Indigenous and Northern Affairs Committee on May 8th, 2024

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Who bears the cost of that $2,000?

[Gary Bell]

Initially, we do, as an airline, but we're having to pass it on to our consumers. Whether it's food, tourism or medical supplies, it's all being passed along.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

How much time do I have, Chair?

[The Chair, Liberal, John Aldag]

You have one minute and 15 seconds.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

What you said there is a bit striking. At a time when food is even more expensive than normal—we see that 70% of people are going hungry in Nunavut, as an example—we see that, with this government, it has not improved after nine years. Then they're applying a carbon tax. It went up April 1, and it's going to continue to rise. How much is that carbon tax going to continue to rise?

Go ahead, Gary.

[Gary Bell]

I understand that it's just over 20¢ per litre right now, and I expect it to go to over 40¢ per litre by 2030.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

How much was the amount per trip from Winnipeg to Churchill? Was it $2,000?

[Gary Bell]

It's about $2,000 more now.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Therefore, when it rises again, to 40¢, it's going to be $4,000 per trip.

It's an obvious question, but does that make food less expensive or more expensive?

[Gary Bell]

That makes it more expensive.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

That's right. Here we're setting records globally on food costs in the north, and we have a government that still wants to slap on another carbon tax and further punish northerners. It's a shame.

Thank you, Mr. Chair.

[The Chair, Liberal, John Aldag]

That's the end of the six minutes. That's good timing.

Next, we're going to go to Mr. Powlowski.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

Mr. McConnell and Mr. Goulet, you've been asked about the added cost of fuel due to carbon tax, but certainly other things have caused the cost of food to go up, such as the global supply situation—both in terms of food but also in terms of fuel—because of the war in Ukraine, supply chain issues coming out of COVID and pent-up demand. There was a recent article by a whole number of economists addressing the issue of how much of inflation is due to the carbon tax, and they almost universally attributed the percentage of the increased cost due to carbon tax as being pretty minimal.

What is your estimation as to how much carbon tax is contributing to the increased prices of food that you're seeing in the northern communities?

[Dan McConnell]

Would you like to go?

[Jean-Pierre Goulet]

I can go.

At our level, as we are the last barrier to take a margin on the product—

[The Chair, Liberal, John Aldag]

I'm sorry; I'm just going to stop for a second.

Are we having an audio problem?

[Michael McLeod, Liberal, Northwest Territories, NT]

Mr. Chairman, I'd like to ask our witness to speak into the mic.

[The Chair, Liberal, John Aldag]

Yes, if you could just swing the boom a bit closer, that will help.

Okay, that's perfect. Thank you. I stopped the clock.

[Jean-Pierre Goulet]

A store is the last frontier before the customer, so all the costs that come down on us are mostly built in. Now, for sure, if there's a carbon tax fee built into the freight, there's not a separate line saying that this is carbon tax. It's not like a GST. For us, we don't see it, but if it comes by sealift, yes, there's a carbon tax built in. The cost of the sealift will go higher, maybe from 75¢ a pound to 85¢ a pound.

Regarding airline fuel in Ottawa, if there's a carbon tax to come to Iqaluit, it will have an impact. There are multiple other little fees that add up that are imposed by other organizations such as Transport Canada. This impacts the bottom line, the cost.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

Mr. McConnell, my understanding is that, for transportation in the territories, they're exempt from the carbon tax as well. Again, your estimation as to how much increase—

[Dan McConnell]

Unfortunately, I don't have an estimation for you, but I will say that your comments are correct. There are a lot of inflationary pressures all across the business, of which the carbon tax is one. I don't have the pro-rated amount of what the contribution is from the carbon tax, but there are a number of inflationary pressures on the business that we're managing.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

Mr. McConnell, I lived for a few years in Norway House and shopped regularly at the Northern store, which I kind of liked. It was the only place you could really buy food. Certainly, for anybody who lives in a place like that, the impression is that you guys have a monopoly, that there's really no competition. What's to stop you from basically charging whatever you want?

I would note that it's been well reported that grocery stores throughout Canada have had record profits this year. Has your company had the same sort of increase in profits? What keeps your prices low?

[Dan McConnell]

No, we haven't had record profits, even if you go back to the first quarter. We've always taken a balanced approach on passing the cost to the consumers, given the relationship that we have with our customers.

There is a lot of competition. Jean-Pierre talked about some of the outshopping and e-commerce opportunities. There are also a lot of local operators, whether they be co-ops or local independent grocers.

It's really the long-term relationship that we have with our consumers. We are publicly traded. We're very transparent with the market in terms of what our margins are, and I can say that they're equitable to those of other retailers, keeping in mind that our business is global, so there is a lot of put-and-take.

I would say that it's the relationship with our customer. It's the commitment we have to the community through our promise. You can see that it's a very transparent process, because our financials are listed online for anybody to see.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

Are your profit margins in the north any different from your profit margins in the other areas, such as Giant Tiger or other places you served?

[Dan McConnell]

We don't break it out, but I would say that the same types of businesses have similar margins. For example, the traditional grocer versus the warehouse clubs, which is what we operate in other markets, would be aligned.