Special Committee on Cooperatives Committee on July 24th, 2012

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

Right. Agreed. Some of your stories really touched exactly that. You want to be part of the solution, not part of the problem, as someone said.

Mr. Whiting, you just talked about a high school program like junior achievement for cooperatives. What a great way to teach that piece there. That's really getting the message out about how strong a cooperative can be through the hard times.

Let's assume that in great times businesses succeed. I'd like to think that they are always great times. My businesses have been through some hard times and some good times, but because we won't let them fail sometimes that's exactly what happens.

You want to improve the conditions for each other, and you know, that's not something you would hear in a private business. I think it was Ms. Folkins who said the members want to improve conditions not just for themselves but for a group of people. That's what a cooperative does.

Monsieur Bélanger asked some questions about ACOA and your dealings with it. Each of you had maybe a little bit of...kind of negative to say about your dealings with the governments, even in your day-to-day, and how maybe they don't understand cooperatives.

As cooperative organizations, as organizations that represent numbers of cooperatives, what role are you playing in that education? What role are you playing in making, in this case ACOA, or in....? Across the country I'll keep asking other people from other federal development agencies: what role are you playing?

What role do you play on the provincial level, too, to teach the provincial economic development agencies, and what role do you play to teach just plain banks? We recognize now how superior credit unions are, but what do you do to teach them about the lending practices, the debt-to-equity ratios of cooperatives and those types of things? Can you tell me what role your umbrella organizations play in that?

That's to Ms. Kelderman, and then each of you, if I could, before the chair cuts me off.

[Dianne Kelderman]

Thank you. That's a terrific question, and I'm very happy to answer it.

We are on the doorsteps, literally, of ACOA and other federal agencies all the time, raising the flag for cooperatives--not in a confrontational way, but simply asking why we are not included and why this program is prohibiting access by this particular sector in our province.

I should tell you that the relationship with the cooperative credit union sector in Nova Scotia, and the Nova Scotia government—and not only this particular government, but also governments in the past—has been unparalleled across the country--very positive, very productive, and very progressive, if I can use that word, in terms of the kinds of results we've been able to achieve collectively for the economy of Nova Scotia.

So a very important role that we play is to be an advocate. To be an advocate you have to be in partnership, you have to be talking, you have to be educating, you have to be informing, and you have to be bringing both the government side and the sector side together to talk, to collaborate, to explore opportunities. We're doing that on a daily basis, and I think the results, as I said, speak for themselves. It's been a very productive relationship in Nova Scotia.

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

Mr. Whiting, very quickly, before the chair cuts you off.

[The Chair, Conservative, Blake Richards]

I'll allow a brief response.

[Dave Whiting]

What we've found is that it's not just government. When we were doing the community economic initiative funding, we had to go out and basically teach the program or explain it all to the accountants, who were advising the businesses, which were a little skeptical about it. So it's not just governments, there are other sectors as well. Any time it's new information, it's hard to get it through. So we've found we had to be aggressive and actually go out on their doorstep to get the point across.

[The Chair, Conservative, Blake Richards]

Thank you very much.

Mr. Harris, the floor is yours for the next five minutes.

[Dan Harris, NDP, Scarborough Southwest, ON]

Thank you, Chair, and thank you to the witnesses.

Before I continue, I'm going to speak on Mr. Bélanger's point to say that we are also very supportive of having that interim report so that we can then go to visit the international summit and learn what there is to be learned there and include that in the future report that will be tabled to Parliament. We think it would be a valuable addition and that we'd be missing an opportunity by not doing that.

There were some excellent statements made. I'm going to start with Ms. Kelderman. You were speaking about...and I love the motto, “great jobs close to home”, because of the community aspect that's fostered. In P.E.I., the example is that it has really kept close-knit communities together by having so many sectors of their local economies be part of co-ops.

You mentioned that there were 29 new incorporations. I'm sorry, was that 2009 or 2011?

[Dianne Kelderman]

2011.

[Dan Harris, NDP, Scarborough Southwest, ON]

Why do you think it was such a bumper year for new incorporations?

[Dianne Kelderman]

I suspect it had something to do with the economy and the crisis we were in, because cooperative businesses tend to do really well during times that are tough, for the reasons I gave when I responded to Mr. Preston. We tend to be rooted, we tend to look for solutions, we tend to get together and come up with solutions. So I expect it was that kind of reaction to what was going on in the economy. And cooperatives tend to grow during those periods. I would expect it had something to do with that, as well as something to do with the innovation that we've been nurturing in the province. We saw a record number. I expect 2012 will be equally good.

[Dan Harris, NDP, Scarborough Southwest, ON]

Do you think the CDI had any impact on why there might have been more growth, whether it be mentorship or assistance in starting up? Do you know how many groups participated in that program?

