Evidence of meeting #25 for Public Accounts in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.
A video is available from Parliament.
4:45 p.m.
Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
No, Jérôme said it's tracked separately. Share purchases are separate as well.
4:45 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
So now, with the remaining $400 million that you have not invested in the investment funds, obviously it must mean you're earning some returns.
4:45 p.m.
Executive Vice President, BDC Capital, Business Development Bank of Canada (BDC)
The Government of Canada provides capital as we request. We only requested some capital to initiate the program, and we'll be doing a capital call some time in the next year or so.
4:45 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
How much has it released to you? How much have you requested until now?
4:45 p.m.
Executive Vice President, BDC Capital, Business Development Bank of Canada (BDC)
It would be $250 million out of the $400 million.
4:45 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
Out of $250 million that has been released, how much of that money has been invested in the 126 companies?
4:45 p.m.
A voice
Twenty-five per cent.
4:50 p.m.
Executive Vice President, BDC Capital, Business Development Bank of Canada (BDC)
Less than that.
4:50 p.m.
Director General, Small Business Branch, Small Business, Tourism and Marketplace Services, Department of Industry
It's hard to say off the top of my head.
4:50 p.m.
Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
We know it has to do with the timing of capital calls.
4:50 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
With the BDC, I've been after them regarding their investments in manufacturing start-ups which are close to nil. They invest hundreds of millions of dollars in unsecured loans, but when asked, they invested only $24 million in manufacturing start-ups last year.
Out of the 126 companies, how many are in the manufacturing sector?
4:50 p.m.
Conservative
The Chair Conservative Kevin Sorenson
On questions like that, and I'll tell you at the end of the meeting but also now, if you could get back to us on that, is it 25%? What is the number? Maybe you could provide a review of the money and what you've walked us through here in the last few moments.
Mr. Poilievre, for five minutes.
4:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
The money that goes into the company, that's through equity and not debt, right?
4:50 p.m.
Conservative
4:50 p.m.
NDP
David Christopherson NDP Hamilton Centre, ON
Thanks, Chair.
I have only one question, unless I don't like the answer.
The question is relating to page 13, paragraph 1.64, and it actually goes back to that previous discussion. There are still parts of that which I find troublesome. I'm going to read this and ask for your comments. I'll jump to the end. It takes us to that difference between an investment and a procurement. I got that message earlier, but it's in this context. I'm just going to read 1.64:
During the consultations prior to the establishment of the Action Plan, there were many calls for a formal request for proposals or a competitive process. Among the stakeholders referring to this need were representatives of one of Canada’s associations of venture capital firms. Initially, the Department of Finance Canada considered that the Action Plan would require a competitive process. In the end, the Department approached this as an investment, not a procurement process.
I understand that puts it in a different category and different rules apply, but still, I'm finding it hard to believe that you didn't take more seriously the request for proposals, a competitive process, particularly when one of the stakeholder groups.... It wasn't an individual firm—I could understand they might have a vested interest in seeing a certain outcome or nuance on a particular aspect—but here you had the umbrella group that represents them. I'm assuming they have tons of credibility and they're sort of the go-to umbrella group under venture capital firms.
Why did you so cavalierly set that aside and go off in your own direction?
4:50 p.m.
Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
It was a competitive process. It was launched publicly. It was launched through Réseau capital and the Canadian Venture Capital and Private Equity Association. We worked closely with both associations, all through the process. All I can say—
4:50 p.m.
Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
—is that I am not aware—
4:50 p.m.
Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
—of any concern that the venture capital association has in that—
4:50 p.m.
NDP
David Christopherson NDP Hamilton Centre, ON
Fair enough.
I will turn to the Auditor General. Obviously I misinterpreted your paragraph, or I'm not getting to the essence of what you were saying, based on the answer I just heard, which would suggest, “No, everything's okay, Dave, and here's why”.
So, Auditor General, help me understand. What was the issue that you're raising in paragraph 1.64 that I'm not getting right?
4:50 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
I think the fundamental issue we were raising was, yes, they went through a process and that process was about trying to attract the interest in the market in this role. But as I think we lay out in the next number of paragraphs, because it was treated as an investment, it didn't follow the rigour that you would find in a normal procurement process.
In the end, it looks like it perhaps has not caused a big problem, but it could have caused a problem. Whenever there's this type of an arrangement and you have in the expression of interest that you reserve the right to pick anybody, I think we identified that the scoring mechanism was changed. I think it wasn't even developed until after the bids were in, and then it was changed during the process. One of the companies that was picked wasn't even a company that had put in a bid in the first place. There was just a number of things that could have made somebody question whether the process was or was not fair.
I think the warning here is less that there was necessarily a problem at the end of this one. I mean, they have companies in place. I think the warning is more that whenever a department decides that something is not a procurement process and therefore they can do some things that are outside a regular procurement process, it really raises the risk that at the end you could have people say, “Wait a minute, this process wasn't fair.”
4:55 p.m.
Conservative
4:55 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Back to Mr. Hill. Thank you for your very good explanation earlier on. I want to build upon it.
As I understand it, the money invested in the companies is equity. It's not debt.