Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. I thank the Member for the question. I think many Members, including myself, have had constituents approach us over the past number of years -- depending on the length of time you've been here -- with frustration in accessing our business programming. I think the committee comments hit this point. There has been a lot of concern around initial approaches made to one entity -- potentially RWED's business program and service delivery -- and they found that they really were more appropriately targeted at the BCC or at the Development Corporation. There seemed to be a lack of understanding, and it certainly wasn't entirely on the part of constituents approaching us, but a lack of understanding even on our part in terms of whose mandate and what mandate each of the organizations was expected to fulfill.

With that, we talked about the genesis of this, some discussion in Common Ground, the Business Program Review Committee, and a need to really move to a one-window approach to eliminate much of the duplication that was going on and try to identify and address some of the gaps in our program delivery that need to be filled. In order to be able to start to do that, we needed to make changes initially at headquarters in terms of how the organization works. Our understanding and our belief that is in time, the evolution of business programming in the regions will mean that we're moving to a one-window approach.

Currently, as the Member knows, RWED is often contracted in the regions to deliver programs on behalf of, say, the BCC. There are Community Futures organizations. We think that driving this change in headquarters will force closer collaboration and a better understanding between these various organizations. Eventually, you will see the change start to happen in the regions as regions are ready for it. Admittedly, different regions are at different stages of development at different experiences with our business programming organizations and lending institutions. This will happen at a different pace, and it will happen in a model that works best for each region.

There isn't an attempt to boilerplate here and impose structure on regions. In attempting to do this, we made this legislation more enabling. It isn't as descriptive. It allows for more flexibility. It allows for some of the partnership approaches that aren't currently available to our entities. This will mean, we think, in future that Aboriginal Business Canada can be a more effective partner with our organizations as can the federal government in some of its other entities, the Business Development Corporation. We think there is an approach to lever more money in this regard. We expect that this organization, when it's tasked with carrying out its new mandate, we will direct the organization to focus on the priorities that this government has laid out in front of it. One of those is diversification of the economy. So we expect that there will be a focus on a wide range of sectors and that this organization will seek to lend money to a wide range of businesses. I think that is what this organization will be able to do. Currently, we are a little handcuffed in that regard and not able to provide the type of programming that we would like.

I apologize for the lack of detail in the opening comments. We have spent a significant amount of time in the committee, back and forth on this bill. What you see here is the result of a real collaboration. I have to admit that there were many suggestions for input and change into our original approach from committee. I think they made sense. We've incorporated those because I think it has made for a better bill and will make for a better organization going forward. Thank you.

Thank you, Mr. Minister. Ms. Lee.

Thank you, Mr. Chair. I do appreciate that this is a finished product from years of work on the part of successive Ministers as well as collaboration with committee membership, as was indicated by the committee report. I do appreciate the information in the committee report, as well. Nevertheless, this is the first opportunity for many of us on this side to be looking at

this. We are not able to get all of the information out of what we have now, so, therefore, the questions.

My next question has to do with what has been mentioned in the committee report already. That has to do with some of the detailed items that have to be left in the regulations. There are so many issues to talk about under this topic, and the committee has already mentioned the dual purpose or dual track that happens in projects like this about the social projects versus economic projects and conflict question and many other things, economic diversification, one-stop shopping for those who need business development advice or banking advice or financing advice, especially in communities. One of the things that I talked about a lot in the last Assembly has to do with what I saw with money that was available under the Business Credit Corporation or the Business Development Corporation under the new name where I saw that the...While I support a lot of money and projects going into communities where there are no business opportunities, where they do need financial resources and financial advice and business advice; rather than seeing a lot of money going there, I was seeing money being approved for businesses in Yellowknife where I thought that they should be able to go to commercial banks to get loans and so on. I think the answers that I used to always get were that the government was serving as the lender of last resort and they were charging premium interest on them. In cases where they could not get commercial lending or commercial financing, the Business Credit Corporation has to be there to provide that sort of service. I think that continues to be a point of contention, and market disruption policies especially are something that I wanted us to debate in this forum, but I am learning from the committee report that that area is one of the areas that will be left to the regulations. That causes me great concern because we know that, regardless of the best intentions of the Minister and maybe the following Ministers because we don't know what will happen to the portfolio, general understanding is general understanding. We may not get the opportunity to do that.

