Finance Committee on May 16th, 2022

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order. Welcome to meeting number 45 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference of May 10, 2022, the committee is meeting on Bill C-19, an act to implement certain provisions of the budget tabled in Parliament on April 7, 2022, and other measures.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. As per the directive of the Board of Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during proceedings.

I would now like to make a few comments for the benefit of the witnesses and the members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike and please mute yourself when you are not speaking. Interpretation is available for those on Zoom. You have the choice, at the bottom of your screen, of floor, English or French audio. For those in the room, you can use the earpiece and select the desired channel.

As a reminder, all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard. I request that members and witnesses treat each other with mutual respect and decorum.

I would now like to welcome today's witnesses.

We have with us, from Agri-Food Analytics Lab, Sylvain Charlebois, director and professor. From the Association of Mead and Honey Alcohol Producers of Quebec, we have René Bougie, president, and Vincent Lambert, secretary. From JDRF Canada, we have Dave Prowten, president and chief executive officer, and Alanna Weisman, endocrinologist. Also, from Publish What You Pay Canada, we have Sasha Caldera, campaign manager, beneficial ownership transparency.

We'll now begin with Mr. Charlebois from Agri-Food Analytics Lab and his opening remarks for up to five minutes, please.

[Dr. Sylvain Charlebois, Director and Professor, Agri-Food Analytics Lab]

Thank you, Mr. Chair, and dear members. I would like to thank the committee for inviting me to speak about Canada's food affordability situation.

Food supply chain hangovers due to the pandemic and the global impact of the invasion of Ukraine have enticed many to question the global nature of our food system. The entire planet operates under a 90-day production cycle of agricultural commodities. Canada's contribution occurs in the fall, obviously, along with the U.S. and parts of Europe.

About 15% of all calories on earth come from wheat. Corn covers a lot of calorific ground as well. With regard to Ukraine, coupled with sanctions against Russia, our global wheat deficit this year will be a significant challenge, given that 25% of wheat exports come from that region. Also, India's decision today to ban exports of wheat will only make things worse.

We are going to be short on wheat, corn, barley and many other commodities. By the time we are done with 2022, it is likely that more than 100 million more people will experience either famine or acute hunger, something that the world has never seen before.

Canada will be fine, food access-wise, but food will get more expensive. Poor nations will always lose access to their food supply first, while richer nations, such as Canada, will secure food supplies by paying more. Poor countries have no capacity to store calories at all. Germany, typically a big buyer of Ukrainian commodities, stated that retail food prices could increase by as much as 50% this year. Commodity traders are already buying and even hoarding what they can get to secure supplies needed for the next several months.

Canada can and should make a greater difference. Of some of the challenges we are currently facing, fertilizer access is certainly one. These critical inputs for farmers are, on average, about $1,500 U.S. a tonne, which is five times what it was 12 months ago. Farmers need fertilizers to produce crops, but the market is controlled by a handful of very greedy multinationals who supply-manage their products to artificially boost fertilizer prices. Some of these multinationals are actually right here in Canada. Many farmers are paying tariffs on fertilizers right now—and even surcharges. In fact, some farmers right now are purchasing fertilizer without even knowing what the price will be.

We are all paying for years of genetic engineering bashing in the media as well, by groups who have used fear to put forward an organic-centric diet for affluent city dwellers. The approval process of new traits for new crops can take years in many developed countries, including Canada.

Agriculture is and will always be about technologies, and we need to accept that as such. A globalization 2.0 agenda will require getting nations to continue to trade, but it also will require them to adhere to an acceptable humanitarian conduct to participate in a global economy.

Canada should take steps to make the agricultural sector more efficient and productive, and have a strong food self-sufficiency strategy.

The only province in Canada that has already adopted such a strategy is Quebec. Canada needs a way to produce more in an open economy with greater access to affordable prices, while growing the agriculture sector through sustainable trade.

A comprehensive strategy would include sustainable water and renewable energy practises to support our production.

Canada lacks ambition and can do better. We have so much to offer.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Charlebois.

Now we will hear from the Association of Mead and Honey Alcohol Producers of Quebec for up to five minutes.

[René Bougie, President, Association of Mead and Honey Alcohol Producers of Quebec]

Good morning, everyone.

Thank you for inviting me to appear before the committee.

My name is René Bougie, and I am the co-owner of Miellerie King—distillery and meadery, located in Kingsey Falls, in the Centre-du-Québec region. I am also the president of the Association des producteurs d'hydromels et d'alcools de miel du Québec, or APHAMQ.

