Thank you, Mr. Chairman. The Standing Committee on Finance reviewed Bill 18, Write-Off of Debts Act, 1993-94, at its meeting in Yellowknife on March 23, 24 and 28, 1994. The committee was pleased that the Ministers of Finance and Economic Development and Tourism and their staff were available to answer questions.
In the past four years, the government wrote off a total of $1.2 million in debts. This bill, however, provides for the writing off of over $2.1 million in debts in a single year. The Standing Committee was concerned about this large increase in the amount of debts to be written off.
Most of the debts come from loans made from the business loans and guarantees fund. These loans have since been transferred to the Business Credit Corporation. The Ministers of Finance and of Economic Development and Tourism explained to the standing committee that this year they have made an effort to clean off the books. Further, the committee noted that many of the debts being written off date back five, six or seven years.
The standing committee trusts that the large total of $2.1 million we see in this bill is not the beginning of a trend in writing off debts. The Minister of Economic Development and Tourism assured the standing committee that recent loans have been made using more stringent guidelines. In fact, the recent Auditor General's report on the department and the Business Credit Corporation stated that: "The new loans made since BCC started are in better condition than the older loans".
The standing committee also had some concerns about policies related to loans to businesses. Committee Members were concerned about the risk involved in many of these loans. The standing committee recognizes that the Business Credit Corporation exists, in part, to provide loans to small business in the north which might not be able to borrow from banks or other conventional sources. Further, Members recognize that these loans carry a higher risk. This risk may be a necessary cost of stimulating the northern economy. However, the BCC still has a responsibility to minimize that risk and standing committee Members have been assured that the corporation
and the department will address this important and complex issue.
Finally, standing committee Members expressed concern about the position of the government as a creditor when borrowers file for bankruptcy. In many of the cases contained in this bill, other creditors were given higher priority than the GNWT in the distribution of assets and proceeds resulting from the bankruptcy. The Standing Committee on Finance asked the government to address this issue. Individual Members of the standing committee will take this opportunity in committee of the whole to ask questions. Thank you, Madam Speaker.