Special Committee on Cooperatives Committee on July 10th, 2012

[The Chair, Conservative, Blake Richards]

I will call the meeting to order.

As you can see, we have a fairly full schedule in front of us here today. I've asked the officials from the three departments here—Agriculture, Industry, and Finance—to be with us for the first hour. Then, of course, as you can see, for the rest of the day we have a good cross-section of witnesses from different parts of the industry, and obviously a good cross-section of witnesses who have been suggested to us by both government members and opposition members. I think we have a good starting point for the committee here today.

We have the officials here from Agriculture, Finance, and Industry to start the first hour. Before we start with their testimony, I will just read to members from O'Brien and Bosc, as a reminder about what questions the officials will deal with. This is from page 1068:

Particular attention is paid to the questioning of public servants. The obligation of a witness to answer all questions put by the committee must be balanced against the role that public servants play in providing confidential advice to their Ministers. The role of the public servant has traditionally been viewed in relation to the implementation and administration of government policy, rather than the determination of what that policy should be. Consequently, public servants have been excused from commenting on the policy decisions made by the government. In addition, committees ordinarily accept the reasons that a public servant gives for declining to answer a specific question or series of questions which involve the giving of a legal opinion, which may be perceived as a conflict with the witness' responsibility to the Minister, which are outside of their own area of responsibility, or which might affect business transactions.

I just read that as advice to members.

We have with us today Claude Carrière from Agriculture, John Connell from Industry, and Jeremy Rudin from Finance.

I believe, Mr. Carrière, you are going to provide the opening statement on behalf of all three, and then we'll open it up for questions from members.

Mr. Carrière, the floor is yours for ten minutes.

[Claude Carrière, Associate Deputy Minister, Agriculture and Agri-Food Canada]

Mr. Chair, with me is Jeremy Rudin, assistant deputy minister of the financial services branch from Finance Canada, and John Connell, associate assistant deputy minister of strategic policy at Industry Canada.

My colleagues are here with me today as the responsibility for cooperatives is shared among the three departments. I welcome this opportunity to address this committee and contribute to your discussions on this vital sector of our economy. Before I do so, I would like to place the issue in the wider context of our department's contribution to the government's overall deficit reduction strategy as part of economic action plan for 2012.

As we all know, the government is moving to a smaller footprint and is asking departments to focus on their core mandates. Much of what our department does is of direct benefit to rural Canada. Our core stakeholder groups remain agricultural producers and processors. This is the end of a cycle in which programs were automatically renewed and the start of an ongoing objectives-based evaluation process, a process in which certain initiatives will also be gradually eliminated.

The programs of the rural and cooperative secretariat have achieved their objectives, and like many of the programs in other departments, they have not been renewed. There is no question that the rural and cooperatives secretariat has laid solid groundwork for communities to more effectively interact and take advantage of opportunities that exist to advance their interests. That said, we believe that virtually every department of government has a responsibility for rural development, particularly economic development. Every department needs to ensure that its programs and policies reflect the unique circumstances of rural Canadians. In other words, they should be viewed through what has been called the rural lens. In that spirit, we are committed to working with other government departments to ensure rural concerns are integral to policy and programming decisions.

To facilitate that, we will have a small but focused policy coordination and research group, the role of which will be to leverage the resources and influence the decisions of other government departments. This dedicated group will be able to draw resources from across the department and will assist in integrating the work of Agriculture and Agri-Food Canada in its portfolio agencies in the interests of rural Canadians.

Of course, cooperatives will continue to play a critical role in this new approach. I am sure members around this table are fully aware of the important contribution that cooperatives make to Canada's economy, providing goods, services and jobs for Canadians from small communities to large cities.

The co-op sector continues to show that it can be a competitive—and profitable—business structure in today's economy, responding to the needs and drivers of the markets in the communities it serves. Canadian farmers can count on a very strong network of agricultural cooperatives that provide them with good production cost control, market access, and skills and expertise transfer.

There are a number of ways that the government has shown its support cooperatives over the years. One example is the Canadian Agricultural Loans Act, a financial loan guarantee program that gives cooperatives easier access to credit. Under CALA, agricultural cooperatives can access loans of up to $3 million to process, distribute or market farm products. Agriculture and Agri-Food Canada and portfolio organizations continue to provide a wide variety of programs for agricultural cooperatives.

