Finance Committee on May 26th, 2020

[Serge Buy]

It's fairly easy. Designating BC Ferries a prescribed organization is not a difficult thing. It can be done tonight. It could be moved to cabinet there. It's a fairly easy decision. The money is there.

Change the legislation to support organizations that can't show revenues in 2019 due to other disasters, and a program to assist the all-vital transportation services, not loan guarantees. I will agree with Mr. Kendrick. It needs to be operational cash, and that can be done maybe on a per passenger basis if needed.

If governments are looking for an easy way to do it, that's probably the easiest way.

[The Chair, Liberal, Wayne Easter]

Okay, with that, we will have to end it. We have another panel, with eight witnesses, on shortly.

On behalf of the committee, I thank each and every one of you for coming forward and presenting your views, and your constructive criticism as well. We appreciate that.

Beyond that, we wish you all the best.

We will suspend for a moment and go to the next witnesses.

Thank you.

[The Chair, Liberal, Wayne Easter]

I will officially call the meeting back to order.

This is the second panel of meeting number 31 of the House of Commons Standing Committee on Finance. We're operating pursuant to the order of reference from the House and meeting on the government's response to the COVID-19 pandemic.

I'll forgo any more preliminaries as we have eight witnesses on this panel.

I would ask witnesses to keep their remarks as close to five minutes as they can so that we can have a fair bit of time for questions.

With that, welcome again. We appreciate your coming.

We'll start with Chris Reynolds, president of Air Tindi Ltd.

[Chris Reynolds, President, Air Tindi Ltd.]

Thank you very much for allowing me the opportunity to speak.

I'll just give you a bit of background on Air Tindi. We have been operating in the Northwest Territories for the last 32 years, based out of Yellowknife. We are one of the larger employers in the city of Yellowknife—prior to COVID-19. We have about 200 employees, and 75% of our employees are Northwest Territories residents.

Our operation consists of basically servicing the north and the vast geography of the north. We have scheduled services, medevac flying, charter flying and specialized operations. Our scheduled services are all to remote communities. Most have no road access, so we're on short, unpaved runways. It's about 18% of our business. We fly scheduled flights from Yellowknife to Fort Simpson, Gamètì, Wekweètì, Whatì and Lutselk'e. For a short term—for Michael there—we also flew to Fort Resolution on a scheduled flight.

We're the dedicated medevac provider for the Northwest Territories. It's about 25% of our business. Medevacs typically go from communities with no road access and only a small nursing station to larger centres such as Inuvik and Yellowknife, as well as Edmonton. Some of the medevacs we do are from extremely remote areas, such as the barren lands and the Arctic Ocean whale camps. We use off-strip aircraft for that, so they're on floats, skis and tundra tires. Right now, believe it or not, they would still be on skis in a lot of the north.

Charter operations—fly-in, fly-out—consist of operating mines, infrastructure requirements for the territory and government flights, and they are 16% of our business.

However, the vast majority is specialty operations. That's 40% of our business. That's operations in to abandoned runways, lakes, eskers and the tundra. That's specialty flight crews and specialty aircraft.

The Northwest Territories is pretty unique, as is Nunavut. There's a small number of airports—27 airports—in the Northwest Territories, but we actually use hundreds of landing spots per year. Those flights are for indigenous support, wildlife surveys, environmental monitoring, exploration and tourism.

Air Tindi has partnerships with indigenous organizations, including joint ventures with equity stake, in the following regions: Inuvialuit in northern NWT, Dehcho in western NWT, Tli?cho in central NWT, Akaitcho in eastern NWT, Kitikmeot in western Nunavut, Kivalliq and the Baffin area.

COVID-19, as everybody is aware, has an extreme impact on aviation. Air Tindi was not immune to that. In mid-March, we took bold, drastic steps to ensure our survival. Come April, we saw an almost immediate impact: a reduction in our revenue by at least 50%. That's played through in May as well, and it looks like our entire summer. Our best guess is June 2021 to see a slight uptick. Our business is highly seasonal due to the 24 hours of daylight in the Northwest Territories and the lack of airports. Usually, you're using the summer season with more light and better weather to do your flying.

Basically, right now, our medevac contract is our only consistent source of revenue. A closed Northwest Territories border does not realistically allow for non-Northwest Territories residents to stay employed while ensuring our social responsibility to reduce spread. We've had to lay off as much as 40% of our staff. We reduced our scheduled flights by 70%, and we had salary and hiring freezes, management salary deferrals, and deferrals or cancellations of other compensation programs.

The industry in the north has seen pretty much the same. There are some airlines—such as North-Wright Air out of Normal Wells, the Sahtu connector—that have shut down all scheduled flights during the containment phase. Others have drastic schedule cuts, and some tourist-based airlines will not survive this, as well as, I hear, some rotary-wing and other companies. There are some airlines that have received the majority of the relief and have not made any cuts.

Relief for us has been very important, very critical. The Northwest Territories government has been working well outside of nine to five to support our business and the important operations that we provide for the north in everything from health and food security to emergency response.

