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37th PARLIAMENT, 1st SESSION

Standing Committee on Industry, Science and Technology

EVIDENCE

CONTENTS

Thursday, April 18, 2002

0910

The Chair (Mr. Walt Lastewka (St. Catharines, Lib.))

Mr. Normand Houle (Vice-President, Business Market, Fédération des caisses Desjardins du Québec)

0915

0920

0925

The Chair

Mr. Robert Martin (Director of Government Affairs, Credit Union Central of Canada)

0930

Mr. Leo Gautreau (Vice-President of Corporate Development, Niagara Credit Union)

0935

0940

The Chair

Mr. Brian Fitzpatrick (Prince Albert, Canadian Alliance)

Mr. Robert Martin

Mr. Leo Gautreau

0945

Mr. Brian Fitzpatrick

Mr. Robert Martin

The Chair

Mr. Normand Houle

The Chair

0950

Mr. Brent St. Denis (Algoma--Manitoulin, Lib.)

Mr. Normand Houle

0955

The Chair

Mr. Brent St. Denis

Mr. Leo Gautreau

Mr. Brent St. Denis

1030

The Chair

Mr. Stéphane Bergeron (Verchères--Les-Patriotes, BQ)

Mr. Normand Houle

1035

Mr. Robert Martin

Mr. Stéphane Bergeron

Mr. Normand Houle

1040

The Chair

Mr. Serge Marcil (Beauharnois--Salaberry, Lib.)

1045

Mr. Normand Houle

Mr. Robert Martin

Mr. Leo Gautreau

1050

Mr. Serge Marcil

Mr. Normand Houle

The Chair

Mrs. Bev Desjarlais (Churchill, NDP)

Mr. Robert Martin

1055

Mr. Brent St. Denis

Mr. Robert Martin

The Chair

Mr. Normand Houle

The Chair

Mr. Stéphane Bergeron

The Chair

CANADA

Standing Committee on Industry, Science and Technology

NUMBER 078

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, April 18, 2002

[Recorded by Electronic Apparatus]

¿ (0910)

[English]

The Chair (Mr. Walt Lastewka (St. Catharines, Lib.)): I'm sure there will be more members coming, but I want to begin the meeting this morning.

There is going to be a slight problem. There will be a short break at 10 o'clock. There are going to be some statements in the House regarding the incident last night in Afghanistan, so it's appropriate that the members be in the House. We'll have a recess for probably fifteen to twenty minutes. As we get more information as to how long it's going to be, we'll decide then.

Perhaps I could get all the witnesses to the table. We'll hear both reports, and then we'll go into questions. We'll take a break, and then we'll come back and have more questions until 11 o'clock.

I'd like to introduce Normand Houle, vice-president, business market, Yves Morency, vice-president of government relations, and Luc Savard, vice-president of government relations, Fédération des caisses Desjardins du Québec.

Monsieur Houle, I would like you to begin with your statement. Then we'll have the statement from the other group and open it up for questions. Please begin.

[Translation]

Mr. Normand Houle (Vice-President, Business Market, Fédération des caisses Desjardins du Québec): Mr. Chairman, ladies and gentlemen of the committee, we are pleased to respond to your invitation and share with you the vision and commitment of the Mouvement des caisses Desjardins regarding small- and medium-sized businesses. We will briefly describe our institution, which as you know is active primarily in Quebec.

First of all, we should point out that Desjardins is Quebec's primary financial institution, and the sixth-largest in Canada, with more than $84.7 billion in assets. Our deep roots in the community and our market position in the field of savings, credit and insurance speak volumes.

Business people in Quebec and those at Desjardins share the same goal: To develop their business in order to develop their community. Desjardins contributes to the development of Quebec by providing competent support to businesses in all regions that are creating jobs and activities today. Desjardins is now reaping the benefits of efforts made in the past to enhance its organizational effectiveness and to redeploy its sales force, particularly the part assigned to small- and medium-sized businesses.

Here is how we categorize businesses: the common factor we have selected is sales figures. Micro and self-employed businesses are those generating $1 million and under in sales. Small businesses generate $1 million to $10 million in sales, and medium-sized businesses generate $10 million to $100 million. Big businesses generate sales of $100 million and over.

We have also provided a profile of our business portfolio. With all sectors combined, the portfolio total is $13.374 billion for 119,000 corporate members.

The table that follows shows how our portfolio has grown in two basic sectors, the commercial/industrial and the agricultural sector, over the past five years. If we add them up, we see that in 1997 we started with a portfolio of $11.223 billion, which by the end of 2001 had grown to $13.374 billion. This represents growth of something over $2 billion, or 20%.

We have adopted some broad objectives in order to do even more for the companies described above. The top priority in our 2003-2005 strategic plan will be SMEs in Quebec. To ensure that we reach that target, we have made a number of investments over the past few years. Our network branches have now established Corporate Financial Centres, where accountant managers are better able to serve their business clientele.

The 65 Desjardins Corporate Financial Centres are located throughout Quebec and demonstrate our tangible contribution to regional development in Quebec. They bring together close to 1,000 account managers who are responsible for over 119,000 borrowing members and nearly 170,000 non-borrowing members. They form teams to meet market requirements. In other words, they pool their corporate financial expertise in the business sectors in which local businesses are involved.

Did you know that 45% of the accountants belonging to Quebec firms in financial institutions are with Desjardins? Moreover, the Desjardins network has more service locations than all other banks in Quebec combined. To give you some figures, our network comprises 1,548 points of service and branches, while all other banks combined have 1,151 points of service.

Since all of us here today wish to promote growth, the business people and Desjardins account managers work together to generate the business development momentum that every Quebec region needs. They are true catalysts for growth and economic development.

The following pages outline the services we offer, and our solutions for SMEs. The Mouvement des caisses Desjardins provides all the products and services that today's companies require through its Caisses, its Corporate Financial Centres and its subsidiaries. Among other things, SMEs have access to savings and financing products, banking services, financial security tools, international services, security transports and insurance products.

¿ (0915)

More specifically, our account managers are trained to identify symptoms that could lead to business difficulties. They act as partners for both entrepreneurs and their teams, as well as local economic development organizations such as Community Futures Development Corporations, CFDCs. Later on, I will explain the partnership that we are currently developing with them. Their proactive intervention is intended to establish a transparent business relationship by helping businesses achieve realistic goals.

We have also developed a host of electronic services, including AccèsD Affaires which allows corporate members to access their accounts at any Caisse, at any time, 24 hours a day, 7 days a week. The service is simple to use and very secure. Businesses save on costs; all informational transactions are free. AccèsD Affaires also allows corporate members to make direct deposits and withdrawals, to obtain payroll management services, and to remit amounts to the government via the Internet.

