Finance Committee on Oct. 18th, 2017

[The Chair, Liberal, Wayne Easter]

Thank you very much, Céline.

We'll turn to the Quebec Coalition on Weight-Related Problems, with Corinne Voyer and Clara Couturier.

[Corinne Voyer, Director, Coalition québécoise sur la problématique du poids]

Thank you.

Good morning, Mr. Chair and members of the committee.

Thank you for inviting the Coalition québécoise sur la problématique du poids, the Weight Coalition, to be part of today’s meeting.

I am accompanied by my colleague Clara Couturier, the research analyst in public policy at the Weight Coalition.

The Weight Coalition brings together more than 400 partners, organizations, health professionals, and Quebecers to demand government action in order to reduce and prevent obesity.

The latest data in the Canadian Community Health Survey are extremely troubling. Almost two out of every three adults and one of three children are either obese or overweight. Obesity increases the risks associated with 13 types of cancer; I repeat, not one type, but 13. It is also a major factor in a number of chronic illnesses, like Type 2 diabetes or cardiovascular disease. Today, it is really distressing to observe how common it is to see children suffering from high blood pressure or Type 2 diabetes.

Since the 1980s, obesity has been constantly on the rise. It is an epidemic that is really out of control and that has a major effect on our economy and on society as a whole. In 2012, it was estimated that obesity and excess weight cost $19 billion in health care, in disability, and in premature mortality in Canada. Given the progression of the problem of excess weight in the country, there is even reason to believe that the financial burden is greater still at the moment.

Up to now, this public health problem has not been taken seriously enough. It is really urgent, really necessary, for all government departments at all levels to invest in prevention and to take action to tackle the various factors that contribute to obesity. One of those factors, and it is undeniable, is the overconsumption of sugary drinks. These non-nutritional products also represents the principal source of added sugar in the diet of Canadians. Sugary drinks are clearly recognized by many scientific researchers and many health experts as a major contributing factor to obesity, to Type 2 diabetes, to cardiovascular disease, and to tooth decay and erosion. These are all major public health problems in the country.

Sugary drinks stand out from other products because the speed with which the sugar enters the system is really harmful to health. They are not essential and they occupy too great a place in the diet of Canadians, especially the young. In Canada, an average teenager drinks half a litre of sugary drinks per day, the equivalent of 10 to 13 teaspoons of sugar, in addition to the sugar in their daily diet.

It is important to point out that the term sugary drinks does not mean carbonated drinks only. It includes the so-called energy drinks, sport drinks, vitamin waters, iced tea, punches, cocktails, lemonade and flavoured coffee. The range is far from limited.

Drink consumption has moved from carbonated drinks to these other products, which, because of the marketing strategies used, are often made to appear more healthy to consumers. However, in fact, they are still simply water with sugar added.

Sugary drinks are available everywhere, in groceries, convenience stores, pharmacies, big box stores, entertainment centres, or restaurants. They are constantly sold at cut prices and they are among the least expensive products on the market. They are promoted on many different platforms. When we are thirsty, it is often easier to find a sugary drink than a water fountain.

In addition to their impact on health, their ecological footprint is devastating in terms of water consumption, transportation, and garbage.

For a number of years, the Weight Coalition has been recommending a special tax on these products and the reinvestment of that money into prevention, especially for healthy nutrition. Moreover, the Organization for Economic Cooperation and Development has recognized this tax measure as having the most potential in cost and effectiveness. The World Health Organization is also recommending that all countries enact a measure of this kind. Currently, a number of international experiments, such as in France, Mexico and Berkeley, California, are demonstrating the effectiveness of a tax on the consumption of sugary drinks. As with tobacco, this strategy that must be used in conjunction with other measures in order to improve the health of Canadians.

The desire to stimulate the Canadian economy, in which the bio-food industry is playing a role, must not come at the expense of ignoring the fact that food is not a product like any other.

Because of the economic burden attributed to obesity and to the chronic diseases that it causes, the external costs of the industry's commercial activities must be considered and recognized. The federal government is therefore responsible for overseeing the bio-food sector more closely and for making sure that the food system is used, first and foremost, so that Canadians have access to healthy and high-quality nutrition.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Corinne.

