[Recorded by Electronic Apparatus]
Thursday, November 23, 1995
.1107 
[English]
The Chairman: I call this meeting to order.
While we don't yet have a quorum - we need eight - we do have enough to welcome our star witness today, Mr. George Haines Jr. from the School of Business at Carleton.
Professor Haines, I think we'll move right into your observations on the matter before us, which is Bill C-99, the Small Business Loans Act. Please begin.
Prof. George Haines, Jr. (School of Business, Carleton University): This work was done with Allan Riding, who's currently on sabbatical at the University of Bradford in England.
We did three projects. The first was an analysis of secondary data with respect to the issue of access to credit, lending priorities and SMEs. The findings of this study provided some initial insights about the decreasing amount of bank lending since 1990. When bank lending during the two most recent recessions was compared, we found that the decrease in the amount of lending from the first quarter of 1990 through the first quarter of 1991 was commensurate with the decrease that occurred during the recessionary period of 1981 fourth quarter through 1982 fourth quarter.
We found differences in the levels of lending that were recorded during the subsequent recovery periods. Changes in the level of bank lending during the recovery period, first quarter 1991 through second quarter 1993, are less than those recorded during the 1982 fourth quarter to 1984 third quarter recovery. This observation was not entirely clear in terms of causality, because the 1982-84 period was one that was also characterized by the entry to commercial lending of offshore financial institutions.
While a decline in the level of small bank loans was recorded from 1990 first quarter through 1993 third quarter, this decline did not occur evenly across Canada in the most recent recession. A disproportionate part of the decline was concentrated in the province of Ontario.
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Econometric analysis of the demand and supply of bank loans clearly demonstrated that there was an independent recessionary effect on the demand for loans, but that no statistically significant shrinkage in the supply of loans could be attributed to the recessions. The econometric analysis also highlighted the need for accurate data on the cost of borrowing for small businesses. The analysis had to rely on the prime rate as such a measure; thus, while the econometric analysis is suggestive, it is not definitive.
Accordingly, a second research project was undertaken to further study the question of shrinkage of supply, and a third research study addressed issues related to the SBLA. The second study was empirical findings from survey data with respect to access to credit on the part of SMEs. This report provided the findings of an investigation regarding the alleged ``credit crunch'', a hypothesis that lending institutions reduced access to credit to SMEs over the 1990 through 1994 period.
This study brings to bear systematic and rigorous statistical treatment of newly collected primary data. It reports on investigations of these data that are intended to further specify the nature of the credit crunch problem. This takes two forms.
First, the data from Canadian Federation of Independent Business surveys from 1987, 1990 and 1994 are compared as to rates of loan turndowns, interest rates charged on loans, empirical models of lending decisions and other aspects of small firms' borrowing experiences.
Second, data extracted in 1990 and 1994 from bank loan files were compared to arrive at a profile of small business borrowers, and to determine the extent to which terms of credit may have shifted between 1990 and 1994. From this investigation we found that turndown rates for loan requests in 1994 are higher than in 1990 and 1987, and turndown rates are higher for smaller firms and are subject to geographic disparities, disparities that correlate with geographic levels of prosperity. The level of technology is not a major factor in loan turndowns, nor in determination of interest rates.
The primary reason for loan turndowns is an inadequate debt-equity balance. Determinants of the three types of loan decisions have altered significantly. By 1994 more factors are significant determinants of loan turndowns, and some of these are new factors. Turndowns were found to be more common if firms had had to deal with multiple account managers, other factors being held constant. The size of the borrower correlates strongly and inversely with the interest rates charged on loans.
According to CFIB data, interest rates on term loans appear to have increased significantly between 1990 and 1994. However, randomly selected bank loan file data did not support this finding. Interest rates displayed regional disparities that correlate with economic conditions. The collateral-to-loan ratios have not changed between 1990 and 1994. Bank actions such as requiring more collateral appear to be most common for firms that have a record of declining sales, and for firms that have rapidly growing sales.