Along the same lines, we have just launched the Visa Business Freedom Solutions Card. This new concept provides a full financing package for businesses, especially micro businesses. With the same card, the entrepreneur can benefit from a line of credit, a business card, term financing, a chequing account and the electronic services I just mentioned. All of that with the same card. As I said, this service is of particular interest to very small businesses. All of these solutions have a common objective: simplification, savings and freedom from worries for our corporate members.

Brokerage Services: Still on the topic of services for businesses, we are, at Desjardins, in the process of developing greater expertise in the area of brokerage activities, in particular, through the Desjardins Securities subsidiary. We are currently redirecting our services to SMEs. Our goal is to play a much greater role in offering services to SMEs with small and medium capital. To this end, we will play an increasingly active role in every stage of the growth of our corporate clients, both locally and abroad.

Recently, one of the major achievements of the Mouvement Desjardins has been the Capital régional et coopératif Desjardins. It is a public company established by the Mouvement Desjardins whose primary goal is to mobilize venture capital for economic development in Quebec. It also provides businesses and cooperatives throughout Quebec with expert advice and a network to support them in their startup, growth and expansion phases. Capital régional et coopératif Desjardins is a new venture capital fund to which Quebec investors can contribute. They receive a tax credit of 50% of their investment.

The mission of the Capital régional et coopératif Desjardins is in keeping with the Mouvement Desjardins's regional development policy. The monies invested in the fund, that is, up to $150 million per year for the next 10 years, will enable it to support numerous capital SMEs and cooperatives throughout Quebec, whether these entities are in the startup, expansion, modernization, merger, or acquisition phase of their development. During its first months of existence, Capital régional et coopératif Desjardins collected almost $80 million in investments.

The support provided will take the form of equity capital—social capital in the case of cooperatives—or equity loans. Capital régional et coopératif Desjardins is the only venture capital fund to have in its act of incorporation an obligation to invest in the resource regions of Quebec in which unemployment is highest. In fact, the Mouvement Desjardins is present where the unemployment rate is highest and where, overall, there is less venture capital.

It is an additional tool that complements the services of the Mouvement Desjardins. Along with the Corporate Financial Centres, we continue to maintain a special relationship with thousands of SMEs throughout Quebec.

We also have bursaries for young entrepreneurs. In the document, there is a bursary program for young entrepreneurs that totals approximately $30,000 per year and includes a host of products and services.

Earlier on, I mentioned the agreements that we have with the CFDC. Desjardins is also a partner in the development of SMEs in the regions through the involvement of its branches and its CFCs with community economic development organizations.

¿ (0920)

We are trying to make sure that all partners carry out their roles properly and in conjunction with each other, namely with the CFDCs.

Desjardins is the main financial partner of the CFDCs in Quebec with its traditional products. By way of example, we are putting the finishing touches on the operational components of a new funding mechanism for the CFDCs to enable them to benefit from the same level of funding they received last year from the Economic Development Agency of Canada as part of their five-year agreements. We are providing CFDCs, whose potential for involvement in promising cases is greater than their investment capabilities, with an innovative capital leverage mechanism that will allow them to support more business development projects with the capital they already have. With the agreements and the predefined ratios, we enable them to have an additional lever and to increase what they can do with the capital they receive from Canada Economic Development. This is unique to the CFDCs. This is done only in Quebec, but it is an example of what we can do together.

While I am on the topic of the work we do with the government, I will point out that at Desjardins, we have 15,581 loans under the Small Businesses Loans Act, the SBLA, totalling $640 million.

I know that work is currently underway to review the mechanisms and pillars of the Small Businesses Loans Act. There is a $250,000 ceiling per business. I would say that given today's reality, this ceiling no longer meets businesses' needs. Their needs are much larger and the definitions of a micro business has changed to such an extent in recent months that there are aspects that would warrant review in this regard.

Our view of the economic situation: In recent months, we have continued to be optimistic. If you look at our economic forecasts, you will see that Desjardins continues to view the economic situation positively, and the recent results have proven us right. The fundamentals of the economy of the province of Quebec—interest rates, the state of public finances, the low rate of inflation and the diversification of the economy—are much better than those of the two previous recessions, which we went through in the early 80s and 90s.

Our remarks this morning are not intended to provide you with the detailed economic forecasts of our economists. We would point out that we expect the real GDP to grow by 2.7% in 2002 and by nearly 3% in Quebec. Expansion will continue in 2003, and the rate of growth will reach about 4% in both Quebec and Canada.

We would mention in passing that the Mouvement des caisses Desjardins had another excellent year in 2001, not to say a record year, in terms of financial results. You have the figures here. We have accumulated a surplus of $601 million, up by 14.3%; a return of 12% on capital, as compared to 11.4% in 2000; a tier-one capital ratio of 12.95%, the industry's best in Canada; and total assets of $84.7 billion.

Thanks to this excellent performance and the solidarity of their capital, 658 caisses Desjardins paid their member-shareholders record dividends of $269 million, 88.1% more than in the previous year. An additional $31 million in sponsorships, awards and scholarships combines with this amounts, for a total of $300 million, which Desjardins caisses paid out to their members and to the community in 2001, as compared with $174 million in 2000.

In conclusion, as you can see, the Mouvement des caisses Desjardins neglects no effort today in developing business in Quebec.

Ever prudent and responsible in what we do and will always do in funds entrusted to us, we want more than ever before to work with SMEs and contribute to their success.

I will be happy to answer questions you may have later on.

¿ (0925)

[English]

The Chair: Merci.

Now I'd like to introduce Leo Gautreau, vice-president of corporate development, Niagara Credit Union, and Rob Martin, director of government affairs, Credit Union Central of Canada.

Rob, are you going to begin?

Mr. Robert Martin (Director of Government Affairs, Credit Union Central of Canada): Yes. I'll be starting off with some introductory comments.

I'd like to thank the chair and the committee for inviting Canadian Central to come and talk to you about the credit unions and how they serve the SME market. First, though, I'd like to make an apology for not having a document before you in advance. We've had some fairly rapid changes in our office, with three people leaving out of four, so I'm the last person left standing. I'm kind of snowed under.

Canadian Central is the national trade and finance association for the most of the credit unions outside Quebec. My colleague here is Leo Gautreau, vice-president of corporate development in Niagara Credit Union, I think the largest credit union in Ontario and one of the largest in Canada. Mr. Gautreau is someone, Mr. Chair, you may already have heard of from down your way.