We turn now to Electric Mobility Canada.

Welcome, Ms. Guimont. The floor is yours.

[Chantal Guimont, President and Chief Executive Officer, Electric Mobility Canada]

Honourable Wayne Easter,

committee members, I will give my presentation in both official languages and I will gladly answer questions in English or French.

On behalf of our board of directors, I thank you for this opportunity to share with you our recommendations for the upcoming budget. Our chair could not be here today as she is out of the country.

EMC is the only national not-for-profit association dedicated exclusively to the acceleration of transportation electrification in all modes of transportation. We count on a diversified membership of more than 150 members representing the complete value chain from manufacturers to end-users, and we have good discussions on how to move this industry forward. Together, EMC members bring an integrated point of view and solutions to the emerging industry.

Last May Canada's zero-emissions vehicle strategy was announced for 2018, under the responsibility of the Ministry of Transport and the Ministry of Innovation, Science and Economic Development Canada. EMC is part of the advisory committee, and many of our members have been active in the five expert groups in the rigorous and large scope of work under way. The advisory committee had the chance to discuss the successful strategies in the short, medium, and long term and the level of ambition associated with those.

While we count on the announcement in 2018 of the strategy, EMC is definitely convinced that the 2018 budget should include measures that are recognized as priorities.

One of the first principal steps is public awareness. As a major barrier to increasing the adoption of electric vehicles, a unanimous consensus exists on the lack of awareness by Canadians, and the necessity to act now.

We have the following recommendations. A national outreach campaign must be funded. A web portal where all the information can be found must be established. Electric vehicle showcases must be developed. Training must be delivered to dealers and sales staff. Mentorship and ambassadors programs must be created, and test drive programs launched.

The second aspect deals with purchase incentives.

In addition to this public awareness campaign, sales incentives have been shown, all around the world, to be a major factor in reducing the cost of owning electric vehicles. Today, three provinces offer measures of that kind: Quebec, Ontario and British Columbia.

In the United States, a strong federal incentive, combined with further incentives offered in a number of states, has significantly increased the number of electric vehicles sold. These measures combined provide for more than $16,700 (Canadian) in incentives to purchase a vehicle in the United States. In Europe, a number of countries, such as Norway and France, also provide incentives of that kind, but, at the moment, Canada has none that cover all provinces. That is why, as a way of reducing the cost of ownership, we recommend eliminating the goods and services tax from sales of the vehicles. In parallel, we recommend creating a finance company that would offer sales and leases of electric vehicles for an all-inclusive monthly fee.

We have not forgotten fleets. Having governments and institutions setting an example is essential in moving things forward. For corporate fleets, we are recommending a reduction in the taxable benefit cost to employees for using a car. For federal government fleets, we are recommending additional budgets for the purchase of electric vehicles in order to set an example.

In summary, our recommendations for the federal budget are to set aside amounts of $100 million annually for the next two years, including $50 million for the tax reduction and $25 million for awareness. This additional allocation of funds, combined with the ongoing federal investment of $120 million for infrastructure over the next four years, would be the basic budget in preparation for the transition period up to 2020.

With the arrival of more EVs with longer ranges from all car manufacturers, Canada can decide to seize the opportunity to become a more strategic market for electric vehicles right now. We are convinced that it's not too late for Canada, but it's now time to share a vision, one supported by short-term pragmatic actions.

We are convinced that the adoption of EVs is a key mobility measure helping Canadians to be more productive by using clean and very efficient electricity, and by procuring energy savings that will be spent on other goods and services.

As for Canadian businesses, transportation electrification does present a challenge, but also an important opportunity to seize.

The Canadian ZEV strategy will evaluate those options in order to create the conditions to take advantage of growing global markets on clean technology, but definitely one of the unavoidable conditions is to support a strong EV market here in Canada.

I thank you for your attention. I'm available for your comments and questions later.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Chantal.

Now we'll turn to the Federal Fleet Services Inc.

Mr. Schmidt and Ms. McMillan, welcome.

[Sarah McMillan, Executive Vice-President, Project Administration, Federal Fleet Services Inc.]

Thank you, Mr. Chair.

