Industry Committee on May 3rd, 2016

[Luc Brûlé, Vice-President, Canadian Space Agency]

Thank you.

It's always a matter of where we put our priorities.

In our case, we do have niche technologies we want to nurture, but it does not preclude us from looking at other technologies. We're very R and D intensive. We're working closely with industry. We have an excellent grants and contribution program that can help in working with industry to develop other technologies. We also need to nurture those ones that are important to us.

[Brian Masse, NDP, Windsor West, ON]

No, I get that, but if you're talking here and your opportunities are in niche technology areas and you have trusted and valued partners, what do we need to do to escape just being an add-on to something versus being that something? If we have the ambition and the support to do so, how do we become more than just an add-on or a niche?

I'll let you think about it and I'll spend my time over there. It's nothing that's urgent. It's just a question of how we get bigger and broader, that's all. Maybe you can answer that in a quick email to me. I'd be interested in knowing how to get there.

[The Chair, Liberal, Dan Ruimy]

The last question goes to Mr. Arseneault.

Mr. Arseneault, you have the floor for five minutes.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

Thank you, Mr. Chair.

My question goes to the officials from the Business Development Bank of Canada.

The words “Business Development Bank of Canada” implies economic development. Clearly, economic development challenges vary depending on whether we are dealing with a rural region, an urban region or a major city. How does the Business Development Bank of Canada respond to those challenges, in your opinion?

Are the rules, the criteria and the relationships with entrepreneurs different in rural regions compared to what they are in major cities? When I say criteria, of course, I mean the criteria that provide access to funding.

[Jérôme Nycz]

Thank you for the question.

If you look at the BDC activities, you will see that our market penetration rate is very high in some regions. For example, in the Atlantic region, industry has been transformed. There was a lot of fishing and a lot of petroleum exploration. So you can see that financial institutions were very active in some periods and less active in periods of economic slowdown.

The BDC has maintained a strong presence in the region. In Newfoundland and Labrador, for example, our participation rate is about 13% or 14%, when the national average is about 3.8%. BDC activities show that our presence is strong when, for example, a town has a major employer and the economy gravitates around that employer. It may be that a plant needs equipment, but since it is what is called a single purpose entity, its market value is less than it would be in a region with more density.

The BDC is very active in funding projects of that kind and in assessing risks according to the industry characteristics. The financing that we provide is perhaps more long term in nature. We finance a larger part of the assets in order to stimulate economic activity in those regions. The companies therefore have working capital in order to support their growth and to face the challenges that are inherent in being established in a remote region.

The BDC has a greater impact in less densely populated regions that are less well covered by other financial institutions. That is really our role in development and we are really committed to it.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

You mentioned the Atlantic provinces, but, if you have time, could you send us an email with statistics like you gave us about Newfoundland and Labrador? You were talking about a penetration rate of 13% compared to the national average, which is approximately 3%.

Is that correct?

[Jérôme Nycz]

BDC's penetration rate for Canada as a whole is about 3.5%. In Newfoundland and Labrador, it is 14.9%. That is one example, but we could give you others.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

I am happy to hear that.

Actually, I was a little concerned to hear you tell our colleague, Mr. Jowhari, that you had moved your offices to where there is a greater concentration of entrepreneurs. We know very well that there is practically no concentration like that in the Atlantic provinces.

[Jérôme Nycz]

Correct.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

You have been asked a number of questions about that, but I would like to come back to the BDC's role, which complements the role of the banks.

How would you describe that complementary role with a word or two, or with an image? How is the Business Development Bank of Canada different in that respect?

[Jérôme Nycz]

First, we are distinct because we are a patient lender and we have no recourse to short-term assets. We fund projects on their merits and the merits of the company, not necessarily because of the entrepreneurs' personal assets.

Second, we often take on a higher share of the risk than a bank does, and we charge accordingly. Our repayment conditions for loans are more favourable. That means longer terms and more flexible repayment options. In addition, if a company gets into difficulty, we can allow entrepreneurs to defer the repayment of the capital so that the company can get back onto its feet.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

Do I have 20 seconds left, Mr. Chair? Not even five seconds?

That will be all. Thank you.

[The Chair, Liberal, Dan Ruimy]

That's a good answer and that concludes that.

Before I whisk you off there were a lot of requests for documentation and so on. Could you please have everything forwarded to the clerk's office so that we can distribute to everybody?

I'd like to thank you all for coming today. It was a great question and answer session. Have a great day. We're going to suspend for three minutes.

[Proceedings continue in camera]