Canada Post Corporation, (a) what, if any, procedure exists governing the sale of such assets (b) what is the advertising or bidding process and how are decisions reached (c) has the corporation disposed of any assets since January 1,1989 and, if so (i) which ones (ii) how many bids or offers were considered (iii) who was the purchaser (iv) how long was each asset on the market before sale agreements were entered into?


Harvie Andre: With respect to the sale of real estate assets owned by Canada Post Corporation, Canada Post's policy is to dispose of surplus real estate assets at current market values. The sale prices are determined based upon input from private sector appraisers and real estate agents who are familiar with the local market.
May 14, 1993

In the event that a property is in a rural location, the local municipality is given the first opportunity to purchase. If it does not wish to conclude a purchase, the property is listed for sale with a local realtor.
In the urban areas, once CPC decides to dispose of a property, the services of local real estate listing brokers and other real estate professionals are engaged to ensure that market value is achieved.
Real estate brokers that may be engaged by CPC to list properties are governed by the code of professional standards of the local real estate board and the Canadian Real Estate Association. As such, they are required to present all offers to the corporation as they are received. Through the use of multiple listing services and other means, prospective purchasers are sought in the market.
Since 1989, Canada Post has sold many properties throughout Canada to both local communities and to local individuals and businesses. Market exposure through real estate brokers and other professionals has resulted in mutually satisfactory agreements being entered into where CPC has been able to achieve market value prices for properties sold.
With regard to specific information on individual property transactions, certain information can be obtained from public title records at the local municipal level. However, Canada Post's policy is to treat as confidential the details of commercial transactions of this nature.


Mr. Riis: Does the government have employees in the riding of Kamloops and if so, (a) how many and what is their primary place of employment (b) are any positions designated as bilingual and if so, how many (c) how many vacancies have occurred in both unilingual and bilingual positions and how many of those have been filled?


Hon. Gilles Loiselle (President of the TVeasury Board and Minister of State (Finance)):: The government has 210 Public Service employees in the census division of Thompson-Nicola regional district which is part of the riding of Kamloops. All of these 210 occupied positions are unilingual English positions. Employees are mainly located in the city of Kamloops.
In the 1992 Public Service recruitment in British Columbia, of 1,655 new recruits, 1,632-99 per cent-
Supply
were appointed to unilingual positions and 23 were appointed to bilingual positions.


Mr. Gardiner: Does the government have employees in the riding of Prince George-Bulkley Valley and if so, (a) how many and what is their primary place of employment (b) are any positions designated as bilingual and if so, how many (c) how many vacancies have occurred in both unilingual and bilingual positions and how many of those have been filled?


Gilles Loiselle: The government has 391 Public Service employees in the census divisions of Bulkley-Nechako regional district and Fraser-Fort George regional district which are part of the riding of Prince George-Bulkley Valley. All of these positions are identified as unilingual English positions. Employees are mainly located in the city of Prince George.
In Public Service recruitment in British Columbia in 1992, of 1,655 new recruits, 1,632 (99 per cent,) were appointed to unilingual positions and 23 were appointed to bilingual positions.


Charles A. Langlois: Mr. Speaker, I ask that the remaining questions be allowed to stand.


The Acting Speaker (Mr. Paproski):: The questions enumerated by the parliamentary secretary have been answered. Shall the remaining questions stand?


Some hon. members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Marchi.
Thomas Hockin: Mr. Speaker, as the Minister of State for Small Businesses and Tourism I am very pleased to be participating in the debate today.

May 14, 1993
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I was surprised to see the name of the member of Parliament who is sponsoring this motion because I expected to be able to work with the Liberal member on these matters and have been working with him most closely. I would like to commend him for the work he has done. The Liberal member for Broadview-Greenwood has worked with me on some very important changes to the Small Businesses Loans Act, and that is not really reflected in the motion that has been put here today.
Be that as it may, I would like to talk about the over-all context of small and medium sized business in Canada today and what the government is doing and to respond to the opposition motion. There are five or she suggestions in the motion and I would like to make some comments on them.
Let us begin with what most members of the House know, that 82 per cent of all the jobs created in Canada in the last 10 years were created by small and medium sized business. A vast majority of those businesses have 10 employees or less. People can say it is a bad sign that jobs are being created by small and medium sized enterprises rather than the great big behemoths of our economy, the great big companies.
I do not believe this is a weakness; I think it is a strength. I have always felt that our country was not sufficiently entrepreneurial. In the 1960s and 1970s we were too dependent on big this, big that, big government, big business, and big labour. Everybody waited for big government, big business or big labour to hire them or tell them what to do. We were becoming dependent on big daddy government, big daddy unions, big daddy business.
It is very good for the country that this entrepreneurial spirit is surging throughout the country. When I was elected in 1984 the first day I went to my constituency office 18 small business people were lined up outside my office-and this is London, Ontario, which is a pretty prosperous town-looking for a government grant or subsidy with which to make their investment. This was a sickness because even our entrepreneurs were not being entrepreneurial. They wanted government to help them out with handouts and subsidies of one sort or another. It
was a culture that had been developed during the 15 years before we took over.
Everybody knows this government's framework policy is to make the country more competitive and this includes small and medium sized enterprises. Of course framework trade agreements have given challenges to small and medium sized businesses but also some tremendous new opportunities. We also know deregulation has allowed entrepreneurs to move into things they ordinarily would not move into.
Let me give a good story about privatization from southern Ontario. A local hospital had to save $1 million on its cafeteria. The people who had been running the cafeteria went to the president of the hospital. They told him they could run that cafeteria, produce better food with better choice, save the hospital $1 million and make $250,000 for themselves if they privatized the cafeteria.
The hospital did that. The food is better. The prices are lower. These people have made a good return on their operations and they are now privatizing two other hospital cafeterias. This is entrepreneurship. This is privatization. It is the kind of ethic, philosophy and rejuvenation the government has tried to bring into the Canadian psyche and economy in the last nine years.
The growth of small and medium sized enterprise is a major part of the success stoiy of what we have been able to do in transforming our economy.
This Liberal motion mentions the banks and I just want to say a word about them. Except for the hon. member for Broadview-Greenwood we have heard almost nothing from the Liberal Party about helping small business until just on the eve of an election it suddenly wants to attack the banks.
I could join them in attacking the banks because they are an easy target, but there is a kind of intellectual bankruptcy to it. If this motion just depends on attacking the banks for helping small business then it has not done much thinking about how to help small business.
The hon. member for Broadview-Greenwood has ideas but the party generally has sort of saved itself from thinking by targeting primarily the banks in this motion. We want to deal with the banks and make sure there is more access to credit for small and medium sized
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enterprise, but we want to do far more than that. This afternoon in my remarks I want to tell what we have done and what we plan to do.
First, businesses with less than 100 employees now represent 99 per cent of all Canadian businesses. For those who think it is the big businesses on the front page that comprise most of Canadian business that is not true. They represent less than 1 per cent. As a group small business represents about 29 per cent of our whole GDP and, as I have said, they have created the bulk of the new jobs in the economy.
Let us turn to the big problem small business has. I went across the country last summer to do some last minute consultations before we changed the Small Businesses Loans Act. I talked to Chambers of Commerce and real people who were paying payrolls in small businesses. The biggest complaint they had was not about the things that are often raised in the House of Commons. They were not complaining very much about the usual subjects that come up here.
What they were talking about was access to credit. They were saying the financial institutions were making it difficult to renew loans. They were decreasing their lines of credit and making it virtually impossible in some sectors of the economy to get credit at all. As minister for tourism, tourism and the hospitality industry has been particularly hurt because of these restrictions to credit.
This Liberal motion is about 12 months late. They asked for a summit meeting with the banks. We have done this two or three times. I have met with the major banks and I got these statistics from them. I asked them what they were doing and if they were cutting back on their access to credit. The banks gave me their report and frankly I was not very impressed.
One bank said it had increased its loans to small businesses by 2 per cent. Another bank said it had decreased its loans by 2 per cent. In the middle of this recession the banks were not doing very much. They more or less implicitly admitted it to me. They had their reasons because they felt there were not that many good small business files they could give loans to. That is to be expected from bankers.
After I listened to that I was convinced we had to change the Small Businesses Loans Act in a major way. I have had help, quite frankly, from all members of the House of Commons in making these changes.
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The first major complaint was that the banks were not interested in the old Small Businesses Loans Act which had an 85 per cent government guarantee of losses. They felt maybe the guarantee should be higher because the banks were exposed to 15 per cent of the loan loss. They also said their fees were not enough, there was too much red tape and the documents were too complicated.
We just attacked every one of these issues. We simplified the administration and simplified the forms. As a matter of fact the banks can use their own forms now; the forms they are used to. We have increased the guarantee to 90 per cent. Instead of just securing a loan on a part of the asset, it can be secured on 100 per cent of the asset.
We have made another big change. People used to complain that the limit under the Small Businesses Loans Act for the federal government guaranteed program was only $100,000. They wanted that lifted so we raised it to $250,000.
We were also given another suggestion by small businesses to change our definition of small businesses from those with sales of $2 million or less. Small businesses have grown since 1980 so we changed that to $5 million in sales or less.
These changes are supported by all members of the House. They are veiy constructive changes. The one I am most proud of-and I had help from all members of the House on this one-was something else the banks did that used to annoy me and we have attacked. This motion today does not reflect this very important change. We have limited the personal guarantee the banks can take when they have a government guaranteed loan. Can we imagine this? When they used the SBLA before the banks would sometimes say: "Okay, we have a government guarantee of 90 per cent, but we also want your house, your car and your cottage as a guarantee". This was not right.
The banks would then get a double guarantee: the government's guarantee plus the customer's assets and then he or she could not use his or her assets as collateral to fund working capital for the business. This change limits the collateral the bank or credit union can take to 25 per cent of the value of the loan.
As a result of all this I want to report something to the House, and this is news. I see that the press gallery is filled today. I want to report that March had the biggest volume of activity under the SBLA program ever in Canadian history. I would like to tell my friend from

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Broadview-Greenwood this because he helped me promote it and needle the banks. It is working. They are getting the word out and doing lots of business.
As a matter of fact if anyone wants to know how finance and government provisions work for these things, the government provisions say 5 per cent against the loan for expected losses. The banks are right. We do $1 billion worth of new business through the SBLA. We only have to provide $50 million to lever $1 billion. This is smart federal government spending. Instead of directly spending $1 billion to create jobs, why not just put $50 million up and have the banks put up the other 95 per cent? By doing this we lever $1 billion with $50 million. This is leverage and smart spending. This change in the Small Businesses Loans Act is making an enormous difference.
This is not the only thing the government is doing. Members should know that the Federal Business Development Bank is an important part of its strategy as well. I have to tell the House that people like to criticize the FBDB because sometimes our constituents do not get a loan from it and they are upset. This government formed a bank which by the way has to make a profit. It does not receive annual appropriations from Parliament. This Federal Business Development Bank increased its volume last year by 9 per cent and its number of loans by 10 per cent when the banks were not. It negotiated 4,000 loans the banks would not do.
The year before, it had increases in the middle of a very tough recession year in both volume and number of loans. The FBDB is an instrument we have some influence over and has been doing its job very well. I want to commend the bank for the work it has done.
We should know that the government's December 2 statement extended many very important new changes for small business which are not reflected in this opposition day motion. Under the SBLA fixed assets can be refinanced retroactively six months. The beginnings of that were looked at in the December 2 initiative. There were other changes brought in especially on the equity side. I want to say a few words about it. When I went across the country last summer, a lot of small businesses said that they needed access to credit. They also needed some access to equity. If we ask people where they would
get the equity, they tell us that the Toronto Stock Exchange is not going to invest in their little company but the next door neighbour who has an RRSP would like to invest, as would the employees.
Therefore we have changed this in the economic statement to allow this to happen, to improve the ability of people to use their RRSPs to invest in an arm's length way in small business and also for employees to buy into their employer's company.
I think the House should be reminded that under tax reform we put in place a tax rate for small business which is the most generous of any jurisdiction in the industrialized world. It is a 12.8 per cent effective rate on small business. That is for the first $200,000 profit.
We allow small businesses to build their equity base through retained earnings. The tax system exempts small business owners, including minority shareholders from the first $500,000 of capital gains realized from the sale of their business interests. That is a very important change. I would like to see more liquidity in the buying and selling of small business. Maybe this will help.
Furthermore the tax system cushions the down side for investors in small businesses through the 75 per cent write-off for allowable business investment losses. In addition, to encourage investors such as pension funds to provide financing to small businesses, institutional investors are allowed to increase their foreign investment portfolio by three times the investment they made in small businesses. These are things we are trying to do to get more money flowing on the equity side into small business.
The federal government has also provided substantial start-up funding and ongoing tax credits to support the operation of the solidarity and working ventures investment funds. These things are very important for building equity.
I would also like to see at some point the great potential that exists for local communities that know their businesses are allowed to buy into those local businesses. It would be good to see if we could develop a community ventures fund in some way with government help, not too much government help because then it will
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become government dependent. However we have made it clear that we are studying that.
Also the April 26 budget continued the investment theme for small business. It offered a mix of investment measures and regulatory changes. The first one was the higher rate refundable R and D tax credits for Canadian controlled private corporations which will no longer be cut off abruptly. It will be gradually phased out as taxable income increases from $200,000 to $400,000.
The annual limit of 75 per cent of taxable income on claims for R and D investment tax credits will be eliminated. A full write-off will be given for rapidly depreciating equipment such as computers and office equipment upon replacement.
Capital cost allowances for acquiring patents and rights to patents will be enriched to better support the use of new technologies. There will be no withholding tax on patents or their rights when purchased at arm's length.
We have also done other things in past budgets to help the small and medium sized business environment. I take a look across the front row here on a Wednesday when we are all here and just about every minister is involved in some way. We have the Minister of Supply and Services sitting here this afternoon. What he has done to make sure that we can get access for bidding on government contracts is revolutionary. He has made that possible.
We take a look at the ministers of regional programs. These programs have billions of dollars available in the west and in Atlantic Canada. I have the program FED-NOR in northern Ontario. This has created thousands of small and medium sized enterprises.
As I said in the House earlier, I am particularly proud-I always mention this when I can because all members of the House support it-of our Canadian aboriginal economic development strategy which helps to fund small businesses on and off reserves for aboriginal Canadians. It has created, from the last figures I saw, 1,600 small businesses on and off reserves. We are starting to develop an entrepreneurial culture and that is particularly important.
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We have that together with the government's over-all commitment in the last two budgets not to increase taxes but to decrease them.
A lot of people talk about the Clinton administration in the United States and what it is doing to try to rejuvenate the American economy. For every dollar of spending it proposes to cut there is $3 of tax increases. Is this not amazing, three dollars of tax increases? In our budgets every time we cut a dollar of spending we increased taxes zero. We have not increased taxes at all in the last two years. If anything we have been decreasing taxes. All this can help small and medium sized enterprise.
Finally I would like to make a comment about this opposition motion. We should not mislead small businesses and tell them they deserve bank loans whether they have done their homework or not. What should really be done in the framework of this motion is to join together in helping to communicate to small business the strength of the new Small Businesses Loans Act, what it stands for, what it is. We must do it through the credit unions and through the banks. Join us in helping small businesses to increase and improve their management skills. We have a whole range of programs to help with that but if we can have help further, that is what is needed.
We have now a Canada which is much more entrepreneurial than it was 10 years ago. We have a Canada with a participation rate of women in operating small businesses at an historic high. As a matter of fact I do not know whether my friend here, the page, knows this but in some provinces of Canada in the last six years over half of the new small and medium sized businesses started are owned and operated by women. This is new. A third of the new business start-ups in Toronto are by new Canadians. This is a new dynamic the country needs and anything we can do to enhance it should be done. The whole range of government programs has greatly facilitated this.
I will go with all members of the House at any time to our financial institutions and tell them to do their part as well. This we have been doing and this we will continue to do. But over all I want them to support, including the socialists, an entrepreneurial Canada, a small business

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enterprise Canada. This is what we believe in, and this we will continue to fight for.


Sergio Marchi: Mr. Speaker, I listened to the minister's response to our opposition motion. At the very end when he said he wanted to deal with the motion, I found him very patronizing to say the least. He talked about new Canadians starting businesses and women starting businesses. We all know and respect this. These people are doing these things in spite of the government. These same business women, these same business people who come from the different communities, are the very same people who have triggered the debate today.
I thought the minister cheapened the debate when his first words were to suggest that this motion was simply a gang-up on the banks or a pre-election gimmick or that somehow we on this side have not talked about small business before until today.
I would ask the minister to check and correct his facts. He is misleading this House. I for one have spoken on the bank issue as early or as late as last week through a statement under Standing Order 31.1 have talked about small business in every budget response that this government has had and it has had nine budgets. The opposition member for Broadview-Greenwood has moved opposition motions before on small business and many of my colleagues and I have participated. Rather than being constructive, rather than taking the high road, rather than looking at the package I as one insignificant member offered six ideas. The member for Broadview- Greenwood who is the next speaker will offer other ideas.
Rather than address himself to the package of ideas and by the end of the day perhaps have two good ideas emerge from the debate to help the small business network that we are aware of, he chose not to. Rather than be constructive he chose to cheapen the debate by suggesting some gimmickry or some ganging up. We were very cautious in saying that we were not putting all the problems at the doorsteps of the banks. There is a role for the national banking industry that gets its licence from Parliament and from government to live up to for the shareholders of the banks, for the depositors of the banks, for the clients and for the economy of Canada. I think he missed a golden opportunity.
I ask him one simple question. The minister said in his opening statement that 82 per cent of all jobs in the country have been created by small business. I said this morning that since 1989 that figure has gone up beyond 95 per cent. I would like him to answer whether he agrees that of the business loans portfolio of all our major banks less than 30 per cent are directed to the small and medium sized firms and 70 per cent of all those loans go to big business. Does he agree with that kind of balanced approach in terms of economic activity? If not, what is he prepared to suggest and do about that situation?


Thomas Hockin: Mr. Speaker, I was mentioning in my initial comments-and I think it is important the hon. member listens to my answer-about constructive help to small businesses in the last two years.
The member for Broadview-Greenwood has helped constructively with the Small Businesses Loans Act. I have to give him credit for that and I am very pleased to do so. Members of our party have worked very carefully with me. These members have not just left this at the level of rhetoric and complaint but have constructively tried to help. That is what I was saying and what was missing in what the hon. member just said to me.
Let me just answer his question. He would like it if 70 per cent of the bank's business is with small business. He would like to see more than 30 per cent of their loans go to small business. So would 1.1 would agree with him. He also knows that the Basel accords require certain kinds of provisioning that the bank has to put aside for small and medium sized loans which is much more strenuous than they have to put aside for other kinds of loans, mortgages, bank loans and so on. Because of that they are restricted somewhat.
Even within those restrictions they could be doing a lot better than they are. I happen to believe they have not done as much during the recession as they should because they had made bad big loans to the Olympias and Yorks of Canada and bad big loans sometimes to some foreign countries that they did not study very carefully. They ended up taking it out of the small business clients sitting across from them who had more and more difficulty getting a loan. All of this we know. All of this is conventional wisdom.
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We did something about it rather than just complain about it, rather than just pound our fist as does the hon. member for Nickel Belt who always stands, does his solo beautifully and waves his fist. We did it by improving the FBDB. We did it by improving the SBLA. Increasing the government guarantee program, lifting the limit and limiting the personal guarantee are going to lead to a record amount of lending through our financial institutions.
We did something else, and I am now being critical of some other financial institutions in Canada. I was Minister of State for Finance and I worked on the reregulation of financial services. I wanted to have more competition against the banks for doing small business lending. Who could compete against the banks? The credit unions already had about 20 per cent of the business. The banks had about 80 per cent. What about the trust companies? What about the life insurance companies? Why could they not be giving more loans to small business, get in there and compete with the banks every Monday morning?
Therefore, through our reregulation which was passed July 1, we now allow all financial institutions over a certain size to do an unlimited amount of commercial lending. Unfortunately the trust companies have not taken up the invitation. The insurance companies are looking at it. At least we have put the framework in place whereby the other competitors will start to breathe down the necks of the banks for that business. That is something constructive that we did. It will take a few years to get the account managers in place in these trust and life insurance companies, but hopefully they will compete with the banks.
These are just two of the constructive things we have done. There is a whole host of other things on the equity side that I have outlined. I believe as small business minister we have done more as a government across the range of about 18 different ministers for small business than any other government in Canadian history.


