Finance Committee on May 26th, 2020

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Producing at home obviously helps to ensure the vitality of our regions.

[Ghislain Gervais]

Yes.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Could you tell us more about that?

[Ghislain Gervais]

We have used our cooperative business model to set up large cooperatives that have a major impact in the regions. The values guiding our decisions are honesty, accountability, solidarity and fairness. These are values cherished by Canadian society.

I have another example of our contribution to the Canadian economy. Over the past five years, we have paid out $238 million in dividends to our members. Few $8-billion companies in Canada have returned that much money to Canada's regions.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I can tell you, I see it on the ground. The cooperative movement in agriculture, in particular, really makes all the difference.

We are talking about food self-sufficiency. Quebec's former Minister of Agriculture Jean Garon spoke of food sovereignty. He said that we would not try to start growing bananas here. His goal was for our exports to compensate for our imports. Exports are also important to our businesses.

How important are exports to your industry during this pandemic?

[Ghislain Gervais]

Due to the pandemic, we are unfortunately not able to add as much value to our export products as we would have liked.

It is important to know that all the products we succeed in exporting represent economic value that we can reinvest in modernization and elsewhere to better support our member producers. It also reduces the country's trade deficit. It is profitable.

Canadian pork production, for instance, has an excellent reputation. We are very good at it. It reduces the trade deficit, helps maintain investment in Quebec's regions and contributes to the economic vitality of the regions. Governments, in turn, receive significant tax revenue from these economic activities.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

Since I have a little time left, I am going to ask you one last question about exports, Mr. Gervais.

How is it going with China with regard to pork exports?

[Ghislain Gervais]

We were hit hard last year when China banned pork from Canada from June to November.

There is currently some partial opening. I say “partial” because we have a plant in Red Deer, Alberta, that still cannot export to China. For us and for the organization, it represents a $2 million to $3 million shortfall per week.

We have been enduring this shortfall for almost a year now. That is $150 million less to maintain our operations, to invest and to return in wealth to our members in the regions of Quebec and Canada.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I hope the message will be heard.

Thank you.

[Ghislain Gervais]

I hope so.

Thank you for your questions.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

We will turn to Mr. Julian, and then we'll start the second round with Mr. Morantz.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thanks, Mr. Chair.

Thanks to all of our witnesses for being here today. We certainly appreciate it and hope that your families are all safe and healthy.

I have a number of questions, so I'd like to get fairly quick responses.

First, to Ms. Greenwood and Mr. Sobot, you've both been talking about the issue of protective equipment. Ms. Greenwood, you were suggesting that we work with the United States, but last month, of course, Mr. Trump interfered in that process and actually banned 3M from exporting N95 masks to Canada.

As long as his erratic and irresponsible policy approaches are in place, does it not make more sense to really focus on building protective equipment manufacturing abilities here in Canada? That's a question I direct both to Ms. Greenwood and also to Mr. Sobot.

[Maryscott Greenwood]

Thank you very much, Mr. Julian, for the comment and the question.

No, I don't think it makes sense to try to be self-reliant. I think it would be almost impossible, very expensive and undesirable to try to not just unscramble the egg but unmake the omelette that is the North American integration.

With respect to your question on 3M, there was unfortunate rhetoric, I agree, coming out of the White House. We stood strongly against that rhetoric. but the reality was that Canada and Mexico both prevailed in gaining an exemption in the FEMA temporary final rule. The Federal Emergency Management Agency is a U.S. agency.

When it comes to personal protective equipment, Canada and Mexico are specifically exempted from the protectionist policy of the United States and the serve Americans first policy. Not only that, importantly, so are the—

[Veso Sobot]

I'm sorry to cut you off, but I want to go to Mr. Sobot, and I have a ton of other questions.

I do think we need to be more self-sufficient, especially in national security issues. I believe COVID was a great risk. However we can imagine greater risks than COVID. I think Canada needs the ability to manufacture right here and to make some of those key items that are necessary for Canadians' health. That would then help with the American relationship because we can sell back into the United States should they need it as well.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much for that.

Mr. Masterson, I actually come from the plastics sector. I started my work in a plastics factory in Delta, B.C.

The plastics industry—yes, you're absolutely right—has proven its worth through this pandemic, but the problem still exists of plastic waste and recycling. Certainly, on the coast of British Columbia, I can tell you that there are piles of plastic garbage that are found in certain parts of the coast.

