Indigenous and Northern Affairs Committee on Nov. 17th, 2010

[The Chair, Conservative, Bruce Stanton]

Welcome, members, witnesses, and representatives. We're going to get going fairly quickly. Welcome, guests as well. We're just getting started. Wednesday afternoons are sometimes a little later starting because we're a little later getting out of question period.

We're resuming our study of Nutrition North Canada. One of our witnesses is still to come, so we'll proceed in the order that you have on your agenda today.

For our witnesses, the way this goes, because there are six of you present today, we'll try to stick to about a five-minute opening presentation. We'll proceed through each of the five-minute presentations, and then we will go directly to questions from members.

We'll begin. First I'd like to introduce the two representatives from Canadian North: the president, Tracy Medve, accompanied by Patrick Schmidt, the VP of NorTerra Inc. And I think, Tracy, you're doing the presentation.

Let's begin. Go ahead with your presentation. We'll go from there.

[Tracy Medve, President, Canadian North]

Thank you very much. Hello everyone. Bonjour.

As a key participant in the northern transportation infrastructure with a major impact on the northern economy, Canadian North values very much the invitation to be here today on the motion of Mr. Payne. We commend this government for showing the political courage to do the right thing for the health of all northerners by taking steps to amend the legacy of the food mail program and replacing it with Nutrition North Canada.

The advantages of Nutrition North are many, including a focused eligibility list, which concentrates on perishable, nutritious foods; logistical efficiency arising from the elimination of arbitrary entry points; transparency, to ensure the subsidy is passed along to northerners; and accountability for food quality throughout the delivery process. For these reasons, we strongly support this program. Nunavut is one of the largest users. Canadian North is 50% owned by the Inuit of Nunavut. The other 50% of our shareholders are the Inuvialuit of the western Arctic, many of whom are also users of the program. Our shareholders need this program to ensure they can feed themselves and their families in a healthy and affordable way. We believe Nutrition North will meet this need in a meaningful and sustainable manner.

Furthermore, we support the program, as it creates a market-neutral structure among the air carriers, removing the hand of government from the supply chain. What do I mean by market neutrality? Under the old food mail program, granting a sizeable government-funded contract, which allowed a single airline to provide discounted air freight rates for most of Canada's north for a five-year term and blocked the entry of competitive airlines, was market disruptive.

Imagine a scenario where two airlines may be flying between communities like Iqaluit and Pond Inlet. Both have an equal number of passengers on board similar aircraft types. But one carrier has the advantage of a large, dedicated, and exclusive revenue stream for the carriage of food funded by the government, thereby creating a competitive advantage unattainable by the other carrier. Such a situation cannot serve to benefit any stakeholder. Fortunately, the Nutrition North program corrects this situation by removing government from the equation and forcing each airline to earn their business based on the quality and cost of the service they offer. No longer will the government be in the business of tilting the balance of competitive power in favour of one carrier over another. My colleague at First Air had suggested the northern air transportation system is in a delicate state of balance. We agree with that. The northern economy is based on stable and efficient competition, and the new program will ensure this competition can continue.

Having said this, we believe the Nutrition North Canada program is not about airlines, nor about commercial interests. The program's focus should be on ensuring the subsidy reaches the northern consumer in a fair and accountable manner. That being said, we do believe the program must be respectful of commercial interests by not disrupting the marketplace through contracts of such significant size that they become economic weapons that can stifle healthy competition.

It is exactly upon this open market concept that our economy is founded and it is exactly this competitive process that has created the southern food prices most northerners envy. Change is always difficult for a longstanding program such as food mail. It is easy to become distracted by the unknowns and believe that the worst will happen. But I ask you to look back at the interim report prepared on behalf of INAC, which suggested that only 62% of the subsidy funding under the old program was reaching the intended recipients. Given this conclusion, what could be worse, I ask you, than knowing that for every dollar the government spends, only 62¢ ultimately goes to the consumer? We believe Nutrition North Canada will ensure that the people for whom the subsidy is destined get every dollar of benefit possible.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you very much.

Now we’ll go to Mr. Richard Joubert from Canada Post. Mr. Joubert tells me that he really doesn’t have a presentation per se today, but he is glad to be here for questions on the subject we have at hand.

So we’ll go to the next speaker.

Nous souhaitons la bienvenue à Mme Rita Novalinga, directrice générale de la Fédération des coopératives du Nouveau-Québec.

Madame Novalinga, go ahead with your presentation.

[Rita Novalinga, General Manager, Fédération des coopératives du Nouveau-Québec]

Thank you, Mr. Chairman, and good afternoon, everyone.

My name is Rita Novalinga, and I am the general manager of the federation of co-ops in Nunavik.