Mr. Robert D. Nault (Kenora-Rainy River):: Mr. Speaker, I just want to ask the minister in the short time that is available-
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Alex Kindy: I rise on a point of order, Mr. Speaker. You saw the member stand and you gave him the floor. I think it is unfair again. I was up.


The Acting Speaker (Mr. Paproski):: The hon. member for Kenora-Rainy River has the floor.


Robert Daniel Nault: Mr. Speaker, I have a list of horror stories as long as my arm. It deals with business people in Kenora-Rainy River who over a period of years have proven to their community, to themselves and to their employees that they are very capable of making a living and a profit.
In the last year or so the banks have changed their guidelines as to how they will allow loans to be approved to small business. Of course my concern is that it discriminates extensively against small businesses.
Could the minister for small business tell us what he has done about that particular issue? That is the reason why this particular debate is happening today. It is very simple. There is a major problem out there. We want it rectified. We want to know what the federal government and this particular minister are going to do about it.


Thomas Hockin: The member for Kenora-Rainy River raises a very important issue on which we have been working for the last 38 or 39 months on an almost regular basis. I talked with the Canadian Bankers' Association and heads of the major banks about their policies concerning loans. I think he is very right to mention it. It can almost be more important than anything else.
Since I talked to them in the past year the banks have guaranteed to me that they will no longer maintain outright prohibitions against regions, sectors, and all these things they were doing.
If they are doing this privately and the member has picked up that people in his region cannot get loans, I would like to know about it because they assured me they would no longer do that.


Dennis Joseph Mills: Mr. Speaker, I am happy to participate in the debate. I am especially happy to hear directly from the minister that he believes I have been attempting to co-operate with him over the last two and a half years in this very important sector of our economy, the small business sector, and especially in the relationship with banks. I

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feel I have been trying to be constructive in this particular area.
Just to put it in context, last December the Minister of Finance came out with his economic statement and announced the amendments to the Small Businesses Loans Act. At that time I stood and supported the Minister of Finance. We have increased the ceiling on sales for small business eligibility from $2 million to $5 million. We have increased the size of the loan from $100,000 to $250,000. The amendment has been made that a bank cannot ask for any more than 25 per cent of the value of the loan in terms of personal security, and there is a cap on the loan of not more than 1.75 over prime.
When all these amendments came to committee in February after the adjournment in January they were accepted. We as Liberals put forward a couple of these amendments. The government agreed and the bill went through the House in one day after it was reported back from committee. That is the reality of it.
During the committee the Canadian Bankers' Association representatives appeared as witnesses. They reminded the minister that for five years they tried to put forward these amendments to make the Small Businesses Loans Act more relevant and meaningful to small business.
Even though I want to give the government members some credit, I certainly do not want them to think they have really moved in this area in an expeditious manner. This severe recession has been going on now for a long time.
At any rate the bill has been passed through the House. It received royal assent in early April. Every time I stood up in the House on debate I told the government this particular piece of legislation was not going to work unless the banks were on side; unless the banks and the Government of Canada let the small business community know about it.
I had repeated assurance from the Minister of Finance and the Minister of State for Small Businesses that they were going to promote this particular piece of legislation. In fact we heard from several banks.
I have a Bank of Montreal press release dated March 31. The comments on the fax cover read: "As you can
see, we plan to aggressively promote this program". On the first $100,000 of a small business loan with the Bank of Montreal it advertises one point below prime. I think the Bank of Montreal has come up with an interesting formula.
I have another media press release dated March 22 from Scotiabank. In fact I see a handwritten note on this one right from the minister which reads: "Dennis, as you can see the Small Businesses Loans Act is starting to become a cornerstone for competition for the small business clients of the banks". Scotiabank is giving the small business loan at prime.
I have anther press release from Blair McRobbie, the vice-president of the Royal Bank and and on and on. As a matter of fact, last night I received a fax from the Bank of Montreal claiming it is also actively promoting this particular piece of legislation.
On the face of it as we stand up here in the House of Commons and are televised from coast to coast to coast you would think everything was okay. The reality hits when we go home to our constituencies. I sit in my office on the Danforth or walk down the street to Hampton Variety on Hampton and talk to Terry who runs the comer store about the relationship with the financial institutions in this country and his local banker. Day after day, case after case it is not working.
There is absolutely no connection between these press releases and the act and what is happening in the street. That is the reason for today's motion which my colleague from York West has put forward.
I think he was much more generous in his motion toward the government. I urged him to be much tougher on the government because I think it has failed miserably in its ability to manage its relationship in terms of motivating the financial institutions in this country.
I am not just talking about the banks. I am also talking about the credit unions. The government had the credit unions appear before this committee. The hon. member mentioned the insurance companies as well.
The bottom line is that there are 1.3 million small businesses operating out there. They complain about two things: red tape and shortage of capital. The banks know they cannot fire up that entrepreneurial spirit unless they give them money.
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We came in as the Government of Canada and every party supported the Small Businesses Loans Act to take the banks off the hook because 90 per cent of the loan is guaranteed by the Crown when a bank lends to a small business. Therefore what is holding them back?
Mr. Speaker, I want to suggest something to you in a very constructive way because I think the minister has done his best to try to move the Small Businesses Loans Act forward. I do not think he wants to see the Small Businesses Loans Act fail, but the fact is that it is failing.
As we were preparing for this debate, I reflected back on some of the experiences I have had and some of the bank people I have talked to. I have come to the conclusion that the basic problem here is one of attitude. I sincerely believe the financial institutions in this country have a real attitude problem. I have given the example before that if one goes into a restaurant for dinner or into a clothing store to buy a sweater or something one is greeted and waited on or served. The notion of service in a retail outlet is always there.
When people go to a bank, first of all they have to muster their courage-and they are the customers. I do not want to say that every credit officer is like this, but I must tell you that I hear day in and day out that the attitude, the approach in terms of bankers' service to the client is just unbelievable. When I say unbelievable, I mean unbelievably negative. There is no appreciation or very little appreciation for the contribution small business people in our communities make toward the total make-up of the economy of a community.
If a small business has just gone through this recession -and this has been a deep, deep recession-if anything it should be given a pat on the back for the resilience it has shown. Instead we have a situation out there right now where the attitude has not shifted.
Imagine a situation, Mr. Speaker, where you are a bank manager. You are going to loan money and know that 90 per cent of the loan is guaranteed by the Crown. I want to be constructive. I think the financial institutions of this country should re-examine their approach to service. I think bankers should do what we as politicians
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have to do. This is the boardroom of the nation, but when we leave this boardroom we have to go home. We go to our communities, we go to stores and we go door to door and listen. The reason we have two ears and one mouth is because we are supposed to listen twice as much as we talk. We must listen to the people in our communities.
The presidents and vice-presidents of the banks should try to do the kind of work we do for a few days. They should get out of those Bay Street towers or those big corporate commercial centres, get in their cars and do some cold calls. Just find a street where there is a small business.
Just imagine if Mr. Allan Taylor, the chairman of the Royal Bank of Canada was to jump in his limousine, go into a small business area, get out of his car, knock on the door of a small business and ask the receptionist: "Is your president or is your accountant here for this company? I would like to let your accountant know that I am here to see what I can do for him. I would like to see if he is satisfied with his banker. I would like to see if there is anything we, the Royal Bank"-or we the CIBC, or whoever the banker is-"could do to help this person grow his business and make more money so we can address the deficit and the debt".
The banks of Canada talk about addressing the deficit and debt of this nation until they are blue in the face. If they are really interested, then they should come to the party. Leave those ivory towers and make some cold calls. Find out what is happening in the streets the same way politicians a lot of businesses have to find out.
We talk about competition. The only ones not having to compete today are the banks. It is almost like a cartel. I say this with respect but I want to say it forcefully.
Last week I was reading the book The New Paradigm in Business. There is the Meredith Corporation, a Fortune 500 company. It is a very large company with $400 million in sales. That is the kind of thing a bank president or vice-president can relate to. The president of Meredith Corporation talks about the corporation's responsibility to those most disadvantaged in the community. It has a formula for working with those people.

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The interviewer asked Mr. Meredith whether he felt the corporation had a duty or an opportunity to do these things. Mr. Meredith answered:
An opportunity more than a duty. I am against those who say a corporation's only social responsibility is to its stockholders. I have heard a good answer to that which says that business is simply one part of a large and complicated ecosystem, which includes government, education, health care, really the entire social order.
For corporations to say our only responsibility is to stockholders is to deny our place in the ecosystem. We have a responsibility to support schools, social programs and the arts.
What I am saying to the banks is that they have to try to change their attitude. In any other corporation, an attitude change has to start at the top. Just like my leader is doing. He has been out on the bus for the last three weeks, on the highways and byways, the side streets and main streets, on the subways, in the plazas and high schools, in the hair salons and other small businesses. If the next Prime Minister of Canada can do that, then the bankers can do it too.
Bankers have to think of the new paradigm. They have to reconnect. It may not even be a good thing. Going in wearing a pin-striped three-piece suit might not be the way to go. They should try to get into a situation where they can connect with the pain and the real frustration. Try and figure out why there is a real lack of confidence.
This is where I think the government has failed. We have to get this country's financial institutions to reconnect with that sector of the economy which is going to lift us out of this recession. It is not going to be the GMs and the IBMs which are downsizing. It is going to be those home-based businesses, those Hampton Varieties, those hardware stores and small farms. That is where we are going to get the rekindled spirit. That is where we are going to get the job creation.
However right now they are on tender hooks because the financial institutions have them scared out of their minds. The only way we are going to change this is if the banks change their attitudes and style. For me, a style change in the banks means that they get out of the ivory towers and into the streets. Knock on the doors of stores. Go into the factories. Show some interest in clients.
I am sure it would shock many small business people if a big bank vice-president knocked on their doors saying: "Can I help you? Can I be of service to you? Can I help your business grow so that you can make more jobs, so that my deposits are more secure, so that I will spend less on taxes for UI and welfare?" For no other reason, the banks should do it for the sake of their shareholders.
I say to the leaders of the financial institutions: Something else will happen to you. Your spirit will change. You will feel good when you go home at night. You will feel good about the fact that you helped a small business that maybe only employs five people. This may not be as exciting as doing a billion dollar deal for some mega-corporation but I will tell you the feeling of satisfaction is much different when you give confidence to a small business person. It is 10 times the kick.
Imagine that the leaders of the banks did that and it spread through 7,000 branches? Imagine those 7,000 branch managers going out there with their files and business cards knocking on doors. There are 295 members of Parliament who do this every weekend and on our breaks from the House of Commons. We have to go out and knock on doors, go to the stores and listen.
Therefore when my colleague from York West today said to the government that we really think it failed miserably in motivating the banks, that is what he is trying to say. If the Minister of Finance and the Prime Minister called the bank presidents and said: "Look, let us do this in the 90 days", I think the spirit of this country could be changed by summer.


Jim Karygiannis: Mr. Speaker, I want to share a scenario with my colleague from Broadview-Greenwood.
A small businessman had just registered a company and was going to work out of his house. He said to me: "Come with me. I want to open a bank account. I went to four or five different banks and each gave me a different scenario of what I can and cannot do".
The first bank we went to was the National Bank of Canada. We sat near the counter and the bank manager did not even want to come out and see him. He sat there with the loans officer and wanted to open an account. The loan officer said that in order to open an account the

May 14, 1993

bank needed this, that and the other thing and the poor chap was providing them. The loan officer said $25 was also needed to cover administration fees for opening the account.
The small businessman said: "Hold on. I want to put money in your bank. You are going to turn around and invest that money and you are going to charge me for services and for every cheque I write. Why do I have to pay you $25?" The answer was that a credit rating was going to be done. The man said: "But I do not want to borrow money. I want to put money in".
So he went to another bank. "Here we run things differently", he was told. "We have to check your background. We have to check where you work. We have to check this". He said: "It does not matter where I work. I have a small company. I want to put money in".
Another incident with the same individual occurred just yesterday. The individual is in Canada and is working under a nine number. He has a social insurance number. He is not a claimant. He is approved in principle and waiting to be landed. His son sponsored him from inside Canada.
He approached the Royal Bank and was told that he could not get Visa through his business because he had a nine number. He said: "I am not going to borrow any money from you", but the reply was that he could not get it. So I picked up the phone and called the Royal Bank and it gave me a long song and dance.
When my colleague from Broadview-Greenwood says to go out to the public and meet the small businesses, I do not think the banks understand. I do not think the banks know what it is like to be in small business with the everyday troubles that are faced, the January-February blues when only $800 or $900 a month is made and $1,400 has to be paid out.
The chap in question is Mohamed Begg, one of my constituents. He opened a brand new business and paid cash for the merchandise. He wants to get a Visa from the Royal Bank. Royal Bank gave him a song and dance and finally said it could not do it but it would think about it. If you are nice to your banker, the bank will do it.
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Therefore, I stand up in this House and concur with what my colleague from Broadview-Greenwood has said. We members of Parliament go out and do those things so why can the bank managers not go out and do what we do?


Dennis Joseph Mills: Mr. Speaker, my comment will be very short. I know there are other questions.
My colleague once again has tried to bring to this House of Commons what is really happening at the street level. It reinforces the need for an attitude change.


Alex Kindy: Mr. Speaker, it was mentioned in the debate that the banks lend about 30 per cent of moneys to small and medium-sized companies and about 70 per cent to huge corporations like Olympia and York and other corporations that have gone under.
Now the government tells us it is happy that at least the banks will lend 30 per cent. How can we persuade the banks that instead of lending to foreign-owned companies and huge corporations that do not create jobs they should be lending to the small businesses in everybody's riding?


Dennis Joseph Mills: Mr. Speaker, I thank the member for his question. Right now I am imagining that I am looking right into the eyes of the chairman of the Bank of Montreal. It could be some other bank. We are not trying to put any specific financial institution on the spot here nor are we trying to single anybody out. We are not saying that people should not have a business plan. We are not asking them to take depositors' money and do something irresponsible.
What I am saying is that the banks should come into the new paradigm, the new approach to business and connect with the community. I believe when that connection is not happening that part of being government is that it is up to the Prime Minister to do something.
I had the privilege of working for the greatest Prime Minister of all time, Pierre Trudeau. I remember we had a desperate situation in 1981 and 1982. Week after week, sector by sector Prime Minister Trudeau brought people into the cabinet room and would listen to them. There would be an exchange and he would say: "I can do this, but you must do that. We must do it together". My colleague from York West is trying to make the point that that has not happened with this government.

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Fred J. Mifflin: Mr. Speaker, I want to make three very brief points and then I want to ask the opinion of the hon. member who made a very eloquent and substantial speech on a very pertinent subject in our country today.
I was not here for the beginning of his presentation but it is certainly relevant to me that from the period 1979 to 1989 small businesses, businesses with less than 100 people, made up 80 per cent of the jobs in Canada. Since 19891 believe they have made up 98 per cent of the jobs. Yet in that period loans to small businesses have gone down 11 per cent and have gone up 11 per cent to big business.
Second, last year I believe the banks made a profit of $1.8 billion. They made that profit despite a loss of $600 million to 900,000 of our 1.3 million small businesses, that is 70 per cent, but $2 billion to one company, Olympia and York. It shows where the priorities are.
Third, I deal a lot with the Federal Business Development Bank. Quite frankly I find it very good to deal with, but I am concerned about some of the policies. Let us look at the statistics. When this government came to power the average loan was $175,000 to 4,100 businesses and last year the average was down to $153,000 to 3,816 businesses, a reduction of about 10 per cent either side.
I want to ask the hon. member, in view of these statistics and some of the other things he mentioned what directions would he want the government to give the Federal Business Development Bank to cope with, for example, these three cases in Brooklyn in my riding, Grates Cove and Old Perlican. We are looking for around $50,000. We cannot get it. What direction can we give to the Federal Business Development Bank to assist in this area?


Dennis Joseph Mills: Mr. Speaker, I obviously cannot deal with the specifics of those cases but I want to try to amplify the point I was trying to make.
There is nothing tougher on a politician or a business person than a cold call. It is kind of nice in the boardroom, the constituency office or the House of
Commons office, but then we have to leave and go out and make some cold calls. We walk down the street and ask people how they are doing. We ask them whether they are satisfied with our work as their MP, or with our product or service. It is tough to make cold calls.
I believe that commercial credit managers, and there are 7,000 to 10,000 of them across this country, must get back into the business of making cold calls and reconnecting, and then we can get competitiveness going. That is when we are going to solve the problems my colleague mentioned in terms of his specific client cases.


Robert Daniel Nault: Mr. Speaker, on a point of order. Based on the fact that we have a very relevant debate going on here with my colleague and that my colleague has been very much involved in this area for some time I have a few questions I would like to pose to him. I was wondering if we could get unanimous consent to extend the discussion.


The Acting Speaker (Mr. Paproski):: Is there unanimous consent?


An hon. member:: No.


The Acting Speaker (Mr. Paproski):: I regret there is not unanimous consent. The hon. member for Quebec-Est.


Marcel R. Tremblay: Mr. Speaker, I welcome this opportunity to provide an overview, for the benefit of opposition members and for Canadians across the country, of what our government has done to assist the small business sector. In fact, the record reflects our government's unparalleled and sustained commitment in this respect.
Judging by the wording of this motion, the hon. member opposite is attacking not only what we have done but small business itself, although that should come as no surprise, considering the opposition's failure to grasp the most elementary principles of the new world economy.
Small businesses are a major source of employment in the new economy. Between 1978 and 1990, businesses
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with 50 or fewer employees created 2.5 million new, full-time jobs, or about 80 per cent of all new permanent jobs.
That is why our government has taken a number of steps to create a climate conducive to small business development. For instance, federal tax rates for small businesses are lower in Canada than in the United States. Canadian small business corporations enjoy a special deduction that reduces the federal income tax rate from 28.8 per cent to 12.8 per cent, including the 3 per cent surtax on the first $200,000 of active business income.
For the sake of comparison, special income tax rates enjoyed by small businesses in the United States apply only to the first $75,000 of business income. Any income exceeding that amount is taxable at the full rate of 34 per cent, while a 5 per cent surtax is applied to income between $100,000 and $335,000.
The lifetime capital gains exemption provides an incentive for individuals to invest in small business corporations. Capital gains realized on the disposition of qualified small business shares are eligible for an exemption of $500,000. This measure offers some very definite advantages to a couple, since both spouses can file separate tax returns for business income. In this way, capital gains of up to one million dollars are eligible for an exemption. In addition, only 75 per cent of capital gains exceeding the exempted amount are subject to income tax.
In the United States, the current tax system offers no capital gains exemption or special tax rates comparable to those in Canada. In the United States, the full amount of capital gains is taxable.
The Canadian tax system also provides some of the most generous tax incentives for R and D. To help small businesses access new technologies, the government offers a 35 per cent refundable tax credit that may be applied to most R and D activities.

By comparison, the general R and D tax credit rate for larger companies is 20 per cent. Elowever, I should point out that this still means that Canada provides the most generous tax support for R and D among all the G-7 major economies.
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This is another aspect of our federal tax system that provides specific benefits to small businesses. In the United States business income distributed as dividends is effectively taxed twice. Companies are taxed on this income at the corporate rate and the shareholders are taxed at their personal rate when they receive dividends.
The Canadian tax system alleviates this double taxation by providing shareholders with the dividend tax credit. This credit means that dividend income is taxed at a much lower rate, including provincial and state taxes. The combined personal and corporate tax rate in Canada on incomes qualifying for the small business deduction is just over 45 per cent compared to about 60 per cent in the U.S.

