Agriculture Committee on Dec. 7th, 2023

[Galen G. Weston]

We have data. They have data. Our data is pretty compelling on this front. We have laid it out in very specific terms. I don't believe that others have done it in quite the same way. We believe our data is right.

It takes a bit of courage to stand in the way of something like this. As I said, we're not trying to stop it. We're just trying to find ways to modify it to reduce risk. I've had outreach from multiple manufacturers that have said explicitly that they applaud the courage and that they agree this code has the potential to increase food prices.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you.

I would like to go back to my earlier intervention with you on food bank usage. I asked this question of Mr. Medline and Mr. Gebara.

The fact is that we have firm evidence that many of your employees are struggling to make ends meet, and some are using food banks. I think it's very relevant when we're discussing food price inflation to also look at the examples that various companies are setting.

For this company, do you have the number of—or any interest in, as the CEO—the number of your employees who are having to access food banks, because this directly speaks to your ability to pay a living wage?

[Galen G. Weston]

Food prices are the most important reason that we're here today, and I can tell you that Loblaw believes wholeheartedly in fair pay. We offer some of the most competitive wages in the industry.

The fact remains that a large portion of our colleague base is part-time, and the reason it's part-time is that shoppers don't shop all the way throughout the day. They shop in the evening and they shop on the weekends, so we need to have people working in the evenings and working on the weekends. They need to be part-time shifts and part-time jobs.

Part-time jobs tend to have wage rates that are closer to minimum wage. As you know, we have a minimum wage system across the provinces that is now indexed to inflation. Since 2019, the minimum wage has increased over 20%, and our pay in our unionized labour force, which is the substantive portion of our employees, has increased commensurately with that minimum wage increase.

There's always opportunity, but we need to make sure that we're a productive and efficient organization, and we have to do it while making sure that we're paying, absolutely, the right wages for the industry. If you take our average wage as an enterprise, it's over $19 an hour, and that is regarded, as a general statement, in line with a living wage.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Weston.

Thank you, Mr. MacGregor.

Colleagues, we're getting close to the time, but Mr. Weston has taken this time to be here. I don't want to not use the full time, so we can extend for 15 minutes and I'm going to.

Ms. Rood, you go ahead, and then we'll have Ms. Taylor Roy. I'll have a few questions for Mr. Weston at the end.

Go ahead, Ms. Rood, for five minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Chair.

Thank you, Mr. Weston, for actually being here in person. It's nice to have you sitting at the table to talk to one on one.

On the fines and fees, to clarify my colleague's point, could you table the total for 2023 of the fines and fees paid? I'm just going to throw that out there.

Earlier, you talked about front-of-pack labelling and how it's going to cost $8 billion. You also said that the government's new P2 plastics ban on food packaging will cost $6 billion.

Will those costs be passed on to consumers and increase the price of food? Will they lead to food waste and impact food availability?

[Galen G. Weston]

I don't think I said that the front-of-pack labelling would cost $8 billion. I don't have a number for what that would cost. On the P2, it's $6 billion, and yes, all of these costs are cost pressures that are likely to end up being paid by consumers.

I would just remind the committee again that the reason for that is that, if you have an increase on 80% in the cost of your business model and your profit is 2% or 3%, you are forced into a situation whereby you have to pass through a lot of these cost increases.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Ultimately, consumers would pay more for fresh food if this plastics ban were to go ahead.

[Galen G. Weston]

I believe so. Yes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

In your opinion, is the imposed timeline that the Liberal government has on this plastic ban a realistic goal?

[Galen G. Weston]

Loblaw, as I mentioned before, leads the way in plastic packaging reduction, and we work with a lot of manufacturers on innovation in this space. We think it will be very difficult to achieve the current timelines as laid out.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

The government has threatened grocers with an excess profits tax if food prices don't stabilize by the beginning of 2024. Today's food price report says that food inflation won't stabilize, and an average family will pay $700 more next year.

Will a grocer tax lower food prices for Canadians?

[Galen G. Weston]

No, I don't believe it will.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

When you were here last spring before this committee, I brought to your attention some of the unfair practices toward and fines that your company was charging our farmers and producers, specifically. At that time, you said you would review those practices.

Has your company made any changes to the way it's treating farmers and small suppliers?

[Galen G. Weston]

We certainly have.

The introduction of the small-supplier program is probably the most public indication of that. The feedback we've received from small suppliers and manufacturers has been extremely positive, and we're continuing to look for ways to do that. We are in the midst of a review of our compliance charges to make sure that they are fair and justifiable, and this is how I know our fees are down nearly 50% this year. I think that's the number. We apply very transparent and stringent standards in terms of when those charges apply.

