Evidence of meeting #7 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 credit.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Dale Ward  Corporate Secretary, Manitoba Central, Assiniboine Credit Union
Nigel Mohammed  Director, Business and Community Financial Centre, Assiniboine Credit Union
Albert Cramer  Chairman, Red Hat Co-operative Ltd.
Doyle Brandt  Red Hat Co-operative Ltd.
Peter Harty  Director, Federation of Alberta Gas Co-ops Ltd.
Kevin Crush  Manager, Communications, Federation of Alberta Gas Co-ops Ltd.
Jodie Stark  Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association
Tim Archer  Executive Director, Community Health Co-operative Federation Ltd.
Patrick Lapointe  Member, Community Health Co-operative Federation Ltd.
Merv Rockel  President, Alberta Federation of Rural Electrification Associations (AFREA)
Robert Marshall  President and Chief Executive Officer, Mountain View Credit Union Limited
Dan Astner  Vice-President, Alberta Federation of Rural Electrification Associations (AFREA)
Vera Goussaert  Executive Director, Manitoba Cooperative Association
Bill Dobson  Director, United Farmers of Alberta
Hazel Corcoran  Executive Director, Canadian Worker Co-operative Federation
Peter Hough  Financial Officer, Canadian Worker Co-operative Federation
Bob Nelson  President and Chief Executive Officer, United Farmers of Alberta

11:35 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

So the member would come to you, or the credit union would come to you. We've heard many of the credit unions say there's a seamless process in place if the loan is bigger than the capability of a single credit union. They would go to their central or bring other partners to the table, but the member or the person applying for the loan wouldn't really see that. It would just happen above and beyond the credit union. So are you doing that?

11:35 a.m.

Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association

Jodie Stark

Yes. Most of the transactions we do are set up that way so that the ultimate client doesn't see our involvement in it, and the agreements and the relationship are between us and the credit union and sometimes other credit unions. There might be a consortium of various credit unions that are involved in the lending.

11:35 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

I recognize that we're dealing with a system that is one person, one vote, and even yours is a cooperative with that type of system. We've heard from many of the groups that this is a risk averse type situation or that it helps to manage risk. I won't say risk averse; rather, it helps manage risk, because there are more minds, if you will, looking at a problem. That may be the best way to put it.

How does that happen, then, when you're bringing together five or six groups of members where it's one person, one vote? Do you have to get consensus, or can you at a management level assume a consensus that includes the members of all the attached organizations?

11:35 a.m.

Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association

Jodie Stark

We don't consult with the members on the various specific transactions that we do. It's more on the overall strategy—what strategy and how we position ourselves in the credit union system—that the members consult with us on, through our board.

The board is structured such that there is representation from the various regions across Canada, and that's how you bring that in. We have people from one end of the country to the other. They vote in who they want representing their region, and various regions have certain numbers of representatives on our board. We do have 164 members all together, and that's growing all the time.

11:35 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

Okay. I get that, and we've heard a lot, certainly, about the credit union system, and we recognize.... Even you mentioned that your profits go back to your partners, to people who are members of Concentra, or back to community projects. I think in your speech you talked about how on-the-ground cooperatives, whether they're credit unions or not, tend to be so grassroots and involved in their communities. That's who is involved. I recognized it from who the sponsors are of baseball teams and those types of things in all of our own communities. That's what happens. Whether it's a local business or a local cooperative, it's far more likely to be involved locally, because that's where they make their....

You talked about your profits also going back down to that level from a community project point of view. Can you give us some examples of that?

11:35 a.m.

Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association

Jodie Stark

Sure. For example, have restructured our social responsibility platform at Concentra over the last year and a half, and we set aside a certain amount of money each year and then allow credit unions from across Canada to submit submissions for particular initiatives that they are interested in helping their community with. If they're successful, they're awarded, I think it's $10,000, each credit union. Then we have a ceremony to present the cheques to them.

That gives every credit union, big or small, the opportunity. When they do that, they receive our money, but we don't ask that our name be posted on anything anywhere. So it would appear as though the credit union is donating the full amount or sponsoring the full event. We just felt that it wasn't necessary to have Concentra's name everywhere. It was more important for us to have the credit unions get the exposure that they need in their own home communities.

11:35 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

I have one other really quick question, if I can do it. I meant to get it in the last panel but I didn't have any time.

We've learned a lot, that cooperatives are maybe a more secure level of business. They're more likely to survive at every benchmark we can come up with—

11:35 a.m.

Conservative

The Chair Conservative Blake Richards

Mr. Preston, your time has expired. If you have a question, I'll let you put it very briefly.

11:35 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

Yes.

Do you give favourable lending to cooperatives because of that success rate, versus to a sole proprietorship or corporation? Would it be easier for a cooperative to get a loan through any credit union because of that success rate? Is that taken into account?

11:35 a.m.

Conservative

The Chair Conservative Blake Richards

I'll ask that the response be as brief as possible as well, please.

11:35 a.m.

Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association

Jodie Stark

Thank you, Mr. Chair.

We don't do direct lending to cooperatives so much. We have provided lines of credit to cooperatives, and have been involved in social housing projects in Toronto to a great extent, because we partner with the credit unions on that. So I can't really speak to the credit unions' credit risk policy, but we do partner with them. We trust that they know that the cooperatives they're going to provide financing to are worthy projects.

11:40 a.m.

Conservative

The Chair Conservative Blake Richards

Thank you. I appreciate the brevity. That was good.