The results suggest that bank account managers appear to be using more factors in their decisions than was previously the case. Small business owners may perceive this as a change to historical ground rules. The situation is exacerbated by the economics of small business lending and account manager rotation.
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On the basis of these findings, there are elements of banks' business practices with SMEs that are open to criticism. Some of these represent failures or inabilities to communicate. Banks ought to explain fully to their small business customers the reasons for loan turndowns and bank actions. Ideally account managers should deal with fewer clients so that good relationships and open lines of communication can be maintained. To the extent that small business owners can acquire an understanding of the changing bank decision process, greater client satisfaction may be obtained.
Perhaps the major obstacle in this regard is the inefficiency and the small margins that result from small lending balances. On the whole, it is the very smallest of bank business borrowers that face the most difficult situation, a situation that has a vicious-circle aspect to it. The small borrowing balance and low margins make it very difficult for the account manager to provide much remediation. Failure of the firm reinforces the sense that smaller is riskier.
One means of attending to this problem is to permit credit unions, cooperative banking firms and caisses populaires to participate in a business loan market, perhaps up to a legislated loan ceiling. The experience with these lenders in Quebec and Saskatchewan has been positive.
The research does not support the hypothesis of a credit crunch. Only two elements of evidence favour the credit crunch hypothesis: increases in loan turndown rates and increases in the average rates of interest on term loans. However, both aspects have alternative explanations that seem reasonable.
The third study dealt with economic impacts, incrementality and risk profile analysis in recent experience with the SBLA. This study addresses the economic impacts of lending under the SBLA, the incrementality of SBLA loans, and the extent to which broadening of the eligibility criteria and increased take-up of the program are likely to change default rates.
A profile of the average SBLA borrower is developed, and distributions of SBLA borrowers' salient characteristics are presented and compared with non-SBLA bank clients. On average, SBLA borrowers appear to be those targeted by the act. They tend to be smaller, more risky and with fewer resources than other firm bank clients.
Expansion of the eligibility criteria for SBLA borrowing has resulted in incremental activity. An estimated 8.6% of borrowers report sales in excess of $2 million, 8% of borrowers are in the professions, and another 4% are in the finance, insurance and real estate sectors. The primary uses of the borrowed funds are to obtain new equipment or to fund new property or floor space. SBLA borrowers benefit from the loan through increased sales, cost reductions and aversion of failure.
Even though SBLA borrowers are on average smaller, younger and have fewer assets, 30.3% of these firms seem to be regarded by lenders as among the least risky firms. The rates lenders charge these firms on operating loans are less than those of firms of average risk. Also, 39.4% of SBLA borrowers paid lower than median rates on non-SBLA term loans from the same lender. These findings imply that 30% to 40% of term loans made under the SBLA are to firms that are otherwise bankable.
It was also found that the amendments to the act made in April 1993 are likely to change historical loan-loss ratios. In particular, it is found that firms with sales of $2 million to $5 million are, perhaps surprisingly, more likely to default than smaller firms. These findings allow refinements of previous estimates of failure rates. Historical rates for most firms in the SBLA portfolio may reliably be projected, with the refinement that default rates for firms with annual sales of $2 million to $5 million are 14.5% higher than for other firms.
Thank you. This concludes the summary of the work we did.
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The Chairman: It's fascinating indeed, and I think for those of us who were not aware of it - I include myself among them - this certainly gives us a very useful context for other work the committee has been doing in terms of performance benchmarks for banks lending to small businesses. It certainly puts a lot of things into context.
Do we have questions from this side of the table?
Mr. Schmidt (Okanagan Centre): First of all may I, through you, Mr. Chairman, thank Professor Haines for appearing before us this morning. I'm particularly interested in the two findings that I think are significant in the third study, which I found very fascinating, and it's really the reason why I think it's appropriate for Professor Haines to appear here.