Today I would like to do three things. I'm going to talk a little about the credit union system, as a lot of people don't know that much about it. I'll give you a general overview of credit union activities in the area of SME lending. Then Mr. Gautreau will take over and tell you about the role Niagara plays in SME lending and its experience in the market.

First, I'd like to update you on the status of the credit union system. It may be surprising to some of you, but over 10 million Canadians bank with a credit union or a caisse populaire. This is the highest per capita membership in financial cooperatives in the world. Outside Quebec there are roughly 700 credit unions, with 1,900 locations, serving approximately 5 million members. As of the fourth quarter 2001 our system had an asset size of approximately $67 billion.

The credit union system in Canada has been an innovator, even though we are fairly small relative to the large banks. We pioneered the first debit cards in Canada, we introduced telephone banking in B.C., and VanCity, our largest credit union, has also established a full-service, virtual Citizens Bank. I think you probably are aware of the recent Financial Consumer Agency of Canada report on service charges, and Citizens Bank fared very well in that report.

When you tell people in central Canada, especially in Toronto and Ottawa, about the credit unions, they are very often surprised. This is largely because credit unions are a big presence in rural Canada, particularly in the western provinces. This presence in rural areas, west or east, is growing--I should underline east too--as many of the banks close their rural branches and we quite often step in and purchase them. In 2000 we purchased 34 BMO branches in Alberta and Saskatchewan alone, but these purchases have been going on in British Columbia and, on a smaller scale, on the east coast. I was out in New Brunswick last year, and the people at Central out there were complaining that they spend their lives on the road at night going from community to community talking to citizens about what the credit unions can do, because the banks are leaving their towns. They say there are so many opportunities, they can't take them up.

We are here today to update you on credit unions and lending to SMEs, so let's get down to that. The first thing I would like to point out is that we are very significant players in this market, especially in the area of authorizations under $250,000. To illustrate this, rather than going to the magical statistical generating machines we all have in our associations, I'd like to draw on a recent Statistics Canada survey of SME lending in Canada. This came out in January 2002, and I think it's something this committee had a hand in crafting. According to this survey, based on data gathered in early 2001, for authorizations of less than $50,000, the credit union system, including caisses populaires, accounts for 38% of the market; for authorizations between $50,000 and $250,000, we account for 26% of the market. So what?

When you consider these numbers, it is important to keep in mind that the credit union system accounts for approximately 10% of the domestic assets of Canada's deposit-taking institutions. Also keep in mind that these markets are perceived to be areas where lending carries a somewhat higher risk of loan loss and smaller margins. Finally, it is important to consider the effect of this lending on job creation. According to the Canadian Federation of Independent Business, 75% of Canada's 1 million businesses employ fewer than five people, precisely the market these levels of authorization serve. So I think these numbers illustrate the significance of credit union and caisse populaire lending to this very significant portion of the market.

¿ (0930)

To move outside Quebec and to the rest of Canada, which I should cover for you, we are the leading provider of loans under $1 million in British Columbia, Saskatchewan, and Manitoba. In Alberta we are the third largest provider, and we're growing very quickly--I think it was 30% a year for a couple of years there. I'd also like you to know that our share of business in the SME market is growing. In 1989 we had 13.45% of the market share in this segment, and in 2000 we had 17.15%. These data are all taken from the Canadian Federation of Independent Business banking survey of 2001.

With members and customer satisfaction, we are also doing extremely well. To back this up, I would once again want to refer to this Canadian Federation of Independent Business survey. The survey ranked 10 institutions according to eight measures of satisfaction. In level of financing to SMEs we placed first. In lending terms we came first again. In information requirements for financing we were first again. We were first in quality for price. In understanding the client's business we placed second. Treatment by account managers gave us another first, access to branch a second place finish, and on-line banking services a fifth place finish. If this were my report card, my dad would say, what about that fifth place finish? But hopefully, you'll be more merciful.

Our SME loan rejection rate is also the lowest of all financial institutions, 6.5% versus 10% to 12% for most of the big banks. Our SME client retention is also higher than that of all other financial institutions except the Alberta Treasury Branches.

A key to our success in this market and the satisfaction of our customers, I think, is the relatively low turnover of our credit account managers, something the CFIB has flagged over and over again as an issue. The high turnover of account managers really feeds into the dissatisfaction of many small business owners with their financial institutions. Firms that are cycled through four or more credit managers in a three-year period are twice as likely to be rejected for business loans as customers of institutions with a lower turnover rate. This high turnover rate is also more characteristic of large banks, where I think small accounts are often used to train new people in account management, and they cycle through them fairly quickly.

I think I've said enough for a general overview, and I'd like to turn it over to Leo Gautreau to talk about credit union activity in the Niagara region.

Mr. Leo Gautreau (Vice-President of Corporate Development, Niagara Credit Union): Thank you, Mr. Chair, for the opportunity to address the committee and give you the perspective of one regional credit union.

Niagara Credit Union, based in St. Catharine's, Ontario, is the largest credit union in Ontario, with approximately $1.3 billion in total assets owned and managed on behalf of over 85,000 members. Approximately 5,000 of those members are commercial in nature, and about 1,000 of those are served by dedicated commercial account managers. Niagara Credit Union was founded in 1945 by a group of small business operators and farmers, at a time when chartered banks were reluctant to provide credit to these entities. Today we are represented in the Niagara region by 15 full-service branches, 3 commercial business centres, 21 ATMs, and a member contact centre with full telephone and Internet banking privileges offered.

Niagara Credit Union has a long and proud history of providing commercial services to the agriculture and small business community in Niagara. From the early days of supporting tender fruit growers and processors to the many small builders, related trades, and suppliers that arose from our founding community, commercial business has always been an important part of our heritage and our success. The strong loyalty to Niagara Credit Union that exists among many of our members is deeply rooted in the family or employment connections of many of our commercial members. So this is a very important sector to us.

This loyalty has been further strengthened through the good times and the bad times, because as a caring organization, Niagara Credit Union has demonstrated that our commitment to service excellence to our members goes beyond numbers on a balance sheet. It is embodied in the strong personal relationships that are based on fairness, integrity, and trust, fairness to the commercial member, but also fairness to all the members of Niagara Credit Union. This is a concept that is becoming increasingly foreign to our competitors in the financial services industry, and we seek to differentiate ourselves from our competition in this manner. Valued relationships are the cornerstone of our strategy.

