Finance Committee on May 18th, 2023

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome, everybody, to meeting number 91 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference of Tuesday, May 2, 2023, and the motion adopted on May 16, 2023, the committee is meeting to discuss Bill C-47, an act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.

I'd 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 it when you are not speaking.

For interpretation 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.

I would remind you that 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.

We have a full room today. It's literally full here, but it's also full on the screen.

We thank all our witnesses. I know it was with very short notice that you had to pull your opening remarks and some of your materials together, but we thank you for doing that for us and for coming before our committee today.

You will be the last set of witnesses the committee will hear on this piece of legislation, so we look forward to hearing your opening remarks, as I said, and your answers to the many questions.

Now I have the opportunity to welcome our witnesses.

We have with us, from the Centrale des syndicats démocratiques, Kaven Bissonnette, who is the vice-president. Also joining us is the union adviser, Francis Fortier.

From the Convenience Industry Council of Canada, Anne Kothawala is with us today. She is the president and CEO. Welcome.

From Cosmetics Alliance Canada, we have Darren Thomas Praznik, who is in my hometown of Mississauga. He's coming to us virtually. He is the president and CEO.

From Humane Society International Canada, we have with us Michael Bernard, who is the deputy director of the organization.

From the Law Society of Ontario, I have an old friend, Cara-Marie O'Hagan. Cara, welcome. It's good to see you. I haven't seen you in many years. It was another life.

Here in the room, we have with us Frederica Carla Anne, also from the Law Society of Ontario, and Matthew Wylie, who is the director of policy.

From the Railway Association of Canada, we have president and CEO, Marc Brazeau. We also have the assistant vice-president of the Canadian Pacific Railway, Nathan Cato, and we have Eric Harvey, who is the senior counsel, regulatory, for the Canadian National Railway Company.

Locally, one of our witnesses is from the Ottawa Food Bank. We have Rachael Wilson, who is the CEO of the organization. Welcome.

Now we're going to have an opportunity for opening statements. We are going to start with the Centrale des syndicats démocratiques.

You have up to five minutes, please.

[Kaven Bissonnette, Vice-President, Centrale des syndicats démocratiques]

Thank you very much, Mr. Chair.

Thank you for the invitation.

I am the vice-president of the Centrale des syndicats démocratiques, the CSD, and I'm here to present the written brief jointly with the three other labour federations in Quebec: the Confédération des syndicats nationaux, or CSN, the Fédération des travailleurs et travailleuses du Québec, or FTQ, and the Centrale des syndicats du Québec, or CSQ. Together, our four labour federations represent more than 1,165,000 workers in all regions of Quebec, in both the public and private sectors.

In a joint brief, the federations are presenting a series of recommendations to the federal government to adjust the employment insurance program to the reality of today's work organization, pending a major reform of the program.

The program is broken, complex and inaccessible, and it also provides inadequate benefits. Before the pandemic, only 40% of unemployed workers in Canada were entitled to benefits. Part-time workers—especially part-time workers who are women—are struggling to accumulate enough hours of work to qualify for benefits.

We therefore recommend that a comprehensive modernization of the Employment Insurance Act be introduced and passed as quickly as possible in order to improve the program and meet the needs of workers as quickly as possible.

With regard to unemployment and seasonal work, we need to end the EI black hole. The weeks between the end of employment insurance benefits and the start of employment are what we call the “black hole”. To try to contain the EI black hole, the government adopted temporary rules in 2018. The government introduced a pilot project in 13 regions where EI is characterized by significant seasonal economic activity and high unemployment. This pilot project allows unemployed workers considered “seasonal” to benefit from five additional weeks of benefits, for a maximum of 45 weeks. The special measures were to end on October 28, 2023. Budget 2023 proposes extending these supports until October 2024.

For the labour federations, it's obvious that the end of the pilot project would be catastrophic. In those regions, workers choose to work in seasonal industries because full-time year-round work is often not possible or accessible, despite the many solutions put in place in the industries to extend the working season. People working in seasonal industries generally have long working weeks in the high season, and their work is often intensive and strenuous. They are the backbone of industries that are vital to communities, which unfortunately rely on a fragile and undiversified economic fabric. This situation is common across Canada.