The 30% to 40% of the loans given under the the provisions of the SBLA were otherwise bankable. Will the increases now from $2 million to $5 million in sales and the increase in the cap to $250,000 per loan increase or decrease that percentage?
Prof. Haines: It's very difficult to say. Those changes would probably not have any big effect based on the data I've seen.
Mr. Schmidt: This means, then, that of the firms that qualify under the SBLA regulations under the act itself, they could could really be bankable elsewhere.
Prof. Haines: That's correct, sir.
Mr. Schmidt: One thing we've all found rather startling is that as the volume of sales increases over $2 million - it goes to $5 million - the failure rate is almost triple the failure rate with sales of less than $2 million. Why?
Prof. Haines: The explanation I've always put forward for this is something I've heard from many people. Prior to my study with Professor Riding, I had done a study on the Canadian pension fund management practices, and I first heard in my discussions with people running pension fund money that the situation for managerial talent in Canada is very different from that in many other country. Let me explain.
In a country such as the United States, if you're an investor in a new and growing firm and it gets into difficulty because of managerial incompetence, there's a ready labour market that you go to to hire managers to come in and rescue the firm. This market does not appear to exist in any orderly fashion in Canada and so people in the venture capital business and people in business find it very difficult to get management talent for growing firms to help that firm meet the problems of growth successfully.
I have also seen this in interviews I've done with managers and owners of individual advanced technology firms, and it's a theme that occurs over and over again.
It seems that's the most likely reason. The original business owner does a good job. He or she is able to work effectively as long as the business is small enough that he or she can maintain personal contact with everybody involved. As it grows, that becomes less possible and a different set of management skills are necessary. Some people can naturally develop these, but it appears there's real difficulty if you need to go out and hire somebody at this point. It can be very difficult to find a capable person.
Mr. Schmidt: My next question changes the direction slightly. The proposed legislation that we're going to be examining this morning increases the charge that is taken from people who borrow the money. Your estimate, I think, was about $100 million per year in terms of the cost of the SBLA. If it now triples from $4 billion to $12 billion, does that project forward then to $300 million? Is the imposition of this additional 1 1/4% large enough to obviate this so that the loan portfolio might not incur this kind of loss to the public treasury?
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Prof. Haines: That's a very difficult question to answer. The effect of this, to begin with, is largely an increase in the cost of borrowing to the borrower that has been passed forward in the form of increased interest rates. When this occurs, I would think that if we were to repeat the study today with this change in conditions, we would find a lower percentage of the very bankable firms now participating in the SBLA. Those are firms that would have a very low chance of going into bankruptcy so that you have to balance it against the increased revenue.
This is a fine forecasting act, and one thing I learned over the years is that forecasts are almost always wrong. Sometimes they're too optimistic and sometimes they aren't, but because you have two different effects here.... On the one hand, you now have fewer firms that are in this no-risk category participating in the insurance program, but on the other hand, you're getting more income from the firms that are. Exactly how this balance will work out in practice is very difficult to say for sure. I would not want to make a forecast.
Mr. Schmidt: I don't want to ask Professor Haines to give us a firm number. It's really just a feeling of whether you think, yes, it will increase in the same proportion as the maximum dollars available will, or whether the requirement of this 1 1/4% will be sufficiently large to perhaps put that down.
Prof. Haines: Since Canadian banks do not, in general, make loans to very risky businesses, I think if I had to bet I would bet that you would be getting closer to a revenue cost balance with this.
The only other comment I would make is that if you looked at practices of the loan guarantees of small businesses in some other countries, there are examples where people tried to go to cost recovery and ended up with very high charges and a program aimed at guaranteeing loans only for extremely risky businesses. I don't know whether that's desirable or not, but it is something that could possibly occur over time. It has happened in the United Kingdom.