Mr. Harris, the floor is now yours for the next five minutes.

11:40 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Thank you, Mr. Chair.

Thank you to the witnesses.

Ms. Stark, at the beginning of your opening remarks you mentioned that a more detailed brief is being prepared. Will that be ready to submit to the committee before August 7, which is the deadline for submissions?

11:40 a.m.

Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association

Jodie Stark

The brief was submitted to your clerk approximately two days ago, so I imagine it's just in the translation process right now.

11:40 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Okay, so it has been submitted. Great, thank you. That clears that up.

Following on Mr. Preston in terms of the reinvestments made, I believe you said that the credit unions in partnership with you are reinvesting approximately four times as much into the communities. Now, is that compared to the traditional commercial banks?

11:40 a.m.

Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association

Jodie Stark

That's correct.

In the 2010 numbers I have, I believe it's around 4% of pre-tax earnings of credit unions nationally that is given to the community as compared to 1% for traditional banks.

11:40 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

That's phenomenal. That's how you build, grow, and strengthen communities, which in turn helps to make the credit unions themselves more stable financially.

You also mentioned that you were happy to see more financial literacy programs and initiatives coming from the government, but that credit unions had not been consulted in that. I personally hope that one of the recommendations we see coming out of this committee based on what we hear would be for a co-op literacy program to inform banks and lenders and the general public about the strengths and the alternative and possibly preferential business model that co-ops offer.

I did want to ask, following up, about consultation. In your recommendations, you said you would ask that the government refrain from considering and treating credit unions simply as banks. This is with respect to the framework for federally chartered credit unions.

How much were you consulted in that process when those rules and regulations were being made up?

11:40 a.m.

Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association

Jodie Stark

Our national trade association, the Credit Union Central of Canada, was consulted throughout the process. I was also involved on a committee that dealt with it throughout the two or three years that the development of that legislation, or regulations, was under way.

I was disappointed, personally, and taken a bit by surprise, that the decision had already been made that it was going to go under the Bank Act as opposed to the Cooperative Credit Associations Act, which is the legislation we're under. This legislation already embeds the cooperative principles right in it. They have the ability to have full retail powers, because here I am, and that's what we have.

I was disappointed by that. If the government starts treating the credit unions more like banks and moves them too far under that system, you're going to lose that stability, because it is, in fact, a system. If you start peeling away the layers of that system, you could affect the stability of the credit union system nationally, and even at the provincial level.

11:40 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Great. Thank you.

Mr. Archer and Mr. Lapointe, I'll follow up on questions from Madame Brosseau. She was, I believe, just getting to the part where you were talking about some of the preventive initiatives you're engaged in.

We know, as time goes on, that if we can prevent people from getting sick and showing up at emergency rooms or doctors' offices that it's going to save the system a whole lot of money. And it will give us more flexibility to actually provide more programs and services and to maybe actually move to the next phase, where we might offer prescription drug programs, dental coverage, and things like that.

Could you expand a little bit on the preventive component your co-op health model offers to help keep people from getting sick?

11:40 a.m.

Member, Community Health Co-operative Federation Ltd.

Patrick Lapointe

I can give you an example related to diabetes. In our organization, we assess an individual's risk factors for diabetes. If in your regular contact with your doctor you start to ring bells for risk factors related to blood sugar, activity level, and these kinds of things, and it looks as though you may potentially, in the future, be at risk of diabetes, then we get you hooked in with a nurse practitioner, a health educator, or a dietician who will work with you to develop a plan to manage your risk.

The same thing can be said, for instance, for cardiovascular disease. If it looks as though there's some kind of family history, or if there are some indicators now that you may develop cardiovascular disease, we want to work with you early to address those issues.

11:45 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Great. Thank you very much.

I'm going to try to not look at the chair and see if I can get another question in.

Thank you very much for your answers.

11:45 a.m.

Conservative

The Chair Conservative Blake Richards

It was a nice try, but not this time.

We will move now to Mr. Lemieux, for the next five minutes.

11:45 a.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Thanks very much, Mr. Chair. And thank you for being here today.

As I mentioned to our last group, this has been a really valuable couple of days. We've been able to really focus on co-ops and their role in Canada. And I must say that it's really encouraging to see the strength of co-ops on the ground. We've heard, from numerous co-ops that have come in front of us, about their growth, their strength, how well they're doing, and how they're contributing to the economy. I'm glad to hear that this is continuing in the discussions we're having now.

I wanted to make a comment to Jodie about the financial co-ops and the federal regulations. The regulations have been gazetted. There's a 30-day comment period. Your comments are welcome. Of course, they'd have to be filed through the gazetting process. The point is that there's a 30-day window open as of July 6, when they were first published, and all feedback is welcome.

I am interested in the Concentra model or the model of co-ops that basically offer more than just financial services. They offer financial services, groceries, gas, and a number of different things. What's the general business model they're using? In other words, is it just one co-op offering a number of services? Or is there an umbrella co-op with sub-co-ops underneath, each one specializing in a particular area, particularly given the difference between, let's say, financial services and goods and services such as gas and groceries? Could you comment on the business models and what you've seen?

11:45 a.m.

Vice-President, Legal and Corporate Affairs, Concentra Financial Services Association

Jodie Stark

Certainly. Thank you for the question.

One of the models I'm a little more familiar with is the Arctic Co-operatives model. I believe that they might be one of your witnesses.

11:45 a.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Yes. They were here.