Debates of Oct. 22nd, 1997

Canada Co-Operatives Act

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Thanks. No, we do not use names here. We use only the member for Saint John. I am learning, Mr. Speaker.

The principles of the 1970 Canada Cooperatives Association Act were based on provincial legislation dating back to the early 20th century. While the provinces have been constantly updating their co-operative acts, as provinces normally are ahead of the federal government, it is about time the federal government caught up.

I commented and complimented the government on bringing this legislation forward and I continue to do so, but I should also say that it was done through the co-operation of the Canadian Cooperatives Association. It was the co-operatives themselves who wanted to bring forward legislation that was going to allow them to compete.

I think it rather interesting and rather appropriate that national co-op week was held October 12 to October 18. Members were not in the House during that period, which is unfortunate. The theme of national co-op week this year was co-operation now more than ever. I believe sincerely that theme in itself speaks also to the legislation.

The legislation allows a number of things. First and foremost, it allows the ability to capitalize in a different fashion from what they have been allowed to do in the past. They now have the ability to go public, to sell shares in corporations, which they never had before. It allows them to capitalize so they can expand and put more assets back into the co-operative.

The legislation requires two-thirds or more of the membership to make changes to a co-operative. That is very important. You must be flexible in today's global economy to be able to deal with the issues that are going to face the co-operatives not only now but in the future.

There is one minor issue that we will be able to discuss at committee, members' dissenting rights. I will not get into the detail now but there are some obvious issues that have to be dealt with in terms of dissenting rights. The question is not whether members should have the ability to dissent, because they should. They are members of a co-operative and have every right to do so. The legislation speaks to a timeframe, and that timeframe is a period of five years to pay out dissenters of their equity in the co-op.

A lot of co-ops want to merge, which they did not have the ability to do under the old legislation. Now I am sure they would like to in order to compete with the major corporate structure. In dissenting rights I think timeframe has to be dealt with. It has to be talked out in committee and perhaps an extension of the timeframe could be arranged. Instead of five years perhaps there could be an extension of years so co-ops will not be dealt with adversely if they have dissenters.

The bill attempts to balance member rights with corporate directorate. It also allows the directors now on the co-ops to have a 20% non-membership make-up, which again is very important to bring in new ideas, new people and new capital to the co-op systems.

It provides for alternate dispute resolution assistance from the federal government with regard to grievances between co-operatives and their members. Again, it is very positive to have that dispute settling mechanism.

Bill C-5 makes changes to the rules governing a corporation. It permits co-operatives to incorporate provided they operate on a co-operative basis, again very positive.

Bill C-5 introduced the concept of natural persons when describing co-operatives. As a result they are awarded the same rights and privileges as natural persons. This is instead of detailing the various rights, powers, privileges individually. It also is in keeping with the same rights now awarded to business corporations and mirrors the powers some province already offer co-operatives, a harmonization of legislation from provinces to the federal government.

Bill C-5 makes changes to the rules governing the issue of shares, which is very important. The conditions of issuing membership shares are set out in the corporation charter. Bill C-5 will permit co-operatives with share capital to issue investment shares to their members and to the public. This is provided the members have agreed to do so and have set out the rules in the charter bylaws. Traditionally co-ops have looked only to their members to finance their operations. This is probably the most important aspect of the legislation that has been put forward. It is very positive.

The government along with the Canadian Cooperatives Association has put forward an excellent piece of legislation. It is important that we do allow co-operatives, people working with people in order to make it better for co-operatives, to compete in today's global economy and global society.

When I arrived here I wanted to be positive about positive legislation. I did not talk about CPP or OAS. I do not plan on doing that right now. I congratulate the government. We will be supporting this piece of legislation. Not only does it help co-operatives but it helps Canadians where they live and where they work.

[Joe Comuzzi, Liberal, Thunder Bay—Nipigon, ON]

Mr. Speaker, thank you for allowing me to ask a question of my colleague from Brandon—Souris. His most fortunate experience since coming to the House has been that he is fortunate enough to sit beside the member for Saint John. I am sure that if he pays attention he will find much wisdom in his seat mate.

The importance of co-operative housing, in the area he represents and in the area in Saskatchewan, as we heard earlier from the spokesperson for the New Democratic Party, and the federal involvement in co-operative housing has really been a success story in Canada.

I can only relate my own parochial and personal interest inasmuch as we have several co-operative housing ventures in the area I represent in Thunder Bay, one being the Castlegreen co-operative housing venture. I have visited Castlegreen on many occasions.

