INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 3, 1998

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I'd like to call the meeting to order, pursuant to an Order of Reference of the House dated Tuesday, October 6, 1998, consideration of Bill C-53, An Act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses.

We're very pleased to welcome back Mr. Garth Whyte from the Canadian Federation of Independent Business. We also have with us today Mr. Jason Baldwin from Aztec Ascent.

What I would propose is that both witnesses have some opening comments. We don't have any written statements this morning. Then we'll proceed to questions.

We are very pleased that Mr. Whyte has agreed to come back, because when they were here originally, we didn't have the draft regulations before us.

I'll turn it over to Mr. Whyte—or Mr. Baldwin—for some preliminary comments.

Mr. Jason Baldwin (Owner, Aztec Ascent): Hello.

I have two concerns about the bill in question. First, it is my understanding that the small business loans won't be usable for leasehold improvements. I think that will affect a large number of businesses.

My understanding was that people were thinking that it would affect primarily restaurants, but I'm an example of a small businessman who used the small business loan to start a business that obviously isn't a restaurant.

My business, Aztec Ascent, is an indoor rock-climbing gym. Although it doesn't make up a huge percentage of the businesses out there, it's one example of a type of business that does use the small business loan for getting started. It wouldn't have been possible for me to get my business started without the help of a small business loan.

The second point I'd like to make is that it's also my understanding that the small business loan won't be able to be used to purchase businesses, I believe, for leasehold improvements.

If a business is about to be purchased, I think the only reason to purchase it is because it's successful. I think limiting people with large amounts of cash to purchasing these types of businesses—i.e., people who could finance it entirely on their own—is a bad idea.

As well, if a person wouldn't be allowed to purchase a successful business using a small business loan, but instead would be forced to start a new one, it seems kind of hypocritical, in a way, because if the one business is only in existence and successful, what's the point of starting another one in competition with it when someone else could buy the first business?

Does that make sense? I'm not sure if I articulated that clearly.

Essentially, those are the two points I would like to make.

The Chair: Thank you very much, Mr. Baldwin.

I'm going to turn it over to Mr. Whyte from the CFIB.

Mr. Garth Whyte (Vice-President, National Affairs, Canadian Federation of Independent Business): Thank you very much, Madam Chair.

Thank you to the committee for asking us to appear again. I was delighted to get the phone call, but then I was a little overwhelmed, because when I got the phone call late last week, we were in the middle of opening our new office in Ottawa. Everything is in boxes, including the previous brief I gave to you folks the week before. I had no fax and no e-mail to get my brief, but I have a copy now.

Needless to say, I'm not as prepared as I'd like to be today. However, I'm here because you requested us to come back. The committee process is very important to the Canadian Federation of Independent Business. We work with all members of Parliament. It's really important, and we really appreciate the committee process.

So we're back here at your request, but we're also here because we were requested by the Canadian Restaurant and Foodservices Association to appear, and we were requested by the officials of the department to appear. So we're here on kind of three fronts.

First off, we're here because we agree with the observations of the Canadian Restaurant and Foodservices Association about subsection 5(4) and paragraph 12(7)(a) of the regulations, and, as Jason was saying, about existing leasehold improvements and the buy-back agreement of 50% of the cost of the finance assets minus 10% per year. Those two issues we would have a concern with.

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I'm going to refer to the brief that was submitted to the committee earlier, in October. We gave 30 copies of it. I hope people have a copy. It was a pretty detailed brief with several bullets.

I want to talk about two of these issues, because it foreshadowed what occurred. The first bullet was on data collection and monitoring. I will just reread it:

The methods of assessing the program are critical. In the past this has been a weakness in the SBLA program. Tighter monitoring and program evaluation is a must. For example, to what extent do we know today which elements of the 1993 and 1995 changes bore fruit...and to what extent can we measure these effects? On another note, judging the SBLA by jobs produced is, in our estimation, more of a political measure than a true measure of this program's success. Measure instead firms that graduate firms out of CSBFA-type financing, their growth rates, financing needs, etc.

In other words, one of the goals is to monitor how we help firms that need financing get off of financings into the future.

Secondly was the issue of regulatory flexibility. It's a principle I guess I'd like to see ensconced in the act. We said:

CFIB understands the need for the government to be able to move quickly when there are problems that need correction under the program. An example would be where the abuses of related companies occurred. In such cases a regulatory approach makes sense. However, for those issues that are fundamental to the program, for example structural changes to the program such as lenders permitted, loan thresholds, qualifying loan recipients, etc., these should be dealt with under legislation, not regulation, in order to ensure accountability and transparency under the program.

Hopefully I'm here to meet all sides. We agree with the Restaurant and Foodservices Association because they were changing the lending criteria. However, we do not blame the department, because our past practice with the department has been excellent, and it was excellent following this issue.

What they were trying to do, I believe, was protect the integrity of the program and close a loophole where there was abuse. However, they may have used a sledgehammer to kill a fly. Usually that's what happens, and then usually what happens is that they talk to the stakeholders, as I believe they have. I also believe that when you deal with the restaurant association this afternoon they'll tell you that the department met with the banking association and with the restaurant association to deal with this issue. That's been the practice in the past with regulations.

However, we do think this does show the principle of better monitoring; keep the program consistent. When we change the rules all the time, we can't monitor past experiences. That's why we were concerned and pleased that the threshold wasn't changed and that certain things have stayed the same.

We also think, on regulations, that some acts have it explicitly stated in the regulations that the department must consult with the affected parties. It's explicitly stated. This committee may want to put that clause in there.

Another observation is that we need balance between the needs of the market and protection of the public purse. This is not a handout program. This is to fill a need for those firms that could not get financing under other circumstances. They're willing to pay a premium and pay back the loan. This shouldn't be seen as column shifting or as a need to offset bank risk.

I pulled some statistics out of one of my boxes; it's brand new stuff from our members opinion survey, October 1998, which I didn't have before when we made our presentation. I note that the restaurant association said that their sector in particular has a difficult time getting financing. We looked at our numbers on availability of financing, and they're correct. When we looked at all the different sectors, the sector on hospitality, personal and other services, 38% said they have difficulty, and actually identified to us that a high priority should be availability of financing.

So there is a gap there. The question is, is it incumbent just on the SBLA program to meet that gap? We would say not. We would say it's also incumbent on the banks to start filling a need as well.

On this one, then, I think it's a good case study, where we have well-intentioned parties who have finally gotten together and discussed this through. I think they're going to come up with a solution.

