Finance Committee on June 9th, 2020

[Michael Denham]

Personal guarantees, as you all know, are a standard practice for any bank when it comes to unsecured lending. It's just to make sure that the borrower has skin in the game. It's like a large-scale version of the skin we all have in the game with respect to our credit card bills and telephone bills. The difference is that it's at a much higher scale.

Personal guarantees are things that we request. When the loan is against either secured assets or fixed assets as collateral, the guarantees are less important. Again, to the extent that the situation doesn't work out—I had to call today one of our clients in Guelph, Ontario—and the personal guarantee is called on, especially for us, we always have discussions with the entrepreneur in a very collegial and non-dramatic way. Again, personal guarantees are a core building block of unsecured lending.

[The Chair, Liberal, Wayne Easter]

Yes, I know all about them from my farming days.

The other point is that the one thing we are short of in Canada is capital investment, especially private investment by companies, to invest in innovation, new technologies and job upskilling, training and so on. Coming out of this pandemic, do you have any suggestions for us?

The committee will be looking at what we do post-COVID, what we should be recommending in government policy, etc., in moving ahead to strengthen and improve our economy, productivity and investment. Do you have any suggestions you can offer on where we ought to be going?

[Michael Denham]

I know time is short, so you don't want a long-winded answer. I know there are two priorities. One is that there are some industries that are just going to stay hard hit for a while. I'm thinking of hotels, retail and aerospace-related industries. There I think we need to be vigilant in the medium term in terms of support. This is more Jérôme's direct bailiwick than mine, and we don't have time to hear from him. If we do, we should.

We have venture capital investments in over 800 companies across the country. Some of these companies are fantastic. There are a handful of unicorns in there. I think we need to make sure that we, collectively, ensure that these great cash-consuming, rapidly growing companies have access to the financing—especially equity financing—they need, and I think governments, both through the VCCI program and part of that BCAP program....

Ottawa has done a very good job and a very thoughtful job in making sure that incentives are brought to bear for equity investments to be available for these companies. I do think we can't lose sight of that, because these truly are remarkable companies that have come a long way. It would just be a real shame and sad for the country if we can't find a way to make sure they have access to the equity they need to continue to grow and ensure their rightful potential.

[The Chair, Liberal, Wayne Easter]

Jérôme, we will give you a little space for a few words.

We'll be a little over, but we have a committee meeting following this, so we can squeeze in a little time. Go ahead if you want to add to that.

[Jérôme Nycz, Executive Vice-President, BDC Capital, Business Development Bank of Canada]

Thank you, Mr. Chair.

I think it's fair to say, as Michael said, that we have tremendous innovation in Canada. We have a thriving VC community and innovation entrepreneurs.

I think one of the challenges that we have in Canada is having interest from mid-sized companies and large companies in buying innovation from tech start-ups. Many of our tech start-ups are selling to the U.S. way before they are able to sell to Canadian companies. Bridging the gap between large corporates and the start-up community is key to enabling those relationships. We've done a number of initiatives in the past year to try to bridge that and bring innovation to these corporates.

I think the financial institutions, the FIs, have moved well in fintech and insuretech, but I think that traditional corporates are slow in adopting Canadian technology. Anything that could be done in that regard would be helpful for the start-up community.

[The Chair, Liberal, Wayne Easter]

Thank you very much for that advice.

Thank you, all three, for your presentations, your answering our questions today, and also thank you for the work you do in terms of trying to make our economy more secure and getting businesses to make the investments to secure livelihoods for all Canadians.

With that, thank you again.

We'll suspend for about two minutes, and then we'll come back with the committee meeting to do committee business.

[Michael Denham]

Thank you, all. Thanks for the opportunity.

[Karen Kastner]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thanks very much.

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order. This is in public. People should know that. We'll just go through the business until, hopefully, next December, but as you know, things are always subject to change.

