Finance Committee on May 17th, 2022

[Brad Goddard]

Yes, that's correct. The employment numbers are correct, but the profitability threshold is around 20,000 hectolitres. The vast majority of Canadian craft brewers actually produce 10,000 hectolitres or below. You've put so much capital up front and you're growing so rapidly, and because of the inefficiency of our sector, it takes a lot of people, and you buy in small quantities, so the expenses really are pretty grand. Those numbers are correct.

[Philip Lawrence]

Yes. There are economies of scale. I think that would be a fair way of putting it.

In terms of the potential for the market, if in fact some of the headwinds such as the ever-increasing excise taxes were able to be reduced or the burden of government regulation was able to be reduced, would there be a potential for growth?

Specifically, are there export markets? Are there places around the world that are thirsty for Canadian beer? Is there a potential even in our own market to push out some of the foreign competition?

[Brad Goddard]

Yes, there are export markets. Export becomes a bit of a challenge for our sector just because of the shelf durability, since we're a fresh food, and it can be an expensive market to access.

In terms of our own market, while beer as a whole is declining, craft beer in Canada is growing. That shrinking piece of the pie for beer in people's pantries is getting larger for craft breweries. There is huge potential for us.

On that, the only province I have good numbers for is Alberta, where in certain quarters craft is growing by 10%. Nationally, craft brewers represent about 10% or 11% of the total beer consumption. That number will continue to grow. Our MNP study showed that with some excise tax reduction, we would see beer production increase by 6%, showing growth in a category that's not growing, and jobs would probably increase by about 6.5%

[Philip Lawrence]

Isn't it also true that a lot of innovation in flavour development and other innovative practices occurs at the microbrewery level? If those smaller craft breweries were to disappear, we would lose a lot of that innovation going forward.

[Brad Goddard]

We'd lose a lot of that innovation. We'd lose a lot of the vitality.

I look at Alberta, which is out my front door. A lot of our small communities now have craft breweries that are representing community hubs. They're a place for people to gather and a place for people to do fundraisers. They provide local employment, and it's good, skilled local employment. Those places are the ones that are going to be particularly under pressure.

[Philip Lawrence]

To finish off, your ask to make sure that we protect this industry was that we provide some fairness for the smaller microbreweries and that there be some type of break as they grow forward so that they are not necessarily competing with the giants domestically and, I assume, with foreign beer companies, and to put them on more of an equal footing. Is that correct?

[Brad Goddard]

That's correct—rightsizing the hectolitre growth, because 75,000 hectolitres in the grand scheme of things actually isn't very large, and we'd like to protect and give room to grow for these brewers so that they don't fall off a tax cliff.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Lawrence.

We're moving to the Liberals. MP Baker, you have five minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much, Mr. Chair.

Thanks very much to all of our witnesses for being with us today.

I want to start by asking Ms. Sarangi a question or two. I want to start by thanking you for your advocacy for those who are most vulnerable in Canada.

The budget proposes free dental care for those 12 and under—that would be this year—with the program being expanded to cover all youth in the next year. Could I ask you to speak to what impact free dental care could have on young people living in poverty?

[Leila Sarangi]

Free dental care, as I mentioned in my opening, is extremely important. We were really pleased to see that program in the budget, and that's why it was the first thing that I mentioned. It's for children under 12 this year, and people with disabilities and youth in the coming year, and then there will be an income-tested dental care program over three years. It is really important.

It's such a huge cost for families, and when people don't take care of their teeth, it can affect other health outcomes. It's connected to overall health, so this will have a huge impact on families, and it's one piece of an overall strategy that we need to address with low-income families that is especially related to health.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much. I appreciate that.

There's another thing that we've spent a fair bit of time on that has had a lot of attention—and rightly so, but maybe not as much as it deserves, frankly. In the budget, we're setting aside about $4 billion for the maintenance and development of Jordan's principle. Basically, it's to ensure fair delivery of services to first nations children.

When we talk about sums of money like that, sometimes it's fairly abstract to a lot of folks. Can you help explain, not just for the members here but for my constituents in Etobicoke Centre and elsewhere around Canada who might be watching this, why these investments are necessary? What does that concretely mean for people on the ground?