The average duration of a seasonal job is less than 16 weeks, and the average duration of benefits is 17 weeks. The extra five weeks do not help fill the black hole for most seasonal workers, unless they live in a region where the unemployment rate is higher than 16%.

Quebec's labour federations reached a consensus containing 15 requests to reform the program, for example, to introduce a universal standard of eligibility for benefits after 420 hours or 12 weeks of work, and to provide a minimum of 35 weeks of benefits.

We also recommend that, pending a comprehensive reform of the EI program, measures relating to workers in seasonal industries be amended to make an additional 15 weeks of benefits available to eligible claimants, and that the criteria for selecting claimants eligible for additional benefits be reviewed, so that it's no longer based on an individual's previous benefits, but rather on the employer's track record or the reason for seasonal layoffs. In other words, a person working for a seasonal company would automatically be eligible, given the nature of the company's activities. In addition, the calculation of the benefit rate would have to be calculated on the best 12 weeks of work, regardless of the regional unemployment rate, and additional benefits for seasonal work should be made permanent.

Furthermore, the creation of an appeals board is another important element in having a true tripartite appeals system. When it was announced in spring 2019 that an appeals board would be created to hear EI appeals, the Quebec labour federations welcomed this decision. Four years on, the situation remains unresolved.

Some progress has been made. First of all, all board members will have part-time worker status. This will ensure that the difference in status between part-time and full-time members doesn't lead to different levels of commitment and effectiveness. Second, Bill C‑47 provides that appeals will be heard in the appellant's region, except in prescribed circumstances.

However, two major problems persist: the bill doesn't insist on in-person hearings, and the proposed new subsection 43.02(2) of the Department of Employment and Social Development Act states that the executive head of the Board of Appeal, who is responsible for managing the day‑to‑day work of the board, reports “to the Commission, through the Chairperson of the Commission, on the overall performance of the Board of Appeal”.

This means that the board of appeal will not be fully tripartite if its top manager is accountable only to the government representative of the Employment Insurance Commission, and not to the commission as a whole. In this regard, we recommend that the Employment Insurance Board of Appeal be established.

Still with regard to Bill C‑47, in subclause 43.04(2), we recommend that the words “through the Chairperson of the Commission” be deleted.

We also recommend, in proposed subclause 43.16(2), that “in the format selected by the appellant” be changed to “in person, except in exceptional circumstances”.

Before I close, I'd like to mention one last point concerning workers who have experienced a lockout. A lockout is a unilateral decision by the employer. The workers didn't choose to go through this situation, because the lockout often ends after several months. When these people aren't called back to work, they don't have access to EI benefits because they aren't considered to be employed for the duration of the lockout. It's a situation they can do nothing about, and it puts them in an incredibly precarious financial and social situation.

This needs to be corrected, as do the federation recommendations.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Bissonnette.

Now we'll hear from the Convenience Industry Council of Canada, and Ms. Anne Kothawala, please.

[Anne Kothawala, President and Chief Executive Officer, Convenience Industry Council of Canada]

Thank you, Chair, and thank you to the members of the committee for inviting our association to speak with you this evening.

My name is Anne Kothawala, and I serve as the CEO of the Convenience Industry Council of Canada, the CICC. We are the voice of the country's 23,000 local convenience stores, employing more than 200,000 Canadians.

Allow me to paint a brief picture of the economic realities facing our local businesses.

Over the past two years, we have seen our store locations decline by 5%. That translates into three convenience stores closing their doors for good every single day. That not only impacts our employees and their families, but also affects the entire community, particularly in rural and remote areas, where we're the only source of essential goods.

We are heavily regulated businesses, so the future of our stores in Canada is heavily dependent on smart government policies.

We are deeply concerned by the inaction on credit card interchange fees and contraband tobacco in the 2023 budget. In the last 12 months, credit card fees have increased by 55%. These fees represent the second-highest cost to Canada's convenience stores, next only to payroll.

We also face a double whammy on credit card fees, as we pay both the interchange fee on the product sold itself plus an interchange fee on the tax of that product. This is an issue that our stores have worked with the federal government on since its initial campaign promise to address fees in 2019.