I have just described some of the mechanisms in Canada's tax system that provide much needed support for small businesses. However, we have also been aware of the serious financial and competitive pressures that surfaced in the last recession and the slow recovery that started in 1992. Considering these harsh realities, the Minister of Finance introduced new initiatives.

In his economic statement last December he launched a small business employment investment package to help small businesses across this country modernize, attract financing, grow, and create jobs.
Let me remind the opposition of the highlights of this package.

To encourage small businesses to expand and to hire new employees, the government will pay any increase in unemployment insurance employer premiums in 1993 over 1992, up to a maximum of $30,000 per enterprise. Any business whose employer share of UI premiums in 1992 was less than $60,000 will be eligible for this assistance.
This means that for most small businesses, UI premium costs will be capped at their 1992 levels. In fact, most start-up businesses will have a UI premium holiday for 1993. This will reduce the cost of hiring additional employees by up to $1,600 per employee.
A 10 per cent investment tax credit, for one year, will be provided for machinery and equipment purchases. It will apply to small businesses in the following sectors:

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farming, fishing, mining, oil and gas, manufacturing, construction and long-distance transportation.
The rules for RRSP investments and labour-sponsored venture capital corporation funds will be simplified and financing options expanded.
The loan limit allowed under the Small Businesses Loans Act will be raised to $250,000.
The Small Businesses Financing Program announced last February will be extended to the end of 1994.

Let me point out that our 1992 action was not just limited to small business itself. We also took targeted steps to boost consumer confidence and encourage home construction, actions which have meant new customers and activities for many small businesses.
We found that people could not become homeowners, not because they could not afford to buy a home but because they did not have the downpayment. So we took steps to help them overcome that obstacle.
Just before the February 1992 budget was brought down, the Canada Mortgage and Housing Corporation reduced the downpayment required to be eligible for its mortgage insurance from 10 per cent to 5 per cent. In the February budget, the minister announced that Canadians could withdraw funds from their RRSPs, without penalty, to finance the downpayment on the purchase of a home. In last December's economic statement, the minister provided a one-year extension for the Home-buyers Plan.

This action helped boost housing starts last year by 6.3 per cent, and housing starts reached an annual level of 170,000 units this April. This is an increase of 17 per cent over the first quarter level.
I am focusing my remarks on targeted actions to make Canadian small and medium businesses more competitive and secure, but I also want to talk about another key part of the growth equation.

First, the theorem: Laws, subsidies and tax relief cannot create prosperity. Prosperity is the result of
market forces, and the private sector is in the best position to create prosperity. This was the philosophy behind the government's agenda for economic renewal, which has guided us since we came to power in 1984.
Since then, we have consistently worked on implementing the fundamental changes that were necessary to build a more competitive, market-oriented economy, an economy with less state intervention, a more effective and efficient economy that would stimulate investment and job creation. Results have included a number of invaluable benefits for small business.
For instance, we deregulated the financial services sector to encourage competition and the availability of new products and services. This reform has helped financial institutions increase their effectiveness, both on the domestic market and internationally.

There is an even more important change we have worked to implement, one that relates directly to the financial health of the small business sector and its access to capital, which the hon. member is so concerned about. This is our commitment to bring down inflation.

Our measures have reflected a basic economic truth that sustained economic growth and price stability go hand in hand.
Inflation must be low, if people are to benefit from lower interest rates. Keeping capital costs down attracts investment and high-growth competitive businesses that create the jobs Canada needs.
We have taken vigorous action by setting and releasing clearcut objectives and following a policy of wage discipline in the federal government in order to reduce inflation.
And we succeeded. For instance, the average inflation rate for 1992 was 1.5 per cent, the lowest in 30 years. As a result, there was a spectacular drop in the bank rate, which fell 8.5 points from its peak in May 1990. Rates are now at their lowest level in 20 years.
For a business with a $100,000 loan repayable over 10 years, lower interest rates will mean a savings of approximately $475 per month.
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Consumers are also benefiting as a result of this situation. Some mortgage rates are now down to 5.75 per cent, something we have not seen in 35 years.
I may add that the spread between prime rates in Canada and the U.S. has dropped to 25 percentage points, from 475 percentage points in May 1990. The Bank of Canada rate is down as well, to 5.56 per cent, more than 300 percentage points below its latest peak reached last November.
I would like to mention one more area where we have been able to provide support for small business.
I am referring to manpower training, which is vitally important if we are to maximize our R and D efforts. Our manpower training resources are particularly important for small businesses which often lack the in-house resources of large corporations.
To meet this challenge, we are increasing assistance for worker adjustment and training. During the coming year alone, we will spend $3.8 billion in this area, 65 per cent more than in 1990-91.

Let me conclude by stating the obvious. There is no merit in a motion that condemns this government for its treatment of small business.
If the hon. member wants to truly speak for the interests of this sector he should be congratulating the government for the special initiatives we have put in place to help small businesses and small firms go out and create new jobs.
Yes, there are companies that are still struggling just as the world economy is still struggling, but their chances are better and the future of their employees is brighter because of the action we have taken.

Canadians realize that providing for economic growth and building a house are much the same, in that both require a strong foundation before going on to the framing and finishing.
I am satisfied that we have built the foundations for economic growth: we have put in place a structure that will help Canadians, and especially small business, to
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succeed. This year and in the years to come, there will be real benefits, and Canada will continue to provide, for its people, a home that is the envy of the rest of the world.
Mr. Speaker, I will now answer questions if there are any points hon. members would like to raise.


Alex Kindy: Mr. Speaker, I listened with interest to the speech by the hon. member for Quebec-Est, in which he provided a description of the so-called financial policy of the Canadian government since 1988.
What the hon. member failed to mention is the impact of the GST on small business. As we all know, small business was hard hit when the GST was introduced in this country. We have seen businesses go bankrupt across the country, due to the fact that the GST added a second tax to one that already exists in some provinces, and I am referring to the provincial tax.
The GST has been very damaging for businesses in the tourism sector. Tourism has practically disappeared as a result of the introduction of this tax. I wish the hon. member would explain why the government did not, for instance, exempt the tourism sector from the GST. People no longer go shopping in Canada, and they are starting to shop in the United States to avoid the GST. We are not competitive in terms of productivity, because of the GST.
All these factors have been very damaging for small business. Small and medium-sized entrepreneurs have been greatly penalized by the fact that they had to collect the GST. Recently, statistics showed an increase of 1,400 employees at the Department of National Revenue, compared with 1982. These people were hired exclusively to collect the GST from small businesses. Large corporations did not suffer, because they had the resources to collect the tax.
I wish the hon. member would explain why his government is doing nothing specific for small business.


Marcel R. Tremblay: Mr. Speaker, Hansard for last Monday, May 10, right here in this Elouse contains a very detailed explanation showing how Bill C-112 makes some adjustments to help the tourism industry. I would not want to repeat everything I said, because it is quite well explained, I believe, in Hansard for May 10.

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Nevertheless, I would like to remind the hon. member of what we did to eliminate an outdated hidden tax that had been implemented about 50 years before and was completely inadequate. In today's environment, with the globalization of markets and products, we needed a much more up-to-date tax so that our exporting manufacturers could compete with other manufacturers around the world to maintain the Canadian jobs that depend on our exports.
If you allow me, Mr. Speaker, I will recall some reasons that led us to change this tax. We eliminated this inequitable manufacturers' sales tax and replaced it with the goods and services tax which reduced operating costs because businesses are now allowed a refund on sales tax, which was not the case before.
We simplified the management of the GST as much as possible, and I repeat that Bill C-112 made this transition even easier. I said in my presentation that we are always listening for new methods and new ways of applying the tax and we will always be very pleased if the tourism industry, with the help of our officials here in the Department of Finance, finds ways to make it easier to apply so that the industry can be even more dynamic. We will be very receptive to their suggestions.


Alex Kindy: Mr. Speaker, I thank the hon. member for his explanation, but I would still like to add that the manufacturers' tax he is talking about, which some thought outdated, applied to very few exports; it was hidden, but there were all sorts of agreements between the Department of Finance and business people. For example, as we well know, the tax could range from 2 to 13 per cent, so it was variable. Most exporters paid very little, perhaps 1 or 2 per cent.
I remember veiy well when the present Minister of Finance was in Calgary and spoke to people in the oil industry about the manufacturers' tax and he told them, "You will be glad, because the manufacturers' tax will be abolished and you will be able to buy much more cheaply." At that time, the manufacturers' tax was 13 per cent.
The president of the petrochemical association answered the minister: "Mr. Minister, this tax does not apply to our products". The minister was so surprised, because it was believed that the tax applied directly to all products. What happened with the GST is that last year,
as I just said, 1,400 new inspectors had to be hired to control the GST.
I would really like the hon. member to give the government the message to abolish the GST, especially in the tourism industry which is suffering in Alberta as well as in Quebec.


Marcel R. Tremblay: Mr. Speaker, very briefly, the speech I referred to a little earlier is on page 19158 of Hansard for May 10.
We have said many times that the new tax is fairer and more equitable. The old tax had many exemptions-as many as 22,000. So you can image how complex it was for those who had to administer it. Experts on the subject always indicated that the average tax rate most frequently encountered on products was 13.5 per cent, much more often than 2.5 per cent. It is based on these assessments and these data from experts that we say today that this hidden tax was of the order of 13.5 per cent; it was replaced by a simpler, fairer, more equitable tax of 7 per cent on goods and services.


Robert Daniel Nault: Mr. Speaker, I want to take this opportunity to thank my colleagues from York West and Broadview-Greenwood for bringing a veiy important topic to the floor of the House of Commons.
Not too long ago in this place we talked about Bill C-99, the Small Businesses Loans Act. During that whole process some of us had an opportunity to stand and suggest to the government that there were problems for small business as it relates to the relationship with financial institutions, in particular the large banks.
The minister at the time suggested to us that this particular piece of legislation was going to help small businesses, that it was going to send the message to the banking community that it should start participating with small businesses to help them get involved in getting the economy rolling again, supplying jobs, and of course the revenues and the spin-offs that come from that.
I want to quote a local northwestern Ontario bank manager. This is dated April 8, 1993. That was after the legislation was passed, put in place and up and running.
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It says: "With respect to MP Bob Nault's comments in the Daily Miner & News of March 29, we fully recognize that small businesses are the engine of recovery and the principal creator of new jobs in Canada. Nine out of ten companies in Canada are small businesses and since 1984 this sector has been responsible for creating 80 per cent of all new jobs". This is nothing that we did not already know.
"We are committed to the small business sector. Small businesses is a core business for us now and in the future. Small businesses make up 90 per cent of our business clients and account for $7 billion in outstanding loans. The average loan is $62,000. Northern Ontario is not treated as a depressed area at Royal Bank. In fact the economy in northwestern Ontario has withstood the recent recession much better than many parts of Ontario. By far the largest percentage of small business loans are approved locally and loans to the business sector in the northwestern area and are on the increase".
I read this verbatim because I want to start the debate by reading a couple of letters I have received and a couple of articles and the headlines of those articles. These titles read: "Bankrupt-Canada's chartered banks are choking the life out of the country's small businesses and the economy; Canadian banks' loan pricing draws criticism; U.S. study finds higher risks undercharged, lower, overcharged; Small business turns tables, leans on banks; Small business is sceptical as Ottawa bets new loan program will end credit crunch".
As can be seen, the concerns are still out there. The reality in the small business community is that not much has changed since the Small Businesses Loans Act went into place. The banks, as my colleague from Broadview-Greenwood has said, have not changed their attitude toward the most important engine of our economy, the most important sector in order to create employment and create the wealth that Canadians expect.
Of course I did as all MPs should do and sent out a massive mailing to the business community in Kenora- Rainy River telling them that the Small Businesses Loans Act was now in force and to take advantage of it. I told them to go down and see their banks, talk to them about it because there is a 90 per cent guarantee by the
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federal government, that there should not be a big problem as long as they have a fairly viable business. They may be struggling but if the business has a good track record in the long run, they can use this Small Businesses Loans Act to get over the hump and in some circumstances help to expand their operation.
Well I did that, as I think all MPs in this House must have, and I was really quite shocked by the reaction that I got from that particular mail-out. I started getting phone calls in my office almost immediately after I sent that out and here are some of the things that people said.
This is from a tourist outfitter whose name is Pat. She called to tell me her horror story with the CIBC in Emo. Her business is worth $600,000 and she has had an operating line of credit of $25,000 for the past seven years. The bank, fortunately or unfortunately depending on how you look at it, got a new bank manager. She has been advised that effective June 15 of this year her line of credit would not be renewed. The interest rate was increased by 1 per cent and the administration fees went up from $25 per month to $65 per month. That is a 260 per cent increase. The manager will not discuss options with her nor is he prepared to do anything about that particular policy or regulation of the CIBC locally.
Just to put this in context, Pat tells me she has two mortgages which will be paid off in two years and this will give her approximately $48,000 a year in extra cash flow. In essence we have a $600,000 business and a bank cutting off her line of credit of $25,000.
I must explain to members here or any people at home listening that a tourist business has to supply food to individuals who come to their camps. They need a line of credit on a regular basis in order to operate. Without it you cannot be in business. That is one example.
Let me give another example. This lady owns a small business which is a beauty salon. She owns her own business and her own building. She estimates that she owes anywhere between $4,000 and $5,000.
She went to the CIBC looking for a small operating line of credit and was turned down by the bank. This particular businesswoman owns her business outright, owns the building, owes a small amount of about $4,000 or $5,000 and could not get a line of credit. Can you

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imagine how we are going to operate in this country if that is the reality we are facing?
I want to give an example that is really interesting. I have many here, and I know I only have a short time, but I want to throw this one at you. This is a brand new business. It is peat moss company and I do not mind telling you it is a real big issue in my riding right now.
The reeve of Barwick called to tell us about the problems this new company was having in securing a line of credit. The company is looking for a $50,000 line of credit and the banks are asking for $51,000 in cash collateral in order to give it the line of credit. This is the interesting part. Foreign investors are prepared to back the peat moss company to the tune of $1 million. What I am saying to everyone out there is that this company has all of the collateral it possibly could want but still is refused the line of credit for reasons which we do not understand.
We all have business contacts and close friends. I asked some very prominent business people in my riding to give me an explanation of what is going on with the banks, and what we can do, why are they doing what they are doing?
Let me tell the House what I was told. It was told to an acquaintance by someone in the higher echelons in the Royal Bank at the regional level. The Royal Bank has placed the small business community in three specific categories. Just so we can let the House know what this is all about, the person who told my friend about this also said that if this information was ever repeated he would deny it, because they would not admit this in a public forum.
The three categories are as follows: Class A is a business which will earn the bank in excess of $500,000 in service charges, interest carrying charges, fees, et cetera; Class B is a business which will earn the bank between $300,000 and $500,000 service charges, interest carrying charges, fees, et cetera; and Class C, all other businesses which will earn the bank under $300,000 in service charges, interest carrying charges, fees, et cetera. Ninety per cent of the small businesses in this country are in Class C.
Everyone can understand why the banks would not want us to know this publicly, because of course this situation suggests that they treat their small business
clients and their clients in general differently based on what they can do for them. This is a situation that the minister for small business can look at to try and help us to explain to the banking institutions, the financial institutions the importance of changing their attitude.
It seems to me that we continually get up to suggest that there is something wrong out there and the government has to do something about it. If the government and we as a community continue to bury our heads in the sand we will not see the recovery that we expect.
In the short time I have had to speak I hope the government has listened when I say there is still a problem out there and it needs to talk to the financial institutions in order for them to do something about it.


Sergio Marchi: Mr. Speaker, I was listening to the remarks of my colleague from Kenora- Rainy River who talked about some real experiences that unfortunately mirrored some of the experiences that I talked about in the House of Commons today.
He talked about businesses that had made a super effort in recessionary times in paying down their loans substantially, only to have a notice at the end of the month telling that business to pay the loan in its entirety when, in fact, that free capital could be used to sustain the business during some very difficult times.
We have had very similar experiences in my riding. That is why I proposed that the banks at least consider the start-up of a joint venture of an organization outside the banking network and the branches to try to create a new business culture that may be more in sync with the needs of small business.
For instance, in my riding a restaurateur is now adjacent to a new recreation facility. In order to tiy to penetrate that new market and perhaps the yuppie generation he wants to reface his restaurant so that he can also play into the fast food, vegetarian, salad bar type of situation. He has been in business for 15 years and has done very well. For 15 years he has been with the same bank, and to try to reface to meet a new market niche he needed about $125,000. He was refused.
This tells me that the banks do not take the time locally to understand the 15-year commitment this person has had, the 15 years of success, the new niche that is now presented to this individual that he wants to penetrate, and therefore he wants that bridge financing from his bank. It seems to me that the bank in that situation, and many others, is too far removed from
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being connected, as the member for Broadview-Green-	$400,000 for a house, something is desperately wrong out
wood said, to the real life experience.	there.
I am just wondering if perhaps a new business culture is in fact needed in addition to a new business attitude.


Robert Daniel Nault: Mr. Speaker, I appreciate my colleague's question.
I have been thinking a lot about that. We of course recognize that there is a very large problem as it relates to banks. As a member of Parliament and as someone who is in charge of doing the business of the people we ask ourselves how do we rectify that problem. Do we change the Bank Act? Do we basically put the hammer to the banking institutions and tell them: "This is what you're going to do?" Or do we stand up in the House like my colleague from Broadview-Greenwood has today and suggest that the banks get their act together, that the banks change their attitude, that the banks get into the real world. Those are really the options.
I will tell the House why I believe that the banks are so removed from reality. The minister of small business likes to stand up in the House and talk about FEDNOR which is a regional development program. I know for a fact that FEDNOR, our regional development program is giving loans to businesses which should be able to get a loan from a regular banking institution. They cannot so they go the FEDNOR, our regional development program, and get the dollars from them.
We also have other programs created because of the banks' lack of understanding of what is going on around them. We have Community Futures, we have the community development corporations that are all built around our communities. That to me says that something is wrong.
If I have a perfectly legitimate business, like my colleague has suggested, which has a great track record, which has proven to be able to supply jobs, which has proven to be a member of the community and wants to see his or her business prosper and cannot get a small $125,000 loan, but I can turn around and get $300,000 or
I suggest to the government that we have two choices. We can be nice to the financial institutions and bring them in, as Mr. Trudeau did, and give them a little lecture about the realities of this country and the importance of what these corporate citizens should think of us as a sovereign nation. Or we will have no choice but to legislate these people into doing what we believe is their mandate and that is to be a player in making sure that the economy goes and be a driver of the engine and not sort of a passenger waiting to see what happens on the side of the road once there is an accident.
I want to say in conclusion that I have really enjoyed this debate. It is a great motion. I think we should get on this topic as often as we can, simply because people out there expect us as parliamentarians to do something about this problem.


Mr. Mark Assad (Gatineau-La Lievre):: Mr. Speaker, first of all, I would like to congratulate my colleague from Kenora-Rainy River for his explanation of how to help small and medium-sized businesses in this country. This is a major concern in our party because we see that the small-business sector is the driving force of this new economy we have to put in place in Canada.
I come from a family of entrepreneurs, not big ones but rather small ones, so to speak, and we have had this kind of problem in the past with getting financing from the bank to start up a business. We know the frustration. We know about the paperwork and the banks' lack of understanding of small and medium-sized businesses in our society.
The figures speak for themselves, as we say, and that is very obvious when we see that 80 per cent of jobs in this country are generated by small and medium-sized businesses. These past few years, they have even created 90 per cent of new jobs in Canada. So, knowing that one sector of our economy, namely small and medium-sized business, accounts for 90 per cent of the new jobs created, one would think that the government would pay more attention to it. But that is not what has happened.

