Finance Committee on May 16th, 2022

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

Thank you, Mr. Chair.

I would like to greet all the witnesses and thank them for their presentations. I also thank them for being with us today.

My first questions will be for Mr. Bougie or Mr. Lambert.

In Bill C-19, the government is imposing the excise tax on wine producers as a result of a WTO dispute.

The problem in your case, Mr. Bougie and Mr. Lambert, is that at the federal level, when we talk about wine, that includes mead. That is not the case in Quebec.

Can you confirm that and explain to me once again how imposing the excise tax on wine will have an impact on producers in your sector?

Thank you.

[René Bougie]

Thank you very much for the question.

Indeed, the big problem for us is that, at the federal level, wines are considered to include any fermented agricultural material that is 100% produced in Canada. Since 2006, we have benefited from an exemption that applied to wines made from the fermentation of 100% Canadian products. However, in the bill that was tabled following the WTO dispute, as you mentioned, all wines were put in the same category. This includes grape wines, which are the ones really targeted by the WTO dispute with Australia, ciders, maple wines and berry wines. At the end of the day, it is all producers who are being targeted, in a way. All these producers will have to pay these duties.

Let us look at the volume of mead produced in Quebec and in Canada. In Quebec, as I was saying earlier, there are about 25 mead producers, who must therefore have hives and do all the work involved in that province. There are 25 of us, but we represent about half of all mead production in Canada. Some figures suggest that there are about 50 mead producers in the country, but there is no national association representing them at the moment. Until recently, we didn't even have a provincial association, because with the work involved in our hives and processing our products and all the other related tasks, we don't have much time to think about organizing and structuring ourselves. It's a lot of work, but now we're organized and we're trying to push for the issues that are important to us, like this one.

We believe that the government is on the wrong track by not moderating the application of excise duties and by imposing them as much on wine producers, who are the real targets, as on cider, mead and berry wine producers. This directly affects small producers who, in addition, occupy all of Quebec's territories and contribute to an economic activity that generates interesting spinoffs for their communities. With this new tax, on top of all the other things I was talking about earlier—and that some of the witnesses mentioned—that are affecting our production, such as increased costs, it will be more difficult to continue processing our various products and to offer attractive prices.

Mr. Lambert, do you want to comment on that?

[Vincent Lambert, Secretary, Association of Mead and Honey Alcohol Producers of Quebec]

You answered the question very well, Mr. Bougie.

[René Bougie]

Thank you very much.

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

I congratulate you on joining forces. Mead production, from A to Z, is more than a full-time job. It takes passionate people like you to do it. We feel your passion.

Can you give some examples of what the adoption of Bill C-19, in its current form, would mean for a particular product, in terms of costs?

[René Bougie]

Let's take the example of a light mead with 4.5% alcohol. The retail price of a 473-millilitre bottle that we sell at a grocery shop will be about $2.90. In the end, the increase will be about 16¢ on that amount. That may not sound like much, but proportionally, it represents a 5% increase in the price of a can. I would remind you that mead is already a product that sells for more than beer and cider. By way of comparison, to produce a litre of absolute alcohol, it will cost $7 to $9 for grain alcohol, while for mead, the cost will vary from $18 to $25. Therefore, it costs us more to produce our raw material.

There are more and more new products on the market, such as sodas and low-sugar flavoured drinks. We want to be competitive, to market our products and to be able to stand out. But because of this tax, the leeway we had to do promotions and try to compete is taken away. We have to bear a lot of costs. After all, we produce directly in the fields. The raw materials we use, for example to feed the bees, have to be transported to the fields and our products have to be delivered by truck. So we have to take into account these transport costs and, incidentally, the increase in the price of diesel. I also mentioned containers. The price of several containers, such as glass bottles, has doubled. We should also not forget the cost of labels. Imposing this tax, on top of all that, would have a major impact on our industry, in my opinion.

Yet it is a measure that would not cost the government much. It's money that hasn't even come into the government coffers since 2006. At the moment, we are only asking that the exemption be maintained. If this is not possible, we are at least asking that an exception be made for us. The bill already provides for exceptions, so we would like to be included. It would give us some breathing room and allow us to have an industry that continues to thrive, as evidenced by the explosion in the number of meaderies and honey-based spirits producers in Quebec and across the country.

Thank you.

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

That's very clear. Thank you very much, Mr. Bougie.

Mr. Chair, is my time up?

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

We'll now hear questions from the NDP and MP Blaikie for six minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

I'll start with a question for JDRF Canada. Your organization has a done a lot of advocacy over the time that I've been a member of Parliament on the 14-hour requirement. When we asked officials, in the context of this particular budget implementation act, why it was that they were maintaining this requirement, I was surprised to hear them make an equity argument. They said it would be unfair to make exceptions for people living with diabetes, because other people have to meet the 14-hour requirement.

If they've made this argument to you, when you've had opportunities to speak with government, what justification did they offer to you in your conversations? What do you think of this apparent equity concern on the part of the government, when it comes to folks without diabetes who are trying to access the disability tax credit?

[Dave Prowten]

This is sort of relative to other diseases. That's one of the things we've heard. This was established in 1988. We're actually not really sure of the genesis, whether it was something like dialysis or some other condition, so 14 hours became a bit of a threshold. We're seeing a longer list of activities being incorporated, such as carbohydrate counting, which is all positive.

