Finance Committee on Sept. 17th, 2009

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. McCallum.

Monsieur Roy.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

I understand the problem full well, Mr. Pellerin, but I'm not sure that everyone tuning in this morning understood the difference between Canadian and US regulations respecting SRM. Can you enlighten us further?

Apparently, Canadian slaughterhouses are not doing as well financially as US slaughterhouses because of the Canadian regulatory regime. Are we talking about a 5% or 10% loss of potential profits, or something less than that?

[Laurent Pellerin]

As far as the differences between Canadian and US regulations are concerned, the Americans have a so-called short list. They struggled with BSE just like Canada did, but the problem was much milder for them. Could it be that they encounter fewer problems because they don't go looking for them? Opinion is divided on that subject.

Canada's program proved to be very effective when it came to identifying cases, which were all concentrated in the same region, that is in several animal feed plants. This is one area on which we need to focus our research to avoid a recurrence of the problem in the future.

The Canadian Food Inspection Agency decided to use the long list of all bone parts or nerves removed from animal carcasses to deal with the BSE crisis. This list is from three to five times more costly to administer that the US list. Rendering by-products from slaughterhouses cannot be used as widely in Canada as they can in the United States, and thus their value is lower.

I cannot tell you in percentage terms what this represents in lost profits for Canadian slaughterhouses versus US slaughterhouses. However, I can tell you that according to a study by the Canadian Meat Council released yesterday in Calgary, Canadian slaughterhouses spend about $30 million more a year disposing of risk material.

Slaughterhouses have not been making a profit for a number of years now. It is an extremely difficult market. Canadian slaughterhouses in particular have not seen any profits. That explains why the slaughterhouses that started up after the 2003 BSE crisis have all closed their doors. None has been able to weather the crisis. Even the large multinational corporations, most of which are US owned, have cut back on their slaughtering operations. Livestock are being shipped to US slaughterhouses instead of being slaughtered here in Canada, because Canadian regulations can be by-passed. The products still end up back here in Canada. Significant quantities of USDA beef are imported with the short list.

Canadian regulations are somewhat inconsistent and stringent. Our animals are slaughtered elsewhere, while we continue to buy meat from other countries with less stringent regulations. Our actions need to be consistent. I'm very serious and extremely nervous about the situation. I meet with producers from across Canada and let me tell you that we have lost the critical mass to continue operating large slaughterhouses in Canada properly. By losing this critical mass, we have become less competitive and volumes are going elsewhere. When a business cannot compete, there is only one way to resolve the situation and that is by shutting down operations. That is what slaughterhouses and producers have opted to do. The number of producers in Canada is declining. Not only is the volume of production declining, but the number of producers is declining as well. Part of the reason for this is that the average age of producers is going up, as was mentioned earlier. However we are also losing producers who are in their forties. They are not getting into the business of livestock production. The same is true of people in their thirties and their twenties. If no action is taken, the average age of producers will not be 60, but more like 65 or 68 years of age.

In Western Canada, some of the farmers attending meetings of grain producers are over 70 years of age. There are no young people coming along to take their place. I see Mr. Menzies nodding in agreement. He knows firsthand the situation in these regions. He is not 70 years old, but he knows what it's like in these regions where many older farmers can't find anyone to take over their farming operations for them.

I want it to be clearly understood that two types of production are at risk in the Canadian livestock market. Over the past 18 months, hog production in Canada is down 5 million out of a total of 31 million hogs. This dramatic decline in production threatens our slaughterhouses because critical mass has disappeared.

The issue has been settled in the Maritime provinces. There are simply no more slaughterhouses. Hog production has almost disappeared, while cattle production is marginal. There are no longer any working slaughterhouses in Quebec. The Cargill slaughterhouse in Ontario has cut back its operations. Slaughterhouses in Manitoba and Saskatchewan are in dire straits. Alberta is cutting back a great deal on its shipments of live animals to the United States.

We need to sound the alarm, and quickly.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Roy.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

Mr. Pellerin, is the situation the same in all regions of Canada, in so far as finding people to take up the business of farming?

[Laurent Pellerin]

Are you talking about slaughterhouses?

[The Vice-Chair, Liberal, Massimo Pacetti]

I'm talking about all sectors.

[Laurent Pellerin]

As far as livestock is concerned, the situation is the same in the east, in Central Canada and out west. Hog production has declined pretty much everywhere in Canada. The industry has fared somewhat better in Quebec because it has received more support over the last several years. However, in 2009, production has declined substantially, while the number of producers facing financial problems has increased.

The bulk of cattle production is in Alberta. This is also where we had the critical mass of processing-exporting slaughterhouses. They have been seriously affected and are concerned about the future of this production. Elsewhere in Canada, in the Maritime provinces, cattle and hog production are disappearing completely. Cattle production is marginal in Quebec. Quebeckers are consumers of beef, but they export it from Western Canada and from other countries. Ontario, which had a solid cattle production base, is experiencing a dramatic decline in production.