Our solution was, let's truly identify what the problem is, validate it, and then close the loophole, but at the same time do not kill the program and do not kill examples such as the one Jason is talking about.

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It's a legitimate concern that the way the reg was proposed, it would have hurt some of our members, but I think that proposal would have changed after they had time to discuss it with us.

The final observation is that this was a rushed process. From our point of view, you deal with the act; the act sets the parameters; and then you deal with the regulations. The regulations were brought forward and there was less consultation. However, it does state the need for the act to state the principles; for the act to state the parameters of what the program is; and for regulations to close things where there are things that you didn't anticipate, whether it was abuse or some of those issues. Because we don't want to see this as a handout. We don't want to see it for bank risk.

The department has been very good with us, consulting us to death, in a sense, on a lot of these things, and this is one we just didn't get a chance to talk to them about. I've had several calls with the restaurant association and with the department since your call on Friday.

Thank you very much, Madam Chair.

The Chair: Thank you very much, Mr. Whyte.

I want to thank both Mr. Baldwin and Mr. Whyte for being here this morning.

I'm going to turn it over to questions. Everyone can ask questions of either party.

Mr. Jaffer.

Mr. Rahim Jaffer (Edmonton—Strathcona, Ref.): Thank you.

You mentioned, Mr. Whyte, that you find the committee process very useful, very important, and that you take advantage of that. I understand one of the amendments being put forward here in our committee to deal with Bill C-53 is the issue that if in fact any future regulations affecting the bill will be developed from Industry Canada or the minister, it would be put first to committee so that parties being affected by it could address that particular regulation and how it would affect them.

I was just curious about, and wanted to hear, your opinion on that, what you think of that, and if that would be useful to you.

Mr. Garth Whyte: That's a good observation. It's a double-edged sword. It puts it in the public eye, but at the same time, it may politicize the process as well. There's a difficulty if it goes to committee first and then to the stakeholders that are being impacted and then it's already etched in stone. That would cause us some difficulty. We've been there before on some issues. So I don't know; we'd have to walk that line very carefully.

I think with the committee, what you've been doing with the act is making it tighter and setting out some parameters. I think that's the way to go, but you can't anticipate every particular regulatory change until we monitor how the program is being delivered.

Mr. Rahim Jaffer: Sure. Currently, I guess—and again, perhaps you can comment, or Jason can—many people complain that often when regulations are put in place, people aren't consulted, or there isn't that much transparency, as you mentioned. This is obviously an attempt to try to increase that transparency and to try to increase the involvement by people who will be impacted by those changes.

On that level, do you think that could be somewhat useful, in terms of transparency?

Mr. Garth Whyte: Yes, I do. Actually, this committee has been excellent—for example, calling the banks to task. We were a part of it. You were a part of it. We said we wanted better accountability of their lending practices, and a process was established.

Maybe the way to do it is to establish a process to look at practices over a two-year period of what you've done and who you've consulted. It would be extra work for the department, but if you felt they'd been doing their job, then that would be adequate.

However, you have to make sure you're not handcuffing yourself and working yourself to death, and the department. I believe with the SBLA, the department has been very open, working very closely with the stakeholders, and consulting over time. However, we still have this evaluation problem, and we still have trouble monitoring issues. That needs to be tightened down.

Perhaps I could sneak in another point, which I forgot to bring up. We're concerned that when you expand this program to include the voluntary sector, all of a sudden you're throwing in a whole new criterion, a whole new sector. We'd like, at least if it's a pilot project, to keep it separate. Maybe you can administer it, but keep it separate, because it could really cause problems as well. All of a sudden it's very difficult to manage a program that is intended, in its first principle, to help those firms that couldn't get financing—usually young, new firms that can't get financing elsewhere, and are prepared to pay a higher premium. Again, it's not a handout.

Mr. Rahim Jaffer: Okay.

I think I'm okay right now, thanks.

The Chair: Thank you. Mr. Bellemare.

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): Merci, madame la présidente.

Mr. Baldwin, you mentioned leasehold improvements. You rented an office space, or business space, and then you had to improve it to accommodate your personal business.

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I personally am in favour of leasehold improvements being included, but just to play the devil's advocate, so that we have the arguments on both sides, what if someone told you, look, it's an indoor mountain-climbing—

Mr. Jason Baldwin: Indoor rock-climbing centre.

Mr. Eugène Bellemare: An indoor rock-climbing centre; I've seen that on TV, and I think my daughter in Toronto does this kind of thing. Every time she tells me, I'm a little worried that she may break a limb.

However, having said all that, someone could say in this committee, well, there are not too many businesses like that. I don't know how many there are in the Ottawa region, for example, since you're from the Ottawa region. If you had to sell, and the next business person didn't want to have a wall rock-climbing business, but just a straight business, such as selling computers or selling wares or whatever, how do you explain this idea that leasehold improvements should be included in the value of the business when you sell it?

Mr. Jason Baldwin: That depends on why you're purchasing the business. If someone wants the location for a purpose other than originally intended, it doesn't matter what the original business was.

For example, if I wanted to expand my rock-climbing empire to, say, a previous McDonald's site, all leasehold improvements that had been done at that McDonald's would be completely useless to me. I would have to cut the building and start afresh. It's more an issue that if someone is going to take the space, obviously they have a use for it, and if not, not.

So I don't see how that would affect the loan process. The fact that I received the loan for this business shows that the banks thought it was a good idea and my investors thought it was a good idea. We've been running successfully for awhile, so obviously the public agrees also it's worthwhile.

Mr. Eugène Bellemare: Should we include leasehold improvements for the purchaser if the purchase is for a similar, or same type, of business?

Mr. Jason Baldwin: I would say yes.

Mr. Eugène Bellemare: Suppose someone wants to buy it but they want to sell chocolates instead. They don't want to climb walls.

Mr. Jason Baldwin: I would say you shouldn't limit the reason you give the loan to people. By doing it case by case like that, I think if they're going to purchase a facility that has a lot of leasehold improvements, demolish it all and put in something else, they'd better have a very good reason for doing that. Obviously, the banks are very active in how they disburse the funds for these loans. If the banks were to see someone wanting to do that, I think they'd say it's probably not a profitable venture, and they wouldn't give them the loan anyway.

Mr. Eugène Bellemare: Do I have more time?

The Chair: Sure.

Mr. Eugène Bellemare: In another area, then, we hear the banks telling us that small businesses depend on the amount of the loan. I keep questioning that. What is really a small business?

