Proceedings of the Standing Senate Committee on
Banking, Trade and
Issue 10 - Evidence - Afternoon meeting
VANCOUVER, Thursday, February 19, 1998
The Standing Senate Committee on Banking, Trade and Commerce met this day at
1:00 p.m. to continue its study of the governance provisions contained in the
Canada Pension Plan Investment Board Act (previously Bill C-2).
Senator Michael A. Meighen (Acting Chairman) in the Chair.
The Acting Chairman: Our first witness this afternoon is Mr. Michael Brown who
is the president of Ventures West, a private venture capital company which
manages over $300 million in a number of pools of investment capital. Mr. Brown
will bring us his perspective from his experience in the marketplace. There
will be an overhead presentation followed by questions.
Mr. Michael J. Brown, Ventures West: Honourable senators, at the outset, I must
admit that I am a pitch man for venture capital, and I make no bones about it.
I want to ensure that, when this fund is set up, provision is made for this
type of investment compared to simply investing in the TSE index, or whatever
is presently contemplated.
At one point I held the position of Chairman of the Securities Policy Advisory
Committee to the province of British Columbia. One of our tasks was to assess
the manner of governance of the securities commission. I would like to share
with you some ideas about governance that I gleaned during my tenure as
chairman of that committee.
Those involved in venture capital are, what I would call, the "gunslingers"
of the financial industry. Our business is making high risk equity investments
in new business, almost all of which will have a technical orientation. When
you hear of nifty little technology companies starting up, the chances are that
venture capital is providing the financing.
The next overhead illustrates some success stories. American companies are
listed on the right-hand side. A column sets out the market capitalization. You
will notice some large numbers there. All of those companies started off in the
fertile mind of an entrepreneur, backed by a venture capital person.
The next slide deals with Canadian companies, and you will notice that the
investments are not nearly so large. However, they are pretty important
companies, even in the context of the Toronto Stock Exchange. In fact, the top
one, Ballard Power, you may have had heard of in another context since there
was an article on that in this week's Canadian Business magazine. I was the
first venture capital person into that company. Some of these companies are
breakthrough companies, and would be exciting areas of public investment.
The next slide is of a study done by a firm in the United States. It was
completed quite a few years ago and I do not know whether it has been recently
updated. However, I would assure you that, if it had, the results would be much
Of a whole variety of different classes of investment opportunity, venture
capital has, historically, had a very high rate of return. Along the bottom of
the graph is the standard deviation. It also has a higher standard deviation,
which means that, if you are going to be in this business, you better make sure
you understand what portfolio management is about. We will discuss the
implications of that for this fund.
Senator St. Germain: Would you explain that standard deviation?
Mr. Brown: Standard variation is the variation you can expect as an average. In
these instances, there is a much greater variation as related to the mean.
In a Canadian context, figures put together by the Business Development Bank
from 1991 to 1996 show a significant economic impact from relatively few
investment dollars. In British Columbia, apart from a few industries for which
no statistics are kept -- such as Ross Rebagliati's favourite -- the technology
business is easily the fastest growing part of our economy.
This next graph is most interesting and it gets to the heart of the reason for
my attendance here today. These numbers represent where the fundamental venture
capital comes from. Venture capital is managed by management groups. We all get
our money from different places. In Canada the two segments, individuals and
tax credits, accounted for 61 per cent of the money. These are these moneys
that were raised in 1966 through what were called, "labour-sponsored
venture capital funds". The tax subsidy, and it is a pure subsidy,
represents more than 60 per cent of the money that is raised. You will notice
that there is another slice for governments, 2 per cent, that is mostly the
federal government, through the Business Development Bank; and there is some
provincial government activity.
Compare that to the United States. One does not see the word "government"
at all. In Canada pension funds represent 7 per cent of $1.1 billion. In the
United States pension funds represent 40 per cent of $13 billion which is $5
billion. In Canada, 7 per cent of $1.1 billion is $70 million. Pension funds in
the United States find it worthwhile to invest 70 times as much. They do that
because they win.
Let us talk a little about management metrics. If you think it is important to
have this type of economic activity in the country, you should understand how
it is managed and the opportunities for diversification. In the United States
there is a huge number of management teams; more than 700. If there is a
minimum figure, it may be managing $25 million or $30 million, and anything
below that will not count. There are 700 in the United State and more than 150
managed at least $200 million. In Canada, the number is much less than 10 per
cent. However, in Canada, two funds managed 40 per cent of the money. There are
two labour-sponsored funds, one in Quebec and the other in Ontario. There is a
serious concentration at the very top in Canada, with much less diversity below.
With less diversity, there are fewer opportunities.
I wish to give you a snapshot of my own firm of which, obviously, I am very
proud. Almost 30 years ago I was one of the founders. Our niche is early stage
technology investing. We are the largest such firm in the country. However, we
would not even be in the top 100 in the United States. In California, Sandhill
Road has a number of buildings, housing venture capital groups. At 3,000
Sandhill Road there are 41 venture capital companies, none of which manages
less than $200 million. I do not think I could get a lease.
If I were to advise the committee what would be a viable policy in this area, I
would suggest that you follow some of the procedures of a major American
pension fund. They believe that venture capital investment ought to occupy 1
per cent or 2 per cent of any asset base, which is not a lot. Obviously, this
is not justified on the basis of economic activity, it is based, on the
rate-o-return. They collaborate in a variety of ways with other pension funds
to determine who are the best management teams. They do not do it in-house.
They find management teams to do it for them. They diversify on the basis of
the quality of the management team, how long it has been in business, where it
is investing, and its technical knowledge. Under the diversification policy
relating to a pension fund, a pension fund person is to manage the management
That is what my pitch about venture capital has been leading up to. I hope that
somewhere in what this pension fund is to do, there is provision to do this
Perhaps I could move to the issue of governance. I am assuming that the main
objective of the investment philosophy of this fund would be to maximize the
value of the assets, and that it is not to ensure that money is spent in
Saskatchewan, Newfoundland or British Columbia. I am also assuming that, by and
large, the internal staff will not be making investment decisions, but that
their duty will be to select managers, be they managers of Canadian equities,
U.S. equities, Canadian bond funds, venture capital or real estate. I would
encourage the committee to think of that as being the activity of the
management of the portfolio, that is, selecting managers not selecting
First, as to board selection -- whether they are called "trustees" or "directors"
-- the focus should be on getting people who know and understand what it means
for a pension fund to maximize the value of its assets.