[Leila Sarangi]

I agree that it's an abstract sum of money, because it is so large, but when we think about the population and how far away they are from equitable services, it doesn't really meet the extent of the need that's there for children on first nations reserves. We have Jordan's principle, because when those kids living on first nations don't have access to services and health services that they deserve, these are really life-and-death situations. It costs money to get those children into places of care that often are outside of the reserves, because there isn't the kind of infrastructure on-reserve that children and families need.

I would also add that it's not only Jordan's principle. Campaign 2000 supports the funding of the full Spirit Bear plan so that the $4 billion is heading in the right direction. We need even more investment, and this will further our commitments to truth and reconciliation so that the full Spirit Bear plan is implemented.

Having health services, education and housing for children and families living on first nations is urgent and important. If we want to move the needle on ending poverty, this has to be a priority.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much, Ms. Sarangi. I appreciate that.

I have 30 seconds. Is that about right, Mr. Chair?

[The Chair, Liberal, Peter Fonseca]

That's about right.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

My question is for the representatives of the Fédération québécoise des municipalités.

How should the federal government work with municipalities to address the housing shortage?

[Jacques Demers]

I'll let Mr. Boulet answer your question.

[David Boulet]

The federal government needs to work with municipalities and the Quebec government to develop programs or use existing programs in a way that would enable municipalities to identify their own requirements and come up with solutions. This means establishing regular communications with the RCMs and other municipalities to find solutions. It won't be easy.

Housing issues are often about apartments or apartment buildings downtown. In some settings, however, finding a solution requires creativity, given the cost of construction and residents' needs.

The numerous problems will only be solved through sustained communication. Each community has different problems and needs.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Baker.

We will now hear from the Bloc.

MP Ste-Marie, you have two and a half minutes.

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

Thank you, Mr. Chair.

My questions are still for Mr. Demers and Mr. Boulet.

Over the past few months, in committee and in the House, we have spent a lot of time studying the dramatic rise in real estate prices and the housing shortage. The government has frequently said that if there is not enough housing, it's because the process for municipal projects is too slow. You can find these comments in Hansard. It's almost a federal government leitmotif.

This is also reflected in the most recent budget, in which the minister announced that in order to ensure that the municipalities could build enough housing units, the government would link infrastructure funding, including public transportation, to measures taken by the provinces, the territories and the municipalities to increase housing supply.

What's your opinion on this?

[Jacques Demers]

I'll make a start on answering this and will then give the floor to Mr. Goulet.

Governments often bounce the problem back to the municipalities, and tell them that the process is too slow. However, what the municipalities repeatedly ask for is predictability.

The federal government tells us that money available this year and that it is prepared to invest. It then asks us why the projects are not moving forward.

It's important to understand that the process of undertaking a major project requires several years. There is zoning and land use planning. The launch of a big project has to be planned. Residents also need to be consulted. We have obligations when any zoning changes are made. People have the right to express their opinion at each of these stages.

When the federal or provincial government decides on the spur of the moment to provide funding, it doesn't work.

That's why we prefer a model like the one used in the fuel tax program, for example. This tax applies on a five-year basis, which provides predictability. The funds can be used right away and reimbursed later. That's the kind of initiative that works.

Things have to be predictable. Major projects are so unwieldy that it's difficult to make changes overnight. If the land use and zoning issues are assessed ahead of time, and then discussed with residents, we can achieve something. Otherwise, the various levels of government will continue to toss the ball back and forth. When we get to the final stages, people will say that the building costs have skyrocketed and that the labour is not available.

There have to be systems in place. The housing problem could have been anticipated. It's as if everyone became more aware of it than ever over the past year.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

That is the time.

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

Thank you, Mr. Demers; that's very clear.

[The Chair, Liberal, Peter Fonseca]

Thank you.

We will now hear from the NDP.

MP Blaikie, you have two and a half minutes.

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

Thank you, Mr. Chair.

I'd like to address the same topic.

The housing problem is obvious. We have to build more housing units. We also know that we're losing a lot of affordable housing because companies are buying buildings that offer affordable housing, only to move ahead with renovictions and hike the rent afterwards.

Mr. Demers and Mr. Boulet, what should the federal government's role be in real estate investment to reduce market pressure and rising rents?