Industry Committee on Nov. 6th, 2014

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you so much, Mr. Chair. My questions are for BDC.

The third point you mentioned was support to entrepreneurs through third party organizations, and your defence of that point was that this was going to make it possible to reach out to young entrepreneurs. Quite frankly, the last time I spoke to young entrepreneurs, I learned they don't need our help through obfuscation of layers and layers. We could learn something from the young entrepreneurs in this country. I simply don't understand what that extra layer of obfuscation, if you like, is going to achieve to help our young people.

[Jean-René Halde]

I'd like to respond to that, if I may. We have an awful lot of young entrepreneurs who need financing to start a business. There are organizations very much capable of doing that and I'm going to refer to what used to be called the Canadian Youth Business Foundation. At the present time the Canadian Youth Business Foundation, now called Futurpreneur but CYBF was their name for a long time, reaches out to young entrepreneurs and is willing to lend to them. At the present time we would love to be able to lend to CYBF so they can on-lend, because they have far-reaching offices to reach the young when it comes to financing.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

But the point I want you to be certain about is that you're not adding another layer of bureaucracy. The money has to go to the young entrepreneurs, not to a middle layer or one more thick layer of bureaucracy that can skim the money from where it should be going.

[Jean-René Halde]

I am absolutely with you on that. What we're trying to remove is ourselves, because at the present time the law is such that they do the work and then they have to come to us, because we're not allowed to lend through them. As BDC, we actually then have to meet with every entrepreneur.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

What's your percentage on the transaction?

[Jean-René Halde]

We literally do this for, honestly, the greater good of the country, because they are small transactions. The costs involved....That's why we want to remove ourselves.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

My point is that I would need to be very comfortable that the money is going to the entrepreneurs.

[Jean-René Halde]

I assure you, it does.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Okay.

Now, going directly to foreign subsidiaries, you said that this is another piece you're focused on. Can you give me an example of how that would work? I think you started with my colleague, but can you pick up where you left off?

[Jean-René Halde]

I will pick that up very quickly, so as not to be cut off.

A supplier would then move to another country. Right now, in order to help that Canadian entrepreneur, what we have to do is lend to the Canadian company and that entrepreneur then moves the money down, let's say, to the foreign country where his new plant is located. The problem that creates is that it puts a lot of debt in the Canadian corporation. Many entrepreneurs have asked us, “Please, just lend to my subsidiary, don't put the loan on my balance sheet in Canada. Deal directly with my subsidiary.” It's a request that many have made.

I was speaking to one entrepreneur yesterday who was making that exact request. It would simplify things. Right now we do it.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Do you analyze that with a lens on the creation of jobs, economic growth, and long-term prosperity in Canada, or where the foreign subsidiary is?

[Jean-René Halde]

We are trying to make sure our role is to make our Canadian companies more and more competitive, and in some cases in a globalized environment, some of them, in order to keep growing, may have to go and establish a plant elsewhere. Our concern is to make sure that that Canadian entrepreneur can keep growing and keep following the large order-givers and so on. So it is not about creating jobs elsewhere, it's about making that company stronger.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

It's about cleaning off the balance sheet in Canada, which isn't always in the best interests of Canadian prosperity.

[Jean-René Halde]

It is about reducing the level of debt on the Canadian balance sheet, so that that Canadian entrepreneur has more room to borrow in Canada for the Canadian business.

[The Chair, Conservative, David Sweet]

Thank you very much. That was a robust round. Thank you, Mr. Halde.

Now to Mr. Côté, for four minutes.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

It is regrettable that Ms. Gallant continues to try to make a silk purse out of a sow's ear; however, this is her usual contemptuous attitude. No one can seriously believe that splitting this bill so that the various parts can be studied separately in committee is the same thing as reviewing these parts without any possibility of bringing amendments.

That being said, I would like to thank the witnesses for being here. I have far too many questions for the amount of time I am given; however, I will start right away with the issue of patents and industrial design.

Previously, when we studied the issue of intellectual property here in committee, no witnesses mentioned the fact that there was a connection between what was proposed at the time and the government's recommendations regarding our compliance with treaties. What connections can be made there, in your opinion? Did the government proceed unilaterally, of its own volition? Otherwise, is there really a link to be made with treaties that were signed, such as the Geneva (1999) Act of the Hague Agreement Concerning the International Registration of Industrial Designs?

[Denis Martel]

Thank you for your question.

Over the years, many consultations were held, particularly by your committee. Moreover, we, as public servants for the government, hear much about consistency at the international level when we discuss the issue with businesses. There are national systems, but companies do business around the world. They want an administrative system that is standardized and consistent with what exists internationally. That is one of the things we hear most often from businesses.

The treaties are very technical and businesses are not very familiar with them, but patent agents are. Consultations were launched in 2003 and the positive comments we hear most often are those regarding adhesion to these treaties or their ratification.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Could you give us an idea of the stakeholders who were consulted?

[Denis Martel]

Often, it is the Intellectual Property Institute of Canada.

This organization represents patent and industrial design agents. Consultations are conducted on an individual basis. We sometimes speak with patent agents or directly to representatives from the association. These are the people who know this field best.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you.

Unfortunately, I have very little time. I must now move on to questions regarding the Investment Canada Act.

Some aspects of the act can prevent information from being disclosed if the investor in question can convince the minister that it could be prejudicial. Could you give us an example of a convincing argument? I find this worrisome.

[Jenifer Aitken]

The provision in the act to which you're referring is related to the disclosure of information in a Governor in Council order. At the end of the national security review process, the Governor in Council can make an order. The act provides for a variety of different types of things that could be contained in that order. It could prohibit an investment, permit an investment, or it could permit it with conditions.

Then, the provision allowing the minister to disclose information in the order says that the minister shall not disclose the information, if the investor satisfies the minister without delay that the communication would prejudice them.

It's a similar structure to the exceptions for disclosure of information under the net benefit process, which already exists in the act; it requires that the minister be satisfied. We're talking about businesses' investments, commercially sensitive information, the disclosure of which could be prejudicial.

[The Chair, Conservative, David Sweet]

Thank you very much.

Thank you, Mr. Côté.

Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chairman.

Ms. Aitken, I'd like to start with you.

We are providing amendments to the Investment Canada Act that will put more teeth into the act and strengthen it. Can you tell me how big a problem is caused by Canadian companies having foreign financing, defaulting on it, and then surrendering their ownership or shares to the control of the foreign entity? Is that a big problem?

[Jenifer Aitken]

Right now there's no notification for it under the act. These changes would provide for a notification and then we would start to get information and have a sense of the scope of those transactions. We know that is a manner in which a Canadian business can be acquired. I can't say exactly how many of those transactions there are now but once we start collecting that data, we will have more information.

[Ted Falk, Conservative, Provencher, MB]

Are you suspecting this an intentional default or an unintentional default? What kind of activities are you thinking there may be?