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There is another statistic that seems almost appalling to me: 70 per cent of the business loans made by banks are to big businesses like multinational and transnational corporations; barely 30 per cent of loans go to small and medium-sized businesses, while they create over 90 per cent of the jobs. If these figures are not telling enough for a national government, I wonder what it is going to take. Sure, banks are there to make a profit. No one is disputing the fact that they are interested in making profits. But when you look at the role of a national government, we have the power to tax and to legislate. All Canadians would benefit from the government ensuring a fair balance nation-wide, but this is not what happens. We hear things such as: "The market will decide", or "we will let the market conditions decide-", but it does not work that way. We have ample proof of that.
We not only need a new policy but also a new determination and the political will to say to the banks: Now, you must think about the well-being of all Canadians. It goes without saying that small and medium sized businesses represent, for Canadians in general, the best avenue to improve our economy and to provide jobs for those who are qualified and who are looking for work. This is what our role should be.
Like my colleague from Kenora-Rainy River indicated, if necessary, we will legislate on banks and we will tell them that their most important role is to have funds available for small and medium sized businesses. It cannot be left up to the manager of each bank or to committees to decide whether a small or medium sized business will get help. They look at their balance sheet and then the paperwork follows. Things can no longer be done in this fashion. We need a very coherent and easily understood policy for everybody, and one which these people can benefit from.
Too many small and medium sized businesses have difficulty getting a line of credit from a bank, as well as a loan. Too often, when these businesses experience the least bit of problem, the bank will immediately insist that it gets paid, instead of proposing a plan which could be based over a year or two, in order to give the business a chance to increase its sales or to restructure its activity to survive. Let us not forget that jobs are at stake. But this is not what we see. We see too many small and medium
sized businesses which are literally at the mercy of banks and which are forced to dismiss people or lay them off. This is not the way to solve our problems.
Small and medium sized businesses also play a vital role in the field of high technology, inventions and innovations. There is ample proof that this sector of our economy is very much at the forefront. Of course, if we want to be part of a global market-this is the buzzword around here, we talk about globalization-we must get going. I submit that the time has come to take drastic action to cure our big problems, even if this means that we must do things which may be considered radical today.
In the past, there were changes that seemed very radical at the time, particularly during the depression, but which would be considered quite ordinary today. The big thing we have to do today is look at that part of our economy which is most beneficial for our country. Obviously, as the figures show, small and medium-sized business will certainly be the sector of our economy that will get us out of this depression. Some people would have us believe that we are in a recession and that we are getting out of it. I am sorry, but there is no evidence of that. The facts show that we are in a depression.
Small and medium-sized business can get us out of this depression. How will we do it? By giving them what they need most, making funds available to them. It does not necessarily mean asking any comer, "Do you need money? Well, here is some." That is not what we are asking. We are asking the government to set rules and insist that the banks implement this new policy. We will insist, we can do it and do not forget, that we have the power to tax, the prerogative to tax and to legislate. The government should not be at the mercy of the banks. Really, it should be the opposite, because we represent the whole country.
The figures from last year showed that small and medium-sized businesses failed more than in the past. The chartered banks lost nearly $600 million in bad loans. However, they lost $2 billion on one single customer. The chartered banks, with some customers, lost $2 billion on Olympia & York or the Campeau Corporation, over three times as much as on all small and medium-sized businesses, which have far more employees than those companies.
May 14, 1993

So you see, Mr. Speaker, there is no balance, but it is our role here to ensure balance in our economy. Until this balance is established, we will have to believe in miracles, that overnight, by some chance, the economy will suddenly recover. That is not true; that is not what is lacking. It will take policies, but especially, as I often repeat, political will so that our financial institutions, especially our banks, think of our whole country and all our fellow citizens, to make the economy recover.
We have great abilities. We must invest in people so that they can acquire technical knowledge or trades, and that is our next step. One thing the next government will do, and we will be in power, is to inaugurate a new era in our country's economy, because the banks will have to co-operate with the government to ensure that small and medium-sized business is recognized for once as the engine of our economy.
If this change is not made in the next few years, if radical policies are not put forward, we will be at the mercy of our financial institutions. We will be at the mercy of our southern neighbour who tends to monopolize everything. It is essential that we have the determination and conviction to represent all our fellow citizens, not the big interests, but the interest of every Canadian, to give them the opportunity to get a job and to progress in our country.


Robert Daniel Nault: Mr. Speaker, I would like to ask my colleague a very important question. It is one that I have been thinking about over the last number of years.
When members of Parliament go back to their ridings people do not let them off the hook very easily regarding government policy. Members on the government side know that when they go back to their ridings they are accountable.
When members get there they have to explain to the people why the government implemented particular legislation and why it went in a particular direction with regard to the economy or the country in general.
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One of the concerns I have had, being from northern Ontario, is that all the policies and all the regulations of the banks with regard to northern Ontario are made in Toronto, Montreal and the major centres.
There are 7,000 credit managers who basically are not calling the shots at all. I am asking a very legitimate question. What are they doing there then? Are they just pushing paper? What are they doing if they do not have the ability to go down the street to talk to a businessman or woman and say to them: I know you, I have seen your record, and you do not fit the criteria from Toronto but I know you are capable of doing it because I have seen you in action?
I want to mention a quote by a friend of mine who wrote to me about a particular statement a bank manager made. The bank manager said that there are a lot of decisions made regionally. This is what my friend said: "You state that things are handled on a local level. Last year our line of credit was reduced. When we questioned this we were told that the local branch's hands were tied and that Burlington had the final say. We phoned the Burlington office and were told that it does not deal with customers. A number was given for our area and then we made arrangements with the person there to talk to him".
Would my colleague not think that it would be more appropriate for these people to have a little more authority and the ability to make decisions in regions like northern Ontario, which are much different than the region of Toronto?


Mark Joseph Assad: Mr. Speaker, the hon. member's question is very relevant. I remember when I was in the National Assembly that on several occasions, when we were talking about regional development, it was said that when businesses in remote areas needed capital, they were at the mercy of analysts from Montreal or somewhere else. Businesses in remote areas face some very specific problems. Of course, the people who analyse the files in Montreal are not familiar with these problems or with local attitudes, so they cannot really say whether a business will be successful. They look at the figures and the profit margin, and that is it. There is a lot more to be considered however.

May 14, 1993
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The hon. member for Kenora-Rainy River is right. Our new policy will have to acknowledge the fact that remote areas have specific needs, and we must find a way to ensure that funds are available for these regions. That is all they want. They do not want main offices to locate in remote areas, but they do want funding to help develop their economy. If capital is not available, they cannot expand, which applies to businesses in urban centres as well.
To answer the hon. member's question, an analyst 500 miles away is certainly in no position to predict or determine whether a business will be successful.


James Capsey (Jim) Karpoff: Mr. Speaker, I am pleased to speak this afternoon on a motion concerning how we can support and encourage the growth and development of small and medium sized business in Canada.
There are a number of aspects to this. I want to review where we are in terms of our economy and job creation as they relate to small and medium sized businesses compared to the job creation that has taken place in large corporations.
At the moment we have a situation in Canada where unemployment is in excess of 11.5 per cent. In some provinces it is close to 20 per cent. Even the official unemployment rate is underestimated by at least 25 per cent to 30 per cent because people have withdrawn from the active labour force, have become discouraged and are no longer considered within the labour force.
As of March of this year, there were 2.6 million Canadians receiving social assistance. This is a phenomenal number of people now depending on public assistance. Of course the reason is as a result of two things. One is the growing unemployment and the second is the diminishing availability of unemployment insurance.
When the government dealt with the economy in a manner that was going to create unemployment in order to protect unemployment insurance, it of course tightened the rules and cut down the benefits in order to dump people off unemployment insurance on to income assistance. That simply drove up our income assistance cost in the country which the government was also
responsible for on a 50 per cent basis. Then it brought in legislation which limited its responsibility to Alberta, British Columbia and Ontario.
Poverty in this country has now reached 4.2 million people who are living below the poverty line. It is appalling that in this country there are 1.2 million children are living in poverty.
Bankruptcies are dramatically up over the last number of years. The rate of bankruptcies continues at a pace of over 7,000. Bankruptcy is not just a statistic. It is a real tragedy for individuals and for companies.
The economic growth forecast is down. The Canadian dollar has fluctuated. The debt and the deficit continue to climb. Last year at this time we were being told by the Minister of Finance that the deficit would be $28 billion. It turned out to be $35 billion. He was out $7 billion, 25 per cent. Any other Minister of Finance who was 25 per cent out in his estimates would have been asked to resign.
Our deficit has climbed to $460 billion, including a $10 billion oversight that the finance department forgot to count previously.
There are many things happening in terms of economics as it impinges upon medium and small businesses. With regard to job creation, it is clear that over the last number of years it is really the small and medium sized business that have been the generator of jobs. Over a 10-year period, companies employing less than five people have been the biggest generator of jobs; 1,200,000 jobs. Those employing less than 20 people, between 5 and 20, created another 650,000 jobs. Actually corporations that employed over 50 people over the last 10 years have created less than 375 jobs.
We know that most foreign takeovers have not resulted in investment in new jobs in this country. They have simply been taking over existing companies, often closing those companies and decreasing the pool of employment rather than increasing it.
Medium and small businesses have generated the kind of economic activity that is necessary to create jobs. There are many things happening to medium and small businesses that are as devastating as some of the inadequacies of our lending institutions in providing them with a line of credit.
May 14, 1993

I look at my riding of Surrey North and at what has happened to a number of businesses in that community over the last three or four years. Free trade in particular has been devastating to them. We lost a big winery. Our last food processors in the lower Fraser Valley have closed. That threatens all of our small agricultural businesses and farms that specialized in growing cannery vegetables and fruits.
It has had a tremendous impact on employment. It had a ripple-down effect where industries such as canners and processors closed because they can move across the line cheaper and ship back in. It removes not only those jobs but transportation jobs as well as all of the stability of market that has been built into the small food producing farms.
We then have big companies like Hawker Siddeley which owns a subsidiary in my riding called Kockums, a manufacturing operation. It is a sawmill equipment operator. I have an article here that came out a week ago in which the company is congratulating itself for its bold move which has increased its profits. What was its bold move? It bought out a competitive company in Hot Springs, Arkansas, bought out another on in Portland, Oregon, closed its Surrey operation and shipped its business down across the line. That is what is happening to small and medium-sized businesses, particularly when they become subsidiaries of multinational corporations.
Hawker Siddeley is very proud that it is now in a much better financial position because it closed its B.C. equipment manufacturing plant and moved it down across the line. There are some interesting things about it. If it had spent the same amount of money on capitalization in the Surrey plant that it spent acquiring the plant in Arkansas, some $30 million, the Surrey plant would have been competitive and we could have had an export business instead of an import business. Of course it says in bold print that it is keeping its sales offices and parts departments operating in Canada.
Small and medium businesses are under threat from a number of things. One thing that makes Canadian small and medium-sized businesses competitive is our social programs. I will come to that in a minute. I also want to take a look at what is happening in Canada in terms of the threat to social programs.
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If you ask any small businessmen what advantages they have in Canada compared to their counterparts in the United States, they will immediately say that we have a national health care program. A business in the United States often has to provide health insurance for its employees that runs into hundreds of dollars a month.


An hon. member:: That is why they are not competitive.


James Capsey (Jim) Karpoff: That is right. That is why they are not competitive.
We now have an attack on our health care system. If our health care system goes and we end up with a two-tiered health care system our companies are going to have to provide their employees with the same type of health care coverage as the Americans.
There have been two threats to our health care system over the last period of time. The first was the cutbacks in transfer payments. Transfer payments have been reduced steadily over an extended period of time. It is important for Canadians to understand that it is not the Tories who started the cutback of transfer payments for health care. It was the Liberals who started the cutbacks to Canada's health care system.
In 1977 they forced the provinces into the EPF system. In 1982 they eliminated the tax points which cost governments money. Then of course there was their six and five policy. Taking a look at transfer payments under the EPF, British Columbia by 1994-95 will have lost a total of $6.8 billion, $2.6 billion because of Liberal cuts.
What happened in the threat to our health care system is that the Liberals set the path and then we had the situation where the Tories came in and said: "We understand how the Liberals have learned to do it. We will do it. We can even do it better" and they did. The Tories were good at learning from the Liberals how to attack health care.
We now have a second controversy in Canada that is a threat to our health care system and that is user fees. Nobody seems to be talking about this. The Liberals are talking about introducing user fees.
Yesterday, Mr. Cote, the Quebec minister of health, a Liberal, stood up and said: " I want to introduce health care user fees". In Newfoundland and in New Brunswick we have a funny thing going on. It is the Liberals who are continually proposing user fees. At least we have one

May 14, 1993
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minister in the Conservative government, the hon. minister of health and welfare, who is saying no.
My fear is that he is going to be gone in six weeks and in six weeks we are not going to have anybody on that side of the House who will stop the Liberals from introducing user fees in this country.


An hon. member:: Stop lying.


James Capsey (Jim) Karpoff: You say stop lying. Why do you not talk to your counterpart in Quebec? What was he proposing? The Liberals are the only people in Canada who have concretely proposed user fees.
Yes, we have the minister of defence who is sending up balloons but of course she is in a very awkward position. She is trying to capture that right wing Tory vote in order to get the leadership. She floats balloons about it. So does the Minister of the Environment.
The only concrete proposals to introduce user fees in this country have come from Liberal governments. That of course is a big threat to our medium and small businesses.
Another major threat to our medium and small businesses is the tax breaks that have been developed for the powerful corporations and the wealthy. Most of these tax breaks have come from the Liberals. It is the Liberals who developed the tax breaks. The Tories have plugged a few of them but not very many.
It is interesting that when Stats Canada did a review of the national debt it concluded that it was made up of three factors: high interest rate policy, tax concessions to the multinational corporations and social programs. We found out that 50 per cent of that debt is due to the failure of Liberal and Tory governments to collect taxes from the multinational companies. Forty-four per cent is due to the high interest rate policy of the Tory government and 6 per cent is due to expenditures on social programs.
I have a list of seven pages of very profitable large corporations that paid no tax in 1990 due to Liberal and Tory tax policy. Let us take a look at some of them. Canadian Pacific Hotels made $48 million and paid zero tax. The Coca Cola Company made $24.5 million and
paid no tax. That means the small businessman is having to pick up the tab for them.
Every time a big multinational pays no tax it is the wage earners and small businesses that have to pick it up. These tax loopholes were developed by the Liberals. They perfected them for years. Fletcher Challenge is another company that made $24 million and paid no tax. I could go on. I have pages of them here.
Let us look at another tax break developed by the Liberals on family trusts. One family, the Bronfmans were able to put $69 million into a family trust courtesy of the Liberals 21 years ago. It has now grown to $700 million and thanks to the Liberals no tax has been paid on the increased value. The Tories have now decided to just extend it forever.
The Liberals talk about the interests of small business. I think they should look at their record.


Beryl Gaffney: Tell us what you've done.


James Capsey (Jim) Karpoff: Another thing that has been crippling small and medium-sized businesses in this country is the GST. It has been a tremendous problem.


Sergio Marchi: And we introduced the GST too?


James Capsey (Jim) Karpoff: No, the Liberals did not introduce it but they are fooling Canadians when they say they will get rid of it. They have said they are going to get rid of it one day. Then they are going to bring in an SGT, a service and goods tax. Then they are going to bring in a value added tax but they will not tell us what it is. They say maybe they will tell us after they are elected but that is never going to happen because the Liberals are not going to form the next government in this country.


Sergio Marchi: And we're going to get rid of you too.


James Capsey (Jim) Karpoff: I want to make sure Canadians understand that the Liberals do a nice bit of talking when they are in opposition. However when they are in power they follow the same lines as the Tories, particularly in British Columbia.
We know the Liberals in British Columbia. We know them very well. We have watched them over the last few years when they pretended they were different from the Tories. Of course the Socreds were simply an amalgamation of the Liberals and Tories. The Liberals in B.C. are doing it again now. They are going to bring out Gordon
May 14, 1993

Campbell, that great Socred and try to trot him out as a Liberal to see if they can get the Tories and Liberals back together and call themselves the Socreds again.
We have been through this. The antics of the Liberals in B.C. have gone on for years. At least they have been honest enough there to say they are the same as the Tories and they call themselves Socreds. It goes on.


The Acting Speaker (Mr. Paproski):: The time for debate has expired. Questions or comments.


James Capsey (Jim) Karpoff: Mr. Speaker, I am sure there would be unanimous consent in the House for me to finish my speech.


The Acting Speaker (Mr. Paproski):: Is there unanimous consent for the hon. member to finish off his speech?


Some hon. members:: No.


The Acting Speaker (Mr. Paproski):: I regret there is no unanimous consent. Questions and comments, the hon. member for York West, the hon. member for St. Catharines and the hon. member for Carleton-Charlotte.


Sergio Marchi: Obviously, Mr. Speaker, there is a lot of interest in pursuing some questions of the member for Surrey North because it was probably the most fearful type of speech I have witnessed in quite some time.
He did not speak to the motion or the subject-matter at hand because of his well-founded insecurities. I understand those insecurities because I visited his riding.
Instead of trying to be constructive and offering a few ideas on where the NDP stands in regard to the six proposals I have advanced with respect to the small business dossier, which the NDP member led off earlier this morning and completely avoided, he continues to discuss off-subject the question of user fees of the government.
He suggests that the Liberal Party is the big bad wolf and it is going to introduce user fees. I think our leader has certainly been eloquent and very clear on what he and our party think and what we will do with user fees. If the Tories want to have that debate in the campaign and
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have drawn that line in the sand then we would be more than happy to take them up on that.
The member's speech was devoid of any constructive ideas. It was a diatribe of insecurities because he is afraid of the Liberal Party of Canada, if not the Tory Party on the west coast. He obviously knows that a certain Prem Vinning is close behind him watching his every move. All of a sudden this MP for Surrey North who did not have any coffee parties for his constituents for five years is now scurrying about trying to organize all these little individual coffee parties to show he is in touch with his riding.
The member knows that the NDP premier of his province is an absentee premier who is good for cutting ribbons. He knows that Sihota and Clark are really trying to hold up a pathetic government. He knows what Stephen Langdon thinks about the Ontario NDP and he has the unmitigated gall and courage to try to scare Canadians. They are not going to fall for his politics of scare tactics. They are going to realize that the only member who is scared for his seat is this particular member for Surrey North.


An hon. member:: Where is the question?


Sergio Marchi: I will get to the question. Obviously he is scared about me going on that tangent as well. I will relieve him of his pain.
I want to ask a very simple question. What do you think about any of the six proposals I have advanced and the other ideas my caucus colleagues have advanced, not on health care, as important as that is or scare politics about other parties, but on the question at hand about small business and how the financial institutions can be made to become full partners with that important network? Can he stick to the subject at hand as opposed to going off half-cocked?


James Capsey (Jim) Karpoff: Mr. Speaker, I would be glad to stick to the subject at hand but I have to make a few comments about my riding of Surrey North.
The only thing the member said that was right is that Mr. Prem Vinning is running behind me, far behind me as the Liberals have always done. When the chips come down the contest will always be, as it has been for the last 30 years in Surrey North, between the Tories and me. The Tories at least have the ability to stand up and be consistent about policy.