Despite years of work on this file, it is now clear that the government has caved to pressure from card networks and financial institutions. Make no mistake: The vast majority of small businesses will be excluded from this policy. Today's announcement doesn't change the fact that the government is allowing credit card companies and banks to force retailers to pay for their credit card loyalty programs.

The details of the scheme announced earlier today will help only the smallest micro-businesses in Canada. It treats most local businesses no differently than large corporations like Walmart or Costco. What's worse is that large corporations like those I just mentioned have the negotiating power to demand better rates than small businesses, so we are actually worse off than these major corporations.

No high-volume, low-margin business will be able to access this new rate, and even qualifying businesses will see, at most, a $1,000 return to their bottom line. This is hardly the relief that we were promised.

This approach also penalizes our local businesses by asking them to pay for the privilege of being a tax collector for government. Tax alone accounts for 42% of our sales. Because convenience stores sell heavily taxed products like gasoline, tobacco and alcohol, we are further penalized by this short-sighted approach.

I'd like to share with you a quote from a local retailer, Jamie Arnold, who is a CICC board member and with Ontario-based Little Short Stop, on today's announcement. He said it was very disappointing to him as a small convenience retailer, because he wouldn't qualify, plain and simple. He said the government had promised to address this issue, but had not delivered. During the pandemic he kept stores open despite a massive decrease in sales, and it would have been nice to see the government acknowledge the essential role convenience stores play in communities by reducing their second-highest cost of doing business.

Bill C-47 presented an opportunity for the government to make good on its promise and do much more to rectify these punitive fees on our businesses. Instead, the government has caved to pressure from card networks and financial institutions, leaving local businesses like ours holding the bag.

While the government missed the mark today, there are other steps it can take to help our stores on interchange fees, namely, removing the interchange fees charged on the HST/GST portion of the sale. The government could also fix rates for fuel purchases made by credit cards to 10¢, which is in line with utility payments. I'm happy to speak to either of these proposals in the Q and A.

I would be remiss not to mention another area of inaction in Bill C-47, which is on the issue of illegal, untaxed tobacco. The proliferation of contraband contributes to organized crime and results in millions of dollars in lost tax revenue for governments annually. Federal leadership is needed on this issue, which was once contained to central Canada but is now a national problem.

Members, as you can see, there are no shortage of challenges facing our businesses. We strongly urge that the budget be further strengthened by revisiting the approach to interchange fees and by dedicating resources to addressing the long-standing issue of illegal tobacco, both of which impact our stores nationally.

I look forward to answering any questions you may have and discussing solutions with you on these issues.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Kothawala.

Now we'll hear from Cosmetics Alliance Canada, please.

[Darren Praznik, President and Chief Executive Officer, Cosmetics Alliance Canada]

Thank you very much, Mr. Chair.

It's certainly a privilege to appear before this committee. I've known several of the members for some time. I knew Mr. Blaikie's father a long time ago, when I was in Manitoba, so it's a delight to be here.

I'm in a rather enviable situation, in that my colleague, Michael Bernard, from Humane Society International, and I are here somewhat together. Since probably 2018-19, our organizations, along with a larger group of stakeholders, including Cruelty Free International and the Animal Alliance of Canada—we representing industry and Mr. Bernard with Humane Society International—have been able to come together to reach an agreement on principles for the implementation of a ban on cosmetic testing on animals in Canada.

We were able to come together on basically three principles: one, that it would mirror the ban in the European Union; two, that it would be implemented within the context of the Canadian regulatory framework for these products; and three, that it would actually be drafted by Health Canada and advanced by the government, so that it was sure not to have any unintended consequences; the regulator would ensure that it would be workable; and we could all come together and advance it, of course, as a government bill.

We're pleased to say that about two years ago, we were able to get all those details worked out. We worked with Health Canada officials in drafting the principles. They've shared with us, following the introduction of the budget bill, these provisions for amending the Food and Drugs Act. They have shared the details with us. We've had a chance to meet with the minister's office here, the legal staff, and together we have a joint letter that we've provided to the committee, which Mr. Bernard will be sharing with you and reading. We've been able to come together, industry and animal advocacy groups, to advance this particular cause. We're quite proud of that. We would certainly commend the inclusion and passage of these important amendments to the Food and Drugs Act through this bill.

