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.