If you came to my constituency office, I would see you as a loner wanting to get into business, or to continue in the business. Do you think the loan, to recognize a small business, should be related to his or her: (1) gross revenue; (2) net revenue; (3) number of employees; or (4) amount of loan?

Mr. Jason Baldwin: That's a good question. I would say that before a business starts, it's very hard to determine what kind of revenue it's going to have.

Making criteria based on expected revenue would be a bad idea. If the business is already in operation and is looking for a loan to expand business, then you could look at revenue and see if that's a valid criterion.

If the business is obviously making millions of dollars, a small business loan would be irrelevant and would be a waste of that kind of fund.

Limiting it by the number of employees is probably a lot more relevant.

And what was your third point, sorry?

Mr. Eugène Bellemare: The amount of the loan.

Mr. Jason Baldwin: The amount of the loan is very important, I'd say. It's very important for businesses to be responsible in the amount of money they bring to the business as well.

Mr. Eugène Bellemare: But would you define a small business by the amount of the loan?

Mr. Jason Baldwin: Define it by the amount of the loan?

Mr. Eugène Bellemare: My thought here is, what about a person who has a multiplicity of small businesses, these persons who have two, three, ten, twenty-two businesses? They are always starting up businesses. They may personally be worth millions of dollars, but that particular business may be a small one—a $100,000 operation, $200,000 max, or even $50,000.

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How would you define “small business” in that context?

Mr. Jason Baldwin: In that context, if it's incorporated or registered independently, I think that's the way we'd have to look at it, because I believe that's the way the law would look at it.

If you're trying to limit one person from getting multiple business loans to start multiple businesses, simply say that every loan needs to have someone to sign for it as, obviously, the person responsible for paying it back. You could limit the number of loans a person could take for the number of small businesses.

For example, if you want to say that they couldn't start more than one, you could say, obviously, no more than one. If you think someone running two small businesses is reasonable, you could limit it to two business loans. And I wouldn't limit it to the gross dollar value, or anything like that, of the total companies, because you're starting to, I guess, break down the corporate veil there, which is the whole reason that would be in place in the first place.

The Chair: Mr. Whyte also wishes to comment, I think.

Mr. Garth Whyte: In our presentation we address this at length, I believe. We are one of the founding peoples of this loan. It's been around for 18 years. It's successful around the world, but to be successful it has to meet certain principles, and the definitions are dictated by the purpose of what you're trying to do here.

The purpose is not to give the banks a break. The purpose is not to give a person who can get loans elsewhere a break. The purpose is to leverage financing, through government backing, for those firms that couldn't get loans in the first place and are prepared to pay a higher premium.

One way to contain the loan—and we've argued this many times—is to restrict the loan size. A quarter of a million dollars is getting up there, but a quarter of a million is now what it's at. We suggest it not be increased.

As well, since it's in the act, the definition of a firm, which is $5 million or whatever, I think is fairly high. You can see that the average loan size under the act is going up, but we need better monitoring. The average loan size for small firms was $30,000. I guess it's at $60,000 now. I think the idea is that this is not to solve the small business financing problem.

We're going to be appearing before the Senate committee on Thursday on the MacKay report and the finance committee on Friday on bank mergers. These are big issues, which I would like to spend a lot more time on.

The SBLA is a niche-type program that is supposed to deal with a particular need that is across sectors but linked to hard assets. I'm concerned that some of the discussion is moving into working capital, or if I need a loan....

Let's say, using Jason's example, they have the rock-climbing leasehold improvements and put something else in. Should they be able to carry forward that SBLA loan? I would say no. I would say they have to get a new leasehold-type loan.

However, on the restaurant side, which is a big issue, a lot of it is taken over if it's a particular franchise, and then we have to evaluate what the impact would be.

A lot of this responsibility does sit with the banks, and we're concerned about—and we reference it in our brief, and ask the committee to look at this—what the impact would be of this on the merger.

Mr. Eugène Bellemare: But let's go back to the leasehold part. You keep referring to restaurants. I'm trying to stay away from them.

Mr. Garth Whyte: I'm sorry.

Mr. Eugène Bellemare: Are we having a small business loan for restaurants law being made here?

Mr. Garth Whyte: No. I appreciate that.

Mr. Eugène Bellemare: Let's try to get other examples.

Should then the loan be for leasehold improvements if the purchaser wants to continue or develop a similar business where he needs the same leasehold improvements? Should there not be that hook there?

Mr. Garth Whyte: Right. I think so. I think we have to look at the various examples and work out the appropriate solution.

What if, on the other hand, the same loan has been flipped three times? Do we want that?

Mr. Eugène Bellemare: Explain.

Mr. Garth Whyte: What if there was a leasehold loan, that person goes out of business, and someone else gets it but it's rolled back into the SBLA through the bank. I believe the department brought forward an example where they said it was done three times. That is abuse of the program.

Mr. Eugène Bellemare: How do you address it?

Mr. Garth Whyte: We would address that two ways, I think. One is to identify the extent of the problem, how serious or severe the problem is, and two, to close the loophole, through regulations, that wasn't anticipated by the act.

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However, in this case study that I've been called back for, I think the definition was made so broadly that it brought in a lot of legitimate loans, and that's where the concern has been. I think in this case you'd have to work with the sectors that are most affected or concerned with that. One of them—and I hate to bring it up again—would be the restaurant sector.

That's why we're here, I believe.

Mr. Eugène Bellemare: I think you're weakening your case when you keep repeating restaurant. You have to have other examples.

The Chair: Thank you.

Mr. Nelson Riis (Kamloops, Thompson and Highland Valleys, NDP): Can I have a supplementary question, please?

The Chair: Well, no; it's kind of out of order.

[Translation]

Mrs. Francine Lalonde (Mercier, BQ): There will be several.

[English]

Mr. Nelson Riis: Could I have unanimous consent to ask a supplementary question?

The Chair: Does he have unanimous consent to ask a supplementary?

Some hon. members: No.

The Chair: Just to clarify, for the committee's sake, I think one of the points Mr. Bellemare was trying to make was the fact that when you sell an existing business—if, say, Mr. Baldwin wanted to sell his business—as a going concern, as an ongoing business, he would want to include those leaseholds in the value of the business he was selling. The regs, as they're drafted right now, would exclude him from doing that if he was selling it to another small business.

