Indigenous and Northern Affairs Committee on June 15th, 2010

[The Chair, Conservative, Bruce Stanton]

You have two minutes remaining, Mr. Lévesque.

[Yvon Lévesque, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

How many?

[The Chair, Conservative, Bruce Stanton]

You have two minutes left.

[Yvon Lévesque, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

How can a retailer-shipper have the same weight and impact on transportation costs as a wholesaler such as Canada Post? It is all fine and well to provide a food subsidy, but how much will the food be worth upon arrival and at the time you do your checks? The shipping is no longer subsidized. You will directly subsidize the food items.

Also, are the small retailers, such as corner stores, not being penalized by such an approach?

[Patrick Borbey]

With regard to your first question on retailers, these foods covered by the subsidy represent a small portion of the overall orders. They are telling us that they could combine their orders and achieve economies of scale in this area. Consequently, they will be able to ensure greater efficiency, even if Canada Post has a well-established network.

As for the small retailers, we listened to their position. They will be able to have the same involvement as the large retailers, under the program, or they could use what we call personal orders. This will minimize the paperwork needed to get the subsidy. It will compensate for the subsidy to southern wholesalers. In this way, we have been able to minimize to some extent the burden that this could represent for small retailers.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Lévesque.

Now, we will move on to Ms. Ashton, who has seven minutes.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much.

Thank you for your presentations.

As the member of Parliament for Churchill, a riding that includes 22 isolated communities, 18 of which have no other option but to fly in, and of course have winter roads during the increasingly short season, I and my riding are greatly concerned with the food mail issue.

Last week I had a meeting with the grand chief of the MKO, the Manitoba Keewatinowi Okimakanak, the northern chiefs' political organization, and they're very concerned about these proposed changes to the food mail program.

Number one is the lack of consultation. They are familiar with the Dargo report, but in coming up with these proposed changes, there has been a lack of consultation with Manitoba first nations that are to be impacted, and Manitoba aboriginal organizations as well. They have concerns about some of the stipulations in the report, such as the exclusion of certain items—for example, toothpaste, something that is also overpriced in many of these remote first nations.

Perhaps the need for consultation would be the most critical in terms of who is now being given the responsibility for food mail, given that many of these first nations have only the North West Company in their communities. What they see now is that an important alternative, an access to more affordable foods, healthy foods, is being given to the company that already has a disastrous monopoly in these communities.

And you know the figures—$14 for a jug of milk, $40 for a bag of flour. We're not talking about luxury items here. We're talking about pieces that people need to get on with their lives. And the same company that is taking advantage of the lack of access in these remote first nations is now being given that responsibility. This is causing great concern.

Also, there is great concern among suppliers, suppliers in Winnipeg, suppliers that have great relationships with many of these first nations and are eager to hear this information.

I'll move on to the second point. After the lack of consultation, the concern revolves around the lack of information. Reading the report today, I'm seeing some pieces that were not known by first nations in my riding, first nations who depend on the food mail program. I would like to know and they would like to know, for example, if there will be the same ability for small northern retailers to deal with the program. Will there be technology transfer support for these retailers, given that they might be coming up against possible competition with the North West Company and Arctic Co-ops?

Also, there's a reference to regulation and transparency. I'd like to hear how that will be enforced, given that the North West Company, which is the sole body that deals with our region, is a private enterprise and currently benefits from the fact that many of these communities are remote and these kinds of prices that are imposed on communities do not come out in public.

Finally, I'd like to know who the board members are from Manitoba. What kind of consultation is taking place with the first nations that I represent and aboriginal organizations in Manitoba? And similarly, where are the other board members from? I hear six.

I know many of our regions depend on this vital program, and I'd really like to hear to what extent it's comprehensive.

[The Chair, Conservative, Bruce Stanton]

There's a fair bit there, I realize, Mr. Borbey. You've got about three minutes, and I'm sure you've got some notes.

[Patrick Borbey]

I'll try.

[The Chair, Conservative, Bruce Stanton]

Please, just go ahead and do your best.

[Patrick Borbey]

I'll try.

In terms of consultation, we can provide you with the information. There were 70 different sessions, including some with Manitoba first nations and organizations. This is a process that took about two years. There was plenty of opportunity—public disclosure of reports and opportunity for people to comment, to come and see us, visit us. It has been a very intense period of consultation, so we feel we've done a fairly good job in that area.

I did answer the question about small retailers just a little bit earlier. Small retailers will have the option of using the same process as big retailers, which is that they will supply us with their waybills and the subsidy will be applied against the waybills. It is not a process that's going to require a lot of technology. One of the options that was considered during the food mail review was a subsidy that would be applied directly at the till. That was rejected because the retailers do not have the technology. It would require a significant investment. We're trying to still capture the transparency associated with that idea by having the retailers put it on the bill so that as people leave the store they will be able to see how much subsidy they got.

So we're trying to compensate for that, but there are not going to be a lot of technology requirements.

The other option they have is to use the personal order mechanism, so they would not be the ones handling the paperwork with INAC. It would be the southern suppliers, the Winnipeg-based suppliers, who currently have, of course, great relationships with the north in terms of both personal orders with individuals and with institutions. In the case of Manitoba, for example, there are some food kitchen programs that benefit as a result of the personal order. That will not change.

