Bill C-311 (Historical)

An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use)

This enactment amends the Importation of Intoxicating Liquors Act to add an exception allowing individuals to import wine for their personal use to the provision that requires that all imports of intoxicating liquor be made by the province.

[Dan Paszkowski, President and Chief Executive Officer, Canadian Vintners Association]

Thank you, Mr. Chair.

The Canadian wine industry is a $9-billion industry that manages 31,000 acres of vineyards, produces 85 million litres of wine, employs 37,000 Canadians and pays $1.7 billion in annual wages. In addition, Canada's wine sector attracts roughly four million tourists every year.

As as result, the national economic impact of a bottle of 100% Canadian wine is $90, or six times more than a bottle of imported wine sold in Canada. This poses an opportunity and a challenge: an opportunity because Canada is the wine market with the second-fastest sales growth in the world, and a challenge because we're the world's sixth-largest wine importer, with 91% of wine imports entering Canada tariff-free.

In our pre-budget 2019 submission, the CVA has proposed two recommendations.

The first is the immediate need for the federal government to prioritize the removal of interprovincial barriers for both personal transport and direct-to-consumer delivery of alcohol across Canada. Significant attention is rightly paid to international trade agreements, but we cannot forget to lead by example at home. Barriers to alcohol trade are long-standing, unjustifiable and costly trade irritants that must be resolved. Vulcanizing our already small domestic market and making it harder for Canadian wineries to grow and realize the economies of scale and other efficiency attributes of larger international competitors must be eliminated. This would benefit all Canadians through greater interprovincial commerce.

More than six years have passed since the historic passage of Bill C-311, yet only three provinces, representing 19% of the Canadian population, have amended their laws to allow for personal transport and interprovincial winery-to-consumer delivery. As such, it was a positive signal that the new Minister of Internal Trade's mandate letter outlined the importance of collaborating with provinces and territories and eliminating barriers to create a stronger, more integrated Canadian economy while fully exercising federal jurisdiction as outlined by section 91.2 of the Constitution Act and Supreme Court decisions on the regulation of trade and commerce.

When the first ministers conference takes place this fall, it is critical that the federal government lead by example and take every measure possible to allow Canadian wineries to enter the 21st century by supporting the implementation of interprovincial winery-to-consumer delivery across Canada.

Our second recommendation calls on the federal government to amend the Excise Tax Act and to eliminate the legislated annual inflation indexation of the excise duty on wine. Canada already has among the highest wine excise duty rates of any wine-producing country in the world, and inflation indexation will continue to negatively impact Canada's wine value chain. This is too rigid a tax policy.

Not only do economic circumstances vary across all regions of Canada, but Canadian wine producers risk losing market share to much larger global players if we pass the increased excise duty cost on to consumers. Canadian wines compete against thousands of wine brands, with imports representing the majority share of both value and premium-priced wines. It is important to reflect upon the size of our industry, considering that each of the top eight wine companies in the United States produces more wine than the entire Canadian wine industry. With a 33% market sales share in Canada, we lack pricing power, and as a result the unintended consequence is a government-imposed producer tax, placing business revenues, wages, taxes and jobs at risk.

Today, the Canadian excise duty on wine is double the rate of our largest trading partner, the United States. To make matters worse, effective January of this year, the U.S. government reduced its excise duty from 37¢ per litre to as low as 2.4¢ per litre by way of an excise tax credit, with full excise paid only beyond 2.35 million litres of wine.

The impact of inflation indexation and changes to a competitive tax policy is why parliamentarians should have the final say on all tax increases. Given the broad economic implications of legislated excise duty indexation on the entire wine value chain from producer to restauranteur, the CVA recommends that the government amend the Excise Tax Act to remove the legislated annual excise duty inflation adjustment.

Thank you very much.

[Dan Paszkowski]

Thank you. That is an excellent starting point.

For the Canadian wine industry to succeed internationally, we have to remove what I view as a non-tariff barrier within our own country, which is the ability to ship a case of wine to a Canadian consumer in another province, which isn't the case, with the exception of three jurisdictions, namely, British Columbia, Manitoba, and Nova Scotia. We are hopeful that will take place.

As you know, five years ago, Bill C-311 was passed. Both the House of Commons and the Senate approved an amendment to the federal Importation of Intoxicating Liquors Act to allow wine at that time, but it now includes beer, to be shipped across provincial borders for personal consumption. However, it was up to the provinces to make amendments to their own laws, which has not taken place. We are now at the point where it might take a Supreme Court ruling or the goodwill of the federal and provincial governments over the course of the next 12 months, beginning July 1, to come to an agreement on how we might be able to allow Canadian wine to be shipped from one province to another without fear of a significant financial penalty, or after three infractions, a significant time in jail, which is what the law says in the provinces that currently disallow trade across interprovincial borders.

Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Madame Speaker, I welcome the question.

Simply put, my bill, Bill C-311, opened up free trade of wine between Canadian provinces at the federal level. The federal government of the day later, in budget 2014, supported the same kind of treatment for Canadian beer and Canadian spirits. The previous government made huge leaps in that area, which not only helped that particular value-added sector, it also helped our farmers who feed into the inputs of that.

Again, the former minister of industry, Mr. James Moore, spearheaded an initiative for which the Liberals like to claim total credit, to have a new agreement on internal trade. We know that deals like CETA, which were supported by every single province and territory after extensive consultation by the previous government to get there, allowed for a good process of which we are bearing the fruits today.

Unfortunately, it is the same government that has not led collaboration with the provinces to the point where it would allow for beers, spirits, and alcohol to flow freely. We had a chance with the Comeau case in New Brunswick, where we could have elevated it to the Supreme Court to get that constitutional clarity. That member voted against it.

On this side of the House, we are always proposing ideas on which we can get pan-Canadian agreement and consensus. It is that member and his party who voted that down, and it is that member and his party who now support a carbon tax, which again is at odds. The Liberals say they want to work with provinces, but yet they impose mandatory carbon taxes that make our Canadian businesses less competitive internationally.

Opposition Motion—Internal Trade

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Mr. Speaker, in the last Parliament I appreciated the member's support for my Bill C-311. However, it also should be stated that the previous government had worked on the AIT, the agreement on internal trade, to add more classes to interprovincial mobility of labour. As well, in addition to wine, the government later adopted beer and spirits to have the same treatment as per my bill.

In regard to the member's question, we have left this to be very open. Again, if the case can be referred directly to the Supreme Court, we are very supportive of that. That is, if a reference can be made drawing upon the evidence of the Comeau case because Judge LeBlanc said that the evidence he had heard about section 121 was actually new evidence supplied. That is the reason we are suggesting this new evidence would allow the Supreme Court to revisit an issue that it issued a result for in the Gold Seal case in 1921. That narrowed the application of section 121. This is the new evidence showing that particular application is incorrect, and again, gives us the unique opportunity today to free up our economy by freeing the beer.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

moved:

That the House: (a) recognize that it is a constitutional right for Canadians to trade with Canadians; (b) re-affirm that the Fathers of Confederation expressed this constitutional right in Section 121 of the Constitution Act, 1867 which reads: "All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces”; (c) recognize that the recent Comeau decision in New Brunswick creates a unique opportunity to seek constitutional clarity on Section 121 from the Supreme Court of Canada; and that therefore, the House call on the government to refer the Comeau decision and its evidence to the Supreme Court for constitutional clarification of Section 121.

Mr. Speaker, it is certainly an honour to kick off our opposition day motion on a subject that is near and dear to me, which is the subject of interprovincial trade in this great country.

Let me first take a moment to provide some background on the subject and why this is an important debate for Canadians. First, let me take members back to 1867 and our Canadian Constitution. In our Canadian Constitution, section 121 states:

All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.

To the credit of our country's founders, they not only had the foresight to understand the critical importance of internal trade to our Canadian economy, but even put it, in plain language, I might add, directly into our Constitution.

Unfortunately, over the years since 1867, many provinces, through regulatory regimes, and in some cases outright protectionism, have created barriers that hinder internal trade. In fact, it is easier for winemakers in Nova Scotia or British Columbia to sell their wine to Asia than to sell it to Ontario. This is in spite of the fact, as I often pointed out during the debate on my wine bill in the last Parliament, Bill C-311, that seven out of every 10 bottles of wine consumed in Canada are made outside of Canada. Yet provinces like Ontario refuse to get on board and support the free trade of Canadian wine.

Over time our federal predecessors realized that internal trade barriers were limiting our economic prosperity in terms of both jobs and gross domestic product growth. That is why, in 1995, which was in the era of Prime Minister Chrétien, Canada's first ministers, working with the federal government, signed the first agreement on internal trade. The stated purpose of this new agreement on internal trade was, “to foster improved interprovincial trade by addressing obstacles to the free movement of persons, goods, services and investments within Canada”.

It was a historic, groundbreaking agreement for that time, and I will rightly credit the Liberals for the agreement occurring under their watch. I should take a step back to say that it was the Canada-U.S. agreement on free trade that caused these concerns to arise in the first place.

For the history buffs out there, of which I am one, some of the provincial premiers of the era who supported this agreement were Ralph Klein, Mike Harcourt, Gary Filmon, Frank McKenna, Clyde Wells, Jacques Parizeau, Roy Romano, and, as that was an election year in Ontario, both Bob Rae and Mike Harris.

These are prominent names, and these premiers represented the entire political spectrum, from the New Democratic Party to the Progressive Conservatives of the day.

From my work on internal trade, starting with Bill C-311 in 2011, I can say that internal trade is a very different subject for Canadians than international trade. While international trade deals are often divided between left and right on the political spectrum, when it comes to internal trade, it really comes down to right and wrong. From my experience, Canadians are hugely supportive of increased internal trade and think it is wrong that many Canadian producers can more easily access the markets of other countries than the markets of other Canadian provinces.

Let me provide an example of this that does not involve Canadian wine.

For the province of Saskatchewan, canola oil has become a significant driver of the export economy. Canola oil, which basically is a vegetable-based oil that has become an alternative for dairy products, has become known as Saskatchewan's other oil boom. Canola is considered to be the most profitable legal cash crop in our country and is part of a $15 billion a year industry in Canada. There is only one problem. In Quebec, the government decided to place restrictions on the sale of certain types of canola-oil-based products, things as common as margarine, for example.

The Quebec government of the time imposed trade barriers that were considered by many to be protectionist, given that over 40% of Canada's dairy industry is supplied by Quebec producers. Ultimately, this is where the Agreement on Internal Trade comes in. Saskatchewan challenged Quebec through the Agreement on Internal Trade process back in 2013, and in 2015, after two years of very expensive legal proceedings in Saskatchewan, it finally won the case.

I think most would agree that in today's fast-moving economy, two years in regulatory limbo is a long time. Critics of the Agreement on Internal Trade frequently reference this process as far too slow moving and extremely expensive.

Here is the good news. Everyone, including all of the provinces that first signed on to the original Agreement on Internal Trade, also agree that this now 20-year-old agreement needs to be replaced. In fact, at the Council of the Federation conference in Prince Edward Island in August 2014, the premiers not only announced that they would conclude a new agreement on internal trade but announced a deadline of March 2016 to do so.

Why did they do so? They did so because Canada's premiers recognized that internal trade is valued at $366 billion a year. That is roughly 20% of Canada's gross domestic product. These are huge numbers, and the best part is that eliminating interprovincial trade barriers would not add tons of new debt, nor would it increase the deficit budgets of governments. In fact, it is probably the most cost-effective way to increase jobs and help grow our Canadian economy. This is a point we all in this place can agree on.

What happened? We have to look to the deadline month of March 2016, the month when Canadian premiers, working with the federal government, should have been concluding an agreement on internal trade to see what happened.

We know that in March 2016, the new agreement on internal trade was derailed. We know that the Prime Minister summoned the premiers to a conference in Vancouver that month. We also know that this Vancouver meeting was not about internal trade but rather was the Prime Minister's attempt to force a national carbon pricing strategy on the premiers. That effort failed. Instead of a national agreement on a carbon pricing strategy, the only agreement we witnessed was an agreement to disagree and talk again at a future summit down the road.

Where does that leave a new agreement on internal trade? Frankly, here in this place, we do not know. We have been told that we will see something possibly in July, but already details are leaking out that a new agreement on internal trade will have all kinds of exemptions, alcohol, again, being one of them. No doubt, in today's debate, the government will use a potential new agreement on internal trade as a reason to oppose this motion, and that is not good enough to give our Canadian economy the kick-start it needs.

Fortunately, there is another way. First, let us recognize why we have so many internal trade barriers to begin with. The reality is that in many cases, over time, various interest groups have effectively lobbied successive governments of all political stripes. The purpose of this lobbying was to enact regulatory red tape that would stifle competition, limit market access, and in some cases, create monopolies. In other situations, provincial governments have directly intervened in certain industries, largely for self-serving political considerations. I know that this is a shocking revelation.

Instead of it being a political debate, which is often influenced by lobbyists, what if this were strictly a legal question? What is the constitutional right of Canadian producers to access Canadians in other provincial markets? Ultimately, I contend that this is the question we should be asking, and that is why debating this motion today is so important for this place and for our national economy.

If we can convince the government to elevate the Comeau ruling to the Supreme Court for clarification, we will be creating an opportunity to grow our economy and create jobs through increased internal trade, because it would be a constitutional right instead of a political backroom deal. If we think about it, that is what we are debating today.

What is the Comeau decision for those who may be unfamiliar? In New Brunswick, a local resident, Mr. Gerard Comeau was charged for personally importing beer and some spirits across a provincial border from Quebec. Fortunately, a New Brunswick judge, after hearing evidence regarding the original intent of section 121, the free trade provision of our constitution that I mentioned earlier, found Mr. Comeau was not guilty. Sadly, the Province of New Brunswick has decided to file an appeal.

It is for that reason we created the “free the beer” campaign. We had some fun with our “free the beer” campaign, which has been widely supported by Canadians, but let us not lose sight of what “free the beer” really means. It means asking the Liberal government to elevate the Comeau case to the Supreme Court for constitutional clarification, and to do that now, rather than waiting on further delays.

This not only has the potential to free the beer and other forms of alcohol for Canadians, but more importantly, it would open up our internal economy for all Canadian producers of a whole host of different products. This obviously includes farmers and other agricultural producers.

Imagine if buying Canadian truly meant buying from all Canadian producers in all provinces, something that in many cases we cannot do now. I submit that needs to change.

I would like to share a few quotes from the chief executive officer of Moosehead Breweries Limited. Moosehead, as some will know, is Canada's oldest independent brewery and is located in New Brunswick. When asked by the CBC on how elevating the Comeau decision to the Supreme Court would benefit the industry, the Moosehead CEO was crystal clear in response. He said:

“The sooner there's some kind of decision, the better for everyone involved,”....

He said Moosehead can compete in an open market if both tax and non-tax barriers to trade are eliminated by all provinces.

“We sell beer in all 50 states in the United States with pretty open borders and hopefully we'll get to that point in Canada soon.”

I like that last part, “hopefully we'll get to that point in Canada soon”. I hope so, as well.

How soon? Today, our Liberal government could vote yes on the motion. If it does, it would send a message that the Liberal government is committed to eliminating trade barriers and wants to help grow our Canadian economy. If the House supports the motion, members will be sending a message that growing our economy through increased internal trade is something they support.

I know the Liberal government, in particular our Minister of Finance, loves to use the talking point “grow the economy”. In fact, I found over 100 references to “grow the economy” from the finance minister alone. The motion would present an opportunity for the Liberal government to do exactly that, grow the economy through increased internal trade.

The best part is that there is little to no cost to taxpayers to remove interprovincial trade barriers, meaning the Liberals' second favourite talking point, “adding debt”, or what the Minister of Finance refers to as “investing”, is not required here. How about that? It is a debt-free way to help grow our Canadian economy. What do folks think about that?

Earlier today, the Standing Committee on Banking, Trade and Commerce from the other place issued a report on the very subject of interprovincial trade. In fact, it is called “Tear Down These Walls: Dismantling Canada's Internal Trade Barriers”.

Among other findings, this report concluded that internal trade barriers reduce Canada's gross domestic product by between $50 billion and $130 billion annually. Let us think about that for a moment. That is why among other recommendations this report also supports that the federal government pursue, through the Governor in Council, a reference of section 121 of the Constitution Act, 1867, to the Supreme Court of Canada.

The only question that remains is timing. When do we take action? Do we continue to wait for a new agreement on internal trade, as we have been anticipating, or do we recognize that the Comeau decision has created a unique opportunity to do so now. I think most would agree we need to take action now.

Canada could be a stronger country economically and it could be more prosperous, if we can truly harmonize our regulations to eliminate interprovincial trade barriers. Again, let us not forget that this need not be a political battle. This could well be a constitutional right for Canadians if only we dare ask.

With Canada soon celebrating our 150th birthday, the anniversary of Confederation, I can think of few better ways to celebrate from an economic perspective than strengthening our internal economy to create more access for Canadian producers.

Before I close, I would like to add a few points. Sometimes in this place motions are done for political or ideological reasons. Some motions are even crafted to appeal directly to certain interest groups or demographics. In this case, I believe that every member of this chamber has producers in their home ridings, be they farmers, small business owners, manufacturers, whoever. All of these people can benefit through supporting the motion before us.

In my view, anything we can do to help increase the accessibility of the Canadian marketplace to Canadian producers is not only helping to grow our Canadian economy, but it is also helping to grow a stronger, more united country. The Fathers of Confederation did not intend Canada to only be a political union. They intended and put it in section 121 that it is meant to be an economic union as well, yet for some reason, there are those who fear competition and increased consumer choice between provinces.

Internal trade barriers not only harm our Canadian economy, but they also stifle innovation and often give competitors outside our borders market access advantage because of our collective inaction. While we all support the notion of Canadians buying from Canadians, let us not forget that we must first remove the barriers so that Canadian-produced goods, products, and services can reach our local marketplace.

I ask all members of the House to support buying Canadian by supporting this motion to ensure we can remove barriers that stand in the way of Canadian producers. It is an opportunity that is before us. Let us grasp it together.

[Debbie Zimmerman, Chief Executive Officer, Grape Growers of Ontario]

Thank you for the opportunity to present the views of the Grape Growers of Ontario on, hopefully, promoting growth and reducing interprovincial barriers.

My comments today are on behalf of the Grape Growers of Ontario, which represents more than 500 growers on 17,000 acres of vineyards in three different designated viticultural areas in Ontario.

Our association works as an advocate for all processing grape growers in the province and works on their behalf to ensure their needs are met. Our vision is to see that the markets for Ontario grapes and wines expand domestically and internationally on a continuous basis. We're always working on finding new markets for our products.

Ontario-grown grape products, hopefully, in the future will be demanded at home and internationally recognized for many of the great wines we produce.

I'll give you a quick snapshot of where we are despite the cold weather. In 2013, Ontario had one of the largest grape harvests. It was recorded at over 80,000 tonnes. Our farm gate, just at the farm level, was $100 million. Ninety-six per cent of the grapes grown in Ontario are vinifera and hybrid wine grapes. However, due to the extreme cold last year, our grape harvest was much smaller at about 52,000 tonnes and valued at just over $62 million.

From our perspective, we know that grape growers in Ontario have a collective legacy of about $684 million of investment in the land, which contributes to the community's landscape. Obviously, that intrinsic value dividend can't really be measured, but we know the economic value of the wine regions in this country would not exist without our growers.

In 2013, Ontario grape growers contributed over $100 million directly and indirectly to Ontario's gross domestic product. As for labour income, over $40 million was paid to labour related to grape growing in the province.

What we know is, and I'm sure you've heard this already from CVA, that 60% of the wines sold in Canada are imported. The other 30% is comprised of 100% VQA and what we call international-Canadian blend wine, which is made up of domestic and, in part, imported bulk product. Canada has to own 50% of its market share in the future, which is considerably low even compared to other competing international wine regions which hold shares upwards of 70% in their domestic market. Australia is 90%. California is 63%. New Zealand is 57%.

A 2012 report that CVA produced also talks about how countries like Australia, the United States, New Zealand, France, and Italy are financially supported by their national and regional governments for both export and domestic markets to encourage wine sales. Grape growers in this country should not have to compete with the treasuries of foreign countries.

In 2013, Ontario's wineries brought home over 214 medals from international competitions. We have an excellent reputation. I think most people know that. The problem is we're not buying our wine in Canada; we're buying wine from other countries, and that is a huge concern.

It should not be easier to ship from a winery in Ontario to Memphis in the United States than it is to Montreal. Market access in Canada is one of the main impediments to domestic growth.

I need to pause here.

We did not agree explicitly with Bill C-311, because we had hoped that would have applied only to Canadian wines to be able to travel freely among the provinces. We have accepted the fact that Canadians themselves are not buying a lot of Canadian wine. We know wine consumption in Canada has increased 30% over the last five years; therefore, it's not surprising that Canada was the sixth largest importer of wine in 2014. We know that exporters have prioritized Canada's competitive pricing growth and prospects as a great target market.

We know that in 2014 alone, total importation of table wine into Canada increased by 3.9% to 291 million litres. We know that Canada's national grape and wine industry is fragmented and faces numerous challenges, including the current legislation, but we're not happy with the fact that Bill C-311 did not apply to domestic. We thought that was a good place to start and we had hoped the liquor boards would have bought into that concept. However, the bill has passed and now also applies to foreign wine to be able to travel freely among the provinces.

Vinexpo recently released its 12th study of the world wine and spirits market with an outlook into 2018, and quite frankly, if you're a wine exporter, particularly to Canada, you have a lot to celebrate. As I have already stated, this is not good news for Canadian wineries.

We think that we need to do a couple of things. We know the industry contributes $6.8 billion in total economic impact to the country. That has been proven over and over again, and I don't think I need to repeat these statistics. I've appeared before the Standing Committee on Agriculture and Agri-Food many times and talked about the economic value of a bottle of wine that is grown in Canada compared to a bottle of wine imported into Canada. We believe we have a great opportunity to grow, but we need Canadians to understand that there is an opportunity to buy Canadian wine.

The Canadian Vintners Association, in a 2013 presentation to this committee, noted that for every $1 million increase in Canadian wine sales, it leads to a $3.1 million increase in gross output: revenues, taxes, jobs, and wages—the value chain. It's a good investment for our economy.

With regard to Canada's domestic grape and wine industry, our industry alone generates $1.2 billion nationally in tax revenue and markups across the wine-growing provinces. We need a reinvestment of some of these moneys into the domestic market across Canada to build an awareness of Canadian wine.

We certainly support the idea that every wine region in the world has support from its home market first. Our country would benefit from policies that promote Canadian-grown wine, everything from putting wine on our national airlines, to promotion through any events that the Canadian tourism associations hold. It's pretty basic stuff. We need long-term, dedicated market funding from the federal government, hopefully to support marketing initiatives that grow the domestic market for Canadian products.

The Grape Growers of Ontario are fully in support of reducing interprovincial trade barriers and retaining the role of the provincial liquor boards. We want to see, though, that support 100% Canadian-grown wine. We think that is important for everybody across Canada. But we need the federal government's support to expand cultivation and the use of Canadian wine grapes through marketing initiatives. We need the government to help us build consumer demand at home. If we had just another 2% of consumer demand at home, we would certainly have a continuing growing region in Ontario, B.C., Quebec, and Nova Scotia. We think that's the best value for our wineries and our grape growers.

We want to build on that consumer awareness, and we want to build our domestic market, which is dismal, at 30%, to at least 50%.

I look forward to any of your questions. Thank you.

[Dan Paszkowski, President and Chief Executive Officer, Canadian Vintners Association]

Good afternoon, everybody.

Thank you for the invitation to provide the Canadian wine industry’s perspective on ways to promote growth and boost competitiveness by reducing interprovincial barriers. The CVA is the national voice of the Canadian wine industry. Our membership represents more than 90% of the wine produced and sold in Canadian and international markets. Our industry is made up of 500 grape wineries and 1,300 independent grape growers, contributing $6.8 billion to the national economy. We produce two types of products: premium 100% Canadian wines, representing a $3.7 billion economic impact, and value-priced international-Canadian blended, better known as ICB, wines made from imported and domestic content, representing a $3.1 billion contribution.

Grapes and wine are a prime example of success for Canada’s value-added agrifood industry. From vineyard development and grape cultivation to winemaking and bottling, our compounded impact extends well beyond cellar door sales and employment, with strong linkages to tourism, retail sales, bars and restaurants across Canada. As a result, the domestic wine industry helps support more than 31,000 jobs and is motivation for more than three million tourists to visit Canadian wineries each year.

The authority to operate provincial liquor boards is based on the federal Importation of Intoxicating Liquors Act, IILA, which requires that all liquor be purchased by, or on behalf of, the provincial government. Until recently, this federal law banned all shipments of wine, beer, and distilled spirits across provincial borders unless the importation was authorized by the receiving province's liquor board.

June 28, 2012 marked the first time in 84 years that the IILA was amended, following royal assent being given to Dan Albas’ Bill C-311, which received unanimous support in both the House of Commons and the Senate. The federal amendments exempt consumers from having to consign wine to the provincial liquor authority when bringing wine, or causing wine to be brought into the province for personal consumption. The exemption did not diminish a province’s control over wine within its jurisdictional borders; it simply provided the province with the right to permit a consumer to bring wine into the province for personal use. The amended legislation removed the federal government's barrier to shipping wine directly to consumers who reside out of province. As a result, most provinces and provincial liquor boards have elected to do the bare minimum. Today, 32 months after Bill C-311 was passed, interprovincial barriers to trade continue to impede the Canadian wine industry’s ability to grow and fully benefit from wine country tourism.

Since the passage of Bill C-311 the following provincial actions have been taken: Manitoba and British Columbia immediately opened their borders and allowed for the interprovincial shipment of wine for personal use. Nova Scotia announced that it will adopt regulations in 2015 to allow interprovincial winery-to-consumer sales. Saskatchewan, Ontario, Quebec, Nova Scotia, and P.E.I. bypassed the spirit of Bill C-311 by making regulatory or policy amendments to avoid direct delivery, allowing their respective residents to transport one case of wine per trip as long as the wine is transported on their person. New Brunswick and Newfoundland continue to restrict residents from bringing wine into the province with an existing exemption of one bottle for New Brunswick and 1.14 litres for Newfoundland and Labrador, which isn't even a wine container's worth. Recently, New Brunswick announced that it is going to make some changes which, we believe, means it will join the above provinces in allowing one case of wine to be directly delivered into the province on one's person.

In February 2014, we were disappointed to learn that Alberta had amended its laws to eliminate courier delivery of wine from another province, while allowing its residents to continue to transport unrestricted volumes on their person, thus invalidating the foundation of direct-to-consumer delivery.

In May 2014, FedEx was charged under the Newfoundland Liquor Control Act for allegedly transporting a case of wine ordered by a local consumer from a British Columbia winery. This so-called contraband liquor case will be heard in provincial court in June 2015.

Most recently, Saskatchewan and British Columbia launched discussions on a bilateral reciprocity agreement that will support the interprovincial direct delivery of locally produced wine and spirits between residents of those two jurisdictions.

Thus, despite widespread support for expanding consumer choice in wine, most consumers across Canada are prohibited from purchasing the wines they desire directly from an out-of-province winery.