Niagara Credit Union has grown significantly over the past decade, and commercial services have been a major factor, growing by over 500% during this period. Commercial loans outstanding to small and medium-sized enterprises in 2001 totalled over $360 million, approximately 31% of our entire portfolio. While we offer a competitive suite of core products and services to our commercial members, our size and scale limit the number of innovative and sophisticated products we can offer, as compared to our larger competitors in the chartered banks.

In order to maintain a long-term sustainable competitive advantage in the markets we serve, we've developed a strategy that builds on our greatest strengths. The basic components of this strategy have been to increase our commercial book by taking advantage of the prosperous Niagara economy and its internal growth and to obtain market share. This has been accomplished by creating a team that both understands risk and is committed to service excellence. We use this orientation to create strong relationships with our new and existing members, with the result that we are recognized in the regional business community as being both very knowledgeable and open for business.

It has been said that a brand is a promise, and the promise is that when you conduct business with Niagara Credit Union, we will deal with requests fairly, in a timely manner, with expertise and value-added advice to our business members, and they will be structured as win-win for both entities. And in the tough times we'll protect Niagara Credit Union's interest, while trying to help our members as well and always treating them with respect. In this regard, we think we have created a very strong commercial brand that is totally aligned with our corporate strategies. We are committed to growing by creating a different financial institution that will expand from the inside out by providing excellent service and advice, and the public will want to do business with us because of the kind of institution we are.

Niagara Credit Union's commercial members come from a wide variety of industrial sectors. We are major participants in the tourism and hospitality industry in Niagara. This is an area that is often avoided by the chartered banks on strictly a portfolio management basis, without due regard for the management or financial profile of an individual borrower. Our approach of treating each borrower and each transaction on their own merits has allowed us to invest significant funds on a prudently managed basis in the growing tourism industry in Niagara.

In the mid 1990s Niagara Credit Union carved out a strong niche in the residential land development and construction sectors. Our understanding of this business, combined with our local knowledge and strong relationships, allows us to support the development and construction of many new residential subdivisions in our region. This has had a very positive effect on the trade suppliers and the resulting secondary industries.

We continue to participate in government-sponsored programs, such as the Small Business Loans Act, and locally, we are a founding sponsor of the Niagara-Canada community investment plan, which the chair, of course, will be quite familiar with as being very instrumental in getting that program off the ground. These programs have been useful in assisting struggling business to obtain financing that otherwise may not have been obtained.

¿ (0935)

We are proud of our participation in the growth of the Niagara wine industry, where Niagara Credit Union has assisted in the start-up or expansion of many of our fine Niagara wineries. Again, we were able to accomplish this through understanding the business and strong relationships.

We play a significant role in agribusiness in the Niagara region, with over $50 million in credit extended to our members in this sector. Our major involvement in agribusiness loans in Niagara tends to be in grapes, tender fruit, nurseries, wineries, and greenhouses.

So in summary, we believe Niagara Credit Union plays an significant role in serving the needs of small and medium-sized enterprises in our region.

Thank you.

¿ (0940)

The Chair: Thank you, sir.

We'll now begin with questions. Mr. Fitzpatrick.

Mr. Brian Fitzpatrick (Prince Albert, Canadian Alliance): Thanks very much, gentlemen, for your presentation.

I spent 25 years in rural Saskatchewan practising law. My bread and butter is small business people and farm people, and certainly, credit unions are very much a part of Saskatchewan, especially rural Saskatchewan. With the problems we've had in rural Saskatchewan, I don't know where we'd be without the credit union system. They've been the full-service provider in those communities, and they've stuck with the communities. So I'm certainly not a critic of the credit union movement.

I think one of the problems we have in Canada with our financial industry is too much concentration and too few hands. I think the more we can open that system up and have competition, the better people will be served. I see it in my communities all the time. The credit unions really do make a difference. I just wanted to pass than on, for what it's worth, as well.

I could even point out that the credit union concept, I think, is getting involved in the political round too--one member, one vote, policies, principles, electing leaders, directors, and so on. I think that's a good movement too. The more we get that going, the better.

A big problem I've seen as a practitioner of law in Saskatchewan is with some things that are placed with the large banks that give them a competitive advantage in the marketplace, and that's on taking the security. The banks have a thing called Bank Act security. Any person who practises law knows what that means. It means the banks are able to bypass provincial laws that other lenders have to comply with, and most of it deals with exemptions, debtor-creditor rights, and so on. I think every province has some legislation in place. I know what the legislation is in Saskatchewan. When you're dealing with farmers and small businesses, I feel that credit unions are at a fairly significant disadvantage in lending and taking security and dealing on a level playing surface with the large banks.

I wonder, Mr. Martin, whether you would have any comment or observations on that point?

Mr. Robert Martin: We are talking about provincial legislation. My focus here in Ottawa has largely been on the federal side. The good news is in the recent financial reform package that went under Bill C-8 and associations that are established under that act. So if some of the credit union business does start to get moved into the federal legislation, we'll be able to have similar advantages in that area. So there's an option there.

It's hard for me to talk about each provincial regime and how much of a disadvantage it would put us at. I don't know, Leo, whether you've had any problems in that area.

Mr. Leo Gautreau: In the province of Ontario we don't have that.. We don't really have any issues regarding security.

¿ (0945)

Mr. Brian Fitzpatrick: I think it's more a problem in provinces like Saskatchewan and Alberta that have certain types of laws that go back to the 1930s and are pretty much entrenched. But it is something I think people are fairly cognizant of in those two provinces. My own point of view is that the banks are banking in Saskatchewan, and they've played by the rules you have in Saskatchewan for banking. In Alberta they should play by the rules in Alberta, just like the other lenders, but that's my own point of view, and I think it's a widely held point of view among people who have observed the situation.

We're in a period of great change, and I think this financial services area is probably one where the pace is almost revolutionary. What I observe with the trends in the banking sector is a lot more centralization. It almost seems to be going back to the fifties or the sixties, the way they're going with centralization. I used to be able to deal with the local Royal Bank branch with a phone call, now I have to go through some telephone exchange in Mississauga to be able to talk to the local manager. I find the bank branches are getting smaller, the people involved in those branches are fewer, and it's more high-tech. If you're good at using computers, the Internet and things along that line, you might be able to function well with that. The credit unions in Saskatchewan seem to be going in the opposite direction. They seem to be building larger facilities, they have a larger staff component, and they're maybe not as heavily involved in the Internet banking as the banks are.

In the context of what's happening with the global movement in financial services and things, how do you see the credit unions fitting in? Where are they going?

Mr. Robert Martin: I think our bread and butter is still going to remain deposit-taking and lending to members, mortgages, with some branching, developing our wealth management side and our SME lending. It's a fairly complicated picture, and if I knew all the answers to that, I'd probably be the president of Credit Union Central of Canada.