[Dianne Kelderman]

There were certainly a lot of groups in Nova Scotia that were contemplating cooperative business enterprises, solutions to community challenges or community opportunities, and did choose the co-op route and were able to move that forward based on the CDI. So absolutely, I think that would have had some impact as well.

[Dan Harris, NDP, Scarborough Southwest, ON]

Do you think the CDI program, rather than having been just taken away, should have been extended, reviewed, changed, or modified to include beyond start-up, that it should have continued in some form?

[Dianne Kelderman]

The decision around the CDI was a very interesting one. As we understand it, the reason for the CDI's being cancelled was because it was successful, because it was doing well. That's contrary to what normally happens inside of government, and inside of the private sector, really. When things are doing well, you ramp it up, particularly during an economic crisis. To cancel it because it was doing well doesn't make a lot of sense. We would have hoped that we would tweak it, enhance it, that it would be a collaboration, a partnership, and taken to the next level, which I think would have had some really important benefits for the country.

[Dan Harris, NDP, Scarborough Southwest, ON]

Thank you.

One of our witnesses this morning said that we have to keep our foot on the gas. And we think that this has been slamming on the brakes.

You mentioned that there are many housing cooperatives involved. I'm in an urban riding myself, with many local cooperatives, and they're all in housing. They're facing some particular issues with respect to funding and lending and extending their mortgages. As well, of course, bridge funding that's existed will be expiring in the next few years.

What kinds of challenges are your housing co-ops facing? And have they experienced this when trying to get financing to repair roofs, say, or make infrastructure improvements in the buildings?

[Dianne Kelderman]

I'm not here, obviously, to speak on behalf of the housing sector, because the Co-operative Housing Federation of Canada has made a presentation and is well equipped to do that and to answer those questions.

I can tell you that the housing cooperatives are members of our organizations as well. Their issues in Nova Scotia are no different from what they are across the country.

But I can tell you what is unique, I think, in Nova Scotia, and that is that we're looking at the future. We're looking at where the opportunity is in the future. We're interested in equity-based housing. We're interested in home ownership. We're interested in working with the co-op housing sector to not only meet the needs they have and to mitigate the risk they have but to look at what the next version of community housing ownership is. That's where we are.

[Dan Harris, NDP, Scarborough Southwest, ON]

Thank you.

[The Chair, Conservative, Blake Richards]

Thank you.

Next we have Mr. Payne, for five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

I thank all the witnesses for coming.

I believe, Ms. Kelderman, that you talked about an 11% dividend returned to your co-op members, which is a pretty nice dividend, I would suggest. I wouldn't mind having some of that myself.

This question is basically for all three groups here.

What about re-investment within the co-op itself? Is there a model you're using? Is there so much in terms of funding percentages? Maybe you could just sort of tell us what has been re-invested over the last couple of years.

[Dianne Kelderman]

I'm happy to respond to that, as well.

Our members, the co-ops and credit unions, generally have three pieces they look at. When we're fortunate to have a surplus or profit in our business entities, we look at three things. First, and most important, we look at re-investment. How do we grow and expand our business enterprises? We're only able to meet the needs of our community or the needs of our members if we're growing and expanding. So investment is critically important.

Second is the return on investment to our members, who are the people who are putting in the money and are willing to risk their investment in our enterprises. Patronage dividends and returns are important.

Third is investment in community in the other kinds of things we support, whether it's a housing initiative or a health care initiative, such as Connecting People for Health, which is wholly financed by the cooperative and credit union sector. What kinds of things do we want to support and advance that meet our principles and values?

Re-investment, return on investment, and commitment to community are three things all of our boards look at when making decisions about surpluses and profit.

[LaVar Payne, Conservative, Medicine Hat, AB]

Do you have a number?

[Dianne Kelderman]

I'm not sure. It's different in every co-op or credit union. The board sets the parameters. In some co-ops, it's set in the by-laws in their constitution that 20% must go for re-investment or those kinds of things. It's different, based on by-laws and constitutions, but it's consistent as a priority in every one.

[LaVar Payne, Conservative, Medicine Hat, AB]

Mr. Whiting.

[Dave Whiting]

I can tell you, because I just met with them yesterday, that one funeral co-op is not giving a dividend. It's going back into the business, because they've just invested in a $300,000 addition. If you've been involved with a funeral, as I have, in the last couple of years, you would know that they've done just a tremendous job in looking after the families and in setting it up for the families. Now they're looking at putting in a crematorium, because there's only one provincial crematorium on Prince Edward Island and one private one. There isn't one in Summerside, for instance, so they're looking at doing that. So there won't be a return there.

A housing co-op, a small one, in Summerside again, needs new windows. The roofs need repairing now. Again, it depends on the individual co-op's circumstances. These houses are getting to be 25 to 30 years old, and I think we all know where you're at with a house that old. You need to replace things.

[LaVar Payne, Conservative, Medicine Hat, AB]

Yes.

Ms. Folkins.