Thank you, Mr. Chairman and members of the committee. It's a pleasure to be here. I spent about 20 years of my career at the Department of Finance and then at EDC dealing with financial crown corporations, so it's always fun to be invited back to that space. I know them far too well in terms of the government's capital structure operations.
It's a pleasure to be invited today to speak in support of the BDC amendments. I want to focus on two things.
First of all, there is the important role that the BDC played during the financial crisis in 2008. At the Conference Board, we wrote the only book I think written in Canada about the policy response to the financial crisis. I think Canada was very lucky to have the BDC and the EDC as policy instruments. Financial markets basically shut down after the financial crisis, and we had two powerful policy instruments—or even three, because Farm Credit also played a role—that we could turn to in order to fill gaps in the financial marketplace.
The BDC was asked to do some exceptional things. It was able to do so fairly quickly. I think that anything we can do in legislation to actually expedite that process.... Because this won't be the last financial crisis we'll face. It may be the biggest that most of us will see in our lifetimes, but we know from academic research that there have been 200 financial crises under capitalism, going back 200 years. Smart governments have tools available to deal with a crisis when it happens, and the BDC is one of those policy tools.
Ultimately, the BDC is there to build capacity and add capacity to the Canadian financial system and to do it in a very smart way without really being a cost to the taxpayer. I think the BDC has made great progress in its evolution in being a very sharp policy tool.
The other point I want to make is that international business today—or business today—is built around what we call “global value chains”. In my time at the EDC I came up with a concept called “integrative trade”, that is, looking at international businesses and the integration of all the parts: exports, imports, investment, services, and goods. The value chain part is really key for the BDC because more and more Canadian firms have to find a way to fit into the global value system, where they can actually find markets and customers abroad as well as within Canada. It's very logical that capital from the BDC should be able to follow businesses as they try to expand their business model on a global basis. Therefore, the thinking around the amendments in that area I think is very logical.
There's a real difference between the EDC and the BDC and I'm glad Martin made that point. The EDC's strength is in evaluating foreign risk: the risk of foreign buyers and the risk of foreign markets. The BDC's strength is evaluating the operations of firms operating in Canada: growth firms and small firms. Giving the BDC the capacity to play a larger role internationally I think is a very logical extension of the act. Financial and crown corporations are constantly in evolution. This is really just another step in their evolution.