Thank you, Mr. Chairman. Mr. Chairman, the Standing Committee on Governance and Economic Development conducted public hearings on Bill 16, Business Development Investment Corporation Act, in Yellowknife on December 2, 2004, and on February 7, 2005. The committee would like to thank the NWT Chamber of Commerce for its written submission, and Minister Bell and his staff for presenting the bill.
The new Business Development and Investment Corporation, or BDIC, created by Bill 16, will replace the existing Business Credit Corporation and NWT Development Corporation, both of which offer assistance to NWT businesses and communities through various programs.
An overriding concern for the committee was whether and how this new legislative framework will lead to real improvements in the services provided to clients. For example, Members noted that in any given region there are a number of agencies, including community teachers' groups and regional RWED offices, involved in actual delivery of business programs. These arrangements, which too often result in clients having to knock on the doors of several agencies to access programs, will not be changed by Bill 16. The Minister assured the committee that although clients may not notice immediate improvement, the new corporation will set the stage for enhanced programs and services in the future.
The one-window structure at headquarters will result in better coordination of programs and services, and it is hoped that eventually the regions will also evolve into one-window service delivery.
The new corporate structure will also create more flexibility and opportunities for the BDIC to partner with other agencies, and thereby increase the pool of money available for its programs.
The committee also noted that much of the detail that will determine the success of the new corporation will be left to regulations. This detail will include program guidelines, appeal processes, market disruption policies and definitions of terms, such as extraordinary costs and need, that have been identified as problematic in past Auditor General reports. Many of these matters are currently addressed in policy, which will have to be reviewed and converted into regulations. The Minister advised that the new board will be tasked with this review, which he hopes
can be completed within the first year of the board's mandate.
Although regulations can ordinarily be approved by government without committee input, given the significance of the regulations that will be made under this act, Members believe it is critical that we have an opportunity to review and comment on them. The committee was pleased that the Minister committed in a letter dated January 27, 2005, to involve the standing committee in new program development and substantive change to existing business program policy. Although the committee does not doubt the Minister's sincerity in making this commitment, Members would have preferred that the bill itself include consultation requirements that would bind future Ministers, as well.
The committee shares the concern of the NWT Chamber of Commerce, that taxpayers' dollars for business development and investment be used responsibly. The lack of a clear separation between the social and economic objective of the NWT Development Corporation has been a concern of the business community, the Auditor General and Members for several years.
The committee believes that Bill 16 goes some way to improve the situation by segregating the funding for the corporation's subsidiaries, which are generally considered social investments, from the loans and investment fund, which will be used to support other programs, including venture investments. The effect is that social investments will have to be funded from GNWT contributions, which will increase transparency and accountability and better ensure that public funds are being used responsibly.
The majority of the committee agrees that social investments are an important means of creating employment and income opportunities in small communities, regardless of how long it takes them to turn a profit or break even. Members were concerned that Bill 16, as originally introduced, required all investments to meet a minimum rate of return. During the clause-by-clause review of the bill, the majority of Members supported a motion which amended Bill 16 to remove the minimum rate of return requirement for investments in the corporation's subsidiaries.
Committee members had lengthy discussions with the Minister about the independence of the BDIC from government. Members noted that the Minister will have the power to issue binding directives to the board and will appoint the chief executive officer. The board's staff will be members of the public service. The committee and Minister agreed to amend the bill to disqualify GNWT public servants from being appointed to the board and to require that the Minister consult with the board before appointing its chief executive officer.
While the majority of the committee was satisfied with these amendments, some Members continue to believe the GNWT could have gone further to increase the corporation's independence and reduce costs by eliminating duplication between government and BDIC and removing the board's staff from the public service.
In its submission to the committee, the NWT Chamber of Commerce raised concerns about the potential for conflict and bias in allocating funding. While it would be impossible for legislation to completely eradicate conflict, Members were pleased to note that the conflict of interest provisions in Bill 16 are broader than what is in the present act, and they will apply to the corporation's officers and committee members, as well as to board members and a CEO.
The committee and Minister also agreed to amend Bill 16 to require that the corporation's annual reports identify the owners and locations of businesses that receive funding. This added requirement will enhance public accountability for the BDIC's programs.
The committee supported the NWT Chamber of Commerce suggestion that there be minimum qualifications for potential directors. During the clause-by-clause review of the bill, an amendment was made to add a requirement that board members either have owned or managed a business enterprise in the NWT, or have business expertise relevant to the NWT economy. There was considerable discussion about whether the word "expertise" would be broad enough to include business-oriented people who have substantial experience and knowledge but do not necessary have expertise in the sense of academic qualifications. For example, Members would not want a person with business knowledge gained through working with an aboriginal development corporation to be ineligible to sit on the board of the BDIC because they have never owned a business themselves and do not meet the government's criteria for business expertise. The Minister assured the committee that the word "expertise" was intended to be broad and inclusive of such people.
Members believe it is important that Bill 16 refer specifically to sustainable development and capacity building, which are important goals for this government and are a substantial part of the reason for the BDIC's existence. The committee and the Minister agreed to amend the bill to include a provision instructing the board to take these goals into consideration where appropriate.
In addition to the amendments described above, the committee and Minister agreed to an amendment to allow for sustainable development and capacity building to be defined in regulation, and to specify which business owners will be named in the BDIC's annual report.
Mr. Chair, it is clear that Bill 16 is only the beginning of the work needed to bring our business programs to the level clients expect, and to ensure cost-effective program delivery. Members will be monitoring the setup and implementation of the BDIC closely, as programs are reviewed and regulations are developed, with a view to ensuring that improvements do happen as promised.
The committee was pleased to hear that if Bill 16 is passed, the Minister intends to get this work underway as quickly as possible, and would immediately begin the process of recruiting board members.
Throughout its review of Bill 16, the committee has appreciated the Minister's forthrightness with information and willingness to consider our input, and we look forward to continuing this collaborative approach through the implementation of the new BDIC.
This concludes the committee's opening comments on Bill 16. Individual Members may have questions and comments as we proceed. Following the clause-by-clause review, a motion was carried to report Bill 16, Business Development and Investment Corporation Act,
as ready for consideration in Committee of the Whole, as amended and reprinted. Thank you.