Recognizing that, I would like to ask the Minister what his plans are and what his intentions are in terms of dealing with things like market disruption issues and many other issues that he is well aware of because he has been listening to it. He was on this side of the House when we talked about that a lot in the last Assembly. I don't know if he could talk about the details of what he sees happening, but what is the process he's interested in engaging in, first of all? Aside from involving the committee members, how is he proposing to come up with these policies and look at the details and get all of the necessary input for the regulations? Thank you, Mr. Chair.

Thank you, Ms. Lee. Mr. Bell.

Thank you, Mr. Chair. The Member is right; I am aware of a number of these discussions going back some years now. She's used this point as an example, but there are many other issues that have come before us and have been debated. There have been a lot of discussions around whether or not that is how we should conduct ourselves and whether or not that is how our program should be structured if, in fact, that makes sense to still be doing, if it used to make sense, or are we in this kind of business. There were many questions.

I think we had a couple of possible approaches here. We could have conducted a program and service review of the three separate entities and done that and then had some discussion around our programs and services and then tried to go out and structure a new board and have them carry out those new functions. But it was going to be very difficult to have the three separate entities conduct this program and service review and speak to gaps and overlap and who should be doing what. The approach that we decided to take -- and this wasn't without some debate at committee and there were varied opinions on this -- was to structure and create a new organization, create the board, get board members, hire the CEO and have the organization set up.

Immediately, as the board's first task, I would direct a program and service review so that we could have those very good discussions about the types of businesses that we engage in and what our priorities and mandate should be and have a look at those programs and services. As I have said, identify gaps, identify overlap.

The Member has pointed out issues around whether we are a lender of last resort and whether or not we should be lending in tax-based municipalities. I tend to believe that if somebody is accessing funding currently in one of the tax-based municipalities where chartered banks do operate and that kind of funding is available, then I think you could see that if somebody has a loan with us and are paying a premium interest, it is because they can't get banking from a chartered bank. Anybody who can get cheaper financing, I would suggest, would. That is a perfect example of the kinds of things that need to be discussed and debated.

I am expecting the new board will carry out this program and service review and come back with some recommendations, and then we will have some discussion. I have indicated to committee that they would obviously be involved in that discussion. Thank you.

Thank you, Mr. Bell. General comments, Mr. Braden.

Thank you, Mr. Chair. I think Ms. Lee and Mr. Bell have covered, at least in part, one of the principal concerns that I had about the way we were doing business. In hearing the Minister's opening comments and Mrs. Groenewegen's committee report, I want to get into it a little bit more. I'll briefly try to explain from my point of view where I see the difficulty. I guess, call it the accountability, Mr. Chair.

When I was sitting as a committee member in the previous Assembly and the reports of the Business Credit Corporation or the Development Corporation had come before us, I really couldn't get a handle on how I was to assess either their success or lack of it of their performance, because we were setting up clients and reporting on them on a business basis, a return on investment and number of jobs created and the contributions or investment that would go into these organizations from our lending arms. I was asked to sort of look at them in the sense of, well, we structure them as businesses and now we judge them as business. But, in reality, the majority of them were absolute failures from the point of view of being profitable, and entities that built their own equity and these kind of business measurements.