I believe that was what Mr. Bellemare was getting at. I think he was trying to get from you, Mr. Whyte, that you would agree—

Mr. Garth Whyte: I would.

The Chair: —that there would be a problem with the way the regs are drafted if Mr. Baldwin was—

Mr. Garth Whyte: That's right.

The Chair: You're talking about, and the department, I think, was looking at, cases where there had been unsuccessful businesses and they've been refinancing the same leaseholds. We're talking about the successful business, or that possibility.

[Translation]

Mrs. Lalonde, please.

Mrs. Francine Lalonde: I'm listening to our extraordinary interpreter. Sometimes, like today, I listen in French; other times, I listen in English.

Mr. Whyte, I have a problem. Regarding the regulations, you told us you'd be talking with the banks and with the department and then you'd see. The problem is that I'm supposed to make a judgment on a piece of legislation and I'd like to know what it means. Yo are telling us, essentially, that we'll know what it means once talks have been held with the department and with the banks.

However, and I'd like to hear more about this from you, you're giving us a direction, but you should elaborate on it for it to be really useful. You tell us that the principles ought to be incorporated into the act. You give us to understand that some principles are not currently incorporated in it and that there are some provisions which the minister can use if some abuses were to occur, but you don't tell us what those provisions are.

I'd like you to suggest what amendments you'd wish to be included in the act. You want to avoid confrontations with the department, and you are right, because the decision is up to them, but we need some indication from you on what you think would be useful.

[English]

Mr. Garth Whyte: If you know us, and follow us, we have confrontations with the department all the time. One time our president appeared before the committee and said that the industry department should be turned into some condos. We now have a very good working relationship with them, but we do have confrontations.

I think with data collection—and monitoring is a first principle—there's no reason we have to keep coming every couple of years and have the same sort of debates and not know the full issues.

Secondly, though, as we read in our statement twice now, on the regulatory flexibility side, I think one of the fundamental principles would be that if there are going to be structural changes to the program, they should be made in the act. The lenders permitted, the loan thresholds, the qualified loan recipients—all those things should be defined in the act. So whenever there's a regulatory change, it's more, oh, we didn't anticipate this particular little issue or abuse, which can be quickly closed without changing overall a definition.

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I think in the case study we're talking about, which is on leasehold improvements, the regulations started to change the overall definition and the terms, and that really shouldn't happen. That should be addressed in the act.

I think that's what this committee has brought out, so that's where I would agree with you.

[Translation]

Mrs. Francine Lalonde: You described the structural changes which seem to be present in the amendments. I guess you haven't described all of them. For the act to be satisfactory, we should list all structural changes included in the regulations.

[English]

Mr. Garth Whyte: I see, yes.

[Translation]

Mrs. Francine Lalonde: Finally, that's what I'm expecting, and I'd like you to help us. You have given us some elements, but we need more.

[English]

Mr. Garth Whyte: Yes, certainly. I would have to go through the act and get back to you in a letter, but I agree that you could put it in there. I would go one step further and just put in there, for regulations, that consultations should be made with the stakeholders. It's implied with all acts, but sometimes it's explicitly stated, provincially at consumer legislation, environmental legislation, and I think this committee would give a comfort level to everyone if this was done.

I can't, off the top of my head, list all of the things that should be there, but the $250,000 maximum loan size should not be changed by regulation. That should stay. The size of firm as defined by regulation? That should not be increased or decreased. If the intent of the act is for cost recovery, and if there are some some problems happening there, and if the officials find out, then we have to go before a committee and make some quick changes on it. But there may be some loophole that isn't anticipated, such as through abuse. People are very good at finding ways to get free money. That's where those loopholes may have to be changed quickly, and that's where, if they get all the stakeholders' agreement, perhaps it could be done.

Having said that, sometimes they approach stakeholders and they don't think about rock climbing. Rock climbing gets blindsided because they only deal with restaurants. That's a concern that has to be dealt with as well.

[Translation]

Mrs. Francine Lalonde: Have you seen the Canadian Bankers Association's presentation? Do you know what problems they have with the regulations?

[English]

Mr. Garth Whyte: I've read their concerns in the presentation by the restaurant association, and I talked to the restaurant association, and I guess—

[Translation]

Mrs. Francine Lalonde: There are the bankers as well. Their concerns were broader than those of the restaurant association.

[English]

Mr. Garth Whyte: I haven't seen it. I must apologize. But since I have this opening, I will take it.

They identified—and I'll quote the letter—that:

A recent study of the Canadian Bankers Association concluded that, of the 13 groups identified, the accomodation and food service sector:

—most often mentioned financing as a key issue affecting their industry,

—had the highest proportion of no business financing at all,

—are better prepared than other groups when approaching their bank for a loan,

—and are turned down more often than any other group.

Then when I heard through other sources that the Canadian Bankers Association validated that this regulation would really hurt this industry, it raised a concern to me. That concern would be that they are underfinancing a legitimate sector.

I would like this committee to monitor not just the SBLA but also, when we call the bank back on its lending practices to small firms, their lending practices by sector—especially in light of the merger. We are concerned, when the merger occurs, that one of the banks will control 70% of the market in certain sectors in certain provinces. That means they may feel they are overexposed, and they may cut down their market share in that area.

We think this is something that is in the broader context. You bring out a very good point. Beyond the SBLA, are banks doing what they should be doing and lending for risk, as the MacKay committee points out? And this is one of the sectors that brings...that this regulation just happened to stumble upon, because people are depending more on the SBLA for the leasehold improvements than they are through the regular financing vehicle.

A good example was brought up of a fairly successful entrepreneur that had many enterprises going, and then to use the SBLA, why couldn't that person get the loan under regular circumstances? They have a lot of other assets happening. What's happening there? Is that going beyond the intent of the act, which is intended to help those firms that can't get loans under normal circumstances, and are prepared to pay a higher premium?

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The Chair: I think Mr. Baldwin also wishes to reply to that.

Mr. Jason Baldwin: In terms of banks, I talked to a number of them, because I was looking at starting my business over a number of years. I was originally going to start in Kingston, but I didn't have the money. I wound up going to Japan to work for awhile to generate more capital so that when I came back I'd be more appealing to the banks. One thing I heard time and time again from many different banks was that they were more willing to give money from the SBLA than they were from themselves.

They do view it as a bit of a safeguard for themselves, in all honesty. I don't know how you can change that. Since the government guarantees a large percentage of that loan, the banks obviously are going to be a little bit more free with money. It doesn't put them in quite as vulnerable a situation. That's my point.

