Thank you for inviting us to appear before you.
Just very quickly, there are about 350 worker co-ops across Canada, and about two-thirds of those are in Quebec. Our organization, the Canadian Worker Co-operative Federation, is a national association. It started about 20 years ago for worker co-ops, multi-stakeholder co-ops, and worker shareholder co-ops. Services include support for start-ups, a newsletter, research, and an RRSP program so that our members can invest in their own businesses. Currently the program has over $14 million invested in it.
The relatively small worker co-op sector in Canada stands in contrast to the sector in Europe, where hundreds of thousands of people work in worker co-ops. In the U.S., about 10 million people are in employee-owned companies under ESOPs, employee stock ownership plans. So Canada is far behind members of the EU and the U.S. in terms of the size of the sector and in terms of employee ownership as a business succession strategy.
I'm going to present a three-point plan in terms of how the federal government can help address this succession crisis that's coming, especially in rural communities and in particular through using employee ownership. Some of these points are also relevant to other parts of the cooperative sector.
The three elements are, one, a cooperative investment strategy; two, to make the federal cooperative development initiative permanent and to expand it; and three, to expand that program that I'll call the CDI--the co-op development initiative--into the new area of conversions to worker co-ops. We believe these programs would be an important legacy of the UN International Year of Cooperatives in 2012.
To go into more detail on the first one, the co-op investment strategy has two prongs. First is a Canada-wide co-op development fund that has previously been proposed by the umbrella organizations the Canadian Co-operative Association, or CCA and le Conseil canadien de la coopération et de la mutualité, CCCM. It's been supported by our organization as well as the Credit Union Central of Canada and others before Parliament.
The second point in the investment strategy is a federal co-op investment plan that is modelled on the Quebec Régime d’investissement coopératif, which is a tax credit program for investing in worker and producer co-ops or farmer co-ops and so on. Both of these components were unanimously endorsed by the finance committee in your 2010 pre-budget report, but they did not make it into the budget.
So in terms of a few details on that, co-funded with the co-op sector, the co-op development fund would provide financing to new and existing co-ops. It would require a one-time federal contribution of $70 million, after which it would be self-sustaining. It would be a repayable loan fund and not a source of grant funding.
Investments would only be made based on an analysis of a cooperative's business plan and its capacity to pay back loans. An example of such a fund is the arctic cooperative development fund, which received about $10 million in 1986 from the federal government and has grown through serving the largely aboriginal co-ops in the north to a $30 million fund now, and it continues to serve those communities. So it would be a very similar situation.
In 2008, the cooperatives secretariat of the federal government commissioned PricewaterhouseCoopers to examine this fund as proposed by the co-op sector and they viewed it very positively. We are convinced that this fund would be an effective source of support for employee-owned co-ops as well as other types.
The federal co-op investment plan, as I mentioned, is modelled on the Québec Régime d’investissement coopératif. It would be a partnership between citizens investing their own money and the federal government. In the plan in Quebec, from 1985 to 2006, almost $400 million in total was invested by members and employees in eligible cooperatives. The plan at the federal level is estimated to cost $17 million to $20 million per year.