Our association represents about half of Quebec's mead producers, who produce over 50% of all meads.

Currently, Quebec has issued about 25 mead production permits, and that number has increased in recent years.

The reason we are here today is that in June, Bill C-19 will eliminate the excise duty exemption for wines. This would have a major impact on our industry.

The situation for mead producers is unique. Indeed, we are currently facing several challenges. There is the bee mortality rate, which has been increasing steadily over the past few years, the increase in various production costs, such as raw materials, fields to look after our bees and diesel. There are also the costs of transporting our various goods and the costs of packaging the bottles and putting labels on the jars. The costs are constantly increasing. Eliminating this important exemption would have a significant impact on our various productions.

What we are asking for is that this exemption be maintained. As a result of negotiations undertaken by provincial negotiators, Quebec mead and berry or maple alcohol producers will not have to pay the mark-up to the Société des alcools du Québec, or SAQ, in the context of the World Trade Organization, or WTO, negotiations.

We would like the federal government to apply this type of exemption. In fact, this is what the bill provides for the production of alcohol at home.

I have presented the main elements related to our demands.

I'm happy to answer questions from members of the committee.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Bougie.

Now, from JDRF Canada, we have Mr. Prowten.

[Dave Prowten, President and Chief Executive Officer, JDRF Canada]

Good afternoon. Thank you for the opportunity to speak with you today.

My name is Dave Prowten. I'm the president and CEO of JDRF Canada. We're the leading charitable funder of type 1 diabetes in the world. I'm joined by Dr. Alanna Weisman, who is a clinician scientist and endocrinologist at Mount Sinai Hospital and University Health Network.

We are here to offer one key recommendation that will vastly improve the lives of Canadians who live with type 1 diabetes. It's a much-needed and long-awaited change to the disability tax credit.

Type 1 diabetes is a relentless 24-hour-a-day and seven-day-a-week disease that requires monitoring and attention. From the moment of diagnosis, a person with type 1 diabetes is reliant on insulin to stay alive. It therefore, by definition, is truly a life-sustaining therapy.

The Centers for Disease Control and Prevention estimate that someone living with type 1 diabetes has to make roughly 300 or more decisions per day than does someone without type 1. Do I need to eat? Do I not need to eat? Do I need to eat less? Do I need to eat more? Do I need to take insulin? How much insulin do I need? Do I need to check my blood sugar? Even with vigilant management and innovative technologies, the risk of long-term complications like heart and kidney disease, and the short-term realities of dangerously low blood sugars, which can lead to confusion, coma and even death, still remain.

That is why we are asking the committee today to make things a little easier for those living with type 1 diabetes by ensuring that they have equitable access to the disability tax credit by removing or reducing the antiquated and arbitrary 14-hour-a-week requirement. It is simply the right thing to do.

Type 1 diabetes is a costly disease, not only for our health care system but also for individuals and families. Depending on which province you live in and what type of benefits package you have through your employer, it can cost Canadians with type 1 diabetes, out of pocket, up to $15,000 a year.

Previously, JDRF has advocated for reducing the number of hours needed to qualify for the DTC from 14 to 10, which was also proposed in the fairness for persons with disabilities act. The disability advisory committee appointed by the Minister of National Revenue actually proposed an even better solution, that qualification be automatic for all Canadians who need life-sustaining therapy, including insulin.

We implore the committee to amend the budget implementation act and call for either a removal of the 14-hour requirement entirely or, alternatively, a reduction in the hours to seven, so that more Canadians with type 1 diabetes can qualify.

To speak more on the disability tax credit, I will turn things over to Dr. Weisman.

[Dr. Alanna Weisman, Endocrinologist, JDRF Canada]

Good afternoon. I'm Dr. Alanna Weisman.

We are supportive and grateful for the commitments made in budget 2021 to recognize more activities under the current requirements, such as time spent determining dietary intake, physical exertion, medical appointments and medically required recuperation. This will help more people with type 1 diabetes access the tax credit. However, the current requirements are still problematic from a policy and medical perspective.

The 14-hour requirement for eligibility was introduced when the DTC was established in 1988. The Canada Revenue Agency states, “The purpose of the DTC is to provide for greater tax equity by allowing some relief for disability costs, since these are unavoidable additional expenses that other taxpayers don’t have to face.”

People with type 1 diabetes should not have to worry about how they are going to pay for insulin, supplies, advanced glucose monitoring devices or insulin pumps. Those costs exist regardless of how much time per week is spent on managing diabetes.

