Special Committee on Cooperatives Committee on July 10th, 2012
Evidence of meeting #3 for Special Committee on Cooperatives in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cooperatives.
A recording is available from Parliament.
On the agenda
MPs speaking
Also speaking
- Claude Carrière Associate Deputy Minister, Agriculture and Agri-Food Canada
- John Connell Associate Assistant Deputy Minister, Strategic Policy Sector, Department of Industry
- Jeremy Rudin Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
- Denyse Guy Executive Director, Canadian Co-operative Association
- Marion Wrobel Vice-President, Policy and Operations, Canadian Bankers Association
- Stephen Fitzpatrick Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
- Nicholas Gazzard Executive Director, National Office, Co-operative Housing Federation of Canada
- Frank Lowery Senior Vice-President, Senior Counsel and Secretary, The Co-operators Group
- John Taylor President, Ontario Mutual Insurance Association
- Michael Barrett Chief Operations Officer, Gay Lea Foods Cooperative Ltd.
- Bob Friesen Farmers of North America
9:35 a.m.
NDP
Ruth Ellen Brosseau Berthier—Maskinongé, QC
The government says it wants to create jobs and stimulate innovation. In this case, can you explain why the government is cutting a tried and true program, a program that costs only $4 million a year? Does that call into question the government’s support of the International Year of the Cooperatives, which Canada publicly supported when the UN resolution was adopted in 2009?
9:35 a.m.
Associate Deputy Minister, Agriculture and Agri-Food Canada
Canada continues to support the cooperatives movement in its initiatives and in the context of the International Year of the Cooperatives and the Quebec International Summit of Cooperatives. The government, and the department, will continue to work with the community to ensure that the cooperatives movement will continue to be healthy now and in the future.
9:35 a.m.
NDP
Ruth Ellen Brosseau Berthier—Maskinongé, QC
Can you please explain what concrete role the federal government is going to play in the next few years, if it no longer provides funding after these changes? What do you anticipate will happen in the next few years, given these cuts? Do you think they will have an impact? They will surely have an impact.
9:35 a.m.
Associate Deputy Minister, Agriculture and Agri-Food Canada
We think that cooperatives will continue to have access to the range of existing programs. We have worked with the cooperatives movement and with the federal, provincial and territorial departments to ensure that we provide the cooperatives with information on hundreds of existing programs, which they have access to.
We have realized that cooperatives did not know that they could register for several of these programs. We distributed a copy of our guide to all the cooperatives just so they would know that they are eligible for these programs.
9:35 a.m.
Conservative
July 10th, 2012 / 9:35 a.m.
Conservative
Jacques Gourde Lotbinière—Chutes-de-la-Chaudière, QC
Thank you, Mr. Chair.
I’d like to thank the witnesses for being here this morning.
There are over 9,000 cooperatives in Canada with 18 million members. We know that, historically, it began very modestly in the early 1900s. Each community had specific people, needs and services. There were a lot of agricultural and financial groups, in particular. In Quebec, insurance cooperatives, including Promutuel, also really played an important role in our country.
There is a marked trend for cooperatives to be in small communities, but also in much larger ones, too. They competed with some services that the cities offered. If we will recall a bit of history, we know that the banks were located mainly in the cities and large communities. They did not necessarily go and provide services to small communities, like the one where the Mouvement Desjardins began, which provided more of a local service.
Then, 25 or 30 years ago, we noted the trend of cooperatives to group into federations to provide services for one another. They needed expertise and buildings to manage themselves and audit one another. In 25 years, we have also seen a lot of mergers. Previously, we often saw two cooperatives merge. Today, 10, 12, 15 and sometimes as many as 20 cooperatives merge to provide services.
Do you think that trend will continue? Or will it stop? What challenges might it present for cooperatives? People are generally proud to be members of a cooperative, to have an active share. But when they become larger, this feeling of belonging from members may be lost. We are starting to feel it in the community. Members are finding that their cooperative is becoming so large, but so far from what the basic initiative was.
9:35 a.m.
Associate Deputy Minister, Agriculture and Agri-Food Canada
Thank you.
I do not claim to have particular knowledge in that area. I must say, though, that I have seen the same thing that you are describing. As far as I know, there haven’t been any studies to support what I am going to say, but I think, as you do, that the cooperatives are facing competitive pressures, in Canada and abroad, in the various areas in which they operate. To deal with the external pressures, they group together to be better able to provide their members with services at a better price.
9:40 a.m.
Conservative
Jacques Gourde Lotbinière—Chutes-de-la-Chaudière, QC
So you are saying that those groups help with respect to competitiveness, but it is important to think about overall competitiveness. We know that the Mouvement Desjardins is very strong in the financial sector in Canada and Quebec. But how can it situate itself or orient itself against globalization? We know that the banks are very important globally. The Mouvement Desjardins is a big player in Canada. But to what extent can the Mouvement Desjardins be compared with the large international banks?
9:40 a.m.
Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
To come back to your initial remarks, I would say you are quite right about the financial sector and the trend towards credit union mergers. In Quebec, the mergers are more or less done. But we are seeing more and more of them in other provinces, and credit unions are becoming bigger and bigger. As you said, that raises the question of whether members' sense of ownership has diminished as a result. That is indeed a drawback.
However, most credit unions see the benefits as outweighing the drawbacks. Those benefits include economies of scale and especially risk diversification so they can invest not just in a single community or city, but also in areas throughout the province, for instance. It was that shift that prompted some credit unions to call on the federal government to create a federal credit union framework, so they can continue down that road.
That being said, a credit union's ability to take advantage of foreign markets may be somewhat limited, because of its structure. We do not think every financial institution absolutely has to be massive. There is enough room in the country for large and small institutions alike. I think you will always see that split in the size of these institutions, despite the current trend towards mergers.
9:40 a.m.
Conservative
9:40 a.m.
NDP
Dan Harris Scarborough Southwest, ON
Thank you, Mr. Chair.
Thank you again, all of you, for being here.
Mr. Carrière, during one of your statements you mentioned that cooperative businesses tend to last longer than traditional businesses do. Could you perhaps elaborate on that? From what we've heard, cooperative business models at about five years out last twice as long as traditional businesses do. Is that correct?
9:40 a.m.
Associate Deputy Minister, Agriculture and Agri-Food Canada
I think we might have read the same thing. I just read that this morning. My understanding is that there is a study by the Government of Quebec. So probably it would be valid only in the province of Quebec, but yes, looking at one year out, five years out, and maybe ten years out, cooperatives have a higher survival rate than comparable small businesses do.
9:40 a.m.
NDP
9:40 a.m.
Associate Deputy Minister, Agriculture and Agri-Food Canada
No, sir. I only read that summary. I don't know what the basis for the study is, but it confirms what I think all of us believe about cooperatives, which is that the sector is doing quite well.
9:40 a.m.
NDP
Dan Harris Scarborough Southwest, ON
It could be an area of study for us to look at in the scheme we're looking at right now.
You also mentioned the international summit that is going to be taking place in October. As I understand it, there are some government funds going to support that. How much is the government putting into that summit?