Mr. Chairman, and members of the committee, thank you for this opportunity to appear before you today.
I've been asked to discuss how credit unions in Canada help to ensure prosperous and secure rural communities. I should first mention that my organization, the Credit Union Central of Canada, is a national trade association for the 332 credit unions and caisses populaires that operate outside Quebec.
Credit unions are part of Canada's cooperative movement, which they share with Caisse Desjardins and with many other cooperative organizations across Canada. Cooperatives are an integral part of Canada's economy and have roots in Canadian history that extend back well over 110 years.
Now for a brief story. Moonbeam is a community of about 1,000 individuals situated in northern Ontario. Several months ago the residents of Moonbeam learned that the operator of the town's grocery store was proposing to cease operations. The town responded to this potential loss of service by establishing a food cooperative, and was assisted in doing so by the caisse populaire of Kapuskasing, which has a branch office in the town.
This story illustrates how cooperatives and cooperative financial institutions work together to build and sustain rural communities. Cooperatives are part of these communities and credit unions are community-based financial institutions.
Cooperatives and credit unions are consumer-owned, unlike banks, which are shareholder-owned. At credit unions the customers are local, the management and employees are local, governance is local, and decision-making is local.
Credit unions support prosperous rural communities through their presence and active involvement in these communities. Physical presence is important and credit unions operate from more than 1,760 locations across Canada and most of these are in smaller communities. This is a large number of locations given the size of the credit union system. By way of contrast, the Royal Bank of Canada, which is more than four times larger than the credit union system, operates from 300 fewer branch locations.
Rural or remote communities do not need to be underserviced communities. In over 360 rural centres a credit union or caisse populaire is the only financial institution physically present in that community. This number does not include the hundreds of communities in Quebec where Caisse Desjardins is the only financial institution branch.
Credit unions focus on strengthening the communities they serve and they put service ahead of profit.
The ability of cooperative financial institutions to continue to contribute to the prosperity of rural communities is dependent upon the existence of government policies that support, or at least do not hinder, this activity.
We are supportive of the federal government's initiative to apply a small business lens to its policies and priorities, but we feel that this needs to go further and that the government should also apply a cooperative lens to all of its initiatives.
What would a cooperative lens do?
A cooperative lens would, among other things, consider the fairness of credit union taxation. We regard the recent increase of income tax on credit unions, which we have opposed, as being the application not of a cooperative lens but of a Bay Street lens.
A cooperative lens would consider the fairness of allowing a non-taxed and non-regulated state-owned enterprise such as Farm Credit Canada to compete directly with small cooperative financial institutions in rural communities, and a cooperative lens would carefully consider ways in which government regulation can be implemented in a manner that does not impose an excessive burden of fixed costs on consumer-owned financial institutions.
The Moonbeam story is a happy story, and there are many other happy stories from across Canada where credit unions and caisses populaires have helped to build prosperous and secure rural communities. But the ability of these consumer-owned financial institutions to serve their communities is not a matter to be taken for granted.
For this reason we urge the federal government to apply a cooperative lens to its policies and programs to ensure that credit unions and caisses populaires can continue to fulfill their important role in the Canadian economy as a strong and active presence in rural communities.
Mr. Chairman, those are my comments.