They advanced our medevac contract fees of $1.2 million for a couple of months.

The Canada emergency wage subsidy has been incredible for us. We were able to bring back all of our employees in April, but that's with a sombre warning that it's due to subsidy only and not due to revenue. Our estimation of 2020 and 2021 revenue will likely mean Air Tindi will be 60% of our former size and many positions will be terminated when the emergency wage subsidy ends.

We were able to take advantage of the northern essential air service program. It's for the Northwest Territories, Yukon and Nunavut. That was for scheduled carriers to maintain a minimum amount of service. We received $1.565 million, which allowed us to increase our scheduled flights by 10%.

We've done everything we could, including payment and insurance holidays from our lenders.

The BCAP has also been influential in securing an additional line of credit.

If further relief is not received, Air Tindi will have to go further and further into debt to survive. That model may not be survivable long term. We'll have to continue taking bold, drastic action to survive until next summer, and then continued relief in the form of grants or the emergency wage subsidy.

In 2021 we will be a much smaller company, with 40% fewer employees. We're hoping that will be enough.

With the economic impact of the closed Northwest Territories border, there are severe constraints on mining, infrastructure, exploration and tourism. With the vast geography of the north, the territories in particular, the Northwest Territories and Nunavut, the transportation costs are the largest hindrance to recovery and growth.

Government subsidization of those transportation costs for infrastructure support and development, mining and exploration, remediation, and tourism we think is key for economic stimuli.

In closing, Air Tindi is very thankful for the federal support—the emergency wage subsidy, BCAP and the northern essential air service program. I would like to caution that it should be not just for scheduled service carriers but also for tourism outfitters and the other ad hoc-type contract charter carriers that are very critical to the north and were not applicable.

Without further support, we may not be able to survive the pandemic. Economic stimulus in the form of a transportation subsidy is essential for long-term recovery and economic growth.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Reynolds.

We'll turn to the Canadian American Business Council and Scotty Greenwood, CEO.

There's more than one way to get you across the border, Scotty. You're on.

[Maryscott Greenwood, Chief Executive Officer, Canadian American Business Council]

Thank you very much, Mr. Chairman and members of the committee. It's a pleasure to be with you this way.

More than any two countries in the world, the U.S. and Canada make things together as integrated economic partners. The U.S. sells more goods to Canada than to any country, more than it sells to China, Japan and the U.K. combined. That is why we believe that both countries must stand for a strong, common cross-border manufacturing response as we tackle the COVID-19 public health crisis and help our shared economies rebuild and recover.

Specifically, we believe that our two countries must continue to work together on a collaborative manufacturing response to COVID-19 to achieve the following basic four objectives: securing the availability of personal protective equipment in both countries; designing Canada-U.S. manufacturing solutions to replenish and maintain strategic stockpiles of medical equipment; continuing to ensure people and goods cross the border efficiently without interrupting our critical supply chains; and expanding market opportunities between our two countries in order to spur recovery and compete globally.

Maintaining an open and efficient supply chain through and beyond COVID-19 will save lives and help us in the fight against this pandemic. It will provide the infrastructure required for jump-starting the economy to compete with other regions of the world in a rapidly changing global economic environment.

We stand with a growing number of businesses, workers and advocacy organizations to urge our governments and all Canadians and Americans to stand together in the global marketplace, push aside those who would divide us and meet our global competition head on. As many may have read or seen, we started a rebound campaign: cabc.co/rebound.

I will just tell you briefly who has signed up so far and who joins us in this effort: AmCham Canada, American Chamber of Commerce in Quebec, Association of Equipment Manufacturers, Association of Oil Pipelines, BIOTECanada, Border Policy Research Institute, Business Council of Canada, Canada-U.S. Business Association, Canadian Food Exporters Association, Canada Arizona Business Council, CanAm Border Trade Alliance, Canadian Manufacturers and Exporters, Canadian Pharmacists Association, Consumer Health Products Canada, Council of the Great Lakes Region, Energy Equipment and Infrastructure Alliance, Food & Consumer Products of Canada, Future Borders Coalition, Government of Ontario, Government of Quebec, Greater Kansas City Chamber of Commerce, International Business Council of the Illinois Chamber of Commerce, Innovative Medicines Canada, Lake Champlain Regional Chamber of Commerce, Lake Placid Regional Office of Sustainable Tourism, MedTech Canada, NASCO, New England-Canada Business Council, New Hampshire-Canadian Trade Council, North Country Chamber of Commerce, Ohio-Canada Business Council, Ontario Chamber of Commerce, Pacific Northwest Transportation Services, Quebec Federation of Chambers of Commerce, the Business Council of New York State, the Canadian Chamber of Commerce, United States Chamber of Commerce, the Vermont Chamber of Commerce, Women in Trucking Association, Woodrow Wilson International Centre for Scholars, and John Hopkins University School of Advanced International Studies.

It's quite a list and the list is growing. We're inviting all citizens and organizations to join on to talk about how Canada and the United States need to address our challenges together and how we're stronger together.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you, Scotty.

