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

4:50 p.m.

Liberal

The Chair Liberal Wayne Easter

We're going to end that discussion there. We'll give you time a little later, Mr. Harford, but we're going to run out of time for questions.

Go ahead, Mr. Liepert.

May 15th, 2017 / 4:50 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

Thank you.

First, thank you all for being here. We've now heard the Liberals' latest justification for the tax. It's a health tax now, according to the member over there. I'm wondering how they're going to sell the notion that on the one hand we're taxing alcohol because it's a health hazard, but we're legalizing marijuana because it's okay to smoke marijuana. This is the rationale that we deal with on a daily basis, guests.

I want to take a couple of minutes and ask a few questions of Ms. Reynolds in the restaurant business. I'm from Alberta where not only has the economic downturn substantially impacted the restaurant business there, with restaurants closing left, right, and centre, but we've also had a carbon come into effect on the first of the year. We now have a minimum wage that is going up to $15 by next year. There might even have been some alcohol taxes in the provincial budget and now we have the excise tax. Obviously, the restaurant business is going to be one of the hardest hit by this tax.

Have you run the numbers, if you will, as to what the bottom line impact will be? I'm not in the restaurant business, but I think the largest margin is one the alcohol side of the restaurant business.

4:50 p.m.

Executive Vice-President, Government Affairs, Restaurants Canada

Joyce Reynolds

Not any more.

4:50 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

Not any more?

4:50 p.m.

Executive Vice-President, Government Affairs, Restaurants Canada

Joyce Reynolds

No, unfortunately. I have to say that the licensed premises are the ones who are struggling the most right now. The full service independent restaurant operators are the ones who are having the toughest go of it, particularly in Alberta. In Saskatchewan, our operators are also having a difficult time because of the economic downturn. In the March 22 Saskatchewan budget, the same day the federal budget came down, they increased the provincial sales tax on alcohol up to 10%. It was a double whammy on the industry in that province. In terms of how operators are going to cope with this, I don't know.

You're absolutely right. We're seeing closures, we're seeing layoffs, we're seeing reduced hours for employees. Our industry has been devastated in Alberta, and this is going to hurt more. I can't give you specific numbers province by province what the impact will be, but when you already see sales to licensees of alcohol stagnating, and you see the resistance that our members get from customers to any type of price increase, and you see the reaction of tourists who come to Canada and find the products priced so much higher than in their home countries, yes it's going to have a serious impact.

4:55 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

I want to ask another question, because as an outsider looking at both the craft beer industry and the wine industry in this country, there has been tremendous growth in the last, say, 10 to 20 years. Is that fair to say? Both in the craft beer industry and the wine industry, would you consider your businesses innovative?

4:55 p.m.

President, Beer Canada

Luke Harford

Absolutely. To demonstrate the level of innovation, in 1990 there were 400 brands of beer sold in Canada across the country. There are over 4,000 brands today.

4:55 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

It's the same with the wine business, is it not?

4:55 p.m.

Board Member, Canadian Vintners Association

Murray Souter

Yes, we've seen a significant increase in the number of wineries. We have 700 wineries in the country, and the number is growing every day.

4:55 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

Just about every time Mr. Sorbara asks a question, he says he's proud of the budget because it's an innovative budget. It's innovative when you can go into southern Ontario and hand out hundreds of millions of dollars, but it's not so innovative when it comes to your industry because we're adding taxation to it. Is that fair?

4:55 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

Innovation is the lifeblood of our industry.

4:55 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

Precisely.

4:55 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

As reported by the LCBO, the NSLC, our liquor boards across the country, 80% of the growth in wine sales every year is from new innovation. So we need to continue to feed that innovation pipeline.

4:55 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

Would you consider this an innovative budget?

4:55 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

4:55 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

Thank you.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

That's it. Your time is up.

Mr. Fonseca.

4:55 p.m.

Liberal

Peter Fonseca Liberal Mississauga East—Cooksville, ON

Thank you, Mr. Chair, and thank you very much to all the witnesses.

On the innovation, I understand that the beverage manufacturers would be eligible for the $1.26 billion in the strategic innovation fund. I have to say, coming from a riding that is considered the wine capital of Canada.... In Mississauga East—Cooksville, believe it or not, in 1811, Canada's Vine Growers Association was set up there. They had wineries along the Credit River. That has all changed today, but that is the history of my riding.

We've heard Mr. Sorbara, Mr. Ouellette, and others speak about what spirits, wine, and beer mean to our economy in terms of tourism and as an economic driver. At all levels of government, we have different taxes on those products. At the federal level, I've heard different numbers used by the witnesses, and I'm trying to get down to the exact number. Maybe you can help me with these numbers.

What I have here in front of me is that when it comes to a bottle of wine, at the federal level—meaning the changes that have been brought forward—it would mean less than 1¢ per bottle of wine. We heard from Mr. Ouellette that for a case of 24 bottles of beer, it would be about 5¢. For spirits, per bottle, it's about 7¢. What I heard thrown out, I think, was 63¢ or 64¢, and some other different numbers.

Can you break down for me how you came to those numbers? I have different numbers here, and I'm just trying to figure this out.

4:55 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

One of the challenges we have, and why you would see so many numbers is that regionally the provincial liquor boards all have varying degrees of markup structures. The 63¢ per litre on a bottle of wine is consistent, of course, as it's the federal excise across the country, but we have varying degrees of provincial tax.

5 p.m.

Liberal

Peter Fonseca Liberal Mississauga East—Cooksville, ON

That's not federal.

5 p.m.

President and Chief Executive Officer, Devonian Coast Wineries

Carl Sparkes

That is not federal, but it's—

5 p.m.

Liberal

Peter Fonseca Liberal Mississauga East—Cooksville, ON

Right here at this committee, what we're talking about is this budget, and federally, on a bottle of wine, we're talking about 1¢.

5 p.m.

Board Member, Canadian Vintners Association

Murray Souter

Yes, but the impact is far greater than that. The 1¢ is the producer cost. Then you tack on how we have to make some money. We're not a charity. If we're trying to make a 20% profit, we would add to that. The provincial government adds to that significantly.

5 p.m.

Executive Vice-President, Government Affairs, Restaurants Canada

Joyce Reynolds

A percentage.

5 p.m.

Board Member, Canadian Vintners Association

Murray Souter

Yes, a percentage. On a $9.95 bottle of wine, the 1¢ cent ends up being 5¢ at the top, because of all these additions. The federal and provincial governments—