Second, we should completely eliminate any political influence in the selection
Third, we should neutralize the desire of the board to self-perpetuate itself so
there is a continuing supply of new blood.
In my suggestions I may be a little specific and, of course, in that, there is a
danger of criticism. I would ask you to consider, as an envelope, my
suggestions to you.
I would suggest maximum terms so that members have to be replaced on a
continuing basis, but that the terms be staggered so that there are always new
people coming on. The nominating committee should have nothing to do with the
board itself. The nominating committee should be composed of representatives of
a dozen of the leading industry-related groups in the country. Those people
always form the same group. They would have, in essence, a responsibility for
the performance of fund. Perhaps for every vacancy the nominating committee
would find two people who are acceptable, present those names to the board, and
the board would make its selection.
This might sound a little far-fetched, but a similar policy is used by the
Vancouver Stock Exchange when it makes recommendations to the provincial
government regarding who will be the non-industry members on the board of
governors of the Vancouver Stock Exchange. It is also similar to a proposal
which we took to the provincial government regarding how the commissioners of
the B.C. Securities Commission would be selected. It was not taken up there,
for a variety of reasons, but I believe my colleagues on that securities policy
advisory committee believed that this was a viable type of plan.
The Acting Chairman: Thank you very much, Mr. Brown. You bring a new perspective
to our deliberations.
Senator Hervieux-Payette: I share your concern, and that is: Do we have enough
venture capital in our country? Some people say we do, and others say there
could be much more. Owners of small high-tech companies believe that venture
capital is scarce and, of course, they have difficulty accessing it. The last
recourse is always the Caisse de dépôt or the Fonds de solidarité
in Quebec. The private sector does not seem to fulfil this need.
Perhaps you could qualify what you man by a "small high-tech company"?
Do you include those in the high-tech medical field as well as those in
computer science and information technology?
Mr. Brown: Yes, I am talking about a broad scope of companies, including those
in all the life sciences, environmental companies such as Ballard, the
information technologies, both hardware and software, the various
communications interests, particularly Canada Wireless where we have
significant national expertise. It includes advance materials companies, and any
business interest involving an advancement in technology that gives the
business its fundamental edge.
Senator Hervieux-Payette: Has the Canadian situation improved or deteriorated
compared to that of the United States in terms of the availability of funds?
Your fund did not exist 20 years ago. How do we compare to the United States in
terms of the relevant time frame?
Mr. Brown: It varies. I would say, in general terms, up to the early 1990s
Canada was under-represented. The labour-sponsored funds have raised huge
amounts of money. You referred to Fonds de solidarité, which is
enormous. Those funds operate under rules which force them to invest their
money quickly. You may have read about Working Ventures in the Ontario press
being penalized by the government of Ontario because it was not investing fast
enough. In the last two or three years there has been an oversupply. I am told
that, this year, the ability of those funds to raise capital is poor. We will
know for certain at the end of February, but the expectation is that they will
raise less than a quarter of the amount they raised last year. Those funds
appear to have a very low cost of capital because the tax subsidy reduces the
cost of capital. As I said, they have to invest their money quickly. When I
approach a large pension fund, the pension fund asks me how I will determine a
rate of return. My competition does not appear to have that type of problem.
That is one of the reasons that the pension funds that invest based on returns
are such a small factor in Canada compared to those in the United States. There
has been an irrationality in the market place because of the tax credits
available on the labour-sponsored funds.Typically, when rates of return
decline, it is difficult to raise money from the pension funds; and rates of
return in this business are very much oriented to how much money there is. When
you have too much money, rates go down, pension funds do not invest, and then
there is a shortage. It is possible that, if the labour funds stop raising as
much money as they have, in the next three or four years there will be a serious
shortage of this kind of money in Canada, starting, perhaps, a couple of years
Senator Hervieux-Payette: Could you explain what you mean by "rate of
return"? You do not calculate that investment-by-investment. Your
calculations are based on the whole fund. In some instances the company fails
and you lose your investment. In others you might make 30 per cent, 40 per
cent, sometimes 200 per cent, and sometimes 500 per cent on the initial
Mr. Brown: The more of those the better.
Senator Hervieux-Payette: American involvement in the venture capital business
is to make money. They are involved because they have calculated this to be a
good investment with a good return, in fact a better return than that from the
more mature companies.
Mr. Brown: In the United States, in the last two or three years, returns for the
best management teams' performance has been running at 30 per cent to 80 per
cent per annum. There are very good rates of return in the United States. In
Canada this seems to be more difficult to do. Rates of return have not gone so
high. That is because, in part, we have not focused on some of the businesses
that have gone public in the United States that have produced these very high
rates of return to some of the best of the management teams.
The rate of return, however, is based on a portfolio. When I showed you the
slide which demonstrated, historically, venture capital having very high rates
of return, that is over a series of different funds that have great variability
in their outcome. Each fund is also extremely variable.We accept that, if we
cannot produce rates of return in the net 20-per-cent range to our investors
over a typical 10-year life of a fund, we have basically failed.
Senator Hervieux-Payette: If we recommend to the government that 1 per cent or 2
per cent should be expressed as policy by the Minister of Finance to the fund
managers, would you say that, going in that direction and considering how the
fund will be built up over a number of years, eventually the tax credit that
was initiated to stimulate investment would be quite unnecessary?
Mr. Brown: One of the interesting outcomes regarding the size of the fund that
is contemplated here is that, if you did allocate 1 per cent or 2 per cent of
assets, over time you would, indeed, replace the labour sponsored funds, you
would replace the subsidy which, in total, from provincial and federal
governments, is approximately $2 billion. The subsidy is a serious amount of
money. That would, possibly, be replaced by the activities of this fund.
Senator Hervieux-Payette: Do you think that, at this time, we have enough fund
managers in these sectors who are qualified to assess the various investments.
Mr. Brown: No. There are not enough good management teams. Of the management
teams that we now have, some are captive, in-house, such as the team of the
Royal Bank. We do not have a wide enough variety of management teams. We should
buildWe have to start somewhere. We are behind the eight-ball in terms of
building up more expertise. That is definitely something that ought to happen.