May 14, 1993
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It is quite funny. If you have been in Surrey North you will know that the Liberal Party is split right down the middle. It had a very competent candidate who lived in that riding for 25 years and was active in the community. After she had worked for a year, the Liberals, on the direction of their leader, dumped her and brought in a person who had been living in Houston, B.C. He has never been involved in the community and is certainly running behind me now. I agree.
The Liberals will be surprised to know that the former Liberal candidate will appear on the front cover of my householder that is coming out. She has given me permission to do this because she has made it clear that most of the Liberals in North Surrey no longer support the federal Liberal Party because they insisted on dumping a local woman. If we want to talk about Surrey North I am quite happy to do so. I can also talk about many of the small businesses.
Go out and talk to small business people. Ask them what they think will happen if there are user fees in this country. What will happen if there is a deterioration of the health care system and they have to start paying the kinds of health care premiums the Americans have to pay?
What happens if we get a government that is not able to generate jobs? The only party that has put out a detailed proposal on jobs is the New Democratic Party. We put out a full employment strategy. It is not just a pie in the sky thing It has been costed by an independent financial organization that says it will reduce unemployment by a million and it will reduce the deficit by $10 billion. It sets out all of the kinds of integrated programs we need. It is too bad the Liberals do not have an integrated economic strategy they could trot out and talk about. So they bring in little Mickey Mouse things-


The Acting Speaker (Mr. Paproski):: I think we should go on with other questioners here. The hon. member for St. Catharines has a question and also the hon. member for Carleton-Gloucester. Otherwise we will not get through.


Kenneth David Atkinson: Mr. Speaker, I listened to the hon. member's speech and he mentioned that a winery was the victim of free trade. Of course, it was the usual NDP tirade against free trade. I guess the
opposite is the protectionism it seems to espouse. Come back within ourselves, put up the tariff barriers around this country and do not trade with anybody. We can trade with everybody else but nobody can come into our country.
I also come from a grape and wine area and one of the biggest things during the last election campaign was that the industry was going to be destroyed. In fact it has prospered. New small and medium-sized wineries have opened. They have won gold medals in wine competitions around the world. They have developed an ice wine that is world renowned now. They are expanding by leaps and bounds. This is in spite of the free trade agreement.
My question of course is the usual NDP argument that transfer payments have been cut. Have transfer payments been cut or has the rate of increase been cut?
I think my friend will acknowledge-and it is a clear question-that transfer payments have increased at the rate of 4 per cent per year under this government which is higher than the rate of inflation. Those have been passed on to the provinces. The provinces' spending increases, including my home province, have been above 10 per cent for the last seven or eight years. That is a major problem but have transfer payments been cut or is the rate of increase the only thing that has been cut?


James Capsey (Jim) Karpoff: I am delighted to try to educate the Tories again about EPF.
The whole basis of transfer payments under the Established Programs Financing was that there was a baseline and that baseline would increase not by expenditures-regardless of what the province spent, it had nothing to do with expenditures- but as a proportion of gross national productivity. As the country got bigger, the share of moneys going to the provinces for health care and post-secondary education would also grow at the rate of the GDP.
What has happened, of course, is that the economy has expanded but the government has said: "Oh, no, we are going to renege on it. We are not going to give you more money just because you are entitled to more money because the population and the economy are growing. We are going to pretend that is not so. We are going to freeze the payments to make sure they do not increase at the rate of growth of the economy".
May 14, 1993

In effect that means there is a diminishing amount of money available to the provinces at a period of time when their needs are expanding, particularly the provinces where they had to expand because of population.
The same applies to the Canada Assistance Plan. The government put a cap on the Canada Assistance Plan at a time when it knew that particularly in Ontario, B.C. and Alberta that the demand on the provincial governments was going away up because of cutbacks in unemployment insurance and in other areas, ensuring that less and less people qualify for unemployment insurance.
Mr. Speaker, I see you are signalling that my time is up. It is too bad because I would have liked to go back and talk about some of the more specifics that deal with businesses under the free trade agreement, closing their doors in Surrey and moving to Arkansas.


Kenneth David Atkinson: Mr. Speaker, I appreciate the opportunity to speak on this motion. I take from my hon. friend's response that there has been an increase in transfer payments.
The motion in front of us refers to a part of our economy which has become vital to the future of our nation and that is small and medium-sized businesses. All sides have recognized small and medium-sized businesses as the real engine of growth, as has been described, and as the creator of jobs in our economy. I am glad, therefore, that the hon. member has introduced this motion because it highlights those Canadians who usually get little attention from the news media and the leaders of our small business communities.
I would like to speak on the role that the Federal Business Development Bank has played in helping finance small businesses. I will do that in a minute. First, in my own community, small and medium-sized businesses are going to be very important to the recovery that will go on.
We know that there is a restructuring going on in the automobile industry. It has hit my community particularly hard. We have to do everything we can to maintain what we have in the automobile industry. That restruc-
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turing is something that is going on throughout North America, particularly at General Motors because of the lack of capacity and the downsizing that is going on. That, or course, is under the auto pact and has nothing to do with the free trade agreement which is usually given as the reason for the downsizing of the automobile industry. When you lose 10 per cent of your market share over a short period of time, obviously you are going to have overcapacity and you are going to have to deal with it.
In order for our area to recover, small and mediumsized businesses are going to be very important. Those small and medium-sized businesses are usually driven by individuals who come from within the city or the community. I think that people realize now you cannot get large companies to come into your community because of the infrastructure costs. It would be nice to have them, but it is very difficult to have everything there for these large businesses to come into your community. Most of the economic activity, as has been pointed out by people on both sides of the House, comes from the small and medium-sized businesses within the community. They are the ones which are going to drive the recovery.
It is not only financing that is necessary for these business to succeed. There are other things as well. First off is the training for the entrepreneurs themselves. Many of these people have good ideas, they have the initiative that is necessary to start their own businesses but they need the training, the development of business plans and so on. The Federal Business Development Bank helps out with that in one area, but there are other things in our community that are also important to that entrepreneurial training.
The Centre for Entrepreneurship associated with Brock University is very important in trying to create the entrepreneurial spirit and help those individuals establish their own businesses. As an outgrowth from the university and the secondary school institutions, we have started what is called New Enterprise Store. It is a storefront operation where potential entrepreneurs have the opportunity to go to be able to develop business plans, to listen to people who have started their own business successfully. They are helped along the way in terms of bookkeeping, financial matters, preparing a business plan, approaching banks for small business financing. These have helped out.

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This institution has helped a great deal. In fact it is expanding across the country. It is an idea that was started by some individuals in St. Catharines, especially Professor Ken Loucks from Brock University and Gene Luczkiw from the Governor Simcoe Secondary School. It is working out well.
We have to encourage these small business entrepreneurs obviously because, as was mentioned previously, this is where most of the jobs are created. The figures that my friends across the way have shown indicate that.
We also need the people to help these entrepreneurs and that gets back to training. I can say that the government is putting a great deal of money into training through the unemployment insurance fund, through the other training initiatives, through the Canadian Jobs Strategy and so on. Those are welcomed in our community.
They help to train individuals for the jobs created by the entrepreneurs. That is what we need in order to succeed and to get out of this malaise and the difficulties that we are having in my community.
The next thing of course is financing and that is what this motion speaks to. There is the small entrepreneur who has the entrepreneurial training programs. The province is also involved in the training programs and is co-ordinating those efforts in order to make sure that the training is directed in the best manner possible. It is getting labour, business and other community leaders involved in that as well. That is something that we look forward to and is good.
The last portion of it is the financing that is necessary for these small and medium-sized businesses. The new knowledge-based economy that we read so much about consists of things like computers and semi-conductors. It consists of medical facilities and medical supplies. It consists of telecommunications equipment and instrumentation be it in medicine, industry or whatever.
The people who are going to be involved in these industries need to have a great deal of knowledge and training. It is necessary that we realize that a lot of these businesses are based on knowledge and the individual's educational qualifications and training.
A lot of these businesses do not have the bricks, the mortar and the machinery or other things that banks look for when they figure out: "Are we going to loan these individuals money? If we are going to loan them money then we have to make sure that we have some lien or mortgage that we can put on assets of that business so that if anything goes wrong with it, we can move in and realize on these assets. In that manner we can try to recoup what we have lent to these individuals".
Unfortunately the new knowledge-based industries do not have a great deal of assets, bricks and mortar. As a result it is something new. It is something new to the banks and other lending institutions. It is something new for the individuals who are going in asking for the loans that they need to develop these knowledge-based industries.
They say: "I have this idea. I can do this, this and this." In turn they are told: "What do you have in terms of a building? What can you give us that we can put a lien on? What personal property security agreement can we get out of this? What mortgage can we get out of this?"
As a result these individuals feel: "We really do not have those things. I have ideas here. I have the experience. I have the knowledge and I know that this business can succeed. Here is a business plan but no, they are not the bricks and mortar that you have asked for".
This is preventing these people from getting the financing that is so desperately needed. Knowledge-based industries are going to be the ones of the future. The lending institutions have to change their mind-set.
As was mentioned across the way it cannot be just a formula that is developed in a head office somewhere where you go to the local loans manager who has a check list to go down. They find out that the various things that were traditionally there are not there any more.
We have to realize that. I think that is one of the things that we are trying to get through in this debate. The whole culture has to change.
The economic indicators currently put out are based on what is referred to as the old economy. They do not go into the new economy. They do not go into the indicators about computers, semi-conductors, software,
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medical supplies, medical equipment and telecommunications networks and so on. Those are the things that we know now are going to be important to the economy of the future. They are going to be important to my area.
We hope that the culture can be developed within these lending institutions and business plans can be looked at in those terms.
No, they do not have the bricks and mortar. Yes, here is an individual with a track record. Elere is an individual with some ideas and it is going to take a little risk on my part. I am willing to do that. I know the person in the community. I know it can be done in this particular area.
I am going to take a risk and I am going to lend this individual the money that is necessary.
The Small Businesses Loans Act helps in that way, certainly through the cut down on the personal guarantees which is always a concern to somebody who goes into business. We commend the government in that regard.
Banks are not the only method of financing these small businesses. In fact in some books the percentage of these businesses which are financed by banks now is very small. We probably need other mechanisms as well, maybe a local based equity fund or venture capital fund, something where business people in the community come together and form this board, people who are given certain perhaps tax breaks or tax concessions in order that an equity fund or a venture capital fund can be developed within an individual area such as mine.
Then people who have these ideas could come to these established business people and in return for a certain portion or certain equity in the company that these people would give up to this local board with a venture capital fund, they would get the money in return. They would probably get experienced business people on the board of directors of these small and medium-sized enterprises who could watch over that equity investment and make sure that these people are going in the right direction in a business sense.
A lot of these people have great ideas, but the business acumen that goes along with it is sometimes something that is necessary.
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I was encouraged by the budget of the Minister of Finance where he recognized that this is a possibility. He said in his budget that this is an area he was going to look into and see if we could establish these local based equity or venture capital funds. There are already the labour community funds which in effect are mutual funds to help out small businesses. There are other things which have been done by the government. We welcome those things.
Certainly we have to realize that our economy is moving in a different direction. We all instinctively know that. We have been told this for more than 20 years. Alvin Toffler in his book Future Shock spoke about what is going on now. He spoke about the telecommunications network that is going to have to be developed. All those things were there. Now it is upon us and we have to be prepared for it. Other countries in the world are going through the same thing. In that term, the banking culture is going to change.
What is the Federal Business Development Bank doing to help? The Federal Business Development Bank has three functions. It permits a project to happen which could not otherwise be realized because of a lack of financing. It counsels and trains small businesses to improve their management skills, which is one of the things I was just talking about. In a small way, and I hope the Federal Business Development Bank will look at this in a greater degree, it has provided equity seed capital to allow companies to continue to expand in a changing economy.
That is what I was mentioning. The Federal Business Development Bank is only in this in what I consider to be a small way. Hopefully it could get into it in a larger manner. Some of the figures pertaining to the bank are testimony to the scope and impact of the FBDB. It has a 10:1 debt equity ratio so there are no cash costs to the government. I know that is something that is important now.
The NDP members have not mentioned today the study which they are floating around as their economic plan. They have indicated they would like to put $2 billion a year into an equity fund or a venture capital fund, funded through taxpayers' dollars and administered through the FBDB.

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It is a laudable idea but where is the $2 billion going to come from? That is the real problem, especially in our current debt situation. It is great to sit here and say that tax loopholes should be closed. Business lunches should be disallowed, business people should not be allowed to take clients to lunch and deduct 80 per cent of that lunch which they are now allowed to do. That will save $1.9 billion a year and would fund the equity fund each year. It just does not happen that way. It would increase taxation on businesses in doing it in that manner, plus not allow a business expense to proceed, plus the restaurant industry would be affected by that particular matter.
It is not easy and the NDP members would probably find that out just as they did in Ontario. It is great to say all these things in opposition but when they are in government and are faced with the reality of governing how things change. There is a debt to deal with and it seems then that a light has gone on. It has been there. We have been talking about it. We knew about it. They get into government in Ontario and suddenly they have to deal with the debt. They have a problem where they did not know there was a problem.
I can tell them right now there is a problem. Their plan for $2 billion is laudable but by taking it from taxpayers' money, borrowing will have to be increased again to finance that $2 billion. That is not going to help because when government takes the money it takes it out of the realm of the private sector and the private sector cannot get at that money. That is what the private sector needs in order to succeed.
It does not need as well a tax increase which is the other way of financing that $2 billion. Again a tax increase takes money out of the private sector and brings it into the public sector.
I am glad that the government has been doing that for the last two years and has not gone through any tax increases because that is something that is very important to small and medium sized businesses, probably more so than anything else.
The clients of the Federal Business Development Bank employ more than 160,000 people, 2 per cent of the entire small and medium sized business work force. Forty-three hundred of the jobs were created in the fiscal year 1992.
Five hundred and eighty-six million dollars in loans were authorized, up 13 per cent from the previous year. The number of loans FBDB expects to generate in 1993 will rise by more than 10 per cent and most are for $100,000 or less.
The loans already made have helped generate more than $900 million in total investment. Almost 20 per cent of the loans went to the tourism industry. Obviously that is an industry that is important to an area like mine with Niagara Falls and all the tourist attractions that are there. It has fallen on tough times in the last couple of years but it is going to come back and we are glad that the FBDB is supporting it.
Another 22 per cent of FBDB loans went to manufacturing. Exporters received $55 million in loans and we see that exports are leading the recovery that we are experiencing now.
In the division that I mentioned previously, the venture capital division, the paid-in capital of $55 million, the FBDB has authorized $92 million in investment since 1984. The venture capital division is something I would like to see expanded, as I mentioned, and there are facts and figures that I have here in regard to the FBDB.
The FBDB plays a role in other areas as well. We heard about women and how they are developing as entrepreneurs and how well women are doing in developing their own businesses but they need help in expanding those businesses. The FBDB is doing that.
The preparation of business plans is necessary. When these individuals approach traditional lending institutions they must have business plans that banks and other institutions can look at and say it is a good idea and they can go ahead with it. Those things are taking place.
All those things are certainly helping and I believe that in the performance of the FBDB we have ample evidence of innovation, hard work and imagination devoted to providing financing, advice, and training for thousands of Canadian entrepreneurs.
This motion does not reflect the accomplishments of the FBDB and certainly that should be noted. I hope that we realize the importance of the FBDB, what has

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been done by the government in the other areas I have mentioned in order that the small and medium sized businesses can receive the financing which is so desperately needed.
We all agree they are the ones that create the jobs and that is the only way we are going to create jobs, not by government pouring money into some make-work project or whatever. It is the private sector through the small and medium sized businesses that are most important.


Gregory Francis Thompson: Mr. Speaker, I have a question for the member and an introductory comment.
One of the interesting things about the last recession and this recession that we are moving through and out of is the fact that New Brunswick has come out of it relatively well in terms of our unemployment rate.


Fred J. Mifflin: Because of Frank McKenna.


Gregory Francis Thompson: The member across the Chamber just mentioned the premier of New Brunswick. I do not disagree completely with that, because he has worked well with our government. We are in this thing together. Whatever benefits New Brunswick benefits all of us. I guess if he is suggesting that it is low, and it is, we have had something to do with it and I agree with that as well.
I want to reference that in relation to our last speaker, the member for St. Catharines and what is happening in Ontario. The figure I want to quote from New Brunswick, which is accurate, is today we have an unemployment rate in New Brunswick of approximately 11.3 per cent.
Going back 12 years ago or so, the unemployment rate in New Brunswick during the last recession-I should say the recession before the last because I am suggesting we are out of this one-was approximately 16 per cent. In other words we have come out of this one about 5 per cent better. However we see the opposite happening in other provinces, for example the province of Ontario.
Historically New Brunswick's rate of unemployment has always been higher than that in the rest of Canada and always a lot higher than in Ontario. I want the member to comment on that in relation to the provincial government in Ontario today, what he sees happening and how that government could better work with us to improve that number.
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Kenneth David Atkinson: Mr. Speaker, I thank my friend and he is correct. This recession has been harder on Ontario than previous ones and harder on a community such as mine that depends very much on the automobile industry.
As I mentioned in my speech, the provincial government has realized that what we say in opposition and what happens when we get in government are two entirely different things. There are a few things that concern me and certainly we have to work together to try to solve this matter.
The provincial government has been putting money into job training. It is having difficulty in getting that off the ground. I hope that we can do that through co-operation. The equity capital, the equity financing, certainly the provincial government could help out in that manner.
The one thing that concerns me is the labour legislation that has been passed and the effect it may have. I know, being on the transport committee, of one particular area, which is the creation of short line railroads which seem to do well when they are created.
There are two examples currently in Canada where businesses have taken over from CN or CP these short line railroads. They seem to be able to run them very well with the same wages by the way or maybe even better than what the individuals received from the large railroads. However, they are flexible. A person who does maintenance on the track can also be driving the train the next day or whatever. They are very flexible in how they do their work.
The Ontario legislation allows successor rights for the unions. This is one of the big things because the unions do not allow the flexibility that is needed by these short line railroads. This is going to be an impediment to forming these short line railroads and it is something I do not think the provincial government looked at in putting that legislation into effect.
It is just one example where you have to look ahead, see what is going to happen to these small businesses and think before you put in these particular measures.


Mr. Eugene Bellemare (Carleton -Gloucester):: Mr. Speaker, I think the hon. member for the government side completely missed the point. For his benefit, I will

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repeat the motion presented by the hon. member for York West, and I quote:
That this House condemn the government for its miserable failure to offer leadership and direction to Canadian banks and other lending institutions in order to provide adequate financial resources for the growth and development of small and medium sized businesses and the consequent creation of thousands of new jobs.
As the hon. member for York West said earlier, there are more than 900,000 small businesses in Canada, and if these businesses could each create one job it would solve many problems. He said that this morning in his excellent speech on small business, which is looking for support from the federal government. Small businesses are having problems with our banking system. As you know, the banks are controlled by the government. So we can say that Tory policy has been very damaging for small businesses, and that is why we have seen so many bankruptcies. We have seen banks and institutions force small businesses and owners of small businesses into a comer so they have no more room to manoeuvre and can no longer make decisions. They are haunted by the fear of losing everything, even their own homes.
I appreciate the hon. member's comments.


Kenneth David Atkinson: Mr. Speaker, I take exception right off the bat to the hon. member's statement that the point was missed. I do not think the point was missed.
The motion refers to banking and banking institutions.
I spoke about the Federal Business Development Bank in my speech. I also spoke about the need for equity and venture capital. I spoke about the banks. As the member says, the banks have an interest to play and have to be more responsive to small and medium sized businesses.
financial institutions, but to say we control the banking system is of course totally wrong.
The banks make their own decisions. What we want them to do is to look at those decisions, realize that the economy is restructuring, realize that these small and medium sized businesses may not have the equity and the assets that they are looking for and to take more of a risk in regard to these small and medium size businesses so they will create jobs. That is what my remarks were directed toward and I think that is directly on point.