Turning to the Canadian Produce Marketing Association, we have Ron Lemaire, president.

[Ron Lemaire, President, Canadian Produce Marketing Association]

Thank you, Mr. Chair and members of the committee.

On behalf of the Canadian Produce Marketing Association and our 850 companies across Canada, from our supply chain, basically farm gate to dinner plate, I am happy to share our comments around certain tools, incentives and tax measures that we feel are necessary to address some of the short-term and long-term issues that are going to happen to our sector due to COVID-19. You can find more information in the brief that has been submitted to the committee.

Since the start of the pandemic we've seen massive shifts within our markets. We will have both winners and losers. With Canadians staying at home and buying patterns shifting in the pandemic, at the end of April we saw retail sales up 8% for vegetables and 5% for fruit. Driving this were the staples, such as potatoes and onions, and that is currently starting to level off. Food service, representing 30% of our value chain, hasn't been so lucky. Catastrophic impact to this sector and those who supply it will be felt for years to come. While meal delivery and curbside pickup has lifted sales to restaurants for produce from zero to 20% and sometimes 30% of traditional volume, it will be a long recovery, as physical distancing and consumer fear will play a role in how restaurants reopen.

Many produce sales rely on volume due to small margins. When restaurants reopen, the physical space cannot accommodate the typical and needed sales within the size of the space and number of patrons. It will be a key decision. Without space and without patrons, restaurants might decide not to reopen, thus further impacting the entire supply chain.

One potential positive is the shift to e-commerce and click and collect. Some small restaurants and storefronts might decide to go online as they've been successful, and by doing so, reduce their lease costs and overhead, but this will mean not hiring the labour force they've traditionally hired.

We've also seen the opportunity for growers and suppliers to increase their e-commerce across the country, but without broadband Internet in rural communities, it's very difficult. It's key that we look at how we can add this access.

Many of our members, particularly those picking, packing and processing, are also being dramatically impacted due to the rising costs of inputs, access to labour, and operational changes. The government's announcement of $77 million set aside for the broader processing industry is appreciated but won't truly support the scope of impact that all processing groups are seeing.

In a post-COVID world, business continuity will be the challenge as we transition. The complexity and seasonality of the industry means that large-scale and small-scale operations across our entire supply chain must have access to the programs and tools developed by government leading into and out of harvest.

We recognize that the government cannot continue to pump money into the system. However, programs such as the Canada emergency wage subsidy should be reviewed and extended beyond September for particularly hard-hit sectors, such as those who supply and operate within food service and the produce supply chain. The Canada emergency response benefit and the Canada emergency student benefit must also be adjusted to support unemployed Canadians without creating a disincentive to work.

Other programs and tools that require consideration include bankruptcy protection for produce sellers; targeted tax credits for essential services now required to change business practices and purchase new equipment, including PPE; and more effective programs to access operating capital for a sector that works within very small margins and limited available capital.

I mentioned the emergency response benefit. It has created unintended consequences, specifically in the short term for many packers, distributors, wholesalers and small retailers, as they're starting to see high levels of absenteeism and challenges in rehiring. With the reality they're now facing, the decision of workers to stay home and potentially not be exposed to COVID and collect the $2,000 a month, many are choosing to pick CERB. The $1,000 cap of allowable monthly income isn't quite enough to influence them to work within the industry. We suggest increasing the allowable income limit or providing targeted exemptions to allow Canadians to collect CERB and work within the produce supply chain over the next 10 months.

The emergency student benefit is another area that is creating a disincentive for students to work. Increasing the allowable income limit or providing a targeted exemption to the income limit could encourage more students to collect the benefit and work for essential providers such as the agriculture sector.

The recent announcement of incentives and the student wage subsidy for new hires was one of our asks, and we appreciate the recent positive move and implementation of the new youth employment program for agriculture.

It is important to note that many grower businesses only begin to generate revenue at the time of harvest, with many revenues for the current season's crop realized at the end of the year, so it's key that they don't necessarily qualify for the emergency wage subsidy and cannot demonstrate that decline of 30%. We need to look at how we can include more growers into that mix.

As well, the bankruptcy protection program does not support the produce industry. We've requested a PACA-like trust model to support fruit and vegetable growers and sellers in Canada. We encourage the government to continue to look at that program, as currently we do not have sufficient bankruptcy protection.

Finally, with the changes to business structure in our supply chain around the purchase of personal protective equipment, as well as other changes in our operations due to COVID, while we appreciate the funding of $77 million, we are encouraging the implementation of a tax credit to support industry in procuring the equipment essential to keep employees safe.

We thank the government for all its work and recognize that it has implemented quite a few extreme measures at a very rapid level to support Canadians, as well as our sector. We're happy to continue to work with you to try to find more solutions as we move forward.

[The Chair, Liberal, Wayne Easter]

Thank you, Ron.

We'll turn to CentrePort Canada, with Diane Gray, president and CEO.

Ms. Gray.

[Diane Gray, President and Chief Executive Officer, CentrePort Canada]

Mr. Chair and members, thank you very much for inviting me to participate today.

