Government Operations Committee on June 14th, 2021

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

[Tyler Dyck]

Exactly, and it was getting worse and worse. They just had to pull aside. Then the slap in the face, really, came with that December investigative report, where, whoa, $300 million was spent and it didn't go to a Canadian company. One guy jumped in—

[The Chair, Conservative, Robert Gordon Kitchen]

I'm sorry to interrupt.

Mr. Guitor, if you feel that you want to add something more, if you would provide that in writing to the clerk that would be greatly appreciated.

We'll now go to Mr. MacKinnon for six minutes.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

Mr. Guitor and Mr. Dyck, thank you for coming to the committee today. Your testimony and your words today certainly help us recall what was an incredibly difficult situation where, all over the world, as I think you've alluded to, the commodities and inputs required to produce all sorts of PPE and materials like hand sanitizer were in short supply. Happily, that situation seems to have corrected itself. Let's hope that is permanent.

Can we go right to solutions here? Mr. Dyck, I heard you speak about an offer—can I call it an offer?—that was made for the government to somehow pay for inputs. Your companies would produce product at no profit and then.... Maybe you could expand on that.

[Tyler Dyck]

You have to remember that at that time everything was pretty much shuttered. People weren't coming in and buying high-end, premium products, and that's what made-in-Canada products are. They're not mass producing this stuff.

The proposition was, “Hey, there are many of us who are already doing this.” They were using their own base materials from the Canadian grains and fruit to produce alcohol and then basically destroying that alcohol and turning it into sanitizer. We were saying, “Just cover the cost. Get that base material and keep our staff working.”

That, actually, as a make-work thing would be sensible, because otherwise we were having to lay off all of our staff. Now, lots of us who really were champions of that continued to go forward with our own funds, because it was the right thing to do, and we wanted to protect our communities. That offer was definitely out there, and it was out there at the federal and provincial levels.

I get it. You know, it's complicated when you're running a big business. It's hard to run a sort of “Hey, we'll have your back”, but my dad likened it to the forest fires coming to our doorsteps out here in B.C. The guys with the skidders and the operators are right out there plowing those division roads, but they almost always get reimbursed for that. The government says, “Hey, we have your back. You guys do the right thing, and we're going to go through.” They don't stop and wait for it. What happened here was that the companies that stopped and waited, and waited for the paycheque, got rewarded, and the ones that got in early were overlooked.

[Steven MacKinnon, Liberal, Gatineau, QC]

Well, look, that's what makes this country great. I'm speaking, of course, about the comment about the skidder operators and companies like your own and Mr. Guitor's that stepped up and supplied this material, and you're certainly to be commended for that.

The federal government, as you're both undoubtedly aware, is not, in the end, a major consumer of hand sanitizer. Certainly hospitals are. Clearly a number of federal government departments and agencies are major users, and I suspect that hand sanitizer will be a permanent fixture, if it was not already.

Did you approach those other major consumers of hand sanitizer? I'm thinking of health authorities, provincial governments, municipal governments, private businesses, retail chains and others who presumably had demands for hand sanitizer that, in aggregate, would far exceed those of the federal government.

[Tyler Dyck]

Yes, many of our members did. A lot of us were already supplying the COVID wards in hospitals. We supplied the whole centre of the province. The hospitals, the ambulance, fire services, front-line workers, and every single doctor's office throughout Thompson Okanagan was supplied with hand sanitizer free of charge. We even did the Border Services Agency. We had calls from everywhere. Everyone was asking, and it would have been the same in every province. We just shipped as much as we possibly could.

For a fee-for-contract thing, yes, you could do that. Some companies did, and early on they did fairly well, but then when these massive contracts came in and the market got flooded with this cheap overseas sanitizer, the stuff that was produced here was, at a dollar cost, worth more than the cheap stuff that was coming in. At the same time, that hadn't generated any jobs here. People were on CERB, and so the government was, in effect, double spending. You were buying sanitizer from overseas while all of these other producers were here, but you were paying people CERB to stay at home so we couldn't even operate. In other words, I think it could have been managed a lot better and actually something almost like the War Measures Act could have been used to keep Canadian companies going for the betterment of Canada.