The Chair: Thank you.

Madame Lalonde, last question, please.

[Translation]

Mrs. Francine Lalonde: I read the letter from the bankers at the same time as you.

[English]

The Chair: I handed that out because I received it by fax, and the clerk was in the process of having it photocopied when Mr. Whyte mentioned that they had the meeting yesterday. I was going to hand it out this afternoon, but because it was mentioned....

So they haven't seen it. It's only been sent to the committee.

[Translation]

Mrs. Francine Lalonde: Okay. We'll have to discuss it again. There is no mention there of some issues they had raised and that don't seem to have been settled. Among other things, according to them, since the act would require them to request the same guarantees as for other loans, it would reduce the borrowing capacity of small businesses. I take it that you are concerned about it.

[English]

Mr. Garth Whyte: Yes, we're concerned about it. Again, if you can get financing out of the SBLA and it doesn't eat up your own personal guarantee, then you should be able to get additional loans you would need. It sounds as if it's being used as, instead of accessing additional financing, the only means of financing, and that would be a concern to us.

[Translation]

The Chair: Thank you very much, Mrs. Lalonde.

[English]

Mrs. Barnes, please.

Mrs. Sue Barnes (London West, Lib.): Thank you very much.

I'm sure it was just an oversight when you said “when” the banks merge, because I don't think that's been settled yet.

Mr. Garth Whyte: I stand corrected. It is an oversight. You're absolutely correct.

Mrs. Sue Barnes: I just thought we would erase from the record.

The issue I wanted to get at—and very shortly—is that I personally, as one member, and as a new member of this committee, would not want to spend my time sifting through the minutiae of many regulatory words, but I think it's fair to say, and probably would hear agreement from around the table, that you don't do in regulations at the back door what you didn't do in the front door in the statute—address policy changes, whether they were intended or inadvertent.

When that has been found, I think that's when you want to address things and take a little clearer look, but I don't think the intent is that in every regulatory situation you want to be going through with a fine-tooth comb, because I think this process, through the interaction with our witnesses, brings out what we need to find.

So just because I'm interested in some regulations that have been identified as a problem area for us, I would not want to have it be misunderstood as interpreting that as every single regulation ever written in future, or anything internal into a statute, required it in all instances. Because I think there's a lot of minutiae you have identified that could properly be relegated in a normal context, but here it's a little different scenario.

Is that more your understanding of the situation?

Mr. Garth Whyte: That's exactly our understanding. I couldn't agree with you more.

Mrs. Sue Barnes: Okay. Thank you.

As well, I'm interested in your sector analysis. I know that will be a debate of another day, or I hope it will be, because I think it does clearly show having some problem areas for us to address, but I am more interested in this: When you survey your own members, do you do follow-ups on job creation?

Mr. Garth Whyte: Yes.

Mrs. Sue Barnes: How accurate do you think your numbers are in accurately assessing job creation from SBLA loans?

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Mr. Garth Whyte: Oh, I don't know if we have.... No, I would say not, or not in the SBLA context. I was talking in a very general context.

Mrs. Sue Barnes: All right.

In your mind, would cost recovery be a different criterion if in fact job creation was proven to be greater?

Mr. Garth Whyte: I believe it's very difficult to determine if the SBLA was the sole reason for those jobs being created. I think you'd have to ask Jason if he would have created his firm without the SBLA. He probably would say, yes, if he could get financing elsewhere.

SBLA for very new and small firms is a challenge, but there are a lot of other policies. At the risk of opening up a hornet's nest, our members identify one of the biggest policies would be to reduce EI premiums. That's one of the biggest issues you could do to keep payroll taxes down to help job creation.

So we're hesitant to have this program be seen as a job creator rather than access to financing and certainly a help in new start-ups.

Mrs. Sue Barnes: Would you see any value in measuring job creation out of SBLA?

Mr. Garth Whyte: Yes. Again, I think the only criterion shouldn't be job creation, but job creation should be a criterion for most programs. However, we feel that governments don't create jobs, and programs don't create jobs; it's the business community that creates jobs. I think a criterion of that program is how successful it is in keeping that firm going, and then seeing if the firm can roll off the SBLA. I'd be concerned to see a firm, over a ten-year period, just continually on SBLAs. Is that the intent of the program?

Mrs. Sue Barnes: Could I ask you another way? In your organization, is there any way that is accurately measuring, to your knowledge, whether inside the banking industry or your own survey mechanisms or someone else's, job creation out of SBLA?

Mr. Garth Whyte: I believe the department is the closest area evaluating the program, but unfortunately, what happens is that the terms of reference change, and when the terms of reference change, it's hard to have a continuum of what the program has done. We've been on record, I guess for several years now, saying, please, let's keep the measurements the same so that we can measure some of them and answer some of these questions.

Mrs. Sue Barnes: Given that, though—and I'll play devil's advocate here—there are normal business cycles, so your measurements can be the same, but there are cycles where some of the factors will change the measurements anyway, because they are outside of control of the business.

Mr. Garth Whyte: Certainly.

Mrs. Sue Barnes: So if anything, maybe the measurement timeframes have to lengthened to take into account full cycles.

Mr. Garth Whyte: I would say that we have enough measurement now that we should be able to put something on the table to see how it works.

We've done a report, entitled “Diamonds in the Rough”, that says those firms that start up during recessions have a higher propensity to survive than those that start up during good times, yet that's when banks shut down their financing. I'm concerned that the SBLA is used as a crutch by the banks during tough times. That's one of the reasons this committee is working so hard to put down principles, I think, and the intent of the act, so that you will ensure that its integrity is there, and the program survives.

The Chair: Last question, Mrs. Barnes.

Mrs. Sue Barnes: Do you believe the banks are actually lending to higher risk or are they lending to normal risk using SBLA?

Mr. Garth Whyte: We suspect they are lending to normal risk in some circumstances, and that's a concern of ours.

Mrs. Sue Barnes: That wouldn't add much to incrementality measures, if that's the case.

Mr. Garth Whyte: Right.

Mrs. Sue Barnes: Thank you.

The Chair: Mr. Riis, please.

Mr. Nelson Riis: Thank you, Madam Chair.

Jason, you provided us with an interesting insight into this discussion. We were pleased that the Restaurant and Foodservices Association flagged this issue with the regulations, and you've added now the indoor rock-climbing sector.

Garth, what other sectors ought we be thinking about when we think of the implications of this provision?