I'd just like to take up your point, though, about the centralization. We see both sides in the credit union system. We do see a centralization where it makes business sense. You're talking about on the prairies. With back office operations, we are seeing the three prairie Centrals starting to cooperate a lot more on areas like information processing, and it might move into other areas. So that way we can capture the savings the banks are actually obtaining through some of their centralization. But we also know that our business is best built face to face. We know our members want their branches. We know the SMEs don't see some kind of telephone banking or Internet banking as a replacement for the branch. So we're trying to move in two directions, taking advantage of some of the centralization the banks are obviously involved in, but also keeping what makes us credit unions. We would certainly hear from our members if we started shutting down branches and trying to centralize, and the banks don't have that route to hear from their customers.

The Chair: Mr. Houle, you have a response?

[Translation]

Mr. Normand Houle: To answer the gentleman's question, I would say that technological change is unavoidable. We cannot get around it, but it all depends what we are using it for. At Desjardins, there are two functions. First of all, our purpose is to streamline our operations in order to focus on our relationship with the world.

Have you ever been in a bank or a caisse populaire where an employee is shuffling paper in the back and cannot serve you? It is frustrating. We want to avoid that, and have all of these human functions that have no added value for these people computerized.

Technology's second function is to make life easier for entrepreneurs in terms of all the little administrative things that they have to deal with.

If we use technology for these two reasons, there is no problem. At Desjardins in Quebec, we are quite advanced as regards technology, and we have nothing to be embarrassed about compared to the banks. In some cases, we are even more state-of-the-art than they are, and we do have 1,548 service points, and we have streamlined. So one is not at the expense of the other. I think that Desjardins's goal is to better serve people and to give them value-added advice. From that perspective, I think that the client is the winner.

[English]

The Chair: Thank you very much.

Mr. St. Denis.

¿ (0950)

Mr. Brent St. Denis (Algoma--Manitoulin, Lib.): Thank you, Mr. Chairman, and thank you, gentlemen, for being here.

I have a question first for Mr. Houle or his colleagues, and then possibly Mr. Martin could add something. I was pleased that you made reference, Monsieur Houle, to the CFDCs, the local Community Futures Development Corporations. I have a northern Ontario riding, so we're quite familiar with them, and I assume they operate the same in Quebec. They're locally managed, with a local board of directors, with capital funding from the federal government through the regional economic development agency; there's no interference from the federal government, but they simply, I imagine, provide annual reports.

You mentioned that you have been in partnership with the CFDCs, you're in the process of developing a new arrangement with them. I wonder if you could talk a bit about that, because it might be helpful to have some lessons that I could bring forward to my own CFDCs and those of my colleagues in Ontario. We're always looking for ways to see partnerships at the local level. I don't want to be disparaging, but I think the big banks are providing opportunities for the co-operative movement and the credit union movement through the way they are centralizing. So I'm wondering if you could speak a bit about the experience you have had with the CFDCs in Quebec and where you see that going.

[Translation]

Mr. Normand Houle: We have recognized the contribution of the Community Futures Development Corporations. We understand their role and we accept it. They invest in small and very small businesses; that is their role. It is also their role to create business plans and to guide these businesses.

At the outset, this was not our role. We had a choice: we could set up teams and draft business plans for small businesses, or we could let an organization that was set up to do this do its job, and see what complementary role we might play. That is the idea. If we want to do more, we should not try to take over the role of others, but rather see what complementary role we can play.

Wherever there are CFDCs, there are also credit unions, but wherever there are CFDCs, there are not necessarily banks. Right off the bat, we have a common interest in doing business together. We are working with the CFDCs. Apart from the fact that the CFDCs bank with us, they have investment funds that are granted to them by the Economic Development Agency of Canada. In some cases or in certain regions, these funds are sometimes insufficient. What we are looking at doing with them—and I can tell you this will be unique to Canada and it will surely snowball—is give them some additional leverage to recognize or assume a part of their shares through financing. For example, if they have a $10 million fund, rather than injecting $10 million into small businesses, with this program that we are setting up with them, it could perhaps be improved and become $15 million. Therefore, there would be more investment, more small businesses, more work, more jobs, etc.

As I was saying earlier, with Capital régional Desjardins, which has a duty to invest in all regions where employment is uncertain, it is really a triumvirate:the financial centres, the CFDCs and the investment fund. This is how we are approaching the problems and working with the CFDCs, just as we have an agreement with the Business Development Bank of Canada, BDC. We have a signed agreement and we do shared loans together, just as we participate in the program.

The idea is not to reinvent the wheel. When a program is set up, it is because there is a need. The idea is not to duplicate what is being done, but to add to the resources and amounts available. It is from that perspective that we work with the CFDCs. We are putting the final touches on the program, and I am sure that when the Quebec director—I believe it is a woman—will present this to her colleagues from the other provinces, this will snowball. But the details are being negotiated as we speak. We are winding it up. We are giving the CFDCs some leverage. In exchange, we are shepherding the small business people to the CFDCs for their business plans, so that they will have some guidance. That is the CFDC's role.

Moreover, we have no conflict of interest. Between establishing a business plan and putting together a loan, there is a conflict. When we work with the CFDCs, we eliminate that conflict, we split up the work and we can play our true role as a lender.

We also work with the LDCs, which are the Quebec organizations that are like the CFDCs. We are doing the same thing: we work together. This is part of our mission and this does not stop us from targeting larger and medium-sized businesses. They are part of our goals as well; one does not preclude the other.

¿ (0955)

[English]

The Chair: Mr. St. Denis, I'm going to cut you off now, because we're getting close to 10 o'clock and the statements concerning our troops that were killed in Afghanistan last night. There were at least four killed. There are at least eight injured, some very seriously. So I'm going to break so we can be there in the House for the presentation. We'll come right back after the presentations. I apologize to the witnesses. I know we've moved you around three times already in the scheduling, but this is a very serious thing that has happened for Canada.

If the witnesses would like to come into the House, we would be glad to take you into the House to sit you down.

¿ (0957)

À (1029)

The Chair: We will reconvene. Thank you for your understanding. It's very important for our country.

Mr. St. Denis, I'm going to ask you to carry on with one more question. Then I will go to a shortened time limit of five minutes.

Mr. Brent St. Denis: I appreciated Monsieur Houle's response to the CFDC question. I'm not sure if Mr. Gautreau has any similar comments from his Niagara experience in relation to the CFDCs down that way.