[Steven MacKinnon, Liberal, Gatineau, QC]

We received countless expressions of interest much like yours. I think there were some 26,000, and that number is probably way out of date. That certainly demonstrates a great public spiritedness on the part of Canadian industry.

I have one final question. Who did you make this idea, this concept of paying for inputs, known to at the federal level, and was that considered?

[Tyler Dyck]

I'd have to go back and check in my notes, but I believe usually we would go through at the federal level, because a lot of what we deal with is excise, and that's what I was alluding to for the other competitiveness model. We'd go through Finance or Agriculture and would usually cc the PM's Office and be that annoying sort of agitator trying to get as many people on that list as possible.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Dyck. If you do come up with a name, you can provide it to the committee. That would be greatly appreciated.

Mr. Guitor, you can do so as well.

We'll now go to our next questioner, Ms. Vignola, for six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Mr. Dyck, from what I hear, the production of disinfectant had enormous repercussions on your family business, which was also the case for Mr. Guitor.

I'll start with Mr. Dyck.

I want to make sure I understand. You started making disinfectant at your own expense. You made a suggestion to the government, quid pro quo, that they pay for the inputs and you would provide the disinfectant.

How much did it cost to transform your production in the end? Were you able to produce your usual alcohol in the distillery or did you only produce disinfectant?

[Tyler Dyck]

I will keep it short so that maybe my colleague can answer too. I feel like I'm robbing all the time here.

At our distillery, we are 100% farm-to-flask. We do not buy in any alcohol. What happened is we ceased production of all our whisky lines. We do 32 different products. All of the stills were running to make alcohol and to refine it up to 96% alcohol, which we could then use for hand sanitizer instead of for our products. Not only were we not producing our own products, but we were in effect robbing ourselves of whisky five, six, seven years down the line. I am not saying this because I want a pat on the back. Many distilleries were doing that, and even if they were buying in alcohol, they were buying it in at their own expense. It definitely had, and will continue to have, an effect going forward on the industry right across Canada.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Mr. Guitor, I'd like to hear you too.

[Gerry Guitor]

Our story is a bit different.

We also produce everything in‑house.

A number of microbreweries had given us all the beer they could no longer use. The Toronto community really rallied around. We were getting everything we could and then turning it into alcohol.

Much like my colleague Mr. Dyck does, we produce everything. We were able to process everything and do everything ourselves.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

All right.

Mr. Guitor, have you started making your own products again or are you still making disinfectant?

[Gerry Guitor]

No, we've gone back to making our products. Our story is a little different from Mr. Dyck's.

When we announced that we would start making disinfectant, we received a lot of media attention. Then, large companies with critical pandemic activities needed disinfectant for their employees.

In this regard, I will tell you an anecdote. A company contacted me and offered me $30 a litre for my disinfectant. I told her that was too much. She asked me how much I wanted and I told her I wasn't sure and suggested $20 a litre. She then said she would pay me $25 a litre. We were just raising money to help the needy. So I said we would take $25 a litre, but $3 or 10% or 15% of that would go to food banks. The company said they would give us $28 a litre. So that's how the adventure started.

So then all the companies that needed disinfectant for their workers, especially first responders, started ordering it. So we took their money and made disinfectant for police departments, hospitals, and so on. Our story is a bit like Robin Hood's.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Excellent.

Mr. Dyck, I remember hearing the Prime Minister say many times in the media that it was great to see companies adapting their production and that the Government of Canada would provide assistance.

Did you receive this assistance through the Canada Emergency Wage Subsidy or some other form of subsidy for production changes?

What percentage of people in your industry do you think received some form of assistance?