We believe there's an opportunity to provide more transparency on these so that manufacturers understand and they don't come as a surprise. We think it's the surprise that is the biggest issue here, and if we can resolve that, a lot of this frustration will likely go away.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you so much.

I'm going to cede the rest of my time to Mr. Lehoux.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Ms. Rood.

Mr. Weston, I'm going to continue along the same line of questioning as Ms. Rood.

The current numbers show that suppliers paid more than $5 billion in fines. Can you tell us how you establish the terms and conditions of your agreements with suppliers? Can you give us those details?

You will appreciate that a code of conduct would have major repercussions in that regard. Five billion dollars is a lot of money.

How do you set those penalties? Can you tell us about the model you follow, Mr. Weston?

[Galen G. Weston]

I'll certainly take that away. It might very well be helpful to share some of that.

I don't know where the $5-billion number comes from in terms of this. It's certainly not our number. As I've said before, in terms of our compliance charges, they are down substantially over the last couple of years. As vendor service levels continue to improve, we expect that number to continue to decline.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Weston.

Thank you, Mr. Lehoux.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you.

[The Chair, Liberal, Kody Blois]

We'll go to Ms. Taylor Roy for five minutes.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you, Mr. Chair.

Thank you, Mr. Weston, for being here in person again. I appreciate it. There are so many questions I could ask you.

One thing I want to talk about is the measures that our government is taking to address long-term issues in our country. These are things around, for example, the P2 plastics.

Obviously, on fighting climate change, as you mentioned, the increased cost of groceries has been driven a great deal.... In fact, we heard last time that one of the stores expects orange juice to go up by 38% because of the climate impacts on crops in different countries.

I know it's the job of business to focus on short-term profit and shareholder value. It's the job of government to think about larger issues and not necessarily the short term.

At the environment committee, on which I sit right now, we are studying clean water. There is a lot of concern about microplastics in the water and the effect of those on human health. Of course, that has a huge impact on health care costs over the long term. I appreciate the fact that you are working on solutions to this as a major user of plastics.

We have to balance putting in ambitious goals to motivate people and ask people to make changes, with looking at the impacts on companies. You said you didn't think the timeline of two and a half years was reasonable to come up with a solution. You've been working on this for a while. The industry has known about our ambition and our desire to protect Canadians' health by making these changes.

Why do you think there has not been a solution, and when do you see that coming?

[Galen G. Weston]

It's an excellent question.

I would say that we are a family business. Our family has been in this business for four generations, so we think about the long term as well. It's why we're so ambitious in our net-zero carbon targets. It's why I co-chair a global effort for the retailers in the manufacturing industry to find ways to reduce plastic waste across the industry.

We have over two trillion dollars' worth of sales in manufacturing and retail committed to what we call the “golden design rules” for reducing plastic waste. We're big advocates of extended producer responsibility, which has been innovated here in Canada. We believe that system design change is ultimately going to lead to the most effective results.

We have to work really closely with the environment ministries at the provincial level and the federal level to make sure that we are putting in policies that are achievable and are actually going to deliver a constructive benefit.

This P2 is a great ambition, but it's not easy to execute. In fact, I think I would say it's impossible to execute in this time frame.

How much longer do we need? I don't know the answer. However I can tell you this: I'm really encouraged by the level of momentum that the industry has globally on this subject, so I think we're going to get it.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

I'd love to hear, if you can find out from the people working on this in your company, some feedback on what's being done exactly and when you think it is.

The other area I wanted to talk about was the price on pollution program. As you said, you're committed to a net-zero carbon target. Clearly, you believe there is a climate crisis, as we do. The price on pollution is often referred to by the opposition as the reason for high food prices. However, there are many countries where there is no price on pollution and food prices are higher than they are here. Their food inflation has been higher.

This is a market-based approach with the climate action incentive rebate we give to Canadians. Most Canadians get back more than they pay. In fact, the most recent studies show that 93% of households making under $50,000 get back more than they pay. It is an efficient way to try to address emissions, as you're doing with your net-zero target.

What is your opinion on programs such as this, whereby we're trying to change consumer behaviour where there are alternatives and using a market-based tool like this to fight climate change?

[The Chair, Liberal, Kody Blois]

You have about 30 seconds, Mr. Weston.

[Galen G. Weston]

Look, I absolutely think market-based solutions are an essential part of how to change economic behaviour and consumer behaviour over time. We're in a difficult spot because we're now trying to manage the cost of living against long-term incentives to change behaviour. I think we have to continue to work on ways to do both.