Mr. Speaker, I am pleased to join in the debate today on Bill C-53, which concerns financing for small and medium size businesses.
I do so somewhat nostalgically remembering that during the government's first term in office I was Bloc Quebecois critic for industry, when it formed the official opposition. I was given this assignment by the leader of the official opposition, Lucien Bouchard, who now carries out his duties at the highest level in Quebec society with his usual talent and energy. His personal qualities are no doubt admired by all parliamentarians sitting in this House.
I recall great moments, I recall also the complexity of this industry, which is part of our daily lives, a highly complex and far reaching many faceted industry, the SMBs.
I would like to take this opportunity to pay tribute to my colleagues from Mercier and from Lévis-et-Chutes-de-la-Chaudière, who spoke earlier. They give heart and soul to the work on industry.
I would also like to thank them for their efforts in the area of research and development, in which we think the federal government—if I have grasped the problem—continues to treat business unjustly, especially business in Quebec, where brainpower is being lost through lack of sophistication, negligence or budget cuts to research and development, preventing Canadian and Quebec industries from maintaining their former position with respect to foreign competitors.
I am thinking of United Aircraft, in Longueuil, where there was a threat—settled now I hope—or a risk, of large numbers of the most competent employees losing their jobs to workers in the U.S. or elsewhere, because of the lack of Canadian government encouragement of R&D.
I would also like to mention the battle being waged by our colleague from Mercier on the Y2K bug. She has made a lot of people think. She has raised the awareness of a number of areas of activity about the dangers in store for us if we do not get our act together as far as informatics are concerned.
Where the Privacy Act is concerned, she has succeeded in making the Minister of Industry more aware of the fact that the disclosure of personal information is already well looked after in Quebec. This is no doubt part of our needs in this modern society, to ensure that corrections and refinements are made as required so that confidential information remains exactly that.
These are all examples of the fine work being done by our colleagues in the Bloc Quebecois in conjunction with the others on the committee. Industry is a very thankless area to work in, because there is rarely anything spectacular about it, but it does affect the everyday lives of the population.
When we speak of peoples' everyday lives, we cannot avoid mentioning small and medium size businesses. If there is one area where our communities can expect development, it is the area of small and medium size businesses. Each in its own way, in its own area of activity, they are at work, often in a very humble way, but they also have to be highly efficient because they do not have much margin for error.
I take this opportunity to pay tribute to all women and men who work in or run small and medium size businesses in my riding of Trois-Rivières, which includes the municipalities of Trois-Rivières; Trois-Rivières-Ouest; Pointe-du-Lac; Yamachiche, where there is an impressive small business called Dufresne et Fils, which does business all across the North American continent. In Louiseville, there are a number of very prosperous small businesses. In Maskinongé also, in the furniture industry. In Saint-Léon-le-Grand, Bergeron et Cie is active in the potato industry.
These are very prosperous businesses that are run well and responsibly. These are businesses that keep a close eye on the books, know where they are going, and know how to best use the resources at their disposal, including of course the Small Business Loans Act, which is of very great use to them.
As the hon. member for Lévis-et-Chutes-de-la-Chaudière said earlier, should Quebec achieve sovereignty some day, as I dearly hope, this is legislation that will probably serve as a model for Quebec. It is the outcome of a long process between the Canadian government and the business community to try to meet a specific need. It is to the credit of the federal public service to have initiated and maintained, since 1961 if I am not mistaken, an act as relevant as that one, which of course should constantly be reviewed, as was the case when I was the critic for industry. This is why I am somewhat familiar with the issue. This is a bill that is greatly appreciated by the business community. I can attest to that.
There is one criticism that is often heard about the administration of that act. Between 30% and 40% of the loans made by banks and lending institutions would be granted even if the act did not exist. This is a criticism about the act which I find rather petty.
We should not be criticizing the bill, as some members of the House would like to do, and claiming that, given the situation, we should perhaps be repealing the legislation or slashing the budgets involved to the point of ineffectiveness. What we should be doing is talking plainly about abuse of mandate. We should be talking about some instruction for officers in lending institutions who should not be using the legislation to serve their own interests.
If memory serves, the intention of this legislation is to have the government help offset the risk run by lending institutions. However if this becomes the rule, it goes against the spirit of the law. If there is no risk in making a loan, then there is no need to rely on the Small Business Loans Act with the government's guarantee.
As a member of the public and a parliamentarian using the forum available to me, I say that loans officers need to be told to respect the spirit of the law and to make loans when appropriate. When the loan does not represent a risk, then make it. That is one of the reasons we have banks.
Speaking of banks, and given the billions of dollars they make in profit, we could ask them to take risks, with respect to the social responsibility that is rightfully theirs.
When profits amount to $7 to $8 billion annually, when the Royal Bank made $1.8 billion this year, it should not be as hard as all that for the Minister of Finance or the Prime Minister to tell the banks to take a few more risks. It is obscene to want to make increasingly high profits and, to top it all, to use taxpayers' money to offset the risk when you are dealing with those you have a responsibility to deal with, which is to say those borrowing money.