What is the industry doing to dramatically reduce the amount of plastic waste and dramatically increase the amount of recycling that takes place in the industry?

[Bob Masterson]

Let me answer that in the reverse order.

First, as you know, in British Columbia the recycling system under Recycle BC is a 100% extended producer responsibility system. Those that produce packaging and put it into the economy are responsible for the cost of the recycling system. The number one thing we're doing is telling all the provinces that it is a model that has to be followed coast to coast. We have been effective in Ontario. Ontario is transitioning to the B.C. model. We're advocating for Alberta to do that. Quebec is going to have to figure that out as well.

Second, industry has to innovate, and there are some really exciting things happening. You have companies like Dow, which announced late last year that for the first time it is making a resin, a plastic material that goes into all the other products, that now contains 70% recovered plastic, creating that true circular economy.

The industry is committed to that. It's putting its own money where its mouth is, in innovation. It supports extended producer responsibility. It understands that it owns the issue of plastic waste and has to work with government officials and consumers to achieve that.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much.

Mr. Lemaire, you talked about the cap on the allowable limit for the CERB. That's something that preoccupies a number of us.

You are suggesting that we don't have that $1,000 cap, and allow people to access the CERB but not have the kind of compression that exists right now, which makes it difficult for people to work, for example, in the produce sector and in the agricultural sector, at the same time that they are accessing the CERB from other businesses.

Is that not your suggestion to committee, that we raise the cap on the allowable limits that exist in the emergency benefit?

[Ron Lemaire]

Raising the cap would be one direction they could go in. I know an exemption may be too far for the agri-food industry or agricultural industry.

We need some type of incentive to bring Canadians back to the farm and to agriculture in the positions they can support. How do we do that? Rather than a disincentive, an incentive would be ideal. I know they mentioned that the student support was a good start. The other piece is how do we leverage the existing tools?

[The Chair, Liberal, Wayne Easter]

We have Mr. Morantz, followed by Mr. Fragiskatos.

Marty.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair. I want to direct my questions to Ms. Gray.

Ms. Gray, you talked in your opening comments—by the way, it's always great to have a fellow Manitoban on the panel; you're the second one today—about capturing opportunities. I want to see if you can elaborate on that a little bit.

You touched on viewing supply chains through a continental lens, tax competitiveness and critical infrastructure. I wonder if you could elaborate on those things, particularly around tax competitiveness.

[Diane Gray]

There are a number of companies right now—and I would say probably almost all, with maybe the chemical and plastics industries exempt from that—involved in some type of production that are examining their supply chains from a security perspective. Part of that is looking at the number of suppliers they have, the locations of those suppliers, the amount of inventory they are carrying and whether they have to carry more, and what the impact is on their overall production activity.

However, there are some new factors that are coming into play right now. As I mentioned before, with what we've heard from companies that have been talking to us—I'll say in the last three weeks—about real estate opportunities and a place in Canada to locate what is clearly a reshoring of their business activity, it is directly related to some of the backlash against China. They talk about it primarily as an American thing, but I've read a fair bit that it's happening in some parts of Canada as well, from a customer perspective. The second part of that primarily relates to security.

Why are they looking at Canada as opposed to putting some of those production places directly into the United States? Well, they've talked about the overall cost of doing business. In Winnipeg, we have some competitive advantages, particularly in the manufacturing sector, with our hydroelectric and low-cost power, our land costs, our labour costs, particularly relative to other parts of Canada. It's certainly not as cheap as Mexico, but it's about the proximity to their customers. That is what is driving that.

You asked specifically about tax rates.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Yes.

[Diane Gray]

Tax rates are one component that a business considers when they look at the overall cost of doing business. Any company is going to look at their bottom line, and taxes obviously play a key component of the cost of doing business. Always pegging ourselves against our closest competitors on an overall tax rate I think is a realistic approach. It's not allowing those tax rates to get really out of whack, frankly.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Is there anything specific around taxation, though, that you have concerns with?

[Diane Gray]

Well, corporate income tax is a factor; provincial corporate business tax is a factor. Regulatory issues and approval times—and others have mentioned that—are all factors. It's not a specific tax. It's that overall cost of doing business and ease of doing business that I think sophisticated companies look at.