Mr. Schmidt: Earlier you indicated that the riskier businesses are not taking part in this program so that would reduce the number of defaults. That's on the side of saying that probably this demand on the treasury will not be there. On the other hand, I hear you saying that it could go in the other direction because the interest rates will go up considerably because it's now going to be 3% above prime - that's almost a given with the current provisions. So that means, then, that a group of business people will now immediately be this group that has to pay the additional 3%, at least, as a minimum. That would go to the other side.
After you take all that into account, is the experience really going to be any different from what it is now, which means it will go to $300 million or maybe $400 million?
Prof. Haines: I don't know.
Mr. Schmidt: What are the relative strengths here?
Prof. Haines: One of the things this study clearly pointed out, which we really don't know, is the extent to which having the SBLA guarantee available brought eminently bankable firms into the bank to apply for a loan, and that's not imponderable. If one wanted to try to collect information on that, it would be possible to do it. But it was something we recognized as an interesting question once we had collected this set of data, so we don't have an answer to that. The extent of that effect in this whole forecasting exercise is quite important, of course, and I don't know what the answer is.
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Mr. Schmidt: I have one final question, Mr. Chairman. Your earlier two studies concluded that there was no credit crunch. Why do we need an SBLA, then?
Prof. Haines: The credit crunch hypothesis said that the banks were in effect conspiring to reduce the supply of credit.
I think we need an SBLA because for many small, growing Canadian firms, the primary source of venture capital is bank loans. A banker will tell you and a business person will tell you that this is not the purpose of bank loans. The fact is that historically that's what has happened in Canada. So this money, although it's used for the purpose that's indicated, frees up other capital for other functions in the business that would not be so freed up if they didn't have the bank loan.
If we take into account the major structural change that appears to be occurring in the Ontario economy, there's certainly a need to encourage new enterprises. New enterprises are frequently perceived as having a certain amount of risk, and the loan guarantee program helps these companies. As I've indicated, it can help in two ways. Because it's there and people know about it, it can get them to come into the bank and make a request when otherwise they might not do it. It can also help the bank in dealing with their request effectively from the bank's point of view. Both things are important.
It's very clear from the study we did, where we looked at the consequences of having this capital available to companies, that this program was an important contributor to the growth of employment and the growth of the economy in Canada over the period we studied.
The Chairman: I just have a quick follow-up. I'm looking to my colleagues if they have anything to add. Mine really is an ancillary question based on the fascinating observation you made about the failure rate of companies in the range of $2 million to $5 million being based on a managerial deficit.
You teach at a business school. The question I'm going to put to you is this: could business schools and schools of administrative studies be doing more to deal with this problem directly, or is it simply a question of experience, that no amount of training is going to produce the kind of people who are needed? Or is it a combination of both?
Prof. Haines: It is a combination of a number of things. I think perhaps business schools could do more in this area, but as organizations, business schools have to respond to a wide variety of needs. I think they tend to pay attention to the marketplace in doing that. There has not been much in the way of resources provided to business schools for entrepreneurial education.
I was involved in an entrepreneurial education program directly at the University of Toronto. We do run a similar program at Carleton amongst our undergraduates. This program used funding from the Province of Ontario. The province's goal in providing this funding was to help small businesses have inexpensive consulting service from students. That program has since been discontinued. I think we are all aware of the fiscal situation of the Province of Ontario.
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So some universities have continued these kinds of programs and some have not, but the people who would benefit from having such training programs rarely realize they're going to need this benefit until they're in the swamp of trying to find someone, so it's been very difficult for business schools to get resources to address this issue.
The Chairman: Taking your model that you respond to the market, there does seem to be a slight element of market failure.
Mr. Schmidt: [Inaudible - Editor]
The Chairman: I think that's fair, Mr. Schmidt.
Mr. Schmidt: I didn't think it was.
The Chairman: I think we will be addressing this question in a more direct fashion when we turn to knowledge-based industries and some of the challenges they face. Surely those are part of what you're talking about.
