Good morning. My name is John Kelsall. Unfortunately, the Honourable Jake Epp, our chair of the board, is unable to be with us today.
As we all know, Canada enjoys an enviable reputation as a prosperous and compassionate nation. We are mindful of our responsibilities in helping those less fortunate around the world to meet the most basic of human needs. HPIC is honoured to be part of the solution that Canada presents to some of the world's most daunting humanitarian challenges. We hope our proposal will result in a clear commitment to the creation of incentives that will radically increase our capacity to meet critical health needs in the developing world.
Our particular contribution is in the area of health care. HPIC supports hundreds of Canadian physicians and non-governmental organizations that work tirelessly in the developing world by providing high-quality medicines, vaccines, and supplies. These are generously donated by Canadian companies and assembled for shipment in our own facilities. Some of our major programs are operated on behalf of the Government of Canada, including our response to natural and man-made disasters.
At the invitation of the WHO, the World Health Organization, we met in Geneva with officials of the WHO to determine the most effective ways of providing medical aid. We're working to develop new guidelines for coordinated and effective emergency responses. HPIC has played a significant role in providing needed medicines, vaccines, and supplies in places such as Indonesia, Pakistan, and Sri Lanka. More recently, again in collaboration with the WHO, we were significant participants in the early response to medical needs in Lebanon.
The overall need, however, is greater than our capacity to provide medicines through philanthropic programs alone. While we readily acknowledge the Canadian health care industry's wonderful support, we know all too well the extent of suffering that occurs in many countries. The tax action we propose will substantially expand Canada's capacity to respond appropriately to a growing need from nations bearing the burden of poverty and disease. Some of the largest Canadian NGOs are currently sourcing their products in the United States and Europe, because the Canadian policy framework is less favourable to product donations. Often, developing countries are obliged to procure low-cost products of inferior, if not inadequate, quality. This is of great concern to the WHO.
In many ways, Canada's economy is tied to those of developing and in-crisis countries, including those in Africa and elsewhere. Our government actively supports their development to reduce poverty and to contribute to a more secure, equitable, and prosperous world. This includes measures to enable access to essential medicines and medical supplies.
To add gift-in-kind donations to the mix of solutions would provide evidence at home of the public and private sector partnerships the government seeks to foster. Therefore, HPIC's proposal invites the government to include, in its next budget, donation incentives that would encourage the private sector to provide, and if necessary manufacture, products that are most urgently required, perhaps including ARVs needed to combat the scourge of HIV/AIDS. It must be noted that there is currently no economic incentive for companies to give gift-in-kind donations out of inventory.
The strongest benefit of our proposal, we believe, is that it encourages companies to donate humanitarian aid for use in countries targeted by government programs, while reducing the real cost of aid underwritten by the government. Rather than spending money to purchase goods, government would incur a substantially lower cost by combining the cost of the incentive with CIDA funding for handling and shipping, where appropriate. The purchasing power of actual cash donations to buy product is minimal in comparison to the much larger volumes of goods that can be obtained for charitable purposes through product donations. The application of this incentive to medicines donated by the Canadian health care industry, which is the sector with which we are most familiar, would have the effect of generating $20 in product for every dollar of tax incentive based on wholesale values.
We are aware that such a change to tax policy for the purpose of increasing the donation of pharmaceutical products would create a demand for other products to be included. It is reasonable that the government would be concerned about the cost of such an incentive. Nevertheless, our position is that the government should consider for inclusion only those products that support the government's own priority programs in the developing world. Moreover, we suggest that consideration only be given to products that are easily valued and that are essential for saving lives.
This initiative would take the form of a cost-effective incentive in addition to the current provision, which allows a donor company to deduct the cost base of inventories but does not serve as an incentive to donate goods to charity. In the United States, there is a program of tax incentives; it is working very well and is adding huge value to that country's aid programs. As a result, proportionally speaking, the U.S. ships much more donated aid than does Canada.
I would just wind up by saying that this our fourth appearance, Mr. Chairman, before the finance committee. On each previous occasion, our proposal received positive comments from all parties and committee members. We're saying that it's time to act.