We're not coming here as adverse stakeholders. In fact, we've been working very closely together, the whole group of us, for some time with Health Canada towards these amendments. I would be remiss, though, if I didn't mention one piece of this puzzle that we are still hoping will come to the attention of Health Canada, which is that Canada is a major exporter of cosmetic products to China. For some years, China has been one of the only countries in the world that has specifically required animal testing on cosmetic products that are imported into China. After much lobbying by international industry, they amended their regulations. They provide an exemption to that unnecessary animal testing if those imported products have a government-issued GMP certificate.

Regrettably, most governments don't issue that. We approached Health Canada a couple of years ago. We worked with its officials. We developed a potential program that would allow for our dozen or so exporting manufacturers in Canada to take advantage of that. We thought we had worked through all the details. All these facilities are currently inspected by Health Canada, with either a drug establishment licence or a natural health products site licence, or they are ISO-certified. We thought we would get it. However, Health Canada sort of said, “Not our problem.” Well, if it's not their problem, whose is it?

Currently, those products are being exported to China with a band-aid solution that the governments of Quebec and Ontario offered. We wanted to just flag that today. Despite the good intentions of the bill and all the work and the commitment that's there, there's still this piece that we need Health Canada to address. Granted, it is administrative, but we wanted to flag it with the committee today.

Mr. Chair, as I said, my colleague Mr. Bernard and I worked very closely together on this, and we're very glad. It's taken some years. We appreciate that COVID has taken time and delayed the drafting and presentation of this legislation, but I think that jointly we all strongly recommend to the committee that it be approved as part of the budget bill.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Praznik.

I guess you'll pass the baton over to your colleague from Humane Society International/Canada.

Mr. Bernard, the floor is yours for some opening remarks, please.

[Michael Bernard, Deputy Director, Humane Society International/Canada]

Thank you very much to the chair and members of the committee for the opportunity to provide comments on Bill C-47, specifically on the proposed amendments to the Food and Drugs Act pertaining to cosmetics testing on animals.

I am the deputy director of Humane Society International/Canada, part of Humane Society International, which has a presence in more than 50 countries, making us one of the largest animal protection organizations in the world. Our organization has been working for a decade in Canada to achieve these historic measures for animals, so we are absolutely delighted to see Canada moving forward with this critical legislation.

I am also very proud to co-represent with Darren a coalition of industry, animal protection, and retail companies that have been working together for the past few years to build alignment and consensus on the principles of this legislation. We sent a letter of support for this legislation to the committee by email, but unfortunately, due to time constraints, I was informed that there was not enough time to have it translated before these proceedings, so I would like to take the opportunity to read the letter into the official record.

The letter is dated May 17, 2023:

Dear Chair and Committee Members,

We are writing to you today to convey our full support for a ban on cosmetics animal testing as proposed in Bill C‑47.

Who We Represent - A Broad Consensus of Industry, Animal Advocates, & Retailers.

The collective of our organizations represents a broad range of stakeholders including the cosmetics industry (150+ companies represented by Cosmetics Alliance Canada), animal protection advocates (Humane Society International/Canada, Animal Alliance Canada, Cruelty Free International) and their retailer partners (Lush Cosmetics, The Body Shop).

Since this issue was first raised in Parliament through a Private Member's Bill in the Senate in 2015, our group of key stakeholder organizations have been working together, and with Health Canada, to advance workable legislation.

The legislative language in Bill C‑47 pertaining to a ban on cosmetics animal testing is consistent with the policy approach that our group has long been advocating for in discussions with Health Canada; that a Canadian ban align with the principles of the E.U. ban and the necessary amendments be drafted by Health Canada to ensure they work within the Canadian regulatory context.

We are thrilled to see this legislation...introduced and look forward to seeing its passage without issue into law.

Of note, Canada will be hosting the 2023 Animal Alternatives World Congress on August 23-27, 2023, in Niagara Falls, Ontario. Government, industry, and other stakeholders will be participating in this important international event. This will be an ideal opportunity to highlight Canada as a leader in the development of animal testing alternatives and the banning of unnecessary animal testing on cosmetic products.