I believe, David, you sent a copy of the report of the steering committee to members, so that's been done. You have that in your hand. We will discuss it. I know that Mr. Ste-Marie had a concern with one point. There's that to deal with, so we'll go through that report and discuss it fully. Also, Mr. Poilievre has a motion he wants to put on the floor.

We won't be able to hold committee meetings on June 25 as we proposed because the House of Commons is closing down to do technology upgrades and whatever between June 23 and, I believe, July 5. I don't have the exact dates but I believe that's it. We'll have to do something about that June 25 meeting if we go ahead with it.

The subcommittee report is before you. I don't believe it's necessary for me to read it. You have all had the opportunity to read it.

I'll just quickly explain that for paragraph 1(a) we've already had those meetings today.

For paragraph 1(b), on Thursday, June 11, we'll be hearing from the Minister of Finance, department officials as well as the Canada Pension Plan Investment Board and the Canada Development Investment Corporation.

For 1(c), on June 16 we'll hear from the new Governor of the Bank of Canada, and we'll do a second panel study of the main estimates.

For 1(d), on June 18 we'll dedicate a meeting to a panel composed of economists from the major Canadian banks. We ask that members submit their witnesses no later than the end of the day today. I want to remind people, because we've seen some of the names coming in, this is for bank economists and probably we should stick to bank economists. That's what the panel is for. I see Peter shaking his head. He can discuss that later. We'll let you in on that, Peter, but that was what that panel was for, bank economists. We had economists previously.

For 1(e), on Monday, June 22.... The reason we're going to Monday is that June 24 is Saint-Jean-Baptiste Day, and there are celebrations on June 23. We felt in fairness to anybody from Quebec that we should move the Tuesday meeting forward to the 22nd. On Thursday, June 25, we will have to make a change there, as indicated, on account of the House. Then there's Tuesday, July 7 and Thursday, July 9. All of those various meetings will be two hours and dedicated to hearing respectively from the Auditor General of Canada, the chief executive officer of the Canada Infrastructure Bank, the commissioner of the Financial Consumer Agency of Canada and the superintendent of Bankruptcy Canada, and another four hours will be dedicated to the hearing of witnesses who have requested to appear.

Let's deal with point one first, and see where we are on that. I don't know whether we want to go by agreement or by motion. We can do it either way, I think.

Is that possible, Mr. Clerk?

[The Clerk of the Committee, Mr. David Gagnon]

Yes. You can have some sort of agreement if you want, but the motion that was passed in the House requires that for any motion that is moved there be a recorded vote.

[The Chair, Liberal, Wayne Easter]

Okay, that's fine. We can go to a recorded vote.

All right, are there any comments on point one? If we break it down that way, it might be easier to do. I know Peter had proposed a witness who wasn't from a bank.

Go ahead.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you, Mr. Chair.

I did propose a witness who understands the banking industry profoundly, and who I think it's fair to say is a very legitimate witness. When we talk about bank economists, I believe the intent is to make sure that we have economists with good knowledge of financial institutions, which this individual does.

Aside from that, I agree with everything you mentioned, including the fact that the House is shutting down, so June 25 cannot be a hearing date anymore, unfortunately.

[The Chair, Liberal, Wayne Easter]

Okay. What do you want to do with the June 25 meeting? Where do you want to move that to? Do we want to cram it in and basically be done as a finance committee, except for emergency situations? It only takes four members to call a meeting. The House of Commons is meeting a number of days, as well.

Do we want to try to insert that meeting before July 9, or what? We can work on that. Does anybody have any comments?

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Sure. That makes sense.

[The Chair, Liberal, Wayne Easter]

Peter's okay with that.

Gabriel, are you okay with that?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

There are two things I'd like to say.

About June 25, we could have a four-hour meeting on Monday, June 22. As for Mr. Julian's first request, I agree with him. We have the right to invite economists who know the banking sector well, even if they do not work in a bank. I agree with Mr. Julian on this point.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Do I see any other comments?

The clerk and I will work on tying that meeting to either the meeting on June 22 or one of the other dates. We'll try to get there.