This also gives me a chance to talk about AgPal. AgPal is a new web-based discovery tool developed by AAFC to help producers and others in the agriculture and agri-business sector find the federal, provincial and territorial programs and services that specifically apply to them. Agricultural cooperatives can use this tool to find a wide variety of programs.

There are programs such as the agriculture education program and agri-opportunities available to existing and start-up cooperatives that reflect the sectors in which they are operating, the needs of the people who are running the cooperatives, and the needs of the people who are accessing cooperatives' services.

All of this information is made available through the Guide of Government Programs Available to Cooperatives, a copy of which has been provided to thousands of cooperatives across Canada. The guide is also available on the web.

The provinces and territories also play an important role in developing innovative ways to capitalize cooperatives and cooperative development.

The government is pleased to be supporting the International Year of the Cooperatives, declared by the United Nations for 2012. We are working with the Canadian Cooperatives Association and the Conseil canadien de la coopération et de la mutualité to promote this international year and make it a success, including the international summit in October in Quebec. As part of our commitment, AAFC will work with the sector to prepare a final report to the United Nations on 2012 in Canada.

In summary, while our department sharpens its focus on its core mandate, the needs and potential of rural Canada and the cooperative sector will continue to inform our policies and programs, both at AAFC and across government.

Thank you once again for the opportunity to be part of this discussion.

Thank you, Mr. Chair.

[The Chair, Conservative, Blake Richards]

Great. Thank you. You stayed well within your time as well.

We'll move to our questioning now.

Madame LeBlanc, you have five minutes.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Thank you.

My question is for Mr. Connell.

Do you think the cooperative model is an important vector in Canada's economic development?

[John Connell, Associate Assistant Deputy Minister, Strategic Policy Sector, Department of Industry]

Yes, of course. It is very important.

I think there are different models for entities to contribute to the economic growth and prosperity of Canada, and cooperatives are one of those. Others would include for-profit enterprises, non-profits, and cooperatives themselves, and for all of those we have governing legislation to ensure the framework that's in place is appropriate to the needs of the entity concerned.

I think in many communities across Canada co-ops are playing an important role. They're found in all sectors. I think in terms of proportionality, it's significant that there are some 9,000 or so cooperatives in Canada. That would compare, though, proportionally, to about 1.1 million small businesses. I think in many cases you have small businesses and co-ops that are beside one another in the same communities, serving the same interests, the same clients in some cases, but they are following completely different business models to do so, one with a membership-based approach, the other with a typical business model approach.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Actually, there is a cooperative model and a model more particularly for business. From the perspective of the industry in general, what do cooperatives contribute to the communities in all regions of the country?

[John Connell]

That is a question for the cooperatives

themselves and the particular needs that are in the communities.

As I said earlier, I think a variety of particular interests are served by co-ops. They are found in all sectors, so they range from agriculture to financial services to retail workers' co-ops. I think in some cases in isolated communities they play a key role. Communities in which people associate with one another much more readily form co-ops to meet their particular needs.

So I think they play an absolutely key role in certain circumstances, and I think those circumstances are driven by the members themselves who form the co-op. It's people coming together and determining that their needs are best met through this particular model as opposed to some of the others that exist.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

In your opinion, this really is an essential part of our economy, through its principles as well, because it really must meet the needs of the communities that other types of businesses or other models will not necessarily meet. Is that correct?

[John Connell]

Yes.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I would like to talk about the role of the Department of Industry. We see that the cooperatives have changed a lot over the years. They came about at a time when, in Canada, more people lived in rural areas than in urban ones. We know all about this evolution. In fact, the cooperative movement and the cooperatives have evolved to include other business lines beyond agriculture.

But how does the Department of Industry see its support for all the cooperatives? Actually, how do you see this role that involves supporting cooperatives that go beyond agriculture? In your opinion, how could the Department of Industry support the cooperatives? You said it was a very important, if not essential, economic model for the Canadian economy.

[The Chair, Conservative, Blake Richards]

Sorry, it will have to be a very brief response.

[John Connell]

Industry Canada has a key role, really, in ensuring that there's economic growth and innovation throughout the country in respect of all business models, so I think we have particular programming that would be available for businesses and cooperatives alike. It includes such programs as the Canada small business financing program and the Canada business program for obtaining business information. The Business Development Bank of Canada within our portfolio is a keen supporter of co-ops as well.

[The Chair, Conservative, Blake Richards]

Madame LeBlanc, your time is up.

