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.
