Evidence of meeting #51 for Public Accounts in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was communities.
A video is available from Parliament.
3:55 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Thank you, Mr. Chairman.
Just in response to the comments of my colleague on the other side, has the northern food basket cost not come down? So the cost of food hasn't been going up in the north. The cost of food has actually been coming down.
4 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
According to the data we have, indeed, the cost of food has gone down. Between March 2011 and March 2014, the revised northern food basket fell by an average of 7.2%—
4 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Okay, and that includes both foods that are eligible under the nutrition north program and other food.
4 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
Yes. There are 67 items in the northern food basket—it's adjusted to be more relevant in the north—and 45 of those are eligible for subsidy and 22 are not. But it's the same as the food basket that was being tracked under the food mail program, so it allows us to compare with—
4 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Good, thank you.
Mr. Auditor General, I'd like to ask you for some clarification. In paragraph 6.19 on page 5, the second part of that paragraph, it states that the full subsidy is $1.60 per kilogram, and a partial subsidy would be five cents per kilogram. Is that a range that has been established, or is that either $1.60 or five cents?
4 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Just to make sure that I get the answer exactly right, I'll ask Mr. Wheeler to respond.
4 p.m.
Glenn Wheeler Principal, Office of the Auditor General of Canada
Mr. Chair, the example we're referring to in paragraph 6.19 refers to a number that's right on. It's $1.60 per kilogram for the full subsidy for one community, and it's five cents per kilogram for the subsidy for the other community. Those numbers don't vary.
4 p.m.
Principal, Office of the Auditor General of Canada
No. The subsidy rates vary by community.
4 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Okay.
Then you're helping me answer my question, because in paragraph 6.8, I see there's a community of Grise Fiord, Nunavut, which gets a $16 per kilogram subsidy. Is that accurate?
4 p.m.
Principal, Office of the Auditor General of Canada
Yes, it varies by community.
4 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Okay, very good. Thank you for that clarification.
Your recommendation in 6.29 talks about confirming whether or not the subsidy that is being issued through nutrition north is actually reaching the intended recipients, which would be the consumers or the end users of the products that are being purchased under the program. The last part of the recommendation says that:
...retailers must provide all the information on eligible items, including current profit margins and profit margins over time, to determine whether the retailers are passing on the full subsidy to consumers.
I believe that's important, that we can confirm the subsidy is being passed on to the consumers. That's the intent of the program.
But I'm wondering about the whole issue of transparency of profit margins by the retailers. I'm wondering if you can expand on that a little bit. I think you're working with three major retailers in the north that account for about 80% of the program volume. Would making their profit margins transparent actually compromise the competitiveness of these firms or even the integrity of the program?
4 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
In this recommendation, and I believe in the report, we're talking about making those profit margins accessible by the department. We're not asking the retailers to make any of those profit margins public or anything like that, just to make that information available to the department so it can do compliance reviews and can make sure.... Again, it's part of the information that we feel is needed to really understand whether the subsidy is in fact ending up in the price that the consumer sees on the shelf. We're not in any way asking that there be a requirement for the retailers to make those profit margins public.
4 p.m.
Conservative
Ted Falk Conservative Provencher, MB
That gives me some of the assurance I'm looking for.
I guess I'm also concerned that we are going to get to the point where we as a government are going to determine a fair profit margin or how much money a retailer should make or is entitled to make.
4 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Again, the intention of the recommendation is to make sure that it's possible to determine whether that full subsidy is showing up in that final price. As we explain in the audit, a number of different factors go into that. We feel it's not sufficient simply to say that this is the landed cost of a product, this is the subsidy amount, so therefore all the subsidy is getting passed on to the consumer, because more factors go into that pricing before it gets to the consumer.
I think it ends up being a certain reality when a government is involved in this type of a market and is doing something that affects final prices. Because of that decision to do something to affect the final prices, the government has to have the way of making sure it knows whether it's having the impact it intended to have or not. The fact that the program exists means there has to be a good way of determining whether the program is in fact doing what it was intended to do.
4:05 p.m.
NDP
4:05 p.m.
NDP
The Chair NDP David Christopherson
I can tell.
We'll move over now to Mr. Bevington.
You now have the floor, sir.
March 23rd, 2015 / 4:05 p.m.
NDP
Dennis Bevington NDP Northwest Territories, NT
Thank you, Mr. Chair.
Thank you to the witnessers for coming today; I appreciate it.
This is a very serious and important topic for northerners, people who live in isolated and remote communities where the cost of food is simply out of sight these days. That includes many of the communities that I represent in the Northwest Territories. Some of which, like Lutsel K'e, only get a five cent per kilogram subsidy even though they're far away from any road system. Others are in similar situations. Some don't receive any subsidy at all.
When this program was set up to take over from food mail, was there any consideration of the fairness to the communities when you chose simply to take the communities that were using food mail to the greatest extent and apply that across the board to all of them, even though many of them would have retailers that would be able to use this subsidy correctly, as you had put it in? Most of those communities that don't have the subsidy probably have a store that would be available. Why would you think that you could initiate a program that was not fairly and equitably cast across northern Canada? What was the rationale in the department to make a move like that when quite clearly, as Canadians and as representatives of the Government of Canada, we have to deal with people fairly and equally across this country? Why was that decision made in the fashion that you took it?
4:05 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
When we moved from food mail to nutrition north, it was very clear some communities weren't using food mail at all. The recommendation that was provided was that because some communities weren't needing it, and if you're basing it on need and fairness and you're looking at the cost of transportation as the primary consideration in what the subsidy should be, if they weren't using it then, why would they necessarily use it in the future?
We've discovered that when you make changes to any of these programs—the subsidy rate, the amount—there's a lot of interest. I think if we had made wholesale changes to the program at that point we would have had some issues. We wanted to see how it was working and developed. If you look to the future—as the Auditor General has pointed out—we need to look at how we manage it going forward.
4:05 p.m.
NDP
Dennis Bevington NDP Northwest Territories, NT
So your rationale was, if they weren't using it, then they don't get it. I think if you applied that kind of rationale to the tax system in this country as government you'd have a revolt on your hands.
How could you possibly have taken the decision that you did? Was there political pressure on you to continue the program simply with the communities that already had it?