Thank you, Chair.
Thank you for the opportunity to be here today.
Our association represents the 252 credit unions and caisses populaires that are outside of Quebec. We contribute $6.5 billion to Canada's economy. We have 5.7 million members. Collectively, credit unions and regional centrals employ almost 29,000 people, and we manage over $225 billion in sector assets. Last year alone, we contributed $62.3 million to communities. That's 5% of our after-tax income.
Credit unions are owned by the people who bank with them, which puts customer service at a premium. That's why, for the 13th year in a row, CFIB has ranked us first for customer service excellence, ahead of federally chartered banks. I'd also like to note that in 380 communities across Canada, credit unions are the sole financial institution. Mr. Chair, I would underline that this includes six communities in Prince Edward Island.
These are just some of the things that enhance our competitiveness. I would speak to workforce diversity, as well.
Unfortunately, disproportionate regulation and uneven taxation rates take away from our competitive ability. That brings us to our recommendations for the next federal budget.
First of all, I'd like to thank you all for your help in getting us the Bank Act exemption, which allows credit unions to continue using generic banking terms. It was a big win for us. You may have noticed that the budget said that regulated financial institutions could use those terms, subject to disclosure.
That brings us to our first recommendation for the next budget. Really, it's a red tape avoidance recommendation. In our sector right now, we're working on a voluntary market conduct code. I'll call it the MCC. We're looking at some of the work that's emerging from the federal government and some of the work that already exists in Saskatchewan, where they've had a voluntary code in place for more than a decade, and comparing that to institutionalizing credit union values and the high level of service that already exists.
We would like to avoid new federal regulation in this sphere for credit unions, and in particular we'd like to avoid any new regulation for banking terminology disclosure. We ask for the committee to support that work and to avoid any costly new regulation for credit unions.
Moving on now to financial sector regulation, I think everyone would agree that over the decades policy has helped to cement the dominant position of banks in the financial sector. In our view, that results primarily from two policy dynamics. The first is a one-size-fits-all regulatory approach, and the second is a trend toward the internationalization of financial sector policy-making.
You may have heard of Basel III. It is one example. The Basel Committee on Banking Supervision started developing the Basel III standard in 2010 in response to failures of large banks during the global financial crisis. I think we just celebrated the 10-year anniversary. I'm always quick to point out that credit unions played no role in that crisis.
Basel III has been finalized as of last December, and while the increased regulatory burden of Basel III may help to improve the safety and soundness of Canada's financially complex and internationally active big banks, it will do nothing or very little, we believe, to enhance what is already a high standard of safety and soundness for credit unions. In short, members, we believe that you get what you regulate for. If we see regulation only for big banks, we will ultimately only have big banks.
We are fortunate that the federal Department of Finance has acknowledged these emerging trends or challenges. We saw that acknowledged in budget 2018. Specifically, the government has suggested that the upcoming 2019 review of financial institutions will be an opportunity to address these issues. Last year, our association provided several recommendations during the second stage of that consultation, and several of the recommendations link directly to enhanced competitiveness. Others were related to governance recommendations. These are actually about the regulation of federal credit unions, and they would really help to advance regulation into the modern age. For example, we support amending the Bank Act to allow for electronic voting in advance of annual general meetings.
To summarize, this recommendation is to ensure, first of all, that the government institutionalizes the perspectives of credit unions. Second, we recommend that you consider the input of CCUA's prior recommendations to the Department of Finance regarding membership thresholds and other governance matters aimed at increased diversity and competitiveness by credit unions.
Finally I'm going to talk about taxing credit unions as co-operatives.
The fair tax treatment of credit unions as co-operatives remains an evolving policy matter in Canada. The Government of British Columbia has recently signalled that it will enhance the lending capacity of credit unions by making their co-operatively oriented tax status permanent. We used to have a similar treatment at the federal level, but it was eliminated in 2013, and it left credit unions with a framework that imposed higher taxes, suitable perhaps for joint stock banks but not for co-operatively structured credit unions.
Our association asks to re-establish the competitive balance in the tax system, and we recommend that the committee and the Department of Finance consider new ways to do so.
Thank you for your attention.