Thank you for your invitation to the Nutrition North Canada study. Since I have only five minutes, I'll go straight to the point and explain why we should amend the subsidy items before the list comes into full force in April 2011 and request a delay, because we will have to get new warehousing in our isolated communities in order for this new initiative to work.

For your information, by the way, I am from Puvirnituq, northern Quebec.

Inuit or northerners who live in the Arctic need a special diet for the north. It is a reality in the south to live with fruits and vegetables, but the Inuit cannot live on that alone, when the average temperature in the winter reaches -65° Celsius with the wind chill factor, especially when people go out on the land to hunt for food. Fruits and vegetables are very delicate food, and when we ship them by air we always have to make sure that the temperature is right, that they are packaged properly, and that they are handled with care, because the food spoils before it reaches its destination. In the winter, when it takes someone an average of 15 minutes to walk home from the Co-op store, fruits and vegetables will already be frozen by the time they get into the house.

Think about the hunters who go out on the land when you have to make decisions for the north. They are, after all, our providers. Condiments such as honey, jam, salt, and sugar that are high in calories are a few examples of food that shields the human body in extreme weather conditions. Tea and coffee, which have been removed from the list that even poverty-stricken Canadians enjoy when they cannot afford other popular drinks, have been removed. Scientific studies show that bird feces pollute the very waters that we drink when they migrate to and from the north, so water should be reinstated and put back on the list.

Nunavik is isolated, in the sense that we have no road access. The 14 communities that we serve are accessible only by air throughout the year. In the summer months, there is an annual sealift going to these communities from July to October. This means that we will have to stock up on canned food for nine months out of the twelve. Co-op stores that we serve are the front-line services in the north. Therefore, to remove items such as rice, noodles, soup mixes, pasta, etc., from the subsidy is a mistake, because they are the only affordable items that complement our meals of caribou, fish, and other country food that we eat. It's like taking away potatoes, carrots, peas, and asparagus from your main meal, if you exclude them from the subsidy.

By now, I think we all know that there's a housing crunch in the far north. The cooperative members in Nunavik fail to understand why detergent, soap, toothpaste, toothbrushes, toilet paper, diapers, and other cleanliness products have been removed from the subsidy, because more than 50% of households are overcrowded, according to the study made by Statistics Canada in 2006. These products are preventing outbreaks of diseases and sickness across the north. If Inuit families were not so careful in cleanliness, there would be many more sicknesses and diseases in the north today.

We should reflect upon what is happening in the north, because there are three strikes against the Inuit and northerners, which you as policy-makers can change when you understand the global picture.

Strike 1, we have quotas that we have to respect, which will have to be amended to complement our traditional diet of country food in light of Nutrition North Canada. Please see your DFO department for that information.

Strike 2 is that we have the overcrowding and homelessness issue, which the government doesn’t see. Homeless people cannot sleep outside in minus weather conditions. Therefore, all cleaning products should be reinstated so that cleanliness will be a priority in overcrowded homes.

Strike 3 is that items that have been removed from the subsidy list are a big setback for the north, because we are going back to the 1970s, when we used to eat canned food and fruits. Even then they were a complement when there was no country food available at certain times of the year. Therefore, give us the funding and the time to build warehouses for these products in our communities.

In conclusion, in order for the Nutrition North Canada project to work, we want to be part of the decision-making for this aspect of the study to decide what should be on the subsidy list, since sealift is open only from July to October. I have included some examples I would like each one of you to see so that you will see the reality of what is happening to prices in the north.

Bear with me. Could you give me one more minute?

I have made photocopies of this, which you will all see. We have done some studies on how much these condiments will cost. I have been given direction from my board of directors not to increase the cost of foods that are not fresh food until February, because they need time to inform the communities and to inform the people of what is happening.

Now, for example, if you take an average bottle of Heinz ketchup, which all of our children enjoy, the new selling price, after the difference, will be $13.59. That’s for a 1.5 kilogram bottle.

[The Chair, Conservative, Bruce Stanton]

Thank you, Ms. Novalinga. Unfortunately, you are out of time.

There will be an opportunity to expand on some of those points during the question and answer time for members.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Mr. Chair, I have a point of order.

The people appearing are going to submit documents. I would imagine they have briefs, such as the one Ms. Novalinga just read. I would like the witnesses to submit their briefs to the clerk so we can have a copy, once they have been translated, of course.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Lemay.

I would point out that the document is in English only. The illustrations, of course, are all there. We’ll do our best to get the translation and interpretation done and get it out to members. So there will be an opportunity to get this. We have a rule that all of our documents are distributed in both official languages.

I will now hand the floor over to Peter Fogarty, President of Marché Central du Nord.

