Thank you.
Again, I appreciate this opportunity to address the committee.
Let me start by echoing the comments that my neighbour has shared in terms of the general drift of federal financing of services to the most vulnerable Canadians over the last 20 to 30 years. Our positions on those issues are virtually identical. Something has to be done systematically and fundamentally around how taxes are raised, where they're raised from, and how they're allocated to service the most vulnerable Canadians, including, of course, seniors.
I'm going to be addressing something much more specific targeted to the sector that I represent, the co-op and credit union community in B.C. I know that the committee has already received a deputation from the Canadian Co-operative Association. Some of the figures around the size and scale and constitution of the co-op movement in Canada have been provided, I think, in that presentation, so I'm not going to repeat that, except to say that the co-op movement in Canada represents a very diverse and a very vibrant sector within the Canadian economy. There are some 9,000 co-ops and credit unions operating in Canada, and they employ some 150,000 people across the country.
Thinking specifically about how the co-op sector and the co-op model can be related to the issue of poverty reduction, I want to just address three areas: first, reasonable economic development; second, job retention and employment generation; and finally, service delivery to marginalized populations, including seniors.
Any strategy to address poverty obviously has to take into account the question of employment generation and economic development, and any strategy that doesn't address that is not going to be addressing some of the root causes of poverty, obviously. In the area of regional economic development, what I will summarize in these comments is that it's important to think about and understand how cooperative approaches to regional economic development help strengthen regional economies, generate new employment, and make small and medium-sized firms, which are the bedrock and the backbone of most regional economies in Canada, more productive, more successful, and more able to compete globally.
We have studied in great detail the use of cooperative systems for sharing services and supports to small and medium-sized firms at a regional level. The evidence has been overwhelming that where you have government policies that promote the sharing of services and the cooperation of small and medium-sized firms that operate in the same sector or in the same market, those firms do better, they compete better, they generate more work, they generate more employment, and they distribute the wealth that they create through their enterprises much more equitably than simply ignoring them or promoting a form of development that stresses competition over cooperation. The details of this have been well documented by scholars internationally. Some of the instances that I provide as examples--northern Italy, Germany, and Spain--are indicated in my report.
The second area is job retention and employment generation. In addition to supporting a cooperative approach to supporting small firms, the use of cooperative models for both generating new jobs and using the co-op system to sustain and protect jobs that are already in place, has, again, proven to be very successful. In Quebec, for example, where the co-op sector has been partnering with the provincial government to use co-op systems to generate new cooperatives, the cost for the generation or the protection of every job is a fraction of the cost that is borne by either private or state-delivered systems.
Job creation using cooperative models is more productive and effective, and the co-ops that are generated survive longer than do conventional private sector firms. A 2008 study from Quebec indicates that over a ten-year period, some 64% of cooperatives are still in operation providing employment, providing economic benefit to the communities, compared to some 42% of private sector firms.
As a model, contrary to what many people believe, not only is the co-op model more durable and more successful in terms of survival rate, but also the spinoff benefits for regional economies are greater.
There are a number of reasons for that, and again I indicate some of them in here. But one of the most obvious is that for cooperative firms, which are owned and democratically controlled by their members, the profit motive isn't the only motive for running the enterprise. Creating employment and keeping jobs are at least as important. So for investor-owned firms that look for a very high return on investments, if that high return isn't met they're much more willing to close down a company than for a co-op, where if the rate of return is sufficient to make a living for the company, to keep the enterprise in production but still retain the jobs, that business will be kept open. It will not shut down simply because the rate of return isn't as high as investors would like it to be. That's just a simple economic fact around co-ops versus private sector firms.
The third item in job retention and creation is the question of business succession. One of the major causes for the failure of businesses, particularly in rural communities, is the lack of a successor to usually a family-owned firm. In a report that was recently done by the Fonds de solidarité in 2005, it's indicated that 70% of small and medium-sized firms do not outlast the first generation, and 90% do not outlast the second generation. And 70% of business owners thinking about retirement have yet to choose their successor. It's one of the most common causes of enterprise failure and one of the ones that is relatively easy to address if there is a strategic approach to business succession, particularly the support of employee buyouts for these firms.
Of all the strategies that have been used to save these firms, employee buyouts are by far the most successful, both in terms of saving the firm and in terms of keeping it going over the long term. And again, the details on studies that reflect on this are indicated in my report.
The final area I want to address is service delivery to vulnerable people. We have been doing a lot of research on the use of cooperative models for the provision of social services and social care to people who are unemployed, who are poor, who are living with disabilities, and to seniors and so on. We have shown how social co-ops, which are basically cooperatives that use the co-op model to train and employ people who are marginalized or otherwise not integrated into the labour force, are a key way of not only integrating and reintegrating people into the labour force who otherwise would be left out, but also improving and expanding the quality and the range of services they need to have a decent quality of life.
Social co-ops were pioneered in Italy at the end of the 1970s and the beginning of the 1980s. Today there are about 6,000 social co-ops providing employment to 160,000 people in Italy. And 15,000 of these people are people who are living with disabilities.
Just to give you a sense of the power of the model, those 160,000 people who are employed constitute 75% of the labour force in the non-profit sector in Italy, but social co-ops comprise only 2% of the organizations in the non-profit sector in Italy. So it's a very powerful model, and its impacts have made a fundamental difference both in the quality of life of the people they serve and in raising the standard of living of the people they employ.
Quebec is one area in Canada where a solidarity co-op model, which is basically the Canadian version of social co-ops, has been used to great effect, particularly in the provision of home care services in Quebec. They have been extremely successful, with some 42 or 43 solidarity co-ops in Quebec, and their market share of the home care sector in Quebec is growing.
So those three areas—regional economic development, employment generation and retention, and social service delivery to marginalized populations—are three ways in which the co-op sector generally, and the co-op model in particular, can provide some strategic benefits for a comprehensive poverty alleviation strategy.
I know that the Canadian Co-operative Association has called for a national strategy to address poverty, with measurable targets at all levels of government. We support that position. We also support the inclusion of specifically cooperative models for both economic development and service delivery to people who are vulnerable and need help.
Thank you.