This letter has been signed by representatives of the organizations that I mentioned earlier.

What would this legislation do? This legislation would prohibit testing cosmetics on animals in Canada, selling cosmetics that rely on new animal testing data to establish the products' safety—with some exceptions—and false or misleading labelling pertaining to the testing of cosmetics on animals.

These measures would bring Canada into line with the 43 countries that have already introduced similar bans or restrictions, including the United Kingdom, the European Union, India, South Korea, Taiwan, New Zealand, Australia and many others. In addition, 10 U.S. states have also enacted bans, and further federal measures are in development in the U.S. and elsewhere.

Of course, there is tremendous public support for these measures here in Canada. In 2018, a public petition with over 630,000 Canadian signatures supporting a ban on cosmetics testing on animals was delivered to Parliament Hill.

Polling conducted in 2019 by Insights West found that 87% of Canadians support a ban on animal testing for cosmetic products.

It is important to note that modern non-animal methods are available for testing cosmetic safety issues and have been shown to predict human responses in the real world better than the animal tests they replace, so there is simply no need for animal testing for cosmetics in this day and age.

This legislation—and the history of this campaign—truly shows the great things that can happen when government, political parties across all party lines, industry, the non-profit sector and the public work together to create a better future.

Thank you, again, to the committee and all parliamentarians and senators for coming together on this important issue.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Bernard.

I'm going to take that virtual baton I talked about and pass it to a former colleague of mine, Cara-Marie O'Hagan, from the Law Society of Ontario.

[Cara-Marie O'Hagan, Executive Director, Policy, Law Society of Ontario]

Thank you very much, Mr. Chair. It's nice to see you again.

I'm here with my colleague, Matthew Wylie, from the Law Society of Ontario. We are speaking to the new mandatory disclosure provisions in Bill C-47.

I'd like to start with a few words about the Law Society of Ontario and the obligations of our members.

The law society regulates almost 70,000 lawyers and paralegals in the public interest. We protect the public, in part, by setting and enforcing standards of ethical conduct for lawyers. Lawyers have duties to keep client information confidential, to protect the client's privilege, to avoid conflicts of interest with their clients and to avoid assisting the client in dishonest or illegal conduct. These duties, along with the legal protection afforded to solicitor-client privilege, allow for the free and frank exchange of information between lawyers and their clients. Most importantly, they enable lawyers to serve as safeguards in the legal system. Clients can seek legal counsel with the benefit of full disclosure; in response, the lawyer provides advice that ensures the bounds of the law are protected and adhered to.

This dynamic is undermined by the proposed amendments to the mandatory disclosure rules in the Income Tax Act. As you are aware, the proposed amendments significantly broaden the instances in which lawyers would be required to report to the CRA on certain client transactions. They impose new reporting requirements on lawyers. The amendments could impact a significant number of transactions conducted daily in large and small law offices across the province.

In many cases, the amendments could work like this: The lawyer provides advice that the transaction—the one the client is engaged in—is compliant with the Income Tax Act. The lawyer could be required to report the transaction to the CRA, so the CRA could then challenge the lawyer's conclusion after the fact, to the detriment of the lawyer and the client. If the lawyer does not report, they and their client can face very significant penalties.

In our view, these amendments are counterproductive to the overall goal of encouraging compliance with the requirements of the Income Tax Act. If these amendments are adopted, clients may fear that their lawyers will report confidential information to the CRA. They may well avoid the essential step of seeking legal advice to determine whether their proposed course of action is, in fact, compliant, or they may withhold information that prevents the lawyer from providing the proper legal advice. In either case, the taxpayer will not have the benefit of the lawyer properly advising them on their existing reporting obligations in the legislation.

Although we recognize the protection afforded to solicitor-client-privileged information in the proposed amendments, the extent of the privilege is uncertain and, in our view, not a solution in this situation. We are also concerned about the constitutional validity of the new proposed mandatory disclosure provisions. In the case of Canada v. the Federation of Law Societies, the Supreme Court found “as a principle of fundamental justice that the state cannot impose duties on lawyers that undermine their duty of commitment to their clients' causes.” The court said this duty “is essential to maintaining confidence in the integrity of the administration of justice.” The proposed amendments require lawyers to report to the CRA on their clients' transactions, so the CRA can then scrutinize the transactions for impropriety. This requirement imposes an obligation on lawyers to act contrary to their “commitment to their clients' causes.”