We'll do the presentation together, and it will be bilingual. We can answer any questions afterwards in both languages.

Thank you, Mr. Chair.

My name is Sarah McMillan. I am the executive vice-president of Federal Fleet Services Inc. I am accompanied by my colleague John Schmidt, who is its vice-president, commercial.

Federal Fleet Services Inc. is the government contracting arm of Chantier Davie Canada Inc., which is the biggest and most specialized ship builder in Canada with the greatest production capacity.

I am the mother of three daughters, respectively 15, 12 and 6 years of age. I retired from the Royal Canadian Navy after 25 years of service. It began in the College Collège militaire Royal de Saint-Jean in Saint-Jean-sur-Richelieu. I have had a number of exciting adventures, including a mission to Afghanistan in 2013, when my youngest daughter was only two.

Mr. Schmidt has worked in the field of Canadian shipbuilding for 42 years, including 25 years in procurement at Public Services and Procurement Canada, or PSPC. He was one of the initiators of Davie’s military support ship program and is considered an expert in marine procurement.

I will begin by giving you an overview of Davie Shipbuilding, located in Lévis, Quebec.

In 2012, the government approved a change in ownership of the largest and oldest naval shipyard in Canada. Over the last five years, Davie’s contribution to the Canadian economy has been in the order of $2.74 billion. It provides 3,000 direct and indirect jobs in Canada, with an average salary in 2016 of $69,000. Of Davie’s employees, 96.4% are the main source of income for their families. I am proud to state that Davie employs 114 apprentices.

Our employees are part of the middle class that the Prime Minister considers so important. Under its new owners, Davie has completed many commercial projects, including ship repair. We delivered Hull 717, our 717th vessel, the Cecon Pride, which was not only Canada’s largest export product of 2014, but also the most complex commercial vessel delivered in North America in that year. In 2016, we delivered Hull 718, the Cecon Excellence, the Cecon Pride’s sister ship.

Davie has also conducted five vessel life extension projects for the Canadian Coast Guard, on time and on budget. Soon, we will also be delivering the MS ASTERIX on time and on budget. This is the first military supply ship built for the Canadian navy in 50 years.

This vessel will be built at 25% of the budget allocated for joint support ships. In other words, we are saving middle-class Canadians 75% of the per-vessel cost. It will be built according to the existing naval construction strategy, representing an immediate saving for taxpayers of $1.5 billion.

If that is applied to the entire federal fleet renewal program, the potential savings for taxpayers will be in excess of $10 billion, considerably reducing the financial requirements in Canada’s future budgets.

I will now pass the floor to my colleague.

[John Schmidt, Vice-President, Commercial, Federal Fleet Services Inc.]

Thank you, Ms. McMillan,

As we look to the future, we have one specific ask of this committee, Parliament, and the Government of Canada. In keeping with the Emerson report tabled in February 2016, the Senate report of May 2017, and the House of Commons report of June 2017, Davie shipyard and Federal Fleet Services are calling for a revision of the national shipbuilding strategy in order to add more Canadian shipbuilding capacity and reduce the federal fleet renewal costs to taxpayers. The policy as it currently stands, which was implemented in 2010 to renew the federal fleet, has been a failure, with not one ship delivered, program delivery dates continually slipping, and budgets escalating to the point of unaffordability. This all spells disaster for middle-class taxpayers, as the program is destined to become a national boondoggle without reform today.

The impact of such a reform will be immediate and will result in the following three points.

One, the fleet would be renewed faster, reducing the cost of inflation and the increasing cost to maintain an aging federal fleet beyond its economic life. For example, the Canadian Coast Guard fleet average age is over 35 years old, and many ships are beyond safe repair.

Two, it would ensure that the regional economic benefit of Canada's shipbuilding programs were shared fairly across Canada. For example, Quebec represents over 23% of the tax base, has over 50% of the shipbuilding capacity in Canada, and yet has received less than 1% of the shipbuilding work.

Three, it would protect middle-class taxpayers by demanding best price for capability. Continuing to pay four times the price is an insult to the middle-class taxpayers, and our delivery of MV Asterix proves that we can significantly reduce the cost of shipbuilding to affordable and world-class levels.

