Public Safety Committee on June 10th, 2014

[Roxanne James, Conservative, Scarborough Centre, ON]

Thank you very much for that clarification.

[The Chair, Conservative, Daryl Kramp]

We'll go to Mr. Garrison, please.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Mr. Chair, I have the same feeling I have every day, which is that this committee has much more important work that it should be doing at this time. That's not to insult either of the witnesses, but we are doing eight sessions of discussion on what witness after witness tells us is a provisional area, something which isn't yet well developed. As we've said many times on this side, it's not that we're opposed to looking at social impact financing, it's just that there are many other things we could be looking at in this committee.

Mr. Broderick, I'm familiar with Vancity not just in Vancouver, but also in greater Victoria. It does lots of good community work. It functions as a real credit union and does not see itself as a bank, even though others tend to regard you that way sometimes.

In one of your opening comments you said that in the current climate, there was a concern that social finance was likely to displace government funding. Would you like to expand on that at all?

[Andy Broderick]

There's always a concern that in innovation you have a retreat away from critical government services. In the case of prisons, I don't see it as being as big a risk.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Okay.

A lot of what you said about Vancity is that the credit union began by filling gaps where other people couldn't get financing for some possibly higher-risk projects. When we're talking about social impact financing, one of my concerns always is that when we turn from philanthropic to private business, why would they have an interest in taking those on when traditional financing hasn't been there for those areas already?

[Andy Broderick]

Because there is going to be a return.

It's actually a market that they don't understand. When you talk about higher risk, I would caution that frequently things are viewed as higher risk simply because the market is not understood and because the risks are not understood.

Again, there has not been the scale there, so that's one of the reasons there hasn't been a market. It's the same thing in lending on the east side of Vancouver. There's no one doing it, so no one understood that it really wasn't a risk and that those homes would be worth over a million bucks each nowadays.

Anyway, I would recommend caution, in that markets tend to move where the easiest money can be made, whether you're a condo developer who doesn't want to develop rental housing or.... Frequently, smaller markets where there actually is a return potential are overlooked.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

I guess when we're talking about criminal justice, that always raises a concern for me, in that some of the more difficult areas in criminal justice might be ignored in order to run projects or direct funding into those things that are low-hanging fruit and easier to achieve.

[Andy Broderick]

Again, I don't know enough about criminal justice to venture an opinion on that.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Okay.

When it comes to goals, I guess, to me it's clear to see what a credit union is doing. It has the community focus and the community development focus. When you get other private interests involved, isn't there a danger that in addition to profit they'll have some other agenda as part of what they're doing?

[Andy Broderick]

It hasn't been my experience. TD Bank was our biggest investor in Vermont. They had over $75 million invested with Housing Vermont.

My experience is that private financial institutions and private corporations, given the opportunity, are looking for ways to move into this kind of investment. They're looking for ways to strengthen their communities. Frankly, trying to highlight it and give those opportunities tends to create a rising tide for all. I have not found it difficult within the right environments to attract private investment to things that people would be surprised at.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Is what they're looking for there a rate of return plus enhanced reputation?

[Andy Broderick]

Yes, whether it's enhanced reputation or honest engagement with their community. Again, these financial institutions, whether we say it or not.... I hate the term “social licence”, but they have a guarantee from the federal government for the depositors. That's a big subsidy. People may talk about them not being subsidized, but that kind of thing is a huge subsidy. Most times, they recognize that they want to be engaged with the communities that are providing that subsidy.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Thank you.

I'll turn to Dr. Tansey.

One of your last comments was about aboriginal people and the impacts on aboriginal people. You didn't have much time to say something about that, so I would like you to maybe talk again about the risks of these kinds of projects for aboriginal communities.

[Prof. James Tansey]

I would say that it's as much about the risks for government. It was more a note of caution to say that since the aboriginal population unfortunately is disproportionately represented in the prison population, any program would need very strong engagement with the aboriginal leadership of Canada if it were to stand any chance of success, given the history of mistrust, the history of abuse, and the current focus on reconciliation around the residential schools.

I know that it has been discussed as the aboriginal population being a main focus of it. I would almost advise to focus on a non-aboriginal population initially, where there's less at risk and there's less mistrust. That was really my main comment.

