Special Committee on Cooperatives Committee on July 26th, 2012

[Margie Parikh]

I don't know that I can answer that definitively. I would say that because we're looking at the federal co-op act, we're talking about the federal level.

Tying that into an earlier question, start-ups, whether they're co-ops or not, may require funding. But if you combine that with the recognition that the cooperative model is good for us—it's good for our communities and it's good for Canadians—that's where I would say we should be looking at supporting that particular model.

[Ray Boughen, Conservative, Palliser, SK]

That's as opposed to putting the same number of dollars into health care.

[Margie Parikh]

I wouldn't trade off health care.

[Ray Boughen, Conservative, Palliser, SK]

I guess I am saying that there's one pot of gold; there's not a whole bunch. We have to draw on that pot of gold to help a whole lot of things, and co-ops may well be one of them.

[Margie Parikh]

Yes. In terms of looking at supporting small businesses, I'm not saying that we shouldn't be supporting all small businesses. But I would like an understanding and a recognition of the role cooperatives play, not only from an economic perspective but also from the community involvement and engagement perspective.

[Ray Boughen, Conservative, Palliser, SK]

Sure. Okay.

Neil, on recycling, SARCAN is Saskatchewan's recycling giant. It handles everything from plastic to paper to used TVs and used video recorders and all those kinds of things. There are a ton of plants around the province. In fact, they do such a good job that those that scavenge in the ditches of the highways and byways of the province don't find many tin cans, because tin cans are also part of the recycling business there. It covers a lot.

That's also available in towns and cities for residents and businesses. Businesses do a lot of recycling. It's not so much with the residential operation. How do you see that you can increase the interest of residents in recycling things?

We're big recyclers. We do paper. We do cans. We do bottles. Our trash in a week is a little wee bag. It's next to nothing.

[Neil Hastie]

You're absolutely right that the beverage container side is pretty well looked after. I think actually SARCAN and Saskatchewan have in fact a leadership role. They get the highest rate of recycling of beverage containers. Beverage containers are a very small part of the consumer packaging stream. It's all the other...what we typically think goes into our blue boxes. It's all of that material we're not doing very well with, and that's where the big opportunity is. We're burying millions of tons of perfectly good plastic and fibre in the ground every year. That was the perspective I was offering up. We're going to have to have a higher level of citizen engagement to crack that nut.

[Ray Boughen, Conservative, Palliser, SK]

Yes, there's independent—

[The Chair, Conservative, Blake Richards]

Sorry, I'll have to stop you there, as time has expired.

We'll move now to Mr. Harris for the next five minutes.

[Dan Harris, NDP, Scarborough Southwest, ON]

Thank you.

Of course the experience with recycling varies from coast to coast to coast in terms of the programs and availabilities and the costs and the differences between single-family dwellings and apartment buildings, for instance, many of which were built before recycling programs came into being, and they recycle at much lower rates.

I want to spend all my time with Mountain Equipment Co-op. I've been a member now for almost 17 years. I've still got the first backpack I bought from MEC, which I still use regularly, although this one's a little better for committee business.

I wanted to touch on Ms. Gallant's comments. It's actually very easy to find on the website if you go to the home page and go to “Sustainability”, and then from there you have a link to “Partnerships and Affiliations”, where all the national and regional partnerships are listed, as well as the “1% for the Planet”. There's an incredible amount of information on MEC's website, things that you would never see on a traditional business website in terms of the governance of the organization, in terms of how you stack up versus other organizations and companies.

I was very happy to see you come today and say you're doing okay and you don't need any help, but that where the help is needed is with the start-ups, with structural and financial supports. Yes, of course, governments have to make decisions, and this government, unfortunately, in our opinion has made decisions to provide large corporate tax cuts with absolutely no incentives towards job creation, but they can't find a few million dollars to help start-ups and cooperatives come together to actually build communities. We've been hearing time and time again from people that this is what co-ops are. They are in the community, they're for the community, they help grow the community, and they're about developing the economies of those local areas.

There's a strange phenomenon that often exists with MEC. For instance, in Toronto, when the store first located on Front Street, every outdoor outfitter in Toronto moved in next door. It then moved to Spadina and King and the same thing happened, where you kind of create a microclimate of everything to do with outdoors.

I noticed in reading this document that it actually reminded me of the magazines we used to get, which of course used to contain your members' ballots as well as information about board of directors. To be better for the environment, of course, that's where the e-mail came in instead. So that was a move MEC made so it would have less of an impact on the environment, and congratulations on that.