I would like to express exactly what I see when I drive into Castlegreen. First there is the pride of ownership among all the residents. It is about the best well kept area in the whole of our community of Thunder Bay. They have the community spirit that I do not see in any other communities. It is due to the residents who live there. It is interesting because many people who live in this co-operative housing area are physically challenged. Although they are physically challenged they participate in all the activities that go on in that area.

My question for the member for Brandon—Souris is on the Sask wheat pool that he mentioned, as did the member who spoke for the NDP. I have a concern about the Saskatchewan Wheat Pool, it being one of the largest co-operatives referred to. I read in the last while that it became a member of the Toronto Stock Exchange and is selling its stock.

Perhaps the member could explain how it can be a co-operative and be a corporation selling shares on a public exchange.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Mr. Speaker, I met with the executive of the Saskatchewan Wheat Pool on a number of occasions. It has a number of subsidiary companies, one which is referred to as AgPro which has a number of retail enterprises developed into its whole co-operative structure.

This is exactly what I spoke about, allowing co-operatives to compete in the global economy and in the economy that we have developed today in this great country of ours. The Saskatchewan Wheat Pool has gone public. It has sold shares. They are non-voting shares. It is allowed.

I talked about dissenting rights. They have in the province of Saskatchewan dissenting rights. Those members of the co-operative who do not wish to be part of that co-operative based on a share structure can with their equity get out of that particular corporation.

That did not happen, quite frankly, because the members of that co-operative found that the direction they were heading in with the share offering they made was quite successful. The dollars generated from that share offering were used to capitalize the co-operative to compete further against other member co-operatives, the Manitoba and Alberta pools, as well as the private sector. They were able to put up sufficient assets to compete with the private sector. So it has been very positive for them.

This legislation will allow the same thing to happen with any co-operative if it wishes to take that step.

[Walt Lastewka, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I congratulate the member for Brandon—Souris for his comments and especially for staying focused.

In various areas of the country there are small and large co-operatives. There has been some concern that there may be some problems there and also some work to be done in committee. Has the member had any feedback or any comments?

The small co-operatives can stay exactly where they are, but it does not limit the other co-operatives from doing some of the things the member just mentioned.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Mr. Speaker, I can honestly say that I have had very little if any opposition to this legislation coming from small or large co-operatives.

One area where I did have some concern with was how the private sector would deal with the legislation. I have made inquiries and quite frankly the private sector is not opposed to the co-operative legislation.

[John Harvard, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-Food]

Mr. Speaker, I would like to speak in support of the new Canada co-operatives act and right off the bat I would like to say that I am absolutely delighted with the tenor of this afternoon's debate. The comments in large part are very supportive and positive about this bill. That speaks well of the government's work.

I know the government consulted widely before the introduction of the bill. It seems that the government has done its work well, has listened to the people in the co-operative movement. I think it has done a good job in drafting the bill. I am quite sure that if anything significant has been overlooked it will be caught at the committee stage.

Co-ops can be found in many important sectors of the Canadian economy. They will be found in agriculture and forestry, in retailing and health care, in housing in most cities right across the country. These co-ops provide benefits for their members and contribute significantly to Canada's economic development and prosperity.

In some sectors of the economy they increase the competition while in other sectors they provide services not otherwise available to members.

There is a mentality that goes along with co-op membership. Co-op members are often people who prefer the distribution of wealth on the basis of effort rather than on capital. They place a priority on meeting the needs of the community. Members have found they can pool their physical efforts and capital resources to create an effective service they would not have otherwise.

In a co-operative the capital is often invested, not for an expected return on investments or dividends but rather often invested for the purpose of providing goods and services at reasonable costs.

A co-operative does not usually make a dividend on the basis of the amount of money someone has invested. Rather it distributes its surpluses on the basis of patronage within the co-operative itself.

By pooling their resources in a co-operative, members reduce their individual risks. The co-operative structure provides a limited liability to its members. They cannot lose on bankruptcy more than their share of the investment in the co-operative. This helps enable the service to be as efficient and co-operative as an incorporated business.

Traditionally a co-operative gives each member one vote in conducting its affairs. It does not generally allow proxy voting.

The co-operative structure can increase the efficiency of capital markets by increasing competition. It promotes a certain amount of risk taking, innovation and economic growth that might not otherwise happen. Co-operatives are different. They contribute to the Canadian economy because of those differences. They enable Canadians to participate in the growth of the economy in an alternative way to the other corporate structures that dominate the rest of the economy.