This is where the comments come in from Ms. Lee. How do we assess the value, the success and the performance of these investments that we make if, in reality, they are made for social purposes? Albeit, maybe for the very best of social purposes such as avoiding excessive income support or welfare or other kinds of subsidies. Those are good reasons. The difficulty I had was being asked to assess this performance on a business basis. What I am hoping is contained in here will be accountabilities, Mr. Chair, that will allow me as an MLA to say, yes, what we are doing is getting in there to help jumpstart profitable businesses that are really going to earn their way. Great! Give me a set of criteria that I can measure success and performance. If we are going to go into something that has a social basis, then I want another set of criteria that I can measure and see if the taxpayer is getting value for their money. Could the Minister address those areas of accountability and performance measurements? Thank you.

I think the Member makes a very good point. I was on committees that tried to review the performance of the Development Corporation and the BCC, as well, and was frustrated with the same sorts of issues. In creating this organization, one of the key things that came to the forefront was the need to delineate between the various mandates of this organization. There is no doubt, and I firmly believe, that there is a social mandate. The Development Corporation currently carries it out. That mandate will exist in the BDIC. There will be different funds. There will be a venture fund that will be for investments that have to perform and that are measured by such things as return on investment. We will have discussions around economic measures like payback period. Then there will be the pool of funds available to subsidiaries that really will be looked to to create economic development in communities, create employment, and will have to be tested by that. It is important for us to develop criteria around these two programs, around these two separate funds so that they can be measured and we can determine whether or not they are successful.

I think we have had some discussions with the Auditor General who has pointed out in the past when that office felt that subsidies were being exceeded. Allowable subsidies that we laid out in our programs were being exceeded for an organization. That, obviously, is very troubling. It is something that we don't want to see. It is important for us to continue to measure ourselves and to identify areas where we aren't seeing that level of success, because you can't put, as the Member has indicated, a return on investment or business case test to an organization that really has been tasked with creating employment, nor should you.

I think these dual mandates exist. It will still be a lender of last resort, which means it will take more risk than a chartered bank would, but it would still be measured by performance. We will have to clearly lay that out for this new organization. We will not get away from the social mandate. We shouldn't hide from that mandate. I think it is a very important one. But I do take the Member's point that we still need to be able to ascertain whether or not we are being successful. We can't just say, oh yes, don't look at that or don't grade that because that is a subsidiary and its only role is to create employment. There still has to be tests. There still has to be standards. We have to make sure we are creating the most employment from money that we can with that organization. We intend to do that. Thank you.

Thank you, Mr. Bell. Mr. Braden.

Thank you, Mr. Chair. Also contained in Mrs. Groenewegen's report was the removal from the bill of a minimum rate of return requirement for investment in the corporation's subsidiaries. Am I connecting the right dots here, that we have the subsidiaries that may be put together more for social purposes and then there are ventures that are more the sort of conventional business models? Does this mean that we have no minimum rate of return requirement for any of the investments that this new entity is going to undertake? Thank you, Mr. Chair.

Thank you, Mr. Braden. Mr. Bell.

Thank you, Mr. Chair. The answer is no. In terms of subsidiaries, and you might think of a current subsidiary would be the Fort McPherson Tent and Canvas shop. For that type of organization, we will not put a return on investment economic test to that organization. The mandate is to create employment. We will talk about the amount of employment created. It will be measured against that standard, but venture investments that we make in organizations will be put to the test and will be tested against return on investment. So the adjustment to the bill was simply to clarify that. It makes it very clear, I believe, that return on investment does come into play when we are talking about venture investments. It does not come into play when we are talking about subsidiaries. I think the Member can see that we would logically see negative returns on investment on our subsidiaries if you put that strict economic test to those organizations. Thank you.

Thank you, Mr. Bell. Mr. Braden.

Thank you. I have one more general question. I am reaching back a couple or three years to some of the experience I had, was that it seemed to me a number of entities in the portfolios of the older corporations, Mr. Chair, really had so little substantiation for them either as businesses or social entities, that it seemed that they should just be taken out of circulation. We should pull out of them completely. In the creation of this new entity, will there be, if you will, a housecleaning? Will we be making some effort to dispense with or get out of the kinds of operations that just don't have any kind of benefit, or is there going to be grandfathering going on? Thank you.