At the CVA, we recognize the frustration of an industry that wants to grow and has the capacity to do so, but faces so many obstacles. The Canadian wine industry accounts for just 30% of annual wine sales volume, the lowest market share of any wine-producing country in the world. We have set a strategic goal of commanding 50% of the domestic market by 2020; however, to achieve this goal, we must secure additional opportunities for wineries to access Canadian consumers across the country.

Over the past decade, 300 new wineries have opened across Canada, stimulating more than $1 billion in capital investment. These wineries are predominantly small businesses focused on premium wines, and each year a greater volume of high-quality wine is produced, yet our premium VQA wines represent a mere 6% market sales share across Canada.

Provincial liquor boards are under no obligation to carry Canadian wines, yet our industry continues to work hard to grow sales within the established retail system, with limited success. Only two provinces have a VQA market sales share greater than 10%. The remaining eight provinces have a VQA market sales share of less than 4%. Of these, three provinces have a VQA market sales share below 1%, which is unacceptable.

Direct delivery provides consumers with an alternative to access our award-winning Canadian wineries, which can also relieve the mounting pressure on brick-and-mortar liquor boards with limited shelf space. We know from the experience in the U.S., Manitoba, and British Columbia that the amount of wine that will be shipped through interprovincial direct sales is limited. With a shipping cost of $3 to $4 per bottle, consumers will first check the availability of a sought-after Canadian wine in their home province or local retail outlet before ordering from a winery.

The reality is that wine is becoming the beverage of choice in Canada and presently accounts for 30% of the beverage alcohol market, up from 18% in 1995, making Canada among the fastest growing wine markets in the world. All major wine-producing countries are investing tens of millions of dollars into Canada to build their brand presence and sales opportunities. Combined with the reduction and elimination of import tariffs, wine imports have garnished 80% of total wine sales growth in Canada over the past decade.

Canadian wineries believe that direct delivery will stimulate more wine sales, drive tourism, and support greater investment and job creation in wine regions across Canada. This is good for Canada, as we know that every $1 increase in Canadian wine sales stimulates a $3 increase in gross output along the value chain.

The removal of internal barriers to wine trade would ensure that consumers have increased choice with access to a wider range of Canadian wine products; that wineries will maintain and expand market opportunities and build relationships, awareness, and consumer loyalty; and that provincial governments will continue to earn taxes, levies, and related costs based on services provided.

Since 2006 Canada has concluded free trade agreements with nine countries. Competition from imports is growing, and import tariff relief provided to the U.S., Chile, the EU, and soon to the Trans-Pacific Partnership countries has created and will create new competitive challenges, which demands that we secure free trade in our own market. This is the most important catalyst for growth both at home and abroad.

To achieve our goal of growing the Canadian wine industry from a $6.8-billion sector to a $10-billion sector over the next five years, we recommend the following: enhance federal engagement with provincial governments to remove interprovincial barriers to wine trade; create an expert intergovernmental working group to facilitate an interprovincial direct-to-consumer alternative for Canadian consumers; implement a priority pilot project to remove interprovincial barriers to wine trade under the auspices of the Agreement on Internal Trade; and establish a multi-year federal funding program for Canadian domestic wine market development to grow wine country tourism and domestic market share for Canadian wines.

Once again, thank you for your ongoing support of the Canadian wine industry and for your efforts to remove internal barriers to trade.

Red Tape Reduction Act

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Mr. Speaker, what I would start with first is I think it behooves this country and all Canadians to have a process in place to take advantage, the best advantage for everyone, of the estimated $650 billion of potential investment that can come through responsible resource development.

We need to have a process to separate the wheat from the chaff so that we know what projects can go ahead that are safe for Canadians and safe for the environment.

I have heard from people in my riding, some who advocate for the pipeline, some who advocate for its denial. Ultimately, we want to see jobs and the economy grow. When I talked to Mayor Litke at Penticton City Hall, he spoke of the need for infrastructure. Councillor Jakubeit has said that small businesses need to have a strong environment for them to grow.

The Red Tape Reduction Commission that travelled all across this country, 15 cities, 200 people, all those round tables, actually heard from British Columbia that we need to see interprovincial barriers to wine removed. Bill C-311 actually opened up that interprovincial transit of wine. This comes back to our strong steps on regulatory red tape.

We are supporting Canadians. We are making sure that good things happen for Canadian businesses.

Motions in Amendment

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency]

Mr. Speaker, it is certainly a pleasure to rise tonight and debate Bill C-31, the economic action plan 2014, act no. 1.

I will not go into a huge amount of detail on all the various parts of the budget. There is a lot in the budget that is good for Canadians. I will zero in on a couple of points. I want to explain those points so Canadians thoroughly understand them. Anyone listening to the debate tonight would have a very difficult job separating fact from fiction on the opposition side. Those members make outlandish and wild accusations with absolutely no proof or credibility to back it up.

Year after year, budget after budget, our government has created the fiscal and policy conditions that help Canadian businesses prosper. Canadian citizens benefit from a high standard of living. That is a sentiment shared by many. Globally recognized authorities, from the Organisation of Economic Cooperation and Development to the International Monetary Fund, have ranked Canada as one of the best countries in the world in which to do business. In fact, they expect Canada to be among the fastest growing and strongest economies in the G7 over this year and next.

I bring that up for a very simple reason. If anyone is listening to the rhetoric in this place tonight, that is fact. That is not fiction. That is not made up. That is reality. If we stick to reality, we could actually have a good, solid discussion about the budget, but if the opposition members only want to engage in fiction, then we cannot have a proper debate over the budget. The reason is simple: facts speak for themselves. Over one million more Canadians are working today than during the worst part of the recession. That is the best job creation record of any G7 country during this period.

Of course, there is ongoing uncertainty in the global economic environment. That is why we must continue to encourage job creation and economic growth, the twin pillars of our economic action plan since its inception in 2009. It is also the reason why we must keep our sights firmly set on the goal of balancing the federal budget by 2015.

In economic action plan 2014, our government renewed its commitment to returning to balanced budgets, fostering jobs and economic growth, and supporting families and communities across Canada. Economic action plan 2014 act, no. 1 contains important measures that build on these three key priorities.

Today, I would like to highlight two measures in particular: the search and rescue volunteers tax credit and important amendments to the Importation of Intoxicating Liquors Act.

Since 2006, our government has put in place a number of tax relief measures to support hard-working Canadians and their families: the first-time home buyers' tax credit, registered disability savings plan, the family caregiver tax credit, pension income splitting and many more.

In Economic action plan 2014, we announced a new tax credit for ground, air and marine search and rescue volunteers. We are proud to publicly recognize the important role these brave men and women play and the difference they make in their communities. The non-refundable search and rescue volunteers tax credit is similar to the volunteer firefighters tax credit, which our government proudly introduced in 2011. Eligible search and rescue volunteers could claim it for 2014 and subsequent tax years.

Search and rescue volunteers are an integral part of Canada's emergency response network, supporting the Canadian Coast Guard, police, and other such agencies. Often working in dangerous conditions, they put their own welfare at risk time and again to ensure the safety and security of their fellow citizens.

To qualify for the new tax credit, an individual must perform at least 200 hours of volunteer search and rescue services in a tax year, for one or more eligible search and rescue organizations. Eligible search and rescue organizations include those that are members of the Search and Rescue Volunteer Association of Canada, the Civil Air Search and Rescue Association, the Canadian Coast Guard Auxiliary, and search and rescue organizations whose status as such is recognized by a provincial, municipal or public authority.

Search and rescue volunteers who perform at least 200 hours of eligible service during a year can begin to claim the new non-refundable credit on their personal income tax and benefit returns starting next year, on their 2014 tax return. Eligible service includes responding to and being on call for search and rescue and related emergency calls, attending meetings, and participating in required training related to search and rescue services, all of these activities taking place on a volunteer basis, of course. The credit will be calculated by multiplying the lowest personal income tax rate for the year by $3,000. For 2014, the credit will be 15% of $3,000, or $450.

It should be noted that the hours volunteered for eligible search and rescue along with firefighter services can be combined. However, only one credit for the year can be claimed, either the volunteer firefighters tax credit or the search and rescue volunteers tax credit. Volunteers with at least 200 hours of combined eligible search and rescue and volunteer firefighting services in a year will be able to choose between the two tax credits. Individuals who receive honoraria for their duties as emergency service volunteers will also be able to choose between the new search and rescue volunteers tax credit and the existing tax exemption of up to $1,000 for honoraria.

Our government is proud to add the search and rescue tax credit to the long list of tax relief measures we have already introduced for Canadians.

With my remaining time, I want to discuss our government's plan to modernize legislation left over from the prohibition days. The Importation of Intoxicating Liquors Act is a federal statute governing the interprovincial transportation and international importation of intoxicating liquors. It was enacted in 1928 at the request of the provinces after the repeal of their liquor prohibition laws. This legislation controls and restricts the movement of liquor from one province to another, as well as its importation into Canada.

Currently, the Importation of Intoxicating Liquors Act prohibits Canadians from taking beer or spirits across provincial boundaries. In Bill C-311, which was sponsored by my colleague from Okanagan-Coquihalla and received royal assent in June 2012, we updated some of the archaic provisions of the act by removing the federal barrier on transporting wine from one province to another for personal use. Bill C-31, the legislation we are debating two years later, contains the next logical step in the process of modernization.

The amendment we have proposed removes the federal barrier that prohibits individuals from moving spirits and beer from one province to another when it is for their personal use.

Our government is taking action within its jurisdiction to strengthen internal trade by removing barriers to the movement of goods within Canada. It is important to note that there is no change to the province's authority to set limits on personal importations of spirits and beer and that change to provincial liquor laws may also be required to allow the interprovincial movement.

I am proud of our government's record of achievement and our sound fiscal policies. We have invested in job creation and training, supported trade and innovation, and improved the quality of life for families and communities from coast to coast to coast. At the same time, we brought the overall tax burden to its lowest level of tax in 50 years. We have introduced measures that will keep us on track to a balanced budget in 2015-16.

I will conclude by simply saying that I am honoured to do my part to advance economic action plan 2014. I sincerely hope all members will join me in giving Bill C-31 their full support.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Mr. Chair.

I find it helpful that the NDP are going to be supporting this because I think there are some things we can all agree on, regardless of party stripe. However, I would like to take issue with the point of consultation. If Mr. Mai were to read, as presented by Mr. Cotler, other than the parliamentary process there is no talk about consultation outside of Parliament. By supporting this amendment, you are saying that parliamentarians should conduct those consultations, which was done through this process. So, Mr. Chair, I would say by their support of this particular amendment, they are supporting the consultation process we've had with Canadians through consulting with the Minister of Justice, different stakeholders, victims' groups. I would simply point out that by voting for this he's affirming this is a good process to go through.

I have to say, through you, Mr. Chair, I enjoy working with Mr. Mai.

I have just one other point, Mr. Chair. We also have had legislation come forward—for example, Bill S-209, that was on the prize fighting provisions—and again that particular...dates back to 1903. So I think it's helpful from time to time, and as Ms. May will probably attest even on my Bill C-311, governments should review their legislation to ensure it is timely, up to date, and giving the best service to Canadians.

Thank you.

Concurrence in Vote 1—The Senate

[Rathika Sitsabaiesan, NDP, Scarborough—Rouge River, ON]

Mr. Speaker, I am pleased to rise this evening to participate in the debate on this important concurrence motion.

It is a belief of mine, as it is of the rest of my colleagues and many Canadians across the country, that the funding of $58,169,816 under the Senate program expenditures in the main estimates allocated for the funding of the Senate under vote 1 should cease to be provided to the Senate.

We are in the midst of a democratic crisis in this country, and Canadians across the country agree that there is no place for an unelected, unaccountable Senate in our democracy.

The origins of the Senate date back to Confederation. The members of the red chamber were asked to review and scrutinize legislation passed by the House of Commons. It was intended to ensure the representation of minorities and of provinces and regions in the federal legislative process.

As the member for Timmins—James Bay clearly articulated earlier, at the time that the Senate was created, these minorities were the wealthy people of this country. They were concerned that the interests of the wealthy few in this country might not be represented sufficiently in the elected House of Commons and wanted to make sure that people were appointed to represent the interests of the wealthy.

It was also intended to be less partisan. However, the Senate has never really played this role, as senators vote according to the party they represent rather than according to the interests of the regions they are supposed to be representing.

In the past few months, information has come to light about certain Liberal and Conservative senators that raises many questions and concerns about the use of public funds granted to those senators. Constituents and Canadians across the country are wondering about Mike Duffy and his $90,000. Fortunately, we have the Leader of the Opposition asking all the right questions, and Canadians are looking for real answers from the government.

Canadians deserve to know the details surrounding the $90,000 loan from former PMO chief of staff Nigel Wright to Mr. Duffy to repay housing allowances he falsely claimed. Despite his permanent residence being clearly in Ontario, Mr. Duffy declared that he lives in Prince Edward Island, where he owns a cottage. The $90,000 loan allowed Mr. Duffy to repay Canadians, and he now no longer participates in the audit. Mr. Duffy left the Conservative caucus, and on May 19 Nigel Wright also resigned for his actions. This transaction between Mr. Wright and Senator Duffy is now with the Ethics Commissioner to evaluate whether there was a violation of the Conflict of Interest Act. The RCMP is also investigating Mike Duffy's expenses.

Then we have Ms. Pamela Wallin, who is supposedly a representative from Saskatchewan, yet primarily resides in Toronto. Since 2010 Senator Wallin has claimed $300,000 worth of travel expenses not related to travel to her province of origin and has been seen at numerous Conservative fundraising events. The senator left the Conservative caucus and chose to sit as an independent as of May 17 of this year.

Then we have Mr. Patrick Brazeau, an even bigger embarrassment, who found himself in the middle of many controversies, including repeated absences from the Senate, an allegation of abuse of his housing allowance and charges of sexual assault. In 2012 Mr. Patrick Brazeau declared that his primary residence was in in Maniwaki, Quebec, which enabled him to receive a housing allowance for a secondary residence in the national capital region. However, we have all learned that media reports indicate the Maniwaki residence is actually the home of Patrick Brazeau's father. On May 9, Deloitte's audit and the report of the Senate committee on the internal economy ordered Patrick Brazeau to repay $48,000 in unjustifiable claims. The senator resigned from the Conservative caucus. We are seeing a trend here.

Abuse of privileges does not rest only with the Conservative caucus but with Liberal senators as well.

These are only some of the abuses of power that we are aware of at the moment. We do not know what else is to come. While we certainly need an independent audit of residency requirements, housing allowances and travel expenses in order to find out whether certain senators are abusing public funds, at the end of the day we need to abolish an institution that no longer serves Canadians.

In any other Canadian workplace, this type of behaviour and lack of responsibility and accountability would result in disciplinary action and, quite possibly, the cessation of the employment relationship, but here what we see are senators stepping away from caucus while maintaining all of their other privileges.

It is outrageous that according to Conservatives, senators are presumed innocent, but unemployed Canadians are guilty by default. It is clear that the Senate is incapable of rectifying its own problems.

While the Senate asked Deloitte to review the expenses of former Conservative Senator Mike Duffy, former Conservative Senator Pamela Wallin, Liberal Senator Mac Harb and former Conservative Senator Patrick Brazeau, the firm is still in the process of completing its audit.

The leader of the government in the Senate has stated that the Senate would make the audit public, but we know there is no guarantee that this will actually happen. Moreover, the Senate committee on internal economy removed paragraphs in its report that criticized Mike Duffy because he had reimbursed the amount he owed. It clear that all public funding for this institution must end.

In 2005, the current Prime Minister campaigned on a promise to reform the Senate, to make it the three Es, equal, elected and effective. He went on to table several bills on Senate reform on behalf of this so-called commitment from his government for change, yet the bills went nowhere. They never rose to the top of the priority list. Even further, the Prime Minister broke his promise not to appoint senators and in fact appointed a whopping 59 senators.

The Senate is a fundamentally undemocratic institution, used by both the Liberals and Conservatives to thank their friends, defeated candidates and donors. They are appointed not because of merit, but as a reward for loyal service to the party in power. The Prime Minister's so-called Senate reform is without a doubt, a complete failure. Like the Liberals, the Conservatives are only part of the problem.

It was not until February 1, that the Prime Minister referred the issue to the Supreme Court of Canada. The court will give its legal opinion on the processes to follow under the constitution to limit the terms of senators, elect senators, eliminate the requirements for senators to have a residence in the province that they represent and, of course, the abolishment of the Senate. The Supreme Court decision may take years to come, but Canadians want and Canadians deserve action today.

While the Conservatives and Liberals rise in their places to defend the status quo and their senators, the NDP is proud to stand up for Canadians and their tax dollars.

The Senate is outdated and fundamentally anti-democratic. We have senators who abuse the public purse. Also, that place is supposed to be the place of sober second thought. However, in fact, it is allowing partisan lines, as well as blocking legislation that is passed in the House of Commons a number of times, such as the NDP bill, Bill C-311, which would have ensured responsibility and action from Canada to prevent climate change. It passed the House of Commons, but the Senate stopped it.

Premiers, including Saskatchewan's Brad Wall, and many Canadians across the country, agree with us. It costs $92.5 million a year to run the Senate, over $90 million a year to cover the costs of salaries and travel for political organizers and people responsible for raising funds for the Liberals and the Conservatives. This is outrageous. The Senate is an archaic institution with appointed senators, some of whom, as we know, abuse their privileges and do not represent the interests or values of Canadians.

I know in my riding of Scarborough—Rouge River, this is a lot of money that could be put to much better use, yet it will take the annual taxes of over 8,000 average families to pay the Senate's tab. Senator Duffy will be collecting another $1.3 million in salary, while Patrick Brazeau will be collecting $7 million over the course of the remainder of his appointment.

There are many residents of Scarborough—Rouge River struggling to provide for themselves and their families. There are much more important uses for our taxpayer money. Youth unemployment in the GTA is double that of the national average. Where is the real job creation strategy? Canadians across the country are in need of affordable housing. Investments in housing are what Canadians are looking for. In my riding, greater investment for the crumbling infrastructure and investment in public transit services are needed. This $90 million could go very far in investment in public transit in Scarborough.

Neither the Conservatives, nor the Liberals, are taking this issue seriously.

On one hand, we have the Conservative's so-called reform that is going nowhere. On the other hand, the Liberals are supporting the status quo. Fortunately—

[Terry David Mulligan]

It's fantastic. I'm heading to Edmonton on Friday and the first place I'll go is to my local wine store because, first of all, I see brands there that I would never see anywhere else. It's astonishing how robust the wine shops are in Alberta. I applaud them wholeheartedly. It's the way B.C. should be. I think we'll all get there at some point—maybe not Ontario. But the fact remains that it's a great example of what you can do with an industry. That's why I cannot believe the Alberta government is saying no, that they won't honour Bill C-311. It's stupefying. We still haven't come up with an answer as to why they have done that.

I would like to congratulate the restaurants in Montreal, by the way, who are pouring more and more B.C. wines. It's a great combination, really good wine and really good food.

[Terry David Mulligan, As an Individual]

Thank you so much for including me in this discussion.

I doubt I'll need 10 minutes.

My take on this is different from all the other folks you've heard from, except for Shirley-Ann. I'm not a corporate type of person, but I do have information that I think would be of interest to you.

I've been hosting Tasting Room Radio, a weekly one-hour food and wine-driven show that started in the Okanagan. It's heard province-wide in Alberta, throughout the Okanagan, and in Vancouver, Victoria, and Vancouver Island.

Not only do I conduct the interviews with the winemakers, growers, and principals of the wineries, but I also edit the interviews. As a result, I listen to them over and over again, shortening them down to a proper size. The information that comes from listening to their saying what they have to say is information that I want to impart to you today.

Two years ago, as a media observer, I attended a meeting at the very beginning of the Vancouver International Wine Festival. I was stunned when I listened to the conversations in the room. The top winemakers, small and large, along with some of the principals and owners, were all having the same conversation they'd had for years. They asked, "How do we get our wines across Canada, how do we work with the liquor boards, and how do we not live under the dark cloud that is the threat of the liquor boards?" This was simply because none of them could stand up and challenge the liquor boards across the country because their products would mysteriously disappear from the shelves.

I realized that they were in a bind, that they wanted to say something, and that they wanted to change the liquor laws that were written in 1928 during Prohibition. Because I had no affiliation with any winery, I stood up and I said, "I'll go".

Then along came the Banff Food and Wine Festival, and I went to the border. I wrote to the liquor control board offices in Victoria as well as to their headquarters in Edmonton and said, "This is what I'm doing and why". I had lunch with the RCMP—they bought—and then I went to the border. The only people who met me there were the media, God bless them. They got the story out and it started things rolling. Shirley-Ann then picked up on it and we ended down the way, in my small part, with Bill C-311.

To my astonishment, after the bill had been unanimously passed in both houses, Alberta refused to honour it. The Liberal B.C. government said, "We'd love to see Ontario wines in British Columbia", and they opened the doors. Ontario said, "Nah, we don't want to see B.C. wines here on a regular basis; we're not quite there yet". It just caused a lot of anger.

Strangely enough, Alberta is the best customer that we have outside of British Columbia. We buy a lot of our own wines. My show is heard in Alberta and I'm constantly getting feedback from Alberta customers and clients saying, "Why are we always being put in the situation where we don't know if we're breaking the law by bringing wines from the Okanagan back into Alberta". It's ironic because we see Tourism of B.C. saying, "Yeah, come on in, this is wine country, come on in", and then when customers get here, they say, "But, you can't take your wines back".

If you can help in any small way, to work with your provincial counterparts to clear up these hurdles, you will have done a great thing for this country.

We have bottlenecks all over the place; look no further than Alberta and Ontario. One or two things that would help would be to embrace the idea of having free trade within Canada, not just with the United Stated, and, additionally, to open up wine sales to the Internet, which everybody is talking about.

For every small winery out there, the wineries that make 3,000 to 5,000 cases of wine, every dollar is accounted for. They need one wine to pay the bills while the other wines are progressing. Usually it's a Sauvignon Blanc or a Pinot Gris, or whatever, but that's the wine they need help with. If we could recognize that, they could pay their bills while all the reds are growing. It would be a wonderful thing if we could target one wine within the portfolio of a small winery and say we're going to support that wine as hard as we can to help the winery pay the bills while it gets the rest of the bottles ready for market.

On the Canadian embassy, I just want to say that Janet Dorozynski is a wonderful supporter of the wine industry, and I applaud her work with the embassies across the world.

Also, on Bill C-311, let's honour it as best we can. That's what it was written for.

I was going to say that no one since 1928 has been charged under the Importation of Intoxicating Liquors Act, but there was one poor schmuck who tried to come across the U.S.-Canada border many years ago. But the threat is always there. The threat is always over top of the wineries, that “We will charge you; we will make your life very uncomfortable”. The liquor boards are seen as bullies. I wish I could say nicer things about them, but they don't like the spotlight; not now and not two years ago.

I'm far more interested in your questions that you have for us here, and that's why I came today.

Thank you.

[Shirley-Ann George]

Unfortunately, Bill C-311 contains the following phrase: “in quantities and as permitted by the laws of the latter province”. So it affects the receiving provinces. Unfortunately, we were not able to convince Parliament to take that out and insist that the province allow reasonable quantities.

So unless Parliament is willing to have some discussions on amending the amendment, if the provinces won't work within the spirit of the law, which you might revisit, there isn't another piece of legislation we're aware of besides the IILA under which we would be able to move forward.

[Shirley-Ann George, President, Alliance of Canadian Wine Consumers]

Thank you.

Good morning, and thank you for the invitation to be here today.

The Alliance of Canadian Wine Consumers, better known as FreeMyGrapes, is a grassroots volunteer organization. Our goal is to make it legal to buy and ship Canadian wine across provincial borders for personal use. Today, I'll provide you with a brief update of what has happened since Bill C-311, the amendment to the IILA , was passed last year, as well as what else still needs to be done.

First, a big thank you to your colleague Dan Albas, the MP for Okanagan—Coquihalla. We are very proud to have been associated with Dan in the unanimous support he was able to garner from Parliament and from Senate. And unanimous support these days on the Hill is almost an oxymoron. We do appreciate all the efforts from both sides, from all the parties, in support of Bill C-311.

Why do we want interprovincial wine shipments? Let's start with the reality that there is overwhelming support from Canadians for this notion. In 2012, Harris/Decima research showed that, nationally, 78% of people said that these interprovincial barriers are unreasonable.

This is largely a North American problem. Imagine telling somebody in Paris they couldn't order a case of wine from Burgundy. If you told Italians they couldn't order their own product and that they could indeed incur a fine of up to $100,000 and jail time for ordering Italian wine, they would look at you as if you had grown a second head. This is the reality in Canada. It's largely going away in the United States. Today, 40 U.S. states are open, with Montana coming on board last week.

Our wineries can ship to 90% of the U.S. market, and small wineries that make up only 5% of U.S. production have been able to garner 50% of the direct-to-consumer market. This is an example where you would think that Canadian governments would want to support Canadian small businesses, especially small rural businesses, and when they had the overwhelming support of Canadians to do so, they would be able to move forward.

You may have some witnesses who will come in and say that provinces can't do this because it's unaffordable. We look at the U.S. numbers and respond that's nonsense. In the U.S., less than 1% of U.S.-produced wine is shipped across state lines. It is indeed a very affordable measure.

Bill C-311 passed on June 28 last year, almost a year ago. What has happened? Manitoba, a province with very little wine production, immediately said its borders were open. Kudos to Manitoba. Within two weeks, B.C. announced its borders were also open, and it continues to be the most forward-looking. It has in fact named a wine envoy, whose job it is to go to the other provinces and try to get them to open up their borders for B.C. wine.

Nova Scotia passed enabling legislation on December 6, and the minister's comments on this legislation are very encouraging, but the officials in the liquor boards prior to the minister's comments were not very encouraging. So we need to wait and see what the regulation actually says, but Nova Scotia is marked as hopeful.

Recent changes that allow one case of wine per trip on your person—so it has to physically accompany you—have been enabled in P.E.I. and Saskatchewan. If you live in P.E.I., you probably make it out to B.C. once or twice in your lifetime, on average. It's probably during the summer when you're not about to put a case of wine in your trunk and drive it across Saskatchewan in the heat of the summer. So this little measure that has been passed is not something that we see as progress at all.

Both provinces have also said they're not going to do any more, although neither one has come up with any answer to the question about how in the world they're going to enforce it.

Unfortunately, Alberta gets the booby prize. According to reports by outside counsel, Alberta law clearly states it is legal to ship into the province. Section 89 of their law says that “an adult may import from another province liquor for the adult's personal use or consumption”. It can't get more clear than that, but the Alberta government's position is that “import” means only on your person. So in free-enterprise, free-trade Alberta, we face a huge disappointment, and more work is needed there.

The Ontario law is actually silent on the importation or possession of wine from another province, but the LCBO's position is that you can only bring in one case on your person per trip.

There was a private member's bill by MPP Rob Milligan in 2012, but we lost that when the legislature was prorogued. He has that said he's going to reintroduce the bill, but unfortunately this Ontario government has a very poor record on opposition bills ever even making it to committee, never mind into law.

