Evidence of meeting #39 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was million.
10:10 a.m.
Chief Operating Officer, First Nations Finance Authority
They could change the legislation. In terms of the reason they created our legislation, providing low-rate loans was only the first part. The second part of our act is to increase internal governance because we want to transition away from managing grant monies from the federal government to managing wealth.
10:10 a.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
I want to ask one quick question.
There are two parts. There are a number of first nations that over the past 10 years have really worked well with the small oil sands plants in northern Alberta. They would create an entity. Let's say, it's trucking gravel, for instance. Do you finance those sorts of things?
The second part of the question is, do you finance casinos?
10:10 a.m.
Chief Operating Officer, First Nations Finance Authority
To answer the first part, when we have a client come onboard, we review five years of audited financial statements to ensure there are certain revenue streams—and we get contracts of what the revenue streams are—that are leveragable into loans. We supply a letter to chief and council that says, based upon our review of your revenues, here's the amount that you can borrow.
You as the community know your priorities. If they fit legally under our act, you can ask for those priorities. We don't create what you're going to borrow for, we just have to make sure it fits within our act.
To date we have financed no casinos. Zero. Having said that, revenues in Alberta on casinos operated by the province are collected by the province, and then a certain per cent under provincial agreements is sent back down to the community, and that can be leveraged because they're deemed to be provincial revenues.
We have used casino revenues to finance infrastructure, but we have not made any loans to build a casino.
10:10 a.m.
President and Chief Executive Officer, First Nations Finance Authority
We lend only on existing revenues, not future revenues.
10:10 a.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Thank you, Mr. Chair. Thank you to all of you for coming today to give your testimony. My question is to the credit union association, following up on my colleague's question.
There were tax changes in 2013, and you said they cost about $40 million. Was the net impact on treasury $40 million?
10:10 a.m.
Alicia Swinamer Manager, Government Relations, Valley First, First West Credit Union
We're with First West Credit Union. We have an industry association. We certainly can give you exact numbers on that for the system.
For First West, ourselves, we estimate $3.1 million in additional tax through the phase-out period, then an additional $1.8 million every year after 2016. That's on top of the tax we already pay.
It is quite a significant amount. Then, it's also important to note, because we are here in B.C., that our provincial legislation was triggered by the federal legislation. B.C. is actually the only province that has had a tax increase at the provincial level, as well.
So we're impacted twice by that tax increase.
10:15 a.m.
Liberal
Raj Grewal Liberal Brampton East, ON
The credit unions generally are more popular in western Canada and in Quebec. In Ontario, they're very underutilized, in my opinion. Only about 10% to 12% of the population are members of such unions.
In your interpretation, how is the credit union model going to compete with the big banks?
10:15 a.m.
Assistant Vice President, Valley First, First West Credit Union
One of the main ways that we do that is just being here. We work very carefully, very well, in small towns, particularly First West Credit Union. We don't have any branches, for instance, in Vancouver or Burnaby. We work in small towns. We're in Keremeos, we're in Lumby, we are in smaller communities like Duncan and Chilliwack. That's were we find Canadians who have financial needs that need to be met, and we provide for that. For us, our differentiator is being in those small and mid-sized communities to be able to provide financial services where many other financial institutions have pulled out or reduced services, perhaps, over the years.
10:15 a.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Globalization in economies moving forward and the growth from Canadian companies is what I see as...you have to be a national player. You have to play in world markets, especially when you're in finance. Given the small scale of credit unions.... By no means are you small because, combined, you guys carry about $320 billion worth of assets on your balance sheets in the country. But one bank, TD, carries $862 billion worth of assets in the country. Going forward, if there is one thing you would want to see in this budget, what would that be?
10:15 a.m.
Manager, Government Relations, Valley First, First West Credit Union
For us, it's fair taxation.
When you asked about our competitiveness with the banks, credit unions are the small business of the financial industry. As my colleague mentioned, we're in a lot of those small communities. One way we really have impact is with small businesses. The Canadian Federation of Independent Business recently came out with a study that says that credit unions are actually tied in Canada for the number one place where small and medium-sized businesses go for their banking needs. In British Columbia, we're actually number one by 23%. It's quite significant. The reason, we believe, is because we're local and we know the businesses. For us, when we're taxed at an unfair level, it reduces the amount that we can contribute and loan to those small businesses. So when we're talking about growing the economy, this is one way, through fair taxation, that we can do that.
10:15 a.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Fair enough. Thank you.
Miles, I know the interprovincial trade barrier is probably one of the most annoying aspects to the wine industry. My colleague, Dan, has done a phenomenal job addressing that issue. Our government is taking steps to make stuff like that easy.
In my experience on this committee, which has been a year now—before that I was a corporate lawyer—in your opinion, what one piece of federal legislation can be changed that's the most annoying to you? Is it regulatory red tape, you know, if this didn't exist we'd be able to do our job more easily?
10:15 a.m.
President and Chief Executive Officer, British Columbia Wine Institute
Well, we're governed by provincial legislation, so anything the federal government can do to help to open interprovincial trade, to allow 100% B.C. or Canadian product to be shipped to another Canadian, would be great.