So those are some preliminary answers. Yes, we are concerned about—

[Niki Ashton, NDP, Churchill, MB]

The board members...?

[Patrick Borbey]

Thank you for asking that question. The minister is open to all suggestions and would be very happy to receive your nominations. You can address them to me or Mr. Tibbetts. He certainly wants to have a board that's very representative of all the northern communities that depend on this program.

[The Chair, Conservative, Bruce Stanton]

I think Ms. Copland wants to get in on that as well.

Ms. Copland, go ahead.

[Elizabeth Copland]

Thank you.

I hear you, Ms. Ashton, because I'm from Arviat, just down from Churchill. My family has ordered from Winnipeg and we have also used the food mail program. I have also been very frustrated by high prices in our northern stores. So I do hear you, which is why I agreed to try this new program. I'd like to help all of Nunavut very much to afford all these nutrients we need. I agree with you.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you, Ms. Ashton, Ms. Copland, and Mr. Borbey.

Now let's go to Mr. Duncan for seven minutes.

[John Duncan, Conservative, Vancouver Island North, BC]

Thank you very much.

My questions are along the same lines. We've moved from a transportation subsidy to a retail subsidy, and I understand that Mr. Bagnell has an issue. I'm not sure what the issue is, but I'm trying to tease out further information. According to the background information on the program, it says:

The personal orders process allows individuals and institutions to purchase eligible items directly from the south and benefit from the subsidy. DIAND states that the inclusion of personal orders will “allow a measure of competition in small northern markets and provide consumers with flexibility related to special dietary needs”.

Is there anything in this program that's more restrictive on personal orders than what was in existence before with southern orders?

[Jamie Tibbetts]

No. We'll have to go through the process of wholesalers and retailers applying to get on the list to be able to supply people who want to buy through personal orders. For the small businesses, they can use that process to get products from a larger wholesaler, for instance, and we'll have an agreement with that larger wholesaler to pass the subsidy on to retailers or individuals in the north. It will work in a similar way.

Less than 10% of the $58 million spent this year will go to the personal order processes. About 85% of the products that are subsidized through Canada Post go back through three or four of the larger wholesalers and distributors in the south that have stores in the north. I don't suspect that balance will change. We'll have to work with the smaller organizations and individuals to have a list of the stores, retailers, and wholesalers we have agreements with that you can get products from.

[John Duncan, Conservative, Vancouver Island North, BC]

There's also an indication that there will be some funding, training, and coaching initiatives under the nutrition education component of the program. Can you further enlighten us about what that might entail?

[Patrick Borbey]

This is the part of the program that will be delivered by Health Canada. They're developing right now the terms and conditions on how that will be delivered. They are targeting interventions at each of the communities that will be eligible under the new program. That will include people hired locally to work with the community population on things such as cooking lessons, tips and advice on how to prepare nutritious goods, and the various calorie intakes and benefits of various foods. That's still under development with our colleagues from Health Canada.

[John Duncan, Conservative, Vancouver Island North, BC]

When this committee was in the north we heard from the North West Company that they were opposed to a retail subsidy on the basis that it would add complexity and a burden. Since the program was announced, what kind of feedback have you had from the retail sector?

[Patrick Borbey]

Just to clarify, during the consultative process there were three options that were looked at in more detail. The point-of-sale subsidy is the option that was of concern to retailers. They were concerned that they did not have the technology to be able to implement that. There would be significant new costs, and it would add a significant amount of complexity. They supported more of a freight retail subsidy, under which the waybills would be submitted to the government and there would be compensation for the cost of the subsidy.

It's a simpler, less complex process. It does not require more technology than what currently exists. It does require that we invest in a process of verification and ensure accountability to make sure that the subsidy is being applied to the right goods. That's how we dealt with some of the concerns of retailers.

However, we also want the retailers to agree that they will implement the benefits that would be associated with a point-of-sale subsidy by putting the information on the bill after the consumer purchases the goods so that they can clearly see what the subsidy amounts to. So for the milk, the bananas, or the pineapples, here is the subsidy you've actually received. They've agreed to collaborate in implementing that kind of transparency, and we will be doing more surveying, more review, things that we can't do right now with the existing program.

[John Duncan, Conservative, Vancouver Island North, BC]

So for auditing purposes, every purchase that's eligible should have an identified purchase price plus the subsidy on the invoice. Am I correct?

[Jamie Tibbetts]

That would be the point-of-sale technology. The amount of subsidy going to the community generally will be put on the sales receipt. And we'll be auditing the reports coming in from the wholesalers and retailers to ensure that it is passed onward.

We're under discussions right now with the larger...You mentioned the North West Company. I had discussions even yesterday about how we're going to work with them and develop a process of internal controls they can live with and we can live with to ensure that transparency and accountability are respected.

[The Chair, Conservative, Bruce Stanton]

Okay. Thank you, Mr. Duncan.

That will end our first round, and now we go to a five-minute round for the question and the response. We probably have time for three questions.

I think we'll begin with Mr. Russell, followed by Mr. Clarke and Monsieur Lemay.

Mr. Russell, go ahead.