So while Ontario is clearly benefiting by shipping their wine to other provinces, they haven't opened their borders. To say that's ridiculous is an understatement.

In Quebec a petition was recently tabled in the legislature with over 3,000 signatures supporting people's ability to buy wine across provincial borders. Quebec has yet to respond to this petition, but the government has tabled enabling legislation, which if they wished, could include regulation that would allow reasonable quantities of wine to be shipped directly from a winery to Quebeckers. Unfortunately, we've been told that the intent of this legislation and the regulation that's currently being written is only to allow it on your person. So there's a real opportunity for movement in Quebec, but the effort needs to be considerable and quick.

So clearly the job is not done, although Canadians truly believed that with the passage of Bill C-311, the work was done. A significant number of them are ordering wine across provincial borders, and wineries—because it's now a possession issue and no longer a shipment issue—are largely willing to ship across provincial borders. The reality is that it's not legal and that there is a significant risk to anybody who does so.

We will continue to make our efforts, but we need some help with this huge loophole that is being used by too many provinces.

First, on behalf of the thousands, and thousands, and thousands of Canadian wine-lovers, we encourage you to continue Parliament's good work in tearing down these obsolete, ineffective, Prohibition-era, job-killing, interprovincial wine barriers.

Second, every time you see one of your provincial counterparts—and I really do encourage this for those members who come from Alberta—ask them to respond to the desire of 82% of Canadians who believe that we should be able to access wine through online purchasing. It is bizarre when you think about it that if you're an Albertan, you can go into B.C., literally load up a tractor-trailer full of wine, get in the passenger seat, drive across the Alberta border, and as long as it's for your personal consumption, that's perfectly legal. But if you order one bottle of wine and have it delivered to your home, you've broken the law.

Third, we encourage you to use all possible vehicles to promote this issue. There is a Conservative meeting happening actually on June 28, the one-year anniversary of the passage of Bill C-311. We encourage you to make sure it is filled with Canadian wine from outside the province, and that you make this public. We encourage you to find all federal-provincial opportunities to drive home the message that it is time to free our grapes. It is only together, by working in concert with consumers, the industry, and parliamentarians, that we'll finish the job.

Thank you.

[Dan Paszkowski]

Absolutely. We've been pushing for this since 2007, so the private member's bill by Dan Albas and the support from Ron Cannan and a number of MPs from every side of the House made a historic change in amending that piece of legislation.

We've had limited success with the provinces, where, as I mentioned, we're approaching the one-year anniversary of the passage of Bill C-311. Manitoba and British Columbia are the only two jurisdictions that have opened up their borders to wine being shipped directly from a winery to a consumer. Nova Scotia and Quebec have passed enabling legislation for it. We believe that Nova Scotia is going to do the right thing and open it up as British Columbia has. In the case of Quebec, it's our understanding that they're going to do what Saskatchewan, Prince Edward Island, and Ontario have done and allow for a constituent to bring home one case per person per trip, which makes it extremely difficult.

[Dan Paszkowski, President and Chief Executive Officer, Canadian Vintners Association]

Thank you, Mr. Chair.

Good morning, everybody. As noted, my name is Dan Paszkowski. I'm the president of the Canadian Vintners Association, better known as the CVA.

I'd like to thank you all for the occasion to provide the Canadian wine industry’s perspectives on various issues and challenges facing our sector, and the opportunities to improve our contribution to the Canadian economy, and the role government can play in the development and success of this vibrant industry.

The CVA is the national voice of the Canadian wine industry, representing all scales of production and accounting for more than 90% of the wine produced and sold across Canada. CVA members are engaged in the entire value chain: grape growing, farm management, grape harvesting, wine production, bottling, retail sales, research, and tourism.

The Canadian wine industry produces 100% Canadian and VQA wines as well as International Canadian Blended, ICB, wines. Both are significant economic drivers to the Canadian economy. We recently completed a landmark national economic impact study, which found that 100% Canadian and VQA wines contributed $3.7 billion, including tourism, to the Canadian economy, and wines blended in Canada from imported and domestic content contributed an additional $3.1 billion. This is an impressive figure—$6.8 billion combined—and is the result of 500 grape wineries and 1,300 independent grape growers across the country.

Wine is synonymous with value-added production. Canadian wineries capture greater revenue than most agrifood products, not only by crushing grapes and producing wine but also by packaging, marketing, and sales. From vineyard development and grape cultivation to the final sale, wine is a highly complex process that involves numerous suppliers, distributors, and service providers throughout the value chain, compounding the economic benefits. Our impact extends well beyond direct sales and employment, with strong linkages to tourism, retail sales, bars, and restaurants.

Our recent study, which was quite conservative in its figures, concluded that each bottle of Canadian-produced wine generates an average of $31 in economic impact. This includes more than $1.2 billion in contributions to government revenue through tax and liquor board markups. Furthermore, the domestic wine industry helps support more than 31,000 jobs and is motivation for more than three million tourists visiting Canadian wineries each year. Put into context, this is four times the number of visitors to the Vancouver Olympics.

The number of wineries in Canada has grown by 300% in the last decade, with more than 100 wineries opening in the last five years. Most are small businesses focused on premium wines. The investment made by the wine industry has been a direct response to the growing consumer interest in wine and wine tourism.

Wine is increasingly becoming the beverage of choice in Canada and presently accounts for 30% of the beverage alcohol market, up from 18% in 1995. However, Canadian wine industry sales account for only 30% of total wine sales while our foreign competition commands 70% of our domestic market.

At 30%, Canada has the lowest wine sales market share of any wine-producing country in the world. For example, South Africa owns 100% of its market, Argentina 99%, and the U.S. 68%, to name just a few.

ICB wines represent 25% of domestic wine sales, yet their market share has dropped almost 8% since 2000 while imports have grown 6%.

One hundred per cent Canadian VQA wines have experienced 2% growth in market share over the past decade, yet represents only 6% of total wine sales. Disappointingly, these premium wines represent less than 4% of total wine sales in 10 of 13 jurisdictions across Canada.

More than 200 million bottles of Canadian wine are sold each year in domestic markets, each contributing more than $31 in value to our economy. By comparison, a 2010 KPMG study prepared for the Wine Council of Ontario concludes that the sale of imported wine contributes a mere 67¢ per litre.

According to a 2012 Bank of Montreal report, Canada’s wine industry has experienced 3.1% growth on average since 2005, outpacing the overall economy.

The Canadian wine industry’s objective is to grow domestic wine sales in all available wine sales channels from coast to coast. With additional sales opportunities, the Canadian wine industry will build our market share beyond 30% towards a target of owning 50% of the domestic wine sales market.

This is good for the Canadian wine industry and good for Canada. Based on our economic study, we know that every $1 million increase in Canadian wine sales will lead to a further $3.1 million increase in gross output, including revenues, taxes, jobs, and wages across the wine industry value chain. This is an excellent, savvy investment in our economy.

Canada is one of the fastest growing wine retail markets in the world, with per capita wine consumption increasing by more than 37% over the past seven years. Supportive federal government policy can assist the domestic wine industry in becoming more competitive and increasing its share of retail wine sales in Canada.

The following three areas should be considered in support of adding further value to Canada’s wine economy.

First is Growing Forward 2. We need to support a domestic market promotion campaign, including major city premier wine tasting events, to build knowledge and relationships with consumers, restaurants, and retailers. We should recognize a national wine week, providing an annual opportunity to celebrate Canadian wines and wine tourism across Canada. Furthermore, we should partner with the Canadian Tourism Commission to build on the synergies between wine and tourism, including studies, marketing, and promotions.

Second is direct-to-consumer delivery. There should be federal engagement with provincial governments to remove interprovincial barriers to wine trade, in support of federal Importation of Intoxicating Liquors Act amendments, the act that passed in June of last year.

Third is tax and regulation. We need to review the tax treatment of Canadian grape content in domestically produced blended wines to support and encourage greater inclusion of domestic ingredients. We should ensure that the proposed repeal of container size regulations takes place to reflect the competitive impacts on the Canadian wine industry. And we should index the small business tax deduction qualifying asset base thresholds to reflect inflation dating back to its origin in 1994, while indexing future asset test thresholds for inflation annually.

In conclusion, Canada’s wine industry is ripe for success. We are a value-added success story, a model for the agricultural sector, with domestic prospects to sustain our growth ambitions and new opportunities for wine country tourism, new jobs, and enhanced government revenues.

We believe that Canadian wine should occupy the majority of the shelf space in our domestic liquor outlets, not because stores are forced to do so but because Canadians prefer Canadian wine and demand it. We've seen VIA Rail shift to 100% Canadian wines on their menus, but our national airline, Air Canada, lacks a policy to guarantee a Canadian wine option on its flights. This is a disgraceful message to send Canadians and international visitors.

The CVA believes that Canadian wine can and should represent at least 50% of wine sales in Canada, but this will require government's concerted support and investment. The return on that investment is exponential for our local communities and national economy.

I'd like to conclude by inviting each one of you to become an ambassador for Canadian wine. So next time you travel, look for Canadian wine and demand it. Request Canadian wine at the meals and special events you attend, offer it to your guests and serve it with pride. Speak with your provincial counterparts about direct-to-consumer regulations to allow for the full implementation of Bill C-311. And finally, support Canadian wineries through tax and regulatory incentives, which, in the end, increase overall tax revenues through gains in market share.

Thank you. I look forward to your questions.

[Patrick Gedge]

Interestingly enough, much of the regulation in our industry comes at the provincial level. The federal government has actually addressed a number of issues over the past number of years that have helped us, including Bill C-311 recently, which was quite special.

From our standpoint, our focus is very much in terms of trying to incentivize the industry, to be able to compete with all countries in the world. That's why one of our focuses in terms of our presentation is related to the excise tax exemption on the Canadian content in International Canadian Blend wines. That is important for two reasons. One reason is that it will continue to increase demand for Canadian grapes, and as we were talking earlier, that is the fundamental of our industry growing into the future—it's pretty hard to make wine without grapes. Anything that incentivizes us to purchase more Canadian grapes will, in turn, help stimulate the entire value chain for our industry.

Then the second part is that an excise tax exemption for the Canadian portion of ICB wines will allow the wineries to be more competitive against foreign imports, and then hopefully, over time, we would increase our 30% market share to 31% market share, to 32% market share, to 33% market share, and trust me, even a 1% or 2% change in market share has real significance in terms of the growth of our industry and the types of dollars that we talked about earlier.

[Pablo Garrido]

I'm from Toronto.

I haven't started moving outside the province. It's my understanding that Bill C-311 was meant, really, to encourage Canadian consumers and Canadian winemakers to connect and be able to purchase wine across provincial borders. It's my general understanding, and I don't pretend to be an economist, that because of international trade rules we can't treat Canadian products preferentially, so that eventually the same rule will apply to wines from all countries that are bottled in Canada.

I could potentially sell it to someone in Alberta. There is movement, and I assume it will be swift movement, afoot by the provincial bodies to ensure that they still can protect their territory as far as the duties and the markups that would be applied in their province are concerned.

[Pablo Garrido, Owner, Savia Wine Agency]

Good afternoon, honourable members of Parliament, committee staff, and fellow participants. Let me say how much I appreciate the opportunity to address you this afternoon. The topic of a potential agreement between Canada and Japan touches areas very close to my heart.

My name is Pablo Garrido. I am the owner of Savia Wine Agency, an agency that specializes in importing Japanese wine to Ontario. If you are not familiar with Japanese wine, don't worry; you are not alone. While the more famous Japanese beverages of sake and beer have admirers the world over, Japanese winemakers are working diligently, with ever-evolving passion, to produce wines which I believe will one day come to rival wines produced in better-known regions. For context, I believe that Japanese winemakers stand where Ontario winemakers were approximately 15 years ago, producing wonderful product yet still working hard to convince consumers that the content in the bottle is worth the price.

I started Savia Wine Agency as a means of marrying my passion for wine with my love of Japan and my exceptional good fortune of being Canadian. With a list of contacts and a plane ticket to Tokyo as my starting point, I have learned quite a bit about myself, the adventures of starting a business, and the intriguing world of tariffs and duties as they apply to alcoholic beverages.

My first lesson came early on, during my initial trip to visit my supplier and wineries. I was returning to Canada with eight bottles of Koshu wine that I planned to use as samples. The combination of duties, excise tax, and provincial liquor markup equalled over $114.00, or 70% over and above the purchase price of the bottles in Japan. While I cannot pretend to be familiar with the duties paid by other industries entering Canada with trade samples, I have to believe that the duties wine agents pay reside somewhere close to the top.

To provide a window into the finances of my business, I charge a commission on a bottle of Koshu wine from Japan of about 10%, or $4 per bottle, totalling $24 per case. Given the aforementioned cost of providing samples to my customers, I need to sell more than four cases simply to recover my sample bottle costs. What these figures demonstrate is that my agency is a labour of love, but one that I cannot afford in the long term.

In addition, as a means of ensuring that we maintain a sense of social responsibility in regard to alcoholic beverages, many liquor boards across Canada maintain a floor on prices to ensure that pricing does not encourage the growth of damaging habits. These pricing practices, while laudable, do present challenges. For example, Ontario levies a markup of 39.6% on wine. I believe that a more fluid duty and tariff policy could help minimize the impact of provincial markups, ultimately helping businesses such as mine bring Canadians greater access to wines they have never experienced before.

With this experience in mind, you can imagine how my interest was piqued when earlier this year the House of Commons unanimously passed Bill C-311. This legislation, presented by Conservative MP Dan Albas, meant the removal of restrictions which, until now, had shackled the interprovincial trade of wine in this country. It brings to mind the type of access Canadian winemakers need in every market.

I recall staying up late into the evening to watch the vote, realizing that a House that appears divided will readily unify under the common goal of greater access to wine.

Using the new legislation governing interprovincial trade as the springboard, I believe that Canada has taken a progressive and significant step forward, signalling a new future-focused era in the trading of wine. With Prime Minister Harper demonstrating through words and action that Canada will no longer stand idly by as the wheels of international trade turn, Canadians can show that as a nation and as a valuable trading partner, we are forward thinking when it comes to the application of duties and tariffs on alcohol-based products.

For our federal government, there stands a unique opportunity to show the average Canadian that trade agreements do not just apply to and satisfy the traditional industries of nations. By addressing the trade barriers for less traditional products and services, such as wine and soap, governments can show the electorate that free trade does indeed greatly benefit small- and medium-sized companies alike.

A perfect example of the benefits of progressive trade was brought into focus for me by the honourable Mr. Keddy who, during a presentation to the Toronto chapter of the Japan Society, told the story that when free trade with the United States was announced, Canadian wineries feared that an influx of American wine would eat away at their market share. Over time, that isn’t exactly what has happened. In fact, in 2011, BMO Nesbitt Burns published a report showing that the United States is now the largest export market for Canadian wine, taking over 40% of total exports. By comparison, according to an Agriculture Canada report on the Canadian wine industry in 2007, the United States only accounted for 13.6% of all wine imported into Canada.

In the same report, a key passage supports the honourable Mr. Keddy’s assertions by stating:

The wine industry responded to the challenge of trade liberalization by focusing on premium wines and introducing new products such as Icewine, for which Canada is recognized as a world leader. At the same time, wineries introduced new high-quality grapes and products that reflect changing consumer taste profiles.

Taking into account the fears that Canadian wine producers had expressed with free trade with the United States, consider this contrast for free trade with Japan. The largest winery I represent produces wine with grapes grown on approximately 14 acres. Henry of Pelham winery in Niagara produces wine from grapes grown on 170 acres. By sheer volume potential, Canadian winemakers can only stand to gain from easier, lower cost access to the world's third largest economy, representing over 127 million consumers, where Canadian wine exports have seen a drop of nearly 17% since 2006, according to an Agriculture Canada report tabled in May of this year. Thus, in Japan I believe Canada has found an exceptional partner and opportunity, the ideal nation to begin building a new legacy of successful international trade in wine.

For Japanese winemakers, such as those I represent, lower market entry costs for their products brings the potential not only for increased sales but for greater exposure, a key goal, especially for Koshu wine, a white wine that is grown using the indigenous Koshu grape of Japan. In fact, this export recognition is so important that in 2009 a group of wineries from the Yamanashi prefecture, Japan's main wine-growing region, created a trade association called Koshu of Japan.

On their website, the wineries state their main goals as overseas promotion, new product development, and publicity. In search of this exposure the group has held annual tasting events in London. One of my personal goals is to convince the trade association to include Canada in their next trade mission. An economic agreement between our two nations, with attention paid to expanding trade in alcoholic beverages would certainly demonstrate in tangible terms Canada's desire to delve into all sectors of trade markets the world over.

Canadian restaurants would also benefit from having access to unique wines at a price point that could more easily win over Canadian consumers. During a fundraising event after the horrendous earthquake and tsunami of March 2011, I recall meeting a senior representative of a major Canadian importer of Japanese goods. During the discussion he mentioned that he had indeed looked into importing Japanese wine into Canada, but the overall costs were an impediment to both sides producing a desired result. A move toward an economic agreement between Canada and Japan would effectively address current challenges to market expansion.

In addition, I believe that in Japan we are currently seeing a nation where traditional industry powerhouses are facing immense pressures. For example, Sharp Electronics as part of its recent restructuring is considering selling its LCD production facilities in Mexico and Taiwan and cutting 5,000 jobs for the first time in 60 years.

Indeed, I see changing and challenging times for Japan. We could very well be witnessing the redefinition of what Japan will be best known for in the future. A strategic, well-designed economic partnership with Canada could prove to be an exceptional catalyst for both nations in realizing their full future trade potential.

Thank you for your time and attention, and for the invitation to be here today.

Message from the Senate

[The Speaker, Conservative, Andrew Scheer]

I have the honour to inform the House that when the House did attend His Excellency the Governor General in the Senate chamber, His Excellency was pleased to give, in Her Majesty's name, the royal assent to the following bills:

Bill C-26, An Act to amend the Criminal Code (citizen's arrest and the defences of property and persons)—Chapter 9, 2012.

Bill C-40, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2013—Chapter 10, 2012.

Bill C-41, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2013—Chapter 11, 2012.

Bill C-288, An Act respecting the National Flag of Canada—Chapter 12, 2012.

Bill C-278, An Act respecting a day to increase public awareness about epilepsy—Chapter 13, 2012.

Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use)—Chapter 14, 2012.

Bill C-310, An Act to amend the Criminal Code (trafficking in persons)—Chapter 15, 2012.

Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts—Chapter 16, 2012.

Bill C-31, An Act to amend the Immigration and Refugee Protection Act, the Balanced Refugee Reform Act, the Marine Transportation Security Act and the Department of Citizenship and Immigration Act—Chapter 17, 2012.

It being 2:15 p.m., the House stands adjourned until Monday, September 17, 2012, at 11 a.m., pursuant to Standing Orders 28(2) and 24(1).

The House resumed from May 31 consideration of the motion that Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), be read the third time and passed.

Wine Industry

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Madam Speaker, it is a privilege and honour to rise this morning to table a petition on behalf of numerous constituents of Kelowna—Lake Country. These wise folks realize it is time to free our grapes and to allow the archaic 1928 Importation of Intoxicating Liquors Act to be amended. They are in support of Bill C-311 by my hard-working colleague from Okanagan—Coquihalla.

Tomorrow we hope to bring this archaic legislation to the 21st century.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Mr. Speaker, Canadian wine producers are eagerly awaiting the passage of Bill C-311, my legislation that would allow Canadians to bring a bottle of wine across provincial borders. It is absolutely vital that we get this popular bill passed before the summer so Canadian wine producers can market and grow their businesses.

Unfortunately, the NDP members have decided to put their own partisan political interests ahead of those Canadian businesses by unnecessarily delaying this legislation.

Could the Minister of Justice please inform the House of the government's position on my legislation?

Importation of Intoxicating Liquors Act

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, if you seek it, I believe you would find unanimous consent for the following very worthwhile and sobering motion. I move:

That, notwithstanding any Standing Orders or usual practice of this House, the motion for the third reading of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), standing on the order of precedence on the order paper, be deemed put and a recorded division deemed requested and deferred until Wednesday, June 6 at the end of government orders.

(Bill C-311. On the Order: Private Members' Business)

May 29, 2012—Third reading of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use)—the Member for Okanagan—Coquihalla.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon, we will continue with the NDP's opposition day motion.

Tomorrow, we will finish report stage on Bill C-31, the Protecting Canada's Immigration System Act. Including second reading, this will be the eighth day of debate on the bill, in addition to many committee meetings. As the Minister of Citizenship, Immigration and Multiculturalism told the House on Tuesday, this bill must become law by June 29.

On Monday, we will resume the third reading debate on Bill C-25,, the pooled registered pension plans act. Following question period that day, we will mark Her Majesty the Queen's jubilee and pay tribute to her 60 years on the throne. After that special occasion, we will get back to the usual business of the day, debating legislation. Bill C-23, the Canada–Jordan economic growth and prosperity act, will be taken up at report stage and third reading.

Jumping ahead to next Thursday, we will resume debating Bill C-24, the Canada–Panama economic growth and prosperity act, at second reading. I would also call Bill C-25 that day if the debate does not finish on Monday.

Finally, June 5 and 6 shall be the seventh and eighth allotted days, both of which will see the House debate motions from the NDP.

I can confirm notice of a motion for unanimous consent regarding the private member's bill, Bill C-311. This is the bill to amend the Importation of Intoxicating Liquors Act that the NDP filibustered the other day. I understand the NDP has now agreed that was a mistake and it is willing to allow it to proceed to a vote at this time. Therefore, we anticipate we will be consenting to that motion to undo the damage that the NDP unwisely did when it filibustered the bill previously.

Wine Industry

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, I rise today to bring attention to the House a petition that I received from my constituents in my riding of Niagara West—Glanbrook. The petitioners call upon the House of Commons and Parliament to vote in favour of Bill C-311, an act to amend the importation of intoxicating liquors act (interprovincial importation of wine for personal use).

With over 40 wineries in my riding of Niagara West—Glanbrook, this piece of legislation is near and dear to me and my constituents. I echo the sentiments of these petitioners and urge all of my hon. colleagues to vote in favour of the bill.

There is a pressing need to modernize the 1928 federal Importation of Intoxicating Liquors Act with a personal exemption for the purchase and shipment of wine across provincial borders. Allowing interprovincial importation of wine for personal use would greatly benefit not only the hard-working men and women of my riding but also Canadians from coast to coast who would soon be able to experience the extravagant array of wines grown not only in Niagara Peninsula but across our great nation.

The Economy

[Gail Shea, Conservative, Minister of National Revenue]

Mr. Speaker, I want to thank the member for Okanagan—Coquihalla for his work on the bill, and also our colleague from Kelowna—Lake Country for his tireless effort on this issue.

Bill C-311 is a positive step toward reducing unnecessary interprovincial trade barriers and toward promoting jobs and growth in the wine industry.

We are truly disappointed in the NDP members for playing silly political games and needlessly delaying passage of a bill that they claim to support. They tell the wine industry one thing, and then their actions in the House display something else. They are clearly not equipped to govern.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Mr. Speaker, last evening in the House of Commons, NDP MPs, many of them from British Columbia, deliberately ran out the clock on debate rather than support the effort to send Bill C-311 to the other place.

In doing so, the NDP has forced a second hour of debate that could potentially not occur again until late October. Given that wine agri-tourism season runs from now until early October, these unreasonable delaying tactics will in turn delay our Canadian wine industry from implementing planned expansions that create jobs and support our local economy.

Does the government recognize the need for this important legislation?

Importation of Intoxicating Liquors Act

[Claude Gravelle, NDP, Nickel Belt, ON]

Mr. Speaker, it is a pleasure for me to rise here today in the House to speak to this bill. I congratulate the member for Okanagan—Coquihalla for introducing this bill.

Like many other Canadians, before this bill was introduced, I did not realize that it was illegal to transport wine from one province to another. I guess that made a lot of us unknowing criminals. Maybe those are the unknown crimes that the Minister of Public Safety was talking about when he introduced his legislation. I am not sure, but a lot of us have been guilty of transporting wine from province to province unknowingly.

I recently visited my son, who lives in Revelstoke, and of course at family gatherings we had a bit of wine from the Okanagan Valley. I can assure members that it is really good wine, although some very good wines are also being made in Ontario, Nova Scotia and in Quebec.

With all of the “grapes of wrath” happening here on the omnibus bill and the harm to our workers, it is a relief to take a moment to look at some of the other grapes, an important and growing market of our country, that we see in B.C., in Niagara and Prince Edward County in Ontario, in Quebec and more.

Recently I had the occasion to have dinner across the river in Gatineau, and as is usual I was brought a bottle of wine and asked to taste it. In this case, the waiter brought some imported wine from another country, and I told him I would like to drink a good Canadian wine if possible.

He only had one bottle of Canadian wine in stock, which is quite unfortunate, but the bottle of wine he had was from the Okanagan Valley. It was probably the best wine I have ever tasted. I said it was unfortunate that he only had one bottle in stock. It was fortunate for me, but it was unfortunate that the other people in the restaurant could not get to taste this wonderful wine. I hear my colleague from British Columbia supporting this great wine from British Columbia.

We in the NDP are going to support this legislation. We want to get it to the finance committee for proper study and amendments. On many levels I like this bill, which would relax restrictions on interprovincial wine purchasing for personal use.

I will read into the record the amendment that we want to add. This amendment has to do with making the wine with 100% Canadian grapes.

The amendment would add these words: “The importation of wine from a province where the wine is made with 100% Canadian grapes, by an individual if the individual brings the wine or causes it to brought into another province in quantities, and as permitted by law of the latter province, for his or her personal consumption and not for resale or other commercial use.”

This amendment would help to promote Canadian wines. It would help the producers of Canadian wines. It may cause us to have to relabel the bottles of wine, but that is a small price to pay to promote the Canadian wine industry.

We would get good consumer choice. This would give Canadians a bigger choice in buying wines. Canadians would strongly benefit from a greater selection of wine, especially wineries from across Canada. There are many small wineries across this great country, and this would promote Canadian producers. We grow a lot of grapes in Canada, and this would certainly encourage wineries to maybe expand and create more employment. Nothing but good would come out of this bill.

For wine producers, a beneficial effect of the bill would be an expanded market for Canadian wineries. As I said, transporting more wine from one province to the next is certainly good for the wine industry.

Although we know we have very good wine in British Columbia, we also have some very good wines in Ontario, especially icewines, and one of the things that the bill would do is allow people from British Columbia to discover the great wines of Ontario. From Nova Scotia to British Columbia, the Canadian wine industry is emerging as internationally recognized cool-climate wine producers, garnering an impressive list of awards and praise from many of the world's most influential wine critics.

Just recently on Parliament Hill, we had some companies come out for a wine tasting evening. We tasted some of probably the best wines made in the world, wines that have won many awards. Some of these wines are known right around the world as being great wines.

On average, capital expenditures for industry have increased from about 12% annually. The softening of the law would allow for greater choice, while still preserving the provincial monopoly power for each liquor board. Of course, allowing liquor boards to bring more wines from outside their province would certainly help all wine producers right across the board.