Let me make sure I have understood the averted eyes of my colleagues in the right way, meaning that I don't see anyone clamouring to get at you. I think I have interpreted that in the correct fashion. It's not hostility, although perhaps a certain anxiety to get on with the day's proceedings, otherwise known as clause-by-clause.
Unless I detect a last question, I think we've come to the end of this particular portion. Intrigued by what you've put on the table, which will help inform both our continuing contacts with the banks.... Professor Haines, with regard to our continuing work with the banks on performance benchmarks for small business lending, this certainly gives us a helpful context. I'm sure we'll want to be talking to you in the future, plus the future work we'll be doing in the general area of high-tech S and T companies and the problems they face. So I suspect this is the first of our meetings, not the last.
Mr. Mayfield (Cariboo - Chilcotin): Professor Haines, I'm not sure if I'm asking on behalf of the committee or myself, but there's something I'm not quite sure I understand, and that is the significance of the debt-equity ratio. Is there more to that than simply having enough security that would interest a banker in making a loan?
Prof. Haines: It's seen as one of several measures of safety. Most bankers are interested in having a sufficient collateral position to cover the loan in case of difficulties, so it's certainly not the only thing the banks look at. Traditionally, the banks look at the five Cs - character, credit-worthiness and so on - and the debt-equity ratio is only one part of the total picture.
Having available assets to provide adequate collateral may be even more important in many cases. This is particularly the case in smaller businesses, where the bank may not have access to audited financial statements.
Mr. Mayfield: My question goes back not to a commercial loan but to a mortgage that I applied for when moving from Alberta to Vancouver, when buying a house there was a traumatic experience. I didn't understand the bank turning down the loan because the down payment was too high for the property. I've never understood that. That's what I was told - that the ratio was wrong. I didn't have any trouble getting a mortgage, but with that bank it was.... That question has always lingered in my mind.
Andy, perhaps I should have asked you as a banker rather than the professor.
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Prof. Haines: One of the overriding things that comes out of all the studies we have done is that banks are not all the same. If you have a problem with a bank, try someplace else if you think that what you're being told by the bank doesn't make sense.
Mr. Mayfield: That's ancient history. The point I'm trying to understand is if there is more to the debt-equity ratio than I understand. Perhaps you've answered my question and I thank you.
The Chairman: Again, thank you and we look forward to meeting with you again. Happily, you live quite handily, so we can have you back without having to beam you up by satellite or fly you in from some obscure place. Thank you, Professor Haines.
We shall now proceed to the rest of our business, which is the clause-by-clause consideration of Bill C-99.
Let me introduce to the committee the people who will help us in this process: Mr. Robert Normand, procedural clerk from the Legislative Counsel Office, and Ms Diane McMurray, the legislative counsel proper. Mr. Schmidt was very anxious that we have such a person with us. We're delighted to welcome both of you.
Mr. Schmidt: You really feel guilty there, don't you?
Some hon. members: Oh, oh!
The Chairman: I like to be able to deliver the goods, as requested.
Mr. Schmidt: Thank you very much.
The Chairman: Keeping our commitments - this is like a red book promise or something.
I'm going to ask Mr. Normand to help me through this as usual so that I don't make a hash of it. I could probably make a hash of it even with him being here, but I'll try not to.
As I understand it, we have a number of amendments that we know about, a couple fromMr. Schmidt and three from Mr. Mitchell. Is that the way it goes? It's something like that, five altogether.
Mr. Schmidt: Mr. Chairman, do you want to go clause by clause and have the amendment at the time we see the clause?
The Chairman: That makes the most sense.
If I may informally reassure myself that the committee is in a consensual frame of mind with all the stuff we've done. If anyone foresees any contentious items, you could tell me now so that I can get through the stuff that is non-contentious. Otherwise, if we're pretty much there with all of this, I suggest we proceed from top to bottom, adding the amendments at the appropriate clauses.
Is that all right with everybody? If there's anything that's going to require more time, of course, we would rearrange our schedule.
Then let us assume that we are ready to go. Let's go.
