Finance Committee on Sept. 20th, 2016

[Manon Brassard]

I spoke a little earlier about a Statistics Canada study. Canada Economic Development wants to have a good idea of how its investments are performing and ensure that they are appropriate, strategic and will yield good results.

We look at our leverage. In terms of business growth, each dollar invested will generate $4.93 in investments. For the development of the regions, the leverage is $6.77. When it comes to the ad hoc or targeted support of communities in need, the leverage is $1.93, but we are aware of the context. For example, in Lac-Mégantic, where the reason for intervening is different, the leverage is less important. The goal is instead to restore the growth and economy of the region.

For start-ups that we support directly, we assess whether they will be able to exist for a long period of time. Our figures indicate that they are still around after five years. In other words, we don't lose anything. Our goal is to create new businesses and to keep them. Do they increase their sales? We are seeing that 68% of businesses that we have helped have increased their sales and their productivity. We use indicators like these to ensure that the investments we make and the contributions we provide generate economic activity, jobs and growth.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Ladies and gentlemen, we understand that your agency isn't a bank. Entrepreneurs who go and see you are often not able to get a loan or the money they need from a private and duly established financial institution. So there is some risk in your investments, which is why your agency exists. We accept that there is some risk, and there needs to be.

What do you estimate your losses to be for last year? Can you give us a number?

[Manon Brassard]

You're right. The agency isn't a bank, and we take some risks. Often, our presence means that other partners will emerge. We are often the catalyst. Our loss rate for approved contributions is 3.9%.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

How much?

[Manon Brassard]

It's 3.9%.

This gives me the opportunity to point out as well that, at the outset, we do everything we can to help a business. When it isn't working well, we aren't going to let it go. We're going to try to give it some services, coaching or connect it with another organization, such as a non-profit organization, for instance, that can help and support it in its activities. Our goal is to help businesses as long as possible.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Chair, I would like to raise one last point.

The main issue that entrepreneurs address when they come and see us or, rather, when we speak with them—they don't generally come and knock on an MP's door—is the one-stop shop. Many private tools are offered to these individuals, and especially public tools. And if we add the municipalities and the provincial governments, they may have 10, 20, 30 or 40 doors to choose from.

Based on your experience and mandate, how do you see the one-stop shop, where entrepreneurs go and see a single authority, who can direct them?

[Manon Brassard]

That's an interesting ideal to consider.

The reality is a little more complicated in that the authorities change their programs, how they do things and their mandates, which makes the situation more difficult. However, Canada Economic Development, CED, is working and will work with everyone in the federal family to facilitate action, be it for referencing or something else.

Knowing that we have a good project in front of us, knowing that we want partners, we are going to invite them to join us, depending on the project. It might be BDC or people from Quebec who might benefit from the support of Investissement Québec. As for us, we are going to try to bring people together around the same table to discuss the project in order to move it forward in a timely fashion.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. Brassard.

Mr. Caron, you have five minutes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Chair.

I would also like to thank the witnesses for being here today.

I see the results of the Economic Development Agency of Canada for the Regions of Quebec, particularly in the Lower St. Lawrence region, where it is very active. I also see the good work of the Community Futures Development Corporations, the CFDCs, which is extremely important in the rural regions.

I have a few questions for you about the CFDCs and the investment in the regions.

My first question is more general. What was the impact of closing Quebec's local development centres, the CLDs, on CED and the CFDCs? I know that in the Lower St. Lawrence, a lot of partnerships were struck between the two organizations. The CLDs have been replaced in some regions but not in others, which has certainly had an impact on the role of the CFDCs and the complementarity that existed in the past.

[Manon Brassard]

I will ask my colleague to answer your question.

[The Chair, Liberal, Wayne Easter]

You may answer the question, Mr. Mongeau.

[Pierre-Marc Mongeau, Vice-President, Operations, Economic Development Agency of Canada for the Regions of Quebec]

Thank you, Mr. Chair.

Know that we are working very closely with all the CFDCs. They are very close partners. We are in contact with them regularly every year to discuss the issues they are facing. So we work with them a lot. Obviously, it wasn't our decision to reduce the number of CLDs. Given the situation, and without the role of the CLDs that no longer exist, we are increasingly looking at how our agency and the CFDCs can work together to foster economic diversification in the various communities. So our role isn't to replace the CLDs, but to work together to look at what impact we might have on diversification. We feel a responsibility for development in the various regions.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I was talking more about complementarity.

Basically, CED, the CFDCs and the CLDs are very complementary, but when a major player is lost, it definitely has an impact on the level of services that can be offered and on role differentiation.

Do you have any examples of this or are you currently in the process of readapting in relation to this new reality?

[Manon Brassard]

We have just renewed our agreements with the CFDCs. It was April 1, if I'm not mistaken. They are three-year agreements. We are still working with the CFDCs to refine our ways of working and our methods of performance evaluation. Still, the CFDCs are continuing with their primary mandate. Their youth strategy, for instance, is very effective. They also have other intervention methods available to them.

The repercussions have been manageable so far. I think that the people on the ground have accepted the situation. They are finding ways of working that will help them adapt.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Let's come back to the agreements concluded with the CFDCs.

Based on what was announced, we're talking about $86 million over three years for Quebec. Is that right?

[Manon Brassard]

Yes, that's it.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Yet, the previous agreement in 2011 was for $154 million over five years. So this is an annual decrease of about 10% of the budget for the CFDCs and an average of $31 million compared with $28 million.

Is there a particular reason why the CFDC budget has decreased in the agreement that was concluded compared with what was provided in the previous agreement?

[Pierre-Marc Mongeau]

Actually, it's not a negotiation with the CFDCs, but a discussion, since they are partners. When we had a discussion with the CFDCs, we looked at all the aspects that we all wanted to change in the three-year agreement. I was surprised by the figures. There was no increase in costs when we have not changed the basic elements in the various agreements we have signed. There was no indexing, but we left the agreements at the same level.

There may have been changes in their internal revenues from the high loans they give but, for our part, we have concluded the same agreements. However, knowing that this indexing hasn't been done, we put in place, with the CFDCs, a fund of $1 million for the first year of the agreement, $1.5 million for the second year and $2 million for the third year. These amounts will be distributed to the various BDCs and CFDCs.

The goal is to foster innovation and clean technologies, as well as help young businesses when they need to make a business plan, for example. We give them a little more money, which enables them to carry out this kind of activity.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

You just mentioned venture capital funds for CFDCs and BDCs. Is that right?

[Pierre-Marc Mongeau]

No.

Venture capital is managed by the CFDC network. We let them take care of that. We participate much more in the operational and maintenance costs.

[The Chair, Liberal, Wayne Easter]

We will have to cut it there, Guy, sorry.

Mr. Ouellette, go ahead.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you very much, Mr. Chair.

Ms. Brassard, thank you for being with us today.

I'd like to know how many indigenous companies have been trained in the past three to five years.

[Manon Brassard]

If I remember correctly, we have established 19 projects with indigenous groups in recent years, totalling $7 million. That answers your question indirectly.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Approximately how many jobs have been created?

[Manon Brassard]

In recent years, 70 or 77. You may be interested to learn that we have received 67 projects from indigenous communities as part of CIP 150, which is under way. If they were all approved, that would equal $14 million.