What I'm here today to ask for, quite simply, is that we know the wine industry, or the wine consumption within Canada is increasing twofold. It's growing. That demand is going to be filled by somebody. What we're asking for is the ability for it to be Canadian wine producers. Anything you can do to help us to help offset some of the tremendous capital costs that are required for these small businesses to take advantage of that is very helpful. That's what I'm here today to ask. Again, the demand will be filled. It could easily be from Italy, Australia, wherever else wine is produced. We think it should be Canadian.
10:20 a.m.
Liberal
The Chair Liberal Wayne Easter
Thank you, Raj. We will have time for a couple more questions. We'll turn to Dan in a minute. I have two questions myself.
Miles, on the wine industry innovation program, is that spelled out somewhere? I'm trying to find the brief.
10:20 a.m.
President and Chief Executive Officer, British Columbia Wine Institute
Yes, it is. The specifics were provided a week ago.
10:20 a.m.
Liberal
The Chair Liberal Wayne Easter
Okay.
Mike, what $30 million can scale up...what's the process there that you're asking to be...$30 million, how would it be fed out? Where from? What does it do?
10:20 a.m.
Executive Director, Sustainability CoLab, The Low Carbon Partnership
I'll start with what it does.
The $30 million would be leveraged against the existing assets from the earlier question for the programs that are already on the ground—for example, the target-based sustainability programs in Ontario, the BEEPs in B.C., smart energy communities that QUEST works with. We'd take what's already happening to other communities where that's not already being offered.
Would you like to talk about the process, Brent?
10:20 a.m.
Executive Director, Quality Urban Energy Systems of Tomorrow, The Low Carbon Partnership
Sure.
On the process, collectively we'd all be aligning to provide services to those 10 communities we'd like to advance for the Low Carbon Partnership or 10 communities that we're trying to help advance as smart energy communities.
I'll give you a quick example. There are over 250 communities already across Canada, representing 60% of the population, that are covered through community energy plans. All those plans are in place, but they're not being implemented. We want to be able to take those 10 communities that have the greatest opportunities and accelerate them, get them going so we can get to our action reduction. We would need all of us to do that. That's just an example or a snapshot of the process in which we would be engaging.
If we take as an example what we did with the City of Calgary or with Campbell River, all we had to do was work with them to move them along their plan a little further, and they've already started to see opportunities for reductions in emissions. That's how we'd be working together. We would have them take the BEEP, as an example, with one of our partners, Climate Smart Businesses, which would actually be working with that community to implement that BEEP so they can be refining, monitoring, testing, and continuing to advance improvement.
We'd be constantly working together and then working with those SMEs across Canada, trying to help them to actually get their energy efficiency programs in place and operating to reduce their energy costs at the end of day, which we know is paramount. Across Canada, 87% of CEOs have identified one key issue, energy costs, as being paramount to the operation of their businesses. Most of those are small or medium-sized companies across Canada that are worried about how they're going to address that. That is what this partnership is all about.
10:20 a.m.
Liberal
The Chair Liberal Wayne Easter
Thank you.
Turning to Mr. Albas and Mr. Cannings, we'll have time for questions from you two, and one from the Liberals.
Go ahead, Mr. Albas.
10:20 a.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Thank you, Mr. Chair.
In regard to the wine industry in Canada, my colleague Mr. Grewal mentioned earlier about the opportunities. I spoke to someone in Nova Scotia recently who said that when we made changes in 2006 to the Excise Tax Act, there were only 80 microbreweries at the time. Now there are ten times the amount of these micro craft brewers. These small touch-points make a big difference. Of course, wine has that extra Excise Act exemption if it has 100% Canadian content. Even though there aren't many touch-points, when you do hit on something, it can really change the nature of an industry.
I'd actually like to go to credit unions for a second. I think there's a bit of misunderstanding in Ottawa in general about how credit unions work, particularly in British Columbia. In British Columbia, it seems to me, compared to most provincial markets, there are a lot more credit unions. Is that the case?
10:20 a.m.
Assistant Vice President, Valley First, First West Credit Union
We are the largest system. One in three British Columbians is a member of a credit union. Your three largest credit unions—Vancity, Coast Capital Savings, and First West Credit Union—were among the five largest in Canada and are based here.
10:20 a.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
While you can say TD is a certain size and we need to pay more attention to some of the bigger players, in British Columbia, credit unions are huge.
When it comes to small business, Alicia, you had mentioned earlier that a lot of the lending to small business is there. If the retained earnings that you have are lower, because it's going towards federal taxation, that means you cannot give out as much money to small business. Is that correct?
10:20 a.m.
Manager, Government Relations, Valley First, First West Credit Union
Yes, that is.
10:20 a.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
So where do those small business owners go if they can't get a loan from you?
10:25 a.m.
Manager, Government Relations, Valley First, First West Credit Union
It's a catch.
We know small businesses. One of their greatest challenges is access to capital. We have heard time and again that this is their challenge. When they come to us as a credit union, because we're local, because we know the business in the cities where we operate, because we know them—and we often know their mothers—we know if that business is going to be viable or not. We're really able to have that connection, that local knowledge and lend to them. So when they come to us, as long as they have a viable business, they have a good chance of getting a loan. When we're not able to loan to them, they have to go to other financial institutions, which are often our banks here in Canada. There are times when, for whatever reason, they're not able to get the capital that they need.