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

9:45 a.m.

Associate Deputy Minister, Agriculture and Agri-Food Canada

Claude Carrière

I don't know. I know that we as a department cooperate and collaborate with the group that is organizing that. We have worked with them on websites and promotions and the like. There may be other assistance, but I'm not aware of that.

9:45 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

This is of course going to be an international summit that regroups cooperatives from all across the world. As you said, the local sector is doing well, and I think we think we could all potentially benefit from having those international co-ops here and having the opportunity to go speak with them and meet with them.

Do you think it might be valuable for this committee to go to that summit and meet with the international cooperatives to get a sense of what the best practices around the world are?

9:45 a.m.

Associate Deputy Minister, Agriculture and Agri-Food Canada

Claude Carrière

I am not an advisor to the committee on what it feels would be useful. I believe the summit itself will be quite interesting and will cover a number of areas on cooperatives. I believe that Canadians have expertise both to share and to learn about.

9:45 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Thank you.

This question might be split between you and Mr. Rudin. During the opening statement, you mentioned the guaranteed loans for farms. We're having an issue now with funding ending for residential co-ops. There are some pilot projects with credit unions, but they are having difficulty lending and extending mortgages and seeking the financing for long-term financing in order to be able to do renovations and repairs on buildings, as well as continuing to offer some low-income subsidized housing.

Perhaps either or both of you could give an impression about what kinds of changes you think might be needed in order to facilitate residential cooperatives getting the kind of financing they need down the road.

9:45 a.m.

Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance

Jeremy Rudin

I'm afraid this isn't an area that I'm very familiar with. The federal government's involvement in this is through the Canada Mortgage and Housing Corporation, and the responsible minister is the Minister of Human Resources and Skills Development.

We can undertake to seek that information and provide it to the committee.

9:45 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

From what we understand, there is a pilot project going on in which some cooperatives are working with, say, Alterna credit and savings and trying to lend and extend an existing mortgage.

Of course, cooperatives expect, as would any individual or business, that if they are going to break an existing mortgage there will be a penalty and fees to pay. However, for a cooperative unit that has about 90 units of housing and is looking at lending and extending, CMHC is expecting them to pay a $140,000 penalty to break that existing mortgage. For a small cooperative, that is a huge amount. Does that not seem excessive?

9:45 a.m.

Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance

Jeremy Rudin

Again, all I can do is undertake to look into the matter and to either report back to the committee or have the responsible officials report back to the committee.

9:45 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

We'd appreciate that.

9:45 a.m.

Conservative

The Chair Conservative Blake Richards

You have ten seconds.

9:45 a.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Ten seconds?

I will just thank you all for being here.

9:45 a.m.

Conservative

The Chair Conservative Blake Richards

Thank you.

We'll move now to Mr. Preston.

9:45 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

Thank you.

Thank you all for being here today.

Before I get to questions, I just want to touch quickly on the conference coming up in October. This committee will have prepared its report by then, and the government response to that report will still be owed to us. I think the conference can be a great place where those types of conversations can take place, as to what's been suggested by this committee and what could be suggested in the government's response.

What are your thoughts on that?

9:45 a.m.

Associate Deputy Minister, Agriculture and Agri-Food Canada

Claude Carrière

As I said earlier in my response, I think the conference will cover some very interesting subjects in the area of cooperatives in a range of fields, and it will probably be a very interesting place where we will both learn things and share things.

July 10th, 2012 / 9:45 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

Absolutely.

My riding is mostly rural, although my experiences with cooperatives within the riding probably don't touch very much that is rural. My businesses bank with a local credit union. Libro is very successful in southern Ontario and does very many community projects, and they are a very successful cooperative credit union. We keep celebrating 100th or 110th anniversaries of our mutual credit unions, our mutual insurance companies, so they've been around for a long time.

I've been involved in my business...even inside the businesses I own some franchises that use cooperatives within them, from a purchasing point of view. The owners get together and of course reduce costs by cooperatively purchasing...or purchasing advertising. My experience with cooperatives is a bit different from what most people across Canada think. When they hear the word “cooperatives”, they think of agriculture, they think of rural Canada, and it's been a very successful model there also.

