Evidence of meeting #33 for Indigenous and Northern Affairs in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was product.
A recording is available from Parliament.
Conservative
John Weston Conservative West Vancouver—Sunshine Coast—Sea to Sky Country, BC
But perhaps they are products more in accordance with the Canada food guide, that sustain healthier living. Isn't that...?
Chief Executive Officer, Arctic Co-operatives Limited
Well, there are requirements. There are lists of products that are available.
The important point, and it's been mentioned a number of times today, is that we don't know what the rates are. If there's roughly $60 million available for the entire program, what will be the subsidy rates in each of the communities? If there are less non-perishable products going in, is that going to impact the subsidy rate to the consumer on the perishable products? It would seem likely to me that that would be the case. We would hope that would have a very positive impact on the cost of perishable nutritious products.
Conservative
John Weston Conservative West Vancouver—Sunshine Coast—Sea to Sky Country, BC
It's classic business: you would think the non-perishable things would go the cheaper way, by sea, and the perishable ones by....
At any rate, thanks.
Conservative
The Chair Conservative Bruce Stanton
That's it. Thank you very much, Mr. Weston.
We're going to go to Mr. Russell.
Liberal
Todd Russell Liberal Labrador, NL
Thank you.
I would like to know, is the Canada food guide culturally appropriate for all areas in Canada?
Conservative
Liberal
Todd Russell Liberal Labrador, NL
I know. He's a fitness guru. He's like Fonda: he's got his Fonda tapes out.
Liberal
Todd Russell Liberal Labrador, NL
I have a couple of questions.
Mr. Bateman, can you guarantee all your customers here that you're going to be able to offer them a cheaper cargo rate because it is a new program?
President and Chief Executive Officer, First Air
All I can guarantee them is that, overall, I'll offer rates to the community at large that allow me to recover 100% of my costs and provide a reasonable return to the shareholder in order to generate a pool to replace assets as the assets come due. That's all I can guarantee them.
Liberal
Todd Russell Liberal Labrador, NL
If certain items come off, if you as retailers keep saying that we're going to try to ship more products by sea or by ice road or by some other means, would that mean less volume, potentially, Mr. Bateman, for your airline? And what does less volume do to your business?
President and Chief Executive Officer, First Air
Definitely it means less volume. Then the challenge is for me to adjust my capacity, my fleet size and the gauge of aircraft, and my flight frequency to meet the demands of the market in a cost-effective manner. Obviously I have to adapt my business model to the market.
Liberal
Todd Russell Liberal Labrador, NL
So if you have less volume going in but you now have a multitude of points from which to pick up this smaller volume, what does that potentially do to your costs? How does that get passed on to your customer?
President and Chief Executive Officer, First Air
I think at a multitude of points—we operate at most of the points that are probably being considered as staging points going forward. I think the key issue for us is the volume that gets tendered. As I say, I carry cargo, mail, passengers, medical travel to the northern communities over a single aircraft. So I would revisit my product offering and realign it with the demands of the market.
Liberal
Todd Russell Liberal Labrador, NL
To the big retailers, what percentage of increase in product do you think you'll now be carrying by sealift, for example? How much volume reduction do you think you'll have in terms of air cargo? Have you made any calculations on that?
Executive Vice-President, Northern Canada Retail Division, North West Company
Mr. Russell, it's not only the method of transportation but it's the infrastructure on the ground. In terms of the infrastructure investment that we have in the 69 communities that we operate in, our net book value of those assets is $76 million. In those markets, we'll spend $15 million every year in capital expenditure and we'll invest about $3 million in new housing or renovated housing for our staff.
So it's not just the shipping method. We can't, overnight, grow and expand the size of our footprint. We will; we'll continue our capital investment expenditure, and the Nutrition North program will act in many ways as an inducement for further investment by northern-based retailers to grow their plants.
We would obviously like, given all the good points that Andy said.... Take heat and electricity; I don't know what it costs everybody else, but in the communities we're affected by, it's a bill of $10 million a year. Our paying that $10 million allows the rest of the infrastructure in those smaller communities to be supported.
To answer your question, we will ship more product by sealift, but hopefully the northern retailers want to keep the economy vibrant and growing in the north. Our role is to make sure more customers are induced to spend money in the north rather than seeking the product elsewhere.
So the answer is that we're going to do our best to put money, investments, capital expenditure, inventory and assets, and hard infrastructure on the ground in order to bring more product to the north, totally. We never ship tires or spare parts or snowmobile parts. We've never engaged in that business. That wasn't part of our game plan.
In terms of more air shipment, if we work together with INAC, the air carriers, and other retailers, if we focus that air freight on perishable goods, we can do a better job. To tell you the exact impact, bottom line for the customer, I don't think any of us have the total knowledge to do that, but we think we can make a good program here.
Conservative
The Chair Conservative Bruce Stanton
That's it, Mr. Russell.
I'm going to take a brief spot here, and I think we have enough time to get the other members on the list here as well.
This is really to our retailers on the question of transparency. I wonder if you could each just give a minute on how, under the new program, your customers are going to be aware of how the subsidies are impacting the costs of the goods--this is, of course, all in the perishable realm--that they're going to find at your store.
We'll start with Mr. McMullen and then we'll go across the table for about a minute each, and that should take about the right time.
Executive Vice-President, Northern Canada Retail Division, North West Company
Thank you, Mr. Chairman.
Overall, INAC will have a communication program, which we will post in all stores as required. We'll develop communication packages in line with INAC. They'll take this type of flavour to them, where we advertise specific products. We might call it “Nutrition North in action”, but we'll talk about what happens to bananas both with and without the subsidy. We'll have posters in our stores on this type of program, on what the subsidy means for 5 pounds of potatoes, 10 pounds of apples, etc.
So we'll have this type of poster, with 25 to 50 high-volume nutritional items posted in all stores on a weekly basis, biweekly basis, whatever is realistic. We'll post “in action” products. What are “in action” products? In February we promote berries. Berries will be a subsidized product, as they are now in the Nutrition North program. As we promote berries we take a discount at the consumer level to inspire them to buy more.
Conservative
The Chair Conservative Bruce Stanton
So the list is going to change from time to time, depending on what--
Executive Vice-President, Northern Canada Retail Division, North West Company
Absolutely. You have to keep the customer informed.
Owner, Newviq'vi Inc.
We've been told by our point-of-sale supplier that we can accommodate the subsidy rates right on the cash receipt for the customer, or on the screen for the customer.
I also understand there is advertising money within this program that's going to be given to regional health authorities to do some kind of advertising within the community. Again, we're operating on an unknown area here exactly as we're operating on an unknown subsidy. We don't know what's going to happen. I think for national health and welfare it's the same situation. The money is there to publish this to customers.