The Law Society of Ontario offers two proposals for the committee to consider as fixes to these significant concerns.

Our preferred solution is to amend the definition of “advisor” under clause 68 and clause 69 of Bill C-47 to specifically exempt legal professionals from the reporting requirements when they are acting in their capacity as legal counsel.

The second option would be to maintain the relieving rule for lawyers, so that lawyers' compliance with the reporting requirements could be established by the lawyer's advising their client of the obligation to report the transaction to the CRA.

I'd be happy to provide further details about these solutions in the Q and A. Those are my remarks. Thank you very much for your time.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. O'Hagan. There will be plenty of time during the Q and A.

We're now going to the Railway Association of Canada for opening remarks.

[Marc Brazeau, President and Chief Executive Officer, Railway Association of Canada]

Thank you, Mr. Chair.

Thank you for the invitation to appear before the committee.

Former member of the CTA and Liberal candidate in Manitoba Mary-Jane Bennett said that interswitching was inefficient—that it wouldn’t correct problems with the supply chain, but amplify them.

Each switch adds to transit time. The more switches you do, the bigger the slowdown. The more you handle a car, the longer it takes to get moving. This measure undermines the capacity, the efficiency and the fluidity of Canada’s supply chains and will harm all shippers.

In fact, that measure was tried between 2014 and 2017, and it failed. Extended interswitching adds, on average, one to two days to rail transit times. It was abandoned by this government after an independent statutory review of the Canada Transportation Act. This government’s transport minister at the time, Marc Garneau, acknowledged that the policy was always meant to be temporary. Nothing has changed that would justify going back to extended interswitching.

Let’s review why extended interswitching was sunset. First, is the lack of reciprocity in the U.S. Regulated interswitching does not exist in the United States. Under the government’s proposal, U.S. railways will be able to solicit Canadian traffic at cost-based rates, without any reciprocity for CPKC and CN to do the same in the U.S. That means fewer available car loads for Canadian railroaders to move across Canada.

It may also mean less available work for port workers if shipments end up in Seattle rather than Vancouver, for example. These are good-paying, overwhelmingly union jobs. The combined network of CN and CPKC exceeds 60,000 kilometres of track. CN and CPKC have 27,000 employees based in Canada. U.S. railways’ Canadian presence is mainly incidental, with just a few hundred kilometres of track.

Why should Parliament intentionally disadvantage Canadian railways to directly benefit U.S. railways?

Helena Borges, former associate deputy minister of Transport Canada, told Parliament in 2017 that extended regulated interswitching was “having unintended consequences on the competitiveness of our railways vis-à-vis the U.S. railways.” Long-haul interswitching was the government’s much-consulted response. Now the government wants to resurrect a policy it already recognized as a failure.

The second reason for sunsetting was the non-compensatory rate. Bill C-47 will force Canadian railways to move traffic, sometimes in the wrong direction and always at below-market rates. The 2016 review found that below-market rates were inappropriate because they hurt railways’ ability to reinvest in their networks. Everything we purchase is at market rates, from buying steel to paying salaries. Railways cannot be the only parts of our supply chains that are not operating at market rates.

The transport minister’s office, in the National Post this morning, acknowledged that extended interswitching creates congestion. It admitted that's why they’re not doing it in Ontario, Quebec or British Columbia. The fact that this measure will apply only in the three prairie provinces proves that this is not evidence-based supply chain policy.

The national supply chain task force never consulted railways on interswitching before its final recommendation. Canadian grain shippers already pay some of the lowest freight rates in the world. To move one ton of grain one mile in Canada, it costs on average just 2.97¢ U.S.

Our class I railways both set historical records for grain movements this past year. This was made possible by a combined $1-billion investment in new grain hopper cars, built in Hamilton, Ontario, and by tens of billions of dollars of investment in capacity and technology over the last decade. An independent study conducted this past January by CPCS found that Canadian freight rates are the lowest among market economies. In fact, they are 11% lower than in the U.S. These rates support the competitiveness of Canadian railway shippers.