On point two, that in relation to the committee's 2020-21 pre-budget consultations, we basically go with normal procedure. I've explained this before. We'll put a press release out in June, and the theme will be an economic restart and recovery. That's what we're proposing. That's open to change if people are not comfortable with it.

We'll ask for submissions to be sent to the clerk by August 7 at midnight, 11:59. All the submissions will have fewer than 2,000 words. We ask them to put their recommendations up front. The reason they're in that early is so that they can be translated and go out to members. Then we'll organize the hearings in the fall. Everyone who has made a submission is considered to have made a request to be a witness. We will have to sit down as a steering committee to try to work out that witness list, because sometimes there can be as many as 500 to 600 submissions.

The point that Gabriel was concerned about, paragraph 2(f), I believe it was, reads as follows: “notwithstanding the routine motion on the distribution of documents adopted by the committee on Wednesday, January 29, 2020, the clerk be allowed to publish briefs in the language they are written on the Digital Binder Site of the committee”.

Just to explain why that was included, Gabriel, it's because there are a lot of submissions when they come in. It's going to take quite a while for them to be translated. They do have to be translated to be considered on the official record of the committee. It was just to give committee members the opportunity to pull them up on the digital site if they wanted some bedtime reading between July and August. That's the reason. Officially they have to be translated to be considered as submissions to the committee.

What's your thought on that?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I appreciate your points, Mr. Chair. They are good ones. However, it goes against what we agreed to in January on the usual functioning of committees. The problem here is that it gives an advantage to those who are fluent in both languages or in English, since many more organization reports are tabled in English first. This gives an advantage to English-speaking MPs over French-speaking MPs.

In the spirit of Parliament, it has always been very important to put all members of Parliament on an equal footing, regardless of the official language they speak. I understand that this may delay things for a month or two and that it is a disadvantage, but, in keeping with the principle of equality in terms of the languages used in Parliament, I would ask you to withdraw item 2.f.

[The Chair, Liberal, Wayne Easter]

I see Peter's hand up as well.

Go head, Peter.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

I agree with Mr. Ste-Marie. I think one thing we could do is to encourage organizations. We get a lot of briefs from companies and organizations that can do the translation themselves. I think that would be one where I agree with Mr. Ste-Marie on the principle.

I would suggest that we invite Canadians, if possible, to provide a translated document, English and French. I think we'll find a lot of the organizations and the companies will endeavour to do that for us, which will facilitate things so that there's not as much of a charge on the House of Commons. As to the principle of having both official languages, I can only agree completely with Mr. Ste-Marie.

[The Chair, Liberal, Wayne Easter]

Could we do it this way, that for those submissions that come in both official languages, they be posted to the digital binder site right away? The ones that are not will go to translation. Are we agreed on that change?

[Some hon. members]

Agreed.

[The Chair, Liberal, Wayne Easter]

That was number two. Point number three is that, when the motion was presented in the first House meeting after the pandemic started and we were all shipped out of Ottawa, part of the motion was the (k) part:

(k) the Standing Committee on Finance be instructed to commence a review of the provisions and operation of the COVID-19 Emergency Response Act within six months of the day on which the act receives royal assent and to report its findings to the House no later than Wednesday, March 31, 2021....

What we're proposing in point three is that, in order to meet the requirements of that motion in the House, our very first meeting in the fall when the House reconvenes would be on that topic, to kind of organize ourselves. Then we would set that topic aside while we do pre-budget consultations and get that work done. As soon as possible after the pre-budget consultations are in the works, we would do the requirements to get a report done by March 31—hear the witnesses, complete it and have the report in the House no later than March 31. That way we're not mixing up the two subjects, and we meet the requirements that the House has asked us to meet by starting within six months.

That's the report. Does somebody want to move the report as amended with those slight changes that we've made, changing (f) to ensure that, if it's bilingual, it will go to the digital binder, and for June 25 we'll rejig that meeting. Does somebody want to move that?