Finance Committee on Dec. 1st, 2020

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Do you have interaction with counterparts in other countries around their planning for summer festivals?

[Martin Roy]

We have had some discussions with associations in Europe. In particular, we are working with an association in Europe by the name of De Concert! The festival organizers who make up the federation have resolved to hold their events in 2021. In the past few days, they put together something of a manifesto in which the federation proclaims its belief in 2021 festivals and events; the manifesto is signed by the organizers of 120 festivals and events. That means festival organizers in Europe are firmly intent on holding events in the summer of 2021.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Are their decisions driven by the availability of vaccines in their own countries and/or rapid testing?

[Martin Roy]

Not necessarily.

The public health guidelines vary from country to country and from province to province. This many months into the pandemic, we now know that the risk is relatively low outdoors and even lower when people wear masks.

Would it be possible for people to attend an outdoor festival while wearing masks? Would the public health authorities in different jurisdictions here allow it? That's a question worth asking.

All kinds of innovative options exist. Festival goers don't necessarily have to be packed together like sardines. It is possible to physically distance when the size of the space allows.

We have all seen various solutions being deployed, including drive-ins and the drawing of circles on festival grounds to keep festival goers two metres apart. That kind of thing is possible in a large outdoor venue.

[The Chair, Liberal, Wayne Easter]

We will have to end it there.

Ms. Koutrakis, you have about three minutes, split with Mr. Fragiskatos.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair, and thank you to all our witnesses for your presentations this afternoon.

In the interests of time, I will address all my questions to Mr. Lemaire.

I listened carefully to your testimony, especially your comments on the perishable agricultural commodities act, PACA. My understanding is that the lack of a Canadian equivalent is a major barrier to our Canadian producers.

What would a Canadian version of PACA look like? How would it compare with the U.S. PACA? Do you know if at this moment we're working on putting something like that in place?

[Ron Lemaire]

The quick answer is that we have one more piece of a three-legged stool to put together, and that is the implementation of a financial protection tool that would protect produce sellers and farmers in the event of a bankruptcy. That would be the statutory deemed trust.

With regard to other tools that exist within the perishable agricultural commodities act, under the leadership of the Liberal government with Minister Vanclief, back in 2000 there was a model put in place that operates now under the dispute resolution corporation. Similar to the way claims are handled through PACA in the U.S., we have a similar model here for dispute resolution. The only piece that we're missing is the bankruptcy tool.

The federal government had the best of intentions in terms of protections for farmers under the BIA, the Bankruptcy and Insolvency Act, but unfortunately it does not protect fresh fruit and vegetable farmers and sellers because of the unique attribute of how we grow, sell and market our products. We're outside of the tent relative to the protections in our current regulations.

[Annie Koutrakis, Liberal, Vimy, QC]

Once a limited statutory deemed trust similar to the PACA is in place, can we expect preferential treatment for Canadian producers? How quickly do you think that could be reinstated, if quickly at all?

[Ron Lemaire]

Most definitely we could. It doesn't require any presidential intervention in the U.S. to reinstate our access. It's a letter from the Perishable Agricultural Commodities Act team—basically, from their administration—saying that they recognize the equivalency and that Canadian farmers exporting to the U.S. have preferential access again.

We are the only country that had that access prior to 2014, when it was taken away. They've identified that their intent is ideally to have it back in place.

[Annie Koutrakis, Liberal, Vimy, QC]

Do we know why they took it away, Mr. Lemaire? I understand that we perhaps didn't hold our side of the bargain or we didn't offer something similar to the U.S. producers. Am I correct?

[Ron Lemaire]

You're correct.

It's been in the ballpark of 30 years of talking about getting there. We got very close with creating the DRC, the dispute resolution corporation, and the program within that model. Without the bankruptcy, they finally said that they needed that last leg of the three-legged stool to make it work. It's inspection, destination inspection, dispute resolution and bankruptcy.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Go ahead, Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Mr. Lemaire, you talked about the connection between the family farm and restaurants. Like all MPs on this committee, I'm very concerned about the future of restaurants beyond the fact that I have many in my community, as we all do. I grew up in that sector. My father was a restaurateur before his retirement. The same is true of his brother and sisters. Every relative that we have in Canada, actually, is involved in the restaurant business.

I want to ask you to elaborate on the connection between restaurants and the family farm. I think we're all concerned about family farms, as we naturally should be. They're so central to the well-being of Canada. I wonder if you can elaborate on the fact that the family farms in this country require restaurants to be strong and vice versa.

[Ron Lemaire]

Definitely, I can. Imagine the way produce is sold. While there are larger farms, the majority of the product is grown by small farm operations and then consolidated. It is then sold through maybe a dealer, which is another farmer, to wholesale, or even through jobbers. The jobber is a small operation. It could be one truck that picks up product either right from the farm and/or from a wholesale market that distributes to restaurants in the Toronto, Montreal, Vancouver or Calgary markets.