Under current legislation, if an individual wishes to purchase wine that is available only in a province other than one in which he or she resides, the individual must make the purchase through a provincial or territorial liquor board, commission or corporation and must pay the associated taxes, markup rates and other special levies on alcohol. Again, as I said a while ago, most Canadians do not know that doing otherwise is against the law, so I am sure that this would help.

As it stands right now, the industry and the public consider that the Importation of Intoxicating Liquors Act, also called the IILA, administered by the Canada Revenue Agency, is the cause of the restricted trade. In reality, the combination of the IILA and provincial legislation makes this trade illegal. It is the provinces' legislation that makes it illegal, so we should work with the provinces to change this legislation and support Bill C-311. I am sure this would help everyone, not only the—

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I am also happy to rise today in support of Bill C-311, an Act to amend the Importation of Intoxicating Liquors Act.

As a couple of my hon. colleagues have so elegantly stated, under the current legislation, if an individual wishes to purchase wine that is available only in a province other than the one in which he or she resides, the individual must make the purchase through a liquor board or commission. The changes to the IILA will change that and allow the importation of wine from a province by an individual.

This bill also strikes the right balance between ensuring that the province maintains jurisdiction over this and at the same time changing the federal law to allow the province more discretion.

The bill is a good idea. It is simple, but those are often the best ideas.

I had the great fortune of growing up in the Annapolis Valley in Nova Scotia. I was forced to leave in the 1980s. There was not a lot of work so I made my way out to beautiful Burnaby, British Columbia. I just had the opportunity to go back for my mother's birthday a couple of weeks ago and I did go down to the Annapolis Valley. I have been back a few times. The sun was out, it was a beautiful Victoria Day weekend and we had some beautiful wine from the Annapolis Valley region.

What a change there has been since the late 1980s until now and how the addition of vineyards to the Annapolis Valley has really changed and vastly improved the area and has done a lot for the local economy. It has brought tourists back to the region. When the wine is combined with lobster, apples and the produce there, it cannot be beat. I was really glad to see that.

Again, small changes like this to existing legislation can really go a long way to boosting that industry a bit more.

What I also noticed in Nova Scotia was the co-operation between vineyards. I thought that was a really good idea. They have come together and decided to produce this wine in all vineyards called l'Acadie, which is a great white wine. It is those kinds of co-operative actions between the vineyards, in association with changes to a law like this, that will help those vineyards and this industry grow in Canada.

I did not know this and was a little alarmed to hear that only 6% of the wine consumed in Canada was grown and aged here, which is something we should work to fix. With having wine experience on both coasts, there is a lot we can do and a lot to promote.

With respect to the other coast, after having grown up in Nova Scotia, and I liked the wines there, the wines in British Columbia are outstanding. There are 210 wineries and 864 vineyards from what I have been able to research. I am not just excited about the product, which I enjoy with my wife Jeanette, but I am also excited about the economic impacts to this industry.

Therefore, when I was reading the bill, and I am happy to support it, I was also thinking of this theory by Jane Jacobs, the great scholar. People know she talks about cities. She also talks about the idea of import replacement, which is a terrific idea. Initially, we import some technology or product, local people get to like it and they start developing it themselves and often improve it. However, what is more important for our economy in terms of wines is that the locally-produced product starts to replace what we used to import. If that goes really well, we start importing back to the place from which we used to buy product. This is a possibility for the Canadian wine industry over the next little while and it is changes like this that will help.

This is an industry that has to be nurtured. The French, Italian and South African wines are massive vineyards that could easily swamp our smaller vineyards in B.C., Nova Scotia and Ontario. We really have to be conscious of the fact that we want to help this industry grow along, and the bill does help that.

Something else my colleagues might want to know is that while teaching at Simon Fraser, I had a couple of colleagues who were looking at the genome technology in wines. This is under study in a lot of countries, and it is basically altering grapes. It is not done naturally. The genes in the grapes are manipulated and that is able to change the taste of wines, the speed of aging and those kinds of things.

Professors Michael Howlett and David Laycock had a very large grant from Genome Canada to study this. They just had a recent book out called Regulating Next Generation Agri-Food Biotechnologies by the Taylor & Francis Group.

We were reminded early on today this was an antiquated act that we were updating today, hopefully, if it goes through here and the next place, but we really have to be ready for the next generation of ideas about this. Therefore, I would suggest that at some point in the House or in an agricultural committee we could take a look at how genome technology affects this and other agricultural industries. It is important to get the policies right in these areas, to approach them from a neutral perspective and ask what is the best thing for Canada.

Again, coming back to this change, having been through the Annapolis Valley and in the vineyards in B.C., this is going to help, but not in a tremendous way though. That is why it is an appropriate place for a private member's bill. It is these types of industries on which we have to get a better handle.

To go back to the beginning of my 10 minutes here, I was talking about growing up in Nova Scotia. With the Acadians there was some tradition of growing wine, but it was not until we brought in experts from abroad that the wine industry in Nova Scotia began to take off, and it benefits all kinds of communities.

For example, in Nova Scotia now we have first nations involved in the wine industry. There is a very famous Okanagan vineyard Nk'Mip Cellars, which is growing by great leaps and bounds. This industry does show how often we look for traditional industries in order to supply economic growth and job development. However, sometimes it is the smaller kinds of industries that are on the edge that perhaps we have not thought of before, which would be areas of growth especially in areas that perhaps have had little economic development in the past.

The ability for personal transportation of wine across provincial borders is a good idea, but we may expand this as well. Again, maybe I can encourage my hon. colleague the next time he comes back with a private member's bill to talk perhaps about microbreweries. In British Columbia there are very famous microbreweries.

Not to belabour the Nova Scotian connection, but when I was a teenager there I used to babysit young kids. They moved out to British Columbia and started a great local brewery called Phillips Brewing Company. When I first moved to B.C. as well, I used to drive a truck for Shaftebury Brewing Company. These are the kinds of small industries that make a special product that people really enjoy. These are boutique products, but there is no reason why people in other provinces should not be able to enjoy them and be able to transfer them across provincial borders worry free.

If we think where the Canadian wine industry was 20 years ago, it was nowhere near 6% of the total of our wine consumption. It has grown to 6%, but I would encourage the government to encourage clustering and investing in clusters in regions where this growth is prevalent and perhaps could be nurtured a bit.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, I will provide some summary remarks. I support this bill and appreciate the hard work of members in preparing and bringing forward this bill.

The prohibition on interprovincial liquor importation is governed at the federal level by the Importation of Intoxicating Liquors Act, the IILA, and, at the provincial-territorial level, by statutes that govern the importation, sale, transportation, warehousing and packaging of alcoholic beverages.

Bill C-311, which is an act to amend the Importation of Intoxicating Liquors Act for the purposes of personal use, proposes to amend the IILA by providing a new exemption to the prohibition on the interprovincial importation of intoxicating liquors, except for purchases made by provincial-territorial liquor boards, commissions or corporations. This bill would allow the importation of wine from a province by an individual if he or she brings the wine into another province for personal consumption. This importation would be required to be in quantities as permitted by the laws of that province or territory in which the wine is being imported.

Under current federal legislation, if an individual wishes to purchase wine that is available only in a province other than the one in which he or she resides, the individual must make the purchase through the provincial-territorial liquor board, commission or corporation and must pay the associated taxes, mark-up rates and other special levies on the alcohol. That is by way of summary.

In terms of some of the comments on this bill, I think the industry and the public consider the IILA administered by CRA, the Canada Revenue Agency, is the cause of the restricted trade. In reality, the combination of the IILA and the provincial legislation makes this trade illegal.

Pursuant to the IILA, all imports from one province into another must be made by the provincial liquor board or a private corporation designated by the province. This includes wine brought in by an individual from one province into another.

While the IILA does restrict interprovincial wine imports, provinces have the power to control the possession, sale, purchase and transport of wine within their respective jurisdictions. Provincial liquor boards impose a significant mark-up fee on wine produced or sold within a particular provincial jurisdiction. Most provincial legislations specifically allow a limited amount of wine for personal use to be brought into another province. For example, the Liquor Control Board of Ontario issued a news release in June of last year announcing a formal policy to permit up to nine litres of wine provided it accompanies the individual.

I know the hon. member who introduced this bill referred to the history but I will add to it. The current law, which is section 3(1) of the IILA, stems from 1928 during the post-prohibition era when the various Canadian provinces were making the transition from prohibition to liquor board systems for liquor distribution. It created a restriction on both the transport of liquor across the provinces and provincial borders and the shipment of liquor between provinces unless the liquor was purchased by the liquor board in the destination province.

What we are looking for? I will go back to the bill. This bill would permit consumers to directly purchase wine in reasonable amounts for personal consumption, which is defined by each province and territory. It would address the legal issues related to interprovincial wine tourism and enable wineries to directly ship, including online, to consumers in provinces in compliance with provincial limits.

We support the bill as it stands, but we do have some suggestions for change as it moves forward. We support the matter of consumer choice. Canadians will certainly benefit from a greater selection of wine, especially smaller wineries across the country. The government needs to support the growing domestic industries, particularly in emerging wine-producing regions from Nova Scotia right across the country to British Columbia.

The Canadian wine industry is emerging as an internationally recognized cool climate wine producer, garnering an impressive list of awards and praise from many of the world's most influential wine critics. There are others that are onboard with the bill, including the Canadian Vintners Association, the Alliance of Canadian Wine Consumers and many wineries across the country.

I do want to make special note of British Columbia and the wine-making and wine-growing industry in our province. Vineyards, certainly in the interior of British Columbia, the Okanagan, Osoyoos, Kelowna and many other parts of the province, including Vancouver Island, which is certainly emerging as a wine-growing region, the Fraser Valley and pockets of the Fraser Canyon are becoming known for their wine or ice wine.

There is also the idea of tourism and the importance of tourism in British Columbia as it relates to the bill, which would allow wine to be transported out of the province. B.C. is well-known for bringing in individuals from outside of British Columbia, from other provinces and territories, and also from other parts of the world. The United States, Europe and many other places around the world come to British Columbia for our fine wine and to enjoy what we have in that amazing part of Canada.

In summary, I will again lend my support to the bill. I strongly support the move to make an historical amendment to allow wine to be transported from province to province. I would like to see an amendment that would look at the labelling, which would include where the wine is made. That would enhance the bill.

Knowing where the wine comes from is quite critical. Consumers are not only enjoying wine, but they are becoming more sophisticated in knowing how the grapes are grown and where they come from. This is an important aspect that should be considered and included in the bill today.

Again, I thank the hon. member and previous members for their work on getting the bill to this stage.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Mr. Speaker, I am happy to say a few words in support of Bill C-311. I would like to thank my colleague for Okanagan—Coquihalla for taking the initiative to introduce the bill.

I know there is pressure to fast-track the bill through Parliament, and I understand that. However, it should be noted that this issue is not new. The Canadian Vintners Association has been requesting more flexibility in our liquor laws for a number of years.

I became involved a few years ago. I wrote the minister on September 2010 and received a very favourable response. At the time, he mentioned that he was soliciting input from provinces and territories to enter into a consensus-building approach to explore the impact of the limitations in place under the act. Subsequently, we had more communication. It is my understanding that this was in the process.

To those who say that we need to go very quickly, I understand that. However, we should put this in context: this issue has been under consideration for a while. Theoretically, the government could have introduced legislation long ago and resolved the issue. That did not happen and we are here today debating this important bill.

Hopefully we can move it forward today. It would certainly be very appropriate if we could change this law before the summer tourist season.

Why is this bill important?

First, it would allow consumers to buy a reasonable quantity of wine directly for personal consumption. The quantity would be defined by each province.

Let us not forget that it is illegal for me, for example, to go to a winery in Ontario, buy a bottle of wine there and take that bottle home with me to British Columbia. It is absurd.

This bill would also address the legal issues surrounding interprovincial wine tourism and would allow wineries to ship their products, including products ordered online, directly to customers in other provinces, according to the limits set by those provinces.

So to support this bill is to support choice for consumers. It would greatly benefit Canadians to have a wider choice of wines, particularly from small wineries all over Canada.

We must remember that the Canadian wine industry is beginning to make an international reputation for itself as a temperate zone wine producer. It has won an impressive number of awards and has earned the praise of a number of the world's most influential countries in terms of wine appreciation.

Making this act more flexible would broaden the choice, while still maintaining the monopoly enjoyed by each province's liquor board.

While I am here I will give a plug to our B.C. government liquor stores and their employees. It is my understanding that the passage of Bill C-311 will not in any way interfere with our provincial liquor boards to serve citizens in our communities. Our government liquor stores are first-class with a wide variety of products and employees who are knowledgeable and proud of what they do. We should also not forget that they play a major role, with their half-decent wages, in contributing to the economy, especially in our small communities. Good union jobs in our small communities are the best guarantee of the survival of a small business. Government liquor store employees contribute significantly to the economy of the communities in which they live and work.

It is important, especially for our small rural communities, for everyone to rally in support of retaining well-paying jobs. I have spoken with representatives of chambers of commerce and labour about the idea of presenting a united front the next time there are proposed government cutbacks that threaten our workers and the way of life in our small communities.

I thank the Canadian Vintners Association, the Canadian Chamber of Commerce and all the wineries in my riding, the riding of the member for Okanagan—Coquihalla, in Kelowna and right across the country. I have tasted fine wines in Ontario, too. These wineries have rallied in support of this legislation.

Hopefully very soon, ideally this summer, the summer tourists will be able to visit wineries in other provinces, buy a few bottles and take them home with them legally.

I thank my colleague from Okanagan—Coquihalla again for spearheading this important issue.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

moved that the bill be read the third time and passed.

Mr. Speaker, I would like to begin tonight with sincere thanks, not only to my colleagues in caucus, but to all members of the House for the unanimous all party support they have shown for Bill C-311. Tonight we have a chance as parliamentarians to change history, to right a wrong that was created 80 years ago and to help a relatively small but thriving wine industry that we as Canadians should all be very proud of. This is an issue that unites all Canadians. In Nova Scotia, Quebec, Ontario, British Columbia, and all across this great country, many citizens are watching and hoping that common sense and doing the right thing will guide us this evening. I will keep my comments relatively brief as this is a time-sensitive issue.

First, I would like to provide members of the House with a brief update on Bill C-311.

My bill proposes an amendment to the Importation of Intoxicating Liquors Act. This amendment creates an individual exception respecting location.

During the committee stage review we heard first hand the immense frustrations from many of our Canadian wineries. Canadian wineries can legally ship wine directly to customers in Hong Kong and Japan, but not legally to customers in Calgary, or anywhere else in Canada.

Even closer to home, if we were lucky enough to leave the House tonight and cross over into Gatineau to buy wine and return back into Ottawa, we would have broken this out-of-date Prohibition era federal law. For a first offence we could be subject to a fine of up to $200 and or imprisonment for up to three months. If we were on vacation in the beautiful Annapolis Valley in Nova Scotia, or the Niagara region of Ontario, and brought back wine with us to our home province, we would have also broken this outdated law. Canadians are quite rightly often shocked by this.

There are over 130 VQA wineries in Ontario and none of them can legally sell one bottle of wine to Saskatchewan. There are over 200 wineries in British Columbia and not one can legally directly sell or ship one bottle of wine to Alberta. They can sell to Asia, yes, but not to Alberta. The fact is, it is easier for Canadian wineries to sell outside Canada directly, as they cannot legally do so within the borders of our own great country. This is something that needs to change.

There are currently nearly 50 wineries in Quebec. Times have changed, and it is high time to change the legislation.

All across Canada I have heard overwhelming support calling for this change. We have an opportunity to make history. We can put an end to this out-of-date and unjust law and allow our outstanding Canadian wineries to be able to sell directly to Canadians. All we need to do is support sending Bill C-311 on to the other place.

Before I close, there are a few comments that I ask all members of this House to be mindful of.

Our Canadian wine industry needs our help. “Made in Canada” VQA wine productions make only 6% of the Canadian domestic wine market. “Cellared in Canada” occupies a further 26% share. This means that 68% of our wine market is served by imported wines. Anything that we can do to help increase our wine production would mean more jobs here in Canada. That is why I am asking for members' support for Bill C-311.

The reason I am keeping my comments relatively brief is one of time. If members of this House can support sending Bill C-311 on to the other place this evening, this would have an immediate impact in helping our Canadian wineries capitalize on this year's grape cycle. If we cannot find a way to support the bill tonight and end up with a second hour of debate, we will in effect enter into another growing cycle. That would be an opportunity lost for hundreds of small Canadian wineries that are hoping today is the day we come through for them. I have not met a single winery owner who does not intend to reinvest and expand his or her wine operation in some way as a result of the bill. That would not only help the wine industry, it would also help support our local economy.

Tonight, the fate of Bill C-311 is in members' hands. We have a chance to change history and take a small but important step that would open up the Canadian marketplace for our small Canadian family-run wineries. I ask that we take this step together and request members' continued support for Bill C-311.

The House resumed from April 4 consideration of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), as reported (without amendment) from the committee.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Mr. Speaker, I am very pleased to present 90 names from a certified petition from members of my riding of Okanagan—Coquihalla in clear support of my private member's Bill C-311 to end the current wine prohibition in Canada.

Free trade in wine should not be a crime. I am very happy to represent my riding today.

Finance

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the eighth report of the Standing Committee on Finance in relation to Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

The committee has considered the bill and has agreed to report the bill back to the House without amendment.

[The Chair, Conservative, James Rajotte]

Thank you, colleagues. Bill C-311 has been dealt with.

Mr. Hoback.

[The Chair, Conservative, James Rajotte]

I call the meeting back to order. I'd ask colleagues to find their seats, please.

Witnesses are free to sit and observe the committee.

Colleagues, we do have Bill C-311. We also have a motion by Mr. Mai.

I'm just informed that we have bells at 5:15. I thought we had a little more time than that, but we're on compressed time.

We all know Bill C-311. We have one clause.

I have no amendments, as the chair.

Is there any discussion on clause 1 of Bill C-311?

(Clause 1 agreed to)

Shall the title carry?

[The Chair, Conservative, James Rajotte]

For instance, if the change were made and Alberta put in restrictions, the Alberta government would have to defend that to me as a citizen of Alberta—if Bill C-311 were passed as currently written.

[Shirley-Ann George]

As I stated, we have evidence from the actions that have been taken to date by the liquor boards that they're unwilling to make the needed changes. So in the way it's worded now a province could literally set the limit at zero or at a thimbleful, and that would meet the requirements of Bill C-311. If the word “reasonable” was added, then the provinces would be forced to ask themselves the question and be able to defend why an amount is reasonable. They could still set a limit that we might feel is too low, but we feel that it is more likely that they will set a limit that they can defend to the public, which is very much in support of this change.

[Mark Hicken]

Sorry.

The second issue that I'd like to deal with flows from the previous one. I'd like to illustrate why we need reform at the federal level by using examples of what the provincial liquor boards have done recently. Following a lot of media attention on this issue—mostly generated by Terry David Mulligan's cross-border run between B.C. and Alberta—a number of liquor boards have taken the position that it is in fact legal for individuals to personally transport wine between provinces, but that it is not legal for wineries to ship directly to consumers. For example, Alberta and Prince Edward Island have interpreted their own provincial laws to this effect, and the LCBO issued a policy statement in June 2011, also to this effect.

In my opinion, the LCBO policy statement is simply wrong in law. The Importation of Intoxicating Liquors Act, or the IILA, makes absolutely no distinction between the personal transport of alcohol and its shipment. Both of those actions are equally prohibited, and in my legal opinion, it is beyond the constitutional jurisdiction of a provincial liquor board to override a federal criminal prohibition by using a policy announcement.

It's arguable whether a province could change the effect of the IILA by passing its own provincial laws dealing with importation. However, I've included a quotation in my brief that shows you that as recently as 2009, the Alberta Gaming and Liquor Commission took the position that a provincial government could not do so, even though Alberta's own provincial laws clearly permit personal importation.

As a result federal action is needed, because we now have a situation with extremely problematic legal consequences. Firstly, provincial governments and liquor boards appear to be so embarrassed by the current law that they are making bizarre distinctions between the personal transport of wine and its shipment, when there is no basis in the relevant laws for those distinctions.

Secondly, provincial governments, such as Ontario, are trying to override the federal law using policy announcements, which in my opinion is untenable.

Thirdly, there are conflicts now between federal and provincial law, such as in Alberta, which produce unfair levels of uncertainty for both consumers and wineries.

The third issue that I was going to deal with is the likely effect on provincial liquor revenues if the amendments proposed by C-311 were adopted. I'm just going to say that I completely agree with the earlier comments of Shirley-Ann George on that issue.

My final point is that if amendments to the bill are possible, I think that the House should consider adding a definition of a minimum reasonable amount for personal consumption into the exemption. As it's currently worded, the bill leaves those definitions to the provinces. If that happens, that will likely result in a patchwork quilt system of regulation, like the United States currently has, or as Shirley-Ann said earlier, it may result in very little change at all to the current situation.

If we had a national minimum standard, then wineries could ship to that standard without any additional regulatory burdens. Provinces would be free to legislate their own choices above those minimum standards. Such a system, if it was put into place, would be better than the American system and would be much closer to what is in place in the rest of the world, such as in France, as Mr. Bosc mentioned earlier.

Those are my comments for now. I'd be happy to answer your questions.

Thanks.

[Hillary Dawson, President, Wine Council of Ontario]

Good afternoon.

I'm Hillary Dawson. I'm president of the Wine Council of Ontario. On behalf of our membership, I'm very honoured to be invited to come and participate in these committee hearings today.

The Wine Council of Ontario is the champion of Ontario's high-quality, authentically local vintners quality alliance wines, and of promoting wine country as a destination. As a non-profit trade association, the WCO represents 80-plus wineries from across the designated viticulture areas of the province. Our members are grape growers, manufacturers, and leaders in tourism in their communities. We're the future of Ontario's wine industry, which is a source of new investment, jobs, and award-winning wines. Additionally, the Wine Council of Ontario promotes the unique qualities of Ontario's locally grown wines through its consumer-facing brand Wine Country Ontario.

The Wine Council of Ontario is a strong supporter of Bill C-311 and has been encouraged by the support that this bill has received from all parties in the House. Clearly, there is consensus that modernizing our commercial relationships with our customers is an idea that's time has come.

One of the reasons that my member wineries have a strong interest in the passage of this bill relates to the challenges of our marketplace. VQA wineries in Ontario currently have the following sales outlets for their wines. First is sales through the LCBO. The LCBO is the sole avenue for mass distribution of wines in Ontario. It has two lines of business: LCBO wines, which it sells in larger volumes at lower price points, and Vintages, which is the key vehicle for sales of premium-priced wines. Though the LCBO is an excellent retail partner and a big supporter of VQA wine sales, Ontario's VQA wineries are mainly challenged by the lack of opportunities to connect with the consumer at the premium price level.

On average, Vintages has been releasing less than 200 VQA wines per year through this channel. Additionally, these releases can be as few as 20 cases, but generally are in the range of about 125 cases. As a result of these realities, VQA wineries are very focused on other avenues to sell premium-priced VQA wines.

Another important channel is sales to other provinces through liquor boards. The Wine Council of Ontario and its winery members have been actively engaging interested liquor boards across Canada to grow the presence of VQA wines on shelf. Channels, like the Manitoba Liquor Control Commission, have partnered with the industry to create promotions for VQA wine, which have led to sustained listings in that market.

It should be noted that these opportunities work best when there are market conditions for both winery and retailer that drive positive results. Not all provinces are interested in developing this market in this way, but the industry has been active in engaging as many as make sense, and will continue to do so in order to ensure a strong presence of 100% Canadian wines for Canadian consumers.

A third avenue for premium VQA wines is direct sales to the trade. When given the opportunity to sell directly to the customer, Ontario's VQA wineries have made a strong success in sales to trade in this province. From our perspective, the lesson around direct delivery is that our wineries are prepared to invest and hustle in driving sales in these channels, which are extremely competitive, and that with this personal service we can grow our business even in the face of imported wines and consignment pricing.

Fourth is our export of wines. This continues to be a significant opportunity for Canadian wines, particularly icewines. Working together under the auspices of a national export strategy, VQA wineries continue to grow the profile of icewines and premium table wines abroad.

Last but not least, our sales at the cellar door. For the vast majority of wineries in Ontario, transactions at the winery itself are the primary vehicle for sales. Currently in Ontario, there are approximately 130 wineries commercially active in producing and selling VQA wines. Cellar door sales are primarily driven through the significant tourism numbers that the wine country experience attracts into our market. It is at the cellar door that our customers make an important emotional connection to both the wine country experience and to the wines. This is what customers want to be able to subscribe to and bring back home. Whether this be an on-site transaction of any volume or a desire to reorder product, the inability to service this request directly for any Canadian out-of-province customers is embarrassing for the winery and exceptionally frustrating for the consumer.

These customers are very wine involved and have an expectation that they'll be able to continue this very personal relationship with their favourite winery at any time. Being able to service this customer directly will allow wineries to have a commercial relationship with their customer that parallels the one that they can have with virtually any other store or supplier currently.

I look forward to the discussions here today. Please know that the Wine Council of Ontario supports the proposed amendments as articulated by the Canadian Vintners Association. This will ensure that the bill's intended impacts are realized, and the opportunities it affords Canadian wine customers are clear.

Direct-to-consumer sales will give Ontario's VQA wineries an opportunity to continue relationships with their most interested and discerning customers. The passage of this bill will be an important and critical first step in being able to carry on these relationships in a modern commercial environment. This will complement the ongoing efforts of Ontario's wineries to grow their shelf presence and sales at both the LCBO and other Canadian liquor boards.

Thank you.

[Debbie Zimmerman, Chief Executive Officer, Grape Growers of Ontario]

Thank you very much.

The Grape Growers of Ontario support Bill C-311. We welcome the all-party support for expanding the cultivation and use of Canadian wine grapes. The legislation is well-intentioned, and if properly implemented, could be very helpful to our members. The excellent reputation of Canadian wines is spreading around the world. All Canadians should be able, legally, to enjoy our wonderful Ontario wines. It should not be easier to ship from a winery in Ontario to Memphis than to Montreal.

While we certainly do not want to stand in the way of this exciting initiative, we must ensure that the modifications proposed in Bill C-311 are the best or the safest way to achieve the goal. We believe that the initiative should apply—and we join with our partners in Nova Scotia—only to wines containing 100% Canadian grapes. However, we understand that the WTO rules require that equivalent competitive opportunity must be provided to all wines from all WTO members. Would Canadian wine blenders and bottlers of imported wine be far behind? Could Costco, offer their Juila Cellier—bottled in Quebec, foreign-origin—wines across the country? Our members are concerned that Bill C-311 could be much more beneficial to imported wine than to 100% Canadian. Could we lose more than we gain?

The Importation of Intoxicating Liquors Act is the basis for the liquor boards' right of first receipt. Amending this law could attract attention from NAFTA and the WTO. Should Canada be challenged about the way, or any way, or all provinces, or prominent provinces implement Bill C-311? Other, indeed, all liquor board practices based on the IILA could be challenged.

There were two challenges of liquor board practices under GATT in the late 1980s and the early 1990s, and Canada lost both. There was another EU challenge under the WTO a few years ago, and this was settled by more concessions than were made. These decisions were not only about markup. They also condemned Canadian practices on point-of-sale and direct delivery, which are at issue here.