On the one hand I am talking about the economic impact of this type of activity
being very good. On the other hand I am saying that, as far as this fund is
concerned, I do not think we should be considering this from an economic impact
point of view. We should be considering this from a rate-of-return point of
view. A good rate of return in this business will stimulate more good
management teams. One of the ways to do that is to cooperate with some of the
other major institutions that invest in this business so that, at the outset,
there can be some understanding of how they have done it. I am not saying this
fund should do it on its own. It should do it in cooperation with OMERS,
Ontario Teachers, the caisse and B.C. pension funds, and other active pension
funds. Some are active although they do not invest much, and others do not play
Senator Hervieux-Payette: Besides your firm, who would you consider to be the
best informed in start-up, high-tech companies to be able to assess the risk?
Mr. Brown: That is a leading question. Until his unfortunate death a month and a
half ago Ben Webster of Helix was definitely one of the best informed people in
this field. Denis Doyle, who runs a group in Ottawa called Capital Alliance, is
one of those.
Most of the labour funds do not invest in early-stage technology, although the
Working Opportunities Fund does do so, and we cooperate significantly with the
Working Opportunities Fund in making investments.
We actually fund companies before they are formed. We will fund the research
involved in establishing a company. Very few people in the country will do
this. The Business Development Bank cooperates with us. We have joint
management programs with that bank and that is funded, in part, by the Bank of
Montreal. My firm manages all of the Bank of Montreal's venture capital in
Canada. The bank of Montreal has been extremely aggressive in being prepared to
move into very high-risk parts of the venture capital business. The Royal Bank
has matched them. When the two get together, I am not sure what will happen.
They are far more aggressive than any of the other banks.
Senator Hervieux-Payette: They are not tax driven?
Mr. Brown: No.
Senator Hervieux-Payette: They are solidly based on the nature of the research
and the potential of the growth?
Mr. Brown: Correct.
Senator Hervieux-Payette: Do you coach the management?
Mr. Brown: Yes. We spend a lot of time, particularly in the early stages,
helping the management teams find the correct people to manage these companies.
There is an article in Canadian Business on Ballard. The president of Ballard
has become famous. He was the vice-president of marketing at his previous place
of business, and I was the chairman of that company for a decade before it was
sold. I actually put him into Ballard as a consequence of understanding what
the dynamics ought to be. Getting involved in the management of companies at an
early stage is a critical part of what a good venture capital management team
Senator Hervieux-Payette: I think it is important for us, if we are to make
recommendations, to know how this can apply in the Canadian context. Thank you
for that information.
Senator St. Germain: If Ballard was so successful why did it need a government
Mr. Brown: They were partly successful because they got the government grant.
Senator St. Germain: Touché. I do not believe in government grants to
anybody, whether they be Bombardiers, Ballards, or whatever.
Mr. Brown: I agree with you. The difference here is that this is one technology
whose time to market is huge. My firm made its first investment in Ballard in
1987, 11 years ago, when the company consisted of five people with a dream in a
garage in North Vancouver. The projection as to when it would have revenues was
within 10 years.It will, in fact, be more than 15. It will be 15 or 20 years
from now before this technology becomes sufficiently universal and you can buy a
car powered by a Ballard fuel cell.
This is the "Intel" of the car engine business. If Canada captures the
equivalent of Intel, it will be a significant evolution of Canadian industrial
development. I am sufficiently old that this probably will not happen in my
lifetime. When my grandchildren buy a car and realize that this technology
started in this country and it has become universal, we will recognize the value
of what the government did.
Senator St. Germain: You talked about political influence on the nominating
committee. That is a major issue. I would like to see the government succeed in
its plight to establish this fund and to have it running successfully. You have
agreed with me that the political influence should be negligible, if at all. I
would point out, however, that a nominating committee has been struck.
Mr. Brown: I have to admit complete ignorance about what steps the government
has already taken.
Senator St. Germain: It has a nominating committee, of which and Michael Phelps
of West Coast Energy is the Chairman, and nine other people have been selected.
The province of Quebec has been left out because it has its own pension fund.
Each of the people who have been selected are senior bureaucrats from
government, other than Alberta. Alberta, being Alberta, picked a leading
businessman to be its nominee. I have not spoken to anyone who compiled this
list. When I look at the list of the people that you recommend -- and already I
have this political-influence concern and this reinforces it -- my view is that
the people on your list should have been included. I do not know care where
they come from as long as they are good in their field. I realize there has to
be provincial involvement but, rather than choose qualified people in this
sector, senior bureaucrats, who may be the best in their particular sector but
they are not necessarily the best people to do this job, have been chosen. What
is your comment on that?
Mr. Brown: I know one of the people in this province who is on the nomination
committee, Doug Pierce. He is, incidentally, very good guy.
However, I must agree with you. I do not believe this is the right kind of
nomination committee. I do not believe geographic representation has much to do
with ensuring a greater return on investment.
My recommendation would be that this committee consider the type of economic
grouping that would provide good advice at the nomination level. I am not
saying that any of the nominees should come from those groups. I believe that,
over time, if the nominating committee were composed of people like that, it
would consider the diversity of the nominees it puts forward compared to the
people on the board.
There are people who understand what technology means, understand what banking
means, understand what pension management means and the contributions that the
Canadian Chamber of Commerce can make. I believe that, if any of you were a
member of any one of those groups, and you were the representative of that
group around the nominating table, you would be highly cognizant of the nature
of your responsibility, and the quality of the choices you would make would take
into account who is already there and who ought to be there.
Senator St. Germain: I see a conflict right off the bat. Their mission statement
is to achieve the highest return for the stakeholders, yet they have chosen a a
regional selection base for this nominating committee. If I may be so bold, I
would recommend that you get to the first board meeting and make your pitch.
Senator Lawson: Could you identify the people you are recommending for a
Mr. Brown: For example, the Canadian Chamber of Commerce would put one person on
the committee. The list could also include a representative from The Canadian
Bankers' Association, The Chartered Accountants of Canada, the Canadian Bar
Association, the Canadian Advanced Technology Association, the Pension Industry
Administrators of Canada, or the Canadian Advanced Technology Association which
is, in a sense, a lobby group. A collection of all of Canada's technology
companies support the Canadian Advanced Technology Association. People like that
would have some understanding of what it means to manage a pension fund like
this and some of the targets for it.
Senator Oliver: As I understand it, the investment board is required to invest
its assets with a view to achieving a maximum rate of return without undue risk
of loss, having regard to the factors that may affect the funding. We have seen
some draft regulations which have been prepared.
Mr. Brown: I have not.