Mr. Garth Whyte: Wow.

Mr. Nelson Riis: An example or two—picking up from where Mr. Bellemare left off.

Mr. Garth Whyte: I guess anybody who does leasehold improvements, people who are in the service sector, people coming through their doors who may have to try to have leasehold improvements, whether it's in the recreational area or....

Nelson, I'm drawing a blank here, but there's a broad range.

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Mr. Jason Baldwin: I would say any storefront business would have to have leasehold improvements. When you are either selling food from a restaurant or operating a facility, you have to improve a building. When you get them they're normally in very rough shape—no carpet, with concrete walls—or they have to be changed dramatically because the previous business was not at all appropriate for the type you wish to run.

So I would say any storefront business requires leasehold improvements before getting started, to a greater or lesser degree.

Mr. Garth Whyte: Part of the problem, though, is that they have to be linked to hard assets as well. The difficulties, at least in the restaurant sector—

Mr. Nelson Riis: Are a little easier to understand.

Mr. Garth Whyte: —are a little easier to understand because there are stoves and other things attached to those things.

Mr. Nelson Riis: I'm trying to visualize for what other facilities this would be an issue in the same dimension as in a restaurant business.

Mr. Garth Whyte: I can't offhand.

Mr. Nelson Riis: Okay.

On the issue you raise about banks that keep using the SBLA, one, two, three times in the same property, isn't this something we should talk to the bankers about? I mean, it would seem to me that a banker just writing these kinds of loans on a business that's continually failing is not applying prudent practices.

Mr. Garth Whyte: Well, I would be careful. I'd like to validate the extent to which that's happening, first, and if it did happen, it might not necessarily be the bank's fault; they may not be tracking the loan. So I'd like to validate the severity of the issue and I'd like to validate how often it occurs—and again, it's back to the evaluation mechanisms—before I would jump to saying how blanket it is.

If it did happen—I guess that's what I'm saying—then it shouldn't. That's not the intent of the program.

Mr. Nelson Riis: One of the other potential loopholes that was mentioned the other day was where people would bundle a number of so-called separate entities in order to qualify for a number of loans under the SBLA as opposed to, theoretically, one loan.

To what extent do you think this may be an issue?

Mr. Garth Whyte: It could be an issue. I hope it's not happening, but it could be an issue. When you start talking loans of one-quarter of a million dollars, and then you add bundling on top of that, if that was occurring, that's a lot of money. Again, I really would like this act to focus on the intent. It's on new start-up firms that don't have a track record and have a hard time getting loans in the first place.

Our research has shown over time that 50% of the net new jobs come from firms that weren't in existence five years beforehand. That's why it's difficult sometimes for governments to say, “We created that job, we created this job”. It just happens.

One of the major barriers is getting that financing to buy those hard assets, and the SBLA links to those hard assets. The fact that there isn't a huge default rate means to date it's been pretty good, because it's been linked to the hard assets.

So sometimes people have pushed for working capital-type loans, or very different types of definition of loans, but that's where you can risk or undermine the program, because they're higher-risk types of loans.

Mr. Nelson Riis: Yes.

Jason, I have one last question. You presumably are a young business.

Mr. Jason Baldwin: Yes.

Mr. Nelson Riis: When you think of expanding, or hiring additional people to work for you, how crucial in your decision-making is the amount of money you pay in EI premiums?

How many employees would you have now?

Mr. Jason Baldwin: That's an interesting question. I currently have me and one full-time employee. When we're talking about jobs created by this program, there are some unseen statistics, I guess, because I'm starting a second business also, and I wouldn't have had the opportunity to do that had I not received the small business loan initially.

Mr. Nelson Riis: Setting aside the small business loan totally, you're thinking of expanding it to a new enterprise, or expanding your existing rock-climbing gym and so on. To what extent—and this is a bit off the topic—does the premium you have to pay on your EI factor into your decision making, or does it at all?

Mr. Jason Baldwin: Not much, to be honest. Obviously, if taxes were to increase enormously it would be very bad, but hiring people is part of opening a business. You hire as many people as you need to. If you can't afford it, you simply don't do it.

Mr. Nelson Riis: Garth, from what you said earlier, your membership sees this as a crucial issue in terms of job creation, yet I really wonder to what extent this is a bogus argument. I mean, to a number of people who are in business I've asked, “If you have five employees, you're going to save a couple of hundred bucks if you reduce the premium a bit, but is this a crucial factor?” I've yet to find a single business person who has responded to the affirmative.

That's not to say it's not a factor, I suppose, but it's way down on the list of whether I'm going to hire a new individual, or create a job.

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Mr. Garth Whyte: First off, we have given presentations on the extent of all payroll taxes that have increased over time, and how it's been an impediment. I think if you want, we could discuss it further, but if worker's compensation premiums increased on top of your municipal payroll before-profit taxes increase, on top of a Canada Pension Plan increase, on top of an EI increase—

Mr. Nelson Riis: You're talking about the whole package.

Mr. Garth Whyte: Yes, the whole payroll package. The OEC job study says the major impediments are payroll taxes and onerous regulations, as a matter of fact.

Mr. Nelson Riis: But I guess what is implicit in your statement is that by a reduction in EI premiums, this will result in job creation.

Mr. Garth Whyte: Fine; I'll say why. We'll get into it in more detail.

Right now, you have CPP increases going like this, and you have EI going like this. So the aggregate payroll taxes are increasing. Most studies show that once they're up there, maybe if you reduce payroll taxes, it may not be the impetus it should be for job creation, but once you increase it, it definitely is a drag, and slows down job creation.

We've asked our members over and over again what it would take for them to hire more people. First would be increased consumer demand. Second would be a decrease in the overall payroll taxes.

What's happening at the federal level right now is that payroll taxes are increasing, not decreasing.

The next question you should ask is, “If you put $7 billion back into the economy, would that make a difference?” That's how much we're taking, in the surplus, out of the EI.

Now, I could—and I guess I should—get some of our members to give you a call, and we'll see if it's an issue. It definitely has been identified by our members as being a big issue.

The Chair: Mr. Whyte, thank you.

Just to clarify for the record, you implied that EI premiums were going like this, when in fact they have gone down.

Mr. Garth Whyte: I should say, after talking to the finance minister, he's now talking about EI not going down at all.

The Chair: But they have come down.

Mr. Garth Whyte: They've come down, they certainly have.

The Chair: You're talking about CPP premiums.

