Foreign Affairs Committee on June 15th, 2017

[Peter Fragiskatos, Liberal, London North Centre, ON]

Mr. Quigley, I don't mean to cut you off, but I have the sense that I have about 15 seconds left before the chair intervenes.

Should we make it a point to have a diverse approach when it comes to this, as far as the DFI is concerned, so that middle-income countries are invested in, because poverty exists there, and also not to ignore LDCs because poverty obviously exists there?

My understanding and everything I've heard from the witness testimony today and in other meetings we have had would indicate that we must have a broad approach and not limit ourselves to either, but proceed in a way that's going to address poverty and development concerns in general terms.

[The Chair, Liberal, Bob Nault]

Mr. Quigley, we'll ask you to give us a short yes or no, because we want to go to Mr. Kmiec before we wrap up.

[Jerome Quigley]

Very quickly, I would take the opposite. I would say it should be less broad than more broad because you don't have a lot of money.

[The Chair, Liberal, Bob Nault]

Thank you.

Mr. Kmiec, go ahead, please.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

How much time do I have?

[The Chair, Liberal, Bob Nault]

You have five minutes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

That's very kind of you.

Ms. Greene, you talked about commercial banks and the idea of savings accounts being used for international development. The system is popular in Europe in certain DFIs. Can you describe how the system works? I also want to know what tax measures benefit those who use the system.

[Jessie Greene]

I'm most familiar with the Dutch system. The Dutch government first gave a tax benefit to institutions that created funds that enabled citizens to make types of impact investments. They weren't necessarily development funds. They could also be environmental funds. In the end, four funds were created by different banks. These include the Triodos Bank and the ASN Bank. Various financial institutions established these funds, which are mutual funds. Therefore, any citizen can buy shares. The funds are then invested according to the institution's mandate, while meeting the conditions imposed for entitlement to the tax benefit. In the case of the ASN Bank, a mutual fund was established in which people could buy shares. Unless I'm mistaken, the fund is currently about 70 million euros.

At first, investors had a tax benefit. People could deduct their investment, or the interest received on these investments. After several years, the tax benefit was eliminated. However, the contributions didn't decrease. Instead, they continued to increase. The tax deduction provided an impetus to establish the funds, which then continued to exist.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I have another question.

Regarding the projects in which you choose to invest, how do you decide the risk you're willing to take? For example, do you decide that you won't invest more than 25% or 50% per project? Most international DFIs don't allow you to invest more than 25% or 50% in equity in a project. I think Norway's DFI chose to establish a percentage for each project. This means the DFI's mandate doesn't specify a maximum percentage of investment in a project.

For Caisse Desjardins, what's the maximum per project? Is it established by region?

[Jessie Greene]

DID has two investment funds. We invest with our own money, DID's equity. Part of our money is set aside to invest in financial inclusion. The risk limits are based on the countries, structures and funding tools we use. We also have another fund, a limited partnership that has external investors, including Desjardins and EDC. This fund has slightly stricter parameters.

Therefore, we establish the risk limits based on our own priorities. We have a fairly elaborate risk assessment model that sets several limits for the tools, currency, and duration in the case of a longer investment. We invest about 60% in equity. We still take many risks, in comparison with a number of DFIs.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Do I have time for one more question?

[The Chair, Liberal, Bob Nault]

I don't think so, Tom.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

That's fine.

[The Chair, Liberal, Bob Nault]

I want to wrap this up because there's another committee coming in here in about 10 minutes. I understand that they will have a minister with them as well.

I want to thank our witnesses from Desjardins and from the Mennonite Economic Development Associates. On behalf of the committee I want to thank you very much. It was a very interesting discussion this morning on the DFI. Again, I'd go back to the conversation we've been having that this is the first new DFI in 20 years. That, in itself, is news that we're moving potentially in a new, bold direction and I liked that discussion this morning for sure.

Colleagues, have a good weekend in the riding. We'll see you on Tuesday morning as usual.

The meeting is adjourned.