I hope the government will change course and take the necessary steps to bring, through publicity and governmental influence—and we all know how much influence government can have when it wants to—pressure to bear on universities and financial commentators to ensure that banks and lending agencies stop misrepresenting and using for their own purposes the objective set out in this legislation, which is to reduce the risk, if any, incurred by the lender. However, when there are no risks involved, the lender should not be able, under this legislation, to avoid risk completely and have the government take on all liability.
The other criticism levelled at this legislation, one that has always annoyed me, concerns potential losses for the government.
Sometimes, businesses go bankrupt, and the risk incurred varies according to economic conditions, because the government guarantees loans up to 85%. The government then has to dig in the pot set aside to compensate lenders after a financial disaster. When this happens, we are tempted to say that the costs are too high, that the amount paid out of the contingency fund for losses is too large.
Vigilance must always be exercised, because public funds are involved. However, for that very reason, our approach should not be based solely on accounting but on public interest. It would then be clear that, while it may have cost so many millions or hundreds of millions of dollars in a given year, the program also generated so much economic activity. They helped create so many jobs and generate so much direct and indirect tax revenues. They also helped to promote certain economic activities that would not have come about if these hundreds of millions or tens of millions of dollars had not been lost.
If these issues are not taken into consideration, there is a link missing. One cannot use an approach based only on accounting if one wants to protect the public interest. When relying too much on an accounting approach, it is even possible, according to some kind of dubious logic, to wish for the total elimination of this fund, which would be disastrous in my view.
So, we need to emphasize not only the negative impact but also the positive effects of losing or risking part of the taxpayers' money.
We have to go back to basics. We have to follow the spirit of the law and ensure that the lending institutions lend the money when there are no risks involved but also that they have the protection they need to take a reasonable risk that they would not take if there were no funds to this effect. That is the spirit of the law.
I also want to remind the House of some statistics on what is being said about this problem. There are always interesting to review.
According to the Canadian Federation of Independent Business, 29% of small business operators claim that financing is one of their biggest concerns. The existence of this legislation and its orderly management are crucial to those who are the main engines of our economy, who help create and maintain jobs throughout Canada and Quebec, especially in the regions.
This is very important: 29% said that credit availability was one of their major concerns.
Close to 90% of SMBs said they find it very difficult, or difficult, to get credit at a reasonable cost, whereas only 10% said it was easy to get financing. This gives us an idea of the difficult context in which SMB managers operate.
Fifty-six per cent feel the small business financing program should only guarantee loans for those SMBs that otherwise would not have access to credit. This is another important point.
Some 80% answered that the Small Business Financing Act should also address working capital financing. This is the other thing I wanted to talk about.
For a long time now—as long as I have been in politics, which is a long time—we, in the Bloc Quebecois, have been saying that the Small Business Loans Act should cover working capital, which is often the Achilles tendon of SMBs. They have bills to pay, the accounts payable are not being paid and, when it drags on for too long, creditors get worried, they panic and get the bank on board. They pull the plug resulting in a lot of layoffs and all the economic and social consequences we know.
Knowing how difficult working capital management can be, including clearly defined measures in the legislation would provide a tangible and practical means to support economic development, especially regional economic development, through the small business sector.
I will close on a very positive note. I think the Department of Industry deserves credit for recognizing volunteer and non-profit organizations. I am thinking particularly about cooperatives which, from now on, will be able to benefit from the Canada Small Business Financing Act.
It is a plus, knowing how important the cooperative movement and the cooperative spirit have become, particularly in Quebec. Cooperatives will now have the additional advantage of being able to rely on the support provided through this important program. Let us just hope that the lenders will have an open mind in administering this legislation.
I remind members of the valuable role played by small and medium size businesses, both in Canada and in Quebec, especially in the regions, which, for the most part, could not survive without local economic development. Let us hope these small and medium size businesses will not suffer too much from the perverse effects of globalization, where more and more we see not only the concentration of capital, but also the concentration of businesses.
This is to say that decisions are increasingly made by select groups, too often by the same international stakeholders, who can change the rules of the game at will and put undue pressure not only on the countries themselves, but also on the continents.
There is a risk that globalization may become the globalization of misery, of misery that is all too prevalent in Africa and South America and that could reach us should governments yield to transnational corporations, which have recently exerted pressure to achieve that result. Let us not forget it because this directly affects our small and medium size businesses.
Transnational corporations are taking measures to give themselves even more power, quasi-political powers, against sovereign states. This was articulated in documents such as the Multilateral Agreement on Investment, which would have had eminently perverse effects on the whole economy. This agreement would have been a kind of charter of rights and freedoms for multinationals against sovereign states. In fact, what is required is an international code of conduct to ensure that, particularly in the environment sector and in developing countries, we put a stop to measures or to investments that worsen the situation and only serve the interests of shareholders. This is a shameful short term vision.
Rather what we need to do is to plan, discuss wealth distribution and business deconcentration, and help small and medium size businesses. There are too often people who are endorsed by sovereign states through the slush fund. We know how it works.
We also know that it will take a lot more intellectual discipline in the years to come—it is not over yet—and that we will have to support our local leaders, including industry people and the unions representing our plant workers, to ensure that society operates in a civilized and increasingly fairer way from a socio-economic point of view.