Senator Oliver: In Toronto, members of the finance department briefed us on
these regulations. In Part I, clauses 6 and 7, there is a section on
investments. Venture capital investments are very high risk where you are
looking at returns of 50 to 80 per cent. Those types of investments do not seem
to fall within the parameters of the regulations that the government has
already drafted. They are not in final form, but let me read you what there is
In clause 6.1 it states that, in selecting investments, the board shall evaluate
them having regard to the overall rate of return and risk of loss of the entire
portfolio of investments held by the board.
Clause 7(1) states that the written statement of investment policies, standards
and procedures in respect to the board's portfolio of investments, which could
be up to $100 billion according to some of the evidence we have had,
established under section 35, of the Act shall include categories of
investments; the use of options, futures and other derivatives; diversification
of the investment portfolio; asset mix and rate of return expectations.
A number of people have suggested -- and this suggestion has been criticized --
that the safest thing for the first board to do is buy an index and be
protected. No one has suggested that they should have even 1 per cent or 2 per
cent of the entire fund in something as speculative as venture funds. How do
you think that you and your proposal will fit into the regulations that have
already been drafted which, quite frankly, are quite conservative?
Mr. Brown: I would guess that, if you talked to the administration of the
Ontario Municipal Employees' Retirement Society, the Ontario Teachers', the
Ontario Hospitals, the caisse, or to the pension funds of British Columbia,
they would have enumerated a similar policy. It goes further than that, there
are some rules, and I forget exactly how they are applied, which go under the
name of "the prudent man rule". The prudent man rule fundamentally
states that the object of the exercise is not only to conserve capital; the
object of the exercise is to maximize return.
Senator Oliver: Without undue risk of loss.
Mr. Brown: Without undue risk of loss. It is clear that venture capital fits
into a ratio of investment where the risk is high and the reward is high, so
you have a high risk-reward ratio.
In other cases there is a much lower-risk reward touch, and if you buy a Canada
savings bonds ratio, such as if one buys a Canada Savings Bond, it will have a
fairly low risk, one hopes, and not great rewards. The reward is commensurate
with being able to get your cash at any time. In our business that is not
possible. You cannot simply phone up and say that you would like to sell
investment X, because the chances are high that there is nobody interested in
buying it just then.
In looking at the variability of return, as you get down to the areas where the
rewards have been the worst, they are still not, by and large, negative. It is
rare in a portfolio of venture capital management companies that you will find
a negative rate of return. The chances of losing the capital are indeed very
low. The chances of getting a high return are much higher than they are with
virtually any other category of investment. There is definitely room in a
portfolio for an investment with the opportunity of a high rate of return, so
as long as it managed properly, and so long as you have the proper
diversification of management teams who understand what they are capable of
doing. That definitely has a place, in spite of the fact that it sounds as if
the risk is very high.
Senator Oliver: We were told that the first board will have the job of actually
defining, drawing up, and making firm the mission statement and the division
statement. The mission statement will be done over the first two or three years
or until they can know where they are headed. Your suggestion that 2 per cent
should be invested in venture capital should be before the first board and it
would make the decision as to whether that should be included in the mission
statement. They may decide that there is no room for it there.
Mr. Brown: I am not sure, senator, that there is no room for it there. It seems
to me that it talks about ensuring maximizing return, bearing in mind the risk.
I am not suggesting that you seek 10 per cent returns or 7 per cent returns
with the degree of risk that there is in our business. If you cannot expect
that you will get 25 per cent to 30 per cent returns by investing 1 per cent or
2 per cent of the portfolio in that business, you probably should not do it.
The nature of risk compared to reward is the ratio you should be looking at.
Obviously, a very conservative approach is to accept a low return. A more
aggressive approach tries to enhance the return overall by taking advantage of
certain industries or management opportunities, bearing in mind that you will
have to accept some higher degree of risk. That is why this investment is not
suitable for half of a portfolio. It is suitable for a small proportion of it.
Generally speaking, the higher the risk-reward ratio, the smaller the proportion
of it will be from a pension fund. We are probably the smallest proportion of
an asset class of virtually every pension fund.
Senator Oliver: Does that apply to the United States?
Mr. Brown: They have the same ratios. Pension funds like the AT&T pension
fund, every year, carves out a certain dollar value which is related to the
increase in the size of the pension fund and, irrespective of market
conditions, they will invest it in some limited partnerships. Our industry is
typically set up in the form of limited partnerships. They will do that to
maintain that percentage interest.
In the United States there are people, gatekeepers, who are an intermediaries in
the venture capital business. When a pension fund decides that it wants to
invest in a venture capital business, it will typically hire a intermediary to
assist it in selecting management teams. The intermediaries can accurately
define the policy that some of these very large pension funds put in place. It
is no accident in the United States that 40 per cent of the $100 billion or so
that is in venture capital in the United States comes from pension funds, with
the assistance of these intermediaries. In Canada the industry is not large
enough to justify any intermediaries. There are none.
Senator Kelleher: We have varying estimates as to what the value of this fund
may be 10 years from now. In any event, it will be significant, somewhere
between $75 billion and $100 billion. What effect do you think this will have
on the Canadian capital market?
Mr. Brown: A lot will depend on the rules for the proportion of assets that must
be held in Canada as compared to offshore.
Senator Kelleher: You are referring to the existing 20-per-cent limit at this
Mr. Brown: Not so many years ago it was a much smaller number. The Pension
Industry Administrators of Canada and some of the pension fund management
teams, the Phillips Hagers of the world, Jarislowski, and those types of
people, would argue that a bigger percentage is appropriate. If that is
increased, then you might find that the size of this fund has virtually no
impact on equity markets. However, it will probably have an impact on debt
markets. Much will depend on the deficit the government is carrying. That is
probably a bigger factor on an annual basis than this would be. There is the
possibility that all kinds of Canadian markets, depending on the requirement to
invest in Canada compared to elsewhere, which would move to different levels
with this fund. That would happen with any forced saving. If you forced people
to save in other ways it would have an impact. Some people may believe that the
benefits of being a Canadian citizen and participating in the CPP pension over
time are such that they do not have to put so much in their own RRSP. If that is
true, you may find that an increase here is offset by a reduction in RRSP
investments. I do not know whether you have looked at that likelihood or not.
Senator Kelleher: Some of us are concerned that the fund could be used to
implement economic or social policy measures. I guess an example of this would
be the caisse in Quebec. Do you think that is a valid concern? If so, what
mechanisms, if any, should be put in place to inhibit that?