Fred J. Mifflin: Mr. Speaker, I want to start by thanking you and my colleagues for allowing me to jump to the head of the line because of another commitment that I have.
I want to say how much I have enjoyed listening to the debate. Many good points have been made on all sides of the House, but I would have to come down on the side of my colleague, the hon. member for York West.
He is encouraging the government to give more direction and leadership to our banks and lending institutions so that they can provide better service to small and medium sized business and, indeed, go on and create jobs in this country. That is the name of the game. That is what everybody wants, to get jobs.
In order to make the points I hope to make in the relatively short time that I have I want to provide background for a couple of minutes and then I want to suggest some of the things that can be done. Some of these policies are new and some of them have been mentioned before, but I want to try and accomplish that in about nine minutes.
I spoke about a knowledge based economy and how . 1 want t0 begin the body of my speech by saying that it the traditional bricks and mortars that banks are looking 's my understanding that there are 1.3 million small or for have changed in this knowledge based economy. I do medium sized businesses in Canada. In the past several not think I did miss the point. I was talking about what years these sma11 and medium sized businesses have had the banks are doing.	t0 bice an unprecedented series of challenges such as the
Meech Lake Accord, the Persian Gulf war, the Canada-U.S. Free Trade Agreement, the NAFTA, the introduc-I take exception to another statement that was just tion of the goods and services tax, the federal made that the government controls the bank system. We government's high dollar and high interest rate policy, obviously do not control the bank system. We have the cross-border shopping, the national referendum and the Bank Act and other regulatory matters dealing with uncertainty that has caused, and plummeting consumer
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confidence. I do not know which of these is worse, but they all impinge on small businesses.
I feel strongly about this because I do not have many big businesses in my riding but I do have many small businesses. My riding may reflect what is happening nationally because from 1979 to 1989 businesses with less than 100 employees created 80 per cent of the new jobs in Canada. Since 1989 this number has dramatically increased to 98 per cent. Unfortunately during this time bank loans to small businesses have decreased by 11 per cent while loans to big business have increased by 11 per cent. So down 11 and up 11.
Of the banks' major business loan portfolio about 70 per cent goes to big business while only 30 per cent is directed to small and medium sized businesses.
I am not against big business. Clearly this is the machinery that runs the country. However there are is preponderance of small business. In my riding certainly the preponderance is in the small business field. That is why I am launching forth so strongly and vehemently for small business.
We have a number of lending institutions, banks, trust companies, life insurers, and credit unions, but the aggregate assets of Canada's five national banks alone are greater than all other domestic finance providers put together. I have respect for the banks, but in support of this motion I had to look at the profits they have made.
The major banks' profits in 1990 were $3.5 billion, in 1991 were $3.7 billion and in 1992 were $1.8 billion. That is quite a marked drop but nonetheless it is a tremendous profit.
One of the reasons the loss was incurred was because of the economic situation in the country. It is interesting that if we examine those losses further we see that the major banks lost an estimated $600 million in loans to 900,000 firms in the small business sector. That is about 70 per cent of the small businesses that are in existence. A loss of $600 million to 900,000 businesses sounds like a pretty big sum but on one loan alone the banks lost $2 billion and that was a loan to a very large business, Olympia and York, with which many Canadians would be very familiar.
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The point I have made is that banks and lending institutions need to be more sympathetic. That includes the Federal Business Development Bank for whom I have great respect, and I have very good rapport with the regional office in St. John's, Newfoundland. I am not suggesting that they change their ways but that the government change the direction it gives them so that they will be allowed to operate more flexibly with policies that would be more benevolent, productive, useful and advantageous to small and medium sized businesses.
I have to look at some of the other areas that impinge on this whole business of small business, the economy, jobs and lending.
Since 1989 Canada has lost 325,000 manufacturing jobs. Unemployment has been at double digit levels for two consecutive years and more than 200,000 people and firms have gone bankrupt since 1990. That is in the last two and a half years.
Forty per cent of service sector jobs pay wages below the poverty level, and adjusted for inflation the average family income is not as high today as when this government came to power. We have lost ground in eight and a half years.
The situation did not happen by accident. The Conservative government that was responsible for running the country made some very basic economic mistakes. Among them was fighting inflation at all costs, high real interest rates, a continuously high Canadian dollar and a free trade agreement without subsidies, without subsidy codes or adjustment programs.
There are some things that need to be done in order to improve this.
First of all, we need to shift the focus from shrinking the economy to growing the economy. In other words, this means jobs with a future and industries for the future. In this way the small and medium sized business sector, which creates most of the new jobs in Canada, will be key when we look at this in the next Parliament.
Then there are fiscal policy commitments. There should be a commitment to fiscal responsibility, unwavering discipline and expenditure control and the holding off from new programs that do not contribute directly

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to economic growth and job creation or the reduction of the deficit, which this government has unsuccessfully tried to achieve for eight and a half years, and the reduction of Canada's debt as a percentage of the gross domestic product. It has gone from 42 per cent of GDP in 1984 to around 62 per cent today. That is a tremendous drop.
With respect to monetary policy, which is very important, rather than have the obsession with zero inflation that this government has had we should take a more balanced approach to inflation and growth, with inflation targets more in line with the U.S. inflation rate. Given a tight fiscal policy it would be possible to have a monetary policy that would provide lower short-term real interest rates. That is what we are concerned with today.
There is another area that I do not believe we have been very successful in. That is federal-provincial fiscal co-operation. We need to renegotiate some of the federal-provincial fiscal arrangements in order to achieve the maximum predictability which would be a major priority for the next Parliament.
In terms of tax policies, we need to replace the goods and services tax in a way that generates equivalent revenues, is fair to consumers and easier to administer for small business. I have said time and time again that this has been a killer for small business in this country.
Many in my riding have gone out of business purely as a result of the goods and services tax and the administration burden alone. We need to promote and not defer federal-provincial co-operation. We need a mandate for the Commons finance committee to consult Canadians and provincial governments in a true and meaningful manner on all the options with regard to the current GST. It should certainly report within a time frame of 12 to 18 months.
Regarding trade policies, we are going to have the NAFTA coming up very soon. We need to look more strongly and more supportively at GATT. It is the corner-stone of our trade policy and has been for years. There are flaws in the free trade agreement that have been long apparent, many of which have been pointed out. They have not been corrected in the recent NAFTA.
We need to improve these agreements. Essentially we need to look at subsidies and anti-dumping codes, a more effective dispute settling mechanism, labour and
environmental standards, and energy and to whom we give it or do not give it away.
We need to place a higher priority on expanding trade with the world's most economically dynamic region. I am talking in particular about the Pacific Rim.
We need to concentrate on skills training more. We need to maintain high paying jobs in the global economy and we will need a work force second to none in skills and flexibility. That has become apparent to me in the training for those people who work on Elibemia. That is another story but I use it by way of example.
We need to co-operate with the provinces, business and labour. We need to establish a national apprenticeship program to address the 420,000 young Canadians who are out of work today. We need tax-based job creation incentives.
We need to create a Canada youth service. We have agreed to do so as part of our policy for youth and I have announced it in my recent report to my constituents.
Last but not least, and this is essentially the real crux of this matter, we need to challenge Canada's major banks to give small business a break and to develop concrete measures to help small and medium sized businesses get the financing they need. We need to further reform the Small Businesses Loans Act and make it easier for small business to get equity financing.
We need to speed up technology acquisition by small and medium sized companies, help small and medium sized companies export, reduce the regulatory burden on small and medium sized businesses and basically give them a break.
I want to conclude by giving three examples. One concerns a series of tourist cabins. They are in the process of not being able to make a go of it because of the many factors that I mentioned. They have gone to the Federal Business Development Bank. I am pleased to report to this House that in this case after some negotiation there will be some help for them.
Another case concerns a couple in another part of my riding who have gone looking for about a $30,000 loan to finance a 20-foot extension they put on a craft shop without competition in the area. At the same time they provide competition to another area by way of a semiconvenience store. As yet they have not been successful
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in securing that loan. This is precisely the kind of policies my colleague from York West is encouraging.
A final example, and it is ongoing, I was on the phone with the people today, concerns a private enterprise. Two people in another part of my riding have, at the encouragement of ACOA, gone into the business of buying a country inn and restaurant. They have made application to ACOA for some assistance and although ACOA suggested they go this route they have now been told that unfortunately this is not the kind of business that is needed in the area. I am working with ACOA and other places to try to get something done.
I have quoted three examples involving about half a dozen people, not large on the scale of Olympia and York at a $2 billion loss in loans from chartered banks. I am looking at $20,000 to $50,000 loans. This is a lot of money to us individually but peanuts in relation to the over-all transfer of money and the profits banks are making.
I am speaking in favour of the motion that has been put forward by my hon. colleagues and spoken so eloquently to here in this House. I do counsel the government to take heed of this motion and pay attention to it because it will benefit all sectors of the economy, all sectors of the country and all Canadians by helping small and medium sized businesses and by putting Canadians back to work.


Beryl Gaffney: Mr. Speaker, I too am very pleased to speak on this opposition day motion:
That this House condemn the government for its miserable failure to offer leadership and direction to Canadian banks and other lending institutions in order to provide adequate financial resources for the growth and development of small and medium sized businesses-
A small business is one with an estimated gross revenue that does not exceed $5 million during the fiscal year. It is also a business with under 100 employees.
From 1979 to 1989 businesses with less than 100 employees created 80 per cent of the new jobs in Canada. Since 1989 this number has dramatically increased to 98 per cent. During this time bank loans to small business have decreased by 11 per cent while loans to big business have increased by 11 per cent.
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In 1992 Canada's major banks lost an estimated $600 million in loans to 900,000 firms in the small business sector. However, banks lost a total of $2 billion in loans from the collapse of Olympia and York, and now are effectively forcing small and medium sized businesses to pay the price.
This government will say that it has changed the Small Businesses Loans Act and that is designed to help new and existing business enterprises obtain term loans from chartered banks, but the government is not going to say what I am hearing from small business in Nepean.
Let me give a couple of examples. Despite being long and loyal customers of banks, small businesses, with all the pressures of the economy, are having their lines of credit pulled, reduced or completely cut off. Our banks, as lending institutions, have failed small business in this country.
I want to mention a specific example but I will not give the firm's name. This is quoted directly from a letter to me from this business. The letter reads:
Banks are loaning and helping very large companies-
-and the letter mentions O&Y-
-but to the small and medium size companies trying to survive this recession, they are very hard on them. They will only finance accounts receivables of 30 and 60 days, and most companies are not paying until 90 and over. This is making it almost impossible to try to keep in business. If the banks were more lenient in a time of problems it would help everyone. They state: "We do not want to finance a company showing a loss", but what companies are making a profit? Not very many at the present time. They are demanding many more reports, which is taking also a lot of extra time, which most companies cannot afford now, as they also tell us to lower overhead. With less staff it makes it much harder to comply with their wishes.
The letter says that this hurts small and medium sized businesses and employees and causes large lay-offs and a loss of revenue for the government.
I do not usually quote from newspapers, especially a local newspaper which sometimes might not be too kind to me, but I am going to quote from an editorial in this morning's The Ottawa Citizen'.
- A new federal cabinet must moderate the absolutism that governs the Bank of Canada. For too long the central bank has been allowed to wage its relentless jihad against inflation as if nothing else matters- Crow can be instructed to quit or obey the law, which requires the Bank of Canada "to regulate credit and currency in the best interest of

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the economic life of the nation-and generally to promote the economic and financial welfare of Canada".
Too-tight monetary policy has made Canada's recession harder.
The present economy was not created by some unpreventable force of nature. It is the chosen creation of Conservative policy.
An article in The Gazette of April 2 stated:
But bank critics also charge that, wounded by bad loans to big businesses, the banks are now gun-shy about lending to anyone.
A change in attitude toward small business by the banks, more than the change in legislation is needed, said one.
Their attitude has been "pathetic", said Susan Bellan, economist, owner of Frida Craft Stores in Toronto, and a spokesman for 1he Canadian Organization of Small Business.
"They go on about how the administration costs for small businesses are high", she said. "They want a big fat return with no work".
The $24 billion loaned to small businesses over the last four years is only a fraction of the $71 billion loaned to big corporations-
Is that not the truth as well?
I also would like to comment briefly on how the New Democratic government in Ontario is hurting business through the many cutbacks it is making. I want to bring right into the regional and local picture the moneys and grants that are being cut back.
My city of Nepean will have a shortfall probably of $2 million this year due to cutbacks on transfer payments. If the city is having a shortfall of $2 million it is going to mean that it has to cut back in certain areas. The cutback the city has to make in turn is going to hurt small businesses. Small businesses then have to cut back. It hurts their cash flow. Government is a major player when it comes to controlling the economy of the country or controlling the economy in a given area.
We also know another measure that is certainly hurting small business in the national capital region is the lack of direct air links to the United States. You cannot get on a plane here in Ottawa and fly direct to a city in the United States. This has been going on since 1974 when the Air Traffic Control Act was set in place.
Today Ottawa is a major cosmopolitan city. No longer is it just a Public Service town. It is high time that this federal government got with it and recognized that Ottawa needs a major air link to the U.S. The nation's capital is the fourth largest region in Canada after
Toronto, Montreal and Hamilton, yet it is the most ignored region. The economy here is suffering the same as everywhere else.
Let me give a few examples of the burdens placed on us by this federal government. Fifteen years ago the federal buildings were built in Hull with the proviso that as it would place an overburden on the sewer system, the federal government said it would contribute to the expansion of the sewage treatment facilities. This has never been done. We have a federal government that makes these commitments and never follows through.
My colleague for Ottawa Centre certainly knows what I am talking about. Like any other area the unemployment rate is up mainly due to downsizing of the Public Service by the federal government. Bankruptcies are up; construction is down.
This area has been pressuring the federal government for 10 years to allow that direct flight that I mentioned before. The nation's capital has only a single lane highway leading into it from the south. When coming from New York State or from the city of Toronto into the nation's capital you come in on a two-lane road. I think the federal government has the responsibility. Sure, it is a provincial responsibility, but it is also a federal responsibility to add to this the nation's capital.
The Ottawa-Carleton economy is still struggling. We know that our unemployment rate is probably lower here than in most cities in the country and we are very concerned about the high rate of unemployment throughout the nation. Welfare is at 13 per cent. We know that bankruptcies were 155 in 1993. We know that we have 25,000 people unemployed. I do not care what the rate of unemployment is, any unemployment is too high.
I am delighted to speak to this motion, although I do not have time to comment on the strategy my colleague from York West is putting forward for small business development where he talks about the national summit between the federal government and major banks and the federal government must urge the banks to stop withdrawing capital from small business and the federal
May 14, 1993

government should encourage banks further to expand the Small Business Loans Act-


The Acting Speaker (Mr. Koury):: I am sorry, your time has expired.


Gregory Francis Thompson: Mr. Speaker, out of generosity we are trying to squeeze in as many speakers as possible and allow some questions from the opposition.
Today's opposition motion as put forward by the member opposite, relates to the Government of Canada and its leadership in directing banks and other lending institutions. I simply want to pick up on what is happening in regard to the economy and our debt and deficit position because there is a connection.
I will be the last guy to stand up in this House and defend the banks because I think there is room for criticism in regard to their behaviour. However, there is also room for some praise so I do not think we can just stand up here and blindly criticize them.
There is a connection between our debt and deficit position in relation to the amount of capital that is available for the private sector in lending institutions. I just want to remind the listening audience that this year in Canada we are going to need about $113 billion. That is what new businesses will need to expand their operations. Out of that we have to remember we have financing and deficit commitments which will eat up about $84 billion.
We are going to have a shortfall of somewhere in the vicinity of $25 billion to $29 billion. That shortfall puts pressure on capital borrowing markets. In fact, we will have to go abroad this year to borrow $25 billion or $29 billion.
There is a cost to small business at the end of the day because of continued deficit financing in this country federally and provincially. I think that has to be made known from the outset. If there is one thing all governments, federal, provincial and municipal, can do to help businesses large or small, it is to get our debt situation under control.
The interesting thing is that small business is the engine of growth in the economy. There are 900,000 small businesses in Canada. Their annual payroll is not insignificant and amounts to $85 billion a year.
Our definition of small business by most standards is any company that employs fewer than 50. Between 1979
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and 1989 that is where the growth in the economy was in the number of employees hired. Between 1979 and 1989 companies with fewer than five employees did 49.2 per cent of all hirings in the economy. For companies with six to 50 employees, it was around 36 per cent of all hirings. Those companies with over 50 employees accounted for about 14.3 per cent of all hirings between 1979 and 1989. The engine of growth in that period very clearly was small business and it continues to be small business.
Of the 28,000 jobs created in Canada by business in February, the last month with a precise number, 90 per cent of them were small business hirings. Therefore, not too much has changed. What have we done as a government to help promote that?
I want to step through some of the things we have done. There is the lifetime capital gains exemption of $500,000 for the sale of shares in a small business. We have done some things on the pension side with initiatives to help encourage investment in small business. We have done the same thing with RRSP contribution limits on the private side and for small businesses again. We have relaxed the rules for RRSPs and RRIFs, Registered Retirement Income Funds, for shares in small businesses.
We have also, much to the dismay of the opposition, reduced the federal corporate tax rate. We have increased tax credits for research and development. We have made it easier for businesses to claim research and development costs. We have reduced the paperwork making access better to federal contracts. In other words, to secure a federal contract there is less paperwork than there used to be.
We have set up the small business data base. That was done in 1986 to provide information and analysis to help business compete in global markets. If we are looking at Canada's export capacity, last year Canada sold $157 billion worth of goods to its international competitors. That program was very much part of that increase. It helped us streamline our access and information systems to those markets.
The Entrepreneurship Awareness Program was set up in 1987 to help non-profit organizations promote entrepreneurship. That is something which had never been done in this country or others and the government took steps in 1987 in that direction.

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Another one we can take some pride in is that the Minister of Finance announced changes to the Small Businesses Loans Act. We were not given a lot of credit in relation to the Small Businesses Loans Act by the opposition. The banks have responded to that but not as much as I would like. Each of us in our constituencies can point to areas where the banks have to be a little more aggressive and work with us in relation to that act.
That was an important change. We increased it in the federal budget of 1992 from $100,000 to $200,000. It increased from $200,000 to today's $250,000 in the 1992 economic statement. We have responded in that area. The result has been that for the year ending March 31, 1992, the Small Businesses Loans Act program gave support to lenders for more than 10,000 loans worth a total of $400 million. That is not insignificant.
We are doing the best we can. We are going to require more co-operation from the banks. We will have to continue to hold their feet to the fire to make sure they respond.
I see one thing happening in relation to the banks and one can ask whose fault it is. Is it ours or somebody else's? Confusion exists when a client comes through the door and I think the member for Broadview-Greenwood spoke today about the relationship between banks and their clients. I think all levels of government have helped destroy that relationship because over the years governments have taken over some of the territory which should have belonged to the private sector to begin with.
I will point to a number of specific examples which affect all regions of the country. They have to do with institutions set up either by the federal government or the provincial governments and sometimes both.
Where does a small business person in my constituency who wants to start a small business go? The first stop might be the bank but in all probability it might be somewhere else. It often might be a federal or provincial agency that is in the same business as the bank and lends money. I want to give some examples that exist from one end of this country to the other. I think this is where the confusion lies.
Someone in New Brunswick wants to start a small business and has the resources, knowledge, skill and
everything necessary to start up a small business. The first thing that person will hear is that ACOA, the Atlantic Canada Opportunities Agency, helps small business gets started and big business as well at times. As soon as that door opens that person will go in and discuss the project.
Aside from that, business development centres have been set up by the federal government. The Department of Commerce and Technology is in most provinces. Sometimes it is under a different name but in New Brunswick we continue to call it the Department of Commerce and Technology. It may have had a name change. We have regional development corporations in the province of New Brunswick. We have the Federal Business Development Bank in all provinces as well. We do not want to forget about the chartered banks themselves.
There is mass confusion on the part of the small business owner when he makes application for a loan. The federal and provincial governments have taken over some of the turf which legitimately was the bank's to begin with. We might say they took it over simply because the banks were not responding to a need and that area had to be taken over. Borrowing and investing had to be encouraged as well as entrepreneurship because the banks were not doing this.
At the end of the day the banks have not had their feet held to the fire. For example they say they will lend money but at the same time the applicant should speak to ACOA or the same agency in Quebec or the Western Diversification Fund out west, to make sure the loan being granted is going to be secured. In fact a grant may be available to help offset the amount needed to be borrowed in the first place. A reduced rate of interest may be available if the applicant gets under the right program.
There is a lot of confusion out there and often the banks are not doing business with these small business people unless some of those loans and insurance agencies as provided by the federal government are there.
In relation to the Federal Business Development Bank we have an institution now that is on a cost-recovery basis. It is reluctant now to take up the space it was originally designed for as the lender of last resort.
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There is a great deal of room for improvement in the whole process. I do not disagree that it has to start right here. I think a lot of it has but more can be done.
I want to look specifically at some of the recommendations coming from the other side of the House and comment on them. In today's The Globe and Mail they are talking about the MP for York West, the chairman of the National Liberal Caucus who laid out some of what he would like to see happen. I am not doing this just to criticize but these are some of the things he is suggesting:
"The government should call a national summit meeting with the banks and representatives from the small and medium-sized business sector to focus on long and short-term problems and challenges in small business financing".
The government does consult regularly with banks and lending institutions.
"The government should urge banks to stop withdrawing loans from small businesses that are meeting interest charges".
Again,-not to be overly generous-I think many of the banks, not all of them, have been quite cognizant of the difficulties small businesses have experienced in the last three or four years. Many of them have bent over backwards to help some of their clients. Many have not because we all have individual horror stories where they have pulled the plug on them.
"The government should encourage banks to expand their lending under the Small Businesses Loans Act".
We have done that and we are continuing to work in that direction.
"Canadian banks should set up a joint venture small business development corporation with each contributing about $200 million in start-up capital".
It is not specific. I guess it means $200 million, more or less. It is not a bad idea but where does the money come from? Does it mean more borrowing? Possibly.
"The Federal Business Development Bank should be strengthened to stem a decline in both the average size and number of loans the FDBD makes each year".
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The difficulty of that is the FBDB is on a cost-recovery basis. In other words, if there is a loss out there who is it picked up by? The taxpayers' of Canada. The taxpayers' of Canada are saying they do not want any more debt. They do not want any more giveaways.
I guess it would mean a massive restructuring of that institute. Over the years it has not been one of my favourite institutions but I guess we would have to take a serious look at how much money we want to put in that direction because at the end of the day there is a cost to the taxpayers of Canada.