At the same time most co-operatives are run like businesses. They charge members a price for services. They return some of the profit to members. Indeed some of the larger co-operatives are integrated both vertically and horizontally. Some have joint ventures with corporations. Some even own corporations.

In September I had the pleasure of spending three days with executives of the Saskatchewan Wheat Pool in Regina and Saskatoon. I also visited their terminal facilities in Vancouver. What I found was a very smooth running, highly professional and aggressive organization. If all Canadians could gain an appreciation of Sask pool the way I did I think most people would come away believing that this is a smart organization. It really hums along. It is doing well for all its members.

Many co-operatives are not very small. Sask pool is one and I will mention more about that in a moment.

In the 1996 Financial Post listing of the top 500 companies in Canada, 17 non-financial co-ops were listed. According to analysis by the Co-operative Secretariat of Agriculture and Agri-Food Canada, seven of these had revenues of over $1 billion. The largest is the Saskatchewan Wheat Pool, number 54 in the top 500. It is incorporated in the province of Saskatchewan. Two federally incorporated co-ops are the next largest. Federated Co-operatives Limited ranked number 75, with revenues of over $2.1 billion, and XCAN Grain Pool Limited ranked 85th, with revenues of over $1.8 billion.

Other major federally incorporated co-ops include Agrifoods International Cooperative Ltd., Co-op Atlantic, Western Co-operative Fertilizers Ltd. and Interprovincial Cooperative Ltd.

These co-operatives compete directly with business corporations, whether Canadian or foreign. They need the flexibility and certainty of good marketplace framework laws so they can respond to the changes of and competition in the domestic and global economies. They need the flexibility of good marketplace framework laws to enhance growth and create more jobs for Canadians.

When it was first introduced in 1970, 27 years ago, the Canada Co-operative Associations Act was the first national legislation specifically developed for co-operatives. It was modelled primarily on the Canada Corporations Act, the federal law regulating business corporations at the time. Business corporate law has been revised substantially since 1970 but the Canada Co-operative Associations Act has not been amended significantly since it was first passed. In the meantime co-operatives have continued to change and evolve.

Provincial legislation regarding co-operatives has continued to change and evolve as provincial governments update their legislation. The result is that the co-operative sector has come to the federal government to inform us that the current federal act is no longer suitable to meet the business needs of Canadian co-operatives, not for today and certainly not for the future.

Let me give an example of that. Some co-operatives find the present act to be very restrictive with regard to access to capital sources and corporate arrangements. As a result, some co-operatives have had to seek special legislation to obtain an acceptable corporate statute law for their operation.

This method of legislative reform is expensive. It is inefficient and does not result in changes that are available to all co-operatives right across the co-op spectrum.

Bill C-5 strengthens and clarifies the corporate governance rules relating to co-operatives. It enhances the ability of co-operatives to carry out business fairly, efficiently and effectively.

Co-operatives are a powerful form of business organization. They contribute greatly to the growth, jobs and prosperity of many communities right across Canada. Modernized legislation will ensure that co-operatives have the legislative and regulatory environment to achieve their full potential in contributing to the wealth of the country in both rural and urban Canada.

The users of co-operative legislation, the co-operative sector, told us it needed changes to the act. The Canadian Co-operative Association, in association with le Conseil canadien de la coopération, has spent several years developing draft model legislation. The associations went to the co-operative movement to discuss this draft model. They built a consensus. Then they came to the federal government and in effect said what needed to be changed and the way they thought it should be done. They were explicit and we tried to respond to their suggestions.

The co-operative movement had another opportunity to provide input along with all Canadians who were concerned about effective marketplace framework laws for co-ops.

Industry Canada and Agriculture and Agri-Food Canada released a consultation paper in September 1996, a little more than a year ago. They invited all parties who were interested to submit comments or suggestions. The paper presented a number of key suggestions as guidelines. They helped solicit comments on the suitability of the proposals as well as stimulated discussion about what should be included in the new federal co-operative legislation.

Before closing I would like to review some great co-op success stories. There are a number of them. They are not all federally incorporated co-operatives. For example, Agropur is Canada's largest fine cheese and whey manufacturer and distributor. It operates in the yogurt and fresh desert sector through Ultima Foods Inc., a company co-owned with Agrifoods International Co-operative Ltd. from British Columbia. In 1995 Agropur had sales of over $1 billion and 4,500 members and 2,200 employees.

The Fogo Island Co-operative Society Limited was formed in 1967 to salvage the economy in Fogo Island, Newfoundland. By 1994 the co-op had grown to 1,234 members and 500 employees.

