Finance Committee on June 11th, 2009

[Jean-René Halde]

Honestly, I believe that's what we'll be hearing from the better financed ones, that they will say, no, we have cheaper sources of funds, thank you very much.

[Mike Wallace, Conservative, Burlington, ON]

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Wallace.

We'll go to Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman.

Just quickly, Mr. Halde, before I go back to Mr. Poloz, I think you received a letter of May 21 from Sara Anghel. I think that's what the chairman was referring to. It's a letter dated May 21, 2009. It's from Sara Anghel, the vice-president, government relations and public affairs. It's regarding the marine....

In order to avoid going around in circles and having to call you back, perhaps you can just keep us posted as to what is happening, so we don't get a letter from them again saying that things have not been working out. I understand that you are working on it. If you can at least let us know in writing, I think it would help the committee so we don't have to keep going in circles, if it's at all possible.

[Jean-René Halde]

I'll be happy to keep you up to date.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

The other request would be, I think, what we're all saying. If we're talking about boat sales and recreational vehicles, I think that means things are turning around. If there is something we could do in terms of maybe lowering the requirements from triple-A to double-A, you have to let us know as well. It's a two-way street. I think you're hearing the same thing around the table.

Mr. Poloz, at the end of the last part of my questioning during my last intervention.... If I go to BDC for financing, I know they're sort of the lender of last resort and that it's going to cost me three, four, or five points more than a regular bank. I'm going to have to pay for that type of lending. Everybody is aware of that. I'm just wondering, is that EDC policy? That's what I'm trying to get to. Again, I'm referring to a couple of cases where it doesn't seem that EDC is competitive. Is that the purpose of EDC? Is that the mandate when it comes to insurance?

[Stephen Poloz]

Thank you.

You said lending, but I think you mean insurance. Is that correct?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Yes, insurance. I'm sorry. I meant lending from the BDC point of view.

[Stephen Poloz]

Okay.

We do both, of course, and in both cases we're seeking a price that is defensible under international law, so that it's a commercial price. As I was saying before, it's very important when someone says “This was so much more, that can't be right”—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I understand all that. I'm saying with BDC it's almost clear. I see Mr. Halde smiling a little bit—you can interject. But dollar for dollar, if you were to go to a bank and you were to go to BDC, I think BDC would be a little bit pricier.

Go ahead.

[Jean-René Halde]

I'd love to respond to that.

We price for risk, and we price for risk, we believe, appropriately. But we also have a mandate to be complementary to the financial institutions. One of the ways to be complementary is to make sure we don't steal the deal from the financial institution by being cheaper. So we make an effort to be slightly different from the financial institution. The purpose is not always to be the highest; it's a function of risk.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I said the same thing in fewer words. I'm just wondering if the same holds true for EDC. I'm not aware that it does.

You're the main player in the market. Is that correct?

[Stephen Poloz]

Yes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Again, I'm talking about insurance.

[Stephen Poloz]

On the lending side, it is our hope that every rate we charge is fully defensible as a commercial rate. There's no policy to try to be more or anything like that. We're very often pari passu with financial partners, so then it's identical. That's simple.

On the insurance side, we are very careful to make sure we are not seen as a competitor to the private market. So there is an explicit policy to be slightly--and I'll use the term advisedly, just as my friend has--more expensive. When you have examples that are significantly more expensive, it is usually the case that there is a big difference in what's being covered, the deductible, whether there is a minimum payment per year, whether there are more buyers or fewer buyers, and whether there are larger limits. That's why I was asking you to please compare apples to apples.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I'm aware of that, and I understand your situation. I'd like to talk to you a little bit more about it after the committee meeting.

I have just a quick question. In your brief, you talk about your business volume reaching nearly $5.6 billion. I think your volume in terms of dollars is the same, but in terms of transactions it's much greater. Did I read it inaccurately?

[Stephen Poloz]

No, you were right. We have more customers with similar dollar volumes to last year. What that tells you is, as one of the other honourable members was asking, exports are much lower at this time than they were last year, so that level means that more people are coming to us--and they're generally smaller companies--looking for protection from those risks that have arisen. That is, of course, our forte. That segment of offering insurance to really small companies so they can trade is very important to EDC's mandate.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

I want to thank both of you for coming in today. We certainly appreciate this ongoing dialogue.

Monsieur Carrier.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Chair, it has been specified that we would receive more information on the loan guarantees for forestry companies. Mr. Halde promised to provide us with information on their position in this regard. Has a deadline been set?

[Jean-René Halde]

I will send you that information in one week.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Will that be sent to the committee clerk?

[Jean-René Halde]

I can send it to the clerk.

[The Chair, Conservative, James Rajotte]

You can provide that to the clerk, and we'll ensure that all members of the committee get it.

Thank you. We've added some responsibilities onto you, and we appreciate your taking on the challenges. We do look forward to an ongoing dialogue, so I hope you find this helpful as well. I do want to mention that we found both EDC and BDC, especially recently, very cooperative, at least at the government relations level. I think all members are finding that increasingly so. We certainly appreciate that very much.

[Jean-René Halde]

Thank you very much. Just be assured we're doing everything we can to help out there.

[The Chair, Conservative, James Rajotte]

Thank you.

The meeting is adjourned.