Last week you asked whether U.S. practices had been challenged. In fact, Canada did challenge the U.S. on a wide range of their practices related to wine and beer. Canada won. That report was adopted by GATT in June 1992. Several practices linked to use of local grapes or local fruit wine were condemned. Earlier GATT and WTO challenges were settled on a negotiated and/or compromised basis. The WTO is more logistical than the GATT. Relitigating could result in great cost to Canadian wineries and grape growers.

I would say that hoping the changes pursuant to Bill C-311 will not be noticed or challenged is not sound business practice. Indeed, we know Mr. Dunning's testimony at the EU is closely being monitored.

We agree with Bill C-311. It is no doubt more politically attractive and would be popular—we realize that—but there are potential risks and downsides that need to be carefully examined to ensure that we're not opening a Pandora's box.

Thank you.

[Miles Prodan, Executive Director, British Columbia Wine Institute]

Good afternoon and thank you for this opportunity to state the B.C. wine industry's case before this committee.

The B.C. Wine Institute is an organization of voluntary members that represents 95% of all wine production in the province and is wholly supported through member sales. The BCWI represents the interests of B.C. VQA—that is 100% B.C.-produced wine—in the marketing, communication, and advocacy of their products to all stakeholders.

Specifically, the B.C. wine industry has enjoyed tremendous growth provincially over the past five years, with over $4 million of average growth annually, and almost 9% over the last five years. With approximately 10,000 acres of grapes planted in B.C., the B.C. wine industry is small. Compared to 15,000 acres here in Ontario and 40,000 in Napa, for instance, we are a cottage industry. This bill goes a long way in helping us to grow our markets. Of the total of 210 grape wineries currently licensed in the province—an additional 24 growers have indicated they will start a winery in the future—approximately 80% produce less than 10,000 cases, and the majority of those are family-owned agribusinesses making fewer than 5,000 cases a year.

As of January of this year, of the total provincial B.C. VQA wine sales, 25% were sold through the B.C. LDB and 24% were sold directly from wineries, with the remainder sold through private liquor stores, restaurants, and the rest.

While it is difficult to estimate how many direct winery sales are done through wine clubs, in-province direct delivery, etc., the majority of B.C. wineries offer such services, and it is an effective and efficient marketing and distribution strategy, specifically for the small operators. It is reasonable to assume that a minority of wineries may currently be illegally shipping wine directly to customers, but the majority do not and are at a distinct disadvantage to those who may be.

B.C. wine tourism has been experiencing tremendous growth over the last number of years, specifically since the 2010 Olympics. We've seen a tremendous number of wineries making significant capital investment in accommodation, restaurants, and the rest to augment the wine tourism industry in B.C.

Provincially, wine tourism was estimated to be worth $75 million in B.C., according to a study done in 2003. While all agree that it's substantially more than that, the number is pegged at $75 million. It is a significant attribute of B.C. tourism.

As you are aware, the Importation of Intoxicating Liquors Act provides no legal exemption in federal law to transport wine across provincial borders, even for small quantities purchased for personal use. The IILA makes it illegal for Canadian wine consumers to take wine that is not purchased in or consigned to the province across a provincial border. It also prohibits a consumer from directly ordering out of province after returning from a B.C. wine tour.

Since June 2011, several liquor boards have allowed a quantity “on your own person” into the province. While this is an improvement, it is only of benefit to residents of border communities, and provides limited benefit to wine consumers or tourists who may have travelled, say, from Nova Scotia to British Columbia to visit wine country once every couple of years.

We see Bill C-311 as having a tremendous impact on the wine business of B.C. The number of wineries in B.C. has grown by 281% in the last ten years. Today, many of those are small family-based wineries focused on small-lot wine. The investment made in the B.C. wine industry has been in response to a growing interest in B.C. wine and tourism.

[Shirley-Ann George, President, Alliance of Canadian Wine Consumers]

Thank you.

On behalf of Canadians, especially those who love wine, we are pleased that you have sought out the views of the Alliance of Canadian Wine Consumers. We represent a grassroots volunteer organization, more commonly known by our campaign name “Free My Grapes”.

We exist for a single purpose—that it should be legal for Canadians to directly buy from Canadian wineries and have the wine shipped across provincial borders for their personal consumption. We call this winery-to-consumer or WTC sales. Bill C-311, ideally with our proposed amendment, has our full support. I have five quick points to make, plus an important request on the amendment.

First, Canadians want interprovincial wine barriers removed. We believe there should be a single Canadian market and expect that everything should be available via the Internet. Bill C-311 will provide an opportunity for greater consumer choice, the ability to visit a winery and have the wine shipped home, to reorder this wine, to join wine clubs, and to go to a winery's website and order wines that you hear about through word of mouth or through local blogs.

Canadians are unwilling to accept this archaic prohibition-based law that has been mocked in major national and local newspapers, radio, and even the national evening newscast. Canadians in every province and territory support our cause. They have signed our petitions, sent letters to MPs, and joined us on Facebook and Twitter. There's even been one individual, Terry David Mulligan, who has been willing to go to jail in his protest of this law.

Second, this is affordable. Our WTC request has been carefully crafted to minimize the impact on provincial revenues. Our analysis, based on ShipCompliant data—which has been tracking the U.S. impact of direct-to-consumer sales, where it is legal in 38 of 50 states to ship across state lines—only 0.6% of a single one per cent of U.S.-produced wine is shipped across state lines. If we apply these numbers to Canada and assume no economic benefit, which is an ultra-conservative projection, 0.6% of 1% translates into 0.001 to 0.015 of the liquor board revenues, ranging from a potential loss to provincial and territorial treasuries of $44 in Nunavut to $619,000 in Ontario. These amounts can be easily recovered through cost savings. For example, WTC and a change of just 1¢ per bottle of wine sold would result in a revenue increase for each and every province.

On the plus-side, we believe that taxes, jobs, and other economic benefits will result in the provinces, more than covering their costs, and that wine-producing provinces will gain significantly from increased tourism, wine sales, and grape sales. The high cost of shipping wine means WTC is only attractive for wines not locally available and will be largely used for higher-end wines. As in the U.S., all this translates to 98% of wines still being purchased locally.

Third, the vast majority of Canadian wines simply are not available to Canadians. A quick tour down the aisle of your local liquor store clearly demonstrates that very few of the 450-plus wineries are actually represented, and the limited shelf space in existing outlets means they never will be.

Fourth, the greatest benefit is going to go to small and medium rural businesses. U.S. experience shows that every state that has allowed WTC has had their local wine sales increase, and most small wineries cannot or will not sell their wines through liquor boards. Also, wine and culinary tourism will increase.

Finally, this bill does not undermine the need or the ability of provinces to properly regulate the sale of wine. Provinces will still set the regulations, such as limiting the changes to winery-to-consumer sales. They will still ensure the protection of minors through such vehicles as licensing shipping companies and demanding proof of age at delivery.

Earlier I mentioned one area of concern, and I will quickly conclude with this. The current amendment is worded in such a way that liquor boards could flaunt the will of Parliament and not actually make a single change. Given that they have been unwilling to work with Canadian vintners and establish a winery-to-consumer framework and that the provinces have refused to respond positively to Minister Gerry Ritz's invitation to discuss the needed changes, we have no reason to believe, with the exception of British Columbia, that they won't just ignore Bill C-311. This will disappoint and anger Canadians, who widely believe that Bill C-311 will make a difference, otherwise why would we be spending our collective time and our collective money working on it?

Our request is that you add the word “reasonable” before “quantity”, and remove the word “and” afterwards.

There is legal precedent that demonstrates that such a change would not create the concerns raised by Mr. Albas, and the provinces would still have the ability to set quantity limits. This change would only encourage them to go beyond the pointless two bottles per year limit that some have today. Mr. Hicken is capable of addressing this further.

In summary, we're asking you to vote in favour of Bill C-311 with the amendment.

Thank you.

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

Orders of the day—we are televised—are pursuant to the order of reference of Wednesday, December 7, 2011, a study of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

This is our second session on this topic.

We have six witnesses before us here this afternoon: firstly, the Alliance of Canadian Wine Consumers; secondly, the British Columbia Wine Institute; next, we have Château des Charmes; we have the Grape Growers of Ontario; the Wine Council of Ontario; and our last presenter, Winelaw.ca.

I want to thank you all for being with us here this afternoon. We will allow you five minutes for an opening statement, and then we'll have questions from members.

We'll start with Ms. George, please.

Wine Industry

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Mr. Speaker, further to all party support that I have been honoured to receive in this House, I rise to present a duly certified petition of 157 signatures of people from my riding of Okanagan—Coquihalla who support my private member's bill, Bill C-311, to end wine prohibition in Canada.

Free trade in wine should not be a crime.

[Ivonne Martinez]

I have had discussions with AGLC, and they have informed me that yes, they would have to impose restrictions, much as many of the other provinces would, if Bill C-311 goes through.

[Ivonne Martinez]

Currently the process goes through AGLC and the liquor stores, and right now that is legal. What Bill C-311 proposes is that you would bypass both of those and would go directly to the consumer, and you are asking the provinces to limit the amount a person would be able to order.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair.

We should note that Mr. Jean may be the first Alberta MP to speak of liquor and bondage at committee.

Mr. Dunning, you say that Bill C-311 could hurt the Canadian wine industry. Is there anyone on your board who runs a winery?

[Ivonne Martinez]

Just to clarify, the wine, as stated in Bill C-311, is for personal use only—

[Dan Paszkowski]

With respect to the private order program, there are private order programs available through most liquor boards. It does take a significant amount of time for the wine to arrive. I think the websites rank it anywhere from three to six months. You require a one-case minimum, and typically not a mixed-case lot.

There are examples that I know of in which a consumer in Ontario, for example, wants a specific wine from British Columbia, but there is an agent in Ontario, so they cannot use the private order program; they're turned over to that winery's agent. The amount of paperwork that agent has to do to get that wine through the liquor board system is not worth his or her while, so it doesn't happen.

Yes, a private order program is there. Is it perfect? No, it's not perfect. Can it be improved? Yes, it can be improved. It can be improved to the point where many consumers will use it. That's no reason not to amend this bill and allow consumers to order directly from a winery.

With respect to trade laws, since 2005 the United States has been implementing a system of direct consumer delivery. They have not been challenged. I have spoken to the United States industry. I've spoken to the European industry as to whether Bill C-311 is open to challenge. As long as it meets national treatment obligations, there is no reason and no case for any country to challenge the outcome of passing this piece of legislation.

[Janice Ruddock]

I'll be really quick.

I want the committee to remember what my job is today. It's to speak on behalf of the Nova Scotia wine industry; it is not to discuss free trade agreements or the ramifications of using protected language in our bills. That's the key point. I know we're not able to put “100% Canadian” on it, but that is what we request.

To summarize, Bill C-311 is a step towards having more Canadians enjoy more Canadian wine if the spirit and the wording of the bill is to support the Canadian wine industry. We, as the Nova Scotia wine industry, are trusting it is.

Thank you for the opportunity, and I apologize; I just get so passionate about our Nova Scotia wines.

[Janice Ruddock, Managing Director, Winery Association of Nova Scotia]

Hello. My name is Janice Ruddock and I am the managing director of the Winery Association of Nova Scotia.

I want to thank the Standing Committee on Finance for the opportunity to attend this committee hearing in reference to Bill C-311, the bill to amend the Importation of Intoxicating Liquors Act.

Please allow me just a few minutes to introduce the wine industry in Nova Scotia. We have a 2020 vision: that in 2020 we will have 20 wineries and over 1,000 acres of grapes planted.

Currently there are 14 wineries, but I'm going to tell you that they have enough enthusiasm for 140 wineries. There are enormous dreams and plans in the Nova Scotia wine industry, and the core part of my job is finding the support to help these dreams come to life by promoting Nova Scotia wines wherever possible. Nova Scotians have one of the lowest per capita consumptions of wine in Canada, so obviously the opportunity to move into other regions of Canada is a very attractive possibility for the growth of the Nova Scotia wine industry.

The majority of our wineries are located in the scenic Annapolis Valley, which is one hour from Halifax and a tourist destination.

With a population of only 945,000—I'm not sure where Hanspeter got the other 55,000—who historically are not wine drinkers, we have to spend a considerable amount of resources just on educating people about wine—not Nova Scotia wine, but wine in general.

Our Nova Scotia signature grape is L'Acadie Blanc, and most wineries in Nova Scotia will produce a L'Acadie Blanc wine, which is the most wonderful accompaniment to our delicious seafood. If you want to, as Scott has mentioned, you will see that this evening. Nova Scotia is being recognized for its high-quality sparkling wines, plus our off-dry whites. We also make red wines and icewines as well.

With current 100% Nova Scotia wine not even filling the shelves of the 105 Nova Scotia Liquor Corporation stores, today our key priorities remain simply to increase the production of 100% Nova Scotia wines and to educate the consumers on Nova Scotia wines. We like to say, “Created under the same earth, sea, and sky, the wines and seafood of Nova Scotia are, quite simply, a match made in Nova Scotia heaven”. That is why our symbol is a wineglass and a lobster claw. This symbol is put on our wine that is produced with only 100% Nova Scotia grapes.

Nova Scotia has great wines. We've been recognized with international accolades. For example, Prestige Brut, from L'Acadie Vineyards, was the only entry from North America to win a medal in the ninth international competition for the world's best sparkling wines.

Nova Scotia wines are very hard to duplicate. They add diversity and uniqueness to the Canadian wine industry, and aren't diversity and uniqueness what Canada is all about?

Therefore, the ability to ship our unique wines across Canada will give Canadian consumers an opportunity to sample truly unique and truly Nova Scotian wines. This year, we are formally launching a Nova Scotia signature wine called Tidal Bay, which again is unique to Nova Scotia. Only 14 months ago, Nova Scotia saw our own wine regulations come into effect. We have been asked whether it's VQA Nova Scotia; it is not, at this point in time, but we certainly are investigating the opportunity.

More to the point on Bill C-311, as you can appreciate, as a growing wine industry in a province of 945,000, the Nova Scotia wine industry is always interested in developing new channels of distribution for our products. Therefore, the Nova Scotia wine industry would support the opportunity for individuals to order or transport Nova Scotia wines across Canadian provincial boundaries.

We have only one request, though—and keep in mind that I am here on behalf of the Nova Scotia wine industry—which is that Bill C-311 reflect or be adapted to incorporate “100% Canadian” in front of the word “wine”. The fledgling 100% Canadian wine industry lacks the awareness that imported wines to Canada have among wine drinkers. Imported wines to Canada increased by 8.8% for the 10-year period from 1996 to 2006. We are concerned that without the definition of “100% Canadian” in front of the word “wine” in Bill C-311, there will be an opportunity for wines of all countries to be moved across provincial borders.

Nova Scotians, being price-sensitive shoppers, will have the opportunity to order imported wines that are under a different business model from our Canadian wines, and there is also a high awareness of the country of origin among our fledgling wine drinkers. No doubt Nova Scotia wine consumers would be thrilled with this opportunity.

[Dan Paszkowski, President and Chief Executive Officer, Canadian Vintners Association]

Thank you, Mr. Chair.

My name is Dan Paszkowski, and I'm the president of the Canadian Vintners Association. On behalf of CVA members, I am grateful for the invitation to appear here today. I'm pleased to discuss Bill C-311, a proposed amendment to the Importation of Intoxicating Liquors Act .

CVA membership represents roughly 90% of all wine produced in Canada. We strongly support Bill C-311 and are encouraged by the support that direct-to-consumer wine delivery has received from consumers across Canada and from all parties in the House of Commons.

Canada has more than 400 grape-based wineries and 1,000 grape growers producing in six provinces. We have 196 grape wineries in British Columbia, 125 in Ontario, 70 in Quebec, and 22 across the Maritimes. The majority of Canada's wineries are small-volume, premium-focused operations that have significant capital invested in their vineyards, wineries, sellers, retail operations, tasting rooms, and increasingly in cellar door restaurants.

We are a young and growing industry. Each vintage, more wineries are opening and more wines are available for sale. While growth is positive, we are challenged by our limited sales channels and the physical brick-and-mortar limitations of provincial liquor board retail stores. In 2011, VQA 100%-Canadian wine sales represent a mere 6% share of the wine market nationally.

Consumer demand for our wines is thriving, and consumers expect to be able to purchase the wines they want in the manner of their choosing: from retailers, at the winery, and remotely by telephone or online.

In our support for direct-to-consumer wine delivery, we have engaged in discussions with consumers and wineries across Canada; with legal and trade experts; with federal and provincial regulators, liquor boards, and elected officials; and with NGOs focused on alcohol in moderation.

In response, we are recommending two minor amendments to the bill that we believe will enhance its clarity, satisfy consumer demand for choice in wines and how they are delivered, satisfy regulatory requirements, and create a new source of government tax revenues. In the interests of time, the amendments we are recommending are included in our written submission.

To comply with our international trade commitments, Bill C-311 must meet national treatment obligations. As such, imported wines must be afforded the best treatment provided domestic wines, but only once they have landed in Canada. Bill C-311 meets this obligation, but to be clear, it does not permit foreign wineries to ship directly to Canadian consumers.

Bill C-311 essentially legalizes the following: out-of-province tourists can buy wine at a winery and transport it home either on their person or by having it delivered; out-of-province consumers can order wine online directly from an out-of-province winery and have it delivered. This would permit Canadians to bring back or have delivered wine that was purchased outside of the consumer's home province. As is normally the case, these purchases would be taxed in the province in which the transaction takes place.

While there is limited concern with tourists bringing wine back home with them after an out-of-province trip, provincial governments and liquor boards have expressed concern about the prospect of Bill C-311 extending direct delivery to out-of-province winery wine clubs, online purchases, or liquor board retail stores.

Interprovincial wine shipments from a winery to an adult consumer would require the winery to collect all taxes, levies, and fees on behalf of the province in which the consumer places the order. It It is important to note that in November 2011 the chair of the New York State Liquor Authority testified that direct-to-consumer wine shipping has generated higher local and state sales tax revenues, providing benefits to the state, consumers, and local wineries.

The Province of Ontario, as do most wine-producing provinces, allows its wineries to sell directly to in-province consumers. This has not led to a displacement of wine sales through the Liquor Control Board of Ontario, whose share of retail sales increased from 83% in 2006 to 84% in 2010.

It has been argued that Bill C-311 will stimulate arbitrage opportunities based on varying provincial tax structures across Canada. Differences in tax rates and wine prices are nothing new in Canada, and Bill C-311 will not eliminate provincial authority addressing these concerns.

Finally, the intent of Bill C-311 aligns perfectly with regional efforts to break down trade barriers between provinces. The Trade, Investment and Labour Mobility Agreement between British Columbia, Alberta, and Saskatchewan, the Quebec-Ontario Trade and Cooperation Agreement, and the Partnership Agreement on Regulation and the Economy between New Brunswick and Nova Scotia are examples of efforts by Canadian provinces to seek new partnerships, expand trade opportunities, and collaborate on issues of mutual importance.

In closing, with a few minor amendments Bill C-311 will provide Canadian wineries with a new sales channel that will create a stronger internal market for Canadian wine, a solid base for the industry to sustain its growth ambitions, new opportunities for wine country tourism, new jobs, and enhanced government revenues.

Thank you.

[Rowland Dunning, Executive Director, Canadian Association of Liquor Jurisdictions]

Thank you, Mr. Chair.

Good afternoon. I'm Rowland Dunning, executive director of the Canadian Association of Liquor Jurisdictions, or CALJ for short. CALJ represents provincial liquor authorities in all ten provinces and the three territories. Thank you for the opportunity to speak today.

CALJ's members believe that Canadians deserve easy and comprehensive access to the fine wines produced across this country. How much access do consumers have, you might ask?

Well, they have a broad choice of Canadian wines in their province's or territory's retail stores, amounting to $1 billion in sales just last year, and they can order any Canadian wine any time through private or special ordering services, which we have outlined in our submission.

Provinces are ensuring these programs become even better and faster. They can take wine home with them on their person and for their personal use when they visit wineries in other provinces. In short, Canadian consumers already have good access to Canadian wine, and that's why we think the proposed amendment is unnecessary. In fact, the only reason Bill C-311 exists, and the only reason we're all here today, is that some wineries feel they shouldn't have to pay provincial markups on these sales.

We would be happy to elaborate on these liquor board supports for Canadian wine and on the private order systems that allow consumers to order any wine from any Canadian winery through their home province's liquor retailer.

Every province and territory does apply a markup or a commodity tax to the sale of alcohol to raise revenue and to help pay for government services such as health care, education, and other important priorities.

Yes, a portion of our markup revenue covers the cost of retailing, but most of it goes to provincial spending priorities as well as to helping offset the social, health care, and law enforcement costs that arise when alcohol is not used responsibly.

We're all for tourists visiting wineries in other provinces and taking wine home with them. However, we do have concerns with direct sales into other provinces, since this is a new and distinct retail channel. The impact on our businesses and provincial revenues from allowing direct sales could be substantial. In some U.S. states and the U.K., direct sales account for 4% to 5% of total wine sales. This is the equivalent of about $300 million in annual wine sales in Canada.

Proponents of the bill say the liquor boards could still collect a portion of their markups by adopting a permit system like that used in some U.S. states. These are cumbersome systems whereby out-of-state wineries and even consumers have to register with tax authorities and purchase permits. Our existing private ordering services are much simpler. Why would anyone want to change from the simple and convenient Canadian service to the bureaucratic American system unless they wanted to avoid legitimate provincial charges on wine sales?

Here's something else to seriously consider. Beyond being unnecessary, we think the bill may actually pose a threat to the overall well-being of the Canadian wine industry. Canada's international trade agreements require equal treatment of imported and domestic wines. CALJ's members are frequently reminded of this obligation by federal trade officials, and Canada's trading partners pay close attention to liquor boards, particularly the sale of wine.

I'm sure you all know that wine has been a focus of discussions between Canada and the EU during the current CETA negotiations. In fact, it is our understanding that the EU have asked DFAIT about this bill and its international implications and have not received a response. CALJ's members do a lot to support Canadian wine, supports our international trading partners readily assert are not entirely consistent with our trade obligations.

In the eighties, Canada lost a trade challenge about wine, and the focus of that challenge was differential markups between domestic and imported products. Proponents of Bill C-311 suggest it is consistent with our international trade obligations, as it allows for the direct sale of Canadian and imported wines; however, foreign wines would have to be sold by Canadian retailers and would be subject to provincial or territorial markups, while Canadian wines sold directly by wineries would not.

We're right back at the problem that caused the trade challenge in the eighties regarding differential markups. We believe this would be so large a concern that Canada would immediately face complaints from its trading partners. Even if direct sales from Canadian wineries paid full markups, it appears to us that foreign wineries would have to be allowed to make direct consumer sales as well.

In any trade dispute, Canada would face complaints not only about the new provisions allowed by the bill but also about all of the measures that support Canadian wine. In such a dispute, Canada and Canadian wine have much to lose.

In summary, and on three key messages that I would like to bring to this committee's attention, CALJ believes Bill C-311 is both unnecessary and potentially harmful to the Canadian wine industry.

First, it could create an unfair system whereby some wineries would pay provincial charges and others would not. Second, it could significantly undermine provincial revenues. Third, it could result in trade complaints that would significantly damage the domestic wine industry.

Thank you for allowing us the opportunity to present our views on this matter.

[Ivonne Martinez, President, Alberta Liquor Store Association]

Thank you very much.

I'm here from Alberta, which apparently is the only province that has a system that is different from the rest of Canada. With that in mind, I'll let you know that the Alberta Liquor Store Association, or ALSA for short, represents 1,200 private liquor retailers throughout Alberta, which again is the only province in Canada with a privatized retail liquor industry. The majority of these stores are independently owned or family owned, and all of them would be affected by passage of Bill C-311.

The Alberta Liquor Store Association appreciates the intent of the bill. We don't have a problem with the bill itself. We do appreciate that increased interprovincial trade is needed; however, the implementation of the bill may have many unintended consequences.

The Alberta model is an open market model. Currently, liquor retailing in Alberta is a $2 billion industry that provides thousands of jobs in private sector investments in communities across the province. Provincial revenue from sales of alcohol last year alone was $700 million. Currently, there are over 17,000 liquor products available in Alberta to anyone who wants to go to a liquor store and buy them. Mr. Albas will be happy to know that there are over 1,200 types of B.C. wines available in Alberta, and last year we sold 10 million bottles of B.C. wine alone in Alberta, so the industry is thriving very well.

To address a point, Alberta does not have limits on the quantity of wine products that people can bring with them across provincial borders for their own personal consumption or limits on their frequency of travel, meaning that you can go back and forth to B.C. as many times as you like and bring back as much wine as you like, as long as it's for your personal consumption and you bring it with you. As a matter of fact, Albertans are able to order wine directly from wineries right now, whether from B.C., Nova Scotia, or France. All they have to do is just do it through a local store and go through the AGLC, which is a regulatory body in Alberta. Wine can actually be delivered to your front doorstep, if that is desired.

As I mentioned, we do have some concerns with the bill, the main one being that it would bypass a regulatory body in Alberta, which would then lose the revenue from this domestic liquor product. Most importantly for my stakeholders, it would bypass retail stores, which would also see a decline in sales. Should the Alberta government increase taxes on the rest of the liquor products to make up for this loss of revenue, it would present a compounded negative effect to store owners and their margins of profit.

Underage drinking is also an issue for my members. Social responsibility is something that we take very seriously. As stated in the Importation of Intoxicating Liquors Act, alcohol is indeed a controlled substance, and by allowing direct sale to consumers, Bill C-311 would bypass provincial regulation, making the market vulnerable to underage drinking without any means of monitoring. Anybody, any kid, can grab a parent's credit card and basically order wine, and it can be delivered to the doorstep without having anyone ask for ID.

Bill C-311 says that the province can impose limits on the quantities of wine a person can bring into the province. As Alberta would lose its revenue on domestic wine with Bill C-311, it stands to reason that the provincial government would impose restrictions on quantities that one can bring into the province. In other words, we would be imposing restrictions on a market that is currently open and without barriers, going backwards in some ways.

Bill C-311 would provide a precedent for other domestic liquor products such as beer and spirits to follow in the same path of being able to be sold directly to consumers. ALSA is of the view that Bill C-311 would be the beginning of a slippery slope for all other liquor products to be granted the same rights. Right now in Lethbridge there's a distillery that makes rum, so from the Alberta perspective we would be pushing the idea that they should be able to sell directly to consumers as well.

Bill C-311 could potentially create serious problems with Canada's various trade agreements, including NAFTA and GATT, which call for Canada to treat domestic wine and imported wine the same in terms of tax treatment. As B.C. wines already receive preferential treatment over other wines, this would create an even bigger platform for challenges under our trade agreements.

In conclusion, we again would like to emphasize that we appreciate the goal of this bill. However, we believe that the intended outcome of this bill can be better achieved by working under the federal-provincial agreement on internal trade. In this manner, the Canadian government can achieve its goal of better interprovincial trade in wine products while engaging and consulting all the parties necessary within government, provinces, and the liquor industry to ensure a successful outcome.

