Thank you, Mr. Chair.
First, please allow me to thank you as well as all the members of the committee for your kind invitation.
Today I'll be speaking directly to the topic of how the Canadian cooperative sector can increase the competitiveness of Canadian enterprises through its research, development, innovation, and commercialization.
I would like to start by making a recommendation to this committee. Co-operatives and Mutuals Canada is asking the federal government to provide concrete support to cooperative development by investing $50 million in our Canadian cooperative investment fund. For years accessing capital has been a major challenge for cooperatives and mutuals, particularly start-up cooperatives. Whether it is for new cooperative ventures, business expansions, bridge financing for seasonal operations, or business succession, co-ops need capital to meet the needs of their members and compete in an increasingly competitive marketplace.
Unlike publicly traded corporations, co-ops don't have access to the stock market. Although they can seek financing from traditional lenders, member-owned businesses often find it difficult to meet the required equity and asset criteria. Capitalization is not a new issue for co-ops and mutuals. However, in 2012 the Special Committee on Cooperatives undertook a review of the Canadian cooperative landscape. The committee, like the co-op sector, found that capitalization was a problem for co-ops and made the following recommendation: that the Government of Canada review the issue of capitalization of cooperatives, including its causes, effects, and potential solutions.
This recommendation did not come as a surprise to the co-op sector. In fact, co-ops had been discussing the development of a national fund for some time to help the sector with its capitalization issue. The recommendation, however, solidified the sector's resolve for the development and implementation of our own national investment fund. Financed by the cooperative sector, the Canadian cooperative investment fund is designed to assist cooperatives to access capital that they might otherwise not have access to. It will be a national fund that is knowledgeable about cooperatives and mandated to structure investments appropriate to cooperative principles and the role of capital in cooperatives.
The goal of the fund is not to replicate or replace any of the current financing sources within or accessible to the sector. Rather, it is to assist securing such resources by topping up the cooperative members' investments through quasi equity, which will in turn leverage the currently available loan offerings provided by credit unions and other financial lenders. Ideally the fund will partner with financial lenders to provide cooperatives with a combination of traditional debt and subordinated debt beyond what may have been possible with the financial lenders alone.
At the moment, we have a total of roughly $15 million pledged by seven organizations. This money all comes from within the co-op sector, from co-ops and credit unions that believe in the need for this fund. We are hoping to reach $20 million very shortly.
Why, then, are we asking the federal government for $50 million if we already have $15 million? To answer that question, I must first state that the co-op sector is moving forward with our investment fund with or without a contribution from the federal government. However, let me tell you the difference this $50 million could make. With a $20-million fund, we are predicting that over 10 years the fund would provide 180 investments totalling roughly $45 million and create approximately 3,600 jobs across the country. Now, compare that with a federal contribution of $50 million, bringing the fund total to $70 million. Over the same 10-year period, we are predicting 735 investments totalling $183 million and the potential to create over 14,500 jobs.
The $50-million contribution would be a one-time payment into the investment fund. We are not looking for a cooperative-specific program. We are looking for the government to invest into a thriving and stable sector of the economy.
Co-operatives and Mutuals Canada, CMC, is the national voice for co-ops and mutuals across the country. We represent more than 18 million cooperative members from 9,000 co-ops. I can guarantee that every member in this room has at least one co-op, credit union, caisse populaire, or mutual in their riding.
We have come to the table with a solution to the problem. We now kindly ask that you, the members of this committee, recommend a $50-million investment into the Canadian cooperative investment fund.
Thank you.