Public Accounts Committee on April 7th, 2022

[Eric Duncan, Conservative, Stormont—Dundas—South Glengarry, ON]

It would be for the respective economic development agencies, that they table that information to us in writing about the number of cases.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

[Eric Duncan, Conservative, Stormont—Dundas—South Glengarry, ON]

I could ask the same for high default rates, just in the interests of time as well. The Auditor General commented on the high default rates that could be found, or their potential.

Ms. Hogan, the interim aspect you have reported in there, but would it be unreasonable to expect that our committee could get updates on a quarterly basis or a couple of times a year—whatever's determined in our recommendations—to understand the progress on default rates and repayable loans that may be considered not repayable if the business has gone out of business or whatever the situation may be?

Would that be information you would deem reasonable for our committee to have on a regular basis?

[Karen Hogan]

I believe that's the kind of information that the regional development agencies should be providing to you. Because repayment of the repayable portion of the loans is only to begin as of December 2023, there are no expected repayments at this time.

[Eric Duncan, Conservative, Stormont—Dundas—South Glengarry, ON]

That's noted. I think perhaps they might receive word.... If a business has gone out of business or if it has defaulted in other ways, they may know early, but again, I think regular reporting would be helpful. I appreciate that.

I have the opportunity for one last question. I will go back to Mr. Padfield. On page 7 of the report, the percentages show that FedDev for southern Ontario had a higher percentage of rejected applications to some of the programs, 48%, compared with 41% of applications that were accepted.

The southern Ontario agency was the only region that had a higher percentage of rejected applications than accepted. Could you speak to that discrepancy and whether the eligibility criteria being somehow less clear for southern Ontario was a factor in that?

[Chris Padfield]

I don't think it's a discrepancy. I think it's the nature of the different economies.

It's really hard to make comparisons between each of the regions. As Mr. Jones pointed out, the west was in much more dire straits just before the pandemic, and when you're making a comparison to southern Ontario.... Even within southern Ontario, we have very different impacts from the pandemic.

There were a number of regions that were locked down for extended periods. Our demand fluctuated significantly as lockdowns rotated around in various regions within the jurisdiction.

Our refusal rate was assessments of eligible costs and what have you. It went back to the point at which you had to have gone through all the various other programs to be able to show that you were ineligible or you were not able to meet your financing needs through some of the other mechanisms before you could come to us.

If our default rate was high, it was because either they received funding from one of the other support mechanisms, or they didn't have any other costs that weren't covered that would have been eligible. It's a reflection of our good due diligence on the projects that came forward and our risk assessments of the investments that we were making as they came to us, which we did regularly and throughout the program.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

We'll now move on to Ms. Bradford for five minutes.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, Madam Chair.

First of all, thank you, witnesses, for appearing today.

In my previous work in economic development with the City of Kitchener, I was quite familiar with the digital main street program and working with Communitech. I can vouch that many small businesses, retailers in particular, were saved through this program. It allowed them to quickly transition to online shopping, which they would never have been able to do before, so it was very effective in that way.

Mr. Padfield, I was wondering. This program was launched in a period of seven weeks. Can you explain how that compares with the usual program launch for new programs? How were you able to accomplish that so quickly in this time? I know there was urgency, but I wondered if you could elaborate.

[Chris Padfield]

We all recognized the emergent nature of the circumstance, with a lot of companies having closed their doors, and a lot of retail companies not having other opportunities to find other sources of income as they were forced to shut down. All the regional development agencies moved very quickly to stand up the program.

We were conscious of the fact that we were going to get a much higher-volume, lower-dollar client than we normally do. We served three times as many clients within the pandemic period as we do normally. We were able to leverage a digital system that we had been advancing within the agency, so we were able to not do this paper-based, and to be able to move forward the number of projects we were able to.

We were able to put in a digital system that allowed us to integrate some controls into it, to make sure that we didn't see duplications of bank accounts or business numbers. We were able to bring in that digital system to be able to move forward quickly and make sure we were putting the kinds of controls in place that were needed to ensure that we weren't funding folks who shouldn't be funded by the agency through the course of this activity.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you for that.

I want to address this next question to each of the three agencies. Please answer the following question, one at time.

How did you deal with the not-for-profits in your particular area? What do you feel you got with the value for money in funding them? If you could each answer that for me, please, that would be wonderful.