Mr. Brown: I would suggest that some of the items I mentioned relating to the
board would inhibit that, such as, the manner in which board members are
selected; a decision that this fund will not, itself, make investments, that
what this fund will do is hire people to make investments; categorize the kinds
of investments it is interested in; and keep deselecting managers according to
how well they are doing. This is typical pension fund policy. They may want
Canadian equities to be, say, 15 per cent of the portfolio and decide to select
three people to manage this. That opens the doors for competition. Perhaps 35
people will want to come and tell you why they should manage it. Part of the
process has to be how those managers are selected. Those managers are almost
always driven by how well they do. What are their rates of return over, say,
three months, six months, nine months, one year, three years, five years, 10
years? The board will have to decide on a policy of what metric will it use to
select those managers. If it uses a metric that is based on Phillips Hager or
Jarislowski because they outperform all the others in rate of return, then I
think you will have avoided the problem. It is a combination of the type of
people you have on the board whether or not the fund itself makes direct
investments, and the policies you set up for selecting managers to look after
various parts of the asset mix.
Senator Kelleher: The concern arises from the fact that, depending on who you
pick, the government may apply pressure to invest in a certain type of industry
or in a particular area of the country.
Mr. Brown: I think it 100 per cent likely that that kind of pressure will
evolve. It will depend on the quality of the individuals who sit around the
table as to whether they are capable of resisting that pressure. If they can
point to a policy which was established at the beginning, they can say that
their duty is to live up to that policy and, if political pressure is applied,
they can tell the world.
The Acting Chairman: Mr. Brown, you have left us with food for thought. Thank
you for assisting us. We wish you well.
Honourable senators, our last guest, Dr. Michael Walker of the Fraser Institute,
needs no introduction. Suffice it to say, he is an economist, a journalist, a
broadcaster, a consultant, a university lecturer and a public speaker.
Dr. Walker, we appreciate you taking the time to assist us. We are sure that
what you have to say to us today will be very significant.
Dr. Michael Walker, Fraser Institute: Honourable senators, our opinions on the
Canada Pension Plan, its deficiencies, and the changes that must be made are in
the public domain. The presentation that we made to the federal-provincial
panel hearings on the Canada Pension Plan contain our suggestions for reform in
advance of the reforms having been made. An article publish in the May 1997
edition of our monthly publication Fraser Forum cover very well the
deficiencies and the changes which have been proposed, although they do not
deal specifically with the issue of management, as we did deal with that issue
in the submission to the federal-provincial panel hearings.
I have left copies of our two submissions with you and, rather than reiterate
the material contained in them, I would simply make one or two comments and, in
particular, follow up on some comments Mr. Michael Brown made to you.
You are most fortunate to have someone with Michael Brown's depth of
understanding of the venture capital business appearing before you. I do not
mean in any way to gainsay the comments he has made.
There was considerable preoccupation in your discussions with him about risk. I
would point out that the single biggest risk the Canada Pension Plan faces is
Senator Oliver: We agree.
Mr. Walker: That is true both from the point of view of its inherent structure
and the way in which the funding of the plan will be handled, given that there
is now a lump of capital that will accumulated in advance of its being needed.
It is for reasons of that kind that we have suggested, right from the beginning,
that the only intelligent way to approach reform of the Canada Pension Plan is
to recognize that the single biggest risk is political and, therefore, to move
it, gradually, out of the political domain.
There are a number of ways of doing this. My colleague, Herb Grubel, talked to
you earlier about the Singaporean system. In our submission to the
federal-provincial panel hearings, we talked about the Chilean solution. There
are a number of different ways in which this political risk can be dealt with
by, in effect, privatizing the plan.
There is also a middle station between where we are and privatization which
makes extraordinarily good sense, particularly given the reactions that your
committee has already had from the financial community concerning the
difficulties that will arise by the size of the fund that will be generated.
My suggestion to you today is that you give serious thought to recommending to
the government that the simplest way to deal with that is to create, as we
suggested to the federal-provincial panel, 10 funds, one for each province, and
that, after a period of adjustment, and we suggested three and five years
respectively, individuals be given the right to choose which of those funds
would hold their deposits.
The fragmentation of 10 different funds would eliminate the problem of
massiveness and the market-moving implications of a few people making decisions
over such a large block of money. The ability of people to chose between them
would ensure that the returns generated by those funds would be adequate and
would be in keeping with returns available elsewhere. That is because you would
have not only a small panel of board members monitoring the results of the fund,
the 20 million Canadians whose funds are being held would be scrutinizing the
affairs of the panels on an ongoing basis because they would have the ability
to move their funds. In the first instance, they would have the requirement to
change funds if they moved from one province to another for employment reasons
or whatever. There is a middle-of-the-road way of dealing with this problem.
You will have rightly detected that I have my own special interest in this. I
have an ulterior motive in this form of solution because, of course, it
provides the first step toward the eventual privatization of the Canada Pension
Plan which, when the Senate has its hearings on the Canada Pension Plan in
2020, will, in any event, have transpired. I am certain, given the enormous
generational cleavages that are contained in the Canada Pension Plan, that it
will not survive as it stands now. When young people who were born in the last
15 years face contributing twice as much as they will benefit, become aware of
this information and politically active I think there is not the slightest
chance that that this pension plan will stand.
I wish to draw your attention to the study that we did in the May 1997 Fraser
Forum where we show the cross-over point and what the changes to the plan have
meant with regard to intergenerational fractures.
The premium that young people are paying still amounts to double the amount that
they will get out of the plan. Our prediction is that this behaviour will not
continue, and that makes any sense, so the plan will undoubtedly be changed and
dramatically changed. My suggestions to you today about management would be an
interesting way to facilitate that and make it a more gradual development
rather than, as we tend to do in adjusting governmental programs, making
cataclysmic changes of the type we have recently had to make by imposing the
largest tax increase in Canadian history to solve a problem that many of us
have been talking about for nearly 20 years.
The final point I would make regarding our suggestion that there be 10 managers
instead of one manager relates to the issue of regional balance. I am surprised
that Michael Brown did not mention in his presentation, particularly in the
case of venture funds, the importance of actually having contact and having a
certain familiarity with the circumstances and the very real danger that a fund
based in Ottawa will disproportionately serve the interests of venturers and
industry in general in a relatively narrow part of the country as opposed to
having an appropriate knowledge of the regional opportunities that might be
available, particularly in the area of venture capital.