In Alberta electricity and gas distribution co-operatives have been quite successful. At one time the rural electrification program carried out by co-operatives in Alberta accounted for about 90% of the electricity supplied to Alberta farmers.

In recent years as depreciated assets have had to be replaced many of these co-operatives have sold their remaining assets and responsibilities to power companies, resulting in a decline in the number of co-operatives in this sector during the past decade.

In the meantime natural gas co-ops increasingly supply the rural areas of Alberta. In 1995 these co-ops accounted for over 54% of the total sales of energy co-operatives in Canada.

I could go on listing a number of other success stories. There are a lot of them out there.

The co-op movement is very successful. We can all be very proud of what has taken place in that field. We expect further successes in the future. I am sure when the bill ultimately becomes law will contribute to further successes in the co-op movement.

I look forward to further examination of the bill when it is before committee.

Business Of The House

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Mr. Speaker, I rise on a point of order. There have been discussions among the members concerned and among representatives of all parties. I believe there would be unanimous consent for the House to make the following order:

That Bill C-202, now standing in the name of the hon. member for Pierrefonds—Dollard, be kept in its place on the Order Paper but put down in the name of the hon. member for Pontiac—Gatineau—Labelle instead.

[The Acting Speaker (Mr. McClelland)]

Does the hon. member have unanimous consent of the House to move the motion?

[Some hon. members]

Agreed.

[The Acting Speaker (Mr. McClelland)]

The House has heard the terms of the motion. Is it the pleasure of the house to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)

The House resumed consideration of the motion that Bill C-5, an act respecting co-operatives, be read the second time and referred to a committee.

Canada Co-Operatives Act

[Howard Hilstrom, Reform, Selkirk—Interlake, MB]

Mr. Speaker, Manitoba has many co-operatives. I happen to be a member of the Red River co-op located in Arborg and Teulon districts. I wonder how many other members of the House are members of a co-op and show their support through actual financial support.

I will leave that aside for a moment. The Manitoba Pool Elevators has a grain terminal at the end of a rail line owned by the CPR which runs up to the town of Arborg. This line is currently in the process of being abandoned. At some point it will be offered for sale to the federal government. I am not sure what the federal government's intentions are when that is done. The ultimate users of the line are the co-op members in that district.

My question would be along the lines of whether the provisions of the bill would assist co-op members to raise the capital necessary to buy this line and maybe operate it as a short line railway.

[John Harvard, Liberal, Charleswood—Assiniboine, MB]

Mr. Speaker, I too am a member of a co-op. I just pulled my membership card out of my wallet. It is the Red River Co-operative Ltd. My membership number is 113284. I have also been a—

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Has it expired yet?

[John Harvard, Liberal, Charleswood—Assiniboine, MB]

I do not know. It is in my wife's name. If it has expired she takes full responsibility.

I have been a member of the Astra Credit Union in the city of Winnipeg for I do not know how many years and it serves me very well.

With regard to the concern raised by the hon. member for Selkirk—Interlake, I hope the particular matter would be addressed by the bill.

However it would be more appropriate for him or one of his party members to raise that question at committee. I am quite sure he could get the technical answer to the question.

[Yves Rocheleau, Bloc, Trois-Rivières, QC]

Mr. Speaker, I am pleased to rise, at this late hour, to speak to Bill C-5, which however dry it may be, is still very important for both Canada's and Quebec's economies, even though the co-operative movement, which comes under federal law in Quebec, is not a strong presence under a federal charter.

The Bloc Quebecois supports this bill and will act as spokesperson for the co-operative movement in Canada and Quebec, which, after consultation, supports the bill in its entirety.

I would like to take this opportunity to salute the management and staff of the Caisse populaire Sainte-Madeleine, of which I am a member. I became the thousandth member in the early 1950s, and my father, Raoul Rocheleau, was a founding member in the 1940s.

I would also like to acknowledge the management and staff of the Fédération des caisses populaires de la région de la Mauricie, who do an extraordinary job in regional development, and to the management and staff of each of the caisses populaires in the riding of Trois-Rivières, which do a most effective job in their areas. In fact, I would say they make our constituents throughout the area feel more secure.

The caisses populaires and the Mouvement Desjardins form one of our major institutions, along with other major co-operatives, such as Agropur or the Coopérative fédérée de Québec, which are booming and continually growing both at home and abroad.

There are of course other kinds of co-operatives—housing, consumer protection and worker co-operatives—with new ones being developed all the time, particularly in the area of the new economy where Quebeckers are in the forefront technologically through their co-operative movement.

