Thank you.
My name is Mike Tarr, and I want to thank you for allowing us to appear before you. I am the chairman of the board of Credit Union Central of Canada, or Canadian Central, as it's usually known. I too have a day job, and it's CEO of Northern Savings Credit Union, located on the north coast of British Columbia.
Canadian Central is a federally regulated financial institution that operates as a national trade association for the 504 affiliate credit unions we represent through nine provincial centrals. Our credit unions employ more than 24,000 Canadians who serve almost five million members across the country. At the end of the second quarter of this year our affiliated credit unions held close to $91 billion in assets. Between the second quarter of 2005 and 2006 our growth was approximately 10.5%
I'd like to spend a few moments talking about some concerns and focus that we have in terms of specific budget recommendations.
First is agriculture policy. Credit unions have a very strong presence in rural Canada. In Saskatchewan, for example, they represent probably 40% of the total financial services marketplace, and they have a growing book of agriculture business. So we are concerned with the agricultural economy. In particular, the credit union system supports the federal government's efforts to promote the biofuels sector, and more specifically the government's commitment to implementing a 5% average renewable-content requirement in transportation fuel by the year 2010.
We believe this is a very important step. We applaud the government for the direction it's taking, but we believe the framework that is put together for this has to include more than simply loan guarantees and the traditional roles government sees the private sector play.
We think tax policy, trade policy, environmental policy, research and development backed by the government, and financial incentives to lenders have to work in a coherent fashion so they make sense and then they can result in the leverage that's necessary for this initiative to move forward.
We have also been active and participating in consultations aimed at reforming the Farm Improvement and Marketing Cooperatives Loans Act. We look forward to proposed reforms being tabled in the near future. We agree in principle that a revised program could usefully target new farmers and intergenerational farm transfers while also seeking to expand the relevance of agricultural cooperatives.
In terms of tax policy, the credit union system is also engaged in lending to small and medium-sized enterprises across the country, or what is often called small business. On a consolidated basis, credit union participation in the SME market equals about $18 billion, which is only $2 billion less than the leading lender to small business in Canada, the Royal Bank.
Credit unions would like to strengthen that engagement with the sector, but lenders are concerned that federal tax legislation and Canada Revenue Agency practices act as impediments. Specifically in reference to the CRA, we are concerned with their policy that is eroding the quality of security that borrowers pledge to lenders. This is particularly true in the case of crown super-priorities. For example, in situations where lenders must sell assets of a small-business debtor, it is common for the CRA to come forward after the sale of assets and claim an interest in the proceeds of the sale because the SME was in arrears to the crown.
Compounding this problem is the fact that it is difficult to obtain accurate information from the CRA regarding the status of a business borrower's obligation. Clearly we get hit both in the front end and the back end of this policy and practice. If the government is concerned with the growth of the SME sector, as I think it ought to be, it should address these issues. These are, in our view, unnecessary impediments.