Mr. Garth Whyte: Sorry. I'm talking now, if they're to stay the same. By the way, we've given your government all sorts of credit for what you've done in the past. We're now talking about the future, and what's happening is that everybody is saying they should stay flat, but no one is talking about Canada Pension Plan premiums that are going up 20¢ to 30¢ per year.

The Chair: Thank you, Mr. Whyte.

Mr. Riis, thank you. Mr. Shepherd.

Before you start, I just wanted to add something for the record. Mr. Riis was asking for examples. I think there's a large entertainment/tourism industry out there where you could find many concrete examples of a large number of leasehold improvements, aside from the restaurant industry, such as theatres or children's activity centres that have started up as small businesses, etc., where you would find a lot of these leasehold improvements as well.

Mr. Garth Whyte: Yes. Thank you.

The Chair: Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): I have just a quick comment on the CPP. The reason those CPP premiums are going up is that the program is not sustainable, but the beneficiaries are the workers in those small businesses.

Mr. Garth Whyte: Of course.

Mr. Alex Shepherd: What I really want to talk about, though, is you mentioned in your introduction the issue of whether in fact this program is going to end up becoming a subsidy to the bank. In fact, you've intimated that in some ways you think it is.

First of all, on your comment with regard to the regulations themselves, the main elements of regulations that the department has put in here are just two of the areas we're touching on here.

One has to do with the leasehold improvements. The comment is that the reason we're curtailing some of the financing is that they have higher rates of default and do not contribute to economic growth. That's one statement. Another has to do with the reporting requirements by the banking system. It says they apply a similar procedure as those applied to a non-SBLA program.

In both of those incidents it seems to me that's the bank talking. Is that a fair comment?

Mr. Garth Whyte: Yes.

Mr. Alex Shepherd: So what the banks would like to do with this plan is to reduce the amount of risk that's in the plan. The ultimate, of course, is, as you talked about before, table shifting. In fact, the beneficiaries of the SBLA program are going to have a tendency to be those businesses that could have gotten bank financing anyway, but now they also have a guarantee.

Is that a fair statement?

Mr. Garth Whyte: That's what I would like to monitor, but we suspect that has happened over time, and now it's coming back into balance. But yes, that is a fair statement.

I should say, though, on the regulatory side, that there is legitimate reason for what the department tried to do. The question wasn't what they were trying to do but maybe how they did it, because they may have captured some firms that were innocent in this issue. But I think we need to monitor and find ways to ensure that the integrity of the program is there, and to ensure that it's not abused.

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Mr. Alex Shepherd: So do you buy into this statement regarding leasehold improvement issues, that these businesses typically do not contribute to economic growth?

Mr. Garth Whyte: No, I can't buy into that statement. But I don't know the context. If it's a churning example, where it's the same loan three or four times, then you could say it's not contributing to economic growth. That's what we have to find out.

I'm just worried that it would be seen to be a a blanket thing, but again, if the intent was to ratchet down, to tighten it down, if there was a case where it was three or four times the same loan, and if the business is churned, I don't see economic growth there, no.

Mr. Alex Shepherd: Okay.

Getting back to some of your original statements concerning, once again, the accessibility to small business operators—and I, like you, have some concern about this $2 million to $5 million in sales—do you have any empirical evidence that shows what kind of businesses that would fall within those sale parameters are actually accessing the SBLA program?

Mr. Garth Whyte: I don't. It's very difficult to track, from our perspective, on this, and we haven't asked who's using the SBLA loan. I think the department should have that, though. We really should have that information.

Mr. Alex Shepherd: Of your members, would you know how many could show sales in excess of $2 million?

Mr. Garth Whyte: I'd have to get it for you, but I could.

Mr. Alex Shepherd: Would it be relatively small?

Mr. Garth Whyte: Yes. It's not a large proportion of our members. I think our definition of a small firm is actually by employee size. A small firm would be 50 or less employees. And as for sales, typically a definition has been $2 million or less, not $5 million.

Mr. Alex Shepherd: We've talked about the incrementality of the program and so forth. A way to somewhat ensure that this is being directed more at the small business requirements is possibly to ratchet down those sales parameters. I don't know what the break-off number is, if it's $3 million or $4 million or whatever.

Mr. Garth Whyte: That's right, except maybe you shouldn't fall into the trap we fell into, because in some sense, your politics is our politics. We've been pushing to ratchet down the loan size, the $250,000. We thought it should be lower. We surveyed our members, and one out of two said it should stay where it's at, because once they've given it out, it's hard to take it back. Likewise, now that the threshold is up there, it's very difficult. There may be some firms that are going go be hit by this, and they legitimately have been using the SBLA and have been paying it back.

This is the problem, I think. It's harder to get the horse back into the barn.

Mr. Alex Shepherd: You can probably do it more effectively by reducing the sales parameters than the quantum of money, because by definition, as you're hitting into those kinds of sales, your demand for capital is going to be higher.

Mr. Garth Whyte: I agree, and I think we're making the same assumption, that the bigger the firm, the bigger the loan. I'd like to see the numbers before we made a decision. Again, how is the program doing? Is there a big default level, or are things going along fairly well?

I'd like to see the evaluation and monitor it before I made a comment one way or the other.

But we agree. In principle, I agree with what you are saying.

Mr. Alex Shepherd: Yes.

The Chair: Thank you, Mr. Shepherd.

Mr. Jones, do you have any questions?

Mr. Jim Jones (Markham, PC): Yes, thank you.

Garth, you said this program was intended for new businesses, so maybe we should rename the program to the “New ” Small Business Loans Act instead of just Small Business Loans Act.

Mr. Garth Whyte: No.

Mr. Jim Jones: And what's your definition of a new business, then?

Mr. Garth Whyte: To put this in context, I've been asked by the committee to come here before you to discuss this. I gave a presentation. That's the context. Maybe I use words like “when” when I mean it won't happen, and “new” when I mean....

The intent of the program was to hit the growing new firms, but it should also help with firm expansion, definitely. There may be a time when there's legitimate expansion.

It's those firms that can't get financing from banks because of their track record or whatever. They are legitimate firms that need financing. They tend to be newer firms, or expanding firms. Actually, in the new firm, they're expanding, often.

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Mr. Jim Jones: Right. You also said that it should be linked to hard assets. What happens now that we're about 415 days away from the millennium, the turning to the year 2000, and there are small businesses that maybe have to get a piece of software rewritten and can't afford it? Maybe they have to get their security systems upgraded, but they can't afford a new security system, they can only repair. What about things like that? Shouldn't that be included too?