We now move to Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you very much, Mr. Chair.

First I would like to thank you for being here to basically get our committee started. I must say that, just from our initial meetings, I think all MPs are very interested in informing themselves on cooperatives—their presence in Canada, their strength in Canada, the successes they have encountered, and some of the challenges—so I think it's good that we are taking this opportunity to meet.

I will also say that the summer is bit of a funny time to meet, but what's nice about it is that we don't have all of our other parliamentary duties conflicting with what work we're trying to accomplish as a committee. It allows us to focus on the matter at hand, which is definitely a plus.

Certainly in my riding of Glengarry—Prescott—Russell there's a good number of cooperatives. It is a very rural riding. It's right beside Ottawa, between Ottawa and the Quebec border. From the work I've been doing with cooperatives in my riding, my sense is that cooperatives are healthy. They're robust. They have a good, strong presence within the riding. They contribute economically to the riding.

I wanted to get a feeling from you, Mr. Carrière, and perhaps the other witnesses, on co-ops in Canada. When we look at a cross-Canada snapshot, would your assessment be that they are on good, solid footing, that they do contribute to the Canadian economy, that...?

How would you define their strategic role within Canada, and then, how are they actually fulfilling that role on the ground?

[Claude Carrière]

As has been said by you and Monsieur Lemieux and by Madame LeBlanc, I think cooperatives are quite an important feature in Canada.

There are more than 9,000 co-ops. There are approximately 800 in the agricultural area. Generally, they have about 18 million members, so a lot of us are members of cooperatives in various fields. They are in agriculture, as I mentioned, but also in health, financial services, child care, housing, insurance, and a great number of areas. They employ about 155,000 people. They have more than $250 billion in assets.

Growth in employment has been tracking the economy. They are present in the north. In some provinces they are significant employers, if not some of the largest employers. They allow members to reduce their risks or reduce costs, or they provide certain benefits to their memberships. As Mr. Connell has said, there are a number of other models of economic development, but cooperatives is one that has been valuable in rural areas.

As you said, Monsieur Lemieux, cooperatives are doing quite well. They have grown and are successful in their chosen fields.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Right.

The Library of Parliament, of course, has provided us with some information. I'm looking at revenues for the top 50 non-financial cooperatives in Canada. I see, for example, in 2005, they're in around the $19 billion mark; 2010, five years later, they're up at $25 billion. That's good growth. That's impressive. I'm looking at assets as well. I see, for example, significant asset growth over those five years.

If I go from the pan-Canadian view back into my riding, I have St-Albert Cheese, which is a farmer-owned co-op. It makes the best cheese in the world, I might say. Their success has been growing. They have increased their distribution. They are going farther abroad from St-Albert to sell their cheese. Sales have gone up. They're doing much better than they were five or six years ago.

I think what you're saying is that when you look across the spectrum in Canada, you're seeing the same type of picture.

[The Chair, Conservative, Blake Richards]

You have about 30 seconds to respond.

[Claude Carrière]

Well, my answer is quite simple. Yes, we agree that cooperatives in agriculture have been doing well. This is our core area. More generally, we've seen that cooperatives are successful.

I understand there's a study recently from the Quebec government that indicates that cooperatives are more successful than other models. They last longer. After five years there are a greater percentage of cooperatives still in operation than small businesses, regularly. We feel that the cooperatives sector has been successful and is successful today.

[The Chair, Conservative, Blake Richards]

Thank you. Your time is up.

Monsieur Bélanger, you're up next for five minutes.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Thank you, Mr. Chair.

I have a few questions to ask quickly, to start.

Mr. Rudin, thank you for being here.

Can you tell us when we could expect regulations to flow from the decision of two years ago to allow for co-op banks? There are regulations pending. Can we have a sense of when that might be coming forward?

[Jeremy Rudin, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance]

Yes, indeed. Budget 2010 introduced the notion of federal credit unions, which are cooperatives. The legislation has been passed by Parliament. The step that's necessary, as you mentioned, is regulation. I'm happy to report that on July 6 these regulations were prepublished for comment. The comment period is 30 days.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Last week.

[Jeremy Rudin]

Indeed. So the comment period is 30 days, and then we'll look over the comments and plan to move expeditiously to bring forward the final version.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Thank you.

Could you tell me if your respective ministers will meet regularly with representatives of the cooperatives and national associations?

[Claude Carrière]

I cannot tell you, Mr. Bélanger.