Finance Committee on May 29th, 2017

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

What a surprise! After beer and spirits, we're now targeting wine. We want to impose on wine the same increases according to the cumulative principle. I won't repeat everything I said about the two other alcohol industry sectors. However, I want to specify that both the people from the Canadian Vintners Association and wine producers clearly told us they would face challenges in terms of the WTO's trade rules. I want to note that this isn't my opinion, but their opinion.

Indeed, 100% Canadian wines are exempt from excise duties. The other wines that will be sold in Canada, including those from our economic partners, will be subject to these excise duties. The duties will increase each year based on inflation. The increases will be indefinite. We don't know when they'll stop. These people clearly told us that our rule exempting 100% Canadian wines from excise duties would be challenged by our international competitors and by other businesses that sell wine in Canada.

As a result, I implore my colleagues to act wisely and to take a clear stand on this issue by opposing clause 50. Obviously, according to the witnesses, this clause will result in challenges before trade tribunals. An international tribunal may reject the rule exempting 100% Canadian wines and may consider that the rule should no longer exist. This could harm our industry, in this case the wine industry, and specifically Canadian wine.

I implore my colleagues to act wisely and responsibly to avoid having the Canadian wine industry face possible legal challenges. If they don't do it for beer and spirits, I hope they'll do it for wine.

[The Chair, Liberal, Wayne Easter]

Mr. Albas, I believe you were....

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I'm glad you're now presuming that I will speak, Mr. Chair, because from a wine-producing area—

[The Chair, Liberal, Wayne Easter]

Well, I thought maybe you were scratching your head.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I often scratch my head when the NDP speak, but not on this one. In this case, I'm scratching my head because here we have a government that claims it was voted in on an economic platform, to grow the economy, to make it more inclusive growth, so to speak. You have many areas, such as in Nova Scotia, in Ontario, in Quebec.... There's a lot of investment that has gone on to improve wine quality and to attract tourism. Even our committee, Mr. Chair, suggested in our pre-budget reports to the Minister of Finance that the government look at ways to assist wineries to grow and build on the international brand Canada has.

Unfortunately, it does seem that the government did not necessarily take that advice. Maybe we should take that in mind, and make recommendations not to do things, so that they'll at least protect them from further things.

I just want to say how disappointing it is to see that where we have an industry that has had proven growth, the government has chosen to add.... This is, in addition to provincial markups, which continue to go up. This is the wrong direction, I believe, for the industry.

We all like to say that we love Canadian wine and we want to see the industry succeed, yet here today we're putting that at risk by adding costs, in addition to a carbon tax, in addition to payroll taxes, in addition to not allowing the small business tax rate to continue to lower.

I think we're going in the wrong direction, and it's going to hit the government coffers eventually, particularly when wineries just decide it's not worth it to grow, and they'll just stay small. We have far too many small wineries in this country. We have only a very few medium size and a very limited number of large ones that can compete with the likes of those in Australia and the United States.

This will throw a wrench in the works and make it much more difficult for that industry to grow and be able to start to build that market share.

[The Chair, Liberal, Wayne Easter]

Mr. Ouellette.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

In terms of the comment about remaining small, small is sometimes good. We could always want to be the Jackson-Triggs, the large winery, but if you had a choice between having an ice wine or something from the Niagara region or something that was produced by a local family that was putting their care and love into their product compared to something mass produced on the market, I think I would take the local winery, because maybe you're going to get something that's extraordinary.

Sometimes I think it's easy to make a blanket judgment on things, but we also shouldn't.... In the 1980s after the entry of NAFTA and the free trade agreement, a lot of wineries in the Okanagan went out of business, but what they did was they revitalized themselves. I remember that. My uncle was a journalist who worked for the Oliver Daily News, not a big news company or a corporation, just a small little group. What they were able to do was replant and they've grown from it. Obviously they've received some great support and promotion, but they started from when most of those wineries were going out of business and were ripping out the vines. I think we can underestimate the entrepreneurship of some of the people who are involved in this industry. I think the escalator offers a level of stability for them, because it's going to say this is the amount and this is the cost.

Don't forget that at the end of the day, if it's a Canadian product made in Canada, there is no excise tax.

[The Chair, Liberal, Wayne Easter]

Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Mr. Chair, it would only be a Liberal who would think an escalating tax would be a stabilizer.

I couldn't help but respond to Mr. Ouellette's first line about maybe small is good. I wish he'd have a conversation with his finance minister, because remember: we were promised a small deficit. Small would be good when it comes to a deficit. I'd ask him to take that to his finance minister.

In the meantime, I think what this committee should be recommending to our friends in the wine industry is the wine industry needs to declare that they're a cluster, and if they become a cluster, they'll get the attention of this government. It seems that unless you're a cluster, you can't get any attention from this government.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Supercluster.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

That's right: a supercluster. We need a supercluster of wine growers in this country and then maybe the Liberal government will actually listen to them.

[The Chair, Liberal, Wayne Easter]

I do think we're straying a little from clause 50, but go ahead, Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I will be very succinct. Fred King used to be the member of Parliament for Okanagan—Similkameen. He probably was the member of Parliament when your family member was there. Fred King, like many of the people who got into the industry, was a farmer. He was from Kaleden. He said that at the time when NAFTA came in, everyone saw the industry as going nowhere. They could not compete with the Americans. The Mulroney government did a replant program that changed the industry. Where people saw opportunity and put in a lot of hard work, that industry made distinct changes, distinct investments, and changed everything in my area. I will say this. If we think that throwing up more challenges and roadblocks is a way to make things better for our economy, that is wrong. I would also argue for a moment that when we heard from them during the pre-budget consultations, we actually agreed that government could do more to support a thriving sector.

As has been said very poignantly by my NDP colleague as well as my Conservative colleagues, this will put the industry on the wrong footing. It's the wrong place to go. I would suggest to the member opposite that if he has met with as many wineries across this great country.... I would agree small can be beautiful, but I will say that having so many small firms try to compete and try to build economies of scale where they can compete with Australia.... There's one vintage in Australia that is larger than the Canadian wine industry as a whole—one vintage by one company in Australia. We need to have larger firms and more market share. This puts not only an anchor around the larger players.... By the way, many of them have huge investments in premium VQA wineries. That will mean less investment in those smaller wineries, but the small people, as we've heard, may be increasingly at risk to challenge. This is not the way to grow an economy, I submit.

[The Chair, Liberal, Wayne Easter]

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Mr. Chairman, I have a question for staff.

With respect to the excise tax, if in fact the wine that's produced is 100% Canadian content with respect to the grapes, does that trigger the excise tax as well?

[Mathieu Bourgeois]

There's no excise duty on 100% Canadian wine.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Is there any further discussion on clause 50?

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I would like a recorded vote, please.

(Clause 50 agreed to: yeas 5; nays 4)

[The Chair, Liberal, Wayne Easter]

Could we get unanimous consent to deal with clauses 51 through to 63?

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Agreed.

[The Chair, Liberal, Wayne Easter]

Are you okay with that, Pierre?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Yes.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

On division.

(Clauses 51 to 63 inclusive agreed to on division)

(On clause 64)

[The Chair, Liberal, Wayne Easter]

Who wanted to speak to clause 64? I think it's somebody from the Conservative Party.

We'll give you a minute to find clause 64. I have to find it, too. It's on rates of duty on spirits.