You suggested earlier that the programs that are available to businesses in Canada are available to cooperative businesses. Rather than create a niche that's only about cooperatives, can you tell us about some of the successes that have happened with cooperative businesses taking advantage...? I think, Mr. Connell, you mentioned a couple of cooperative businesses that are treated in our economic development agencies, or through Industry Canada, or through others, and they've been very successful by taking advantage of other government programs.

9:50 a.m.

Associate Assistant Deputy Minister, Strategic Policy Sector, Department of Industry

John Connell

I think the program I mentioned was the Canada small business financing program. This is offered in partnership with the banks, co-ops, other lending institutions, and it's a guarantee program. We don't have reporting from co-ops themselves. We've gone through and looked at anyone with the word “cooperative” and found out there was about $9 million loaned since 2004. We're now changing our data system so that we will have reporting from co-ops themselves.

I think the other relevant point about the program is that there are over 500 financial co-ops under the program that are in fact lenders, so they're lending out under the program, whether it be to businesses or co-ops. What's critical I think is that the co-op be operated for profit, that it not be a non-profit. So to be eligible for the program we need to see a revenue flow showing that it's being operated on an ongoing basis; that's the case for the vast of majority of co-ops in any event.

9:50 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

This is available to all businesses. Any business can go there, but a cooperative can also take advantage of these programs.

9:50 a.m.

Associate Assistant Deputy Minister, Strategic Policy Sector, Department of Industry

John Connell

It's for small businesses up to a certain asset size or revenue base. I'm not familiar with the figures off the top of my head.

9:50 a.m.

Conservative

Joe Preston Conservative Elgin—Middlesex—London, ON

I know of many small businessmen who wish they weren't not-for-profit, and they attempt to take advantage of most of these things too.

Mr. Carrière, you mentioned this morning the incredible sustainable success rate of cooperatives—I just read it over the weekend, and it's the first time I saw it—more than double, it seems, the regular start-up of a small business. What do you think the cause of that is? Is it just the fact that it's a group effort, it's a cooperative effort, rather than one entrepreneur? I've met many successful entrepreneurs in life who have been terrible businessmen, because they're all about one thing rather than their total business. Does a cooperative give you that type of thought process, where there's more than one brain perhaps attached to the business?

9:50 a.m.

Associate Deputy Minister, Agriculture and Agri-Food Canada

Claude Carrière

Well, it may in part be because they have a ready market. Their members and the communities in which they live might give them a boost that other small businesses perhaps don't have. There are business services and cooperative business services available now from the federations of cooperatives, so they perhaps have a better support network than other similarly sized small businesses that are not cooperatives.

As Mr. Harris was saying, it may be an area that is worth studying further. It has impressive statistics.

9:50 a.m.

Conservative

The Chair Conservative Blake Richards

For our last round of this panel, Mr. Marston.

I think you only have about three minutes.

9:50 a.m.

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

I'll have to fit it in. Thank you, Mr. Chair—I appreciate it.

Thank you, gentlemen, for being here.

I serve on the finance committee. During the pre-budget hearings, we had a pre-budget report given to us by a number of organizations: the Canadian Co-operative Association, the Credit Union Central of Canada, the Desjardins Group, The Co-operators. They had all come together with a report.

Mr. Carrière, was that report considered during the run-up to this particular change?

9:55 a.m.

Associate Deputy Minister, Agriculture and Agri-Food Canada

Claude Carrière

I'm not sure I'm aware of that report.

9:55 a.m.

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

Mr. Connell, would you be aware of it?

9:55 a.m.

Associate Assistant Deputy Minister, Strategic Policy Sector, Department of Industry

9:55 a.m.

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

You're not aware of it. Okay.

Well, that makes this line of questioning a little tougher, then.

I'll give you a little bit of background of what was there. They proposed a federal cooperative investment plan, a cooperative development plan co-funded by the federal government and the cooperative sector. There were a number of points they were making.

Mr. Preston, in his questioning, was very clear that we've had a major success in this area, better success than what we're seeing among some of the entrepreneurs out there in the business community. I think mentoring is a factor, Mr. Preston.

So we have a successful model. We have people within that group saying to us, “Here are some other ways we can advance it and make it better.” It just strikes me as strange that we're cutting back, with cuts to the rural and cooperatives secretariat and the programs of the cooperative initiative.

I guess it takes me to a place where I have to ask bluntly if this has just been an exercise to meet the austerity cuts of this government.