As mentioned, I am Diane Gray, president and CEO of CentrePort Canada.

CentrePort, for those of you who don't know, is a 20,000-acre tri-modal inland port project in Winnipeg, Manitoba. It has been planned as a complete community, and it's anchored by rail, truck and air cargo shipments, multiple industrial areas for business, residential and retail components, and educational and training services. With the support of all levels of government, we've put in place the necessary infrastructure, as well as other support services, including fast-tracked land development activities.

The objective ultimately is to attract economic activity based upon an ease of doing business. COVID-19 and the subsequent disruption to our economy has clearly caused some broad-based challenges. While some industrial sectors have been hit harder than others, I want to speak about a few issues that are shared commonly by many of the companies that I connect with either directly or through organizations like the Business Council of Manitoba, the Manitoba Trucking Association, the chambers of commerce in our province, Canadian Manufacturers and Exporters and the World Trade Centre Winnipeg.

I'll briefly highlight three of these issues as they relate to the topic of today's agenda: sustainability of business and supply chains.

The first is—and, Scotty, I'm going to emphasize something you said—the importance of maintaining and enhancing the North American supply chain. Viewing our economy through the continental lens is of critical importance to Canadian business and consumers. Keeping that border open has allowed our highly integrated North American economy to continue to serve business and people.

To give you a sense of how important that is to CentrePort and to the economy of Manitoba, I'll tell you that $22.6 billion in trade moved through the Emerson border crossing south of Winnipeg last year, and that's the busiest point of entry in western Canada. As we seek to help businesses recover, we have to continue to look at how we enhance this regional advantage.

We all have examples to share of the value of our North American supply chain. That's not just Canada and the U.S. It's also french fries moving from the Simplot potato plant in Portage la Prairie, Manitoba, to Mexico City's McDonald's restaurants, with those same containers and trucks returning with avocados and other produce for Canadian consumers.

The point I'm making is that the border is important to trade and to our supply chains, and what we have to do is resist protectionism to keep our largest markets open to our businesses, particularly as they pivot on customers and suppliers. That's a next big component of what I'm going to talk about.

This is a conversation that's happening in many companies, particularly manufacturing companies right now in Canada, both SMEs and larger businesses, around repatriating assembly work and the sourcing of supply to the continent. At CentrePort, we're fielding calls from companies looking for a footprint to do just that to serve their North American customers.

Yesterday, a Quebec company confirmed its decision to open an assembly and logistics facility in CentrePort to serve its U.S. clients. Part of its decision relates to concerns over an American backlash to China, so we need to be cognizant of that. However, some of it relates to the security of its supply chain. Security is an issue that I think is not just COVID-related, but it is certainly one that has currently had a real and noticeable impact on both small and large companies.

New Flyer, a company you may have heard about, North America's largest bus manufacturing company, headquartered in Winnipeg, found that delays in parts that were being shipped out of China had a ripple effect, and that backed up its entire manufacturing process. It's one of those companies currently looking at how it streamlines and pivots on its supply chain activities.

In Canada, we should be concerning ourselves with capturing as many of the repatriated opportunities as possible. The dollar right now is currently an advantage to us, but we have to ensure that we have the infrastructure and the tax rates that allow businesses to invest in our country and not just those south of us. Canada should compete on how goods are produced. Process innovation and technology are the foundation of this approach.

The other point is one that was made in the Economist a few months ago: Visibility is velocity. This speaks to the importance of revolutionizing the tracking of supply chains and it's importance to business.

The second issue I want to flag is certainty of markets and customers. Outside of food processing, most industrial businesses that produce things are being very cautious right now and are waiting to see the recovery in their order books before fully restarting.

Yesterday, Canadian Manufacturers and Exporters released some results of a study they did and it showed that over 70% of the manufacturing and export companies in our country have been impacted by COVID. With global trade challenged for the foreseeable future, certainly for finding new customers, businesses will have to look more locally and likely to potential customers on the continent.

If governments want to support the recovery of the Canadian economy, they need to be serious about Canadian technology and supporting, buying and using that technology even if it isn't the cheapest to be found. There are numerous examples of how we haven't bought from companies in our provinces, let alone our country. This includes electric buses, intelligent health care technologies and many others. Governments should lead the way through investment in and deployment of Canadian technologies wherever possible.

The third point is that e-commerce is here to stay, but does that really change anything? Certainly COVID has accelerated trends such as e-commerce adoption, distribution activity shifts and point-of-sale practices, but these were happening already. It would be good if North America's consumer goods economy isn't completely overtaken by Amazon, Walmart and Alibaba. We need to ask ourselves how we can support smaller retailers with rapid consumer goods distribution to meet market demands. There is no going back on grocery delivery either. All of these shifts will impact what the future hub-and-spoke model of distribution looks like and how localized the warehouses will need to be to meet market demands. The acceleration of technology and rapid market delivery will continue to create winners and losers in our economy.