Mac Harb: Mr. Speaker, it gives me great pleasure to speak on the motion of my colleague the hon. member for York West, particularly because it deals with small business.
Our region is no different than any other region in Canada. Small business does generate the vast majority of jobs. According to statistics 98.7 per cent of all enterprises in Canada from 1979 to 1989 create about 2.1 million jobs on an annual basis. Approximately 81 per cent of all jobs in Canada have been created by small business.
Where are all those jobs? Let us look at what is happening here. Small business in Canada creates 81 per cent of the jobs. Twelve per cent of these jobs are created in the construction industry; 16 per cent of these jobs are created in the retail industry and 27 per cent of these jobs are in business and personal services. An additional 15 per cent of jobs are created in the areas of real estate, insurance, finance and community services.
As you can see, these jobs are to a large extent consumer-driven. In other words, if a consumer does not go out and use his purchasing powers nothing will move.
There is an interesting article which was published in The Canadian Forum with the headline: "Bankrupt". In the article by Susan Bellan it states that from 1990 to 1992 Canadian companies faced an unprecedented series of crises. The writer indicates some of these crises include the collapse of Meech Lake, the gulf war, the free trade agreement, the introduction-believe it or not-the goods and services tax, the high dollar and high interest rate until 1991, record unemployment, crossborder shopping, three major public sector strikes in five weeks and the referendum. The result of all that was a complete collapse of consumer confidence.

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Can the hon. member for Nepean tell me who was governing during those past three years?


Beryl Gaffney: You do not need an answer.


Mac Harb: She said I do not need an answer, Mr. Speaker. That basically says it all.
As a result of the collapse of consumer confidence, small business over the past three years has suffered a major blow as a result of a lack of policies and lack of action on the part of the government.
The Canadian Federation of Independent Business issued its annual report in March, 1993. In this report it makes a number of suggestions. This government always tries to portray that it listens to the small business sector and the people out there. If that is the case then why after nine years with this government do we still have the same people coming back on a regular basis saying the same thing over and over to this government without it even listening to them?
Mr. Speaker, I can see you pointing to me so I am going to say that my party has responded to the call of the business community. As a part of our agenda we have proposals that deal with improved and continuous training for workers and managers. We have initiatives to help businesses bring new products to market and speed technology acquisition by small and medium-sized businesses, among many other initiatives to help the economy.


Jack Iyerak Anawak: [Editor's note: Member spoke in Inuktitut.]
Mr. Speaker, I take this opportunity to give a northern point of view to this motion that was put forward by my colleague from York West.
I just want to point out some things we have difficulty with in terms of trying to get loans, money and funding from various financial agencies in the north. We have two banks in the eastern Arctic, one in Rankin Inlet and one in Iqaluit. There are 33 other communities which do not have any banks or road systems. The only way to get there is by airplane. So we have a hard time getting
money. If we want to borrow $2,000 we have to pay something like $500 for air fare.
We have to be very ingenious about it because we have not been able to create credit unions. This government will not allow the Canadian Aboriginal Economic Development Program to fund credit unions because the banks will not allow deposit-taking corporations to be formed other than their own. So we have had to be ingenious.
I would just like to point out one success story. There is an organization called Kakivak in Iqaluit which goes out to all the communities and gets them together to form committees that lend out money based on the knowledge of the person rather than their credit rating through the banks. The communities are small so they know whether that person is able to pay a loan off or not. According to their good credit rating or the knowledge of that person they will lend that person anywhere from $500 to $2,000 to buy a snowmobile or hunting equipment.
So, Mr. Speaker, I thank you for the opportunity to say a few words. I wanted to press home the point that organizations like Kakivak in the north are what is needed if the government is not going to allow programs like the Canadian Aboriginal Economic Development Strategy to recognize the real need for credit unions in the north. This was again emphasized by a friend of mine from Cambridge Bay, Bill Lyall, when he was addressing the Arctic Co-ops Limited in Winnipeg a couple of weeks ago at their annual general meeting.
I would suggest that in following the thrust of the motion put forward by my colleague from York West, there is a need to create growth among the small business community in the north. That thrust can be through the creation of credit unions, but in the absence of credit unions, through organizations like Kakivak.


The Acting Speaker (Mr. Paproski):: It being four o'clock p.m., it is my duty to inform the House that pursuant to Standing Order 81(17), proceedings on the motion have expired.
Pursuant to Standing Order 30(7), the House will now proceed to the consideration of Private Members' Business, as listed on today's Order Paper.
May 14, 1993



PRIVATE MEMBERS' BUSINESS


Beryl Gaffney: That, in the opinion of this House, the government should consider
the advisability of establishing programs to assist in improving the
economy of the national capital region.
She said: Mr. Speaker, the national capital region is a model to the rest of the country, showing Canadians how two languages and many cultures can live and work together and prosper in a caring, financially sound community that respects the environment. There is a shared sense of purpose in our community and a broadly-held integrated vision of social and economic objectives.
Ours is a region long recognized as the high-tech capital of Canada. As a world leader in industries of the mind, our knowledge in intensive industries are globally competitive and export oriented. Our region is home to numerous national and international businesses, professional associations and government agencies. It is recognized as an international business centre, travel centre and renowned as a tourist attraction.
The quality of life in our community leads people to choose Nepean and the other cities which make up the national capital region over other communities as a place to live, work and invest.
As you may recall, Mr. Speaker, shortly after the 1988 election a Conservative member of Parliament, who later went on to lead the charge to pass the GST, declared that the national capital region would pay a price for voting Liberal in the 1988 election. Many individuals and businesses in Nepean with whom I have met over the past five years believe that the federal government has indeed abandoned the national capital region.
I believe it is necessary to stand in the House today to specifically address the economy of the national capital region, and for this reason I am very pleased to speak to my motion which states:
Private Members' Business
That, in the opinion of this House, the government should consider
the advisability of establishing programs to assist in improving the
economy of the national capital region.
During my frequent visits to Nepean businesses, the issue of research and development is almost always brought up and unique ideas are often put forward to enhance research and development. One such firm is a company specializing in advanced product research and engineering laboratories. The president wrote to me recently to offer his views on the matter of government involvement in R and D. I will read directly from his letter.
It states: "As a matter of principle, the government should not sponsor any activity which would decrease competitiveness in business. Government programs should be aimed at supporting activities that lie within the accepted and proven mission of the supported entity. For example, government regulatory bodies or universities should not attempt to act as product research or testing labs. Programs introduced by government should clearly differentiate in their support between strategic and current infrastructure. The lack of such differentiation often leads to decrease rather than increase of competitive position of Canadian infrastructure".
He went on to give examples of government labs directly competing with the private sector laboratories. I will not go into those right now.
Sustainable development must be an integral part of Canada's economic and industrial strategies. Environmentally friendly practices promote efficiency, productivity and long-term competitiveness. A Liberal government would reserve 25 per cent of all new R and D spending for environmental technologies.
In many regions of Canada we have seen that where there is a spirit of enterprise, dynamic local government, educational institutions and thoughtful provincial planning, economic potential and vitality follows, especially when it comes to small scale, locally based initiatives. A Liberal government would seek to form partnerships with all these players, not just count on megaprojects to build viable long-term regional economies.
I heard a number of complaints from Nepean businesses about the growing trend by the federal government to compete directly with the private sector while maintaining an unfair advantage. One example of this is

May 14, 1993
Private Members' Business
the Canadian Communications Group, CCG. The printing department within the Department of Supply and Services is now bidding on outside contracts.
CCG can almost always be the lowest bidder as it does not have the overhead costs, that is, the capital costs as those in private industry. Apparently CCG is also bidding on government contracts and then contracting out and charging the department that placed the order a commission fee. This is not only dishonest, it is also quite clearly a case of government competing with private industry.
Another example is the Department of Public Works which has a group of landscape artists that compete for projects with the private sector. This government group bids on tenders before the private sector is even asked to quote within the government services. It bids on the basis of recovery of wages only. This does not include the cost for space, equipment, benefits, profit or taxes, perpetuating themselves by saying that they provide services cheaper than the private sector. Of course it can provide services cheaper than the private sector when it does not add in all the overhead costs because it does not have any overhead costs.
This government has to stop this practice of competing for projects and outright stealing from the private sector.


Mac Harb: Borrowing.


Beryl Gaffney: Is borrowing a better word?
One of the biggest omissions in the national capital region is first and foremost the need to establish vital air traffic links between Ottawa and the key U.S. and European business destinations. Of all the major cities in Canada, Ottawa has the poorest flight connections with U.S. destinations.
Applications have been submitted to the federal government, including a recent bid by U.S. Air to establish a direct air route between Ottawa and Pittsburgh but there has been no action by this federal government.
As the Ottawa Business News recently pointed out, the business community of the national capital region has been asking: "When is the federal government going to relieve this community of the disadvantage it has compared to other Canadian cities?"
According to Mr. Len Potechin, chairman of Regional Realty and head of the National Capital Coalition for Better Air Service, Ottawa was the only city specifically excluded from the original Canada-U.S. air treaty in 1974.
"You've got to understand that in 1974, Ottawa was a government
town," he said. "Ottawa is now a flourishing business community.
We're saying since 1974, Ottawa's been given nothing. There isn't a
single Canadian airline that flies us non-stop to the United States.
It's not acceptable to the capital of this country.
The cost saving to businesses in the region would be significant. One medium sized firm in Ottawa estimates that it spends $200,000 a year on extra travel costs over and above lost time and productivity due to poor travel connections to their largest markets south of the border.
The Leper, Cambridge, Campbell report suggests a loss of income without direct flights to communities across North America to be $10.3 billion annually. In the national capital region that figure is in the vicinity of $400 million to $500 million annually lost to the region. Obviously an air link is vital. It would open up lucrative new markets and would allow our community's economy to fly high.
Also of grave importance to the economy of this region is the need to eliminate the existing interprovincial trade barriers. The goal of the RMOC is to eliminate the existing barriers under municipal control in the national capital region by 1994 and to support federal and provincial government initiatives to remove all barriers by 1995.1 would like to use the example of the owner of a large equipment company in the Ottawa area.
He has a major capital investment in each piece of equipment. He is not allowed by Quebec law to work on the Quebec side of the Ottawa River. Yet the Quebec equipment companies are able to bid in Ontario in direct competition with his firm. I say either open up the boundaries on both sides of the river or let us close them once and for all. There has to be fair competition in this region.
Residents of Nepean and others in the national capital region have also expressed a concern about the future of the green belt. In the 1960s the federal government had the foresight to protect environmentally sensitive land in the nation's capital with the establishment of the green belt lands. The green belt was established to control urban sprawl, provide beauty to the nation's capital,
May 14, 1993

assist municipalities in local improvements, such as the cycling paths, the Stoney Swamp, the Pinhey Forest and the Log Farm. They have all added to the enhancement and beauty of the nation's capital.
Unfortunately it appears that this government has begun to move away from that premise. The majority in this region do not want the green belt chipped away for residential and commercial development. The federal government must pass legislation, perhaps something similar to the National Parks Act to ensure that the green belt is protected.
Our road network in the nation's capital is deplorable. A perfect example of this is the immediate need to construct and complete highway 416, the planned four-lane highway between Ottawa and highway 401. Expanding companies in the NCR such as the high-tech industries and commercial markets are faced with insurmountable transit problems when dealing with markets beyond the region. The federal government has a responsibility, in spite of what it says, together with the province of Ontario and the RMOC to ensure this road is completed forthwith.
The Liberal Party is advocating the establishment of a number of programs at the national level which come to the aid of the citizens in this region as well as all regions in Canada. The focus would be shifted from shrinking the economy to growing the economy. This would create jobs and industries with a future. The small and medium sized business sector which creates most new jobs in Canada is a key to rebuilding the Canadian economy.
There needs to be a stronger commitment to fiscal responsibility, to unwavering discipline and expenditure control, to holding off on new programs that do not contribute directly to economic growth and job creation, to reducing the deficit and to reducing Canada's debt as a percentage of the GDP.
Rather than an obsession with zero inflation, a new government should take a balanced approach to inflation and growth with inflation targets more in line with the U.S. inflation rate. Given a tight fiscal policy it would be possible to have a monetary policy that would provide the stability required for lower short-term real interest
Private Members' Business
rates. Renegotiation of the federal-provincial fiscal arrangements to achieve maximum predictability should be a major priority.
In tax policy a Liberal government would replace the GST in a way that generates equivalent revenues, is fairer to consumers, easier to administer for small business and promotes federal-provincial co-operation. In the first session of a new Parliament the Commons finance committee would be mandated to consult Canadians and provincial governments on all the options to the current GST and to report within 12 months.
As several Nepean business leaders have told me and as the Canadian Federation of Independent Business has pointed out, most of the GST debate dealt with the macro-economic aspects of the tax and its impact on Canadian consumers, whereas very little was said about the costs of collecting the GST. However more than 1.8 million Canadian businesses and institutions now act as tax collectors for the federal government and many businesses are suffering hardship because of the onerous GST compliance requirements.
Trade policy has a special significance for the achievement of Canada's economic and social goals. Canada's exports account for about 40 per cent of the total output of the private sector. Indeed, one in five Canadian jobs are directly dependent on exports. Of perhaps even greater significance is that every $1 billion of new export translates into 15,000 Canadians jobs. Consequently Canada faces two prime challenges regarding international trade.
First, Canadian firms must be more internationally competitive if they are to take advantage of existing and new export markets.
Second, Canada must have secure and enhanced access to world markets if we are to increase our exports and thereby our economic growth. The major challenge today is that we must earn our way in what is rapidly becoming an interdependent and highly competitive global economy. However over the last decade some disturbing signs of Canadian competitive weaknesses have emerged. In particular, growth in our manufacturing productivity and technology performance, two acid

May 14, 1993
Private Members' Business
tests of competitiveness, have been poor relative to our major international competitors.
There can be little doubt that Canada's ability to compete in a changing world economy is being eroded not the least by the amount of national debt Canadians are financing.
In the new transnational economy it is the information and knowledged-based industries for which this region is known that are providing the foundation for industrial renewal and growth. Canada cannot hide from these changes.
As the Leader of the Opposition has stated: "In today's world, protectionism is not right nor left wing it is simply passe". Globalism is not right wing or left wing, it is a fact of life. Failure to adjust will result in economic stagnation and few jobs for Canadians. It can mean the unravelling of Canada's social system from health care to accessible education. What Canada needs is a policy mix that on the one hand acknowledges economic change and on the other hand will help Canadians adapt to this age of transformation.
This involves recognizing the linkages between free markets and governments. We have lived through an era dominated by a simple, even simplistic paradigm. The notion that a policy of rolling back the state and tearing down the walls will unaided ensure growth and prosperity overlooks the way in which the government defines, for good or ill, the context within which economies develop.
Education, research and environmental policies are the new building blocks of economic growth. Regulatory and tax regimes determine the way that private and public investment is channelled. Political structures determine what makes economic decisions, which interests will affect these decisions and what will be the outcome of political conflict.
stakeholders in the Canadian economy to meet global competition. It means that government must help to build the foundations upon which the winners of the future will naturally flourish.
Without secure access to export markets even competitive exports can be restrained. Therefore Canada's central objective in its trade policy must be to secure and increase access to world markets. A multilateral approach to trade liberalization has traditionally been the corner-stone of Canada's trade policy, and this longstanding approach has served Canada's interests well.
The General Agreement on Tariffs and Trade has provided smaller nations such as Canada with the opportunities to improve our access to world markets through negotiated reductions in tariff and non-tariff barriers. A successful Uruguay round of GATT is essential to the health of the global economy and maintenance of the international system.
With regard to the Canada-U.S. Free Trade Agreement, we are disappointed that the long apparent flaws in the Canada-U.S. Free Trade Agreement have not been corrected. We should seek improvements in both this arrangement and the NAFTA in areas including: subsidies and anti-dumping codes, a more effective dispute settling mechanism, labour and environmental standards and energy. We must also place a high priority on expanding trade with the world's most economically dynamic region, the Pacific basin.
To maintain high-paying jobs in the global economy Canada will need a work force second to none in skills and flexibility. In Canada, business spends less than half what American companies spend on worker training and less than one-fifth what Japanese companies spend. In co-operation with the provinces, business and labour a Liberal government would establish a national apprenticeship program and tax-based on the job training incentives. A Liberal government would also create a Canada youth service.
This does not mean that governments should attempt Small and medium sized business creates more jobs to choose the industrial winners and losers. It does mean than any other sector of the economy. It is time to that governments can play a part in helping sectors challenge Canada's major banks to give small business a adjust to market signals. It means that government can break and to develop concrete measures to help them encourage economic partnerships among business, la- get the financing they need. The Small Businesses Loans bour and the different levels of government and other Act needs to be reformed even further than it has been.
May 14, 1993

I have outlined a number of measures that the Conservative government could take at the local level, and I could have outlined many more if time had permitted.
Canadians recognize that we have to have a sound basis of fiscal management and we need to have control of government expenditures. At the same time, if government revenues are weak, as they most certainly are these days, then we have a weak economy.
My party is committed to operating in a framework of fiscal responsibility. For 25 years I have been committed to looking after the interests of my constituents in the city of Nepean and the Regional Municipality of Ottawa-Carleton. In a recent speech the distinguished economist, Judith Maxwell, said: "A society that stops building for tomorrow gets stale and deteriorates". I think we can all recognize that the current government has stopped building for tomorrow.
I believe it is time that we elect a Liberal government that will build for tomorrow.


