I will not detain the committee for more than a moment, Mr. Chairman. This resolution is of the type I hoped would be eliminated in this House of Commons, so I will not prolong the agony by speaking at any length. I do not agree with the previous speaker when he suggests autocratic control by the government of the lending policies in the manner in which I suspect the hon. member meant. I think the government should of course keep its eye on the Industrial Development Bank, but not to the extent of controlling the interested parties.
I am aware of the useful role the Industrial Development Bank has played in the past. There are some things which I feel bear reviewing. The first is the fact that the interest rates are often too high to the person who can least afford to pay high interest rates. In other words, if the Industrial Development Bank considers someone a poor risk, I think it would be better if the bank did not lend that individual any money at all rather than put him in the position of working just for the bank interest rate. This is what happens to many of the borrowers who are forced to pay 8 per cent or 8.5 per cent interest. The individual is simply working for the Industrial Development Bank.
I think, in general, the interest rates of the Industrial Development Bank have been far too high. I am sure if this bank is interested in the development of the country it is not
Industrial Development Bank Act necessary to plague the borrower with excessively high interest rates. We know interest rates charged by this bank have been very high indeed.
Another point I should like to make is that the Industrial Development Bank has the practice and policy of tying up all the assets an individual has without regard to the value of those assets. I think the bank, in working out its security, should take only sufficient security to guarantee its investment. In many cases we find that the Industrial Development Bank has gone far beyond this point and has tied up the operations of the individual. As a matter of fact, legally an individual could not sell even a wheelbarrow without first getting permission from the Industrial Development Bank. I think this is wrong, and that the bank should assess a proper amount of equity for its own protection.
[DOT] (8:30 p.m.)
I must say that so far as the employees are concerned, I have learned from people who have dealt with the Industrial Development Bank that they co-operate within the terms of the act and within the policies set out for them to an extent that is far beyond the call of duty. It would be interesting to know what the relationship with the Industrial Development Bank will be, now that the regular chartered banks have broadened their field by entering into the conventional mortgage business. I would be interested in knowing whether or not there is still a real need for the Industrial Development Bank, as was the case previously.
It would also be interesting to know whether the government would consider expanding this concept of an Industrial Development Bank and setting up a municipal development bank. The municipalities are in a very bad situation financially, and it seems to me that the government could expand this concept by creating a municipal development bank, and thus increase their borrowings through such an organization at low money cost.
Not long ago when speaking about the cost of money in some of the organizations for which he was responsible, the Minister of Labour mentioned the figure of seven eighths of one per cent. I do not suggest that we could supply money to a municipal development bank at a cost of seven eighths of one per cent, but I do say that the municipalities need help and need it now. If an organization based on the same principle as the Industrial Development Bank were set up, I think they could lend money at a rate as low as 2 per cent, without any problem whatever.
DEBATES October 17. 1967
That concludes my remarks, Mr. Chairman.
I may or may not have more to say at the second reading stage of the bill once the legislation has been introduced.
Topic: INDUSTRIAL DEVELOPMENT
Subtopic: BANK ACT