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.

Importation of Intoxicating Liquors Act

[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.