Evidence of meeting #90 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Luke Harford  President, Beer Canada
Murray Souter  Board Member, Canadian Vintners Association
Carl Sparkes  President and Chief Executive Officer, Devonian Coast Wineries
Joyce Reynolds  Executive Vice-President, Government Affairs, Restaurants Canada
Jan Westcott  President and Chief Executive Officer, Spirits Canada
Frank Rider  Chairman of the Board, Canadian Association of Mutual Insurance Companies
Normand Lafrenière  President, Canadian Association of Mutual Insurance Companies
Nicholas Rivers  Associate Professor, University of Ottawa, As an Individual
Marc André Way  President, Canadian Taxi Association
François Pepin  President of the Council, Transport 2000 Québec
Maëlle Plouganou  Secretary of the Board, Transport 2000 Québec
Louis Marcotte  Director General, International Business Development, Investment and Innovation, Department of Foreign Affairs, Trade and Development
Roger Ermuth  Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General, Treasury Board Secretariat

4:25 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

The winery side of it is under 5%. Is that what you're saying?

May 15th, 2017 / 4:25 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

Correct. It's significantly less.

4:25 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

On a per-acre basis, how does grape production compare with other commodities?

4:25 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

Do you mean in revenue per acre?

4:25 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

Yes, revenue per acre.

4:25 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

There are differences across the country in yields per acre depending on the region, the grape variety, and the style of wines we're trying to produce. On average, across our market we would be at about three tonnes per acre. For the cost of a tonne of grapes, right now we're averaging about $1,800.

4:25 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

As you pointed out in your comments—I represent Prince Edward Island—we have four small wineries in Prince Edward Island. I believe most are in Mr. Easter's riding. The Annapolis Valley in Nova Scotia has been very successful. A couple of weeks ago I participated in an economic forum. One of the presenters was Pete Luckett, of Pete's Frootique, who unveiled a new 45,000-square-foot winery that he was building somewhere in the area.

Could you expand a bit more? If this tax measure proceeds the way it is, what impact will it have on rural job numbers?

4:30 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

Had Pete Luckett been aware—and he is today—when he started this initiative that this threat was looming, he would be having second thoughts about that investment, as he probably is today. You're quite right about the Annapolis Valley becoming a focal point for tourism. It's actually part of our brand today. Can you imagine that? Nova Scotia used to be about lobster; today it's about wine and lobster. We attract about 150,000 visitors just to the wineries. More than half of the tourists who come to Nova Scotia are saying they come because wine is part of the culture and they get to do this. The growth has been in the high double digits in the past five years in the region. What's more important beyond just the winery is the extended impact. You have more restaurants opening up with the culinary institute, or the culinary combination with wine. Today I think we're in the fourth year of the world's largest film and wine festival that's hosted in Wolfville. It's getting bigger every year, bringing in celebrities. It has a huge, positive impact for rural Nova Scotia.

4:30 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

In the hypothetical world, if you take one of those small wineries, what would be the financial hit on that small winery?

4:30 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

An average winery in our region would be around 7,000 or 8,000 cases. You apply the math. It's 63¢ a litre; a case is nine litres. So, someone do the math.

4:30 p.m.

An hon. member

That's $40,000.

4:30 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

Yes, it's about $40,000, which is meaningful for a—

4:30 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

It's an additional $40,000 cost for that small winery. What would be the job numbers in a winery to support a winery like that?

4:30 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

For 5,000 cases, that would be 10 or a dozen people.

4:30 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

Okay. So it's significant in the rural communities.

4:30 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

For sure.

4:30 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

To Mr. Harford, I do support your industry and where you're coming from. As you pointed out, it's significant for small communities in rural Prince Edward Island, and has meant a lot of work. When I was involved as a provincial politician in P.E.I., when we developed some of the first wineries, we had to use tax measures to stimulate their growth. You've had some growth on the Northumberland Strait as well.

You made a comment on Atlantic Canada's difficult situation from the beer side. Could you elaborate a bit more?

4:30 p.m.

President, Beer Canada

Luke Harford

There are a lot of moving parts in market dynamics in any part of the country. I was trying to highlight the fact that the rigidity of a CPI indexed excise won't necessarily work well in every jurisdiction, and looked at Atlantic Canada, which has demographics that are shifting with an aging population. There are job challenges in certain pockets of Atlantic Canada and in Newfoundland with the collapse of oil prices. In the last five years there have been a whole bunch of reasons why it wouldn't be the time to automatically—without thinking, without analyzing, without studying the impact—increase taxes. That's the point I was trying to make.

If we look at Atlantic Canada, sales have declined by 3.5% and CPI has increased by 5.5%. The dynamics of the situation in that sector of the country are that we'd be increasing taxes at a time when they're trying to adjust to changing market conditions that aren't necessarily positive.

4:30 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

Do I still have time?

4:30 p.m.

Liberal

The Chair Liberal Wayne Easter

No, but you can ask one last quick one.

4:30 p.m.

Liberal

Bobby Morrissey Liberal Egmont, PE

Thank you, Mr. Chair.

To both Mr. Harford and Mr. Sparkes, I take it that you would challenge the revenue projection numbers coming from a tax increase like this as ever materializing.

4:35 p.m.

President, Beer Canada

Luke Harford

Yes. I think the challenge I would have for the finance department is this: does it matter if all their revenue is made from imports, or do they have a responsibility to also make sure that their tax policies don't discourage domestic manufacturing?

I think that's the challenge I would put to Finance Canada.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay. Thank you both.

Mr. Albas, I believe you're splitting some of your time with Mr. Lobb.

4:35 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Thank you, Mr. Chair.

Thank you to all our witnesses for what you do for the Canadian economy.

I'd like to go first to you, Mr. Harford. When I was in Nova Scotia, I had a chance to sit down and do some consultations with some local brewers. I asked one of the youngest ones of the pack what we could do at the federal level. He asked if I could help him with his excise tax provincially. I guess there was a movement where the Province of Nova Scotia said that they were going to start charging, when a free sample was given out, excise on that free sample. Even though it was a loss, they were still going to do that.

Given that context, where he was worried about that small amount of free sample that he was giving out—he and his partner put their life savings into this new project—are you going to see some job losses? As well, perhaps, for different microbrewers or whatnot, do you think we might see some closures based on this?

4:35 p.m.

President, Beer Canada

Luke Harford

That's one of the insidious things about this escalator, that it will ride in the background over time and everybody will be asking themselves, for instance, why is it nobody can afford a case of beer anymore? Why is it these small brewers can't access capital anymore? Why is it they're not investing in Canada anymore?

The day the budget came down, Moosehead Breweries out of Saint John, New Brunswick, said that took $250,000 out of their business that they have to find someplace else. Does that mean they don't send people on training programs? Does that mean they don't invest in winter tires for their trucks? There are all kinds of things that they now have to find the money for because they have a bigger tax bill.