For example, those living with type 1 diabetes rely on insulin to survive. Diabetes management has come to the point where insulin pumps are viable options for individuals looking for an alternative approach to calculating and administering daily doses of insulin. While an insulin pump saves time and may help ease the mental burden associated with calculating insulin doses, it costs $6,000 to $8,000 and is not often covered by traditional health insurance plans. Less time spent on managing diabetes does not equate to an eased financial burden.

The current requirements for the disability tax credit are rife with inequities in access based solely on how health care providers fill out forms. The DTC could be approved for one person while being denied for another who has the same condition, simply because of a difference in the way their individual health care provider filled out their application form.

The current eligibility process is cumbersome and the 14-hour requirement is arbitrary, presenting many challenges for those trying to access the benefit. This barrier can be improved by removing the requirement entirely or reducing the threshold to seven hours to eliminate uncertainty around qualification. If this threshold is not removed or reduced to seven hours, individuals with type 1 diabetes will continue to be denied access, forcing them to remain living with the financial burden that comes with this disease and without the proper support in place to ease it.

I would like to thank JDRF and Dave for their work, and to thank the committee for hearing our testimony. We hope you will consider our recommendation to make the DTC more equitable and accessible to all with type 1 diabetes.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Dr. Weisman and Mr. Prowten.

We are now moving to Publish What You Pay Canada and Sasha Caldera for up to five minutes.

[Sasha Caldera, Campaign Manager, Beneficial Ownership Transparency, Publish What You Pay Canada]

Thank you very much, Mr. Chair and House finance committee members. Thank you for inviting me to speak today.

I might have connection difficulties. If I am lagging, please let me know, and I will turn off my screen.

My name is Sasha Caldera, and I am the beneficial ownership transparency campaign manager at Publish What You Pay Canada. Publish What You Pay Canada is part of the global Publish What You Pay movement of the civil society organizations working to make oil, gas and mineral governance open, accountable and responsive to all people. For the past four and a half years, I have been leading a coalition consisting of three civil society organizations to advocate for a publicly accessible beneficial ownership registry with our partners Transparency International Canada and Canadians for Tax Fairness.

In budget 2022, we applaud Minister Freeland's commitment to accelerate the timeline for a publicly accessible corporate beneficial ownership registry by 2023. This commitment is two years earlier than anticipated and includes participation from willing provinces and territories. Budget 2022 also includes a commitment for discussion with provinces and territories for a beneficial ownership property registry. Together these announcements are important to combat the proceeds of crime from entering Canada's economy.

Experts estimate that $45 billion to $113 billion is laundered annually into the country. Canada's announcement for a publicly accessible beneficial ownership registry is in line with other G7 and G20 countries committing to deploy such registries. These tools are now urgent national security priorities to prevent Russian oligarchs and other corrupt foreign officials from hiding dirty money in liberal democracies. Currently 105 countries around the world have made commitments to implementing publicly accessible registries.

The commitment in budget 2022 for a public registry includes ensuring that provinces and territories can participate in a registry system. As a vast majority of companies are registered within provinces, Ottawa will need to offer a blueprint that provinces can get behind. We recommend that the federal government reach an agreement with provinces and territories to allow provincially registered companies to send beneficial ownership information directly into a central registry that is managed by the federal government.

In turn, provinces can mirror legislation to their own business acts based on legislative amendments to the Canada Business Corporations Act. Using this approach, provinces would not have to devote resources to upgrading their own business registries, and provincial authorities can access the back end of the registry for investigations. Additionally, provinces can use beneficial ownership property registries to track down properties that might be owned by oligarchs on sanctions lists. We hypothesize that provinces can reap substantial revenues from asset forfeitures, as we recognize that properties are commonly used as vehicles to launder money in Canada.

Ottawa's leading the design, staffing and maintenance of a registry would be practical for a number of reasons. First, it would be appealing to smaller provinces that might not have the resources to collect and scrutinize beneficial ownership information. Second, Ottawa can commence work with willing provinces and eventually expand the registry to cover the entire country. Finally, if provinces start to collect and publish different information about beneficial owners on their own, it will be frustrating for businesses that require consistent data to fulfill anti-money laundering reporting requirements. Businesses having access to a free and searchable registry with verified data can reduce administrative costs to carry out due diligence checks and improve compliance with federal regulations.

With respect to the legislative changes in Bill C-19, I would recommend that under division 30, proposed subsection 21.21(1) should be revised to as follows: “The corporation shall conduct ongoing monitoring and, at least once each financial year, ensure that it has identified all individuals with significant control over the corporation and that the information in the register is accurate, complete and up to date.”