Mr.   Brian@: Mr. Speaker, I would like to take this opportunity to clarify for my colleague the extensive and ongoing support which this government is providing for the national capital region.
I would emphasize that in order to ensure Canada's long-term prosperity we must focus on the international competitiveness of our industry. The extensive consultations undertaken through this government's prosperity initiative and the action plan produced by the initiative's arm's length steering group reinforced a number of key requirements to ensuring this country's long-term prosperity.
These included the need for better use of technology in Canadian businesses and the need for aggressive pursuit of export market opportunities.
Industry, Science and Technology Canada provides a broad range of services and targeted financial support encouraging international competitiveness and excellence in industry, science and technology.
The national capital region has felt the benefit of this thrust with support of local businesses, associations and
Private Members' Business
councils through research and development programs such as the strategic technologies program, the microelectronics and systems development program, and forest products R and D and innovation program.
In addition, support has been provided to local enterprises within the NCR for diagnostic services related to the application of new technologies including the advanced manufacturing technology assistance program, or AMTAP, and the automotive components initiative.
Businesses involved in the defence industries in the national capital region have also benefited from support provided under the defence industries productivity program, or DIPP, and over the past five years over $110 million in assistance under these ISTC programs alone has been provided in the NCR toward estimated project costs of more than $260 million.
Two other important ISTC initiatives aimed at enhancing Canada's industrial competitiveness are the technology outreach program and the networks of centres of excellence. ISTC has launched a number of technology centres through its technology outreach program which promote the acquisition, development and diffusion of technology and management skills to Canadian businesses.
These centres are available to help Canadian businesses, including those in the national capital region. TOP-funded centres located in the national capital region include the Canadian Institute of Biotechnology, formed by the Industrial Biotechnology Association of Canada to provide technological information and develop networks for marketing biotechnologies; and the Mining Industry Technology Council of Canada, created by the Canadian mining industry to foster and co-ordinate shared R and D and encourage networking between individuals and organizations.
The networks of centres of excellence program has seen the establishment of 15 NCEs, each of which is a nation-wide network pursuing leading edge research in an area of strategic importance to Canada.
Both Carleton University and the University of Ottawa are members of several NCEs. These centres may also play an important role in enhancing the competitiveness of businesses resident in the national capital region.

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Private Members' Business
Like these aforementioned centres, ISTC has also fostered a series of joint industry-government initiatives to improve the international competitiveness of specific industry sectors, especially in terms of economic opportunities and benefits and the application of technologies and innovations. ISTC has initiated sector campaigns in automotive components, manufactured wood products, environmental industries, medical devices, fashion apparel, advanced manufacturing technology and national forest products.
The national capital region serves as home to some of the national councils, associations and federations that are major players in these joint initiatives. More important, businesses within the national capital region can and do play significant roles in driving these campaigns and working together with their fellow industry members to strengthen their respective industry sectors.
The region has also felt the benefit of ISTC initiatives to increase understanding of the importance of science and technology to Canada's international competitiveness and economic prosperity. The initiatives undertaken by ISTC's Science and Technology Public Awareness Campaign Secretariat, as well as the many activities funded under Science Culture Canada, focus on meeting the future demand of Canadian businesses for highly skilled scientists and engineers.
In addition to these activities NCR students, like other Canadians, can benefit from the ongoing Canada Scholarships Program which supports students in the pursuit of post-secondary studies in the natural sciences, engineering, technology and related disciplines.
In addition to ISTC's programming, the department's efforts in fostering international competitiveness are complemented by those of External Affairs and International Trade Canada. These departments offer programs and services available to businesses both within and outside the national capital region, such as the Program for Export Market Development, export seminars, workshops and counselling through the International Trade Centre.
EAITC maintains a network of trade commissioners in Canadian embassies, consulates and high commissions outside Canada as well as Canada-based trade commissioners. This network provides businesses throughout Canada including those within the national capital region with export market intelligence, export education and information that is vital to entering and competing successfully in foreign markets.
ISTC also operates a business service centre in Ottawa to provide businesses in the national capital region with first-level counselling, publications, sector profiles and access to a reference and video library as well as to computer data bases like Business Opportunities Sourcing System and Discovery.
Through the business service centre, businesses in the national capital region are able to obtain business and market information of key importance to their future planning and decision-making and locate contacts in both ISTC and other government departments and agencies for specific programs and services. They are able to make use of data bases that will provide them with a wealth of information with respect to other businesses and available technologies.
The National Research Council's Industrial Research Assistance Program, or IRAP as it is known, is another program available to national capital region businesses. IRAP provides technological advice and financial assistance in support of increased industrial competitiveness and is delivered to NCR businesses through IRAP's local office in Ottawa.
The Federal Business Development Bank, or FBDB, in addition to its regular lending and business management programs and services, offers training and counselling programs such as community business and self-employment initiatives. These programs are individually adapted to the community's training and counselling needs. These FBDB services are available to the National Capital Region from FBDB's Eastern Ontario District Office in Ottawa.
Other federal departments and agencies also play an important role in supporting the needs of the national capital region. Employment and Immigration Canada has in place a wide range of training and adjustment programs and services designed to ease the impact of lay-offs and provide training for alternative opportunities.
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As my colleague, the Minister of Finance stated in his government's economic and fiscal statement of last December, Canada has more generous tax incentives for R and D than any other G-7 country. National capital region businesses investing in research and development have these incentives for growth and prosperity available to them as well.
In the December economic statement the Minister of Finance also announced a small business employment and investment package, the components of which will benefit small businesses throughout Canada including the national capital region.
I would like to summarize for my colleague whose interest focuses on the economic well-being of the national capital region that the Government of Canada continues to invest in policies that make our economy work better throughout Canada. Under these initiatives the economy of the national capital region has benefited and will continue to benefit.


Jean-Robert Gauthier: Mr. Speaker, it is with pleasure and, I must say, great pride that I rise to speak to this Motion No. 757, to support and comment on this proposal of my friend and colleague from Nepean. The hon. member has worked very hard for her riding, as we know, and she is known in the National Capital Region as one of the hardest-working members of this House. She has earned her stripes and I am sure that, in the coming elections, she will have the confidence not only of those who voted for her before, who will no doubt support her again, but also of all those who did not vote for her last time. She will certainly increase her majority and perhaps even get the largest majority of all members from the National Capital Region.

This motion allows us to highlight the national capital region in a particular way. Outside Ottawa and the national capital region people have the idea that this is a fat cat area but the recession has had a severe impact on Ottawa and the national capital region. It has taken a severe toll.
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Listening to the government member who just spoke, one would think that everything was rosy and nice. Just like many other Canadians, the 650,000 people living in Ottawa and Hull have had to put up with a very serious and severe recession. Let me provide a few statistics which illustrate the difficulties the national capital region has experienced.
In 1992 there were 10,800 fewer jobs in Ottawa-Carle-ton compared to 1988. At the same time the working age population had grown by 33,000. In other words, there were 33,000 more people in the work force but we lost 10,800 jobs. One does not have to be a mathematician of any great ability to understand the serious problem for our youth and people trying to make a career in Ottawa and trying to find an appropriate and good job.
Our unemployment rate is about 7.6 per cent. That means we still have families having to cope with difficult economic times. The percentage of the local population receiving unemployment or welfare benefits has almost doubled to 13.9 per cent from the 7.1 per cent it was in 1988, some four years ago. One in seven Ottawa-Carle-ton residents receive some form of social assistance. That is almost 90,000 people in this area.
Welfare cases grew 44 per cent in 1991, another 25 per cent in 1992 and there are projections this year that it will go up another 12 per cent in 1993. These are not fat cat statistics. These are people who are having a hard time coping.
The average monthly social assistance case-load for 1993 is projected to grow to 12 per cent. The number is projected to be 34,000 compared to 30,500 last year. There is an increase in case-load in those applying for social assistance.
In 1988, 12,881 people were on welfare. In four years the number of people on welfare in Ottawa-Carleton has almost tripled. These people have felt the impact of this recession. These figures show how the Toiy made-in-Canada recession has hit Ottawa and the national capital region very hard. We know there is no special place in the Tory hearts-if they have any-for the residents of the national capital region.
There is less for the recipients of social assistance. The Tories are cutting transfers to the provinces. Where does the load fall? It falls on the local economies which have to support more and more social assistance programs. It is becoming a severe burden on the local economies.

May 14, 1993
Private Members' Business
In fact the Tories are generally gleeful when it comes to capital bashing. I do not have to quote or state what the Prime Minister called or said about public servants. We all know it is public record today. He says he does not believe a public servant has worked a day in his life. That is not my quote. It is his. He said when he came into power: "I am going to give them a pair of running shoes and a pink slip". That is his quote also.
We have food banks in the community of Ottawa. In my riding I have two in which demand rose 22 per cent in 1992 from 1991. It is estimated that 20,000 people use regional food banks. Twenty thousand Canadians living in this community use food banks. Throughout this region, it is sad to say, children live in poverty.
Lay-offs continue in the Ottawa area. Most economists predict that unemployment will remain high for at least another year. However in its most recent budget the government took no action to relieve the critical problem of unemployment.
The evidence is clear. An Angus Reid poll reported in the media May 5, 1993 indicated that unemployment remains a top concern of Canadians. Forty-four per cent picked unemployment as the most pressing issue. On the state of the economy it was 37 per cent.
Canadians are letting their priorities be known, but the government is callously ignoring them. Beyond encouraging Canadians to vote the Tories out of office after almost nine years of failed economic policies, there are some specific actions that can be taken to bolster this local economy, to help the national capital region regain its confidence and its status of a good region to live in.
Of particular importance for the national capital region is the elimination of interprovincial trade barriers. We have heard a great deal of talk about trade barriers for years, particularly at the regional and federal levels. There must now be action from the provinces and it would appear particularly important to us for Quebec to come to an agreement to eliminate trade barriers between Quebec and Ontario which affect many aspects of doing business in this community. These barriers create
extra costs that make it difficult for business to operate profitably, competitively and efficiently.
The perennial question is why we are unable to reduce these barriers within our own country when we have eliminated many between Canada and the United States. I urge the responsible authorities to take action on this matter in the very near future. It is important to our local economy. It is important to Canadians.
Another issue which my friend from Nepean touched upon was airline service out of or to the Ottawa area and the road service. If we are to produce goods, if we are to produce high tech goods, we must have routes, we must have transportation access to the United States and to the markets. We must have the link with the 401. Highway 416 must be finished. We must have a link by air. We must have from the American airlines an agreement to service this area so that our producers have some way of getting their products to market.
This allows me to talk about the medium-sized businesses and the small businesses. Indeed small business is the engine of the growth of our country and in my riding of Ottawa-Vanier it is the main employer. It is not the federal government. Only 12 to 13 per cent work for the federal government. The rest all work in service industries and are in small and medium-sized businesses.
This government has taken very few steps to help these businesses compete. Entrepreneurs are still wondering what the Tories were thinking when they introduced the GST just as the recession that they created was gathering steam. It seems to me, after looking at the whole GST mess, it would be almost impossible to design a tax that is more costly and more inefficient than the GST.
The Canadian Federation of Independent Businesses says that the cost of compliance for small business was $4.6 billion in 1992.1 made a speech earlier this week on the whole aspect of the GST, what it brings in, what it costs to administer and how much we have left at the end. The GST is the most inefficient, ineffective tax that anybody could even think about. The Liberal caucus and my friends on this side of the House have said that we will scrap the GST. We will replace it with something that is the result of a consultation process with Canadians, a process which will include provinces, which will
May 14, 1993

give us feedback, replace the tax with a tax that is fair, that is just and is equitable.
I am sorry my time is up, but I would like to continue on that.


The Acting Speaker (Mr. Paproski):: I am sorry it is too.


Mac Harb: Mr. Speaker, it gives me great pleasure to speak in support of the motion proposed by my colleague from Nepean. I hope at the end of the hour this House will see the wisdom of endorsing this motion, even though it is a non-votable item.
As my colleagues from Ottawa-Vanier and from Nepean have clearly stated, this region is not really getting its fair shake when it comes to the federal government and the provincial government. For whatever reason we seem to be always the city that everybody loves to hate. In reality, everybody loves to hate politicians and the different levels of government. People do not seem to differentiate between Parliament Hill and the city of Ottawa. Canadians have to realize there are two cities of Ottawa.
There is the city of Ottawa which my colleagues have been talking about with all of the difficulties that every region in this land is faced with, all of the challenges and also all of the potentials. The member on the government side talked quite a bit about high-tech industries and some of the initiatives the government is putting forward. I suggest that governments, provincial as well as federal and to a large extent municipal are running behind industry, not ahead of it.
Industry is leading the way, in particular the high-tech industries, but not because of the good things that governments have been doing. If you speak to people in many of those industries, they will tell you that if only the government would leave them alone, they would strive and be able to succeed and do extremely well. The high-tech industries and private sector corporations whether small, medium or large in size, are all burdened with the same thing, a lot of bureaucracy, red tape, taxes, the different files they have to fill up and a lot of different forms.
Private Members' Business
A tremendous amount of red tape exists out there that is stopping or making make it difficult for small, medium and large sized business to strive in this country. There is a lack of co-ordination as we have too many conflicting policies at different levels.
My colleague was talking about the different challenges and spoke about the different things that the federal government could do. I can mention some of them as well. First, the federal government can stop harassing the Public Service. I believe and my colleagues on this side join with me in saying we have one of the finest Public Services anywhere in the world. Stop harassing them. Leave them alone and let them do their work.
We have two very fine national institutions in Ottawa, Carleton University and the University of Ottawa, as well as very fine community colleges. Stop cutting funds to education. Let these institutions train the future workers and leaders of this country.
Since this government came into office over $100 million has been taken away from the National Research Council. This is not acceptable. We have to reinstate funding to the National Research Council.
We talk about free trade with Mexico and with the United States. Why do we not talk about free trade within Canada itseif?
This government must also do something about the problem of cross-border shopping. It takes one hour to go to the United States from this city in order to fill up your gas tank and buy your cigarettes and come back. This has to be stopped somehow and we have to create more incentives for people to shop locally.
Other issues which my colleague did not have a chance to allude to is the question of infrastructure. Infrastructure is an excellent opportunity for this city as it will create annually about 6,400 jobs.
The return on the investment will be horrendous. This government can do something about it.
There is the matter of trying to create a link between this city and the outside world, for instance a direct link between Ottawa and Pittsburgh and Chicago in the United States and other cities around the world. As my colleagues have indicated, one of the most distinguished business leaders in the city, Len Potechin, chairman of

May 14, 1993
Private Members' Business
Regional Realty and the head of the National Capital Coalition for Better Air Service, has clearly stated that if the government approved this at no cost to anybody but with a tremendous benefit to the national capital region, it would help revitalize the economy here.
The net benefit would be at least $400 million to $500 million annually if the government would only move along with this particular initiative.
With regard to connections between Ottawa and other cities, my colleague mentioned highway 416, an excellent point. The federal government can show some wisdom by entering into some kind of a partnership with the provincial government to try and speed up this project.
The federal government through the ministry of the environment, and I know we have a fairly dynamic Minister of the Environment, could inject some funds in order clean up the Ottawa River and the Rideau River to try to ensure those two fantastic rivers remain accessible to people for recreational purposes.
Federal government policies with regard to immigration are severely damaging the local economy. Take, for example, second language training. As it is right now, any school board or teacher you speak to in the national capital will tell you that there are not enough resources for teachers in order to teach children of immigrants.
Not only are the children suffering as a result of that but also the adults who move to our city. They may initially have lived in Toronto, Montreal, or Vancouver and then moved to the national capital region. School boards in this region face a tremendous challenge trying to provide services to adults and children. It is really difficult. The federal government should set a standard with regard to second language training in order to help them and ease the pain of school boards.
The lists goes on. There are about 50 other ways in which the government could help the national capital region. In order to allow my colleague for Carleton- Gloucester to inject his wisdom into the debate, I will stop right here.
[!Translation\


Eugène Bellemare: Mr. Speaker, I appreciate this opportunity, since I will probably be the last member to speak today.
It is a pleasure to speak to the motion presented by the hon. member for Nepean, which says that the government should consider the advisability of establishing programs to assist in improving the economy of the national capital region. The hon. member is to be commended for her motion, and I may add that I appreciate her intelligence and that I had the pleasure of representing the municipality of Gloucester, when she represented the municipality of Nepean, in the government of the Regional Municipality of Ottawa-Carleton. With the hon. member for Ottawa Centre, we sat as members of the Ottawa-Carleton Regional Municipality. We are always in touch, and we have always worked together on economic issues in the national capital region. We are familiar with the problems of social services and education, and we believe there is room for improvement.
Earlier, the government member for Elk Island, in Alberta, referred to dozens of very interesting activities in the National Capital Region. I appreciate his interest in what is going on in our capital, but I must say I am very concerned about his government's attitude to the national capital. I have never heard a government member refer with pride to our nation's capital.
When we think of Washington, London, Tokyo or Paris, we see, hear and know that the national governments promote their capital. But in Canada since 1984, the national government of our country has taken diabolical pleasure in persistently attacking our capital. We must always improve our capital. Our capital must always be among the best and the most beautiful in the world. I and my colleagues from Nepean, Ottawa Centre and Ottawa-Vanier care about it.
The government must deal with the issues of interprovincial barriers preventing tradespeople from obtaining a competency card so that they can go and work on the Quebec side. We welcome tradespeople from Quebec to work in our community. Unfortunately, Quebec has a regulation requiring cards that prevents non-Quebecers from working in Hull, Gatineau or Aylmer, in our region. That is abominable and the government must make sure that the flow of workers goes both ways. The government must deal with airline service and the highway system in order to improve them. The government must stop cutting services and always dumping on public servants and frightening them.
May 14, 1993

In my riding, 52 per cent of the workers are employed by the federal, provincial, regional or municipal government or by educational institutions. This means that the rest work for small and medium-sized businesses. These companies must be encouraged by giving them better access to financing so that they can create jobs.
I congratulate Carleton-Gloucester, the Board of Trade, the Gloucester Chamber of Commerce, the French-language Chamber of Commerce of business people in the region, the Cumberland Chamber of Commerce. These are people who want to promote small business, who cooperate, who want to do things and get things moving so that people can work. Let us stop making cuts and rather work hard in the national capital to develop job creation programs.
More and more people are unemployed and on welfare. These people are not pleased with their fate and, even worse, cannot pay taxes. They too would like to do their share to pay for social services, but how can they pay or help to pay their taxes when they do not even have a job? Other people who are employed often do not feel that they are secure with federal programs. We are lucky here, a bilingual capital, a very high level of education, a wonderful quality of life compared to Washington, for example, where people feel unsafe a few blocks from the Capitol. Here the attitude and atmosphere is friendly; this is a place where one can raise a family and have a very wide choice in education. Young people must be given hope. Do young people in the national capital today have hope of finding employment in the region?
I ask what the government is doing to improve the region's economic programs. Our national capital will
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not be developed by breaking off parts of agencies or organizations and transferring them to Flin Flon or Saskatchewan or Alberta or anywhere else in Canada. We must promote our national capital. We need to think globally. As I just said, we need to think of the great capitals of the world and ensure that ours becomes one of the three or four greatest capitals in the world.
The NCC, the National Capital Commission, should be a "facilitator" in the national capital region. It should help with development. Contractors, for example, home builders often have difficulty obtaining cooperation from the NCC. I salute the construction industry and small business people like Guertin or Legault and companies like Coscan, Minto or Urbandale. I hope that the federal government will be involved in tourism, which is not a big expense but which can bring in a lot of revenue.
Finally, to conclude, I make a plea for the youth of the national capital. I ask the Government of Canada to improve the programs so as to give our young people hope.


The Acting Speaker (Mr. Paproski):: There being no further speakers, the time provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 96(1), the order is dropped from the Order Paper.
It being five o'clock p.m. this House stands adjourned until Tuesday, May 25, 1993 at ten o'clock a.m. pursuant to Standing Orders 28(2) and 24(1).


[Stage Direction]
The House adjourned at 4.58 p.m.
[Stage Direction]
Tuesday, May 25, 1993