Community Economies and Jobs to Suffer with Federal Cuts to Co-operative Development

April 16, 2012

On April 13, 2012 the Canadian Co-operative Association was informed by the Government of Canada about the termination of the Co-op Development Initiatives along with significant cuts to the Rural and Co-operatives Secretariat. This came as a surprise to the Canadian Community Economic Development Network and our member organizations including the Canadian Cooperative Association, the Canadian Worker Co-operative Federation, the Co-operative Housing Federation of Canada, the Manitoba Co-operative Association, and co-operatives throughout the country. Cuts will have a significant impact on the development of new co-operative businesses, jobs, and services for communities throughout Canada.

In a year that the United Nations has declared the “International Year of Cooperatives” — which the federal government endorsed at the United Nations and has been a partner in supporting — the elimination of the only federal government program dedicated to co-op development is not only hard to understand, it is misguided and will result in a negative economic impact much greater than the short-term spending that is “saved.”

With over $330 billion in assets, about 9,000 co-operatives in Canada provide services to 18 million members. They are a significant part of our economy and our communities. At a time when job creation is needed for economic recovery and growth, why cut support to a sector that employs over 150,000 Canadians and continues to grow? In an era when economic decisions are increasingly made outside of the communities most impacted by them, and the accumulation of wealth in few pockets is contributing to a growing income gap in our country, what we precisely need is stronger leadership and investment in a business model that roots ownership locally and distributes wealth equitably.  Co-operatives also build democracy through their core principle of giving every member of a co-op an equal vote in the decisions of the business, including member representation on the co-op’s board of directors, providing the opportunity for more than 100,000 Canadians to participate in the governance of co-operative businesses in their communities.

Co-operatives are also businesses oriented to member service rather than maximization of profits. This means that, while being strong businesses, they will operate in circumstances that meet members and communities needs as long as feasible rather than closing its doors as soon as maximum profits are not realized and leaving communities without important jobs, services, and economies. For example, more than 1,000 communities in Canada have a financial co-operative as the only financial institution providing important services to the community.

Co-operatives are also more stable businesses for our communities and economies. A 2008 study in Quebec found that 62 per cent of new co-ops are still operating after five years, compared with 35 per cent for other new businesses. After 10 years, the figures are 44 per cent and 20 per cent respectively. Similar research in BC and Alberta recently found parallel results in their provinces.

But while the co-op sector is a huge part of our economy, co-operatives usually start with a collection of people looking to address a need in their community, or capture an opportunity, in a way that puts their needs and their local economy first. These initiatives are worth investment in the development, start-up, and growth phases because of the significant impact and returns that they generate over time. The Co-op Development Initiative provided precisely this type of strategic investment. Since the program’s inception in 2003, more than 300 new co-ops were created with support from the CDI program, and more than 1,600 groups received advice and assistance, which might yet lead to the creation of more co-ops.

In light of the significant negative impact that this $4 million “saving” will have on the Canadian economy and many communities, we urge the federal government to reverse their decision. Our communities and our economy are worth it.

For more information, contact Kirsten Bernas, at , (204) 943-0547.


Related Resources

Agriculture Canada cutbacks contradict federal focus on jobs and innovation,” Canadian Co-operative Association press release, April 13, 2012.  

Cancellation of Co-operative Development Funding will Impact Ontario Communities” Ontario Co-operative Association press release. 

Dark Days for co-ops in Canada, Saskatchewan Co-operative Association leader says” in Reginal Leader Post, April 16, 2012.

Canadian government cuts co-op development program, slashes Co-operatives Secretariat,” Cooperative News, April 13, 2012.

Cancellation of CDI and Devastation at Co-ops Secretariat” CoopZone statement.

Implications of the Federal Budget and The Rural and Cooperatives Secretariat” Blog post by the Rural Ontario Institute and letter to Minister Ritz