This revision is necessary because companies controlled by criminal organizations that wish to abuse the system or to evade taxes can delay updating beneficial ownership information by simply relying on this annual reporting requirement. The proposed change places the onus on the company to be proactive and ensures that the director of Corporations Canada is kept informed. Moreover, the public registry will possess the most accurate information about individuals of significant control.

Moving forward, we urge the federal government to ensure that all design elements of a publicly accessible registry are included in the second budget implementation act in order to meet the federal government timeline of 2023.

Furthermore, stakeholder consultations must be carried out in the most transparent manner, where a diverse cross-section of civil society, journalist and industry submissions are made public. We see this approach to be consistent with the goal of a publicly accessible registry, which is a crucial anti-money laundering tool that can strengthen the integrity of Canada’s economy.

Thank you so much for your time, and I'm happy to take your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Caldera.

I'd like to thank all of our witnesses for their opening remarks.

We are now moving to our first round of questions from members. In this round each party has up to six minutes to ask questions of the witnesses. We're starting with the Conservatives.

I have MP Stewart up for six minutes.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Mr. Chair.

My questions today are for the Juvenile Diabetes Research Foundation. I would like to thank you and each and every one of the presenters for being here today.

These questions can be answered by either Mr. Prowten or Ms. Weisman. You can decide that for yourselves.

I wanted to say a few things. Growing up, my mother's two best friends, two sisters, both had type 1 diabetes. They've both passed on at this point. They were very close. They lived and grew up down the street from where I lived. Today some of my best friends have children with type 1 diabetes as well. Certainly I am no expert in it, but I have seen and witnessed some of the struggles first-hand.

I'm going to give you some quotes from a friend of mine, just so that you can see where the mindset is of many parents today who have children with type 1 diabetes.

This one particular mother says to me, “Jake, I'm now functioning as my child's pancreas, literally. It's all in my...to do what that pancreas is supposed to do but now doesn't. I wonder if the Prime Minister thinks he needs his pancreas 24 hours a day. I can guarantee it's a 24-hour-a-day job, though I wish it were only 14 hours. I'd like to know how he would do working a full-time job and performing the job of his child's pancreas. The burden is so heavy that I've seen type 1 parents give their careers up to care for their child, and I've watched them run on minimal sleep themselves. The burden is really that heavy.”

Today my questions mainly sit with the disability tax credit. Both kids and adults who have type 1 diabetes require life-sustaining therapy for the rest of their lives. Most have insulin pumps that give insulin 24 hours a day. Can you confirm that an inequality of access to the disability tax credit is really about patients and doctors trying to navigate arbitrary and inconsistent rules by the Department of Finance and Revenue Canada?

Thank you.

[Dave Prowten]

I'll start, and then I'll let Dr. Weisman maybe conclude.

We did a survey of our constituent base, and 43% of those who responded indicated that they have trouble getting the disability tax credit, whether or not that's from their medical professional or through the system. It's very bothersome and cumbersome for people, because not only do they have this disease but then they have to track what they're doing and defend all the time and energy spent managing that with their GP or endocrinologists. This is about giving people a credit, a disability tax credit, a financial break, but, really, they have to justify their life to get through the system to get the credit. Your question is actually very well directed, because it is a real challenge for us to get it through, and in some cases doctors are being asked to be compensated for the time spent on the form.

Dr. Weisman can give more specifics? It's a credit, but it's costing people, which is unfortunate, too.

[Dr. Alanna Weisman]

Absolutely. I echo everything Dave has said. I would just add that there is inequity in the system of applying for the tax credit. Because some providers may have only a few patients with type 1 diabetes, particularly in more rural or underserved areas, they may be less familiar with the process. We do see this inequity based on the particular provider's experience with the process, whether they support the application and, in addition, how much they might charge—as Dave alluded to—for completing this paperwork on behalf of the patient.

This is a costly condition, as Dave alluded to as well. There's been a lot of progress in technologies. They've helped a lot of people, but they're expensive. Regardless of the amount of time a patient is spending managing the condition, they're still having these financial burdens.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Ms. Weisman.

I heard a parent ask whether the government asks someone who is blind if they cannot see at least 14 hours per day. You can see the stress that parents of children with type 1 diabetes are under.

It does defy common sense that Canadians requiring insulin multiple times a day for the rest of their lives don't automatically qualify as requiring life-sustaining therapy for at least 14 hours per week. When you think about this, it's a 24-hour-a-day process for anyone living with type 1 diabetes. Would you mind elaborating just a little further on that?

[Dr. Alanna Weisman]

I'm happy to.