I would say with respect to your opening comments that this is obviously something that is in the early stages. The Peterborough program reported out in 2010 and reported real success, but I would also argue that there's too much at stake to not do something in this area when our reoffending rates are 75% to 90% in this system. It can continue as it is, but the system is fundamentally broken if the goal is rehabilitation of prisoners.

We have to try something. The conventional solutions are simply not working. If there's scope for some form of experimentation here, the Peterborough example shows that with the right kinds of organizations involved, you can demonstrate a dramatic decline in reoffending rates. I think that's worthy of attention and worthy of the federal government's attention.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Following along that line, if you're saying that for projects to deal specifically with aboriginal people we'd need high levels of consultation, yet aboriginal people are the main group or one of the major groups within the overall programs, wouldn't you need that same consultation with aboriginal communities in any program that you're doing in our corrections system?

[Prof. James Tansey]

Absolutely. I'm not aware of what measures you've undertaken to engage as a committee, but I would encourage early engagement with aboriginal leadership in Canada on this so that it's a program that's co-developed and co-designed, rather than one that's created for that portion of the Canadian population.

In British Columbia we've had a lot of success through the aboriginal friendship centre that has led on establishing some best practices in this area, and that very early engagement has proved very productive. Andy mentioned that earlier on.

[The Chair, Conservative, Daryl Kramp]

Thank you very much, Mr. Garrison.

Now we'll go to Mr. Norlock, for seven minutes, please.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Mr. Chair, through you to the witnesses, thank you for appearing.

Mr. Tansey, when you said the system is fundamentally broken, I'm assuming you mean the current attempts at rehabilitating folks and trying to dissuade recidivism. Is that correct?

[Prof. James Tansey]

From my perspective, the goal of the criminal justice system is to rehabilitate prisoners so they can reintegrate into society and not reoffend.

If your view of the criminal justice system is that it's about punishment, then I suppose you could argue it's successful. But from a rehabilitation perspective, I'd argue that if the reoffending rates are as high as they appear to be, then it is failing.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you for that.

I have said before in this committee and in some other committees that.... You know, the Albert Einstein definition of insanity is doing the same thing over and over again and expecting a different result.

With that in mind, I would suggest to you that with all the skepticism with regard to new approaches...and I do look at some of what you say at ISIS...to act as an incubator and an innovator. Well, innovation in and of itself means that you're trying to do something different to achieve, if not different results, at least better results.

With that in mind, then, I guess I go back to some of the other things both of the witnesses said, that governments are reticent to try something new because of their fear of failure. Of course, those who oppose whoever is in the government, and it doesn't matter who it is, would like to jump on it and say, “There. You're an abject failure,” whereas in business, I've been told that if you don't innovate, in the new society you'll probably fail. So fear of failure is not an option. You just go ahead and do the best you can to make sure the program or the business you're into will be successful.

That brings me to one of the former witnesses we had before the committee who surveyed 80 companies that are familiar with this and think this new ground we're looking at or considering treading upon is.... There are 80 companies prepared to invest. Are you familiar with this statement, and would you say it's relatively correct?

[Prof. James Tansey]

One of our projects is looking at the potential for impact investing, which would encompass this form of program. Our experience has been that companies are willing to make donations...or it's easier for them to make a donation that supports an initiative of this type, which comes from their granting arm, and to take some risk there. It's much easier for them to do that than to run it through their conventional investment committees. With the banking sector, once it becomes an investment it's perceived very differently; it's reviewed very differently, and it will be discounted heavily simply because it's new.

In areas such as clean technology, for instance, we have a very strong program through SDTC for supporting and providing non-diluting venture capital for early-stage demonstration projects. There's a very strong precedent there, and a great review and audit process for evaluating those investments.

I'd suggest that a similar mechanism for the federal government to act alongside and like an investor, but to bring along private investors as well, would be appropriate here. It gives them some security and some reassurance that there's real money at the table. A program such as SDTC really underwrites clean technology innovation. I would say a similar program would be needed for social programs like this.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Do you have comments, Mr. Broderick?

[Andy Broderick]

Yes, I think that in this kind of early action you're going to have to figure out how to de-risk it enough to attract investors. Whether it's as Mr. Tansey says or another mechanism, there are various ways to reduce the risk, at least for first actors.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

If governments were part of the consortium of investors, would there be more impetus for them to get involved because the government is putting some of its own capital towards it?

[Andy Broderick]

Absolutely.