Evidence of meeting #3 for Special Committee on Cooperatives in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cooperatives.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Claude Carrière  Associate Deputy Minister, Agriculture and Agri-Food Canada
John Connell  Associate Assistant Deputy Minister, Strategic Policy Sector, Department of Industry
Jeremy Rudin  Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
Denyse Guy  Executive Director, Canadian Co-operative Association
Marion Wrobel  Vice-President, Policy and Operations, Canadian Bankers Association
Stephen Fitzpatrick  Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
Nicholas Gazzard  Executive Director, National Office, Co-operative Housing Federation of Canada
Frank Lowery  Senior Vice-President, Senior Counsel and Secretary, The Co-operators Group
John Taylor  President, Ontario Mutual Insurance Association
Michael Barrett  Chief Operations Officer, Gay Lea Foods Cooperative Ltd.
Bob Friesen  Farmers of North America

9:55 a.m.

Associate Deputy Minister, Agriculture and Agri-Food Canada

Claude Carrière

Mr. Chairman, as I said in my earlier remarks, the Department of Agriculture and Agri-Food, like other departments, was charged at looking at a reduced footprint and at programs that either were not performing or ones that had met their objectives. In the case of the programs you're talking about, they had met their objectives. The secretariat has been successful. That was part of the proposal to reduce our expenditures. The program administration elements—

9:55 a.m.

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

I accept your explanation, sir, but I just have another point to take it a bit further, though. We had, in effect, very well operated programs that were successful. Did this department have any plans for changing them prior to being asked to look at them in this fashion?

It strikes me as common sense that if you have something successful, you should sustain it, grow it, keep it going, especially if we have the number of businesses failing that we do in the country.

9:55 a.m.

Conservative

The Chair Conservative Blake Richards

It will have to be a very, very brief response.

9:55 a.m.

Associate Deputy Minister, Agriculture and Agri-Food Canada

Claude Carrière

Mr. Chairman, I can only repeat what I've said. When a program has achieved its objectives, it's no longer necessary.

9:55 a.m.

Conservative

The Chair Conservative Blake Richards

Thank you. The time has expired and we've reached the conclusion of this panel.

I'll thank our three witnesses, Mr. Carrière, Mr. Connell, and Mr. Rudin, for your excellent testimony. We appreciate your being here to give us some good background from a government perspective. Thank you very much.

I'll just suspend the meeting for a couple of minutes so that we can have time to change panels. Thank you.

9:55 a.m.

Liberal

Mauril Bélanger Liberal Ottawa—Vanier, ON

Chair, just before the witnesses leave, could we have a copy of the statement that Monsieur Carrière made at the start of the meeting?

9:55 a.m.

Conservative

The Chair Conservative Blake Richards

There has not been a statement—

9:55 a.m.

An hon. member

[Inaudible—Editor]

9:55 a.m.

Conservative

The Chair Conservative Blake Richards

But not to be distributed to the committee.

9:55 a.m.

Liberal

Mauril Bélanger Liberal Ottawa—Vanier, ON

Have we received one?

9:55 a.m.

Conservative

The Chair Conservative Blake Richards

No, the committee has not received one.

9:55 a.m.

Liberal

Mauril Bélanger Liberal Ottawa—Vanier, ON

Could we have a copy of that statement, Monsieur Carrière?

9:55 a.m.

Associate Deputy Minister, Agriculture and Agri-Food Canada

9:55 a.m.

Liberal

Mauril Bélanger Liberal Ottawa—Vanier, ON

Merci.

9:55 a.m.

Conservative

The Chair Conservative Blake Richards

Great. Thank you.

10 a.m.

Conservative

The Chair Conservative Blake Richards

I will call the meeting back to order. I'll recognize Mr. Bélanger in one second.

First I'd like to indicate that, Mr. Bélanger, you asked for a copy of the presentation and we'll make sure that it is translated and distributed to the committee.

I now recognize you on a point of order.

10:05 a.m.

Liberal

Mauril Bélanger Liberal Ottawa—Vanier, ON

Thank you, Mr. Chairman.

Very quickly, I would hope that in the preparation of future meetings you would consult somewhat with the vice-chairs of the committee, the two of us, in terms of the structure and who is to be invited. That's just a wish.

Second, I wanted to know, Mr. Chairman...you have received some correspondence as chair of the committee, which you've decided not to distribute. I was wondering if that is a policy that you intend to continue to apply or if you are willing to consider changing that so that members can get copies of the correspondence you have received as chair of the committee.

10:05 a.m.

Conservative

The Chair Conservative Blake Richards

Thank you.

Obviously that is always at the will of the committee. If someone would like to make a motion to that effect, we can consider that here.

I would suggest that be left, of course. We do have some time at the end of the day for committee business, and I would ask that we leave that for that time. We do have witnesses here and I would like to—

10:05 a.m.

Liberal

Mauril Bélanger Liberal Ottawa—Vanier, ON

The thing is, Mr. Chairman, that one of these letters was sent from one of our witnesses now appearing and I would have wanted to be able to refer to that. But because you decided not to distribute it, I'm in a bit of a quandary here. So I want to know if that is a policy of yours, and based on what?

