Special Committee on Cooperatives Committee on July 24th, 2012

[Dianne Kelderman]

Certainly our larger cooperatives would benefit and would be in the loop of what the programs and the changes are.

There are, however—not this particular example—some programs that exist for which, when cooperatives actually apply, it comes as a surprise to the federal public service. I'll give you one example. We recently, in our health care venture, made an application under the SR&ED, the scientific research and experimental development tax incentive program. It's still in the system because it was the first time they actually ever had such an application because it was a foreign concept. We hadn't had a cooperative like this apply before because the program wasn't particularly designed for this. So yes, our larger cooperatives would be able to—

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

It would be the same, for example, as when one makes large capital acquisitions in the manufacturing sector and the accelerated depreciation of equipment applies to businesses. I'm certain it applies to co-ops, too, that make.... It's the same as when paying dividends. When you pay dividends to your members they probably benefit from the preferential dividend tax rate, just as other Canadians would if they weren't members of cooperatives.

[Dianne Kelderman]

We don't have special rules that we follow because we're cooperatives.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

No, and that's my point. I do understand the point you're making that when you go to apply for programming the people who are receiving your application may not be knowledgeable about co-ops or on how they might fit the model, and there is a learning process there, and I get that.

[Dianne Kelderman]

That is the message.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

But I'm just trying to highlight that there are other programs too. I just don't want people who might be watching this—because this is televised—to think that wow, there is a real disconnect here and that all government programs don't apply to co-ops. I think it's probably a mix of the two. There are probably a good number that do apply, and there are some that don't, and obviously that's where we have to focus effort and focus work.

[The Chair, Conservative, Blake Richards]

Thank you.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Chair.

[The Chair, Conservative, Blake Richards]

Thank you very much.

We'll move next to Madame Brosseau, for five minutes.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Thank you.

I really appreciate the time you are spending with us this afternoon. I find that I'm learning so much every day, and it's just amazing. This is very valuable information.

I just want to say that we can all agree that co-ops are successful, but when it is said that co-ops are successful and do not need any more government support, I think that's wrong. The cuts to the CDI will really hurt the start-up of new co-ops and the potential future success of them, especially with these difficult economic times we're in.

It makes me really think about the future and the relationship the federal government has with the provinces. Do you think it's adequate? What do you see as the future relationship between the federal government and the provinces? Are we doing enough?

Dianne, could you comment on that?

[Dianne Kelderman]

Sure. I'm not sure I can comment on whether the federal government and the provinces should have a different kind of relationship, but they certainly should be connected and supporting what's going on from an economic and social perspective in the provinces. If I use our health care venture as an example, then health care is a provincial jurisdiction but there is a lot of federal impact and involvement in health care. There has to be commonality and understanding and support around that.

I think the more we can combine and understand what's going on at both levels, the better. If we have federal programs that are being implemented provincially, and if we use ACOA as just one example—not to pick on ACOA, because they've been a terrific resource for the Atlantic region—if the federal government is implementing those kinds of things in the provinces, then there has to be a lot of collaboration, and a lot of understanding.

It can't be—which I think it has been far too often—a “them” and an “us”. It has to be, to use the word, a collaborative, cooperative kind of venture. So it has to be the feds, the province, and the players, the stakeholders, whether it's cooperatives or private industry or social enterprise industry. It has to be a collaboration of all three, because otherwise we're not going to maximize the opportunity and we're going to be butting heads.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Exactly.

I was really interested by the HealthConnex. I really think it could have great benefits. There are great benefits already, but I think it's something that could maybe be emulated and used in other provinces. I wonder, do you think this model could be repeated, and should this model be repeated in other—

[Dianne Kelderman]

Absolutely. That's our goal; that's our intent. That's our business plan. It's to replicate first across Atlantic Canada with our cooperative and credit union partners, then to replicate nationally. We're already working with The Co-operators, as a matter of fact, on a pilot initiative. So it can be replicated. I think one of the beauties of our sector is that we're all about sharing best practice, sharing what works in one region and hoping it will take root and work in other regions.

This particular health care venture I think is a really unique opportunity for our sector, for communities, and for the country as a whole. Everybody is talking about health care, everybody's talking about the cost of health care, everybody's talking about the amount of the budget that goes to health care, but nobody's interested really in coming up with new out-of-the-box, community-owned solutions. We are. It's not going to be the panacea. It's not going to answer all the issues. But I think it should be supported and embraced as community and Canadians saying we want to be a part of the solution and here's an opportunity for us to do so.

