Special Committee on Cooperatives Committee on July 10th, 2012

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Thank you.

I just want to add to the comments of my colleague, Mr. Lemieux, that we are going to be going to the cooperatives in Quebec. We're really looking forward to it, and I think we are very lucky to have this opportunity to learn more about cooperatives. We're really looking forward to doing it more internationally, on an international level, to find out what works better in other countries when it comes to health care and how we can improve our health care system, and be more efficient and fiscally responsible, too. We are looking forward to that.

I just have one question for Mr. Lowery. Of the 9,000 cooperatives in Canada, only 70% are registered federally. Is that right?

Okay. What kinds of problems...is there a lot of red tape when it comes to registering a cooperative federally? Is it very complicated?

[Frank Lowery]

No. Registering a cooperative is basically like registering a company. The federal government keeps a registry.

The only problem with the cooperative registry federally is that even if you look at the registry, there are many co-ops on there that no longer exist. It's not really generally kept up to date, but it's no different from registering a company on the same basis.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

So the access to programs is fairly easy. I've recently downloaded the—

[Frank Lowery]

Could I respond to that?

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Yes.

[Frank Lowery]

That's a separate issue, and it's back to Mr. Lemieux's opening comments. I would agree with him. Obviously I wouldn't be here talking about co-ops in a positive way if I didn't think they were robust and institutions that we should be promoting.

But I would say—and I agree with his comments, so he's heard all these positive things about co-ops—that there are three things that I don't think you mentioned, which are relevant in the context of why I'm here and why I think other people are here. One is that the level of awareness is very low. We've heard that from everyone. That needs to be raised.

The second is that we believe in an even playing field. I've illustrated one example in the insurance industry, that under the Insurance Companies Act you cannot incorporate a cooperative insurance company. In fact, I don't think you can do it provincially either. So we need an even playing field.

I think that's what the rural and cooperatives secretariat did, incidentally. I think they addressed both those issues.

The last one is that I think you, as government policy-makers, people who are involved in the process and who have been elected to Ottawa, need to think innovatively sometimes as to how you solve some of the problems you have, and some of the public policy challenges you have, particularly in the health care and energy sectors. I think these are things you have to address. You have to ask yourself—put aside the issue of whether you give money to them—whether the cooperative form of enterprise is one that's actually worth promoting. I happen to think it is.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Do you have any more comments or closing remarks, Mr. Gazzard?

[Nicholas Gazzard]

Again, I would echo those remarks. There is room for all kinds of different models of enterprise. There are the traditional ones we know—small and large businesses. But it has become apparent to me, with the amount of interest in cooperatives around the table here today, together with the desire to know a lot more than the body of knowledge seems to be, that there is a great deal of understanding yet to be had about how cooperatives can complement existing business models and can in fact show an ethical alternative, in many cases.

I'll go back to my earlier remark. I'm not the sort of person who attacks capitalism for the sake of it, but certainly we've seen some horrible behaviour, especially in the financial industry over the past five or six years, that seems to be going on. And I think cooperatives do show....

You can have large enterprises as well. Look at Mondragon cooperative in Spain. I don't know if you know about the federation's bank, or Mondragon, but it is huge.

You can have a local day care. It's a very adaptable model that has an ethical basis. It supplies jobs and can create growth. And actually, small cooperative start-ups have a much better success rate for continuing over five years than normal small business start-ups do. So there's a lot to be learned. There's a lot to be gained.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Do I have any more time?

[Frank Lowery]

Can I just add one little thing to that comment?

Certainly when I'm speaking about cooperatives, I'm speaking about other democratic organizations as well, such as mutuals, fraternal benefits, and reciprocal exchanges. It's really elemental democratic ownership by the people who are being served by them. That's what I'm speaking of.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Would you like to add anything else, Mr. Taylor?

[John Taylor]

Just building on Mr. Lowery's last point, when you look at where cooperatives and mutuals and reciprocals come from, they are essentially individuals showing initiative but acting as a group when there is really no profit motive. There is no one in the profit sector willing to deal with many of the issues individuals are facing. I don't think we should lose sight of that fundamental cultural value that drives all of the organizations that are appearing before your committee.

[The Chair, Conservative, Blake Richards]

Next on the list we have Ms. Gallant, for five minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

I have a question that pertains to federally regulated cooperatives. In our previous session, it was mentioned that we should be looking at cooperatives through a smaller lens rather than just treating the federally regulated cooperatives as other federal institutions. There were a couple of oblique references. I'm wondering, from your standpoint, especially with respect to insurance and mutuals, if you see it to be the case that, being federally regulated and a much smaller entity, it isn't, as a consequence, a level playing field.