Mr. Garth Whyte: Yes, I think the act has opened a door for that. What I am more concerned about is working capital. When we start talking about working capital, that's when you get in trouble with this program.

That's where, I can guarantee you, you will kill the program. But a firm that's showing, “Look, we're advancing, and we're going to survive”, and are not trying to use the SBLA as a means to cover all their risk for the bank and for themselves—that's what we were concerned about.

Mr. Jim Jones: Finally, it seems as though the restaurant industry has trouble getting bank financing. Is it the same in the U.S.?

Mr. Garth Whyte: I don't know. I'm not sure. I do know among our membership, as I pointed out, they seem to be the ones expressing the most concerns. It's something we're going to start tracking, because you may see banks clamping down on a certain sector without looking at a business-by-business case and without lending for risk.

It seems as though it's, “This is what you get, and this is the interest payments you get”. Well, if it's a higher risk, charge a higher interest rate. Some people will be prepared to do it; don't just shut them off.

We're concerned that in certain regions you've seen banks at times clamp down on certain sectors. Is this the case in the hospitality sector and is it being off-loaded on the SBLA? I think it's something both the committee and the CFIB should look into.

Mr. Jim Jones: Thank you.

The Chair: Thank you, Mr. Jones. Mr. Lastewka.

Mr. Walt Lastewka (St. Catharines, Lib.): Mr. Whyte, I know you've presented comments before on lowering the $250,000, and of course it's a done deal. I guess your point now is that it should stay there—

Mr. Garth Whyte: That's correct.

Mr. Walt Lastewka: —and over time the $250,000 will be a smaller amount for people.

The area I want to talk to you about...and I know the department has been working hard to close the loophole on, or abuse of, the leasehold improvements. When the bankers were here last week they said they understood there was abuse, and it needed to be corrected somehow. You here today have again expressed that if there's abuse, it's basically taking away from some of your members because of the problem.

Now, have you been working with the department on that to try to fix the abuse, or with the bankers?

Mr. Garth Whyte: We have. We haven't recently, but we trust the department on this one. This is one where the department will monitor the program. As I've said to other members, we don't have the capability to monitor the SBLA. We have to look to the department to monitor it. When they have a concern, then we should sit down and look at it. There's always a way to solve the problem, to close that, because I think among most of our members and our association we don't want to see any abuse in the program. So we'll do whatever it takes, either through education or agreeing to some sort of change to tighten down the program.

Mr. Walt Lastewka: I heard you say that the SBLA or the new finances act should be used for new firms or expanding firms who can't get the higher-risk loan from the bank. You made that comment. At the same time, you made the comment that the program shouldn't be used if the money is available on a regular loan program.

Mr. Garth Whyte: I think what I was trying to say was that this was the original intent of the program. The intent is to help newer firms, but it's newer, expanding, small business firms. This is called the Small Business Loans Act, not the medium-sized or large business loans act.

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We get upset when governments talk about the Small Business Loans Act and all of a sudden they're talking about a loan the size of a quarter of a million dollars. But the definitions are changing.

So that's where we saw it. We saw that primarily for loans the size of $30,000, $40,000, $50,000.

I don't know what size of loan you had, Jason, but it wouldn't be a mega loan.

Mr. Jason Baldwin: My loan was a bit larger than that. My loan was for $117,000.

Mr. Garth Whyte: Through the SBLA, $417,000?

Mr. Jason Baldwin: Partly financed by the bank. I'm not sure how the split went; the bank gave part of it and the SBLA gave part of it.

Mr. Walt Lastewka: You stressed to the committee—and I think I can appreciate this—that your objective, after we finish this legislation and the regulations have been approved and we're into the program, is that there should be almost a hands-off from changing the regulation—unless there is some heavy abuse by those people who find loopholes—and that we should try to leave the program the same for at least five years and then have the review, with statistics.

Mr. Garth Whyte: Yes. Again, I'm hearing a lot of great comments from this committee on these things. As we monitor some of these questions that have come forward—and if it's suggested we should do it sooner, then it should come forward through the department saying to the committee, “We have to do something”—yes, let's try to make the program consistent. We are a little concerned with the pilot projects, the voluntary sector, which we haven't talked much about. I'm not sure how it fits into the program.

So on those types of new changes, I'd hate to hear, five years from now, if I'm appearing five years from now, “Well, we couldn't monitor the program because we included the voluntary sector, and we included leasing”. I think those types of reasonings have to stop. We have to say, okay, we have a good base now, and let's start answering some of the questions that Madam Barnes and other people were asking so that we can better evaluate the program.

Mr. Walt Lastewka: I think it's been made clear that pilot projects are separate. The pilot projects are on their own. Nobody is committing anybody to go and do the pilot projects.

Mr. Garth Whyte: Once the pilot projects are deemed successful, if they are, then I hope they'd be rolled out on their own rather than into the SBLA. I think that's the point we're trying to make.

Mr. Walt Lastewka: I understand.

In the past when there have been changes to regulations, in the procedure I understand, there's first consultation with the stakeholders, then the regulations are gazetted, then there's a 30-day period for input, and then a 30-day period before the minister approves the regulation.

Have you participated in regulation changes like that in the past?

Mr. Garth Whyte: I have, and we've also outside the SBLA expressed concern on the regulatory process, because you can't read every gazetted regulation that's there, and often we're not approached.

A case in point is a change in the stamp rate. All of a sudden it magically appears. We should have read it, yes, but it just happens.

So there are some things that are very important that sometimes get slipped in through regulations. But we haven't experienced that through the SBLA.

Mr. Walt Lastewka: Okay.

Thank you, Madam Chair.

The Chair: Thank you.

I want to apologize to our witnesses. We told Mr. Whyte we'd only keep him here for about 30 or 45 minutes.

Mr. Garth Whyte: That's fine.

The Chair: I also want to clarify that when Mr. Baldwin was answering the amount of his loan, it came across as $417,000. In fact, it's $117,000. There was a bit of confusion there. People were left with the impression that it was over the amount.

Mr. Jason Baldwin: Right. The loan was $117,000.

The Chair: I want to thank the witnesses for being with us. It was very enlightening.

We appreciate, Mr. Whyte, your taking the time to come back. We know you have a number of constraints this week.

Mr. Garth Whyte: My pleasure.

The Chair: Mr. Baldwin, we appreciate your interest.

The meeting is now adjourned until this afternoon.