Thank you.

[Hanspeter Stutz, As an Individual]

Thank you, Mr. Chair.

Thank you for giving me the opportunity to express my thoughts in reference to Bill C-311. I wish to emphasize that this is my opinion in regard to this issue and has nothing to do with the opinion of an organization.

First you have to realize where I am coming from. One of my toughest challenges as an immigrant from Switzerland and a producer of alcoholic beverages is the existing—or not existing—rules and regulations here in Canada. The interprovincial barriers are one big issue, the lack of Canadian wine regulation the other, but I understand this is not the right place and time to talk about a Canada wine standard.

We want to talk about an open—or let's start with a more open—domestic market. Since you are the Standing Committee on Finance, I assume that the growth of the economy is one of pillars in your mandate.

Let's go back to Nova Scotia.

The local farm area in Nova Scotia disposes of around 50,000 acres of unused farmland. The prices are still reasonable, because there is no shortage yet. The opportunities in Nova Scotia are obvious when you consider the following comparison of the cost of land: one acre of farmland in Nova Scotia costs between $2,500 and $4,000. One acre of farmland in Switzerland is between a rocketing $30,000 and $50,000.

Of course, we could grow vineyards along the north mountain, about 50 kilometres in length, but the question would come up very quickly: where could we sell all this additional wine, with a Nova Scotia population of approximately one million people?

This point is underscored by the present barriers we face as wine producers in selling our products in other provinces. It is easier for our winery to ship 20 cases of wine to Beijing, Germany, Dubai, or Switzerland than to ship one case to our neighbour, New Brunswick. Surely this is counterproductive to our joint goals and objectives. We are in the 21st century and we need a completely open domestic market for private and commercial trade with respect to licensees.

I support what you will hear of Janice's Ruddock's concerns about—I call them the big boys. We have to review these rules and regulations. We have to add the wording “100% Canadian” in front of the word “wine” in the bill.

Furthermore, we should limit the import of foreign products and concentrate on the marketing of our own. No wine region in the world has this policy, and we are the laughingstock of many wine-producing countries. We should strive to be world class, but with our present policies limiting our marketing opportunities, this cannot happen.

Your help is needed on this issue.

The innovative and creative small or medium-size winery has a certain disadvantage in this current environment, and the big guys are clearly laughing at us. Canada has outdated rules and regulations where wine importing, wine growing, winemaking, and wine marketing are concerned. Our competitors abroad could not be happier about all the red tape we are facing. The red tape has to go.

The wine industry in Canada has changed dramatically and has the potential to continue changing, but the rules will need to change. Your Standing Committee on Finance is challenged and should take action to change this antique modus. We should be one proud nation of wine producers. Think Canadian and out of the provincial boxes.

Thank you.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Mr. Chair, and through you to Mr. Cannan.

I certainly have appreciated your work on this file and the advice and the support you've given me so far. The expected economic impact is difficult to ascertain, and I do not endorse the practice of using optimistic numbers to paint a very bright picture, but what I can say is that many of the wineries I have spoken with have suggested a sales volume increase of at least 5% to 10%, which I think is a realistic expectation.

I can say that in every case, every winery I have spoken with has stated that the increased revenues will be directly and immediately reinvested into our local economies. New buildings, storage tanks, forklifts, barrels, and outright expansion are just some of the capital plans many wineries would like to accelerate. That's why they've been very supportive of Bill C-311.

On another note, in the riding south of mine, British Columbia—Southern Interior, is Oliver, a small town where there's a very strong business creating barrels for wine production, so there are a number of spinoff industries.

From my understanding in speaking to some of the purveyors in Nova Scotia, they are in an emerging wine region and they are trying to grow as much as they can. Whether that means wine tourism or agri-tourism and culinary tourism, it all seems to flow from great food and great wine.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

That's a very good question.

Regardless of the type of wine—what kinds of blends, etc.—this would allow the interprovincial movement of wine. Anything that is subject to the Excise Act, such as foreign bottled wine, would be subject to that act instead. This particular amendment to Bill C-311 has nothing to do with that, but only with the interprovincial movement of wine.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Mr. Chair.

Some 83 years ago, during the Prohibition era, the Importation of Intoxicating Liquors Act, known as the IILA, was passed, making it illegal for everyday citizens to transport or ship wine across provincial boundaries. It is for all intents and purposes an interprovincial trade barrier, meaning a winery in Quebec cannot legally sell a bottle of wine to a customer in Alberta.

Now, here's where it gets more redundant. That same Quebec winery that cannot legally send a bottle of wine to Alberta can send that same bottle of wine to a customer in Texas. Many small Canadian wineries can more easily access markets outside of Canada than they can within our own great country.

Canadians have proven that they can produce some of the best wines in the world, yet they cannot sell that wine directly to consumers in other Canadian provinces. We as members of Parliament have the opportunity to work together and change this by supporting Bill C-311.

Let's imagine if cars built in Ontario could not be sold in British Columbia. What if prize Nova Scotia lobster could not be sent directly to households across Canada? This is the reality for our small Canadian wine producers.

The wine industry has been battling this unjust Prohibition-era legislation for many years. Now it's time to open up the Canadian marketplace to support the hard-working families who run small wineries in provinces like Quebec, Nova Scotia, Ontario, and British Columbia.

How do we best eliminate the 80-year-old trade barrier, put an end to wine prohibition in Canada, and open up the Canadian marketplace? I would like to share the intent and direction of my proposed amendment to the IILA legislation. I would also like to add that I worked very closely with Minister Shea, parliamentary secretary Cathy McLeod, and their staff for the duration of this process. I would like to publicly thank them for their efforts and support in helping move this bill forward.

Essentially, Bill C-311 proposes an amendment that would allow private citizens to directly transport, or cause to be transported, wine that is purchased from one province to another province, provided it is for personal use and the personal exemption policy of the latter province allows it.

Let's be clear on a few points. Yes, this amendment supports Canadians being able to directly purchase wine online from a winery in British Columbia, Nova Scotia, Ontario, or Quebec and have that wine shipped back to a province such as Alberta. This action would no longer be in contravention of the IILA legislation.

Let's also be clear that this amendment will ultimately clarify that it is indeed the provinces that can set up their own personal importation policy as they see fit. In essence, my amendment proposes to take Ottawa and this trade barrier out of the way and let the provinces set policy that they feel is appropriate.

There are some interests that would like to propose an amendment to the language of my bill, an amendment that in my view would potentially be more restrictive on the ability of the provinces to set importation policy. An example is inserting the word “reasonable”. Now, who would decide “reasonable”, and what mechanism is there to address that definition?

For the record, I do not support efforts to amend the language of Bill C-311 in any way that might restrict the ability of the provinces to set their own personal importation policy. As much as we all support interprovincial trade, we must also recognize that liquor distribution is a provincial responsibility, and provinces and territories must be free to set their policies accordingly.

Again, I point out that ultimately my goal here is to remove the federal government and the IILA as a trade barrier. I shall also note that some provinces have already taken a leadership role in setting their own personal importation policy. In fact, I would suspect that you will hear from the Canadian Association of Liquor Jurisdictions, which will mention this as one of the reasons they are not likely to support the amendment.

However, provincial policy should not conflict with federal legislation. The fact that a federal law exists to prevent this practice does raise the obvious question of a potential conflict with provincial policy. In other words, how can a province essentially say it's okay to personally import wine while the IILA legislation is clear that this is a criminal act? That, of course, leads to another reason that this amendment in Bill C-311 is badly needed.

I would also add that not all provinces have a personal importation policy. In fact, one province has stated that it will not consider such a policy until the IILA legislation is amended, which is precisely what we are trying to do here.

The final discussion I expect you to hear is one of revenue. Will the amendment create a loss of revenue for liquor distribution monopolies?

I have a few thoughts on the subject. In my riding, many of the smaller wineries do not sell through provincial liquor distribution models. They simply do not have the volume and cannot afford the hefty fees. One small winery owner tells me that it costs him roughly 60% to sell through the liquor distribution branch, and he simply does not have the volume to absorb those kinds of costs. To maximize his income, he depends on the ability to sell directly. Unfortunately, for many of the vacationing Albertans who visit his winery every year, even though Alberta does have a consumer-friendly personal importation policy, IILA still makes it illegal for wine to be taken home by his customers, and shipping remains illegal.

I'd like to take a moment and illustrate another reason that Bill C-311 is not only good for the wine industry but also for the shipping industry. Today, major shipping companies will not ship wine precisely because of the IILA. I have had a few major shipping companies that wanted to be here in person to show their support for Bill C-311 and illustrate how this will be a positive economic policy for the Canadian shipping industry.

I'll get back to my small winery example. In this case, many small wineries currently do not sell through the provincial liquor distribution system. It is difficult to suggest or assess that there would be a loss of revenue, as many of these wineries are already engaged in direct sales. Bill C-311 simply looks to rightfully expand that marketplace across Canada.

We must also recognize that when wine is sold, it is fully subject to HST or PST and GST, depending on the jurisdiction. In other words, increased wine sales resulting from Bill C-311 would continue to benefit government revenues, just not solely directly through liquor distribution monopolies. I'd also like to add that there is GST on shipping as well, so any increased shipping activity as a result of this amendment would also increase GST revenues to both levels of government, not to mention all of the economic spinoffs that go along with it.

Who pays for all of this? Well, it is the consumer. That is also an important point to consider in this discussion. Wine as a commodity is fragile and heavy. As a result, this will be very costly to ship. Shipping an individual bottle can range upwards of $20, while shipping a case of wine can be in the $50 to $70 range. Why do I mention that? Ultimately, there is no cost savings to consumers in directly purchasing out-of-province wine. Consumers are not in support of this bill as part of an effort to avoid purchasing from a government-run liquor store; this bill is about consumer choice and opening up the market to small Canadian producers so that they can sell to Canadians.

Over the past six months, I have heard support from all across Canada, and I know that many of you have likely heard from your constituents on this bill as well. This is a small but important step for a Canadian industry that provides jobs and supports our local economies. In my region, the spinoff industries are considerable. I know that both Nova Scotia and Quebec are also emerging wine regions, while Ontario has become Canada's largest producer. We have an opportunity to take a small step that will eliminate a Prohibition-era trade barrier and legitimately help an industry grow and prosper.

I appreciate the time the committee will spend reviewing this bill. I certainly welcome your questions or comments.

Thank you, Mr. Chair, for your consideration today.

[The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)), Conservative, Dan Albas]

I call this meeting to order.

This is the 50th meeting of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Wednesday, December 7, 2011, concern a study of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

We have two panels today, colleagues. In our first panel we're very pleased to have our colleague, the member of Parliament for Okanagan—Coquihalla, Mr. Dan Albas. Welcome to the committee and congratulations on your bill passing second reading. I understand you have an opening statement for the committee, and then we'll have questions from members.

Please begin your opening statement.

Importation of Intoxicating Liquors Act

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, the second petition pertains to something which members on all sides of the House have been supportive of, my colleague's Bill C-311, to modernize the archaic 1928 Importation of Intoxicating Liquors Act.

We want to free our grapes and let the wine flow across the provincial borders, so we can have a much more enjoyable Canada from coast to coast to coast.

[The Chair, Conservative, James Rajotte]

Thank you.

I want to thank all of our witnesses for being here to respond our questions. It was a very lively debate. If you have anything further to submit to the committee, please do so. We will all consider it.

Colleagues, I just wanted to see whether there was agreement to proceed with the proposed operational budgets for Bill C-25, Bill S-5, and Bill C-311. You should all have the numbers in front of you. Is there agreement to these three bills and the witnesses?

The Environment

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Speaker, I rise today to present four petitions.

The first petition is with regard to issues relating to the climate crisis. It was nice to hear the voice again of the hon. member for Thunder Bay—Superior North. He was the sponsor of a bill to which this petition refers, which was a bill in the last session of Parliament, Bill C-311.

The petitioners, primarily from Ontario, are asking Parliament to again take up the challenge of reaching the targets for emissions reductions that were in the previous legislation, reducing to 25% below 1990 levels by 2020 and by 80% below 1990 levels by 2050.

Wine Industry

[Greg Kerr, Conservative, West Nova, NS]

Mr. Speaker, I am pleased to present a petition signed by a number of residents from Nova Scotia. Mr. Speaker, I realize you want me to be brief, but I must say it is very exciting that they are writing in support of our colleague's Bill C-311, which would provide personal exemption for the purchase and shipment of wine across provincial borders. The petitioners are very enthused about this initiative.

Importation of Intoxicating Liquors Act

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Mr. Speaker, I have been asked by the constituents of my riding of Niagara West—Glanbrook to present the following two petitions.

The first one calls on the House of Commons to support Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act.

With over 30 wineries in my riding of Niagara West—Glanbrook, this legislation is not only dear to my constituents, but also to me as well. Allowing interprovincial importation of wine for personal use will greatly benefit not only the hard-working men and women of my riding, but also Canadians from coast to coast will soon be able to experience the extravagant array of wines that are grown in the Niagara Peninsula and indeed from everywhere in Canada.

Wine Industry

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Madam Speaker, I am pleased to present my last petition from citizens all over British Columbia in support of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use) and a personal exemption for the purchase and shipment of wine across provincial borders.

I am in support of the bill and I thank the hon. member for Okanagan—Coquihalla for presenting it. I certainly will be voting in favour of Bill C-311.

[Brent Rathgeber, Conservative, Edmonton—St. Albert, AB]

Mr. Speaker, it is an honour for me to rise and present a petition signed by 110 individuals mostly, but not exclusively, from Edmonton—St. Albert calling upon the House to pass Bill C-311, the private member's bill sponsored by the hon. member for Okanagan—Coquihalla. If passed, this bill would encourage job growth in the wine industry and support domestic wine and Canadian tourism.

Importation of Intoxicating Liquors Act

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Madam Speaker, I will begin by thanking the members of the House tonight for supporting Bill C-311. Many good questions have been asked and comments received. For me, it has been extremely heartening to hear from members from all sides of the House who also believe that having trade barriers within our own country because of an 80-year-old prohibition era law needs to come to an end.

When I set out to introduce the bill, it was out of concern for the many small family-run wineries in my riding and in the nearby ridings of Kelowna Lake Country and Southern Interior, wineries that are too small and cannot afford to sell to the large-scale liquor distribution monopolies.

I did not know then that Nova Scotia was an emerging wine region. I thank the member for Kings--Hants for his passionate and dedicated support for the wine producers of his region.

I also did not know that the province of Quebec is fast becoming a major wine producing province, with 5 wine producing regions and over 50 wineries.

I thank the member for Brossard—La Prairie for his support of this bill, and also the member for Saanich—Gulf Islands for speaking in support of this bill reminding us that there are great wines in her region of British Columbia as well. Of course, special thanks goes to all my colleagues in caucus, many of whom represent the great wine producing regions of Ontario and elsewhere in Nova Scotia and British Columbia.

Before I close, I will clarify a few points on my bill. I want to make it clear that my bill only proposes to remove a federal trade barrier that currently restricts a winery's ability to sell its wine directly to customers across Canada for non-commercial purposes. While the bill would remove the federal trade barrier, it also makes it very clear that it is ultimately up to the provincial governments to set personal exemption limits as they see fit. Already, some provinces have taken a lead on this, and I commend those provinces. However, other provinces have cited the IILA legislation as a reason for not taking action.

I would also like to make it clear that my bill deals only with the inter-provincial movement of wine. My bill proposes no changes to how wine is imported into Canada, nor does it amend the Excise Act.

To summarize, my bill would make it easier for Canadian wineries to sell to Canadians.

There is much that we have disagreed on so far in this 41st session of Parliament. It gives me great pleasure to know that when it comes time to removing trade barriers that prevent Canadians from selling to fellow Canadians across this great country that our House can come together and be united on behalf of our constituents.

Again I would like to thank all members of the House for their support for Bill C-311.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Madam Speaker, it is a pleasure to speak to Bill C-311 and support my colleague from Okanagan—Coquihalla and the other speakers throughout B.C. and across this nation who have already spoken to this bill, which is similar to Motion No. 601 that I introduced in November 2010 and that helped move this team effort to the stage that it is today. It is great that the spirit of Christmas is alive and well. The unity and camaraderie is great to see within the House of Commons. It is something that we can all embrace.

As was mentioned, we are a country of unity, a family, and this is something that has been identified as an archaic piece of legislation, the Importation of Intoxicating Liquor Act, which was initiated in 1928, post-prohibition. The federal government of the day thought it would be good to give the provinces the ability to control the distribution of wine, beer and spirits and receive a little of the tax revenue. It did not anticipate something called the Internet back then. Fast forward to 2011 and what we have is something that, as I mentioned, is an archaic piece of legislation.

We want to encourage Canadians to enjoy internationally award winning wines that are produced in all parts of this country. There are actually over 400 wineries now across the nation. Over 200 in British Columbia, many of them right in my riding of Kelowna—Lake Country, have received international awards. I had the opportunity to host the agriculture committee last year. It was quite interesting. Members tried to make me be the mule to illegally bring back some of this fine vintage that they could not find in the liquor stores here in Ontario, for example.

I applaud the initiatives some of the provinces have taken to date, some baby steps. The Ontario Liquor Board says that we can purchase from its private purchase program. The reality is that it often takes over a month or two to purchase that and at a significant markup.

Many of these wineries are boutique wineries, the mom and dads small operations that produce maybe 3,000 or 4,000 cases a year. That is not enough to supply the liquor board, so they are really captive in their own province. In order to expand their market share across Canada, we need to break down the interprovincial trade barriers. It is good for the economy. It is good for jobs. It is good for agriculture. It is good for tourism. It is a win-win for everybody.

I know there have been some concerns expressed by some of the provincial liquor boards of a loss of revenue.

I have had the opportunity to speak with the Canadian Vintners Association and consultants who have looked at this in the U.S. A number of states have analyzed this and now over 35 states have gone directly to the consumer with a minimal, they are saying 1% to 2%, loss in revenue for the liquor board. However, overall, the macro prospective, if we look at the agricultural support and at the tourism initiatives, is that it is a benefit all across the country.

I had to laugh when I was approached by Shirley-Ann George about a year and a half ago. I had met her on one of the trade committees that I had been working on for five and a half years. Our country is working on over 50 trade agreements internationally. She came to B.C. and visited one of the wineries in the Okanagan. When she came back to Ontario, she was very disappointed that she was not able to find her vintners quality assurance, VQA, that blend produced in the Okanagan. After she retired, she decided to take it upon herself to start an organization called Free My Grapes. The website is active. She has had all kinds of people contacting her saying, “What is this? This is ludicrous”.

The allowing of a personal exemption is something that we are encouraging the provinces to look at, whether it is 12 cases a year or something through a wine club or directly through vintners, something that is reasonable. We have been having discussions among all parties and we are basically in agreement here. We now have provincial parties across the country, even opposition parties, that have contacted me within the province of B.C. saying that they support this.

I think the time has come now to move forward, and bring this legislation into the 21st century. It will help, I think, demystify everything. As my hon. colleague from the Island just commented about Terry David Mulligan, I talked to him earlier today on how he had to host a tasting room show. I am not, by all means, a wine connoisseur, a sommelier. I just know a bad policy when I see one.

The fact is that this bill will take time to move through the process and many people do not understand that. We have democracy and we are working through the House. It will go through after Christmas, hopefully, and the committee will have 30 days to review the bill. It will come back to the House and then go the Senate. On May 8 Canadian vintners have their annual lobby day on the Hill. That is sort of the target date, we hope, when we can all raise our glasses and cheer the fact that we have broken this interprovincial trade barrier.

As we approach the Christmas season, I know people are engaged in festivities. I would ask that we all be responsible to one another, drink responsibly, and do not drink and drive. If people enjoy the beverages of Canada from coast to coast to coast, we can have a stronger community, a stronger agri-tourism sector and, most of all, support our small vintners by moving this bill by my colleague from Okanagan—Coquihalla through the House.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Madam Speaker, I too am very pleased to rise in this House and add my support to Bill C-311.

When the member for Brossard—La Prairie rose to speak on behalf of the New Democrats to kick off this debate, he indicated that we were supportive of the legislation and that we would be pleased to discuss it at committee and perhaps enhance the bill to make it even better for the wineries in Canada.

We are talking about Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use). The proposal is to amend the Importation of Intoxicating Liquors Act by providing a new exemption to the prohibition on the interprovincial importation of intoxicating liquors. This would allow the importation of wine from one province to another by individuals who bring wine or cause wine to be brought into another province for personal consumption. We are talking about a minor change to the legislation, but an important change.

Many other members have very ably outlined some of the technical aspects of the bill, but I want to take this conversation down to the local level to talk about why wine importation is so important in our individual communities.

In my riding of Nanaimo—Cowichan, I am very blessed to live in a rich agricultural area. We have many wineries in the Cowichan Valley. I want to talk about a recent festival because it highlights the rich diversity of Nanaimo—Cowichan. Many other members share this kind of riding, but I think it is important to highlight what this means to our local wineries, restaurants and farmers.

We just had a Cowichan wine culinary festival. The festival ran from Wednesday, September 14, to Sunday, September 18. When the invitation was sent out, all wine and culinary aficionados were invited to our wineries, farms and restaurants. The invitation talked about the range and variety of activities that would happen in the Cowichan Valley:

“Our community has rallied around our vintners, farmers, food producers and chefs who have created tasting or tour activities and events showcasing the best of Cowichan,” commented Mike Hanson, Festival Director, 2011 Cowichan Wine & Culinary Festival. “Together we are offering a truly memorable cultural destination experience”.

That is an important aspect of this. We are not just talking about growing grapes, but about making wine and incorporating it into a total experience. Of course, the Cowichan Valley is becoming quite well known for its winery tours, which incorporate visits to some of the restaurants.

The festival also offered an assortment of the region's best wines and ciders, tours and tastings, unique farm-fresh epicurean delights from organic farmers and food producers, live entertainment, green earth seminars, hand-blown glassware and your favourite bottles of wine over lunch.

Unfortunately, I was here in Ottawa during that period of time, so was not able to take part, but I know from speaking to people, despite the rain, that people came out in droves.

There was also an article on September 15 in the Times Colonist that said, “Duncan: an arbiter of good taste”. The columnist, Jack Knox, talked about the fact that we had the downtown Duncan grape stomp, which was literally where people gathered in downtown Duncan. There were a number of participants. The big barrels were set up, and people got in the barrels and stomped the grapes. The columnist suggested that perhaps this was a good anger management technique, but it really highlighted the kind of involvement that the Cowichan Valley has in supporting our local grape growers.

In the same article, the Times Colonist columnist pointed out that what has happened with Canadian wineries is that they are now focusing on quality, not necessarily price, and as other speakers have rightly pointed out, in British Columbia we have some very fine wineries that have taken awards all over the world. Over the past generation, the Cowichan Valley now has more than 20 wineries operating, and they are very fine wineries.

The columnist went on to say that because of their growth in wineries:

“With that came a degree of sophistication,” says Hilary Abbott, owner of Hilary's Cheese Co. in Cowichan Bay.

There is now also a site in Victoria, Madam Speaker, which I am sure you will be very interested in. It continued:

People who like well crafted wine like well crafted food. The Cowichan Valley really caught the Go Local bug, perhaps due to the growing conditions that have already made it a Vancouver Island breadbasket. Even Barber, the Canadian guru of fresh, good food, spent the last years of his life in this valley. “He liked to say this was the Provence of Canada,” says Abbott.

Cowichan Bay was a great example of the change. Languishing a bit in the 1990s, it saw a rebirth with the arrival of True Grain Bread, the nucleus around which other boutique food shops grew. “As a cheese company, we hitchhiked on their success,” Abbott says. The transition culminated in 2009 when Cowichan Bay became North America's first CittaSlow community, making it officially hip. “We like to think we're a culinary destination.”

For listeners who do not know what CittaSlow is, it is part of the whole international slow food movement that encourages us to slow down and enjoy our local food and the preparation of it. Little Cowichan Bay has become a leader in the CittaSlow movement in British Columbia.

People from British Columbia are very familiar with food expert Don Genova. In a blog he again talks about Cowichan Bay, but he expanded on the fact that we have Hilary's Cheese and True Grain bakeries. He also talked about the Cowichan Bay Seafood and Udder Guy's Ice Cream, which makes wonderful natural ice cream. People can tour down through Cowichan Bay and have our fine wines and fine local foods. It is the kind of rich diversity that this kind of grape growing has added to our community.

It is very important to bring that kind of reality to this kind of technical piece of legislation that we are talking about right now. In March a well-known B.C. broadcaster, Terry David Mulligan, publicly lugged 12 bottles from B.C., Washington State and Ontario, as well as some B.C. beer, across the Alberta boundary to draw attention to what he says was an antiquated law. The host of the Tasting Room Radio show was ignored by B.C.

Further on in this article, one of my colleagues was quoted as saying, “...changes to the law are supported by B.C. wineries, who say they want to be able to grow their business by allowing residents other than British Columbians to directly buy from them, and by members of a national vintners group”.

I certainly am hearing some widespread support from our local wineries for this piece of legislation and I know many people in this House would benefit if I were able to bring a bottle of wine here to Ottawa and share it with my colleagues. They would be able to understand the fine wines that we produce in the Cowichan Valley. I am sure they would be ordering them online as quickly as they could.

In his speech, the member for Brossard—La Prairie quoted some stakeholders who were in support of the piece of legislation but who also raised some cautions around it. As responsible lawmakers, it is always important that we consider a bill and review the potential impacts. However, in one quote he made in a pre-budget submission, he said:

It is not possible to determine the impact of Bill C-311 on stakeholders, such as wine producers and provincial/territorial governments, in part due to differences among the provincial and territorial liquor-related statutes and exemptions contained in those statutes. In addition, prohibitions regarding the interprovincial/interterritorial importation of wine are not enforced consistently in respect of consumers and wine producers. Wine producers are unable to ship orders directly to individuals across provincial/territorial borders; however, individuals who transport wine from one province/territory to another on their person are rarely charged with an offence.

This pre-budget submission cautions us that we need to take a look at what the different provincial rules and regulations are to ensure we are not having an unintended consequence. That is always a responsible action on our part.

The other piece that some people have raised is that when we are looking at this exemption, we should consider whether the wineries are producing their wines from grapes that are all grown in Canada. There have been some issues. Some wineries have indicated their wine was made in Canada when, in fact, the grapes are imported largely from the United States and then processed here in Canada. There have been some concerns raised about that. The member for British Columbia Southern Interior, in particular, has always spoken in favour of labelling laws so that Canadians know exactly what they are getting.

I think this is a very positive move forward. I look forward to members in this House and other Canadians being able to take advantage of the fine wines in the Cowichan Valley and I urge all members to support this bill.

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Madam Speaker, I would like to take a moment to congratulate my colleague from Okanagan—Coquihalla for his excellent work on this legislation. He has certainly been a strong advocate for his riding and the many excellent wineries and vineyards of which his constituents are so proud.

I would also like to take time to acknowledge the contributions and the hard work of the member for Kelowna—Lake Country, whose efforts have been essential to the strong progress of the bill.

As other speakers have already noted, there are many compelling reasons to support my hon. colleague's private member's bill.