Mr. Leo Gautreau: Actually, I don't. I haven't personally had much experience with them. I believe we've had some activities in Welland and Fort Erie. I have not personally been involved, so I can't speak intelligently to it. The type of role we like to play in that kind of thing is a complementary one. We don't want to run them ourselves, we simply don't have the capacity to do it, but if we can participate in initiatives like that, where we can add expertise, as we like to give back to the community, a financial contribution towards administration, and so on, we enjoy doing that type of thing.

Mr. Brent St. Denis: I'm good for now, Mr. Chair. I'll defer to Stéphane.

À (1030)

The Chair: Monsieur Bergeron.

[Translation]

Mr. Stéphane Bergeron (Verchères--Les-Patriotes, BQ): Thank you, Mr. Chairman. Thank you for being here today, gentlemen. This is a meeting I care very much about, and I am very pleased to see that you were finally able to find a moment that suited everyone in your schedule so that this meeting could take place. I will not spend any more time on a preamble as I know we have very little time.

I would like to come back to a point raised by Mr. Houle and which seems very important. We discussed it yesterday with the president of the Business Development Bank of Canada, and it seems to me to be a key element, providing this committee can do serious work examining the funding issues for small- and medium-sized businesses. I am referring to the definition of a small- and medium-sized business. You brought this issue up. You said that it was important that we study this issue and, possibly, if we are to proceed to draft recommendations for the government—and I feel we are likely to do so—we will indeed have to define what we agree today is a small- and medium-sized business. You have also brought up the possibility of potentially raising the threshold or the ceiling for funding for small- and medium-sized businesses as presently defined in the legal provisions affecting funding of SMEs.

Could you give us a definition of what you consider to be a small- and medium-sized business, in terms of employees and sales? And could you also tell us what you would consider to be the maximum amount of money that could be granted to a small- or medium-sized business?

Mr. Normand Houle: Mr. Bergeron, there are different definitions of what constitutes a small, medium or large business. Undoubtedly, you have seen other documentation on this issue. Take a major company, such as Desjardins. They have a turnover of over $100 million. We opted to use turnover as a criterion because it is one of the most representative factors. Today, when you compare high tech companies with the manufacturing firms, workforce size no longer means very much. Consequently, we opted for turnover. In our view, a company with a turnover of $100 million or more is a large firm. To the banks, a large company is one with a turnover of $250 million or more. I don't know whether the banking industry has a definition for what constitutes a small and a very small firm, however. Banks have not paid much attention to these sizes of company. They don't tend to focus on small and very small firms.

Approximately seven years ago, a very small or a micro company was defined as a self-employed person, with a turnover of up to $100,000. Today, this has risen to $1 million. That really gives you an idea of the order of magnitude we're looking at here. Companies are increasingly specialized. They purchase sophisticated equipment mainly in U.S. dollars or in German marks, because these countries are the major manufacturers of specialized machinery. I don't think that I need to tell you that $250,000, these days, is not a great deal of money.

A very small or small company is defined as having a turnover of between $1 million and $10 million. Moreover, most companies not only in Quebec but also in the rest of Canada fall into this bracket. Consequently, $250,000 is not a very high cut-off point. If I am not mistaken, work is currently being done on this issue. However, I don't think I'm in a position to put forward the ideal limit... The last time there was a major overhaul of the Small Business Loans Act, the cut-off was raised from $100,000 to $250,000. I don't think that it would be out of the question to raise that further towards the $500,000 mark. I think that that would be quite effective and indeed workable.

When you look at the growth in small and medium businesses and if you look at the numbers of jobs that these companies create in Canada and in Quebec... These companies are the backbone of our economy, that's really the size of it. Companies such as Nortel and Bell are not a dime a dozen in Canada. They are of course major employers, but they are not really the bedrock of our economy. The worst of the whole situation is that these programs are used. These programs have changed over the course of time. These programs have been refined. Talks are going on between various financial institutions. I threw out some figures earlier; for example, $640 million in loans. In the past, we could do what we wanted with small business loans. What we couldn't do in another way, we did through a small business loan.

Today, this is no longer the case. We have never seen small business loans in this way. We see them as an additional tool which enables us to provide leverage to a small business and which allows us to get around capital outlay, which is often a factor that we are obliged to comply with, because of our fiscal ratios. Often, this is a requirement. This small business loans system enables small companies to offer a comprehensive tender and to develop a larger number of initiatives with the CFDCs. I am talking here about loans made in conjunction with the Business Development Bank of Canada.

We met with officials from the Business Development Bank of Canada and we signed an agreement with them. They also have a role to play, and we really complement each other. We ensure that we don't tread on each other's toes and that neither body is trying to take the lion's share. We really supplement each other's work. The bank has a target, they have a business that they deal with and we have our own.

I think that overall, this is a very useful approach. Of course it goes without saying that the whole process is adapted to changes in the economy, in markets and in industries. As for the $250,000 cut-off figure, I don't think that it is up to me to tell you where the ceiling should be set. I could throw out the figure of $500,000 for example, but it could also be set at $400,000 or even $600,000. However, I believe that the current threshold should be increased and I think that this issue should be looked at in great depth.

À (1035)

[English]

Mr. Robert Martin: I don't disagree with anything he said. I just want to underline, though, that for the purposes of this presentation, I've tended to focus on authorization size. We mostly talked about authorizations under $250,000, because I know there's been some controversy on this issue, and firms that have 50 employees or fewer. I know some other institutions tend to be more liberal on how large they go, and I've tried to keep it at the small end, to stay honest.

[Translation]

Mr. Stéphane Bergeron: You were talking earlier about the issue of quality of service to members in the cooperative movement and comparing that with the goals of more traditional financial institutions like banks.

As you and we well know, there has been considerable criticism over the past few years in the media and within the movement itself. The Mouvement Desjardins was accused of becoming more and more like the traditional financial institutions, like the banks, in terms of customer service. You talked earlier about the feeling one gets walking into a bank or a credit union, about seeing a woman counting money in the back and not coming to serve customers. We have also heard about that type of thing in credit unions.

With the new economy and globalization of markets, how can we preserve not only the spirit, but also the letter, of the cooperative movement in Canada's credit unions or the Mouvement Desjardins in Quebec, for example?

Mr. Normand Houle: First of all, let me say that this is a challenge. It used to be that every village in Quebec had a credit union. It was as simple as that. Not so long ago, there were some 1,400 credit unions and, in addition, nearly 1,000 service points. That is an incredible network. There were no other networks like that, even in Canada as a whole. It is very costly.

The fact that it is costly is one thing, but we also need to look at how fast the financial services industry is evolving and how quickly the barriers to international competition are coming down. Some of them have already come down, and I am sure that you will legislate at some point to make the system even more flexible.

