Evidence of meeting #50 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was wine.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

3:55 p.m.

Conservative

The Chair James Rajotte

Thank you, Mr. Brison.

We'll go to Mrs. McLeod, please.

March 27th, 2012 / 3:55 p.m.

Conservative

Cathy McLeod Kamloops—Thompson—Cariboo, BC

Thank you, Mr. Chair.

It's my pleasure to ask you some questions about this very important bill.

I always like to tell a story. I live in British Columbia, and my parents live in Ontario. They used to come out every summer, and there was a particular sparkling white that was very special to them. I remember that when they were celebrating their 50th wedding anniversary, we desperately wanted to have a few bottles of it at their wedding celebration, because it was so important. It turned out to be absolutely impossible. My sister looked at bringing it in through the distribution branches. We went through many avenues to see if we could provide this sparkling white that was special to them on their 50th wedding anniversary, with no success.

I always look at that and think there has to be something wrong in Canada when there are such barriers between British Columbia and Ontario that you can't share a special bottle of champagne on a special occasion.

Certainly that helped frame my thinking. Living next to Kelowna, I recognize what a great wine country we have there. Perhaps one day I'll get to Nova Scotia and also be able to enjoy some of the up-and-coming wines that are there.

I know that FreeMyGrapes.ca calculated a very minor percentage of impact in liquor board revenue. I think it was 0.001%. I know we'll have some witnesses later, and perhaps they'll have an opportunity to address that issue. The calculations I've seen have shown impacts very minor in nature.

You mentioned the red tape commission. I was a member of that commission. If you could bring those two pieces together—how your bill fits our government's goal in terms of red tape—that would be great.

3:55 p.m.

Conservative

Dan Albas Okanagan—Coquihalla, BC

Thank you.

Through you, Mr. Chair, the IILA legislation is one of those obscure laws that leaves most Canadians I've spoken with shocked and shaking their heads in disbelief. It's almost unfathomable, when you think about it, that you can order wine from outside of Canada more easily than you can within our own country.

Canadians, first and foremost, want to support Canadians. In this case, Canadian wine is some of the best in the world, yet an 80-year-old Prohibition-era law stands in the way of that. Our government has made a commitment to support jobs and the economy, and removing interprovincial trade barriers in this case will do that exactly that.

In my region, the wine industry has expanded to custom barrel manufacturing, which I alluded to earlier, stainless steel tank fabrication, marketing aids and services, wine tourism, and more. The possibilities are endless. I'd also like to add that the Osoyoos Indian Band, one of Canada's most progressive first nations communities, also produces world-class wines. This is an industry that brings together many cultures, creates jobs, and supports agriculture in a very value-added manner.

4 p.m.

Conservative

Cathy McLeod Kamloops—Thompson—Cariboo, BC

Great. Thank you.

To get to this stage, I know that we had good support in the House, in terms of moving into committee. Again, I know it's broadly in line with our government's priority in terms of lowering trade barriers, so I wonder if you can speak a little bit to the importance of getting out of the way of an increase in internal trade and updating this clearly outdated piece of legislation.

4 p.m.

Conservative

Dan Albas Okanagan—Coquihalla, BC

I can't think of a better example. The IILA legislation was created, as I said, 80 years ago, during the Prohibition era. In all that time, it has never been enforced, not even once in eight decades. In fact, there's a legitimate question as to how the federal government could enforce this law.

However, the majority of Canadians are law-abiding people. Certainly the major shipping companies comply with this legislation, as do the vast majority of wine owners. On the one hand you have a Prohibition-era law that's over 80 years old and has never once been enforced, yet on the other hand you have economic activity being blocked because this law is a trade barrier more than anything else.

Imagine being in a business, and because a customer lives in the province next door, you're forced to refuse that sale. Canadians have collectively proven to be a very trade-savvy nation, yet when it comes to the wine industry, we do not currently allow free trade within our own country. It's almost unthinkable, were it not true.

I'm very pleased to have all parties' support on this, as this trade barrier does need to come to an end.

4 p.m.

Conservative

The Chair James Rajotte

You have 20 seconds.

4 p.m.

Conservative

Cathy McLeod Kamloops—Thompson—Cariboo, BC

Thank you.

4 p.m.

Conservative

The Chair James Rajotte

On behalf of the committee, I just wanted to clarify one thing, Mr. Albas, in relation to questions from Mr. Brison. You indicated that it may be your wish at some point to see the commercial aspect or resale addressed, but this piece of legislation deals with personal consumption only. I just wanted to clarify that.

4 p.m.

Conservative

Dan Albas Okanagan—Coquihalla, BC

Yes, it deals only with personal consumption, subject to quantities permitted by the host province or the province in question.

4 p.m.

Conservative

The Chair James Rajotte

Okay. Thanks very much for that clarification.

I want to thank you very much for your presentation and for appearing before us. You're certainly welcome to submit anything to the committee for further consideration. Our second day on this will be April 3. You're certainly welcome to stay around to hear our witnesses.

Colleagues, we will suspend for a minute, and then we'll bring our witnesses forward to the table.

Thank you again.

4 p.m.

Conservative

The Chair James Rajotte

Okay, I'll call the meeting back to order. Ladies and gentlemen, we're on a very tight timeline. I will ask all of the witnesses to take their seats, please.

We have six presentations, and then we will have the opportunity for, I believe, a couple of rounds of questions from members. I will ask my colleagues to take their seats as well, please. Thank you. Order.

We have, presenting as an individual, Mr. Hanspeter Stutz; we have the Alberta Liquor Store Association; we have the Canadian Association of Liquor Jurisdictions; we have the Canadian Vintners Association; we have the Vintage Consulting Group Incorporated; and we have the Winery Association of Nova Scotia.

As mentioned, you each have five minutes for an opening presentation, and then we will have questions from colleagues.

We will start with Mr. Stutz.

4:05 p.m.

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.

4:05 p.m.

Conservative

The Chair James Rajotte

Okay. Thank you very much for your presentation.

We'll hear from Ms. Martinez, please.

4:10 p.m.

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.

4:15 p.m.

Conservative

The Chair James Rajotte

Thank you, Ms. Martinez.

We'll hear now from Mr. Dunning, please.