10:05 a.m.

Conservative

The Chair Conservative Blake Richards

A letter that has been sent to me is certainly a letter that has been sent to me. If you have received a letter or a copy of a letter, you are obviously able to do as you wish.

I will recognize other members in a second.

On a point of order, Mr. Marston.

10:05 a.m.

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

Being new to the committee I don't want to be barging in on this, but I'm on the finance committee and the correspondence that comes to the finance committee is shared with the whole committee.

I'm a little surprised that this has.... Has this been the past practice of this committee, that certain things are edited out without the other members even seeing them?

10:05 a.m.

Conservative

The Chair Conservative Blake Richards

Again, I think we are getting into an area here that should be kept to committee business. We do have time at the end of the meeting for that, and I would ask that members keep that in mind.

10:05 a.m.

An hon. member

But we have the witnesses here, Mr. Chairman.

10:05 a.m.

Conservative

The Chair Conservative Blake Richards

Understood, and that's why I would like to make sure that we have an opportunity for the witnesses to share their testimony with us. If there is something that they would like to discuss with the committee, the time will be theirs to do that. I would ask members that we allow them that opportunity and save matters of this type for committee business, which we do have time for at the end of the day. So I will ask that to be done.

We will move to our panel now. We do have three individuals here. Our first individual will be Denyse Guy from the Canadian Co-operative Association. Then we'll have the Canadian Bankers Association, and Credit Union Central of Canada.

We do have two individuals who we expect at some point. Mr. Laframboise will join us as well, but we do currently have Mr. Fitzpatrick. I will allow each organization ten minutes for their opening remarks, and then we'll move to questioning.

I will call first upon Ms. Guy.

10:05 a.m.

Denyse Guy Executive Director, Canadian Co-operative Association

Thank you, Mr. Chair and committee members. My name is Denyse Guy, and I am the executive director of the Canadian Co-operative Association, which is referred to as CCA.

I wish to begin by thanking you for inviting CCA to participate in these historic committee hearings into the cooperative sector. It is fitting that these hearings are taking place in 2012, as this year has been declared the International Year of Cooperatives by the United Nations General Assembly.

The UN has asked all member states to take measures that will create a supportive environment for the development of cooperatives. The committee overseeing Canada's participation in the International Year of Cooperatives, which includes leaders of the Canadian cooperative sector, as well as the executive director with the federal government's rural and cooperatives secretariat, has established three goals for 2012: the first is to increase public awareness of cooperatives and the economic and social contribution of the cooperative business model; the second is to support the growth and sustainability of cooperatives; and the third is to create legacy initiatives that will live beyond December 31, 2012.

The Canadian Co-operative Association is a national organization representing cooperatives and credit unions in Canada. These hearings will hopefully provide an answer to the question of why the co-op sector needs a strong partnership with the federal government.

As you know, there are 9,000 cooperatives in Canada, representing 18 million members and over 150,000 jobs. The cooperative sector is well entrenched in our Canadian landscape and touches every corner of our country. Cooperatives can be found in different regions and different sectors in Canada.

I want to share with you some well-established cooperatives across this country who are members of CCA and who are not represented here today.

Arctic Co-operatives Limited—and you may have seen them on the CTV morning news in the last two days—is a service federation that is owned and controlled by 31 community-based cooperative business enterprises located in Nunavut and Northwest Territories. Arctic Co-operatives coordinates resources, consolidates purchasing power, and provides operational and technical support to the community-based cooperatives that provide food retail stores, gas bars, hotels, and arts and crafts marketing.

Federated Co-operatives Limited is a multi-faceted organization. It is owned by approximately 235 retail cooperatives located throughout western Canada. These co-ops are the member owners. Federated Co-op provides central wholesaling, manufacturing, marketing, and administrative services to its member owners, in the form of feed plants, food stores, petroleum operations, and a refining facility.

Co-op Atlantic is the second largest regional cooperative wholesaler in Canada and the largest co-op in Atlantic Canada. Based in Moncton, New Brunswick, Co-op Atlantic is owned by more than 100 cooperatively owned businesses. Co-op Atlantic provides food, agriculture, energy, social housing, and real estate services to organizations and businesses in more than 150 communities.

These are the large, established cooperatives, and when we talk about cooperatives there are all different sizes and shapes. If you look in your ridings, we see many co-op forms, from agriculture to housing, day care to groceries, health services to water supply, to radio stations and manufacturing. The list is long. The possibilities are endless. They are already working in your backyards.

With regard to innovation, it happens in cooperative models every day. Not only are co-ops working in your ridings and helping your constituents, they are developing innovative ways and meeting unmet needs for your communities and the citizens you represent. The cooperative model of ownership is flexible, resilient, responsive, and adaptable enough to respond to the concerns of local communities.

One example of this innovation is Aashiana day care, in Ajax. This co-op provides day care to members who are new Canadians, and it allows women to achieve economies of scale through purchasing food in bulk, sharing administrative and marketing costs, and accessing professional development.

HealthConnex, which is in Truro, Nova Scotia, is changing the focus of doctor–patient relationships from sickness care to actual health care. Through various web-based services, HealthConnex is providing doctors with more time to concentrate on wellness and keeping people healthy.