Absolutely, as Dave mentioned in his opening remarks, insulin is a life-sustaining therapy for people with type 1 diabetes. If they were to not administer insulin, after a very short period of time they would be at risk of having dangerously high blood sugars, potentially leading to avoidable hospitalizations, coma or even death.

Our standard of care is to deliver insulin, as we call it, “intensively”, which means either through multiple injections per day with each of those injections needing to be thought about and calculated, or through an insulin pump, which again is still being delivered on a 24-hour basis, still with multiple calculations and adjustments that need to be made each day. Insulin is absolutely a 24-hour, life-sustaining therapy.

Also note that in type 1 diabetes, there are no other medications approved for treatment. We have one medication, and that is insulin.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Stewart.

We're moving to the Liberals and MP Baker for six minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much, Mr. Chair.

Thank you so much to all our witnesses for being with us today. I wish I had time to ask questions to all of you.

I'm going to start with Mr. Charlebois, if I may. My understanding is that our research shows that food prices are going to rise by approximately 5% to 7% this year. Can you speak to what the key reasons are for this increase?

[Dr. Sylvain Charlebois]

Certainly.

When we published Canada's Food Price Report in December, we were expecting an increase of anywhere between 5% to 7%. Given what has gone on so far in 2022, we are expecting the 7% threshold to be surpassed essentially because of the invasion of Ukraine.

I would probably point to two major factors.

First, we did start the year with this COVID hangover affecting supply chains. What a lot of people may not appreciate is that, as soon as efficiencies of supply chains are affected, it tends to cost more to move products around, whether that's on water or on land. That's exactly what's been going on. Variants have actually impacted the economies around the world at different times and in different ways.

Planning, predicting and forecasting in logistics have been very difficult and challenging for companies. That's why it's costing more to do anything right now. That's the one big factor.

The other big factor, obviously, is the war. Let's face it—that particular region is so critical to global agriculture. It does produce a lot of grains, as I mentioned, but it's the reaction to the war that is really going to cost way more, I think—the sanctions on Russia.

Also, what we're slowly seeing is nations panicking. We saw a few weeks ago Indonesia banning exports of palm oil. That's going to have a huge impact on vegetable oil as an ingredient, and vegetable oil is in everything we eat. It's impacting food service and food retail. Right now, already, we're seeing prices increase there. That's going to have a huge impact on most food categories.

Today, we just learned that India is banning exports of wheat. As I mentioned in my opening reports, wheat represents basically 15% of all calories consumed in the world, so we're going to be way short on wheat. Even if Canada and the U.S. have bumper crops this year, we're going to be seeing many people around the world suffering from hunger, unfortunately. In Canada, we are expecting prices to rise significantly—way beyond 7%, unfortunately.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks for that, it was a very fulsome answer.

Based on what you've described there, all of these things—the war, supply chain issues, the actions taken by Indonesia and India, etc.—are all global forces. These are global factors that are impacting food prices. Am I correct?

There are some folks out there who have been saying that somehow the climb of food prices in Canada is due to domestic forces. What I'm hearing you say is that it's due to global forces. Is that correct?

[Dr. Sylvain Charlebois]

Absolutely.

Currently I'm speaking to you from Tampa Bay, Florida. I'm a visiting scholar at the University of South Florida. The food inflation rate here is 9.4%. This is not just a Canadian phenomenon. This is affecting the entire planet. I think that everyone should be worried about what's going on right now.

Canada's a rich country. As I mentioned, access to food won't necessarily be an issue. However, food affordability will be for many families in Canada, as a result of what's going on.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I really appreciate that. Thank you.

I just want to take a moment to ask the folks from Publish What You Pay Canada something, with my remaining 90 seconds.

If I could, I wanted to go back. Your organization was one of the driving forces behind the push to adopt a beneficial ownership registry. Bill C-19 has taken the first step towards that with the amendments to the Canada Business Corporations Act. Can you tell us why a beneficial ownership registry is so critical?

[Sasha Caldera]

Absolutely.

A beneficial ownership registry that is publicly accessible would deter the proceeds of crime from entering Canada. This is really important, because about $45 billion up to $100 billion is laundered through shell companies and shell properties and a variety of other means, each year. If the beneficial owners of these entities—that is the properties or companies—knew that they would be locatable and accessible on a public registry they would not register these entities in Canada.

We've seen these registries begin to be rolled out in many other G7 countries. Canada being a safe, stable democratic country has a huge risk if it leaves this back door to its economy open, where you can be a beneficial owner and incorporate a company or property anonymously.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker.

We go now to the Bloc and MP Ste-Marie for six minutes, please.