Mr. Speaker, may I congratulate you on your appointment.
We are here today to speak on the second reading of Bill C-5, Bill C-91 in the last Parliament. This is a bill which completely revises the federal legislation on co-operatives, at the request of the Canadian Council for Co-operatives and its francophone counterpart.
I would like to start by pointing out that only 50 co-operatives are registered under federal charter. A large number of these, however, are extremely important ones, which specialize in the production and distribution of grain. In Quebec, and I think it is important to point this out, there are only six federally chartered co-operatives, which are of different sizes.
Some people may wonder what we in Quebec have to say about this bill. The same thing, basically, as the representatives of other parts of Canada, because this bill, while affecting only a few co-operatives directly, can affect the entire Quebec co-operative movement indirectly.
In Quebec there is a Conseil québécois des co-opératives, which is part of the Conseil francophone and which, after some negotiations I would say, gave its support to the reform proposed by the Canadian Council. I must point out that, on Bill C-91, some of the demands by the Quebec council were accepted, while others were not. Nevertheless, the Conseil endorsed the bill on behalf of its entire membership.
Still, as the NDP member pointed out, while the bill does not directly affect co-operatives, it creates problems for a number of them—and I will try to explain why—in terms of its possible influence.
One may wonder why it was necessary to review, to modernize the federal legislation on co-operatives.
In Quebec, the provincial government just modernized the co-operatives act. The same thing is being done in Canada and it has also been done in recent years in other countries where co-ops are important institutions. Why? Because of the changes affecting markets, because of globalization and the stiff competition often faced by co-ops, particularly those that are key players.
In Quebec, these key players include the Nutrinor agri-food coop, which is fairly big but not as big as Agropur, the 53rd largest business in Quebec, and much smaller than La Co-opérative fédérée de Québec, which ranks 19th among the province's businesses.
Although the bill does not deal with financial coops, I take this opportunity to say that the Mouvement Desjardins would be number one in Quebec, with assets of $82 billion.
Businesses located in Quebec and governed by a federal charter must have some leeway to face new market conditions.
However, we can understand that in doing so co-operatives sometimes give rise to vigorous debate among their members, among the various types of co-operatives, because some people wonder whether, through better financing, by a turning profit in a co-operative fashion and selling shares on a market, that is, a sort of stock, whether they are not selling their soul. This debate goes on among the big co-operatives and between them and others operating in the service industry.
This should be pointed out, because the criticism I will make is in the context of full support for the bill. However, during committee work, we will express concerns, and move amendments on a number of specific points.
Co-operatives, I must point out, are vital in Quebec. When we look at Canada's history we see they are vital in western Canada as well and that their emergence showed the producers were taking control of their future rather than leave it to capitalist development, which, at the time, was largely unregulated. It is therefore a means of taking of control and the sign of an economy more collectively oriented and yet a strong market player.
In Quebec, this truth goes hand in hand with the fact that co-operatives have given Quebeckers control over a large part of their economy. When we put this in a historical context, it takes on proportions even broader than those in the west of Canada, because there is not only the context of social ownership, but also of Quebec ownership as opposed to foreign ownership. This explains the importance we give to having rules for the co-operative movement and consolidated legislation that underscores these principles.
There are various types of co-operatives. Some may be threatened by the new principles appearing in Bill C-5. In addition to grain, meat or agricultural production co-operatives, which bring producers together, there are also family investment co-operatives, student co-operatives—and there are many flourishing ones in Quebec as young people learn to build financial strength by using their purchasing power—and there are increasing numbers of co-operatives in new areas as well. There are some in the Montreal area, and no doubt elsewhere, in the new field of electronics; one will be known as “La Puce”, another will make it possible to offer Internet sites to all community organizations in the Montreal area with large servers.
It is therefore an area of high activity as far as sectors in the new economy are concerned, but the service sector is also represented, with housing and consumer co-operatives. Finally, I have not mentioned workers' co-operatives, which also operate on different principles.
So these various kinds of co-operative operate on co-operative principles having to do with the various aspects of pooling capital and, in the case of workers, pooling the activities of an enterprise supplying work. Therefore, even if the new principles in Bill C-5 do not affect them directly, they may be a cause of concern for these different kinds of co-operative that wish to continue to operate on a co-operative basis.
Having done a little research, I must point out that, in the various countries modernizing co-operative legislation, there are three approaches. The first is to go with values, but this poses a problem because it depends on the kind of co-operative involved. The second approach is to be pragmatic, but this raises concerns, and I am be inclined to think that Bill C-5 falls into this category. The third approach is systemic and tries to respect the inherent logic behind the various co-operative principles as implemented in co-operatives.