[Frank Lowery]

I'm not sure that this specific issue applies to The Co-operators. We're an entity that has about $10 billion in assets. We have about $3 billion in annual revenue. We're a relatively large institution. Our cooperative is not a regulated financial entity for the purposes of federal legislation. Our insurance companies are.

Having said that, what happens is that when the regulators come to look at our insurance company, they look at things in cooperatives to make sure that we're not doing “bad things”. I'll give you an example. I was listening to Mr. Butt's comments with great interest. There is a principle, which is cooperation among cooperatives. But you need to keep in mind that in an organization like ours, which has federally regulated financial institutions, where most of the money is, we have to run it in a prudent way. We cannot, for example, say that we like co-op housing, so we're going to invest $100 million in co-op housing with a .5% return.

[A voice]

You can't say that?

[Frank Lowery]

No, we can't. I might say it personally, but as an organization we cannot. So we are subject to exactly the same prudential standards.

Having said that, we do actually do things to support the cooperative sector. Co-operative Housing is a member of The Co-operators. We do actually have a branded insurance policy with them through to their members. So we do things to support them, but they are all in the context of business and all in the context of the normal prudential regulation.

[Nicholas Gazzard]

Could I add a remark to that, Mr. Chair, very quickly?

[The Chair, Conservative, Blake Richards]

Yes, I'll allow that, and then we'll only have a few minutes remaining, and I'll go to Mr. Preston.

[Nicholas Gazzard]

To give you a little perspective, Ms. Gallant, no housing co-ops, for example, are federally incorporated. We're all incorporated under provincial legislation. An enormous number of the cooperative enterprises in the country are incorporated provincially because they don't do extra-provincial business.

[The Chair, Conservative, Blake Richards]

Thank you very much.

We have about three and a half minutes remaining in our time allotted for this panel.

I have Mr. Preston on the list, so I'll give you that three and a half minutes.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

I'll rush, then.

First of all, thank you. This is about learning, as you mentioned, Mr. Lowery, and that's truly what it is. If we thought we knew it all, we wouldn't have to have this committee in the first place. We don't know it all. We are trying to gather all the information we can.

Awareness is something that Madam Guy mentioned this morning too. One of her first priorities was getting the awareness out there. We have 9,000 cooperative enterprises across Canada, and there are many numbers of members in each of those co-ops. Those people don't need to be taught the secret we're all learning about how well cooperatives work or how well it happens.

How do we get the message to the rest of Canada? How do we tell them about how good cooperatives are, and why aren't they looking at them as part of either a business transaction or a way of living?

[Frank Lowery]

I don't have the silver bullet. I will say that on the provincial level, in Ontario, even though we're a federally regulated institution, we're very active in the communities. That includes the head office of our life company in Regina. Basically, we're out there trying to be in the community.

In Ontario we were advocating for the creation, interestingly, of a cooperative secretariat modelled on the federal cooperative secretariat, the reason being the success of the federal cooperative secretariat in bringing a level of awareness, within government particularly, of co-ops and their nature.

I think over a period of three years I met, with the CCA or with On Co-op—their version in Ontario—something like 35 to 50 MPPs, and maybe one or two of them had any idea of what a co-op was. Most of our time was spent bringing awareness.

The co-op secretariat, in my view, was a great institution in the federal government. I know it's going to continue to exist in a lower form. But it's that type of thing—just bringing awareness.

In Ontario, there are these enterprise centres. If you went to an enterprise centre in Ontario and asked about the formation of business, they would never tell you there's a cooperative form. They'd tell you about a stock company. They'd tell you about sole proprietorship. They'd tell you about a partnership. But they would not tell you about a cooperative. Now, they do.

It's that type of thing. It's the little nicks, the little changes, getting people who face the public in places to actually talk about co-ops. We're making some strides, though not as many as we would like.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Very quickly, you mentioned in your opening, and I wrote it down—if I've written it down incorrectly, tell me—that you think you contribute something in the neighbourhood of $650,000 in fees to different, if you will, organizations you belong to that are cooperatively based.

I would guess that would be the same.... Would you contribute to cooperatively based organizations? Are you members of them and that's why these fees would be...?

[Nicholas Gazzard]

It's a much lesser extent. We don't have a $10 billion balance sheet. But we do provide assistance to different projects. We tend to keep our money within the housing sector.

On the issue of promotion, I don't have a silver bullet either, but this year has certainly helped. Having an international year has helped, and having this committee helps.