On clause 1
The Chairman: Clause 1 is a substantive clause, not the title. I would ask the official from the department, who will introduce himself, to make comments if any and then be prepared to handle our observations or queries.
Mr. Peter Webber (Team Leader, Small Business Financing, Entrepreneurship and Small Business Office, Department of Industry): My name is Peter Webber and I am with Industry Canada.
The Chairman: Is there anything you'd like to say at this moment, or are you just on standby?
Mr. Webber: I'm happy to answer questions, but in order to expedite matters I think I'll keep my mouth shut unless I'm called on.
The Chairman: There's an amendment for this one. This is the one I think we've all received.
Mr. Schmidt: It's a technical question. As is provided, the part we need to amend here.... Do you have the amendment with you?
The Chairman: Yes, we do.
Mr. Schmidt: I simply move that amendment rather than reading it all into the record. I think you have it.
The Chairman: Fine. Everyone has this, amendments to Bill C-99, explanatory notes and the actual amendment. So we have one amendment and then a second amendment. We have to move (a) first and then (b), is that...?
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Mr. Schmidt: I move the amendment.
The Chairman: Mr. Mitchell seconded it.
Amendment agreed to [See Minutes of Proceedings]
The Chairman: Are you moving amendment (b), Mr. Schmidt?
Mr. R. Normand (Procedural Clerk): Mr. Chairman, so that members understand the process, an amendment is not officially before the committee unless it has been moved by the member. For example, an amendment is being moved to clause 1. There's part (a) and part (b). The first one is replacing line 25 on page 1 with the following, and then there's paragraph (b), which is replacing lines 1 to 3 on page 2. This is one amendment to clause 1 that has been prepared and is being moved by Mr. Schmidt, Mr. Chairman. This is what should be moved by the member.
The Chairman: Okay, fine. What do I have to do to satisfy the record?
Mr. Normand: As I understand it, sir, the first motion from Mr. Schmidt has been moved and has been carried.
Mr. Schmidt: Right. I moved it and Mr. Mitchell seconded it.
The Chairman: Do we have to read the actual words to help out or not?
Mr. Normand: The next one, sir, should be read into the record.
The Chairman: The next one. All right.
So Mr. Schmidt should move amendment (b) and then read it out.
Mr. Schmidt: I move that clause 1 be amended by replacing lines 1 to 3 on page 2 with the following:
- (c).
Amendment agreed to
The Chairman: Are there any other amendments to clause 1?
Clause 1 as amended agreed to
The Chairman: We'll get the hang of it, don't you worry.
On clause 2
Mr. Mitchell (Parry Sound - Muskoka): Mr. Chairman, there's an amendment. I move that Bill C-99 be amended by deleting clause 2.
Mr. Normand: Mr. Chairman, on a point of clarification, the hon. member has just moved that clause 2 be deleted. The question before the committee is ``shall clause 2 carry?''
The Chairman: So the right answer is no.
Mr. Normand: That is right. The option for the members is to vote on the clause - all those in favour and all those against. This is the way to go.
Mr. Bélanger (Ottawa - Vanier): That motion is a substitute motion and is perfectly acceptable the way he has presented it.
Mr. Normand: I'm very sorry, sir, it isn't.
Mr. Bélanger: I beg to differ.
Mr. Normand: The question is shall clause 2 stand -
Mr. Bélanger: A substitute motion is acceptable. This can be seen as a substitute motion.
The Chairman: If it will just help us get through the day to vote against it, can we vote against it?
Some hon. members: Oh, oh!
Mr. Bélanger: You shouldn't be inviting a negative vote, Mr. Chairman. It's a positive vote. Some rules and procedures do recognize flexibility and logic.
Mr. Normand: It is citation 698 of Beauchesne's.
Mr. Schmidt: Mr. Chairman, I don't want to get into a procedural wrangle at all. I want to ask for an explanation, because what it really means is that the current subsection 3(1.1) would then remain. If clause 2 is negatived -
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Mr. Webber: I'm sorry; we're talking about clause 2.