The rural fabric that is small and medium-sized cattle and veal producers is disintegrating. Similar crises occurred in the past when cows changed owners and farming operations consolidated. Today, cows are being sent to slaughter. Livestock numbers are down everywhere in Canada. This problem needs to be resolved quickly.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Pellerin.

Mr. Dechert.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Thank you, ladies and gentlemen, for your presentations and suggestions.

I have a couple of questions for Mr. Blakely from the AFL-CIO.

I was encouraged, sir, to hear you say that there are jobs available across Canada. I take your point about mobility of labour. I think lots of things can be done to enhance that.

I wonder if your organization could provide to our committee the lists of those jobs, the names of the employers, the contact information, and that sort of thing so that we can publicize that. I'd love to be able to tell some of my constituents who are looking for work where to find those jobs. I'm very encouraged to hear about that.

With respect to your comments about infrastructure, I just want you to know that in the city of Mississauga, where I live, there are a number of very major infrastructure projects going on, including the rebuilding of the city hall square, which is a $43 million project; the construction of a new building at the University of Toronto Mississauga, a $70 million project; and the construction of two parking structures at Erindale and Cooksville GO stations, about $31 million each. I believe these projects employ your members. They're under construction today.

All of the money for those projects has been transferred, I understand, by the Government of Canada to the Province of Ontario and is on its way to the City of Mississauga. Mayor Hazel McCallion and her staff have been working extremely hard to get these projects under construction. Try driving down any major street in Mississauga today and you'll find traffic delays due to construction. Things are getting done.

But I appreciate your raising that.

I'm pleased to see that my colleague Mr. McCallum is here today. He may be interested to know that his successor at the Royal Bank of Canada, chief economist Craig Wright, said yesterday that the economy is growing again, in part due to the aggressive policy actions on behalf of the government, which are taking effect. In fact, he went on to cite improved markets, low borrowing rates, and fiscal stimulus as the keys to the turnaround.

So it's interesting to note that these things are happening. They're taking place. We'll continue to make sure that projects get built as quickly as possible. There are lots of large-scale construction projects, such as water pumping stations in Peel region, water treatment facilities, and a new vehicle maintenance garage for the Peel Regional Police. These are large projects that are under construction in Mississauga and Peel region today. I hope your members will be encouraged by that.

I was a little concerned to hear your criticisms, frankly, of the home renovation tax credit. I mean, it's wildly popular, so much so that even the NDP and the Bloc are apparently going to support it tomorrow.

It has created jobs in my riding. As I've gone across my riding over the summer, I have noted many projects under construction in homes across the riding. I've talked to hundreds of entrepreneurs in the home renovation business, including roofers, people who install doors and windows, heating and air-conditioning contractors, driveway paving companies, and those who put in lawn irrigation systems and home security systems. They all tell me that they're run off their feet, frankly, by the work they're doing, which is largely due to that tax credit. They are promoting it to their customers.

Now, more would be nice. I don't think any consumer would complain about that. Obviously there's a fiscal balance that we have to maintain.

I'm wondering if you have any statistics to back up your claim that it's not creating jobs, because it's certainly different from what has been told to me and what I have seen, with my own eyes, going on in my riding in the city of Mississauga.

[Robert Blakely]

Construction is a business that has upwards of 350,000 contractors in it, most of whom employ a small number of people. Each one of those businesses has a capacity.

A large national construction company like Black & McDonald isn't going to be doing a home renovation. That's generally done by smaller contractors.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Fair enough, but they are working on the Mississauga city hall project, for example.

[Robert Blakely]

I agree; Black & McDonald, of course. That's their business. The smaller--

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

I understand that the president of the Ontario Home Builders' Association, Frank Giannone, recently said that the Ontario home renovation business and the home builder associations are witnessing positive trends and increasing consumer interest as a result of the federal government's home renovation tax credit. I believe those large new home construction projects, many of which go on in Mississauga and Peel region, do employ members of your unions.

[Robert Blakely]

Yes, just about all of them.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

And housing starts are up in our region.

So it is good news, and obviously we want to continue to support that. Our support for new home purchases has been helpful in driving business to those new home projects.

[Robert Blakely]

I think you are taking my comments somewhat out of context. The context is basically that very small construction projects aren't done by contractors; they're done by the entrepreneur who has a roll of wire or some pipe in the back of his pickup truck.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

The entrepreneurs do employ people. Small business employs more people in Canada than any other form of business.

[Robert Blakely]

I agree.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

We certainly want to support them as well as everybody else.

[Robert Blakely]

In our business, the small entrepreneur is the company most likely to do his business in the underground economy.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

In order to take advantage of the tax credit, they need to have a receipt.

[The Vice-Chair, Liberal, Massimo Pacetti]

We have to go because we're over the time. Thank you, Mr. Dechert. We can have this discussion afterwards.

One of the panel members didn't show up from 9 o'clock to 10:30, so we're going to try to slot him in on the next panel and will need the extra five or ten minutes.

I want to thank all the witnesses for appearing. As usual, it has been a very interesting discussion. We're going to have a difficult time trying to make recommendations, but that's up to us. If there's any additional information, you can send it through the clerk.

The meeting is suspended.