Modo, the car co-op in Vancouver, which is the largest in Canada, is now 15 years old. It's a not-for-profit car sharing cooperative, which was incorporated in 1997 to foster car sharing and raise awareness about the benefits of sharing cars over individual ownership.

These are just some examples of innovation. Cooperatives are economic engines of the Canadian economy, and we heard that previously in our three other talks.

Cooperatives have a unique governance model, but they are also businesses. As businesses, they provide needed services to their members and to all Canadians. They employ Canadians: 150,000 jobs. They contribute to job creation. There are at least 2,000 communities with at least one credit union or caisses populaires, and more than 1,100 communities in which a financial cooperative is the only financial service provider.

Cooperatives make money. They have $330 billion in assets. They pay taxes. The Income Tax Act does not favour cooperatives over other types of corporations. Whether you are a wheat pool, a dairy co-op, a retail co-op or a co-op wholesaler—all pay income tax at the same rates and with the same rules.

Cooperatives foster and create innovation—I have shared with you lots of different types of models. Cooperatives share good governance. They are democratically controlled enterprises designed to meet the economic and social needs of their members.

Cooperatives are non-partisan. Cooperatives are a proven tool for mutual self-help, allowing people to work together towards common goals. Members are from all political parties.

Co-ops are a unique form of enterprise. They have been an economic force for over 100 years. They built Canada. They have been instrumental in building communities from coast to coast to coast. A cooperative is a business—a business with a difference. They are community-based and values-driven enterprises that care not only about the bottom line but also about the needs of their members and the quality of life in their communities. A cooperative is jointly owned by the members who use its services. All members of co-ops are equal decision-makers in the enterprise, using a democratic system of one member, one vote. These are values we cherish as Canadians.

In turn, all members share the benefits of cooperation based on how much they use the cooperative service.

The development process for a co-op is not an easy one, believe you me. I have been involved with it for years. There is no single co-op development guide that will answer all questions. Unfortunately, available federal business services are not meeting the needs of the sector. Yes, we have a book and lots of services, but it's not meeting the needs of the sector.

The cooperative model as a way of doing business is not readily recognized within the government's language on business. However, the survival rate of co-ops is higher than that of traditional businesses—we heard that previously. Two studies done in Quebec and studies done in B.C. and Alberta have given the statistics for the survival rate of cooperatives.

Our sector is not looking for handouts or special treatment. Our sector simply wants to access what other Canadian businesses already have available to them. At the same time, understand that our business model is unique.

Cooperatives have positive relationships with the government. The cooperative landscape has recently changed, and so has our way of thinking. As part of the deficit reduction action plan rolled out in Budget 2012, Agriculture and Agri-Food Canada reduced spending by 10%. We all know this. It has cut the CDI program and downsized Canada's role in the cooperatives secretariat.

The cooperatives sector understands why these cuts were needed and supports the government's efforts to balance the budget. These cuts do not signify an end to the cooperative sector's relationship with the federal government but rather an opportunity for a new direction.

So what are the difficulties for cooperatives trying to obtain federal financing? Because of its unique ownership, a cooperative is distinct from other small and medium-sized businesses. When we compare the two models, we see where the difficulties present themselves for co-ops when trying to access current federal funding and programs available to SMEs. Newly developing co-ops don't have access to equity or established business track records, and as a result they tend to fall through the cracks. This is also partly due to the fact that people managing the mainstream business support programs have limited knowledge and understanding of co-ops and how they operate.

Access to financing for cooperative enterprises has been an age-old problem. So much so that many cooperatives have given up trying to work with the federal government. Some of the main issues that impede cooperatives from accessing federal funding and programs are a lack of understanding among government staff as to what a co-op is. Most don't see it as a serious business model. In its language, current federal programming refers to corporations, partnerships, sole proprietorships, and not-for-profits, but rarely cooperatives.

There is a lack of understanding of ownership. A cooperative is an enterprise owned by the members who use its services, purchase its goods, transform its products, or who are employed there. The inability of co-op members to provide personal guarantees is seen as lacking in security. Co-op applications don't fit easily in the boxes of government programs, which are mainly designed for private businesses. If you don't fit the box, you don't qualify.

A new home is needed at Industry Canada. Agriculture and Agri-food Canada has historically been the federal department responsible for cooperatives. The cooperative sector would like to see Industry Canada as the federal department responsible for cooperatives. The diversity of the cooperative sector aligns much better with Industry Canada compared to its current home at Agriculture.

The partnership between Agriculture Canada and Canada's cooperative sector has been a good one, but the sector goes far beyond agriculture and farming. Cooperatives operate and employ many different industries, such as retail, manufacturing, financial services, insurance, housing, health care, social services, natural services, utilities, energy and water, transportation, professional technical services, and cultural and tourism sectors.

A partnership between Industry Canada and the cooperatives sector is a natural fit. The cooperative model can help not only Industry Canada but all federal departments, agencies, and crown corporations to implement their policies. We suggest applying a cooperative lens to policies and/or programs to see how cooperatives can be better used within the government.