The Mouvement Desjardins is a jewel in Quebec's economic crown. We might well ask where Quebec would be economically if there were no Mouvement Desjardins. As proof, I have two accounts, which recently came to my attention, one personal and the other more a collective experience. The collective one is contained in the account of Mr. Ricardo Petrella, who spoke recently at a conference in Quebec City on social democracy.

As a European academic, a humanist, a thinker, a renowned philosopher and president of the club of Lisbon, he expressed the hope that the Mouvement Desjardins would not only continue to grow but that the Quebec co-operative movement, which is exemplary, would also continue to grow. However, he encouraged the management of the Mouvement Desjardins—and I urge them to heed his advice—to retain its truly co-operative quality in the face of the current trend to focus more on business.

These are the words of a credible individual, who is looking at the Mouvement Desjardins from outside and considers Quebeckers to be in an enviable position.

Another person who had good things to say was the British consul posted to Montreal, whom I recently had the honour to host in my riding. As he was going past the building of the Fédération des caisses populaires Desjardins, which I mentioned earlier, he interrupted me to say: “Yes, I know the Mouvement Desjardins. It is one of the very fine achievements of the Quebec people and is known internationally”. The consul, Mr. Rawlinson, praised it highly, and without prompting.

The Mouvement Desjardins has an international presence, particularly in developing countries in Africa, where, as in Quebec, the co-operative approach has helped give people more control over their destinies. One might well wonder what would have become of these people in Africa, and in Quebec, if they had not had the good sense, and the backing of the Mouvement Desjardins and its human resources, to take charge of their destiny by means of co-operatives.

I would, however, like to draw your attention to some reservations that the Bloc Quebecois has about certain clauses, particularly clause 3 regarding the purpose of the co-operative, which could have been confusing. I will read it rapidly:

1. (1) The purposes of this Act are (a) to set out the law applicable to the business endeavours of persons who have associated themselves in a democratic manner to carry on a common purpose; and (b) to advance the cause of uniformity of co-operative business law in Canada.

(2) No co-operative may be incorporated under this Act unless (a) it will carry on its undertaking in two or more provinces;

This represents a victory by the co-operative movement, because the government initially intended to drop this clause, present in the earlier bill, which could have resulted in confusion in communities faced with both federally and provincially incorporated co-operatives for the same product.

In Quebec, in any case, it appears that this way was not desirable, and fortunately it appears that the government understood the message sent it.

Nevertheless, there is a word in clause 3 that poses a threat, in our opinion, and that word is “uniformity”. Uniformity, in the mouth of the federal government, means a lot of things. It can mean hegemony and centralization as we saw in the case of the securities commission and in the case of health care, where the government withdrew in financial terms but wanted to maintain national standards. We also saw it with the rumours of the federal government wanting to set up income collection agencies for the country as a whole, eliminating departments of revenue, including that of Quebec. Therefore, when a word like “uniformity” is used, it is cause for concern or at least for finding out the political will behind its use.

Clause 122 on distribution at dissolution contains a broad principle, which provides that the remaining property of a co-operative is to be distributed among the members. There are, however, two exceptions to this. One appears in clause 354 on housing co-operatives and the other appears in clause 361 on worker co-operatives.

In the case of housing co-operatives, without any explanation, the clause provides that any remaining property is to be distributed to other housing co-operatives rather than to members. There is no explanation. Perhaps this could be explained in committee soon.

Clause 361 on worker co-operatives provides that, rather than apply the general principle, at least 20% of the remaining property is to be distributed to another co-operative or a charitable entity before any distribution is made to members. Here again things seem a bit arbitrary.

There is no explanation for the double standards, where two types of major co-operatives, housing and worker co-operatives, are treated differently from what is provided for in the general principle applied to co-operatives on distribution at dissolution.

I conclude on this point by saying that the co-operative movement serves as a sort of insurance for people against the neo-liberal current in which people are increasingly divided, singled out and where individualism counts most, where governments are subjugated and where the social safety net is increasingly in jeopardy. The co-operative approach is doubtless the way to the future for people, who will learn to work together to develop solidarity from day one in their own community recognizing that mutual support and not the need to dominate is the way to success and to greater social justice.

[The Acting Speaker (Mr. McClelland)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mr. McClelland)]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

On division.

(Motion agreed to, bill read the second time and referred to a committee)

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I rise on a point of order. I think you would find unanimous consent to call it 6.30 p.m.

[The Acting Speaker (Mr. McClelland)]

Is there unanimous consent to call it 6.30 p.m.?

[Some hon. members]

Agreed.

A motion to adjourn the House under Standing Order 38 deemed to have been moved