I would first like to start with a short story. I am a member from British Columbia. My parents lived in Ontario and they would come out for a visit every summer. As part of their treat, and part of what they did during the summer, they explored some of the wonderful wineries around our province. We found a sparkling wine that was of particular joy to our pallets. For many years during their visits, this wine helped us celebrate births, different activities and celebrations. When they were in British Columbia, we always enjoyed this sparkling white wine.

I thought it would be nice to have this sparkling white wine when it came time to celebrate their 50th anniversary in Ontario. I did not know at the time about the Importation of Intoxicating Liquors Act. It turned out to be an absolutely impossible task to provide the sparkling white wine for this festive event. I was quite surprised to learn that.

Why was that such a challenge? It really goes back to the Importation of Intoxicating Liquors Act that dates back to the days of the temperance movement.

Unfortunately, the outdated provisions of the IILA have serious consequences for Canadian consumers and businesses. We are lagging behind our major trading partners on this important issue. The United States struck down barriers to direct consumer sales back in 2005. As long as certain provisions of the IILA stay in place, Canadian consumers will remain at a distinct disadvantage by not having access to wines from across Canada. Furthermore, this legislation intrudes into areas of provincial responsibility, an area where this government has no desire to be and does not belong. Our preference is simply to get out of the way and let the provinces go about their business in areas of their jurisdiction.

That is why the amendment only deals with the federal aspects of the prohibition-era law, which restricts the movement of wine across provincial boundaries.

Bill C-311 would ensure that provinces would maintain the ability to set policy regarding provincial exemptions on wine importation. They would be free to enhance or expand the interprovincial trade in wine as they saw fit.

There are also practical considerations related to this bill. For instance, although the IILA provides penalties for non-compliance, the law is challenging for the federal government to enforce. The proposed changes will make the IILA more relevant to the current travel practices of Canadians and will remove an unenforced section of law.

More to the point, our government's goal is to reduce, not create or maintain, barriers to provincial trade. We are working closely with our provincial and territorial counterparts to advance this goal.

However, the bill is not solely about governments' rights and responsibilities. It is fundamentally about giving consumers greater choice.

Currently, Canadians do not have easy access to made in Canada wines, which are internationally recognized as being the best in the world. Even though Canadian wines win awards around the globe, they are often not available outside the provinces in which they are produced. Liquor boards have limited space shelf and have tried to expand choice through private order programs, but they can be slow and costly. As in the case I was relaying earlier, it was just so cumbersome and burdensome that it was not worth the time and effort.

These costs are also a deterrent to the wine industry, especially small and medium-sized businesses trying to get a foothold in the marketplace. The wine industry is growing all across Canada beyond the well-known locations such as British Columbia and Ontario. Nova Scotia, Quebec, New Brunswick and Prince Edward Island are all involved in the wine-making business as they diversify their economies. These fledgling firms need our support, not government interference. Of all the arguments in favour of Bill C-311, few matter more to business people than the potential economic spinoffs of this legislation. This is particularly true in British Columbia, one of the most important wine regions in Canada.

To appreciate the importance of the sector to the provincial economy, let me provide a broad overview of the industry and members will see how much is at stake.

The wine industry in British Columbia is one of the fastest growing agri-food sectors. In 1988, B.C. was home to just 14 wineries. Today it boasts almost 200 wineries, 710 vineyards, producing 60 different varieties of grapes.

Or put another way, British Columbia now has 9,100 acres under vine, up from just 1,000 acres planted in 1989. People will find crops in all five wine growing regions of the province including the Okanagan, Similkameen and Fraser Valley as well as Vancouver Island and the Gulf Islands. In fact, I am proud to say that the wine industry is also of growing importance in my riding of Kamloops—Thompson—Cariboo.

Tourism across the province greatly benefits from the promotion of B.C.'s wine sector and it provides added value to visitors from around the world. Events such as Sun Peaks winter wine festival serve to cross promote our excellent regional wine as well as other attractions available in the region.

To translate these numbers into production volumes, one-third of Canada's grapes are grown in the province. The value of these crops is $40 million annually.

Let us extrapolate those to jobs in the province. The swelling ranks of people employed in both growing and harvesting the crops, hosting festivals and visitors and other related industries is extensive. Everything from festival planning to wine barrel production revolve around B.C. wineries.

Along with the growth in the sector has come exceptional skill. In 2010, B.C.'s maturing wine industry won over 1,600 medals in competitions around the globe. The province is especially recognized for its outstanding dessert wines.

This success is attracting global attention. According to Sotheby's International Realty Canada, people are coming from all over the world to see B.C.'s wine success story for themselves. It cites the examples of the Okanagan Valley, which is increasingly attracting international visits to its growing wine tourism region as well as its spectacular lake and scenery. It is worth noting that the Okanagan Valley has been named a Frommer's Top Travel Destination, a prestigious global ranking.

In addition to boutique wineries, tours and festivals, upscale restaurants, championship golf courses and luxury hotels, all cater to wine tourists. Many of these individuals fall in love with the idea of having their own vineyard. As a reflection of this interest, Sotheby's has created a distinct Vineyard Collection to market wine-related properties, drawing prospective buyers from as far afield as China, Italy and Germany.

A further spinoff of this interest and attention is a growing export market. Demand for high quality B.C. wines internationally has led to a nearly 300% increase in exports to Asia since 2008. Similarly, Canadians are free to purchase imported wines from other countries. How ironic that we cannot have access to these quality products grown right in our own backyard.

Even if Canadians buy wines on site when visiting wineries in other provinces, they are not permitted by the IILA to bring those purchases back home with them. Yet they can bring foreign wines through the border when they travel outside the country.

Consumers of domestic wines should not be shortchanged by the outdated Importation of Intoxicating Liquors Act, a problem that this private member's bill will finally address. For the first time in nearly a century, it will be possible for wine producers to sell their products openly and freely into other provinces in keeping with provincial laws. Unlike the 1920s, they have access to modern technologies like the Internet that make such sales simple and cost-effective. At the click of a mouse, even the most discerning wine palate could be satisfied with an award winning wine produced by Canadian vintners.

I call on all members to lend their support to this worthy and long overdue legislative change. Canada's wine makers are counting on it.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Madam Speaker, I am pleased to be part of the debate on this private member's bill, Bill C-311.

I wish to congratulate my colleague from Okanagan—Coquihalla, a riding in the beautiful province of British Columbia, on this very sensible bill. I am pleased that all the parties in the House seem to agree that it is a good thing to do.

I also want to congratulate my colleague from Kings—Hants for being the seconder of this bill and having spoken on behalf of the Liberal Party in support of it.

I represent a riding in British Columbia that has a large wine industry.

The wine industry is of growing importance in my province.

We have heard from members who have spoken to this bill that the current law makes no sense. We are dealing with a law that dates from 1928, the Importation of Intoxicating Liquors Act, which was passed more than 80 years ago. This law was brought into force following the lifting of prohibition on alcohol. Some of the elements of the law at that time were overly restrictive because there was no clarity as to how the use and sale of alcohol would proceed following the period of prohibition.

What happens under that law established 80 years ago is that people visiting a vineyard in the province of British Columbia who come from another province in Canada would be able to taste wine, buy a bottle or two and consume it in B.C. However, they would not be able to take any home or order any to have sent home. This makes no sense from many perspectives, one of which is the trade barrier that it implies.

We are one nation. We are a united nation. We are a nation of Canadians who are united in many ways. One way to unify us is to reduce barriers to trade, to increase the prosperity of small businesses and their workforces. When there is a trade barrier that does nothing to protect people, it is important that we look at those laws, update them and change them. That is exactly what Bill C-311 is all about. It is time to change that law.

The changes proposed are widely supported. I know some of my colleagues have been speaking about that. It is a change that is supported by Canadian consumers who enjoy agri-tourism, visiting vineyards and going on wine tours. For example, the circle tours which have been developed in British Columbia are an important tourist product. People from other countries and provinces are invited. Some drive through the interior of British Columbia, one of the most spectacular parts of Canada, and through the Okanagan. They stop at wineries, enjoy high-quality meals, see the magnificent art on the walls, go on tours to see how wine is made and enjoy the products. It makes no sense whatsoever that if tourists visiting a winery come from south of the border, for example, they are able to have wine shipped to them, but if they come from Alberta, Nova Scotia or Quebec, they are not able to do that without breaking the law.

The law is actually quite strict. There is a $200 maximum penalty for a first offence. For a second offence, the penalty is between $200 and $1,000 or imprisonment of three to six months for the default of payment. I know some in the House might think that more and longer prison sentences are a good thing, but we all agree that for bringing wine from one province to another, it is completely ridiculous. This penalty actually goes up to between 6 and 12 months for each offence after the second offence. This a very out-of-date law.

Some concerns have been raised about the provinces' responsibilities in that regard. Will the federal government be acting in an area of provincial jurisdiction? I would like to say that that is not the case will Bill C-311, because it allows the provinces to set their own limits regarding the quantity of alcohol and bottles of wine that can be transported between provinces. This means that if a province does not want to import any wine and wants to stop all such imports, it can set the maximum amount at zero. Thus, the quantity or existence of this interprovincial exchange remains in the hands of the provinces.

Who is for this? It is very strongly supported by the vintners, of course, as well as the business community and even the provinces. I note that the solicitor general of British Columbia was publicly considering taking steps to reduce the effects of this antiquated law that made it an offence to take wine across a provincial boundary.

According to the vintners, the proposed amendments are widely supported by the Canadian wine industry. They are pleased to be able to facilitate consumer choice in wine. It is good for small business, for tourism and for people who love to sample wine from other parts of the country and bring it back to share with their families, friends and neighbours.

Having recently been on an economic tour of the interior of British Columbia, I noted that some of the rural communities that were struggling to develop their economies after a downturn in their logging industry. The local provision of jobs through logging are turning to agri-tourism. The vineyards and wineries are a high quality example of agri-tourism in British Columbia. In fact, our wineries are among the best in the world. We have a solid reputation for award winning wines. We want people to not only come and travel throughout British Columbia and bring their tourist dollars and leave them with the small businesses, the hotels, the restaurants and wineries, but we want them to be able to take some of that product home with them, or order that product.

Small and medium-sized businesses are the bulk of the wine industry. Almost all of Canada's wineries are small businesses. This is a very important part of rural economy and it is growing. The number of Canadian grape wineries has increased by roughly 300% to more than 400 wineries. British Columbia, of course, is one of Canada's wine centres and gives the other provinces a run for their money in terms of awards and recognition.

These are small businesses and our small and medium-sized business sector in Canada is incredibly important in terms of job creation, innovation and recycling money in the Canadian economy. Small and medium-sized enterprises employ two-thirds of the private sector workforce, overall. The wineries are an important segment of this.

In British Columbia, the B.C. wineries are happy to see this bill brought forward, so are wine lovers across Canada who can continue to appreciate and share with their friends the bounty that our vineyards produce.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Madam Speaker, I am pleased to speak today in support of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

Over the past years, as our former agriculture critic, I have been working with the Canadian Vintners Association, CVA, on behalf of wineries in my riding and right across the country to get some movement on this important issue.

At the request of local vineyards and the CVA, I have written a number of letters to the Minister of Agriculture and Agri-Food on this issue. For example, on September 21, 2010, I wrote the following letter to the minister:

Please find attached copies of letters that I have received from Mr. Tim Martiniuk, General Manager of Stoneboat Vineyards in Oliver, BC and Mr. Dan Pazkowski, President of the Canadian Vintners Association. These letters outline the need to modify the Importation of Intoxicating Liquors Act (IILA) to allow Canadian consumers more flexibility when purchasing wine at local wineries.

I concluded my letter by saying:

On behalf of our BC wineries I would like to thank you for the efforts you have already undertaken with the Provinces to improve the accessibility of our excellent wine among Canadians. I encourage you to explore other federal options that will facilitate a workable solution. Please be assured that you can count on my support on any initiatives that will advance this issue.

Yesterday I met with Mr. Pazkowski, as well as with Mr. Luke Harford, vice-president of the CVA, on another important matter that concerns our Canadian wine industry, that of the 21.2% excise duty that is paid on all wines sold in Canada that do not come under the VQA or Canadian-grown label. What this means is that Canadian blended wine producers pay an extra 10.78¢ per litre of excise duty which is hurting their industry. I will be following up with the minister on this issue.

As a result of yesterday's meeting, Mr. Pazkowski, at my request, has sent me the Canadian Vintners Association talking points on Bill C-311, hot off the press, which I would like to share with the House in the time remaining.

The first question that is often asked is:

Why is this important to Canadian producers?

According to the association, and I agree, this change would:

Facilitate better choice for Canadian consumers so that more Canadians can enjoy the full range of great Canadian wines.

Ensure that Canadians who have visited wine producing areas and tasted the products can continue to get the products they have enjoyed as tourists if the wine is not available at local liquor boards.

Help Canadian producers increase their market share at a time when imported wine products are increasing their portion of the market and dominating liquor board listings.

Will this undermine the current system of provincial liquor authorities?

A personal exemption is NOT intended to undermine or destroy the current system of liquor boards. Despite the best of intentions and the support of liquor boards in producing jurisdictions for the Canadian wine industry, liquor boards are not able to carry the full range of Canadian wines, due to supply requirements, space restrictions, etc.

Allowing a limited amount of 100% Canadian wines to be supplied directly to Canadian consumers from wine producers or to transport wine across provincial borders would represent a very small percentage of total wine sales. A personal exemption of 12-24 cases per year per adult consumer is not going to undermine the liquor board system.

For small wineries, these sales could represent an important revenue and profit stream they would not otherwise receive. The products likely to be traded are small volume but higher value wines which are not available in liquor boards and are of interest to premium wine consumers. Higher profits by wineries are shared with governments in the form of higher taxes.

Who would participate in an electronic direct delivery of wine across provincial borders if a personal exemption was put into place?

Such a system would respond to the desires of a “select group” of wine connoisseurs/consumers who want variety, quality and regional wines. This select consumer group has a shopping strategy and is willing to:

pay the transportation fee

order a set minimum quantity (e.g., 6-12 bottles)

order more expensive wines at a price point of at least $15 per bottle

consider both online and retail purchases

Yet another question that is often asked is:

How much 100% Canadian wines would be sold under such a system?

It is difficult to accurately measure the volume of wine sales from wineries that would be sold to tourists and wine enthusiasts. We anticipate that Canadian tourists are currently purchasing wine while on vacation at wineries and transporting this wine across provincial boundaries, without knowing they are violating the IILA.

US data shows that Direct Sales represents approximately 2% of total production in the US, of which approximately 1% is DCT shipments (tasting room delivery, internet, phone, wine club).

Based on the US model, approximately 1% of total 100% Canadian wine sales would take advantage of direct sales which could represent approximately 27,500 cases per year and would be drawn from wines that are not available at a local liquor stores via tasting room deliveries, internet, phone or winery wine club purchases.

This would also stimulate greater interest in retail sales at both wineries and liquor boards, resulting in greater market access across Canada and greater tax revenues and sales for both wineries and liquor boards.

The next question that is asked is:

Do Liquor Boards have a Meaningful Minimum Personal Exemption

According to the Vintners Association:

Liquor Boards have steadfastly opposed any amendments to the IILA to facilitate interprovincial trade in Canadian wine, even though total 100% Canadian wine sales across Canada represent a mere 6% of total wine sales.

With growing consumer pressure, liquor boards have further attempted to circumvent proposed amendments to the IILA by recently introducing small volume personal exemption limits.

For example, in Ontario the LCBO Board of Directors recently adopted a policy permitting Ontario residents of legal drinking age to transport 9 Litres of wine (equivalent to one case of 12 bottles) on their person from another Canadian province or territories, as long as it is for personal consumption. Other provinces have lower personal exemption limits [for example] Newfoundland (1.14 Litres) and PEI (2 litres) etc.

The Vintners Association would like to make two important points:

(1) Provincial personal exemptions are restricted to wine transported on your person, and do not permit the use of winery wine clubs, internet, phone, etc. This restricts the use of modern technology and limits the opportunity for Canadian consumers to access wines unless they travel to BC, Nova Scotia [or other provinces] which does not happen often in a country the size of Canada. Alternatively, you have the option to use the slow and expensive liquor board private order program.

(2) Provincial personal exemptions (e.g., the LCBO policy) are technically illegal since it contravenes IILA Section 3(1) that all alcohol entering a province be purchased by or on behalf of the Crown and Section (5) that anyone who contravenes the IILA is liable to penalties on summary conviction.

To ensure that liquor boards treat the issue seriously, it is important that Bill C-311 include a reasonable quantity. Industry fears that leaving the quantity to the provinces will provide limited benefits to Canadian consumers and would fail to address the spirit of Bill C-311.

I will continue with another question that is posed in this document, which is:

Are Provincial Private Order Programs effective?

The answer is:

Many liquor boards have introduced private ordering programs for wines that are not available at their provincial stores. This system requires consumers to request that liquor boards facilitate their communication with wineries, pay a premium for this service, and wait as much as 12 times longer for receipt.

In conclusion, I think Bill C-311 is a reasonable compromise. I would like to thank my colleague from Okanagan—Coquihalla for introducing this bill.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Mr. Speaker, I am very pleased to have the opportunity to continue to speak to Bill C-311, brought forward by my colleague from the riding of Okanagan—Coquihalla who is doing great work serving his constituents.

The amendment contained in Bill C-311 is clearly long overdue. There are also clear advantages to adopting it. For example, this progressive amendment to the legislation would reduce red tape by lowering the regulatory burden on the wine industry. This is a priority for our government. We are determined to help businesses and entrepreneurs succeed, keeping taxes low, investing in projects of national importance, and maintaining Canada's brand as one of the best places in the world to invest.

Consistent with our government's commitments, this long-awaited reform would reduce barriers to internal trade. This anachronistic aspect of the Importation of Intoxicating Liquors Act is out of step with global trends to liberalize internal trade. Once adopted, this amendment would remove an irritating federal obstacle to trade.

Bill C-311 sends a strong signal that Ottawa is getting out of the way on an issue that is squarely within provincial jurisdiction. The federal government does not have the authority or means to stop the interprovincial movement of goods at provincial borders. The IILA merely serves as an umbrella under which the provinces and territories exercise their authority to control the importation of wine products into their jurisdictions.

Provincial and territorial governments administer a system of licences and permits to distribute, transport, detail and use alcohol products. They would be free to develop or amend their own legislation, should they so choose, to enhance or expand the interprovincial trade in wine. For instance, some provinces and territories designate communities as being dry or impose community-controlled restrictions on the purchase of alcohol. Nothing in Bill C-311 precludes them from continuing to do so.

Most crucial, this legislation would respond to the needs of the business community in an industry currently being held back from achieving its full potential. Individual wineries, most particularly those in British Columbia and in my home province of Ontario, along with the Canadian Vintners Association, have repeatedly requested permission for more liberalized domestic access to their products. As one example, according to local media reports, Vineland Estates in Ontario receives at least 100 requests for its products from consumers in other provinces every month, a need it is currently unable to satisfy because to do so is illegal. Being free to sell wine directly to consumers would enable Canada's winemakers to expand their operations and create jobs in local communities. Bill C-311 takes us closer to making this happen.

Canadians have been calling for an exemption to the IILA to remove the federal obstacle for individuals to purchase wine directly from wineries anywhere in Canada for their personal consumption. They should be able to buy a favourite wine made in a neighbouring province without worrying about breaking the law. These calls have the backing of numerous municipal and provincial chambers of commerce in wine producing regions across the country as well as the Canadian Chamber of Commerce because they know the impact this could have on jobs and economic growth. Members of the opposition have also endorsed these necessary amendments, no doubt because their own constituents are also telling them it is time to act.

In an era when it is possible to buy products from just about anywhere on the planet, via the Internet, and have them shipped in a matter of days to people's homes, it is almost unbelievable that Canadian consumers are currently contravening federal laws if they attempt to purchase wine from their favourite out of province winery. We can take an important step toward putting an end to this restrictive practice by voting today to adopt the amendment contained in Bill C-311.

I strongly encourage—

The House resumed from October 20 consideration of the motion that Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), be read the second time and referred to a committee.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I have two quick questions because I'm going to run out of time.

Mr. Sparling, you had talked about improving productivity. That's something that I think is very interesting. Perhaps you could just comment on that briefly.

Mr. Paszkowski, my colleague had talked to you about Bill C-311, Mr. Albas's bill. What would be the actual net benefit? Do you have an idea of where that would leave you if this bill were passed? Is there a dollar figure that you could see and put a tangible number on?

Who wants to go first?

Perhaps, Mr. Paszkowski, you could go first.

[Dan Paszkowski, President and Chief Executive Officer, Canadian Vintners Association]

Thank you, Mr. Chair. Thank you, members of the committee.

My name is Dan Paszkowski, and I'm the president of the Canadian Vintners Association, better known as the CVA in this presentation. Sitting next to me is Luke Hartford, the vice-president of the CVA.

We are the national association of the Canadian wine industry. We represent the wineries across Canada responsible for more than 90% of annual wine production. Our members are engaged in the entire wine value chain, from grape growing and farm management to harvesting, production, bottling, research, retail sales, and tourism.

Our industry is a growing one. It is changing amid a global revolution in grape growing, wine production, wine marketing, and consumer tastes. Our members have made significant long-term investments that are inherently tied to terroir or the land. Newly planted vineyards need up to four years to provide a harvest, and unlike other manufacturing businesses, once planted, the vineyard cannot simply get up and move to another country. We are very much tied to the land.

Today, we have more than 400 grape-based wineries producing in six provinces across Canada. We support over 1,000 grape growers and roughly 11,500 jobs.

Canada is a fast-growing wine market, with total annual sales of approximately 460 million litres, valued at almost $6 billion. Since 2003, per capita consumption has grown by almost 40% to 16.2 litres, about 20 bottles per person, which makes Canada an extremely attractive market for any country to sell their wine products in.

We have a growing and sophisticated wine consumer base, but imported wines dominate with 68% of total wine sales. This foreign domination is the exact reverse of most other major wine-producing countries, such as Spain, where domestic wines account for 96% of market share, and Italy, where they account for 94%.

The future of the Canadian wine industry depends, in large part, on continuously adapting to changing domestic and global markets. Twenty years ago, in response to foreign competition and the signing of the Canada–U.S. Free Trade Agreement, Canadian winemakers made significant innovations, including a switch to higher quality grapes, the establishment of VQA standards, the development of wine country tourism, and the promotion of icewine.

Increased foreign competition transformed the Canadian wine industry and enhanced the competitiveness of the Canadian grape and wine sector. This did not come without a cost. Today, foreign competition has reduced Canadian wine sales from 49% in 1987, before free trade, to its current level of 32%. It remains an industry goal to once again command 50% of total wine sales by the year 2020.

While innovation will continue to be a critical driver behind our success, our immediate challenge is to improve access to both domestic and international markets, grow our consumer base, and provide our winemakers with the same oenological tools and approval processes to match our international competition.

A key priority of GF2 must be the unrestricted interprovincial movement of goods. Interprovincial barriers to wine trade are alive and strong in Canada. It remains illegal to deliver or ship wine across provincial borders due to federal legislation known as the Importation of Intoxicating Liquors Act, a law passed in 1928.

Canadian consumers increasingly expect and want to purchase wines in the manner of their choosing, whether at liquor boards, winery tasting rooms, wine clubs, or over the Internet. Today’s consumer wants convenience and a greater choice of Canadian wines.

Wine savvy consumers are part of a rapidly growing interactive social network, and social media offers wineries an effective tool for achieving our e-commerce goals. Yet our ability to effectively use these modern marketing tools is largely restricted by the federal law.

It was not the intent 80 years ago for federal law to discourage interprovincial trade, impede Canada’s competitiveness, and restrict market growth. Yet the unfortunate consequence is that an out-of-province Canadian tourist cannot visit a winery and take wine home with him or herself. Furthermore, out-of-province consumers cannot order our wines directly from their homes.

It is vital that the IILA be sufficiently amended, as proposed in Bill C-311, with the goal of establishing a reasonable personal exemption to permit Canadian wine consumers to order and have wine shipped directly to their residence from an out-of-province winery. Consumer interest and exposure to Canadian wines would stimulate new sales and tourism opportunities and create increased opportunities for jobs, economic growth, and additional federal and provincial tax revenues.

The Canadian wine industry has benefited from Agriculture and Agri-Food Canada’s AgriMarketing program, known as AMP, and its predecessors dating back to 2000. AMP activities have supported participation in prestigious international wine competitions, development of promotional materials, and attracted respective influencers, including foreign wine writers and sommeliers, to experience Canada’s wine and wine regions.

AMP has also supported the Canadian wine industry’s engagement in international trade policy discussions. These efforts have helped support harmonization of national and international standards, elimination of barriers to trade, and promoted the sharing of information to ensure science-based decision-making. In addition, AMP has helped improve market share in traditional markets, expand exports into emerging markets, promote Canadian wines in Canadian embassies and consulates around the world, and provided brand exposure to elevate our international sales profile.

In light of fierce global competition, GF2 should continue to support AMP through a well-funded, timely, and business friendly program that is cognizant of the reality of business operations.

Foreign wine producers around the world are financially supported by their national and regional governments, for both export and domestic marketing programs, to support wine sales and economic development. For example, EU wine reform dedicated $1.2 billion to support the marketing of wine over the period 2008 to 2012. Our foreign competitors are using government funding for their marketing efforts in Canada. Annually, wine producing nations hold country-specific wine tastings in major centres across Canada to build brand and country exposure. These successful ventures have resulted in market share growth and the development of relationships with key retailers, namely the liquor boards.

To help the Canadian wine industry cultivate a stronger internal market, we recommend that the federal government officially proclaim the week leading up to Thanksgiving Day as National Wine and Food Week. This would provide the impetus for farm producers, industry associations, communities, retailers, restaurants, and all Canadians to “go local” and take notice of the excellent wine and food that farm businesses across Canada have to offer. This will also open the door for new domestic sales opportunities and generate greater demand for home-grown products, with significant economic spinoffs for local businesses.

Proclamation of a national wine and food week should be supported by federal sponsorship of domestic market development activities. For example, past programs, such as Canada à la carte, were very successful in promoting Canadian wine and food products across the country. Alternatively, adding a domestic component to the AMP would also support the same objective.

Finally, Canada has strengthened its relationship with key international partners and continues to harmonize technical requirements and standards. Additives and processing aids are a critical part of the Canadian wine industry’s future competitiveness, and Growing Forward 2 should seek opportunities to revise the current approval processes to allow for international equivalences based on sound science. This is particularly true for wine additives or processing aids that are not approved for use by Canadian winemakers but are permitted for use in foreign wines sold in Canada under existing oenological practices agreements.

The federal government needs to identify and track where Canada is behind other wine producing countries and dedicate resources toward greater harmonization in support of competitiveness and jobs.

Thank you. I look forward to your questions.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Madam Speaker, it is with a great deal of pleasure that I rise in the House today to speak to Bill C-311, an act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

I will begin by recognizing the work of my colleague from Kelowna—Lake Country on this file and congratulate him on his very important work. Members will know he has done a great deal to move this file forward and I am sure we will continue to work together to address this issue in order to help Canadians improve their ability to have greater control over the wine they choose and help an important Canadian industry to grow and prosper.

