Mr. Speaker, I will start by responding directly to the speech of the colleague to whom I asked a question.

I am always repeating the same question because I never get an answer from the government. There is a specific measure set out in Bill C-4 that could result in the loss of 20,000 jobs in Quebec, and the member is telling me about the jobs that will be created in Saskatchewan.

Does he really mean to say that Bill C-4 will create jobs in certain locations and eliminate them in others? In fact, that is exactly what Bill C-4 will do.

The issue of labour-sponsored funds is crucial. This model for economic development has worked well in Quebec. Since labour-sponsored funds were created in 1983, this economic model has strengthened the role of Quebec and Canada in raising venture capital funds in order to develop emerging leading-edge sectors for the country. This has happened not only in Quebec but also in the rest of the country, because other provinces followed suit with other models for labour-sponsored funds.

These funds have not only been useful in raising venture capital levels but also in raising savings levels. Quebec used to be one of the provinces where people saved the least, but now it is among those where people save the most. Speculators and large corporations are not the ones who are investing in the Fonds de solidarité FTQ and the Fondaction. It is small investors, workers. These people decided to put money aside, but they did not choose to invest in major hedge funds or mutual funds made up of mostly stocks and bonds. They were prepared to accept a greater share of the risk.

We know that venture capital that is invested in labour-sponsored funds or private venture capital funds is unsecured. For example, if things go bad, then one becomes a creditor. These funds are provided to a company and the creditor, which is actually a venture capital fund, is at the bottom of the creditor pecking order.

This model has worked well in Quebec, despite what the government says. How do I know? It is obvious. If Quebec were an OECD member country, it would currently rank third in terms of venture capital in relation to GDP—its economic size—behind Israel and the United States. It invests in proportion to its economy. It is nearly three times the Canadian average and four times the Ontario average.

The government's proposal to gradually eliminate the tax credit is something that Ontario did in 2005. Since then, the venture capital rates in Ontario have been steadily decreasing and now represent just 36% of Canada's venture capital. There is a cause-effect relationship here.

Quebec's rate has reached 36%, even though its economy is much smaller than Ontario's. The two have the same proportion even though they have very different economic levels.

How significant are venture capital and labour-sponsored funds in Quebec?

Labour-sponsored funds represent over $10 billion in capital. At the beginning of the debate at second reading, the member for Beauce said that 10% of this capital is invested, but that is not true. He would repeat that to anyone who would listen.

Every year, investments are renewed, which means that 10% is reinvested. Obviously, when the capital is invested in a business that operates well, the funds will eventually withdraw the capital to invest it elsewhere.

However, Quebec law requires labour-sponsored funds to invest at least 60% of their assets in venture capital or development capital every year. I repeat: 60%.

Labour-sponsored funds generally surpass that objective. Right now, 67% of all that capital is invested. We are talking about nearly $7 billion invested in innovation, research and development, and it also goes to help struggling businesses and start-ups, in order to help Quebec develop.

I believe that this model could be adapted to the Canadian model. This is a model that is universally supported.

If our Conservative friends had bothered to listen to the submissions, particularly those made to the Standing Committee on Finance, they would have noted that opposition to this tax credit goes well beyond the two labour-sponsored funds targeted.

Canada's Venture Capital and Private Equity Association opposes abolishing this tax credit because private venture capital works hand in hand with labour-sponsored funds. The Fédération des chambres de commerce du Québec also opposes this measure. The Board of Trade of Metropolitan Montreal, the Regroupement des jeunes chambres de commerce du Québec and the Manufacturiers et exportateurs du Québec all oppose this measure because they know the impact it will have.

The government relied on only two studies to support its position, if we can actually call them studies. The first comes from the School of Public Policy at the University of Calgary and dates back to three or four years ago. The second is an OECD study from 2006.

These studies clearly show that the OECD and the School of Public Policy at the University of Calgary have no understanding whatsoever of the complex role played by the two labour-sponsored funds, particularly in Quebec.

There are examples of development outside Quebec, but the fact remains that this is fundamentally a Quebec phenomenon. The study by the University of Calgary's School of Public Policy states that it is not really venture capital. The amounts are much smaller. The role of these labour-sponsored funds is extremely complex and there are two types: development capital and risk capital. Both are needed in a region such as mine, where there is insufficient venture capital. These funds can serve regions ignored by private capital.

There is another important aspect. I am addressing my remarks in particular to those members who represent rural areas, areas outside a large city or major urban centre.

Obviously, risk capital is more readily and disproportionately available in major cities. Regions such as mine and the Lower St. Lawrence need this capital to develop. For that reason, labour-sponsored funds have specific funds for regions not served by private venture capital or development capital. Thus, labour-sponsored funds play a very crucial role.

I am surprised to see the government acting so nonchalantly and not justifying its position. The government wants to eliminate the tax credit gradually, even though it knows what happened in Ontario. Ontario is no longer a leader in terms of venture capital and development capital.

I asked a government official some questions. How can the government take this position without conducting any studies? Was there an impact study on venture capital? The answer was no. Was there an impact study on savings? The official told me no. The last question I asked is probably the most serious: was a study conducted to compare what these two types of funds offered and what the government has offered?

What the two funds offered the government in exchange for not phasing out this tax credit was to accept the venture capital action plan proposed by the government. The government is taking away the equivalent of $355 million from the tax credit over five years, while allocating $400 million to launch the venture capital action plan. The two funds said they wanted to put a cap on the share offering and reduce the government's tax cost by 30%. In return, they proposed investing $2 billion over 10 years in the venture capital action plan. The government has only $400 million invested. The funds said they would invest five times more than what the government invested. The Minister of Finance refused. He wants to eliminate the tax credit. How does that make any sense? If the government were really serious about wanting to develop venture capital in Canada, it would have accepted and jumped all over the offer made by the two funds, which work hand in hand with all funds and private venture capital funds.

Preserving this particular measure is extremely important. I have made it my own personal cause, as the opposition and government members know very well. Indeed, this issue is critical and crucial to economic development in Quebec—development that this government is jeopardizing. At this time, the funds support 160,000 jobs, and studies have shown that 20,000 of those jobs will disappear if the government goes ahead with this measure.

I implore the government to carefully assess the impact this will have. If it really cares about job creation and economic growth, it will remove those parts of the bill in order to ensure a better future for Quebec and the rest of Canada.

Guy Caron

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