One of the statements made under “Returns and Redemptions” was that “member capital is MEC's main source of funding for future growth, given its limited access to other sources of funding due to its co-operative structure”. That statement sounds as if perhaps you had some problems seeking financing in the past. Do those kinds of structural challenges still exist, or does MEC prefer to self-fund everything?

[Margie Parikh]

We don't self-fund everything. We access capital. For example, right now we have some capital investments, so we've gone to the banks to access financing. But we have sizable revenues, and it is not as challenging as it might be if we were smaller. I'm not sure—I wasn't around then—but as I said—

[Dan Harris, NDP, Scarborough Southwest, ON]

Mr. Lemieux, for instance, said that a small co-op with no track record has great difficulty. But MEC now has more than 40 years of a track record and impressive growth, which makes it easier.

[Margie Parikh]

Yes, and because we are a member organization, we are risk-averse. That's another difference you find with cooperatives. While we do access capital from the banks, we do so after very, very careful consideration, because it isn't our organization; it's collectively our organization. So we do that with great care.

[Dan Harris, NDP, Scarborough Southwest, ON]

I wanted to continue with the employment side.

MEC employs a great number of people in a variety of different capacities. I was looking at the average wage, for instance, in the retail area. It is $13.74 per hour.

[The Chair, Conservative, Blake Richards]

Time has expired. Ask the question quickly.

[Dan Harris, NDP, Scarborough Southwest, ON]

In terms of what you pay your employees, how does that stack up compared to competitors in other retail establishments?

[Margie Parikh]

Our policy says that our lowest-paid employees, our floor staff, must be paid above market. And conversely, our highest-paid employees, our CEO and our senior staff, must not exceed the market. That is the policy.

[Dan Harris, NDP, Scarborough Southwest, ON]

Thank you very much.

[The Chair, Conservative, Blake Richards]

Thank you very much.

We'll move now to Mr. Payne, for the next five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

I want to thank all the panel members for coming out today.

I just want to talk a little bit about some of the finance stuff and what is available to co-ops as well as to small business. If you look at the dividends, your membership dividends are handled no differently, on a tax basis, than any other corporation's. You have low tax rates, which is the same as small business. So really, there's not any difference there.

Other co-ops have had an opportunity to invest in equipment for their organizations, in terms of manufacturing and production, and they also get accelerated depreciation. There are a lot of things that are very similar to other businesses.

In terms of start-ups, certainly there might be some funding available to smaller organizations or to co-ops for training, for example. There are a number of those things one could say are available to co-ops, are available to small business, and are available to large business. To that point, I think we can say that there is some opportunity for co-ops and not exclusively for small business or for large business.

Those are a couple of points I wanted to make there.

In terms of Mountain Equipment Co-op, I was looking at your $9-million patronage payment. Did that go out to individual members? How does that work? Or is it just on a redemption of your memberships once they're surrendered? How do you do that?

[Shona McGlashan]

What happens is that at the end of each year, the surplus we have is apportioned as a patronage return in proportion to the amount of business each member has done in the co-op during that year. People don't get that money in their hands, because under our rules, our members have directed us that the money will then be applied to buy patronage shares for each individual member in the organization. Over the course of the years, and in proportion to the amount of business you're doing in the co-op, your equity in the organization will grow—slowly. We're not talking huge amounts of money here, but it will grow. If members want to find out what their equity is, they can call our service centre and they can get that number.

Separately, each year the board of directors issues a share redemption, and they will make a decision such as, say, that for everybody who has this amount of equity, we're going to redeem a hundred dollars' worth of that, or various things like that.

They are two separate issues that are quite often confused in people's minds.

[LaVar Payne, Conservative, Medicine Hat, AB]

Okay, thank you.

Mr. Hastie, I was listening to your opening comments about recycling and getting it up to 70%. Part of that would be so that there would not be any greenhouse gases emitted from what was going into the landfills. I don't know if you've done any study, but obviously recycling is taking up some sort of energy. How would putting it into landfill compare to recycling, which a lot of people do, including me?

[Neil Hastie]

The science on recycling and the impacts for greenhouse gases is fairly clear. Yes, you're right, if I go and pick something up with a truck, the truck is burning diesel. It puts something into the atmosphere. But the net benefit still exists because you're avoiding the landfill. It's the net benefit. But it is true that recycling activities consume energy. It's an industrial process. It consumes energy. But the net benefit is still quite significant.

[LaVar Payne, Conservative, Medicine Hat, AB]

Do you have any numbers we'd be looking at?

[Neil Hastie]

I don't have them at my fingertips, but that kind of data has been looked at.