Government Operations Committee on Oct. 25th, 2011

[The Chair, NDP, Pat Martin]

Thank you, John.

We have one speaker left in this round: Ron Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I'm the cleanup hitter for the end here.

Thank you to our witnesses, and thank you, Mr. Chair.

We've heard lots of interesting comments on this study on the effectiveness of the Office of Small and Medium Enterprises and the Canadian innovation commercialization program.

CFIB, we appreciate the work you do. I'm a former small business owner, and I say every week is a small business week. Every day, the moms and dads and the entrepreneurs hiring more employees keep our country moving and growing.

There are a couple of specific issues we're looking at from the comments you've put forward here. One of them is procurement, the aspect of procurement for economic development opportunities in creating jobs and growing our economy.

I was interested in reading the survey, and one of the comments from one of your members referred to MERX. It said, “There should be better description or preview and preference should be given to Canadian owned businesses, after all, it is Canadian tax dollars paying for these contracts.”

Is that the position of CFIB?

[Corinne Pohlmann]

Our position on that has been that we need to have a debate about it. We know we have free trade requirements around the world, and we are big advocates of encouraging free trade. However, there have been a number of instances where Canadian firms feel like they are being shut out because of the low-cost component of a lot of the contracts that are coming forward by international bidders.

There's one great story of a member of ours who does promotional products and used to provide what tended to be very small contracts to a variety of government departments. He had a contract--I think it was at Agriculture Canada--where they actually had to have a bag that had Canada logos all over it. He'd been doing this contract for a number of years; he lost it recently to a Canadian company, but it was being manufactured in China. He was manufacturing in Canada. Basically, as part of that, in the final product that he eventually saw, they were told they could take out the “Made in China” logo in the bag. It was supposed to be a Canadian product, but ultimately it was manufactured in China.

So he felt a little bit.... The fact is it was actually made in China, but Agriculture Canada was allowed to take that labelling off and have the product look like it was made in Canada, even though it was actually made by a Canadian company that had it manufactured in China.

Those are the types of struggles that our members are facing. They feel they're creating jobs, and keeping jobs, in Canada and paying taxes in Canada, and they feel sometimes they are competing with these companies that are perhaps in other countries, and the company leaves the country.

Our position, as I said, is that I think we need to have a debate about that. We're not necessarily advocating either way, but it is something that comes up from our membership every once in a while. But we also understand the need to make sure that we provide opportunities for our businesses in other countries as well, so we don't want to necessarily shut that opportunity off either.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I appreciate your support for our trade initiative as well. As a member of the trade committee for the last five and a half years, as you know, we have nine more trade agreements, and we continue to grow the business opportunities outside of the United States. They will still be our biggest ally, but it is a balanced approach, and I appreciate that candid response.

Specifically to the CICP process, one of the comments you make is that the negative aspect is that government picks winners and losers. Do you have a recommended process or an alternative selection process?

[Corinne Pohlmann]

Well, it's always tough, and on this one I have to say that we haven't made our final decision on CICP either because we'd like to see what the outcomes are. And we are pleased that it's not a direct subsidy because that would have been more difficult for us. Rather it's just paying for the testing, which we think is a better approach.

But we are concerned, of course, always. It's always risky when governments get into this game of picking the winners and losers. From my understanding--and I'm not super knowledgeable on the program--it does seem that they tried to take it independently to NRC and have them go through the whole process for them. However, ultimately, somewhere down the road we get calls from a member who is just off the list, or their competitor got in and they didn't. This is the part where it can be a bit more troublesome as to who gets it and who doesn't. And governments...should they be in that game, is always a question.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I have one quick question to Ms. Scarborough.

I appreciate the great work of you and your angelic partners across the country. I represent an area in central Okanagan, in B.C. We have a very entrepreneurial, high-tech, tourism, venture capitalist, very flourishing portion of our industry. Accelerate Okanagan is a new incubator that's just recently come together and is bringing those ideas collectively.

I just wonder, from your members, do you look at taking an equity position on some of your deals, or is it mostly just lending of capital?

[Michelle Scarborough]

Angel investment is all about equity, typically. There are angels that like convertible debentures. But any of the deals I've done as an angel investor, if I use myself specifically, have all been equity, typically not on the convertible debenture side.

There are ways in which angel investors will go into certain investments depending on the risk, depending on the team, depending on the technology and the stage of innovation that it's at. Are they commercial or are they not? So they as individuals and as part of a group, if they're operating as part of a group, will make decisions as to how they want to run the term sheet and how they want to make their investment predicated on a number of those factors.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Just remember buyandsell.gc.ca. We've got to get that out there as much as we can.

Thank you very much.

[The Chair, NDP, Pat Martin]

All right. Thank you, Ron.

Thank you to both of our witnesses. That concludes our second round, and I believe there is no other interest in questioning, so if either of you have any closing remarks, we would welcome that.

Failing that, we'll just thank you both for giving up your time today to be with us. We found your presentation very useful and very valuable. Thank you very much for being with us today.

[Corinne Pohlmann]

Thank you.

[The Chair, NDP, Pat Martin]

With that, I'm going to suspend the meeting for one minute. Then we have one item of committee business, so I'll ask the members to stick around.

[Proceedings continue in camera]