Extended regulator interswitching is a cure in search of a disease. There is no justification for market intervention, particularly through a policy as egregious and ill-advised as extended regulated interswitching.

The government's decision to eliminate this policy was the right one. It was based on facts and evidence.

Long-haul interswitching was the government's solution to the problems with extended regulated interswitching. The former is based on market rates for comparable traffic, and the latter is the below market regulated rate. Those asking for this policy want a cheaper rate. It is not about improving service, nor is it about improving competitiveness.

Extended interswitching will do the exact opposite. The only winners of extended regulated interswitching are U.S. railways. To limit the harm to Canadians, division 22 must be amended or deleted entirely.

We're asking, at a minimum, that rates be market based and applicable to Canadian origins and destinations. You'll find more details in our brief.

Mr. Chair, it is collaboration and not more economic regulations that move supply chains.

My colleagues and I will be happy to take questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Brazeau.

We're now going to hear from the Ottawa Food Bank.

Ms. Wilson, please go ahead.

[Rachael Wilson, Chief Executive Officer, Ottawa Food Bank]

Thank you. My name is Rachael Wilson, and I have the privilege of serving as the CEO of the Ottawa Food Bank.

We don't talk about solving hunger at the Ottawa Food Bank. Hunger is solved with a meal. Our network is composed of 112 emergency food programs across the city and deals with the symptoms of poverty every single day. It should come as no surprise to anyone that there are simultaneous health care, affordable housing and food security crises. They are deeply linked. That is why we support comprehensive policies that address the underlying issues of poverty in our country.

Today I am here to discuss the grocery rebate. While any additional money that goes back into the pockets of our clients is crucial, this rebate alone will not bring significant change. It doesn't go far enough. The most a family will receive is $467. To put things into perspective, in Ottawa the cost of maintaining a healthy diet is a staggering $1,088 for a family of four per month, according to the Ottawa Public Health 2022 nutritious food basket.

I listened to my colleagues from the greater Toronto area last night, and they shared the perspective from their community. This is not a big-city problem. There are food banks in every community right across this country. Here in Ottawa, the nation's capital, we are the fifth-largest food bank in the country.

Last year, one in seven households in Ottawa reported experiencing food insecurity, a significant increase from one in 15 just five years ago. This year, we saw an 86% increase in visits since March 2019. These are not just numbers on a spreadsheet. They are families, individuals, seniors and children.

I share these numbers with you, but I wonder what impact they will make. We saw food bank client numbers rise by 28% following the 2018 recession, and those numbers never came back down. The numbers are rising now by 30%. Is that enough people struggling in our country? Of the clients we serve at the Ottawa Food Bank, 37% are children. What number of children is enough? Is it 40%; is it 50%? Does half of our city need to be food insecure before we take any meaningful action? What more needs to happen before we decide to take the necessary steps to ensure that every Canadian has food and a house?

I want you to think about the entire province of British Columbia, around 5.4 million people. Imagine the entire province going without food for days. I want you to think about the health impacts that would have, the loss of productivity and the impact on the economy. What would that mean for children and their learning? That is what is happening right now in our country. There are almost seven million people in Canada who are food insecure. If an entire province were shut down because people were not able to eat, we would declare a crisis immediately. I am confident every effort would be made to support those who were impacted.

If I sound dramatic or over the top, I assure you, I am not. I have worked at the Ottawa Food Bank for seven years and have never had to make the kinds of decisions we are making today about who gets food and who goes without.

I urge you to see this as a non-partisan issue. Food banks in Canada have been around for 40 years. We have seen every type of government come and go, yet food banks remain and continue to fill the gap left by government policy.

What legacy does this government want to leave? The Ottawa Food Bank is ready to partner with you to eliminate food insecurity and poverty in our community by ensuring policies that prioritize the most vulnerable, including the continued investment in the Canada child benefit, the expansion of the Canada workers benefit, a minimum income floor for all Canadians, and a policy that encourages the construction of affordable housing.

As you've heard from my food bank colleagues across the province, our resounding message is clear. Food banks are no longer a stopgap measure. We have been a lifeline in the face of every crisis. Our communities look to us for support and hope in their time of need.