Every time there is a new institution, it creates undue competition. More and more players are entering into market niches. The foreign financial institutions do not come in and compete with us for the whole range of products and services. They choose one and make sure they are the leaders in that area. The next one to enter the market becomes the leader in another area.

It is a huge challenge to maintain a vast network with the best technology and offer the whole range of products and services. There have been studies on that, and it would appear that in the not-too-distant future one or two Canadian banks will be able to offer the whole package of services.

They have already started to choose niches. They are deciding that some aspects are profitable and others are money-losers. The latter services are no longer offered. They have even started concentrating services in urban areas only. That are banks that think that way. They have service points only in urban centres. Of course, that helps us, since we exist everywhere. There is an advantage, but the competition is very strong. I often say that a billion dollars in profit in absolute numbers is a lot of money, but if you have to invest $250 million at the beginning of the year to renew your systems, it is not very much.

Let us take the Royal Bank, for example. It is a big institution in Canada, but it is very small from a global perspective. That is something we see everywhere. Even if we think that no one will want to compete with a small credit union in the Gaspé region, it is no longer true. Distance is no longer a factor.

People talk about maintaining personalized services. It used to be that people came into the credit union and there was a family-like atmosphere. That is changing. We try to keep relations as strong as possible. We need increasingly refined products. Even the most loyal customers or members of cooperatives or private banks have lost their loyalty. What they are looking for, first and foremost, is not just a smile, but rather price, products, quality of service, etc.; they want fast service. It is a constant challenge, but a very stimulating one, to try to maintain the balance between new technologies and services that we can provide with technology. We need to invest in skills to service our members. We say that in Maria, which is in the Gaspé region, and in Montreal, members should receive the same offer of services. It is a huge challenge, just to find the resources to provide the services. It is not easy.

The Desjardins mission statement indicates clearly and specifically that we want to serve all customers, everywhere in Quebec. It is right there in the chairman's speeches: it is our challenge and our daily work. It is not easy.

Our competitors, however, decide not to offer services in certain sectors. Is there potential for 3,000 customers? No. Then they will not open a branch. That is reasonable. It is very much a financial or business perspective. Being present everywhere, serving small, medium-sized and soon large enterprises, and offering the whole range of services is a very great challenge.

It is true that there are changes in the services offered, but there are members and customers today that agree with this new direction. They do not want to wait in line; they want to access these services through the Internet. Once customers get a taste of that, they do not want to go to the branch anymore. They want highly specialized services, and that is what we are trying to give them.

À (1040)

Mr. Stéphane Bergeron: They wait in line because there is at least service offered there.

Mr. Normand Houle: There are people who no longer want to come to the institution at all. They do not need to. That is another dilemma. There are people who absolutely want to shake the teller's hand and get a candy or something like that, and that is all right. There are also younger, more professional members who use the Internet, their Palm Pilot or their cellular, and they do not want to go into the institution at all because it is not necessary. They look at their Palm Pilot and the share price is there; they call in to buy however many shares they want. We have to serve both types of customers. It is a challenge.

Small businesses have certain needs and medium-sized ones have other needs. Large companies are a whole other world. We want to provide the best service all the time, but it is not easy to be perfect.

[English]

The Chair: Thank you.

Mr. Marcil.

[Translation]

Mr. Serge Marcil (Beauharnois--Salaberry, Lib.): Thank you very much.

I would like to welcome the witnesses from the Mouvement Desjardins and especially Normand Houle, who was one of my students when I was a school principal. I am pleased to see him here today as Vice-President of Desjardins.

Since I am a member from the region, like Stéphane, I really appreciate the mandate that the Mouvement Desjardins has given itself with respect to being active and present in the resource regions, particularly in regions where the unemployment rate is higher. That is one of the reasons that the CFDCs were created with Economic Development Canada. They operate only in regions where the unemployment rate is very high and there are economic problems. I am also pleased to see the cooperation that has developed among the Mouvement Desjardins, the CFDCs and the LDCs, which have similar and complementary mandates.

Here is my question, which I will direct to both organizations represented here. If there were things to improve or develop where the cooperatives are concerned, what would you expect the Government of Canada to do to help you better serve your customers or target certain markets that you maybe find difficult to target right now? What do you expect from the government of Canada in this regard? I know that the Mouvement Desjardins is governed by a provincial charter, but you operate not only in Quebec, but also in Ontario, Manitoba and even Florida. There is a Desjardins branch in Florida.

À (1045)

Mr. Normand Houle: Two.

Let me try to answer you. More and more, programs must be looked at together, as a whole. I mean the whole of financial institutions, including credit cooperatives. Our role is greater with small and very small enterprises. I think that we must study and review the programs, and work together in creating them.

We must always ensure that one program does not infringe on the mandate or role of another. This is how we can build a coherent and strong economy. Our role is always a complementary one. I have already seen programs that were theoretically good but that were poorly applied on the ground. You know that some programs have been abused. They were treated like subsidies and nothing was gained from them. We must ensure that they play their proper roles. In some cases, we even have to get entrepreneurs involved. We have spent years creating focus groups to find out what the entrepreneurs need or do not need and what irritates them. We must be able to form these permanent discussion groups, because programs quickly become obsolete due to the speed at which everything is evolving. Thus, they need constant renewal.

I think that we already have some leverage. Maybe there is not enough. Perhaps we should hold a forum on that issue. I think that there is already some leverage. With good adaptation and complementarity among our operations, we can only help one another as citizens and organizations to build a strong and solid economy.

[English]

Mr. Robert Martin: I just want to make some general comments first, and then have Leo talk about an issue he's raised.

The federal government is doing a lot for us, the credit union system, in the rest of Canada. The last legislative reform that went through with Bill C-8 has given us a great deal more flexibility at the federal level to move parts of our business under the federal act where a business case dictates that this makes sense and the system wants to move in that direction. We have the democratic process of our system that we have to respect. Things are going along quite well, and a big thing is the regulations that accompany the act, that flesh it out. We are pretty much in weekly negotiations with the federal government on fleshing out what that legislation actually means, and we are getting quite a bit of cooperation. A lot of space has been opened up for us and a lot of flexibility has been granted to our system by the federal government. We hope this process continues and continues to go as well as it has been going. It's going to be up to parts of our system to decide how they want to use this new legislation to expand their business, but there are openings.

I think Leo wanted to talk about a particular issue he's observed in the Niagara region that would be helpful.