I'll end on the suggestion that there are three main things the federal government can do to ensure the sustainability of our businesses and increase supply chain efficiencies. The first is to understand that recovery for some sectors is likely to be slow as long as companies' order books aren't full. They need help with access to capital, and in some cases, support in pivoting on markets and source products.

Second, please keep the business environment competitive through tax and other supports, including the adoption and deployment of new technologies.

Finally, continue to fund critical infrastructure to ensure that our Canadian-made, Canadian-grown or Canadian-sourced goods can reach their final destinations.

Thank you. I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Gray.

From the Chemistry Industry Association of Canada, we have Bob Masterson, president and CEO.

Bob.

[Bob Masterson, President and Chief Executive Officer, Chemistry Industry Association of Canada]

Thank you, Chairman Easter.

I'm pleased to be with you on behalf of Canada's chemical sector and the plastics manufacturers. For those who don't know us well, we're Canada's third-largest manufacturing industry, with about $60 billion a year of shipments.

To begin, I want to extend our sector's appreciation to Parliament and to the Government of Canada for how quickly you have put in place a number of these measures to support individuals and the economy, businesses broadly. I'll speak to our sector. We haven't relied on those measures, but our customers have. They've been very important and you've really demonstrated leadership in this unprecedented challenge.

I have three brief messages for you with respect to the status of Canada's chemistry sector. It is resilient, responsive and poised to contribute to the economic recovery.

First, our chemistry sector is a highly resilient sector. There have been no material impacts on the sector from COVID-19. In our industry, over half of our members report that they are operating at normal levels of production for this time of year. We do have about 30% who say they're still operational but are operating at lower than normal levels. You can think of folks selling chemicals, paints and coatings to the automotive sector. There were a number of tough weeks there, but they were operational. We have another 20%, however, who are actually producing above normal capacity. Overall, the sector hasn't relied on any economic supports and it has no intention to rely on sector supports. It doesn't need a package and has experienced very few layoffs in any company across the sector. It's highly resilient.

Second, the chemistry sector is highly responsive and responsible. We produce very important water treatment and disinfection chemicals that are essential for public safety in a crisis such as this, and we've certainly seen a steep increase in demand for those products. We'll talk about plastics perhaps during some of the questions, but plastics were a pretty unwelcome product until COVID-19 came along, and all of a sudden, plastic products were in demand. You can think of the packaging of food. We have as members the folks who manufacture for the medical industry. The sanitary value of plastic is now understood in a way that we did, but folks such as yourselves and Canadians did not understand before this crisis. There's a very important role being played by plastics. You can think of all the PPE that is needed. There is so much plastic in there, so there are huge demands for those products.

Our members have also reconfigured their production processes. We have people such as BASF Canada, which makes paints and coatings in Windsor. They pivoted and now they're making hand sanitizer and donating that product. Shell Chemicals and Procter and Gamble Canada have also reconfigured their operations for the first time ever to produce these essential products to help with this response.

I'll give you one other example of how the industry has responded. This again was led by BASF Canada and Trimac, both of which are members of our association. They created a platform called the rapid response platform and it is now matching those that have PPE available with those that need PPE to restart their businesses. In the first week of operations alone, it has made matches between 10,000 organizations in Canada—in the one week it has been online. You go online and say you need 5,000 plastic gowns for your dentist office. Someone will come back online and you will get that. There were 10,000 matches in the first week alone, and we're very proud to have contributed to that.

Third and finally, this industry stands very well poised to assist with Canada's economic recovery. We currently have $7 billion of new capital investment that has continued under construction. Despite this crisis, those projects are continuing. They will come online in late 2021 or early 2022, and you can imagine what a shot of support to the economy that $7 billion of new investment will contribute. There are a few projects that were under way and have been deferred, and a few others that were proposed and are not yet going. Those projects currently total about $11 billion, and we're confident that as we come out of this crisis we're going to hear that some of them are going to move ahead as planned. The conditions will be there for them to continue to invest and to assist in the recovery.

Our large major facilities, though, have also had to defer all major capital investment because of this crisis. These projects, routine maintenance projects, can involve thousands of contractors and hundreds of millions of dollars. You just couldn't bring contractor staff in those numbers on site during COVID and risk contaminating your operators and taking your site down.

That activity is going to have to happen. Hopefully we come out of this recovery soon, in the coming weeks, and that can start to take place late in the summer and fall, or at worst early next year.

When you total that up, that's more than a billion dollars of preplanned maintenance activity also happening in our sector.

When we put that all together again, the three messages are that the sector is highly resilient; it's highly responsive, and we do stand poised to contribute to the economic recovery. Certainly the provinces of Alberta, British Columbia, Ontario and Quebec are looking to the sector to continue to grow and support that economic recovery.

In closing, there are a couple of brief things I'd like to say. I'd like to offer our advice and perspective on what Canada can do to support that future growth and help the sector contribute to the economy.

First, it's essential for the Government of Canada to embrace the investment growth potential of the sector. Mr. Chairman, you've heard me characterize it in the past. It's been somewhat ambivalent. It needs to be enthusiastic. We need to be enthusiastic about the growth prospects of Canada's chemistry sector.