Currently, the system, the thinking, and the policies are very much against that and don't engage or support that kind of thinking. If we want to make changes in health care or education and the other kinds of things, then this is absolutely where we need to go.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Pamela, could you elaborate maybe on some challenges you have in the forestry industry and what sets you apart or what helps, being a cooperative? Can you just explain some of the challenges you've had in being a cooperative and what sets you apart from a private company?

[Pamela Folkins]

Setting us apart, I think we draw on a larger pool of expertise. We're not scared to say we don't know. We're willing to work together towards improving things for each other; therefore, we're learning together. We truly believe we shouldn't reinvent the wheel if things are working. Continuous review and improvement are so, so important. Education and continuity have got to happen, or this country is going to suffer more.

[The Chair, Conservative, Blake Richards]

Thank you.

Mr. Gourde, you have five minutes.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you, Mr. Chair.

I want to thank the witnesses for being with us this afternoon. Their input is quite enlightening.

I am very familiar with the cooperative world in Quebec. I was glad to hear you talk about the history of cooperatives in the Atlantic provinces.

Over the past 25 years, Quebec has seen many cooperative mergers, whether it be savings and credit unions or farming cooperatives in the regions. Small cooperatives would join forces with two others, then four.

Have you seen a similar trend in the Atlantic provinces in recent years?

[Dianne Kelderman]

It's a trend more on the credit union side, where financial institutions are coming together for economies of scale. We see it more on that side than on other sides, whether it's agriculture or manufacturing or tourism or transportation, those kinds of things. Those are still fairly independent, locally owned industries. We probably haven't seen it to quite the extent that you have in Quebec.

Mergers in the co-op world are a little different, in that entities come together and merge for economies of scale, for the provision of better business services, for more cost efficiency, those kinds of things. But the enterprises are still owned by the individuals involved, by the local community members, by the constituents in the communities, so they're not big conglomerates, so to speak.

[Dave Whiting]

If I might add, there comes a time in some industries when you have to get bigger or you're going to be run out of the business. The dairy industry on the island was a prime example. ADL is a combination of co-ops that merged, if you will. It's a little bit of a modified co-op, in that you have to be an operating dairy farmer to belong, which only makes sense. But that's an example of what you're talking about. It became a necessity because of all the.... There was Neilson up in Ontario and its big new plant in Georgetown, and the American dairies. It becomes necessary to join something together just for the benefits of the operation.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Ms. Folkins.

[Pamela Folkins]

I guess Dianne and her colleague have really expressed it. I can only concur with them.

As far as merging goes, everyone needs to maintain their own identity in their own organizations. In New Brunswick we have seven woodlot owner groups. We work in conjunction under one umbrella through our provincial organization. We all have our own boards of directors. We have regional differences, as much as anyone who is working in a sector.

So yes, we probably would not merge. It could be supported by government to do so on some occasions, but we maintain very strongly the importance of our own identity and continuing to work together for the same goal and objective.

[The Chair, Conservative, Blake Richards]

You have about a minute and 20 seconds.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Do your respective provinces offer any specific programs, in terms of financing and other assistance, to support cooperatives?

[Dianne Kelderman]

Yes, we do, but regrettably not nearly as good as those of Quebec.

We have, as I indicated earlier, a very strong, positive, productive relationship with the Province of Nova Scotia. The loan programs I referred to—small-business high-risk financing programs, the social enterprise fund I referred to earlier—are all in partnership with the province. We use our capital from our sector to do the lending, but we have a loan guarantee from the province, and I indicated 3.5% loan losses, which are banking rates, so to speak. So we have that.

We have a community investment tax credit where we can invest in community projects, cooperatives, and private business projects and get tax credits, a 35% provincial tax credit. It's RRSP-eligible. So yes, we have support mechanisms in place with the province.

Our view, and I think part of the reason we've been particularly successful, is we don't go to the provincial government—or frankly, from Nova Scotia's perspective, to the federal government either—with our cap in hand and say “give us money”. We first come to the table with money and ask you to partner with us, to match us, to be fair and reasonable in terms of investments and tax credits and partnerships that you afford other industries across the country.

[The Chair, Conservative, Blake Richards]

Thank you very much.

Time has expired on the second round of questioning. We'll move into our third.... No, pardon me. Sorry. We have one remaining member in our second round of questioning, and that is Mr. Boughen.

You have the floor for the next five minutes.