The CLMPC report traces the evolution of international models of investment and financing that involve unions and workers, such as the spread of tax-subsidized employee share ownership plans (ESOPs) in the United States. Sweden's supplementary pension system (ATP) and Denmark's employee capital pension fund (ECPF) reveal traits similar to those identified by the CLMPC for Canadian labour-sponsored funds.
In Canada, it was the 1981-83 recession, and persistently high unemployment, that led union leaders to seek alternative ways to support growth and job creation. The Fédération des travailleurs et travailleuses du Québec developed a completely new vehicle, namely, a labour-sponsored fund with a multi-faceted investment mandate. Since the inception of the Fonds de solidarité in 1983, this model has been emulated and adapted to other Canadian jurisdictions. In 1988, the federal government amended the Income Tax Act to set up the first national version, the Working Ventures Canadian Fund. Legislation has also been promulgated to establish funds in all provinces except Newfoundland and Alberta.
At the time of this report, there were eighteen funds in existence. A few are fully active, while most are at the early stages of capitalization and institutional/portfolio development.
CLMPC research has identified ten broad characteristics that are shared, to varying degrees, by all labour-sponsored investment funds. CLMPC drew heavily on the performance of the Fonds de solidarité to illustrate these salient features, given its comparatively long evolution and history.
By definition, all labour-sponsored funds must be accountable to public policy concerns as set out in their respective statutes. In all cases, inception has been made possible because of enabling legislation, tax credits and other incentives provided by Canadian governments at both the federal and provincial levels.
Governments elected to support the funds because they appeared to offer a means of advancing certain public policy goals, such as strengthening the national venture capital market and provincial sub-markets, addressing alleged gaps in financing for small business, employment creation and protection, and facilitating a new role for workers and unions in the economy. The funds operate under fairly explicit and enforceable guidelines and sanctions.