There is plenty of shipbuilding work for all shipyards to prosper in Canada and to become competitive in niche markets. Continuing to build ships under a virtual monopoly will be a detriment to taxpayers and will continue to reward mediocrity. No ships in eight years is not a record to be proud of, and we can do better by involving all capable shipyards in the fleet renewal program and by adding the renewal of our Transport Canada subsidized ferries to the current federal program.

We at Davie and Federal Fleet Services have submitted more than a dozen proposals to the government, which would significantly reduce the burden on middle-class taxpayers while maintaining significant high-skilled jobs across Canada and delivering the needed capabilities to the Royal Canadian Navy, the Canadian Coast Guard, and Transport Canada. These projects include building a second naval support ship over the next 24 months and converting four icebreakers to meet the urgent capability gap faced by the Canadian Coast Guard as it tries to fulfill its mandate of keeping the St. Lawrence Seaway open and Arctic waters safe for navigation.

With these projects and others, Davie shipbuilding and its 996 suppliers in Canada will be in a strong position to maintain more than 1,400 high-skilled jobs, middle-class jobs, in Quebec and Canada for the next 20 years. We request that Canada move forward now to ensure Davie has the opportunity to participate as an equal player in the renewal of our aging federal fleet and provide Canada a way to significantly reduce costs and demands on the middle-class taxpayer.

Thank you. We'd be pleased to take your questions.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

We now turn to Ms. Baugh from Ovarian Cancer Canada.

Welcome.

[Elisabeth Baugh, Chief Executive Officer, Ovarian Cancer Canada]

Thank you very much for the opportunity to be here today.

Good morning.

Thank you for inviting me. My presentation will be in English.

I want to tell you about ovarian cancer today, which affects thousands of Canadians, and illustrate how a small investment by the Canadian government can make a significant impact on the health of the economy. Your leadership is needed to address both the health and economic impacts of this disease.

Ovarian cancer is the most fatal women's cancer in Canada. Thousands of Canadian women are living with ovarian cancer now, and five women die every day because of it. There is no screening test, no vaccine, and all Canadian women are at risk. It is too often diagnosed in its latest stages.

For those with ovarian cancer, there are few treatment options. Surgery and chemotherapy—the primary treatments—are rarely effective over time. New publicly available treatments have been few since the 1990s. Up to 75% of women will have a recurrence of their disease, and when that happens, the treatments are focused on symptom management, not a cure.

While there have been slight shifts in disease outcomes, overall outcomes have not changed significantly for this disease in 50 years. Of all women diagnosed today, 56% will not be living in five years. To give you a sense of comparison, the five-year mortality rate for breast cancer is 13%. For prostate cancer, it's 5%. Ovarian cancer sits stubbornly at 56%, four times the mortality rate of breast cancer.

Why has ovarian cancer not seen the advances that cancers like breast and prostate cancer have seen? We simply haven't invested in fighting ovarian cancer the way we have with breast and prostate cancers. Not that long ago, those cancers too had very high mortality rates. However, they've seen significant investments in research and corresponding improvements in outcomes. The investment in breast cancer research between 2010 and 2014 was almost five times the investment in ovarian cancer.

Why has ovarian cancer research not seen this investment? There are unique elements of the disease that haven't allowed it to fit into the existing research funding framework. For instance, the low incidence of ovarian cancer cannot demonstrate the needed economic benefit, and it also impacts the ability to accrue for clinical trials. The disease has not been fatal enough or rare enough to align with the funding available. Research models for ovarian cancer are needed, and funding for models in general is very scarce. Funding for targeted drugs that have proven effective is low.

The assumption is often made that a general investment in ovarian cancer research will impact progress in ovarian cancer. Sadly, this is not the case. There are unique features of this disease. For example, ovarian cancer metastasises completely differently from other cancers, so general investments have not translated into real progress in ovarian cancer.

Ovarian Cancer Canada has taken a leadership role, helping to build capacity and increase funds available for research, and also to increase the number of ovarian cancer researchers in Canada. In 20 years, our organization has invested over $6 million, played a key role in establishing Canada's national research conference, partnered with CIHR and others to increase grant availability, established national tissue banks, and funded capacity grants for new scientists. However, the investment needed to advance knowledge of ovarian cancer is beyond the capacity of our organization.