Mr. Leo Gautreau: It's not so much in the Niagara region, but it extends to other regions, and it goes to what Mr. Houle was saying about partnering together. It is the issue of training and the ability to assist more credit unions to get into commercial lending. There are a number of credit unions across the country that are not involved in commercial lending at all. Many of them have high liquidity, and commercial lending would be a good outlet for their funds, but it's too costly to set up the infrastructure to get into that. So through some partnering with provincial counterparts in training and funding and so on, particularly in the rural areas with the smaller credit unions that are serving those markets, assistance could be worthwhile.

À (1050)

[Translation]

Mr. Serge Marcil: Let me put one last question.

Quebec has Investissement Québec and the Société générale de financement; at the federal level, there is the BDC. These organizations were set up because there was a time when people had no access to financial institutions. Financial institutions were unwilling to receive just any client. If you did not have all the qualifications, they would not lend you anything. Thus, organizations were created to fill this gap.

In your opinion, how are you, as institutions, affected by the competition existing among all these provincial and federal organizations?

Mr. Normand Houle: I can tell you that here we are working together with Investissement Québec through Programme Garantie-Québec, especially with regard to the new economy with its state-of-the-art technological companies. This does not keep us from working with the CFDCs whose startup investment mandate is more local and regional. Once again, it is the same pattern comprised of provincial and federal programs, as well as local organizations and financial institutions. It is important that they should not all be doing the same thing. If two organizations provide the very same programs with the same objective, there is a waste of money. We are not multiplying, but rather dividing. I think there is much work to be done on that, so much so that there is enough of it for everyone.

[English]

The Chair: Thank you very much.

Ms. Desjarlais.

Mrs. Bev Desjarlais (Churchill, NDP): Thank you.

I'll give you all my questions quickly, so that we can be within the time.

First, it was an excellent presentation, and it is really satisfying to hear that there's actually an institution out there looking at more than just the bottom line with a commitment to the community. It was very good to hear that.

Do you have any gender statistics on loan application approval and denial ?

Second, do you have some involvement with EDC in partnerships? When representatives from industry came, they mentioned that the EDC actually has partnerships in place. I just wondered whether the credit unions have as well.

Third, is there an entry level limit you have before a credit union will go into a community? Do you need to have so many depositors, so many dollars flowing through the community?

My next question is whether or not credit unions are involved in first nation communities, whether there are any credit unions there. Even in the last few years we've seen banks actually going into first nation communities, and I don't know whether credit unions have.

That is my last question. Thank you.

Mr. Robert Martin: Those are all difficult questions. In the matter of gender, who's borrowing and who's being authorized, we have no macro statistics. That may be something that it is kept credit union by credit union. It's a sensitive issue. We get mixed views on whether we should be collecting data and asking for it, but at the Canadian Central level, we don't have those data. It would be interesting.

We don't have any partnerships at the big level with the EDC. There may be some small ones out there, probably on the prairies, having to do with agricultural operations, but nothing large. We do have a deal with the FCC. We have a CU lease, which is concerned with the leasing business, especially agricultural leasing, and we use the FCC's network to help distribute our financing products.

Entry level is something decided case by case. You'd have to look at which direction the community is going, whether it's growing, whether it seems viable, what kind of infrastructure is in there. For example, if there are banks that have left, they may not have invested in any kind of banking system for years and years, knowing full well that they're going to be leaving. So you look at that and see how much that will cost, how viable the deposit base is. Also, there's the process of just the community involvement. If somebody from Credit Union Central, say in New Brunswick, goes down and see there's a big community movement to bring a credit union in, that does push things along.

With native lending on reserves, there is actually something that happened recently in northern Ontario. The Anishinabek Credit Union was established. I think it's the first aboriginal credit union in Canada, and I think its doors have only been open for six months. Is that right, Leo?

You have one too?

À (1055)

Mr. Brent St. Denis: There is one in my riding, in Blind River.

Mr. Robert Martin: I think there are still issues with lending on reserve about taking security and how that is managed.

The Chair: Mr. Martin, I'm going to have to go to Mr. Houle. I want to make sure he has a chance.

[Translation]

Mr. Normand Houle: The first question was about statistics on male and female entrepreneurs. I have no such statistics here, but I am sure that they exist.

Recently, a communication plan addressed to women was implemented. We do not want to discriminate. As far as we are concerned, entrepreneurs, be they male or female, are simply entrepreneurs. Female entrepreneurs must receive the same service as any other entrepreneur. But there is an awareness-raising program that I could send you and a reach-out plan addressed to business women and professional women. It is being implemented. It exists.

Secondly, we have set target numbers for women sitting on the management boards of the federation, organizations belonging to the Mouvement Desjardins and the caisses. I do not have the percentage, currently it must be nearing 30%, but it is constantly changing and we pay close attention to it. If we could reach 50/50, it would be good. So, some elements already exist. I could send you a little document about the program for women.

In partnership with Canada Economic Development, there are the CFDCs that I mentioned earlier. I tell you quite frankly that we have targets for this with Canada Economic Development, because this organization has a very high profile in all fairs, sponsorships, etc. Canada Economic Development is everywhere. I do not know what kind of budget they have, but they are everywhere. Obviously, there is great interest in what could be done with Canada Economic Development, but no one has acted on it yet.

We have no problem with the GDP or the threshold for setting up a caisse populaire in a town or city. We have almost always envisaged one caisse per village. Such a network can certainly not be maintained. We are consolidating it, but even now, as I said earlier, there are 1,548 outlets in Quebec. This is astounding. It is already very big.

With regard to aboriginal persons, let me announce that in keeping with the will of the president of the Mouvement, we set up a commission on relations with aboriginal people. I believe the first meeting will take place tomorrow, before the general meetings of the Mouvement, to better understand their needs, work with them and see what we can do together with them.

This commission is directly accountable to the president of the Mouvement Desjardins.

[English]

The Chair: I will have to conclude, unfortunately. I think there's a lot to be gained by this committee in having you present with us to discuss your business. When we do the bank reviews, we could perhaps ask you to come back to talk about various things. It's very valuable for this committee to understand the whole financial system, the banks, the credit unions, and other financial institutions, to make sure we concentrate on the small business, as you have pointed out today.

I apologize for having to conclude this meeting, but I know there are people at the door waiting to take over right at 11 o'clock. Thank you very much. I hope to see you soon. Monsieur Houle, I'd like to come and visit some of your areas in Quebec to get a better understanding. I've read so much, heard so much, I'd like to come and see it.

Mr. Stéphane Bergeron: Would they allow us to travel to Quebec?

The Chair: I don't know about you, but they'll allow me.

The meeting is adjourned.