Evidence of meeting #9 for Finance in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was federal.
10:30 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
Thank you.
I wanted to comment. I know you are specific in terms of the direction we should take to make sure the funding is renewed after 2009.
Your organization received $168,000 from the federal government, and I just wondered if you could comment quickly on how that was used as an investment for your organization.
10:30 a.m.
Executive Director, BC Association of Magazine Publishers
That funding was just announced within the last month. We're really excited about the opportunities that funding provides us.
We intend to have a number of programs to assist magazine publishers to improve the quality of Canadian editorial content. We intend to have a number of programs to increase rural magazine publishers' access to professional development opportunities, not only in Toronto but also in B.C. We have a number of marketing campaigns to try to familiarize Canadians with their local gems of B.C. magazines. In addition to that, we have a number of initiatives to try to increase the access that B.C. magazines have on the newsstand.
10:35 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
Thank you, Mr. Dykstra. Our time is up.
I have a couple of questions before we go. I'll ask Mr. Munro, since he didn't get a question and he's waiting with anticipation.
I read an article by the Fraser Institute on labour-sponsored funds, which said that there's not really a need to give them the extra benefit. In fact, in your presentation you didn't discuss your return. Was that done intentionally? Can you discuss that?
10:35 a.m.
Senior Vice-President, National Sales, Marketing and Government Relations, GrowthWorks Capital Ltd.
No.
First, the study by the Fraser Institute was not a study. The report by the Fraser Institute was based on some research that was done by two Ontario professors, Cumming and MacIntosh, six years ago. The data has not been updated. They compared returns from American venture capitalist institutional managers with retail venture capitalists in Canada of the labour-sponsored fund industry, and half of our funds sit in cash, so it was an apples to oranges analysis, and the industry is working on a response to that. In terms of looking at it data to data, that should be out in the next six months.
I could speak about the GrowthWorks returns. In Ontario, where we have been for five years, we've now had compound annual rates of return of between 6% and 9% positive for the last five years, every year without the tax credits. In British Columbia our 10-year rate of return is 5% positive without the tax credit. As a management team running over $900 million of Canadians' RRSP money, we've had a positive performance track record in every region we're in.
10:35 a.m.
Senior Vice-President, National Sales, Marketing and Government Relations, GrowthWorks Capital Ltd.
The cash content depends on the fund you're talking about, but it's usually in the portion of 40%, which is above the reserve requirement of 20%, and usually represents the successful divestments we've made. We've had two successful divestments in the last year for over $176 million of cash. That cash stays in the fund until it's redeemed at the end of the eight-year cycle.
10:35 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
In your presentation you mentioned at the outset that this didn't include Quebec. Have you no relationship with the labour-sponsored fund in Quebec?
10:35 a.m.
Senior Vice-President, National Sales, Marketing and Government Relations, GrowthWorks Capital Ltd.
Do you mean the Solidarity Fund? No.
10:35 a.m.
Senior Vice-President, National Sales, Marketing and Government Relations, GrowthWorks Capital Ltd.
It's run completely independently in that province.
10:35 a.m.
Senior Vice-President, National Sales, Marketing and Government Relations, GrowthWorks Capital Ltd.
They have different rules in Quebec. They are able to invest a small percentage of capital outside the province of Quebec, and as a matter of fact, outside of Canada.
10:35 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
How is your attraction rate in terms of small investors or small business? Are they able to access your funds, or is there a lot of paperwork involved?
10:35 a.m.
Senior Vice-President, National Sales, Marketing and Government Relations, GrowthWorks Capital Ltd.
No. If someone, an entrepreneur, applies for funding from us.... Remember, we're not a lender; we're an equity investor. If we look at 100 business plans, on average, 90 would be reviewed and turned down within two weeks. And we try to do it in a manner that gives them another pathway. Of the remaining 10, we might fund two to three of those opportunities.
So of 100 deals we look at, we'd do 2% to 3%. The only security we have is the due diligence we do up front, because this is RRSP money from Canadians.
10:35 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
Thank you.
I have some other questions. I don't mean to cut you off.
Just quickly, Ms. Stiene, is there any way we can make money on what you're proposing? Can we generate some money? It's duty free. Duty free means tax free, so I'm trying to see what the benefit would be for government coffers.
10:35 a.m.
Member, Arrivals Duty Free Coalition
Yes, the benefit for the government is that you are actually getting taxes from the 490 Canadians we've identified who will probably be hired to serve the public and--
10:35 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
And the profit from the duty-free shops would be subject to tax in Canada.
10:35 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
Mr. Ruel, just quickly, do you have a concrete example you can give us of what the government can do to help disabled people become employed? I've had a few people come into my office looking for jobs. You're not going to get a small business to adapt the company to hire somebody; let's face reality. But I think even the big guys have a bit of a problem. They're still struggling in trying to adapt the work atmosphere, if I can say that. I'm wondering how that's going.
10:35 a.m.
National Equality Director, Alliance for Equality of Blind Canadians
Well, I think there are also a great many workplaces where very little, if any, adaptation is required. Personally, I believe there's a great deal of education to be done with the employer. There's a great deal of misunderstanding about disability.
10:35 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
I agree with that, but I'm asking if resources should be put towards helping the employer or towards education.
10:35 a.m.
National Equality Director, Alliance for Equality of Blind Canadians
I think there's a great deal of education to be done for the employer as well as a need for some help, as you say, in terms of some of the technology costs.
10:40 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
Just quickly, last week somebody was advocating for refundability of the disability tax credit. Would that make a difference for some of your members?
10:40 a.m.
National Equality Director, Alliance for Equality of Blind Canadians
Refundability of....
10:40 a.m.
Liberal