We are slowly but surely getting to the heart of the matter, Madam Speaker. This important bill will significantly change the operations of a Canadian institution which has proven successful, both from a financial point of view, as well as in terms of fulfilling the federal government's role.
However, I draw your attention to the fact that the government is not only working in secret, but is also using misleading terms. The title of the bill itself is confusing and does not adequately inform the reader as to its scope.
Indeed, Bill C-91, An Act to continue the Federal Business Development Bank under the name Business Development Bank of Canada, alludes to the new name, but not to the new purpose of the bank.
This legislation changes the role of the former Federal Business Development Bank, which will soon become the Business Development Bank of Canada. The mandate is changed because, in the past, the Federal Business Development Bank was formally recognized as a bank of last resort.
Last year, when the committee looked at the role of the FBDB, it is the Bloc Quebecois which, along with the other members of the committee, in an attempt to convey the notion of last resort, proposed the term "complementary". That term was accepted by the committee. The word "complementary" therefore defined the role of last resort bank under the act.
Today-I do not know how to qualify it, and some words may be a little too strong-but there is definitely something wrong. The word `complementary" completely changes the bank's mandate and completely obliterates the concept of last resort.
The Federal Business Development Bank is switching leagues and is more or less going into direct competition with the current network of chartered banks and the network of Caisses populaires Desjardins.
Last resort implied that the whole outlook of the Federal Business Development Bank was geared to concern about regional development, expressed through ad hoc financial aid for small and medium size businesses. It assisted small and medium size businesses which had higher than usual risk factors because of their capital outlay or the economic sector in which they operated.
Therefore, the bank's mandate, under the legislation, was to look at cases which had already been rejected by at least two conventional financial institutions. That was the last resort mandate. Consequently, the whole outlook was geared to regional development.
Today, the bank will soon be competing with conventional institutions and this may perhaps fulfil needs in the rest of Canada. Although the operation seems quintessentially political, the changing of names is a perfect example-without condemning too harshly the people from the Langevin Block and the minister's office-of the government's desire to fill existing market needs in the rest of Canada.
But, this will also affect institutions in Quebec which have already carved out their niches, which have solid reputations and have been successful in filling the needs of the market. In particular, I am thinking of the Mouvement Desjardins, which is very concerned, by the way, by the federal government's approach, and of the Fonds de solidarité de la FTQ and the Société de développement industriel du Québec, which, together with the Caisse de dépôt and the Banque nationale, worked and contributed to making it possible for businesses in need in the various regions of Quebec to obtain loans.
Therefore, we had cultivated a last resort mentality, and I am personally very upset when I hear people at the Federal Business Development Bank say that it will no longer be a bank for losers. We have to see things more objectively.
Life in the business world is not always rosy. It is difficult at times. There are nuances. It is absolutely necessary to have a lending institution like the Federal Business Development Bank with a mandate to review the situation of businesses which are different from others, out of an almost socio-economic concern to ensure that businesses which otherwise would not be backed by conventional sources will find backing in the public sector.
I often heard the president of the FBDB refer to the case of Lassonde, in Quebec, a company that today is thriving and at the time had access to funds from the federal bank when traditional institutions could not, I suppose, justify approving a loan because the risk may have been too high, but the federal bank, acting in the public interest, did, and the rest is history.
There has been one obvious change. The clause on last resort financing has been eliminated, and the new Business Development Bank of Canada will, as a result, be competing directly with traditional institutions.
There are some subtle changes as well, because the Federal Business Development Bank has a new way to raise funds. So far, the bank has been operating only with public funds. From now on, it will be able to turn to private financing as well. The private sector will be able to lend money to the new Business Development Bank of Canada through what are commonly called hybrid instruments.
The bank's mandate has changed in two ways. Formerly, the bank only had to break even. Today, when it deals with the private sector, it will have to be a good investment in terms of interest yields on investments by the private sector. So it will have to pay attractive rates which, we must assume, will be based on the bank's profits. This is no longer about breaking even. The yield will be based on profits. The bank's focus on regional development will have to change. The bank will have to change its culture, its vision and gradually become a strictly commercial bank. This is a profound change in the bank's mission.
Finally, I am worried. Let me explain. As our NDP colleague said earlier, 52 per cent of the loans approved by the Federal Business Development Bank were for $100,000 or less. Once we no longer have this philosophy that the bank should promote genuine regional development by small business but instead operate on a more commercial basis so that it can offer
attractive yields to private investors, where are these loans going to come from, those 52 per cent?
Who will approve these loans worth $100,000 or less which represent 52 per cent of the FBDB's portfolio at the present time? We have every reason to be concerned about the future impact of these changes.