In particular. we would call on the federal government to bring forward the spirit of collaboration. We've seen through this health crisis the way the federal and provincial governments have worked so closely together to define the right roles and to take the right actions in an expeditious manner. We need to do the same thing with the economic recovery. We can't have the provinces rowing in one direction and the federal government in another. We have to see that coordinated response. If we can achieve that, it will be fantastic. That's the key thing we see. We want to see the federal government as enthusiastic as the provinces are about the growth opportunities in this sector.

Second and finally, I think we agree that our industry owns the issue of plastic waste. We have to solve that. We accept the federal government's agenda of what they wish to do, but I will assure you, if you want to convey a message to the global chemistry industry and plastics industry that you are ambivalent about its resilience, its responsibility, its responsiveness, and its investment growth prospects, go ahead and declare plastics toxic under CEPA as the means to regulate those. After what we've seen in this crisis, that will be a message to the sector that you don't really want the investment.

We think there are other tools you could use. We support the entire agenda, the actions the government wishes to take. We just urge you to use a regulatory tool other than declaring these necessary, sanitary and safe products toxic. We don't think Canadians support doing that. We as an association certainly don't support it.

I look forward to your questions.

Thank you again, Mr. Chairman, for the opportunity to speak.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Bob.

We go now to the Coalition of Concerned Manufacturers and Businesses of Canada, with Mr. Sobot and Mr. Sword.

[Veso Sobot, Board Member, Coalition of Concerned Manufacturers and Businesses of Canada]

Mr. Chair, thank you so much.

My name is Veso Sobot. I'm a director with the Coalition of Concerned Manufacturers and Businesses of Canada. We're based in Scarborough, Ontario. We have about 300 members, all Canadian companies, all looking to create valuable products and sell them in Canada and around the world.

Today I would like to offer some suggestions from the coalition on self-sufficiency in supply chains.

I'm going to pick it up where Bob Masterson left it. We're going to talk about the plastics sector a little bit. As Bob said, the benefits of plastic have never been as clear as they are today. The COVID epidemic has clearly shown Canada's strategic vulnerability and dependance on these products. We don't make them in this country as much as we used to, and we need to make them here. Plastics are made from natural gas. We have a strategic raw material advantage in this sector. Canada's plentiful natural gas supply gives us a cost advantage over countries like China, which derives its plastics from coal.

China has other advantages, however. China has a fixed currency, and Canada has a floating currency—advantage China. Manufacturers in Canada are subjected to class action law suits, and Chinese manufacturers are not—advantage China. Canadian manufacturers are subjected to strict environmental rules, and Chinese manufacturers are not—advantage China. Canadian manufacturers have to pay a carbon tax, and the Chinese do not—advantage China.

It's our contention that it's time for the federal government to advantage Canada. Here are recommendations for doing so.

Incentivize Canadians to repatriate manufacturing back to Canada, as they're doing in Japan and the United States. This will alleviate a dependancy on unfriendly foreign suppliers and strengthen our national security.

Create an expedited approvals process for Canadian companies, one that takes days, not months, and allow Canadian companies to get expedited approvals. The government of Canada appealed to manufacturers to retool and produce PPE here. Many of our members have done just that, only to find that the approvals process is the bottleneck. A member company has been waiting a month for approval from Health Canada for something as simple as a face shield, while other companies from Wuhan have their approvals. We urge the government to streamline and fast-track the process for Canadian companies.

Environment and Climate Change Canada is working to deem plastic toxic right now. As Bob mentioned, labelling plastic as toxic under CEPA would result in a less safe environment for workers and consumers, and thousands of job losses across Canada, without any benefit. Our members are telling us that they're finding it harder to get private equity for their investments because the government is going down this route. The federal government must drop this misguided initiative immediately.

We urge the government to stop investing in Chinese infrastructure, and instead take that money and invest it in Canadian infrastructure. Investing in Canadian infrastructure that lasts 50 to 100 years at these low interest rates means that future generations will receive that benefit, making it the best return on investment of all stimulus spending options. Let municipal needs and the free market supply the solutions necessary to create world-class infrastructure in Canada. Let's cut off giving money to China for its infrastructure.

I'd like to pass it on to my colleague, David Sword, to add a couple more recommendations.

[David Sword, Board Member, Coalition of Concerned Manufacturers and Businesses of Canada]

Thank you, Mr. Chair and committee members, for having us.

My name is David Sword, and I'm in the energy field. I'm also here to support the coalition in its overall position on manufacturing and energy in Canada.

There's a strong relationship between energy projects and the manufacturing sector in Canada. When anything energy-related needs to be built in this country, manufacturing benefits immediately and directly. Canadian manufacturing provides the necessary ingredients to help the energy sector both build and maintain its operations.

That brings us to natural gas. It's a vital fuel, and thankfully Canada has an abundant supply. Natural gas is in demand both within our country and worldwide.