I'm not sure who wants to start.

[Chris Padfield]

I can start, if you'd like.

The not-for-profits were supported in two ways. Partway through the program, they became eligible for support through the program itself, to ensure that they had liquidity to continue. There was a circumstance where we provided about $5 million to keep 28 different not-for-profits functioning and to support businesses within the region.

We also leveraged 14 other not-for-profit organizations to help us deliver recovery activities that included the digital mainstream and working with the Toronto Region Board of Trade to help the digitalization of other companies that were small manufacturers, or the second- and third-floor main street companies.

Through that work, we were able to support 39,000 different SMEs across the region with that host of activities that we were able to diverge. We also leveraged some organizations to help us deliver support to under-represented groups, including women and official languages communities within the region.

We have a deep, strong ecosystem in southern Ontario, and we were happy to be able to leverage some of those partners to help us advance this initiative.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you very much.

Mr. Jones, would you like to answer, if that's how it worked out in your area?

[Dylan Jones]

Thank you.

Essentially, the main program provided funds, and through the non-profits we were able to provide supporting services for businesses.

We focused a lot on dealing with the under-represented groups. We reached out to Indigenous Business Development Services, Small Business Services centres and the entrepreneurs with disabilities program, etc.

In total, 164 non-profit projects ended up delivering services to 21,000 businesses. It was an important part of the mix, because people needed things other than just money to get through the crisis.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you for that. I appreciate that.

Finally, I'll ask Ms. Brassard.

[Manon Brassard]

We had similar results. We went to six particular not-for-profits that helped us in the delivery. We had the Sault Ste. Marie Innovation Centre. We had the

Kirkland and District Community Development Corporation.

It was also a way to reach out to more diversified clientele and make sure nobody was left behind or forgotten.

[The Vice-Chair, Liberal, Jean Yip]

Thank you very much.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

I guess I'm done. Thank you so much.

[The Vice-Chair, Liberal, Jean Yip]

Now we move on to our third round, for five minutes.

Mr. Lawrence.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Ms. Bradford, was your question brief? You guys have been very kind to us. Would you like to finish off?

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.

I was just going to ask Mr. Padfield. Given the high volume of projects in such a short period of time, were you able to accomplish that with the same staff complement, or did it just involve a lot of overtime?

[Chris Padfield]

We added some additional staff to help us out. We have additional staff who will help us when it comes to the recoveries time as well.

We added 30 or 40 staff to help us do this. We will carry them forward as we go into the back end of the program and look to close out files in recovery.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.

Thank you for that, Mr. Lawrence.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you.

My questions will focus on paragraph 53, which talks about the selection criteria.

I have concerns that business owners are often working extremely hard and don't have time to even look up to ask for the government grants, as many of you who have business experience know. I noticed that some non-profits were invited, while some were not. I'm not alleging any misconduct here. I think there are challenges in making sure that all businesses are aware of some of the solutions you offer.

What proactive steps do you take to make sure that businesses in the communities are aware of the programs you offer?

I'll direct that to Mr. Padfield, to start.

[Chris Padfield]

We leverage our social media, for sure. Whether it's Twitter, Facebook or what have you, we make sure we're getting the word out. We also have a whole host of internal contacts that we reach out to in terms of that big ecosystem I was talking about. We have 36 different post-secondary institutions within the region. We reached out to about 130 different incubators and accelerators to explain all of this.

We also ran technical sessions across the region. We ran 15 different virtual sessions to explain and give details to businesses because, I agree, the last thing any business wants to do is fill out a government form. The more we can make things smooth for them, the better.

The 36 different CFDCs were leveraging their local networks where they have contacts.

We engaged everyone, from the chambers of commerce and onward, to make sure we were—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I apologize for cutting you off. I have a more precise question.

Other economic development agencies across the world do some very accurate and very involved analysis in terms of looking at their own economies, both locally and nationally, to see where gaps are. They make sure taxpayers' dollars are precisely invested. It's not just based on who applies or—I apologize for the flippancy—based on their review of Twitter.

We have a lot of that information, I think, from StatCan. Do you take that information and say that this is what the community of Orono needs or this is what the community of Port Hope needs? Do you say that this is how we can work with local mayors and local individuals to make sure we're investing those dollars precisely?

If not, I think it might be a suggestion for you.