Evidence of meeting #90 for Health in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was packaging.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sinclair Davidson  Professor of Institutional Economics, School of Economics, Finance and Marketing, College of Business, Royal Melbourne Institute of Technology, As an Individual
Peter Luongo  Managing Director, Rothmans, Benson & Hedges Inc.
Satinder Chera  President, Canadian Convenience Stores Association
Anne Kothawala  President, Convenience Distributors, Canadian Convenience Stores Association
Akehil Johnson  Volunteer, Freeze the Industry
Anabel Bergeron  Volunteer, Freeze the Industry
Maxime Le  Volunteer, Freeze the Industry

4:05 p.m.

Managing Director, Rothmans, Benson & Hedges Inc.

Peter Luongo

That report came out just a few weeks ago.

4:05 p.m.

Liberal

Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB

The reason I ask is that I was reading a statement by the Conference of the Parties to the World Health Organization Framework Convention on Tobacco Control. Basically what they are saying—and I've been hearing this from other experts in other meetings, as well—is that the only evidence they've found that actually says there's less harm is industry-sponsored research, and that there's been no definitive evidence to support this claim that these are less harmful.

4:10 p.m.

Managing Director, Rothmans, Benson & Hedges Inc.

Peter Luongo

Number one, there have been a number of people who have come out, including Public Health England. There was a recent review done of all the evidence submitted to the FDA in the U.S. A number of positive statements came out of that, including, as I mentioned in my testimony, the committee recognizing by an eight-to-one margin that completely switching to IQOS would reduce people's exposure—

4:10 p.m.

Liberal

Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB

I'm sorry. Who was on this committee?

4:10 p.m.

Managing Director, Rothmans, Benson & Hedges Inc.

Peter Luongo

It was a group of people picked by the FDA for their independence explicitly. I can provide a list of those names.

4:10 p.m.

Liberal

Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB

Thank you. If that study by Public Health England, in particular, could be submitted to the committee later, we would appreciate it.

4:10 p.m.

Managing Director, Rothmans, Benson & Hedges Inc.

Peter Luongo

Absolutely.

4:10 p.m.

Liberal

Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB

Thank you very much.

I have limited time, so I'd like to go on to this.

Mr. Chera, you talked about the issue with the contraband tobacco and how plain packaging would increase contraband. You said that the Government of Australia has noted that this is increasing the rates that...? Correct me if I'm wrong. I wrote something down here to the effect that you said that the Government of Australia had indicated that this was not working, that, in fact, plain packaging was increasing the rates of contraband tobacco.

4:10 p.m.

President, Canadian Convenience Stores Association

Satinder Chera

What I was referring to is a report that was done by the Australian government. It found that, over the last three years, under plain packaging, the decline in the incidence of smoking had actually stalled, that it hadn't continued the way it had prior to plain packaging being introduced. It was an observation. What we noted was that one of the reasons plain packaging was brought in, from what we've heard from our counterparts down in Australia, was to help to reduce the incidence of smoking. The government's own analysis showed that it actually had stalled.

4:10 p.m.

Liberal

Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB

Again, I beg to differ. We've been reading reports from the Australian government and from the World Health Organization. We had a previous witness from the Canadian Cancer Society. Although he hadn't read them all yet, he was able to refer to 150 peer-reviewed scientific studies that showed that plain packaging, in fact, does not increase the rate of contraband tobacco and that it also, in fact, does help to decrease smoking rates.

4:10 p.m.

President, Convenience Distributors, Canadian Convenience Stores Association

Anne Kothawala

Three countries in the world so far have moved to plain packaging: Australia, France, and the U.K. The U.K. is still pretty new. But based on everything we have heard in dealing with our counterparts in Australia, for example, they have doubled border security because they have noticed that there has been an increase in contraband. We're not saying there's a direct cause and effect. We are saying, based on what we have heard from these three countries, who didn't have as big a contraband problem as we have here in Canada...and I think that's important. We've already got a bad problem.

February 12th, 2018 / 4:10 p.m.

Liberal

Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB

I hate to cut you off, but I have limited time here.

Again, data from the Department of Health in Australia has said this was one of the contributing factors to decreasing smoking. The study you're referring to seems to fly in the face of the majority of evidence. Now again we're talking about over 100 papers by independent, peer-reviewed scientific organizations that are saying this does not increase contraband tobacco. To say that since this happened because they're paying more for border security is no more than a correlation, and it's so many steps removed from that, I don't know how we can draw a conclusion from that.

4:10 p.m.

President, Canadian Convenience Stores Association

Satinder Chera

We'd be happy to share the exact data that we retrieved from the Government of Australia and present that to the committee.

4:10 p.m.

Liberal

Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB

All right, thank you very much. We'd appreciate receiving that information.

Now let's go on to vaping.

Ms. Kothawala, you talked about vaping being a safe alternative to cigarettes.

4:10 p.m.

President, Convenience Distributors, Canadian Convenience Stores Association

Anne Kothawala

I said it was safer.

4:10 p.m.

Liberal

Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB

Or safer. Yes, sorry: a safer alternative to cigarettes.