That's where LNG comes into play. LNG is liquid natural gas, of course, natural gas that has been supercooled to form a liquid to enable ease of long-distance transportation. Natural gas is being used to help fuel economic growth and replace coal, and it is also a perfect fuel complement to the intermittent nature of renewable energy.

It's valued because of its cleaner-burning aspects in terms of air particulates, but the fuel also contains a fraction of the GHG content of coal. That's a fuel that's in wide use in Asia, and it continues to grow. For example, in China and India they add new coal plants annually, and now Japan is seeking to do the same.

Canada can and should play a vital role, a global role, in providing that fuel of choice to improve air quality and to be a supplier of choice, and also to get the capital investment and jobs that are in the sector and jobs in manufacturing. Doing that would help Canada's overall contribution to lowering global emissions. What goes up must come down somewhere, and it is truly a global issue.

We have to get more projects going. Just consider a tale of two countries, Canada and the United States. We are both rich in natural gas. We have abundant supplies, but the United States has gone from having virtually no exports and being poised to import to being one of the world's top natural gas exporters in less than a decade.

According to the FERC, the Federal Energy Regulatory Commission in Washington, the United States has seven existing export terminals, eight under construction, and 14 that have been approved for construction and are awaiting final investment decisions. Canada has two, and both are experiencing some form of difficulty. So in the LNG hockey game, the score is 29-2 for the United States.

We're a nation of builders, but we simply can't get big projects going well. The path must be cleared for such valued projects. Approvals have to be strict, but there must be a clear path to yes. If a proponent follows a very strict set of guidelines and strict rules, with public input and participation and with reasonable time frames, there has to be a signal to the proponent that they stand a strong chance of success if they follow the rules and the criteria.

We don't seem to enjoy that in Canada. That applies to all major projects going forward, and not just to the resource sector. Changes to major approvals were significant under Bill C-69, so it is our recommendation that the bill be amended with the series of recommendations that were submitted to the Senate during the debate on the legislation.

Virtually all sectors agree that in the absence of such a change, no large-sized project will be advanced, and certainly none will be undertaken, under this set of conditions. We do not think that stopping major projects and resource developments was the intended end result of Bill C-69, but it appears that that is what it has been.

Together, through effort, we can create jobs, improve air quality, have more successful manufacturing, and create an energy and economic future for Canada. LNG and manufacturing want to play that role. Our organization is going to be releasing a more comprehensive list of recommendations to help restart the economy, but this will be a major centrepiece of it.

Thank you for your time.

[The Chair, Liberal, Wayne Easter]

Thank you for your presentation.

We turn now to the Macdonald-Laurier Institute, with Richard Fadden and Jonathan Berkshire Miller.

Richard, I guess you're up.

[Richard Fadden, Former National Security Advisor to the Prime Minister, Advisory Council Member, Macdonald-Laurier Institute]

Yes, thank you, Mr. Chairman.

Thank you very much for the opportunity to speak to you.

Let me start by saying that I'm not sure I can say a great deal that is useful to the committee about the details of self-sufficiency, or supply chains and how they've challenged our national ability to procure essential equipment and potentially, in due course, to acquire medicines and food. Rather, I'd like to say a few words about why we find ourselves, not just as a federal government but as a country, in not as good a position as we could be in to deal with crises like the one we're dealing with now.

Being able to deal effectively with crises or emergencies requires forethought, planning, coordination and the taking of actual decisions in terms of mitigation and emergency preparedness. What I'm talking about, of course, is emergency preparedness as an important stand-alone activity for all orders of government, for the private sector and indeed for individuals.

To be direct, and I believe accurate, we have not been, for decades, as good as we could have been in dealing with emergency preparedness. I want to stress that this comment is not directed at a particular government. From the time I was made a deputy minister by Mr. Chrétien, I heard virtually every prime minister and minister speak about emergency preparedness, and, to suggest that I'm an equal opportunity critic, I think the same criticism applies to the public servants and to me. We all talked a good line. We all took a few initial steps but, sometimes for good reasons and sometimes for not-so-great reasons, we did not do all we could do on the emergency preparedness front.

Parenthetically, and speaking as a Canadian, we have to find a way to deal with the challenge of democracies with regular elections making it difficult to deal with long-term issues. It's not unique to Canada, but it's a real problem.

First, I mean that in dealing with emergency preparedness, we have to think in an organized way about bad things—geopolitical and climatic issues, natural disasters and, of course, pandemics. The first part happens a fair bit, but it's the second step that we do not do as well as we could, which is to coordinate within and between governments and with the private sector with a view of agreeing on what can be done to prepare for and lessen the effects of the bad things. We need to expend both political capital and real capital to deal with these mitigating measures.

Aside from anything else, it means that decision-makers—and again, I want to stress that I don't just mean politicians—must find the time, the energy and the interest to deal with assessments of future, long-term problems. Let me give you a good example that I think applies to the current situation. A few years ago, the United States National Intelligence Council issued a document entitled “Global Trends 2025”. What did they predict? They predicted the risk of a highly contagious respiratory disease that would likely cost the United States millions of deaths.