For all of those reasons my recommendation is that this megafund be broken down
into 10 pieces with each of the provinces having a fund, all of which would be
conducted under the guise of the federal program. I do not mean to introduce
unnecessary federal-provincial difficulties here. I see this as a continuation
of the federal program, but activated and operated on a provincial basis.
Mr. Chairman, that is all I have by way of opening comments.
Senator Kenny: When Mr. Walker made the point about the hearings in 2020, I was
most concerned for those of us who will still be here. Are you referring to
this hearing continuing until then?
Mr. Walker: Undoubtedly.
Senator Oliver: I would like to get your views and opinions as to how the board
and governance should be structured. Earlier this week when this committee was
in Toronto, a number of eminent witnesses gave us a lot of advice on the
direction this board should follow. The board will be incredibly powerful and,
if the fund ever reaches $100 billion, it will be responsible for a substantial
sum of money.
How many people do you think should be on the board? How should they be
appointed? How long should their appointments be? How many committees should
there be? What should their pay be? Should their pay be based upon performance?
What are your views on how this should be structured to maximize the advantage
for all participating Canadians?
Mr. Walker: I do not have an answer to those questions. Those issues should be
pragmatically determined. However, I do not think a large number of people is
required. What is most important from the point of view of pension fund
management is the work of Keith Ambachtsheer.
Senator Oliver: He appeared before us in Toronto.
Mr. Walker: Keith is a trustee of the Fraser Institute and an acquaintance of
mine for more than 30 years. His work in pension fund efficiency management
analysis is state of the art and does not exist anywhere else. It is that
assessment, and the assurance that we have that kind of assessment of the
conduct of the board's activities, that is more important than the particular
way in which the board is structured.
Obviously, from the point of view of insulating it from political influence that
is very important. Frankly, I do not see any practical way of ensuring that
that will happen. We will have to look, as I am sure the committee has done,
very carefully at the travails of the Caisse de dépôt and, over the
years, the eminent people who have found it necessary to resign from that board
because of their feeling that they were being politically pressured.
Once again, rather than trying to pretend that these problems do not exist by
having an elaborate design system, you must recognize that you will not avoid
the problems by having one board and only one point of pressure. If there is
only one point of opportunity, there will be political pressure of one kind
applied, subtly or directly. One option to minimize that would be to create
competition between a number of boards for the right to hold these funds. How
do private sector pension funds, of which there are a huge number, or private
sector mutual funds avoid political pressure and avoid nepotism? They do so
because of the pressure of competition. What keeps pension fund managers honest
is the fact that their results are regularly reported on and regularly turned
over by investors and by professionals. The level of scrutiny is very high. It
is in that direction that you will find solace for your concerns about this
Its very large size, I think, is unacceptable. It would be stupid for us to set
up a fund of this size, given all the problems we know we can run into from
past history with the caisse de dépôt and other organizations in
the government ambit.
Senator Oliver: Mr. Keith Ambachtsheer, who appeared before us in Toronto, also
assisted this committee in its study on institutional investors. On both
occasions he states the opposite of what you are saying. He told us that bigger
is better and that he has tested it.
Mr. Walker: I know.
Senator Oliver: He stated in his paper that two people conducted research and "proposed
two reasons why 'bigger is better' in pension fund management."
First, with increased size comes increased economies of scale and, hence, lower
unit-operating costs. Perhaps more importantly, with increased size comes the
ability to support a full-time professional planning team.
Those were his words.
Mr. Walker: With all respect, senator, do not forget that he is looking at
privately conducted pension funds which are being scrutinized via the mechanism
of Ambachtsheer's own measurements and a large number of measurements made by
other people, and they are responsive to their members who have the option to
effect a change in the management by moving their funds.
Unless that option is open to the Canadians whose $100 billion will be subjected
to this fund, then this analysis would not apply. Of course, as it is now
proposed, there will be no option. You, as a Canadian who finds it unacceptable
that your fund is investing the money one way of another, do not have the
option of moving it to another fund. Perhaps 10 boards are not required with
each province having its own board and its own fund but, certainly, more than
one is needed.
Senator Oliver: Why could what you are suggesting not be achieved by having one
fund but 10 managers competing with one another?
Mr. Walker: Ultimately, you are concerned about the decisions that are made at
the top. Pension funds, whether mutual funds for public distribution or captive
pension funds, are typically managed in that way with alternative managers. The
central issue here is that your money is captive within that group, and there
is no input in the decision about which pension fund managers to have and the
instructions that go to those pension funds managers. Pension fund managers are
only as good as the instructions that they receive, as we all know from those
who ultimately set the asset mix and set the policies.
Mr. Brown was making clear comment to you about the necessity to broaden the
instructions for the Canada Pension Plan fund to include the opportunity for
venture capital investing. How will those be interpreted and how will they be
administered? If it were simple we would not have the huge multiplicity of
financial institutions that we have. We have this multiplicity of financial
institutions because people do not believe that you just have one group or one
administration of their pension funds. That is why they contrive, through their
actions as private individuals, to support this wide variety of financial
institutions in the private sector. We should look at that and listen to it. If
Canadians had their way, they would not do what the government is currently
proposing to do.
Senator Kenny: Given the inevitability, Mr. Walker, that you see of political
interference in these funds -- and you have talked about the caisse example and
I am sure you are familiar with some pretty silly investments made by the
Heritage Fund -- why would you not be advocating a pay-as-you-go approach
instead of creating this fund that is inevitably going to tempt politicians of
whatever stripe in the future?
Mr. Walker: In my early career when I worked at the Bank of Canada, what was
regarded as one of the main tools of monetary policy was moral suasion. What is
"moral suasion"? Moral suasion, by any other name, is political
interference with the fundamental aspects of the financial structure of the
We have to cast a very broad net when we think about what form this interference
might take, particularly in an institution as a large and as potentially
powerful, and all that implies.
Why would I not be in favour of pay-as-you-go? The problem with pay-as-you-go is
that this pension plan was supposed to have cost a maximum of 5.1 per cent of
payroll when it was originally devised back in the 1960s. That was supposed to
be the terminal rate. In other words we were going to go from the 1.9 per cent
where it started, up to 5.1 per cent and then it would be 5.1 forever. That rate
had gone up to nearly 14 per cent in the last calculations that were made by
the Chief Actuary for Canada.
The problem is that the early people into the plan received huge benefits out of
the plan, and the latecomers in the plan get very little benefit but make a
very large contribution. For example, people like my son and those of his age
will pay for a pension of something like 70 per cent of payroll and get
something like 23 per cent because of the way in which this pay-as-you-go scheme
works when you have a collapse in the population.
