Good morning, and thank you for the opportunity to appear before the committee.
I'll give you just a very quick background. I have worked as a senior manager in a cooperative, I have sat on co-op and credit union boards, and I have worked as a consultant to cooperatives in Canada, the U.S., the U.K., Australia, and New Zealand. So I'm not just an academic. I have some mud on my boots.
Since 2000 I have been involved in creating a master of management in cooperatives and credit unions degree in the Sobey School of Business at Saint Mary's University. We created that special degree because managing a cooperative business is significantly different from managing an investor-owned company.
I would say that the key difference, first of all, is the business purpose. The purpose of a co-op is to meet member and community need. By contrast, the purpose of an investor-owned company is to provide maximum returns to the shareholders or investors. That, of course, creates a very different dynamic in terms of running the business, how it operates, and the kinds of pressures it feels and the kinds of pressures it responds to. We created the master of management program in co-ops and credit unions to apply the cooperative values and principles and business purpose to every aspect of cooperative business, and to assist cooperative managers in doing that.
At Saint Mary's we also created the Centre of Excellence in Accounting and Reporting for Co-operatives, which is funded by the Canadian Institute of Chartered Accountants. This fall we will be holding an international conference, in conjunction with the international cooperative summit, on cooperative economics. In other words, what would happen if we rethink economics, if we stop thinking of it just narrowly in terms of wealth creation and think of it instead as meeting human need? We might not turn to the economy and look at it simply in terms of its health being indicated by growth and the gross national product; rather, it's a healthy economy if it is providing its citizens with a decent income, with health care, with education, with the necessities of life. How well is an economy doing that as opposed to our simply having economic growth?
These are questions that are particularly germane for cooperatives, because unlike publicly traded investor-owned companies, cooperatives can do quite well, reasonably well, in an economy that is not growing, as we saw in 2008. Cooperatives did not produce any of the toxic paper that brought the global economy down. Cooperatives and credit unions, the financial institutions, continued to lend through the 2008-09 recession without having massive government subsidies and inflows of cash to encourage them to lend. They lent because their members needed loans, and they continued to grow. Cooperatives and credit unions around the world continued to grow in the face of the 2008 great recession. Again, they did that without the massive infusions of government funding that the global banking community needed.
So we have set up these programs, and we are looking at the global economy. Cooperatives have strong implications for public policy.
Often people will say that cooperatives need a level playing field, but too often what happens is that the playing field is defined as the playing field of investor-owned companies. In other words, let's give everybody the same playing field. What policy-makers need to ask themselves is what is needed for the encouragement of healthy cooperative development, which is a very different question.
If you think of the level playing field argument, you might think of it this way. Let's say I had a classroom of 100 students, and half of them were blind and half of them were deaf. If I said, “I'm going to treat you all equally; I'm going to write everything on the board and I'm not going to say another word”, it might be equal, but it sure as heck wouldn't be fair.
It is the same with cooperatives. They are a different kind of business. It's a different business model. It has some very positive public policy implications, such as its stability through the economic crisis. Cooperatives don't easily up and leave communities. Their failure rates are lower than private business failure rates, as studies in Quebec and across the country have shown.
So there are very strong public policy benefits from cooperatives. What we don't have is appropriate public policy support for cooperatives across the country. For example, if I were to look at my self-directed registered retirement savings plan, it is very difficult for me to put any of that in cooperatives and follow the rules of Revenue Canada. The government has lots to do in terms of coming up with a regulatory and policy framework for cooperatives that encourages them, and that is different but appropriate.
There are also regulatory issues concerning cooperatives. For example, in the recent couple of decades we've seen the need for harsher and harsher regulation around accounting standards. But cooperatives have not had the same problems with accounting. We haven't had the Enrons and the WorldComs and the Arthur Andersens. Cooperatives haven't had those kinds of business experiences. They haven't produced those kinds of business manipulations. Yet every time we tighten up, we ask cooperatives to jump through the same hoops as if they were Arthur Andersen.
So cooperatives need appropriate policy, appropriate legislation, and appropriate regulation. That will be a continuing challenge.
I'm open for any questions you might have, but I guess the thing I would end with is that the cooperative business model is the sleeping giant in the world. There are 100 million people working in cooperatives around the world. That is more than all the multinationals in the world put together. This is clearly a business model that works. It's clearly a business model, if we look at post-2008, that works very well in crises, that works very well in times of difficulty. In fact, one can argue that it even works better. This is an area where government needs to do some serious thinking in terms of how they create....
As a last point, we take our students to visit the co-ops in the Mondragón region of the Basque Country each year, and it's very interesting. When we were there in 2011, we asked officials what the gap was between the lowest paid and the highest paid. The gap was one to nine, as opposed to one to several hundred in the investor-owned companies in Spain.
We asked them how many people they have laid off as a result of the 2008 recession...in which Spain is not faring well. They have laid off none of their members. They haven't laid off anybody. As a result, in the three valleys where the co-ops are concentrated, the unemployment rate would be close to a structural unemployment rate of zero. In addition to that, in the Basque Country the unemployment rate as a result of the co-op presence is around 12%. In Spain it's 23%.
So in the midst of a staggering economy, the industrial cooperative base, with about 80,000 jobs in the Basque Country, is doing very well and is very strong. We could only wish that we had a similar cooperative industrial base in Atlantic Canada.
I'll leave it at that for now. If there are any questions, I'm sure all of us would be pleased.
I'm delighted to see you, Bryan and Jeff. It's very good to hear from you.