[Tyler Dyck]

As far as I know, none of our members have received assistance directly linked to production changeover. I'm talking about B.C. We have 70 craft distilleries here in B.C.

Early on there were only a couple of dozen who did the conversion. A bunch of others were waiting to see. With the positive words coming out of Ottawa and out of our own province—John Horgan was doing the same thing, saying, “Hey, we've got your back, thanks for doing the right thing”—I think it's fair to say that a lot of national distillers were emboldened by that and they doubled down. I know we did.

My dad said, “Well, they are going to do the right thing. Why wouldn't they?” Maybe we were naive. I work with lots of people at the national and provincial levels, and I always hear the same thing, “Well, you guys could have just waited. Your members could have waited for more demand and more desperation and then signed the cheques.” That's not what we are all about, and remember, those were very scary times.

Many of the members did eventually have to pivot across for paying. Some were doing a sort of combination where they would sell to a corporation that could afford it, and then they would use those funds to make more to donate to hospitals and front-line workers, but, yes—

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Dyck.

We will now go to Mr. Green for six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

I want to thank the witnesses who are here before us.

I'm the member representing Hamilton Centre, but I certainly know the west coast perspective. Both Gord Johns and Rachel Blaney have been up in the House talking about the great work coming out of the west coast. Certainly, we have distillers in Ontario.

In fact, I will even state at the outset that at some of our darkest points during COVID, our government, in fact all governments and I believe Canadian society, looked to those good-news stories, those stories of goodwill and the all hands on deck, team Canada approach. While I'm not government, I want to begin my comments by thanking you for not being cynical and for doing everything in your ability, within your association and within your sector, to provide one of the most critical PPEs, hand sanitizers. To change up that production on the fly, to just do the right thing because it was the right thing to do, is really commendable. As a member of Parliament, I just want to take this moment to thank you.

You mentioned, Mr. Dyck, that it was about more than hurt feelings. I do want to get into some deeper understanding about whether your association has done any preliminary estimates on what it would take to be made whole. Perhaps Mr. Guitor from Ontario could also comment.

We have heard what individual distilleries have put out, but have you, from a national perspective, looked at the amount of, I will say, goodwill—but these are real dollars—that you have invested into this recovery? Could you estimate the amount that would make these distillers whole for the contribution they had early on and without any promise of profit?

[Tyler Dyck]

It's a difficult one. I can tell you in talking with distillers across Canada, I think most of us are much more interested in working collaboratively with government to find solutions that would allow our industry to be more robust moving forward.

Almost all of our other G7 trading partners have changed federal acts and excise taxation policy to promote domestically made products. These are not trade violations because they are not saying you have to use 100% Canadian grain to do it, but they are policies that have allowed.... South of the border in 2017, they changed their federal excise on the first amount of volume of distilleries, so it champions small to medium-size distilleries right here in Canada. Almost across the board, those distilleries use 100% Canadian grains and fruits to distinguish themselves from everything else.

Policies like that, which have spurred over 1,000 new distillery starts in the States in the last couple of years, have built a robust and nationally proud industry. Despite having to ask our government for repetitive meetings on, “Hey, can we change this, can we copy this, otherwise you're going to leave us behind”, there has been no response. They keep escalating our excise rate where we—

[Matthew Green, NDP, Hamilton Centre, ON]

Perhaps I could pause you right there as I think we might be getting to something here.

I want you to correct me if I'm wrong, but if I understand the escalator that you're talking about, it's an increase of 12.6¢ for a litre bottle of 100% pure alcohol spirits.

[Tyler Dyck]

Yes, it's 12.7¢ now. It goes up every year.

[Matthew Green, NDP, Hamilton Centre, ON]

For 750 millilitres are we talking about four cents, essentially?

[Tyler Dyck]

No, for 750 millilitres, the federal rate you'd pay is about $3.60 to $3.70 just in excise, but then—