Unlike other organizations in cancer that turn to their survivors for support, we cannot rely on our survivor community for funding because, sadly, so many do not survive. This is where the government can step in and help to change the lives of women in Canada. Ovarian Cancer Canada has worked closely with the research community, which has identified priority areas for investment to make a difference in this disease within 10 to 15 years. The research community is ready and poised to deliver on these priorities.

The investment required from the federal government to advance this research framework is $10 million. Ovarian Cancer Canada will work in partnership with Canadian research funding partners who are committed to working with us to implement the research funding quickly. With this limited investment, the Canadian government can impact a healthy Canadian economy and women's health. We know the cost of cancer care places a heavy burden on the health care system and the economy, costing the Canadian economy an estimated $626.5 billion in direct health care costs, corporate profits, and taxation revenues, and $543 billion in wage-based productivity.

This investment is completely consistent with “Investing in Canada's future: strengthening the foundations of Canadian research”, which was a report completed last spring for the federal Minister of Science. This will position Canada as a world leader in addressing this orphan cancer, bringing innovation and capacity that will have an impact on women around the globe.

Thank you for your time.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Elisabeth.

We now turn to the last panel. From the Quebec Employers' Council, we have Ms. Kozhaya.

[Norma Kozhaya, Vice-President of Research and Chief Economist, Quebec Employers Council]

Thank you.

Good morning.

My thanks to the Standing Committee on Finance for inviting us to provide our comments on the upcoming budget.

In its comments, the Quebec Employers Council, or CPQ, is basically trying to answer the questions the committee asked about measures that would increase the productivity of Canadians and the productivity and competitiveness of Canadian companies.

Those two questions are intrinsically linked. The productivity of companies is a result of the productivity of the workers, and the productivity of the workers depends largely on the investments made and the processes put in place by employers.

Let me start by providing some points by way of background.

The first point is the digital and technological revolution, the fourth industrial revolution, as it has been called. Then there are the changes that will be necessary in the fight against climate change; they require investment, innovation and an urgent need to adapt the skills of the workforce.

Then there is the situation in America. Access to the American market is likely to be more difficult in the coming years. America’s likely reform of the taxes on companies and individuals will doubtless have significant effects on the competitiveness of our companies. Finally, we must not forget the demographics of our aging society.

To meet the challenges posed by these structural and cyclical changes, Canada has to maintain a most favourable business environment in terms of taxation and regulation. It will also require much more agility in government decision-making in order to provide answers more quickly, departing from a rigid structure in order to reduce delays in approving and authorizing projects.

The pillars needed to boost the Canadian economy in a sustainable way are innovation, human capital, and private and public investment.

In terms of help for companies, the government should invest in programs that have a structural leverage effect on productivity, innovation and commercialization, as well as on exports and on reducing the companies' environmental footprint. For example, it would be appropriate to equip Canadian companies with the goal of profiting from the new opportunities provided by the Comprehensive Economic and Trade Agreement, CETA, or, for large companies, to make research and development tax credits refundable.

We must not forget the importance of regulating online commerce and the distribution of digital content more fairly in order to maintain the competitiveness of Canadian companies. This problem with online sales also deprives governments of significant tax revenues.

We applaud the government's openness in amending some aspects of the proposed tax reforms affecting small or medium businesses, SMEs. We reiterate the importance of taking the time to thoroughly analyze the economic consequences of the proposals, especially those possible consequences on entrepreneurship, business transfers, and risk taking.

The reduction of taxes on SMEs is certainly good news. But attention must be paid so that the growing gap thereby created with the rate for large companies should not become a disincentive to growth. Large companies must also be competitive, of course.

The CPQ would like to stress the importance of investing in infrastructure. But it has to be done in the most strategic and effective way possible, specifically by investing in Quebec ports and airports, as well as in transportation hubs. Let us also not forget rail transportation, or key projects in mass transportation, as governments did with the Caisse de dépôt et placement du Québec for the metropolitan electric network.