Mr. Schmidt: My apologies. I stand corrected.
Mr. Webber: Clause 2 relates to the claims processing fee, Mr. Schmidt.
Mr. Bélanger: Is his motion to delete?
The Chairman: We're told a motion to delete is not the way to go at this.
Prof. Haines: That's right, sir.
Mr. Bélanger: Do we have a motion to carry? I didn't hear a clause 2 -
A voice: Clause 2 carried.
The Chairman: I put that.
Mr. Bélanger: Who moved it?
The Chairman: I asked it.
Mr. Bélanger: The chair moves the motion?
The Chairman: No, I asked.
Mr. Bélanger: The motion has not been moved.
Mr. Normand: It is before the committee, sir.
The Chairman: It's before the committee. Does it require a mover?
Mr. Normand: Yes.
Ms Brown (Oakville - Milton): I will move it.
The Chairman: Ms Brown has moved it. So we have a motion on the floor: shall clause 2 carry?
Clause 2 negatived
The Chairman: Beauchesne's 698(6). It seems pretty straightforward. Do you want me to read it out?
Mr. Bélanger: I'm going to read the whole thing.
Clause 3 agreed to
On clause 4
Mr. Schmidt: I move that clause 4 be amended by replacing lines 9 to 18 on page 4 with the following:
- (2) Paragraph 7(1)(p) of the Act is re-
The Chairman: We're on page 4. We're amending lines 9 to 18.
Mr. Webber: Mr. Chairman, just for clarification, this is a consequential amendment on the one we adopted earlier with respect to clause 1.
Mr. Mitchell: Mr. Chairman, in view of clause 2 being defeated there's a consequential amendment that clause 4 in Bill C-99 be amended by deleting lines 29 to 32 on page 4 as a consequence of clause 2 being defeated.
The Chairman: So that's another thing we have to do.
Mr. Mitchell: So there are two amendments on clause 4.
The Chairman: We'll deal first with Mr. Schmidt's amendment.
Amendment agreed to
Mr. Mitchell: I move to delete lines 29 to 32 in consequence of clause 2 being defeated.
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The Chairman: Let's make sure everybody is happy with that.
Amendment agreed to
The Chairman: Let's double-check just to make sure. All right, we're satisfied that's the case.
Clause 4 as amended agreed to
The Chairman: Clause 5 is on page 4.
On clause 5 -
Mr. Schmidt: I'd like to address the legislative counsel.
We heard the minister say that because the time has now gone so far, there's really no good reason why.... Clause 5 is redundant. In fact, it could be eliminated. The act then simply comes into force the day it's assented to. I'd just like to ask the legislative counsel if that's indeed the case and whether we really need clause 5.
Ms Diane McMurray (Legislative Counsel): I was at the meeting yesterday, and it was my understanding the government had no problems with basically taking out clause 5. There was no rationale for keeping the coming into force provision in. Sometimes there is. I believe in Bill C-88 the government did give some rationale.
Mr. Schmidt: There was earlier for this, too, but that time period has now past.
Ms McMurray: That's right. From what they said, my understanding is there's no reason for keeping this clause. So everybody voted against it. The majority voted against it. It would simply disappear from this bill.
Mr. Schmidt: So then we should vote against it.
The Chairman: So we should vote against it.
Clause 5 negatived
The Chairman: It goes down in flames. How satisfying.
Now, we have a title, which is:
- An act to amend the Small Business Loans Act
Some hon. members: Agreed.
The Chairman: Shall the bill as amended carry?
Some hon. members: Agreed.
The Chairman: Shall I report the bill as amended to the House?
Some hon. members: Agreed.
The Chairman: Good. I believe that's it. I want to quit while I'm ahead.
So is there any other business the committee wishes to discuss? Seeing none, I declare the meeting adjourned.