Thank you, Mr. Braden. Mr. Bell.

Thank you. All of the subsidiaries and venture investments will come over as is at start. Then, as I have indicated, the first task of the new board is this program review. One of the things they will have to look at is our current investments and subsidiaries, if you will, our portfolio, and make some determinations. I think there are a number of reasons we could move away from investment in a subsidiary or strict investment in a venture. One of the reasons would be

that that venture is successful now and really could move out to more traditional forms of financing. I think you are going to see, with the amount of development in the North, more and more investments that are able to go on their own now, that have had the benefit of our support through their early stages, allowed them to become viable and now that the economy is really heating up, will be able to move out. We are not going to try to cling and hang on to those organizations to somehow be able to demonstrate success and report on ones that work. We see our role as moving those out into more traditional forms of financing and letting them go on their own. But on the flipside if we had subsidiaries or investments, I guess subsidiaries, more appropriately in this term, that we're putting money into but really aren't creating employment, we have to ask ourselves what we're doing and if that's effective use of taxpayer dollars. I would suggest that it's not. So we have to review that. But let me just say that we are patient, and even as a private investor or as a private entrepreneur, you can imagine a number of years and an amount of time being allotted for payback.

Quite often in new ventures there's a period of investment. There might be a significant period of investing in research and development and it can take companies a number of years before they start to break even and pay back the investment to their owners. I used Fort McPherson Tent and Canvas as an example earlier. We've been in that organization for a number of years and we've been very patient and worked with that company and we think it's brought a lot of benefit to that community, and we understand that this potentially is one of the first years now going forward that they believe the organization will be able to break even. I think it's done a great service and made us very proud, in RWED and in the Development Corporation, of that organization. Had we not been patient, had we put it to a strict economic test some number of years ago, I would suggest that we would have cancelled that program and I think it would have been a mistake. Thank you.

Thank you, Mr. Bell. General comments. Mr. Yakeleya.

Thank you, Mr. Chairman. Mr. Chair, I just wanted to ask the Minister for some clarification on the board itself setting up the independence at government's arm's length and the appointment of the CEO and the board and get some governments who have some relationship with that board. I'm looking at the accountability and the reporting structures of the CEO. Does he have two masters or one master? Who does the CEO report to? Thank you.

Thank you, Mr. Yakeleya. Mr. Bell.

Thank you, Mr. Chairman. This concern has been raised I think under our current setup and structure. If you use the Development Corporation, for example, the CEO is appointed by the Minister and so is the board chair, and this creates some issues and some concerns around reporting relationships. That is something we sought to rectify. Committee was very insistent and strong on this point, and we came to an agreement that the most appropriate way to handle this was to have the Minister in the end finally appoint the CEO, but the board would go out and conduct the hiring exercise, conduct a competition and come to the Minister with a short list. That's a different mechanism than we currently use now. But I think the Member will appreciate that we are voting public money to be used for the operation of this organization and, as such, I am accountable to the Legislature and to the public for the expenditure of those funds and can't give up that accountability or that responsibility. So it is important that we maintain that. But we have gone some measure, we believe, toward allowing the board to choose who the CEO will be, and think that this will improve both the culture of the new organization and the ability of the board to have more influence over their employees. Thank you.

Thank you, Mr. Minister. Mr. Yakeleya.

Thank you, Mr. Chairman. I appreciate the Minister's concern on the public funds. I guess I'm concerned about the independence of the CEO. You have a board that is going to be overlooking this new initiative here and you also have a Minister. So I guess I'm looking at some clear lines in terms of the relationship with the CEO and the board. It has already been talked about, but this is the first time I have seen this bill. So I want to get some assurance in terms of whoever the CEO is. Again, the bottom line, does he report to the board or to the Minister at the end of the day?