My last point is that, as we do this, we must not accept the argument of some that Canada can be an island in and of itself and develop manufacturing and other capabilities to deal with all our supply chain issues. The best way to do this is to work with our close allies. Here, I agree to some degree with Scotty and Ms. Gray. We need to deal effectively with the United States, but it cannot be only with the United States. The United States does not provide Canada with everything we need. This is helped by formal agreements with key allies on the nature of crises that we may face in the future.

One way or the other, we will make our dealing with future crises easier if we plan for them. I say this with not just the belief but the absolute conviction that the way the world is unfolding right now, with political friction, climatic effects and other things, we are going to have other crises.

I would urge you, Mr. Chairman, not to have your committee deal only with the effects of this one pandemic, but with future pandemics and future crises, be they natural disasters or of another nature. We have to do better on emergency preparedness. We have to do so at a federal level and on a national level and, in point of fact, industry needs to do better as well.

Thanks very much for listening, Mr. Chairman. I look forward to any questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Fadden.

Before I go to the last witness, I will tell you that the lineup for the first round of questions will be Mr. Poilievre first and then Mr. McLeod, Mr. Ste-Marie and Mr. Julian.

I am turning to the Sollio Cooperative Group, with Ghislain Gervais, president.

Mr. Gervais.

[Ghislain Gervais, President, Sollio Cooperative Group]

Thank you, Mr. Chair.

Good evening, everyone.

I am pleased to speak to you tonight, and I thank you for giving me the opportunity.

I will introduce myself first. I am Ghislain Gervais. I am a poultry producer in Saint-Guillaume in Centre-du-Québec. I operate an agricultural and grain farm with my wife, my son and my brother.

[Ghislain Gervais]

Since February 2016, I have been president of Sollio Cooperative Group, formerly known as La Coop fédérée.

Supply chains and food self-sufficiency are issues of great concern to us. In operation for nearly 100 years, Sollio Cooperative Group is the only Canada-wide agricultural supply cooperative. We represent more than 122,000 members, agricultural producers and consumers in 50 traditional agricultural and consumer cooperatives.

We have more than 15,000 employees in our three divisions: Sollio Agriculture supplies farms; Olymel specializes in pork and poultry farming and processing; and BMR is one of Quebec's leading retailers of construction materials and hardware.

Last year, our cooperative surpassed $7 billion in consolidated sales, and this year we will surpass $8 billion.

Having said that, I think it is important to bear in mind that our supply chains were under strain even before the pandemic, because of the strike at Canadian National, or CN, and the rail blockades, to say nothing of access to the Chinese market.

Agricultural producers and food processors are feeling the repercussions of the pandemic, which must be limited to protect the supply chain.

At Olymel alone, costs to date amount to more than $20 million, not counting lost market margins. While unforeseen costs mount—costs we assume in their entirety—American processing plants are receiving direct government assistance to stay open.

Recently, we urged governments to create a specific assistance program to ensure the agri-food sector's viability and the food security of Canadians. Measures announced since then by the Canadian government are a step in the right direction, but still clearly not enough. The government must above all not presume that we will be able to withstand a second wave of the pandemic if the dire needs that became obvious during the first wave are ignored.

We have already learned some lessons, and I'd like to take this opportunity to share our thoughts with you. We have defined areas for action that correspond to our vision of the economic recovery to be undertaken. Our aim is to help the agri-food chain face current and future challenges.

First, there is the increase in productivity, which goes hand in hand with infrastructure automation and robotization.

Second, greater food self-sufficiency is necessary, but agri-food exporters must also be supported through investments in food processing.

Developing the vitality of the regions is also an important aspect of the recovery, in particular by stepping up the deployment of adequate telecommunications infrastructure.

Our fourth area for action is support for a more sustainable economy which we believe involves significant support for the digitization and performance of agriculture.

Another avenue to consider is the promotion and support of the cooperative model, which has proven its worth and makes it possible to develop large-scale companies. The cooperative business model also reflects Canadian values.

Promoting the frontline trades represents the last, but not least, area for action. There are still labour shortages despite our current unemployment rates. The last few months remind us how essential the frontline trades are to our businesses and that they need to be supported.

These are the avenues we are proposing to ensure your support is well targeted and our supply chains are protected. They are necessary in order for Canada to increase its food self-sufficiency, but also to protect its capacity and its reputation as a world-class exporter, which have recently suffered.

I thank you again for your invitation. I would be pleased to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Gervais.

Thank you to all the witnesses.

We'll go to a five-and-a-half-minute round now to get everybody in, starting with Mr. Poilievre.

[The Clerk]

Mr. Chair, I'm sorry to intervene. I think there's a witness from the Macdonald-Laurier Institute who wants to share some opening remarks.

[The Chair, Liberal, Wayne Easter]

Okay.

The second witness from the Macdonald-Laurier Institute is Mr. Berkshire Miller.

[The Clerk]

Yes.

[The Chair, Liberal, Wayne Easter]

Okay.

Mr. Berkshire Miller, go ahead.