Mr. Speaker, I am pleased to rise to speak on Bill C-53. I will be restricting my comments to Group No. 1 amendments put forward by my hon. colleague for Mercier.
Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small business, is this government's attempt to put a band-aid solution on a problem of access to financing for small business.
The Liberal government has helped to create that problem.
The mandate of the Small Business Loans Act is to facilitate debt financing for small, young businesses that would not likely obtain that financing under the current banking oligarchy in Canada. This mandate, which will be maintained under Bill C-53, essentially dictates that the government and therefore the taxpayer should take on more risk than private lenders are prepared to incur.
The only reason the taxpayer is forced to incur that risk is the Liberal government has mismanaged and over regulated the banking industry.
Even with the changes contained within Bill C-53, the taxpayer still covers 85% of any small business loan defaults. One of the amendments put forward by my hon. colleague calls on this taxpayer liability to be reduced to 50%. I am sure members of this House have enough respect for the average Canadian working to support this proposal.
Whether the members chose to support or oppose this bill, it must be remembered that the essential aspect of Bill C-53 is to provide high risk loans that the private sector cannot or will not provide.
If members of the House believe this is a fair risk to place on the shoulders of Canadian families they should support the bill. If they believe it is an unfair risk to place on the taxpayer they should oppose the bill. Furthermore, if members believe the private sector can and should provide small business financing they should oppose the bill and force the government to make fundamental changes to the financial services sector.
Two questions immediately came to mind after reviewing this bill. Why should the taxpayers take on more risk than the banks and is there no other way to ensure that small businesses have access to much needed investment capital?
The intervention by the government maintained by Bill C-53 will remove important market forces from the lending process and will lead to the funding of less viable business ventures. This may help to garner political support for the Liberals but will do nothing to foster a healthy economy.
This government seems to have no concern for average Canadian families struggling every day under the highest tax burden in the G-7. Clause 5.1 of Bill C-53 illustrates the government's indifference to the fact that it is playing politics with the paycheques of Canadian people.
This section refers to the minister's liability should a loan not be repaid. However, it is clear that the liability is that of the Canadian taxpayer. It is not the industry minister's problem if high risk loans are defaulted on. It is the taxpayers'.
For this reason I fully support the amendment and would include reference to the taxpayers in the legislation so that it is transparent to legislators just who is ultimately responsible should the loans under this act fall to default.
I think the issue of risk should be examined more closely. Risk is a key element in the proper functioning of a free market. If it is artificially lessened or eliminated from market interactions it leads to a misallocation of scare resources. That is, lending institutions will be less inclined, despite the provisions for due diligence contained in Bill C-53, to evaluate the long term viability of a business venture.
This situation will lend itself to the financing of unsustainable market ventures and it is the taxpayers under this regime who will inevitably be the losers.
This is supported by the government's own statistics which show that the default rate under the Small Business Loans Act was about 5% while the private sector was at approximately 1%. This is substantial when one considers the amount of money at stake.
The industry department proudly claims that the taxpayer has only a $1.5 billion liability. This is not an insignificant amount of money. Canadian taxpayers are at their breaking point. Someone has to say enough is enough.
Everyone in this House understands the vital role that small businesses play in the Canadian economy. Many of my colleagues from the official opposition are small business operators. We understand the difficulties small business owners face.
I remind the House that high taxes and regulations come first to mind when I think of how tough it is survive in a small business climate. If payroll and income taxes were lower, life would be easier for small business owners. However, the government does not care enough to do anything about these problems.
If members of the House wish to stand and talk about their commitment to small businesses, then they should first return every cent of the EI surplus. Until that time they have no right to speak on behalf of small business.
The impact of small business on the Canadian economy is substantial and Reformers have always supported the needs of small businesses. However, Bill C-53 is not a debate about whether small business is valuable, it is a question of whether small businesses can get access to financing without the government intervening in the economy.
High risk small business ventures can be financed in a competitive banking system, provided the lenders are not unnecessarily restricted from conducting their affairs in a manner that allows them to incur risk without incurring losses. It is really that simple.
The Reform Party is committed to getting the government out of the business of business and out of the pockets of average Canadian families, but this bill further entrenches the government's role in the banking industry. We must push aggressively to change the industry so that small businesses can get access to financing without the government setting the terms of that financing.
Bill C-53 and its predecessor the Small Business Loans Act allow the government to ignore the real obstacles to small business financing. No more taxpayer dollars should be placed at risk until the government has made substantial changes to the banking industry to create real competition.
At this point small businesses' access to finance can be reviewed and new legislation can be tabled if the government can demonstrate a legitimate market failure.
The government just cannot seem to get the fundamentals right. Bill C-53 plays politics with the taxpayers' paycheques. It demands that the taxpayer take on more risk than the banks by guaranteeing loans. Let us get the government out of the business of business and off the backs of the Canadian taxpayers.