As background, for the benefit of all members, the Importation of Intoxicating Liquors Act, or the IILA, controls the importation of intoxicating liquors into Canada and between provinces, as we have been discussing. The Canada Revenue Agency is responsible for the IILA, as it interacts with the Excise Act and the Excise Act 2001. Canada Border Services Agency administers the IILA at the border. However, neither agency administers or enforces the IILA in respect of interprovincial transactions.

Since 1928, the act has legally restricted the movement of wine across provincial borders. While this may have responded to the needs of the day, Canada did not even have a wine industry at the time. However, today fantastic wineries can be found in provinces from coast to coast. Vineyards are a fast growing and increasingly important part of our agricultural sector and they could be growing even faster.

Many of Canada's innovative vintners have earned worldwide recognition for their outstanding products. Indeed, Canadian wines are frequently the recipients of international prizes. These award-winning wines are in demand around the world.

Despite this progress and success, Canadian wineries find themselves in contravention of federal law if they respond to requests for their products from consumers in neighbouring provinces. That is because the IILA makes it a crime for consumers to purchase wine directly from vintners beyond their provincial borders.

Not only does the legislation penalize consumers by limiting choice and their access to Canadian wine products, it also hurts the culinary and wine tourism industry, an important sector of our economy in my home province of Ontario and in beautiful British Columbia due to the increasingly popular tourist wine regions in these areas. Wine tasting tours in areas like the Niagara region of Ontario and the Okanagan or Fraser Valley in the B.C. Interior are tremendously popular with domestic tourists and visitors from around the globe.

More important, this outdated aspect of the legislation limits wineries' sales of their products across Canada. This is particularly the case for small and medium-sized wineries that are just getting their business off the ground. Many wineries complain that the process of applying to provincial liquor boards to have their products put on the store shelves can be lengthy and costly. The last thing these vintners need is 83-year-old legislation that hinders job creation and stifles economic growth.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Madam Speaker, I am very happy to rise to speak in favour of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), an act from 1928.

As a bit of a digression, there was a time in 1928 when these kinds of prohibitions created some opportunities in the area in which I live. The ship named Malahat was built in Victoria in 1917. It was a five-masted schooner nearly 80 metres long, which carried 60,000 cases of rum down to California. It would sit in international waters and then have small boats run through the American prohibition. We are talking about a law that dates from an era that is obviously a long time ago and a very different situation, a law which no longer serves a useful purpose and in fact inhibits the development of many small wineries around the country.

On Vancouver Island there are now 26 wineries operating. In order for those wineries to operate, they buy lots of things locally. They buy all of their agricultural equipment, fertilizers and marketing goods and they employ people to build websites. It is a very important link to a lot of small businesses in my riding in particular and around Vancouver Island.

It is also very important, as many have mentioned, to the tourism industry. People who come to visit my riding could start at Starling Lane Winery on West Saanich Road, cross over to Salt Spring Island, as my friend from Saanich—Gulf Islands said, cross back to Cherry Point Vineyards in Cobble Hill, Yellowpoint Vineyard in Ladysmith, Blue Grouse Vineyards & Winery in Duncan and come to the largest winery on Vancouver Island, Averill Creek Vineyards in Duncan. All of these are family-owned enterprises and small businesses.

As many have already mentioned, the peculiar thing is if people from British Columbia have a designated driver and sample the wines at each of the vineyards, they can take a case with them or order one shipped to their homes. However, people from Alberta or Quebec cannot have wine shipped to them or take it with them as they drive across the country. This is completely non-productive, which is the nicest word I can think of to use, for economic growth and development in all of these regions, particularly for small businesses that face the challenge of high costs these days.

One thing that is particularly difficult for wineries on Vancouver Island and in the Okanagan are the increasing land costs. When a small winery is established, wants to expand and buy more land, it is very difficult, so it needs to make use of whatever revenue sources it can to develop its business further. If wineries were able to run online businesses and ship across the country, it would be important revenue generation, which would add very little in terms of costs to their operations. It might be the difference between wineries being able to survive as a family-supporting business and not being able to survive in the future. The damage the existence of this law has done is quite serious for small businesses and may become more serious as time goes on.

In contrast to the hon. member for Okanagan—Coquihalla who is not a wine drinker, I will join the others who have confessed to being wine drinkers. My partner and I like to go on wine tours in the Okanagan. We have done it on several occasions, taking turns being the designated driver each day and stuffing the car full of bottles when we drive home. However, if we lived in Alberta, we could not stuff the car full of bottles.

On our last tour, some people I know who run a winery, one of my favourites, Road 13 in Oliver, asked me if they could ship me a case. I replied that as a newly-elected MP I would love to have a case shipped to me so I could entertain members with fine B.C. wine. They said that I could not do that. They said that they could not sell it to me, I could not advertise for them or promote the industry because of the existing very archaic law.

We drove across the country this summer through the Okanagan. If we had managed to stuff wine under the seats of our car, or put a few in the back seat next to the dogs and delivered it here, I would be unable to invite members for a drink later for two reasons: first, there might not be any left; and second, I would not have done that because it would be illegal for me to do so.

I make light of this because it is an absurd situation we are in, where small businesses that are doing very well in developing very high quality wines cannot market those to other Canadians in other provinces.

I look forward to this going to committee. I look forward to the debate on it. I look forward to the day when I can invite members around to my office to sample some of the great wines from British Columbia, but that will not be tonight.

[Scott Brison, Liberal, Kings—Hants, NS]

Madam Speaker, it is a pleasure to rise today to speak to Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use). As the law stands today, it is illegal to purchase wine from a winery in one province and then bring it home.

In Canada a consumer cannot purchase a bottle of wine in one province and then transport it across a provincial border. One cannot purchase wine online or have it sent by mail if the wine is coming from a different province. I use these examples because simply laying out the facts as the law stands now, it seems difficult for people to believe we have a law in place that is this nonsensical and anachronistic.

The reality is it is easier today for a consumer to import wine from another country than to import wine from another province. There are more trade barriers between New Brunswick and Nova Scotia than there are between Canada and Chile, as an example. This ridiculous situation needs to be addressed and this legislation is a big help in addressing it.

As an example, if people from New Brunswick make the very short trip to visit a winery in the Annapolis Valley of Nova Scotia, they cannot even bring wine home with them. It is against the law. There are both federal and provincial laws that make this activity illegal. Most of these rules date back to the prohibition era. They are outdated and they needlessly cost Canadian jobs. We need to get rid of them.

That is why I am proud not only to support but also to second Bill C-311. The bill would get rid of the federal rule against importing wine from one province to another as long as that wine would be for personal use and not for commercial purposes. It would amend Canada's Importation of Intoxicating Liquors Act to create an exception for personal use. I would argue that we ought to go further to include the restaurant industry and commercial use as well. That is a discussion for another day and also engagement with provincial governments.

The legislation would not get rid of the problem entirely. Most provinces will still not allow wine to be imported from another province, but Bill C-311 sends the right signal and provides some federal leadership by removing the federal obstacle. That is a step in the right direction.

Thankfully, the Province of Ontario is already moving in that direction on the provincial side. This past summer the LCBO changed its rules to allow individuals to bring with them up to nine litres of wine from another province. It makes me wonder why they would choose nine litres when wine comes in cases, of course. However, sometimes the bureaucracy does things that we cannot understand. It is like buying cars that never seem to take whole containers of antifreeze. Anyway, that is another discussion.

In any case, it is a step in the right direction. I commend the Ontario government for taking that step. We need every province to make these kinds of changes.

The member for York Centre referred to the Liberal Party's aversion to free trade. In fact, the Liberal Party, with the exception of one election in 1988, has always been the party of freer trade. In fact, if we look from an economic perspective, liberalized trade is something that is key to the Liberal Party and core to our beliefs on the economy.

In order to keep Canada's wine industry, including our wineries in Nova Scotia competitive, it is essential that we break down these barriers on the federal side and on the provincial side. In terms of Nova Scotia's wine industry, when I was first elected 14 years ago, there was one winery operating in my riding of Kings—Hants. As of 2010, there are now 17 farm wineries and 30 grape growers operating vineyards. It is a $10 million a year industry.

The hon. member referred to the fact that today the Annapolis Valley in Nova Scotia is perhaps where the B.C. industry in the Okanagan Valley was 20 years ago. That is quite right. It would be helpful for us to look at what lessons we can learn from what has occurred in the Okanagan Valley and in the Niagara region. We should also look at the genesis of the wine industry in the Napa Valley, the Sonomo Valley and central coast. We should be looking at these and determining best practice on a local level.

In any case, the success of these wineries in my riding has created huge spinoffs for restaurants and tourism, and the whole foodie-type tourism which is growing. It is a remarkably valuable resource and an enhancement to the quality of life for people who live in the Annapolis Valley of Nova Scotia.

In my riding of Kings--Hants we can now boast nine wineries: L'Acadie Vineyards in Gaspereau, operated by Bruce Ewert; Avondale Sky Winery in Newport Landing, operated by Ben Swetnam; Benjamin Bridge Vineyards in Gaspereau, operated by Gerry McConnell and his family; Blomidon Estate Winery in Canning, managed by Greg Benjamin; Domaine De Grand Pré in Grand Pré, managed by Hanspeter Stutz, winemaker Jurg Stutz; Gaspereau Vineyards in Gaspereau, managed by Dan Burns, winemaker, Gina Haverstock; Luckett Vineyards in Wolfville, operated by that great Nova Scotian entrepreneur Pete Luckett; Muir Murray Estate Winery outside of Wolfville, operated by Dr. Jonathan Murray; and Sainte-Famille Wines in Falmouth, operated by Suzanne Corkum.

In terms of recognition, people are taking notice of the wines in Nova Scotia. Many of these wineries are now winning awards. As an example, at last year's Canadian Wine Awards, Bruce Ewert of L'Acadie Vineyards received a gold medal for his 2007 Prestige Brut. Nova Scotia is excited to host this year's awards in November 2011.

A recent Globe and Mail article on Benjamin Bridge Brut Reserve was titled, “Surprise! One of Canada's best wines is from Nova Scotia”.

It said:

I’ll say it straight. One of the best Canadian wines I’ve tasted comes from Nova Scotia. I’m only surprised that it didn’t come from the Champagne region of France. It’s called Benjamin Bridge Brut Reserve...

The sparkling wine industry is evolving successfully in Nova Scotia as well as the ice wine industry. The success is also enhancing our orchard industry and value-added industry related to the orchards and the emerging cider industry. There are a lot of spinoffs.

This is probably a bad sign for any industry, when politicians start to enter it, but a couple of years ago we planted a vineyard on our property on the shores of the Minas Basin. We have a wonderful south-facing slope on the shores of the Minas Basin. We planted L'Acadie vines and we are intending on expanding that this year. In my line of work, it is always good to have a backup plan.

The wineries in our region are drawing tourists from throughout the country and around the world. Tourists are touring the wineries, eating at our restaurants, staying at the inns, the bed and breakfasts, and hotels, supporting the local economy.

What is really crazy is that in many cases people from other parts of Canada, after sampling the excellent local wines, cannot buy a case to take it home with them. That is nuts.

I remember in the 1990s, I lived in New York and travelled throughout the U.S. doing business. I remember spending a weekend in Napa Valley. We bought cases of wine and had them shipped back to us in New York. It was great. That is the way it should be. It is not only good for the local economy, but it is civilized.

The idea that we cannot transport wine across a provincial border is so nonsensical and damaging to the development and the evolution of businesses, wineries and restaurants. It makes no sense whatsoever.

In terms of the future growth of Nova Scotia wine, more and more Nova Scotians are discovering and supporting local wineries. In fact, last year the Nova Scotia Liquor Commission sold $109 million of worth of wine. Of that, almost 6% of that was local wine from Nova Scotia.

Even in terms of our own province, it is growing. The key, the way to grow our markets, is to actually expand so that we can sell wine across Canada.

Nova Scotia has a population of less than a million people, so our market is too small to sustain the kind of growth that we are able to achieve in our industry. We need to remove these needless interprovincial trade barriers and open up our markets so that local businesses can create jobs and grow the economy.

I know I am delving into areas of provincial jurisdiction which is always a mistake for a federal politician, but nevertheless.

I am a citizen of Nova Scotia. I did not relinquish my citizenship to become a federal politician. As such, I do have opinions and one of those opinions is that neither the provincial liquor commission in Nova Scotia nor the provincial government need be in the liquor business to begin with. Last year the liquor commission made $230 million and was run by bureaucrats. Imagine how much it would be worth if it were run by retailers who understood the markets. We could privatize that and take $3 billion or $4 billion off the provincial debt.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I rise today to say that I am in favour of sending this bill to be studied in committee. The question is not so much about governments losing revenue as it is about helping small business and small producers. My colleague was right to say that many provinces, Quebec included, have small wineries, and this bill would allow them to increase production as well as trade between provinces.

In this case, it should be made clear that the bill is specifically about individuals. It says:

...the importation of wine from a province by an individual, if the individual brings the wine or causes it to be brought into another province, in quantities and as permitted by the laws of the latter province, for his or her personal consumption, and not for resale or other commercial use.

It is important to examine this in committee in order to understand the potential repercussions of this bill in terms of loss of revenues for a government. Certain points need to be studied. For instance, since the Province of Quebec does not allow individuals to import wine and there is no exemption for this, that province could suffer losses. This risk exists for other provinces, too. On the other hand, this bill would stimulate the economy, which is good. It would help small businesses, especially at a time when economic uncertainty is at our door. This bill could really be beneficial for small businesses that really need help right now.

Thus, it is important to look at all aspects affected by this bill. I know many people support it, like my colleague. At first glance, we can see the benefits this bill could have in terms of job creation and assistance to small wine producers.

However, I would like to add that, at this stage, it is difficult to really assess its impact. One study said:

It is not possible to determine the impact of Bill C-311 on stakeholders, such as wine producers and provincial/territorial governments, in part due to differences among the provincial and territorial liquor-related statutes and exemptions contained in those statutes. In addition, prohibitions regarding the interprovincial/interterritorial importation of wine are not enforced consistently in respect of consumers and wine producers. Wine producers are unable to ship orders directly to individuals across provincial/territorial borders; however, individuals who transport wine from one province/territory to another on their person are rarely charged with an offence.

That is from a report submitted as part of the prebudget consultations for budget 2011.

The activity that would appear to be most affected by the bill would be the direct shipment of wine to individuals across provincial borders.

For wine producers, a beneficial effect of the bill would likely be an expanded market for Canadian wineries, resulting in higher sales, more jobs, and increased investment in winery equipment and infrastructure; the provinces would thereby benefit from additional income tax revenue.

There are obviously benefits in this regard. The bill would allow more production and more trade between the provinces. Wine lovers, especially individuals, would be able to go to another province and bring back wine to their province without necessarily breaking the law. However, what is important once again is to look at the limits imposed by the provinces. The report also states:

However, any increase in wine demand could be limited by any personal exemption provided by the provinces or territories, which for most is no more than 1.5 litres of wine.

There already are some restrictions and exemptions. For example, in Ontario, there is a nine-litre exemption. Thus, someone who buys wine outside the province can bring back up to nine litres.

For provinces and territories that have a personal consumption exemption, the effect of Bill C-311 on provincial/territorial revenues could be zero, assuming that individuals would not exceed the amounts allowed in the exemption. If individuals order amounts that exceed the personal consumption exemptions, then provincial/territorial liquor authorities would decide how to enforce the exemption amounts.

For provinces/territorial that do not have an exemption, the primary impact of the bill could be a decrease in provincial/territorial revenues in the event that individuals who would normally order wine from other provinces/territorial through their provincial/territorial liquor board, commission or corporation would perhaps instead order directly from the winery.

Some of the repercussions must be analyzed. Let us take a look at what happened in the United States.

A U.S.study examining interstate wine shipments found that, when a similar prohibition on interstate alcohol importations was lifted in the United States in 2005, interstate sales of wine increased by 11.5% between 2005 and 2008; however, wine sales that did not have tax deducted by either the shipping state or the receiving state, whether due to wine producers not charging taxes consistently or due to tax evasion by consumers, increased by 9.6% over the period.

These data could suggest that a loss of tax revenue might occur with increased accessibility to direct wine shipments in Canada. However, other sources have argued that wine sales directly to individuals in Canada represent an estimated 1% of the Vintners Quality Alliance 100% Canadian wine sales; thus, the bill's impact on liquor board, commission or corporation revenues could be limited.

That comes from the House of Commons Standing Committee on Finance pre-budget consultation in 2011.

The issue here is to really look at what the impacts are and what the benefit will be, obviously for the wine producers but also for all the other producers or makers who are related to wine as well. My colleague did mention that there are a lot of people involved in that industry, so it could be beneficial.

I think Canadians will strongly benefit from a greater selection of wine, especially from the smaller wineries across Canada. We need to really look at the options and what this will bring to the economy.

In terms of analyzing, as I mentioned before, it is really difficult for us to know exactly how loss will occur due to the loss of revenue for provincial governments. We should sit down and look at it. That is why it is important for the Standing Committee on Finance to look at all the options and all the benefits that would bring.

There are some issues with the bill, but when we look at the benefits, especially right now in terms of the economy, helping our wineries, especially the small wineries, could be very beneficial. It is something we have to look at.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Madam Speaker, there is no question that Bill C-311, if passed, would result in increased wine sales. Currently all of Canada's major wine-producing regions have the HST that is applicable on the sale of wine, regardless of where that wine is sold across Canada. Increased sales would mean more HST revenue both to the federal and respective provincial governments. There is also HST on shipping so, again, we would see a net taxation gain for many of the provinces that have these wineries.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I would like to thank the hon. member for his speech.

I have a question for him about Bill C-311. Currently, certain governments that do not use an exemption collect revenue on wine imported from other provinces. I would like my colleague to give me some reassurance.

Could the member explain to me if this bill would prevent a provincial government from collecting revenue from a wine imported by an individual from another province? Basically, would the province that wishes to continue to get revenue from those be allowed to do that?

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

moved that Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), be read the second time and referred to a committee.

Madam Speaker, it is with a tremendous amount of pleasure that I rise in the House today to kick off the first hour of debate at second reading of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

I would first like to recognize the work of my colleague from Kelowna—Lake Country. Members will know he has done a great deal to move this important issue forward and to help an important Canadian industry grow and prosper.

I would like to share with all members of the House why I believe this bill is important.

Twenty years ago in the province of British Columbia there were roughly 15 wineries. Today the number is closer to 200 growing close to 10,000 acres of grapes, with a crop yield in excess of $40 million annually. More importantly, this has created an industry that provides thousands of jobs, even spinoff industries, such as, barrel making, stainless steel tanks and fabrication, laboratories, bottle and label making, marketing, and agri-tourism.

The economic benefits of the wine industry are far reaching. It is a clean industry that does not pollute our skies or rivers and is something at which many families can prosper, including first nation communities. That is correct. In the riding of British Columbia Southern Interior is Canada's first aboriginal owned winery. It makes great wines. In my riding of Okanagan—Coquihalla, much like the ridings of Kelowna—Lake Country and British Columbia Southern Interior, we know first-hand the significant value and economic benefits of the wine industry.

Here is something very exciting. Nova Scotia is an emerging wine region. In fact, I have learned that Nova Scotia has discovered a great varietal called the l'Acadie grape which is well suited to the local climate and produces great wine. Today, as an emerging wine region, there are roughly 15 wineries in Nova Scotia, exactly where British Columbia was 20 years ago. Let us not forget that today B.C. has close to 200 wineries. That is great growth and prosperity for the B.C. wine industry and holds great potential for the province of Nova Scotia.

It does not end there. I have also learned that in the province of Quebec there are now five different wine regions and within those five regions are some 50 Quebec wineries that also produce some great wine. In Ontario the number grows to close to 140 wineries with roughly 16,000 acres planted in grapes. In fact, there is now a winery in every province of this great country. That is why we must not overlook the importance of supporting the Canadian wine industry, but there is a challenge.

Some 83 years ago during the prohibition era, a law was passed to make it illegal for everyday citizens to transport or ship wine across provincial borders. It is, for all intents and purposes, an interprovincial trade barrier, meaning that a winery in Quebec cannot legally send a bottle of wine to a customer in Alberta. Here is where it gets more redundant. That same Quebec winery that cannot legally send a bottle of wine to Alberta can send that exact same bottle of wine to Texas. Many small Canadian wineries can access markets outside our borders more easily than they can inside our own great country.

Canadians have proven that they can produce some of the best wine in the world and yet they cannot sell the wine directly to consumers in other Canadian provinces. We, as members of Parliament, have an opportunity to work together to change that by supporting Bill C-311.

Imagine if cars built in Ontario could not be sold in British Columbia. What if prized Nova Scotia lobster could not be sent directly to all households across Canada? This is the reality for many of the small Canadian wine producers. Those in the wine industry have been battling this unjust prohibition era legislation for many years, but collectively they have been the underdog. For a small family winery, as the vast majority of them are, without sufficient volume and financial resources, selling through large-scale provincial liquor distribution is very costly. That is why this prohibition era legislation is particularly harmful, because it restricts any marketplace alternative.

I am not a wine drinker, but I do appreciate that all across Canada from coast to coast we have families who work very hard to grow grapes. They invest their life savings into their vineyards and turn those grapes into a value-added commodity that helps drive our regional economies and puts people to work. However, an 83-year-old prohibition law essentially denies these same Canadian wine producers the ability to access the Canadian marketplace like every other Canadian producer can.

I will talk about how the bill hopes to rectify this situation, but first I will provide some background for the benefit of members.

The Importation of Intoxicating Liquors Act controls the importation of intoxicating liquors into Canada and between provinces. Ultimately, the Canada Revenue Agency is responsible for the Importation of Intoxicating Liquors Act, typically referred to as the IILA. At the border, this is administered by the Canada Border Services Agency. However, neither the CRA nor the CBSA administers or enforces the IILA in respect of interprovincial transactions.

Currently, the IILA dictates that all imports of wine from one province into another must be made solely by the provincial liquor board or a private corporation designated by that province. This prevents wine to be brought in or to be shipped by an individual from one province to another. This is why Canada Post and other shipping companies will not allow a citizen or a winery to directly send wine across a provincial territory. It is also why it is illegal for citizens to transport wine in person across provincial borders. That means if someone travels to Gatineau and purchases wine, the moment it is brought back to Ottawa, the person has broken a federal law according to the IILA.

Bill C-311 would amend the IILA to allow Canadians to purchase wine while visiting another province and then bring that wine back home into their own province. Bill C-311 would also amend the IILA to allow for domestic wineries to market and sell their products directly to consumers from other regions of the country.

To be clear, the purpose of the exemption is solely for personal use and not for commercial purposes. The personal exemption quantity limit is established individually by each province in question. To date, both Alberta and Ontario have developed a personal exemption policy for a provincial exemption definition. Other provinces have declined to develop a personal exemption on account of the IILA making the personal importation of wine illegal. That is why it is so important that we take action to create this personal exemption.

I would like to take a moment to share with the House that this proposal has generated a great deal of support from across Canada. In fact, even today I received a letter from Federal Express Canada in support of this bill. The Canadian Vintners Association and the Canadian Chamber of Commerce are in support of a personal exemption for the delivery of wine directly to consumers from outside their home province.

When reading the newspapers recently, I was pleased to learn that the Liberal finance and revenue critic, the member for Kings—Hants, supports the idea of reforming the IILA. The leader of the B.C. NDP agrees and last week stated that the B.C. NDP is advocating for an industry that employs a lot of people, is of huge value and is a cultural symbol in the Okanagan and a lot of other regions as well. I would also note that our NDP colleague, the member for British Columbia Southern Interior, has also made it clear to the Minister of Agriculture and Agri-Food via correspondence that he would like to see changes to the IILA on behalf of his constituents.

Before I close I would like to share with the House the reality of a small family-run winery in my riding.

A typical 15-acre vineyard can yield roughly 40 tonnes of grapes per year. Those 40 tonnes of grapes, all going well, would then produce just 2,500 cases of wine. To sell through the large-scale liquor distribution system is very costly for a small winery. In my province, a small family winery is potentially looking at costs of 60% to sell through the liquor distribution branch, LDB, bureaucracy. That means of the 2,500 cases of wine, the first 1,500 cases are sacrificed solely to pay for the overhead of selling through a government corporate structure. That leaves just 1,000 cases of wine for a small family winery to try to pay the bills, provide jobs, pay taxes and make a living.

The reality for small wineries is that they cannot afford those kinds of costs. That is why opening up the Canadian marketplace is of such critical importance to the wine industry.

This week a small winery owner told me that this IILA exemption could increase his business by a potential 10%. That means more capital would be available for him to invest into expanding his winery. When I asked the winery owner what he would do with that added revenue, he was very quick to respond. He needs to build another 2,500 square foot building. That new building would house some new stainless steel fermentation tanks that would also need to be purchased. That creates jobs and supports our economy.

I would like to thank my colleagues for listening to my comments today. I am hopeful they will join me in supporting this bill and the Canadian wine industry.

[The Chair, Conservative, Harold Albrecht]

Are there questions or concerns? Seeing none, Bill C-311 is considered votable.

Next is Bill C-278.

[The Chair, Conservative, Harold Albrecht]

Do we have any comments or questions? Seeing none, Bill C-217 is considered votable.

Bill C-311 is next.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Mr. Speaker, earlier this week I introduced my private member's bill calling for an end to wine prohibition in Canada. Bill C-311, if passed by my colleagues, will allow Canadian wineries to sell to Canadians all across this great country, something that the 83-year old prohibition era Importation of Intoxicating Liquors Act currently makes illegal.

After I introduced my bill the phone started to ring: CBC Halifax, Niagara This Week, the St. Catharine's Standard and others.

It turns out Nova Scotia is an emerging wine region with roughly 15 wineries. It can produce great wines in places like the Annapolis Valley and elsewhere.

Twenty years ago in British Columbia we had roughly 15 wineries. Today in B.C. we have close to 200. Think about the potential for Nova Scotia.

Ontario Niagara region has close to 16,000 acres planted in grapes. In the province of Quebec there are now close to 50 wineries.

In fact, there are now wineries in every province across Canada.

Ending wine prohibition will help family-owned wineries all across Canada. I hope my colleagues will support Bill C-311.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

moved for leave to introduce Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

Mr. Speaker, in the year 1928 a prohibition era law was passed and to this day makes it illegal to bring a bottle of wine from one province to another.

Canadians are a law-abiding people who like to follow the law and many share a passion for our great Canadian wines. This passion for wine, along with the hard work of many Canadian families, have resulted in wineries now being located in every province across our great nation.

My bill proposes an amendment to the Importation of Intoxicating Liquors Act. This amendment would create a personal exemption from the act. This personal exemption would allow individuals to either directly import, send, take, or transport or cause to be imported, sent, taken or transported wine only for personal consumption. This is not for resale or for other commercial use in quantities as permitted by the province in question.

I would like to recognize the member for Kelowna—Lake Country for his ongoing work on this subject. I would also like to thank the many small wineries in my riding of Okanagan—Coquihalla for their invaluable assistance in bringing this matter forward.

(Motions deemed adopted, bill read the first time and printed)