What's interesting to us is.... We take away that there's this desire to help people with type 1 diabetes actually get the disability tax credit, and we're trying to thread the needle. Ideally, we could get rid of the hour requirement, because if you have got type 1 diabetes, you need insulin. It's a life-sustaining therapy. It's as simple as that.

If we need to find a middle ground, we'd say, “Let's reduce that from 14 to seven,” because it seems like the GPs and doctors.... If that's a hurdle where people are debating if 14 hours is enough, we don't think that's the real issue. It's not the amount of time. You have type 1. It's an expensive disease. It's meant to be a disability tax credit. It's meant to be a financial helper. It's not really about the time.

We're trying to find a way that would actually be acceptable to the government to make this change. We feel like we're all moving in the right direction, but we're really trying to find a way that could make it acceptable for more and more people with type 1 to get approved.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

It just seems odd to me that, if there's an acceptance in principle by the government that it wants to help people with type 1 diabetes, I don't know why it's so difficult. It's a pretty predictable process in terms of people knowing how much material they're going to need and knowing how much time it takes up in the day.

Have you heard anybody in government say, “We just really don't think that people with type 1 diabetes are fit for the DTC program, because that's not what the program was intended for?”

I don't understand why, and I'm not blaming you. I find this logjam perplexing, because it seems like a relatively straightforward problem and the solution should be correspondingly straightforward.

[Dave Prowten]

We would agree with you, strongly. In reality, if you have type 1, you need insulin from the moment you're diagnosed. Therefore, it's a life-sustaining therapy. If you're making an extra 300 decisions a day.... I did a calculation. That's like a decision every 12 seconds to get up to an hour a day. We make many decisions very quickly these days, but when you're making a dosing decision about how much insulin to give, that's a calculation and it's not done in 12 seconds.

You're spot-on here. We are trying to find a way to get things as low as possible, so more people can go to their GP or go to their endocrinologist and not have to debate about the number of hour so that a form can get signed and completed.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

How frequent or how normal is it for this area to push back on people's paperwork on this? Have you heard many stories of people who are having the details of their paperwork being contested by the CRA?

[Dave Prowten]

We had a big issue a few years ago, when there were some changes being made. That's when this really came to light. Ever since then, we've been battling that and it seems like there's a series of them. Patients have to track their hours, the doctors have to sign it off and then the CRA has to review it. It's actually a very complicated and cumbersome process, and there are many steps on the journey, I would say.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

It would be interesting to calculate the hourly value of everybody's time who is involved in that process and compare it to the expenditure by government on the tax credit measure itself. I suspect we're asking for a lot of productivity invested in a relatively low-cost outcome for government.

[Dave Prowten]

The other thing is that companies have started to pop up to be the processors of the forms, because it's such a cumbersome process. If this could be streamlined for the patients, which is what this is really about, that would be the win. If they could have a very simple form that they knew would be accepted if you have type 1 diabetes, the whole system would be much more efficient, from the patient to the government supporting them.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Indeed.

If I have some time remaining, Mr. Chair—

[The Chair, Liberal, Peter Fonseca]

You have 15 seconds.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Okay. I'll give that up and wait for my next round.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Members and witnesses, we are moving to our second round now. We have the Conservatives up first, with MP Chambers for five minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Thank you to our witnesses for appearing. I apologize to those of you who were ready to appear last week. We're glad to have you back this week with us.

Professor Charlebois, I was very surprised or perhaps concerned this morning, when I saw some of the news about more protectionism with the wheat exports coming out of India. You mentioned the palm oil issue as well.

You mentioned we're a rich country and we'll likely be okay, but do you think the government is prepared for what could happen?

[Dr. Sylvain Charlebois]

I assume you're talking about supplies and food security domestically. Is that your question?

[Adam Chambers, Conservative, Simcoe North, ON]

Yes. Generally, do you think we're in a good spot? Is the government prepared for some of the negative potential scenarios that may come with food shortage issues, supply issues, etc.?

[Dr. Sylvain Charlebois]

I don't see any evidence of that at this point. I'm using the federal budget as evidence.

I think Ottawa's intent was to make our agriculture greener, which is fine, but what the world really needs right now is more efficient Canadian agriculture. I'm thinking about some of the tariffs that farmers are exposed to. Farmers are price-takers. Mr. Bougie, in his sector, that's exactly what he's talking about. Price-taking economics is quite cruel, especially in the context of a global food security crisis.

Canadian farmers need more breathing room. They need access to affordable fertilizers, which is not what they have right now. The cost of diesel is also impacting the entire supply chain.

I don't see any measures right now that will help our entire supply chain, at this point, to make sure that food access is not an issue at all, unfortunately.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much for that answer. I represent a riding that has significant agriculture and farmers in it, and they're expressing those concerns that you expressed to me.

When you were speaking with my colleague, Mr. Baker, about global forces on the supply chain and increasing inflation prices on food, you said there are some things that are within the government's control and some things that are outside of the government's control. Let's set aside the things that are outside of the government's control.

Do you think the government is taking steps on the things that are within its control to keep inflation on food prices low?