Special Committee on Cooperatives Committee on July 27th, 2012

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

It would be fair to say that the Assiniboine Credit Union story, which is a great story, is one that's really a build-your-own success story. Correct? It's a made-in-Manitoba success story?

[Nigel Mohammed]

Yes, yes.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Absolutely. Some of the things that we try to do as a government to encourage the further development of these build-your-own success stories is to look at things like the tax rate for small business. Were you aware that since our government has come into office, we've increased the income limit to which the small business tax rate applies from $300,000 to $500,000?

[Nigel Mohammed]

Yes.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Have you had any feedback on that from some of your clients, as far as that impact on their competiveness is concerned?

[Nigel Mohammed]

Actually, we have not. One of the things I can say is this: our standard to provide financing for small business really would be to those businesses that have a hard time getting conventional financing. So the financing that we deliver to our small business members quite often would be supported through loan guarantee programs. We have special partnerships with the province or, in the case of Western Economic Diversification formerly, to support business start-ups as well as expansion. So the individuals whom we serve through the centre of small business really are those who really have a hard time to begin with in getting financing through conventional means.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

On that note, were you aware that our government invested an additional $75 million in the Business Development Bank of Canada to support the formation of a late-stage venture capital fund in Canada? As well, in 2009 we invested $450 million in the Business Development Bank of Canada to support small and medium sized enterprises and firms. In fact, since 2009 our country has seen the growth of jobs by over 750,000 new jobs.

Do you think that Canada is well positioned now in terms of global competitiveness, especially for small business growth?

[Nigel Mohammed]

Yes, and I'd like Dale to step in here as well from a more provincial perspective. But what I can say from what we've seen in terms of financing small business, certainly the demand for small business, whether it's home-based or otherwise, has been growing, so we have been having a lot more requests for small business financing to be able to start and expand businesses.

I don't know if Dale wants to make any comments about what he has observed through Credit Union Central of Manitoba, from a Manitoba perspective. That might shed some more light on that.

[Dale Ward]

I don't know that I could connect the dots between these specific programs that you're referring to, but in terms of the Manitoba marketplace and the economy, small and medium sized enterprises are clearly a backbone piece and a real driver of our province. In Manitoba—

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

I'm sorry to interrupt you. I just want to get one more point in before my time expires.

I wanted to ask if you were aware that Canada's small business financing program is celebrating its fiftieth anniversary as of 2011. Since 1999 we've seen loans totalling about a billion dollars each year. Do you think this program has been helpful to some of your clients?

[The Chair, Conservative, Blake Richards]

The time has expired, so I'll just ask that you keep your response as brief as possible. Thank you.

[Nigel Mohammed]

The answer is yes. We continue to use the small business financing program as one of the tools, one of those loan guarantee programs, to be able to provide access to financing. So that program certainly, I would say, has been important, together with the formerly mentioned Western Economic Diversification microloan fund. They have been important in allowing us to be able to support the financing needs of our members.

[The Chair, Conservative, Blake Richards]

Okay. Thank you very much. I appreciate your brevity there.

We'll now move to Monsieur Bélanger for five minutes.

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

Thank you, Mr. Chairman.

Gentlemen, thank you for being here, and thanks to the panellists on the video conference.

Indeed, I've had the pleasure of meeting representatives of the gas federation and rural electrification and water, and that's a phenomenon unique to Alberta, unfortunately. It speaks to a will to make sure that the rural communities can thrive.

Technology changes, as you mentioned, and you're now having your meters read by wireless technology. I believe the same is true of the electrification, the REAs. However, no government in Canada has managed to go completely to wireless, high-speed, throughout the country. Rural communities are still waiting for that to come to them.

Is that part of the business plan of your federation to perhaps eventually offer the wireless capacity to clients in rural Alberta? I know that La Coop fédérée, which operates in four eastern provinces, is indeed interested in doing just that, and they're investing a substantial amount of money.

[Peter Harty]

No, it's not through our gas co-op federation. We looked at the possibility and put it forward to our members. The members turned it down. Then a group of our members formed a private company called Corridor Communications Inc. They are putting that wireless broadband Internet in place as a private company. But it's not part of the co-op. The idea started there. But as a co-op, it's one member, one vote. Not enough members agreed. So a minority of our membership took it upon themselves to form a company and go ahead with that incentive.

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

Are they being profitable?

[Peter Harty]

They're still in the expansion stage. They have 147 300-foot towers up and they're going forward.

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

All right.

I have only five minutes, so I'm going to direct a question to the Assiniboine Credit Union.

Yesterday the matter of the section 95 co-ops came up. I'm of the view that when a business arrangement is made, only if it's beneficial to both parties should it be broken. We found out in one instance yesterday that the mortgage rate for four years outstanding was at 1.2%. In that case I would have thought that the CMHC could easily arrange for a small penalty, or even no penalty, so that the co-op could borrow more, do the repairs required, generate more economic activity by doing that, and at the same time get a higher than 1.2% return by just buying a Government of Canada bond, for instance.

Would you agree that where there's a lower mortgage rate, and basically the loan that's being repaid could be reinvested at a higher rate, that is the circumstance where, indeed, there should be flexibility?

[Nigel Mohammed]

Yes, I would agree with that argument for sure.

The other advantage, if I can say, in terms of the wider co-op development impact, is that many of these housing co-ops probably.... Certainly in Winnipeg the Assiniboine Credit Union has been the first choice for these co-ops to look at getting that refinancing done. More than simply being able to benefit the housing co-op by allowing it access to the financing required to do its capital improvements, it is also about being able to get that financing secured.

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

I have to stop you there. I have a question.

Did your co-op, your credit union, make use of any of the $125 billion that was made available to the financial institutions? And $67 billion of it was mostly taken up by banks. Did your co-op make use of that government assistance through CMHC?

[Nigel Mohammed]

I have to say that I'm not familiar with our credit union accessing or taking advantage of that. I'm not able to respond.

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

Would you also have a sense of the percentage of the money that we just heard about, the $450 million being made available to small businesses in this country, that has been taken up by small business co-ops? Or have they been excluded in any instances from accessing those funds?

[Nigel Mohammed]

Again, I'm sorry, but I'm not familiar with the level of our access and utilization of those funds you referenced.

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

Thank you.

[The Chair, Conservative, Blake Richards]

Thank you.

Do you have something to add there very briefly, Mr. Ward?