Industry Committee on April 19th, 2016

[Pierre-Marc Mongeau]

We are actually starting to work more with universities, but non-profit organizations are also major players. For instance, we support Écotech Québec, an organization that connects small businesses that develop clean technologies with larger promoters that could use those new technologies, such as heating, ventilation and air conditioning systems.

That is along the lines of what Daphne was saying, meaning that we are extensively using the networks of the organizations we support financially. However, we must ensure that we obtain results. It is not just a question of money; it is a question of a final product. We want to make sure that the organizations comply with specific indicators.

[Lloyd Longfield, Liberal, Guelph, ON]

That's great, thank you.

Very briefly, could you add just a little bit? I have another follow-up, if I could squeeze it in.

[The Chair, Liberal, Dan Ruimy]

You have one minute.

[Denise Frenette]

I'll just provide two examples where's there's been collaboration that goes beyond Atlantic Canada.

The first one is that we have an organization in Atlantic Canada called Springboard. It's a network of universities and colleges that work with industry to commercialize research. This organization connects across Canada with other universities and colleges to make the advancement. We recently worked collaboratively with DEC, our sister organization, on the spruce budworm initiative.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

We're just about to embark on a manufacturing study. Part of the study is going to include innovation and what's being done. When we're getting into that study, we'll be looking for where your success points are, not only with your RDA, but Ontario, to try to see how we can help our manufacturers to know some great ideas going on in Atlantic Canada, or western Canada, or Quebec, or Ontario. Are you tracking that, or is it within your plans to track success by sector, or key successes that we would be able to take to the manufacturing study?

[The Chair, Liberal, Dan Ruimy]

Very quickly, give us a yes or no answer. We are done.

[Daphne Meredith]

Yes. We all have some we are ready to share with you.

[Voices]

Yes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you very much.

[The Chair, Liberal, Dan Ruimy]

We are going to move to Mr. Lobb. You have five minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you.

My first question is for CED.

On page 5 of your presentation, you have 724 projects for a total of $317.7 million. Are those grants, repayable contributions, or a combination of both, and can you break down how that works?

[Pierre-Marc Mongeau]

I can start answering the question.

Yes, it is always a combination. We lend money to a company, and the company has a certain number of years to pay the loan back without interest. In some cases, such as non-profit organizations, the contribution is non-reimbursable. If memory serves, that happens in about 45% of cases. Reimbursable contributions represent around 55% of cases. Those figures are approximations, but they give you an idea of the relationship between the two categories.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Okay. Great.

What is the success on loans over the last couple of years? I guess you would call them your non-repayables or your lost loans, or what have you. What is the default rate on those loans?

[Pierre-Marc Mongeau]

I will let my colleague answer. However, I can tell you that the non-payment rate is very low and comparable to that of the industry.

[Marc Lemieux, Chief Financial Officer and Acting Vice-President, Operations, Canada Economic Development]

There are a number of ways to measure that.

If we feel that we are unable to recover the money owed, we write off those amounts from our ledgers. But I think that, in the last 10 years, the agency has written off less than 4% on average, which is not very high at all.

However, for some of those 10 years, the reimbursement is not due yet or has not been completed. Generally speaking, for maturity years, the loss rate is close to 15%.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Okay. Very good.

The next question is for WED, and it's about the Canada 150 infrastructure funding.

I am wondering if there has been any consultation with the Federation of Canadian Municipalities, and what their thoughts are on $23 million going into recreational and cultural centres, maybe another $23 million going into that. Has there been any consultation at all on that?

[Daphne Meredith]

I think you were addressing that to us. Thank you for the question.

I will have to check exactly what has been communicated to the federation. I will have to get back to you on that. Normally, they would be part of our outreach network, of course, and would obviously be aware of the previous investment. The question is how much engagement has happened since budget 2016.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Okay. Fair enough.

The last question I have—and I am coming up against the clock here—would be on indigenous economic growth. I know it was listed in both presentations.

I am curious how you are engaging with members of the indigenous communities. What kind of programs are you rolling out to help entrepreneurs get going? What successes or failures are you seeing with that at this time?

[Daphne Meredith]

Outreach is very much part of what we need to do to make sure they're aware of the opportunity to receive our investments. We are strong on outreach. We also use website information for people to understand our priorities.

In addition, we have a network, the Community Futures organizations. Several of them, actually 15 of them, are aboriginal in nature. We use them to get the word out on the opportunity. As a result, we've had some $13 million in investment in the last two calls or intakes that we've had for investment. We have a number of projects on the go with those communities and we're supporting as well others that we do through what we call the strategic partnerships initiative. There's another $7 million in investments there.

Since we've really put a focus on this in the last two years, we're seeing stronger and stronger uptake each time. It's growing. We're also engaging aboriginal groups to talk about business opportunities. In particular, we had a large engagement in Saskatchewan that drew a number of first nation leaders in Saskatchewan and Manitoba to talk about even opportunities in the defence procurement world and some of the practices happening through to the Maritimes engaging aboriginal business.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We move on to Mr. Baylis. You have five minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Mr. Mongeau, in your presentation, you talked about supporting economic growth, innovation and diversification.

What do you think the best three investment opportunities would be for Quebec?

[Pierre-Marc Mongeau]

We work a lot with industry clusters. There is a great deal of optimism. For instance we are venturing into the aerospace industry. A lot of Quebec companies are developing composite materials and they are improving by the day.

I also talked about INO, an organization from Quebec that provides services in optics-photonics. They use laser and light for unique detection. That market is growing fast.

For the rest, we would like to continue to expand in a lot of areas. In Quebec, we have 12 business offices and each has a three-year strategic plan to identify the strengths in their region. That enables us to have a better overview and to better target our investments in various regions.

I was talking about the first two clusters, which are probably the strongest. The second cluster, the one dealing with optics, should grow.

In terms of the others, we are exploring a variety of avenues in our various business offices. We adapt to the communities in which we work.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

So your main goal is to include the companies that wish to be part of those industrial clusters.

[Pierre-Marc Mongeau]

I was talking earlier about non-profit organizations. Those are very structured organizations. I don't know all the names by heart, but there are organizations that specifically deal with networking and with supporting the companies that manufacture aluminum, for instance. There are also some that work more in innovation. Those non-profits help create a network in Quebec for specific products and materials. So there is a lot of hope.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

You have also talked about the innovation culture at the CED. Could you tell us more about what you have in mind for that?