With our population currently aging, the government must speed up the procedures surrounding economic immigration, temporary workers, seasonal workers, and investor and entrepreneurial immigrants.

Finally, the CPQ stresses the importance of not becoming mired in structural deficits and of the need to prepare a clear plan to return to balanced budgets in a few years, because the financial security of generations to come is involved. This is also why the CPQ would like to see initiatives targeted more on increasing private investment than simply on public sector spending.

You will find other comments in the brief we have submitted.

I will gladly answer your questions in either official language. Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you, Norma.

I thank every one of you for your presentations. As you can imagine, with some 170 presentations we've had across the country, the variety of requests makes the job a little tougher.

Mr. Fergus, we'll have to drop back to five minutes because of the time.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

That is going to be impossible for me, Mr. Chair. As you know, I generally take a lot of time. But I will try to be brief.

Thank you all for your presentations. They were very interesting.

Ms. Huot, thank you very much for your presentations. I have read your document and I find it very interesting. Just one point drew my attention. If I understood correctly, your organization prefers using sales taxes to income taxes. If you had the choice of individual or corporate income taxes and sales taxes, you would like to see us opt for sales taxes. Is that correct?

[Céline Huot]

Most studies indeed show that the effects on the economy are more detrimental when income taxes are increased than with an equivalent increase in sales taxes. If you are looking for a strategy that will encourage investment, returning to work and savings, an increase in income taxes, either corporate or personal, individual tax will constitute an obstacle to investment and to a return to work. That is not the case with an increase in sales tax. That has more influence on the use consumers make of the goods.

So, yes, it is a strategy that we would like to advocate.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Okay. Here is my second question. I appreciate your suggestion to encourage consistency in the policies we use to globalize our economy. We have to seek out free trade agreements with other countries and encourage consistency between all government organizations.

Just before that, you mentioned that we should have a plan B for NAFTA. Do you have any suggestions for us? Are your members ready to invest in China, or in Europe, in order to take advantage of the agreement that we have just signed with Europe. Are they really ready to make the effort and to take advantage of those doors that are now wide open?

[Céline Huot]

Clearly, our physical and cultural proximity with the United States means that our companies turn more easily to that market. Going to China or to Europe brings them a genuinely additional complexity. They are less familiar with the market or the language. Procedures in China take much longer and political guidance is required.

That last point brings us to the need to have a strategy. We see it in the missions to China that we organize: if our missions come with that guidance, doors open much more easily because that is part of the culture of the country. Without that guidance, the obstacles are bigger.

Similar constraints do not exist when we are doing business in the United States. The context is completely different, meaning that the funding needed to support the companies will not be the same. The guidance will be different, as will the assurances and guarantees that we will provide to companies because we will be focusing on markets that are a little riskier, such as Latin America or elsewhere.

That is where the plan B becomes important, in my opinion. We cannot just base ourselves on what we are doing at the moment and tell companies that we are going to change our markets. We are going to have to open more doors, to negotiate and to have more of a presence in the other markets we have neglected in previous years.

We are also going to have to make sure that programs are coherent. The plan B will be essential here. We will also have to pay attention to what happens in the very short term. SMEs may perhaps have problems with liquidity, or may not be in a strong enough position financially. We will have to be flexible and to provide a degree of latitude for some things.

We will certainly be able to look at those issues in more detail.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you very much.

My thanks also to Mr. Bouchard and Ms. Baugh for their support with regard to investing in basic research. I agree with them 100%.

I have just one more question. I do not have much time left.

Ms. Voyer, thank you for your presentation. I know that I should have been a little more aware of the place sugar occupies in our products. I am in the process of looking at it. Forty-seven grams of sugar, that must be a lot, correct?

[Corinne Voyer]

In fact, four grams of sugar is the equivalent of a teaspoon. If you divide 47 by four, you get almost 12 teaspoons of sugar in a drink of that size.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

My colleague here has a drink with “no added sugar” written on it. Still, there are 53 grams of sugar, which perhaps means 12, 13 or 14 teaspoons.

When it says “no added sugar”, does that mean natural sugar?

[Corinne Voyer]

I would have to check, but I think so.