Over the years, our reason for highlighting the problems and suggesting that we
fund the pension plan or increase the rate of contribution was to stop the huge
Senator Kenny: I understand that problem clearly. The point I am trying to make
is that, given that this pool of capital will be just too tempting, the honey
pot will be there and folks will go for it. I do not think it is good enough to
say there was an original deal, here is how it was supposed to function, and
there is a transfer of obligation to the next generation, because it is a moving
target. The demographics will change, the problem will change, and the length
of time people will work will change. The world you are looking at is very
different from the world people were looking at when the pension plan was set
up. When your son is testifying before the committee in the year 2020, it will
be a very different world again. Folks will be living much longer and all of the
assumptions will be different. Perhaps a pay-as-you-go eliminates the
likelihood of folks reaching in. We heard testimony earlier today that perhaps
people should not receive a pension until they are 67 or 70 years of age. That
is a pretty rational argument if people live to the age of 87 or longer.
Mr. Walker: You have illustrated my first point which is that the biggest risk
associated with the Canada Pension Plan is political. You enumerated it by
asking: What if we change the plan?
Senator Kenny: Exactly.
Mr. Walker: If you make your own arrangements and invest your own money in a
plan that is your money, then there is no opportunity for a politician in 20
years time to have a good idea and say: "Sorry, you paid all that money
in, but we are not going to give it to you now, we will postpone payment, as
indeed we did with the Old Age Security." It has already been done once.
That is why we suggest that the biggest risk is political. Looking at the
history of the Canada Pension Plan, only about 2.5 per cent of the more than
8-per-cent increase in the terminal rate was caused by mistaken economic and
demographic projection. The rest of it was caused by the extension of the
program and things like disability that were added to the program in later
Senator Kenny: I understand your point, sir. All I am saying is to suggest that
one thing should stay static, the Canada Pension Plan, while everything else is
changing, strikes me as a touch irrational.
Mr. Walker: I am suggesting that the irrationality is exercised largely by the
political process. If you are concerned about the retirement needs of
Canadians, then what you should be trying to do is to move this very important
pillar of their future security as far as you can from the political process. By
jacking up the rate, we have at least ensured that it will not founder simply
because of the fact that people of my son's age are not going to pay 13 per
cent or 14 per cent of their income to support the system. At least we
recognized early enough that we have this fundamental weakness of the plan,
that it was falling apart under its own weight.
Moving the rate up so that we eliminate part of the intergenerational transfer
was making the plan more secure. We should take it out of the politically
insecure area where people would be faced, as we saw in the case of Italy, with
large reductions in the amount of availability of pension income. The solution
you are proposing is: Let it all run and then cut back on the benefits at some
point in the future when we know we will have to do that. I say that is fraud
and we should not do it. That is why we have changed plan.
Senator Kenny: I am not suggesting fraud here. If I were, I would describe it
differently. I am suggesting that it is very difficult for legislators, or for
anyone, to clearly predict the needs 20 years down the road.
Mr. Walker: Absolutely.
Senator Kenny: We are trying to establish a system that will meet the needs 20
years down the road. The purpose of having a political process is to adapt and
adjust as you go along. I understand exactly where you are coming from. I
understand what you are saying. It is underfunded. There is no doubt about it.
To achieve the stated objectives we have to do something different. I am simply
asking the question: Are the objectives correct?
Mr. Walker: To answer your question about uncertainty, what you are really
proposing is that you have more confidence in the political process to deal
with the economic and demographic uncertainties that we face in the future than
you have in the ability of individuals looking after their own circumstances to
do that, if they had an equivalent amount of capital to deal with that
situation. I do not think there is any evidence whatsoever that governments
have done a better job than have individuals, properly incented, have done
themselves in looking after their own affairs.
As a matter of fact, there has been quite a backlash against the idea that
governments have a better opportunity to do that than individuals. That is why
we have such a swing back towards capitalism, to use its broadest possible
term, and away from socialization or nationalization of these activities.
The instinct you have to follow in trying to find a way to make modifications to
the Canada Pension Plan is to move away from the old way of thinking that the
government, that a "nanny state", is best to look after people's
interest, and move it more towards a situation where individuals are given both
the power and the incentive to look after their own affairs.
We have come a long way from where we started as to why one would not favour
pay-as-you-go. To reiterate the reason why I do not favour it, it is because of
the political risk involved. As well, I do not think it will happen. A
13.5-per-cent or 14-per-cent tax rate on my son's generation will not be
possible and, therefore, the plan will fall apart and people will be left
without the support they require in their old age. Moreover, to look at a step
in the right direction, namely, prefunding, as a problem rather than part of
the solution, is an awkward way of looking at it.
I would suggest that we find a better way to deal with the problems that the
solution has created, rather than throw out the baby with the bath water, and
let us go back to a situation where everybody has admitted we did not have a
solution but a major problem on our hands.
Senator St. Germain: Dr. Walker, from the time we started these hearings I have
been saying that political risk is the greatest danger we face.
I was in Ottawa when this bill was rushed through the House of Commons, closure
was invoked, and it was rushed through the Senate.
We do not have a majority and we work as hard as we could. However, what strikes
me is that there is no public outcry over this huge tax grab. Is there a reason
for that? This is fraught with dangers, as you say. There is political risk by
virtue of the way this has been set up. The nominating committee has been
described as "inept" by various experts who have appeared before the
committee. It is a GIC appointed board which is fraught with political
participation. I questioned the Minister of Finance and was not appeased by his
responses. I would like to know why there was no hue and outcry about the
process that was being presented.
Mr. Walker: As has already been noted by Senator Kenny, many of us who were very
concerned about the changes to the Canada Pension Plan breathed a sigh of
relief when we started to move in the direction of a solution.
Increasing the tax rate itself, given that we have the obligations that we have,
is a step in the right direction. We would have done it differently and we have
made that clear. We would have spread the tax over the whole tax-paying public.
We would not have made it a payroll tax. However, we are moving in the right
direction, instead of perpetuating the lie that the Canada Pension Plan is fine
and we will have a 14-per-cent contribution rate in the next 25 years and
everything will hang together.
Senator St. Germain: Is it not correct that, 10 years ago when our government
was in power, we tried to make the changes and the provinces would not go along
with it and that the present administration had no choice but to deal with it?