What they need from you are solutions and policies that help everyone thrive. I urge each one of you to consider the voices of those who are most affected by poverty and food insecurity. I urge this committee to recognize the pressing need for income-based systemic solutions to address chronic poverty levels in all of our communities.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Wilson.

Thank you, witnesses, for your opening statements. I'm sure the members are eager to ask you many questions. We have many witnesses, members, so just in case, you may want to point your question to whichever witness you want to address it to.

We are starting with the first round. Each party will have up to six minutes for questions. We're starting with the Conservatives.

I have Mr. Chambers up first, for six minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Ms. Wilson, thank you for your testimony. I know you watched our testimony last night. We covered a lot of ground with your peers.

One of the things we asked them was to share—and we don't want to create work for an organization that is likely understaffed and overworked—some statistics in terms of what they were seeing with some of their clients. I'm not asking you to disclose the same thing now, but maybe you have a monthly report or something that you already do. We would appreciate receiving that.

[Rachael Wilson]

We would be happy to submit.... We do a hunger count every single year that clearly identifies those who are accessing food banks and the reasons they're accessing food banks.

I can tell you briefly that this year we've seen a significant increase in the number of two-parent families that are accessing food banks, and the number of those people who are employed has increased by 37% over last year's numbers.

We continue to see families, individuals, seniors—people from all walks of life—accessing food banks, and we'd be happy to submit a report that indicates that.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much.

I'm going to move on. I know some of my colleagues also have some questions for those of you who weren't with us last night, so I want to leave them the opportunity to come back to you.

Ms. Kothawala, I want to talk a bit about credit cards, which is a topic that always bubbles back up every few years. I know for your members it's probably an ongoing issue, but it always gets brought to the fore. You made a couple of comments, and I just want to unpack them a bit. You said that 42% of the revenue of your members actually goes to taxes that they then remit to government? Did I get that right?

[Anne Kothawala]

That is correct. It's because a number of the products that we sell are highly taxed products, like gasoline and tobacco. Unfortunately, we can sell beverage alcohol in only a few provinces, but in the province of Quebec these are all highly taxed products.

[Adam Chambers, Conservative, Simcoe North, ON]

That's right. I don't think it's any surprise that the profit margins on these highly taxed products are obviously—and I can say this without giving any confidential information away—quite low.

[Anne Kothawala]

They're very low. I think there are a lot of misconceptions, particularly on the gasoline side. That's why that's one of the examples we've used. Currently, when you go to a gas station—let's say it's for a $60 fill-up—there's a processing fee of roughly $1.20 when you fill up your car with gas. If you go to the same station and they have an EV charging ability, it would be a 10¢ flat fee. Why is that? It's because that's treated as a utility.

That's one of the areas in which we think some progress could be made in recognizing that the retailing of fuel is not what people think it is. The profit margins, as you point out, are extremely low. In fact, in Atlantic Canada, where the price of gas is regulated, we had retailers who were literally losing money.

[Adam Chambers, Conservative, Simcoe North, ON]

I assume that's what is partially driving—you also mentioned another sobering stat—the fact that 5% of your members' stores are closing. Was that over a year, or was that over a couple of years?

[Anne Kothawala]

That was over the course of two years. The last time we surveyed our members and looked at the data, that's why we said it was the equivalent of three stores closing over the course of 2021, because that was information from our report last year. We're in the field right now to determine what the 2022 numbers will be, and we suspect they'll be even worse, based on reports we're getting back from our members.

I think the one thing that's really important to point out is that a disproportionate number of closures are actually happening in rural communities across this country, where the local convenience store or gas station is often the only game in town.

[Adam Chambers, Conservative, Simcoe North, ON]

You mentioned this utility issue. To me, it just seems like a matter of fairness, right? The government is benefiting, obviously, from the sale of these highly taxed products. We've asked the retailer to remit the tax, but there's basically a fee for collecting it and remitting it. That fee has to be paid from the profit margins on the rest of the goods in the store, because the profit margin on that $60 of gas is probably only $1.20, or it's quite a small number, right?

[Anne Kothawala]

It's quite small. You're absolutely—