For us, sugary drinks are water with sugar added. After that, you are getting into the juice category, which is perhaps the product you are talking about. That is why the label says “no added sugar”.

Currently, the problem with juices is that they are not good for one's health when they are consumed in large quantities, because the sugar they contain gets into the system quickly. Up until now, the Canada Food Guide has seen one juice as one serving of fruit. Science has shown that this is false, because juice has lost all its fibre, which serves to slow digestion.

That is about to change, but, at the moment, Canadians are not aware of it. A lot of awareness still needs to be done in terms of juices. For us, the tax is limited to water with added sugar, though it may eventually apply to juices.

We have to think about disadvantaged communities, for example, that really believe that they will get the vitamins they need from drinking juice. They are not able to get healthy fruits and vegetables. Before taxing juice, we have to raise awareness.

Diet drinks—this is somewhat related to your question—do not contain sugar; they contain sweeteners. They are just as harmful for the teeth as normal sugary drinks, because they are just as acidic. The science on this is not clear, and more research on the subject is needed. Our diet contains a lot of sweeteners and we do not know whether, in the long term, quantities like that can be harmful to the health. As a result, we just have to be careful for the moment.

[The Chair, Liberal, Wayne Easter]

We're well over the five minutes.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Mr. Chair.

Thanks to all who have come to testify.

I am from the west, and I am going to take time to choose my words properly.

I will start with the representatives of Federal Fleet, Inc.

I know the Davie shipyard well. My father worked in shipyards for almost 40 years. He worked for one yard in Poland that built 70 vessels per year. That is a big shipyard compared to what we have in Canada today.

I would like to ask you some questions on the cost to Canadian taxpayers.

When you were talking about innovation and entrepreneurship, you proposed a project to the government that would allow it to save a lot of money.

On June 1, 2017, the Parliamentary Budget Officer produced a report entitled “The Cost of Canada's Surface Combatants”. The report shows that, because of inflation, it is costing Canadian taxpayers about $250 million for each month that the federal government delays building those vessels.

I knew that the government is looking for revenue, but, when you are spending money, I feel that this is an important item to consider.

You made a proposal that appeared to save money for taxpayers. What would those savings be and how would it work?

[John Schmidt]

I'll respond in English because, unfortunately, my French is not quite as good as Sarah's.

We appreciate your interest in Davie. In the case of the CSC project you were referring to, Tom, what we're saying is that, in order to beat inflation on a project, as you know, you have to speed up production or you have to spread production across many suppliers.

Recently there was a report issued by the U.K. government called the “National Shipbuilding Strategy”—the same title as ours. For that they hired a world expert to study their program, which is very similar to our current program, in which we have created two monopolies. They found that in order to bring the cost of their ships down, they had to spread the work around to other shipyards such that they were building mega blocks in different shipyards.

That's what we've done in our programs. We believe it can bring the cost down by as much as 75%, to 25% of the current value, and, as a case in point, we're currently bidding on a frigate program with a foreign navy, on a design similar to the one being put forward for the CSC program, and we'll be bidding that at about 25% of the current budgetary cost given by the PBO of $4 billion per ship, which is a huge number for a frigate. That is well beyond what it should be. From my 42 years in this business, I think that is way beyond what we should be paying for a ship like that when we can produce it at one-quarter of the cost. But we're not at the dance; that's the problem.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Okay.

My next question goes to Ms. McMillan, whom I thank for her service to our country.

As a former naval officer, you know those ships better than anyone. I would also like to mention that my father worked as a contractor for National Defence for 30 years, here in Canada. He has worked on all Canada's ships at one time or another.

The Resolve project is about converting a container ship into an auxiliary oiler replenishment ship.

Would it meet the requirements?

Will that help the Royal Canadian Navy in its future missions? Is it the kind of ship we need?

[Sarah McMillan]

I'll answer this one in English to make sure I get the terms right, just because all my training in the navy was in English.

Do we believe that we'll meet the navy's requirements? Yes, we believe that we'll actually meet and exceed the navy's requirements, not just from a capability perspective but also from a quality-of-life perspective for sailors. I think the product the navy will be getting from us at this stage will be world-class. I would be proud to sail in it myself. My friends will be sailing in it.