The complexity of the procurement and distribution to food service trickles right back to the family farm. We have a term in produce: “sell it or smell it”. It's extremely perishable. You need to move the product quickly when it's pulled out of the ground, put into the system and sold to the end user. Through that system, if you are moving product and the restaurant is not able to pay, it may have to go through two or three other hands before it goes down to the farmer. In some cases there's a direct line, but as Ms. Sullivan mentioned, there are many pieces in our food system between the farmer and the end point of food. Any break in that system could cause a dramatic impact to the farmer himself.

[Peter Fragiskatos, Liberal, London North Centre, ON]

These challenges are all the more pressing in the context of COVID-19. Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Ron, I don't know why we can't get it over the finish line. We've recommended a couple of times at the finance committee that it be done. I understand the agriculture committee has just recommended that it be done. If anybody's listening from finance, let's get this damn thing done.

Mr. Ste-Marie is next.

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

Thank you, Mr. Chair.

I want to thank all the witnesses in this afternoon's panel.

My questions are for Mr. Roy.

Mr. Roy, you talked about how you understood yesterday's economic statement and what needs to be done in the months ahead. Can you tell us what morale is like among your members? What do they need?

You mentioned recommendations. Would you mind explaining them again?

[Martin Roy]

As I said, we are encouraged by a few measures, but the discouragement felt by FAME and RÉMI members is fairly widespread and profound. A few months ago, people were telling me that they had lost a year and it was hard but that 2021 would be even harder. A normal festival and event season won't be possible in 2021. We aren't expecting things to return to normal until 2022. That means we have to rethink our business models. We have practically no self-generated revenues. The only thing keeping us somewhat afloat right now are the subsidies. Otherwise, we would be completely lifeless. That's the reality on the ground.

We made recommendations regarding the emergency wage subsidy, which has come a long way. It is essential that the subsidy remain tailored to the culture and tourism sectors, to account for the hyperseasonal nature of our business, as I mentioned earlier. The funding for Canadian Heritage has increased. We feared a decrease, but it has been postponed. The problem has not been fixed; it still exists, and if nothing is done, come 2022, we will be negatively impacted again when funding levels drop back down.

We believe the sector's economic recovery hinges on the marquee tourism events program, version 2.0. It was introduced in response to the 2008 crisis by the Conservative government at the time. The Conservatives invested $100 million over two years to stimulate the economy through events-based tourism. That would be the ideal solution for us right now. It would, however, require more than the 2009-10 investment, which is why we are recommending $225 million in funding over three years—so $75 million times three. There would be an indirect spinoff for hotels.

I would also draw the committee's attention to the recommendations that were made further to the evaluation of the program in 2011, when it ended. There were three lessons learned. First, applicants needed time to develop project proposals, second, it was necessary to take the time to develop a data collection system, and third, time was of the essence.

For some people, summer 2022 is a long way off. For us, now is when we have to start planning for festivals and events that will take place 12, 15 or 18 months down the road. That is why we are calling on the government to include the program in its next budget. The recovery of the event and tourism sector would then truly be possible.

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

Thank you. This should be clear.

It's sad to see that summer 2020 was cancelled for your members. I gather that things will be much the same next summer. These decisions obviously fall under public health jurisdiction.

The government announced an extension of the emergency wage subsidy and the Canada emergency rent subsidy until next June. I understand that, if the public health authorities maintain the health restrictions, the government will need to extend its support measures. Isn't that right?

[Martin Roy]

Mr. Ste-Marie, you're absolutely right. There must be a balance between the health crisis issue and the government's response. We're currently hearing that assistance programs will be extended until June. However, if there are no festivals this summer, at the very least, the hardest hit businesses will require assistance.

That's why we're working with the Coalition of Hardest Hit Businesses. Some 3% to 5% of businesses are still really struggling, including festival and event organizations, hotels and other businesses. These businesses must be assisted on a priority basis, even if it means adjusting the government assistance. The model doesn't need to be one size fits all. Some businesses are harder hit than others. This must be acknowledged. Programs must be designed to take this reality into account.

I believe that the emergency wage subsidy may be needed well past June 2021, perhaps for a few specific sectors and businesses that we could focus on together. Festivals and events are an obvious example.

[The Chair, Liberal, Wayne Easter]

Gabriel, you'll have to split 30 seconds between the question and the answer.

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

Okay.

Mr. Roy, you have one minute to make additional comments.

[Martin Roy]

I've been to Joliette quite often, in your constituency, Mr. Ste-Marie.

The Festival de Lanaudière is incredible. It's the largest classical music festival in Canada. The event organizers received some good news yesterday. The reduction in their grant was cancelled. They were technically supposed to lose $30,000 this year. The correction made through the economic statement is good news not only for this particular festival, but for many festivals across Canada.

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

Yes. The festival's new director is also very dynamic.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you both.

We'll turn to Mr. Boulerice, who will be followed by Mr. Falk.

Mr. Boulerice, you have six minutes.