Mr. Walker: There is a quinquennial review of the provisions of the Canada
Pension Plan. It was quite evident to us that changes had to be made, and we
started to write about this a decade ago, or even more. I cannot remember when
we did our first study in this direction. Sometimes it does take lots of
evidence before people will change their thinking. Finally, the calculations the
Chief Actuary has been grinding out year after year were acknowledged and the
contribution rate kept going up, and it started to dawn on many people that
this was not a viable proposition. The reaction that was evident at the task
force hearings across the country helped push the government to do something in
Senator St. Germain: You are recommending that we create 10 funds. I was not in
government as a participant but I was part of the political process when the
GST was introduced. I was opposed to it. I wanted a lower tax and a broader tax
that required less administration. What are the implications of having 10
administrations where there is government involvement? I can see a horrific
bureaucracy, or do you think that could be controlled?
Mr. Walker: As I stated to Senator Oliver, the administrative structures
involved here need not be in any way elaborate. The Ontario Teachers' Pension
Fund operates with a very small in-house staff. Most of those types of funds
would be in the order of magnitude of a large pension fund. The fact that you
would have a few more board members and a few more analysts would not be
significant. We are talking about hundreds of a per cent or less than hundreds
of a per cent of the total flow of resources through this fund. In my opinion,
that would be more than made up by the competitive struggle between these funds
to outperform each other.
There is clear evidence from Chile that, when pension funds are put into the
private sector, they suddenly begin to perform better to the point where the
private funds provide pensions twice as large as funds managed in a public way.
Admittedly, the public funds are all invested in government bonds. The point
is, you do get additional rates of return. I think you would get more return
from a disaggregated structure of management.
One has to ask the question: Why do we not have one big pension fund in the
Toronto Stock Exchange? If big pension funds are the way to go, why have they
not all gobbled each other up? They have been at it for a very long time. The
reality is that competition makes a difference. It makes a difference in
hamburgers and it makes a difference in the management of funds, notwithstanding
my good friend Keith Ambachtsheer's blind side on this one.
Senator St. Germain: How would Canadians decide which funds to invest in? How
would the mechanics of that work?
Mr. Walker: How do they decide right now?
Senator St. Germain: How do we move this towards privatization?
Mr. Walker: We specifically stated in our proposal to the federal-provincial
task force that we should give people the right to choose where to invest.
There are some for whom it would be a new experience but, for the most part,
people are making these choices all the time. Increasingly, as they descend
into "old fartdoms" -- as my son puts it -- they are forced into
making those choices to make provision for their future.
Our suggestion is that you restrain their choice as between the 10 federally
conducted bodies in the first instance but, after a period of five years, or
seven years, or 10 years, they be allowed to transfer to eligible private
managers. In that way, over a period of time, at least the management of the
fund would be taken completely out of the public sector.
There are, obviously, other things that we think should be done, including the
creation of recognition bonds for dealing with the problem of the
intergenerational inequity. We still have a huge generational inequity built
into the Canada Pension Plan which will eventually founder it.
Senator St. Germain: Are you talking about those people who were born in the
last 15 years?
Mr. Walker: People who were born after 1980 face a two-to-one
contribution-to-benefit ratio. That is to say they will receive back precisely
one-half of what they paid in. When they become more politically active and
understand what is going on, do you think that will continue?
To return to my points raised with Senator Kenny, political risk of that kind is
important because I do not think people will tolerate it.
Senator Oliver: In point 5 in your proposal you state:
Individuals opting to move from the CCP to the new arrangements would receive a
recognition bond for the accumulated benefits they had already earned. The lump
sum equivalent of these benefits to be calculated on the basis of current, real
market rates of return...
You are stating that, in order get a away from the government and government
bureaucracy, we should move into the private sector and let the marketplace
determine values. You do not want to have a government-owned and run pension
Mr. Walker: We believe that the only way to protect people's retirement incomes
effectively is to privatize them. Moreover, as I have said, I predict that this
will happen. It is only a question of when.
Senator Oliver: The difficulty is that many people cannot manage their money or
their funds very well. If, after five years, some people had a certain amount
in the government fund and you gave it to them to invest in their private fund,
they would probably deregister it and spend it. The protection under the
present CPP fund would be gone.
Mr. Walker: We have the Old Age Security, we have the GIS, and we have different
programs at the provincial level which are designed to look after people who
will find themselves in those circumstances, notwithstanding the existence of
the Canada Pension Plan. We can pretend that the Canada Pension Plan absolves
us from this problem of people who will insist on not managing their own
affairs properly, but it is just not so. We will face that problem whether we
have a publicly funded CPP or a privately funded one. I do not think that
problem is a significant one. It is one that will always be with us.
Senator Oliver: I notice that this paper on which you are basing your remarks
today was given in Calgary on May 7, 1996, which is quite a while ago. What
response did you receive from the government to this fairly novel idea?
Mr. Walker: The idea of funding the plan of course is what we are talking about
here today and then the setting up of the fund. We specifically note that a
board like the Ontario Teachers' fund could manage this fund and do it quite
adequately. We suggest, however, novelly, that there should not be just one but
several of to reduce the risks we have talked about.
Please understand that our ultimate ambition, and the point of view we were
expressing in that paper, is that, ultimately, the plan should be privatized.
This is not yet a politically attractive option, so we did not expect the
government to phone us up and say that this is great idea. It is our job in life
to say things that are not particularly popular, especially when we believe, on
the basis of analysis, that they seem to be compelling. There is no question
that this is a compelling idea. It is one that will save this important public
program from its main weaknesses, and it is an idea which is being adopted
elsewhere in this world at an increasing rate, including recently in the United
Kingdom. It is a novel idea but it is not that novel.
Senator Oliver: When you were talking about the creation of 10 funds and 10
managers, I was trying to test you by quoting Keith Ambachtsheer who said that
bigger is better.
When we debated this in the Senate a couple of months ago, two very eloquent
speeches were made, one by Senator Michael Pitfield and another by Senator Roch
Bolduc, both of whom are very experience senators and highly intelligent
people. They suggested we consider the possibility of three funds as a way of
achieving what you would like to achieve. Some thought has been given to one of
Mr. Walker: It is just common sense, but then most of what we do is just common
The Acting Chairman: On behalf of the committee, Dr. Walker, I would thank you
very much for appearing. As always, your remarks were appreciated and
On behalf of the all committee members, I would thank our clerk, his staff, the
interpreters, and all of the technical and political staff for the wonderful
support they have provided.
The committee adjourned.