What are the stumbling blocks in Bill C-5? Once again, I repeat that, overall, the Bloc Quebecois and the Conseil québécois des co-opératives are in agreement with the bill as it stands. But a few problems remain.
First of all, the major stumbling block, and I will conclude with this, is that this bill, the Canada Co-operatives Act, is modelled on the Canada Business Corporations Act. This raises a structural problem, because a co-operative is community owned. A member of a co-operative does not own a share in the co-operative that he may sell as he wishes to whom he wishes. One cannot therefore say that one is going to buy a share in a co-operative and be a member of the co-operative. That is not how it works. If co-operatives are successful, it is because they let it be known that they intend to be consumer, producer or worker co-operatives, so they issue shares, which is why people then meet to achieve a common purpose stated in their bylaws. That is what co-operative officials' performance for instance is assessed against by their members.
Co-operative members hold shares that they can sell back to the cooperative and the co-operative only. They are not free to sell their shares to whomsoever they wish; it is up to the co-operative to decide who will be allowed to join. This is a far cry from a business corporation.
Since the entire legislation is modelled on the Canada Business Corporations Act, it is understandable that, even if an effort was made to adapt the spirit of the law, the corporations act sometimes shows through. As I said, I do realize that the intent was to update the Canada Cooperatives Act and enable co-operatives to secure new capital on the market, without interfering with the spirit of the legislation.
So, this is the first major flaw, as far as I could see—I perused this very thick bill and checked also with others and these are the problems we found—in fact, the Conseil québécois des co-opératives even had a question about this—under the charter, co-operatives are not required by law to disclose for what purpose they were established. This is a very serious problem because, for one thing, how can members be asked to use the services provided by their co-operative if these can change?
No doubt there is room for improvement. An improvement that could, one might say, be made fairly easily. The reasons for the refusal to do so remain to be seen.
The bill also contains some worrisome elements. For example clause 4, where once again the spirit is really that of a corporation, where control is defined as going to the person with control of 50% of the votes. In my opinion, one shared by all those I spoke to about this, this is incompatible with the co-operative spirit. This ia one example, but I will not go through the entire bill because it is a very long one.
Before Bill C-91, fears were expressed concerning the proposal made by the minister of the time, to the effect that co-operatives in Quebec, as in the other provinces, could choose to be registered under either a Quebec or a federal charter. This problem has been corrected in this bill, and a co-operative must, in order to be federally chartered, carry out business in more than one province and have offices in more than one.
This allows me to say that, given the rapidly changing markets, co-operatives can make acquisitions and find themselves in a position to be able to use the federal charter, hence the importance of taking the necessary time to study the wording.
The two clauses that are the most serious grounds for concern are, however, those which deal with reserve splitting during the lifetime of a co-operative. This is, one might say, hard to understand. It could open the door to all sorts of abuse. I know that the response will be that this bill is an enabling one. That means that the co-operatives are not obliged to use all of the clauses, except that the bill, or the act, cannot be a sort of self-serve affair, either, where one helps oneself to the elements one wants; it cannot be like that without a real danger of moving away from the co-operative spirit.
I know that the answer may be “But the co-operative movement itself will protect the co-operative spirit”. But it is hard to create the conditions that would allow that to be changed and then to say that it is up to the co-operative movement to do what has to be done.
Another important provision stipulates that only two thirds of the board will be made up of members, which could mean that 20%, if not more, of the board's membership would have investment shares. The danger would then be that decisions would not be made by members but by—shall we say—major investors.
Another provision of the bill seeks to counter such an effect, but it remains to be seen whether it is adequate. In fact, the principle underlying the whole notion of co-operatives is that members must have control over major decisions, and that co-operatives must know what their mandate is.
The committee has its work cut out. Hopefully, it will have the time required to do it.
We agree that the legislation must be updated. Quebec has done it. I imagine the other provinces have also done it or will do it. Other countries have done it. It is not an easy task, given the rapid changes occurring in the market and the very stiff competition major co-operatives must face. Still, we should not throw the baby out with the bath water.
When we hear those who can help us deal with the issue, we will have to make sure the bill does not weaken but strengthens the co-operative movement, which is so greatly needed in Quebec and in Canada.
I am convinced that co-operativess, as well as the Conseil québécois, as well as various professors—there are two chairs on co-operation in Montreal—will be pleased to provide advice to us, as they did when the Quebec government updated its legislation.