A study in the Canadian Medical Association Journal said that young people who started off vaping were significantly more likely to go on to smoke tobacco. Even if the actual substance is all you smoke, it may not be as dangerous. Would this not be a significant danger for someone starting to use this product, going on to tobacco? Wouldn't this indirectly make it a very dangerous product?

4:15 p.m.

President, Convenience Distributors, Canadian Convenience Stores Association

Anne Kothawala

I appreciate what Freeze the Industry is talking about. What we're saying with respect to cigarettes and vaping is that if young people want to access either of these products, they can. In the case of vape, it's from the illegal vape shops. We have followed the law. Health Canada had a directive that we could not sell, so distributors and retailers did not sell those products. Meanwhile we're competing with illegal shops, which are cropping up on every street corner. We're saying that if that's going to continue to happen, there should be a level playing field.

By the way, we have a very strong track record in checking for ID, so young people don't develop their smoking habit based on buying cigarettes in convenience stores.

4:15 p.m.

Liberal

The Chair Liberal Bill Casey

All right, time's up.

Now we go to Ms. Finley. Welcome to our committee.

4:15 p.m.

Conservative

Diane Finley Conservative Haldimand—Norfolk, ON

Thank you very much, Mr. Chair.

Dr. Davidson, could you tell us about the illegal tobacco market in Australia? Do you grow tobacco there? Are the products counterfeit or are they contraband? Are they domestically produced or brought in from outside the country?

4:15 p.m.

Prof. Sinclair Davidson

No legal tobacco is grown in Australia. There used to be tobacco licences for farming here in Victoria, where I live, and I think over the last 10 years the governments have been buying back the licences, so there is no legal tobacco produced in Australia. Any tobacco produced in Australia must be illegally grown or it is imported into the country either as illicit or as contraband. We have both types—people buy legal tobacco in neighbouring countries and import it into the country, and/or they're actually using counterfeit cigarettes. We have both.

KPMG U.K. does an annual survey, and they estimate that the size of those illegal markets has grown from about 11% before the policy was introduced to about 13% to 14% now. That, depending upon the precise numbers, is about a 20% to 25% increase in the illegal markets in Australia.

Now bear in mind that Australia is an island, so it's actually quite hard to get stuff to us. There's also been talk that a lot of people have stopped smuggling more dangerous types of drugs and are substituting tobacco for those, simply because the penalties for smuggling tobacco are so much lower than the penalties for smuggling harder drugs. You might even say that that could be a positive, I suppose, except of course for the people who are completely against criminals. There's been an increase in theft from convenience stores, with people now breaking in and stealing tobacco products, so convenience stores are now having to compete against their own stolen product, which is, of course, grossly unfair to them.

There's also been a policy disconnect. We have illegal tobacconists setting up all over the place, but between the customs people, the local police, and the local councils that are supposed to license all of this, there doesn't seem to be a clear pathway of responsibility to the policing of the illegal market. One of the other recommendations I should make, now that I'm thinking about it, is for the Canadian government to actually create clear lines of responsibility for enforcing the plain packaging laws; otherwise, it ends up falling between the cracks and everybody is pointing a finger at everybody else.

There was another point I was going to make, but it escapes me for the minute.

4:15 p.m.

Conservative

Diane Finley Conservative Haldimand—Norfolk, ON

Are you at all familiar with the contraband situation in Canada and North America?

4:15 p.m.

Prof. Sinclair Davidson

I have some familiarity with it, and that was the other point I wanted to make. Our native title here in Australia is very different from native title in North America. We can't actually have situations where Australian aboriginal people grow tobacco on their lands and then sell it into the rest of Australia, which I understand can happen in North America. In the United States and I think also in Canada, that is the situation. I also understand that the illegal market in Canada is so much bigger than what it is here in Australia.

4:20 p.m.

Conservative

Diane Finley Conservative Haldimand—Norfolk, ON

Exactly. In fact, it's conservatively estimated at between 20% and 30% of the market. In some areas it's as high as 80% percent. It's a very serious issue. It's not just that these are dirty cigarettes or that they're cheap cigarettes. The money, as mentioned earlier, is actually tied to international organized crime and it's often used to launder money. It's easier to drive a big truck full of cartons of cigarettes across the Canada-U.S. border than it is to transport hundreds of thousands or even millions of dollars of cash. This is big business and it's big money.

4:20 p.m.

Prof. Sinclair Davidson

The point to understand is that this actually becomes a subsidy to criminality, which of course, in and of itself, is always bad policy.

I like to make the point that criminality itself is a gateway drug to further criminality because criminals do not pay taxes, they do not pay dividends, they do not employ under minimum employment standards, they engage in violence, they increase insurance costs, they subvert social institutions, and they compete unfairly with legal business. All around, criminality is a serious problem that needs to be suppressed and certainly not subsidized, even when you have the best of intentions.

4:20 p.m.

Conservative

Diane Finley Conservative Haldimand—Norfolk, ON

My big fear with this bill is that it's going to be one of the best pieces of good news the contraband industry in this country could ever get.

Thank you very much, Dr. Davidson.