[Peter Fogarty, President, Marché central du Nord]

Good afternoon, and thank you for inviting me. My name is Peter Fogarty, and I am the owner of Marché Central du Nord, a company that has been around for more than 20 years. We ship groceries to people in northern communities, more specifically, nurses, doctors and people in Iqaluit and Kuujjuaq.

We prepare grocery orders for people.

I own a grocery store called Metro Fogarty, in Charlemagne. Everything is done on site. We have about 15 employees. They put together grocery orders for people up north. People place an order and send us their grocery list. They could ask for six steaks, an inch-and-a-half thick. We get the order Sunday night or Monday morning. The steaks are frozen and vacuum packed, and extremely high quality. They are on the plane by Tuesday. That is why the company has been around for 20 years. Marché Central du Nord specializes in preparing grocery orders.

Furthermore, I recently made an investment, without knowing what was happening up north. I am building another Metro Fogarty location in Charlemagne. This is a $10-million investment so that I can provide my Metro and northern customers with more quality products and top-notch service. With more products, we will be able to provide people in northern communities with approximately 15,000 items.

Since the nutrition north Canada program was created, our northern sales have dropped by $25,000 a week. We are no longer allowed to ship toothpaste, toilet paper and many other products. I put together a chart to show how Metro Fogarty was doing before. I have another chart showing the decline in sales since the nutrition north program has been around. It is not a good thing for us. Do not forget, we provide jobs to people who prepare the orders.

I have a few questions. Does Marché Central du Nord qualify for the subsidy? Will my business be eligible for the program, according to the Department of Indian and Northern Affairs? What kind of reporting do we have to do for the subsidy? I believe our current file, with Canada Post, is good. Our reports covered every customer and shipping, and I think they were well done. A bit earlier, certain people said that two airlines were necessary. When we used First Air to ship our orders, we were providing top-quality service to people up north. In 20 years of operation, I have never lost a single order. Orders would leave on Sunday, Monday or Tuesday night and get to their destination in excellent condition. Regardless of who is doing the shipping, the quality of our merchandise is first-rate, and that is what matters. And the fact that certain items were removed from the eligibility list has been hard on us.

From a technological standpoint, Marché Central du Nord's computer system is very professional. What are the requirements of the nutrition north Canada program? What are the costs? Up to now, we have been in the dark. Just recently, we invested over $25,000 to comply with Canada Post's standards. We had to buy new equipment. Is there a way we can continue to use our current systems? Will Canada Post's system be adapted to our new databases? Those are things we want to know.

Can the nutrition north Canada program help suppliers in southern Canada attract and keep customers? We provide a service that establishments up north cannot—personalized, top-quality service. We feel that people in Canada's north are entitled to receive the best, most professional service possible, service that is first-rate. The quality of our shipments is exceptional. Residents up north receive their orders after two or three days. That means a maximum turnaround time of 48 hours for orders that are hand-picked and custom-cut. We want to know if that will still be the case under the nutrition north Canada program. We do not know how we are going to ship orders. Will it be with First Air or some other competitor? How will this new system benefit people in northern communities? Are they better off under the program? I am not so sure. It remains to be seen.

Right now, we are trying to make our way in the dark. Marché Central du Nord employs 15 people, who process, prepare, package and ship grocery orders. We care about our customers, and we want to give them the best service and fresh, quality products. We need to know how this program is going to affect us. In addition, our northern customers are fortunate enough to pay the same prices as customers in the greater Montreal area. We save people in northern Canada money. They receive Metro's flyer and can buy ground beef on sale for $1.99 a pound, ham for 99¢ a pound. They just have to pay the shipping. All of our northern customers pay the same price as our in-store customers do. If a bottle of Ketchup is on for 99¢ or $1.99, we charge that same price plus the cost of shipping. There are no hidden costs. We have been doing things that way for 20 years. We have always respected our customers. Many people who come to Montreal from up north shop with us, because they want the quality and prices we can offer.

We do not manipulate prices. We are part of the Metro grocery store chain, we operate under the Metro banner, and we scan the products at the cash, as we would with any other customer. Not to mention, our northern customers receive a service that our in-store customers do not: we package their order with great care, fruits, vegetables, lettuce, tomatoes, all of it. Everything is packaged to ensure that the products arrive at their destination in the same fresh, high-quality condition they left our store in. That has been our goal for 20 years, and for 20 years, we have been successful at it. We do not want to lose our business. A lot of families depend on us for their livelihood, and we provide many families in northern communities with quality products.

[The Chair, Conservative, Bruce Stanton]

Okay.

[Peter Fogarty]

Thank you very much.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Fogarty.

Now we'll go to Jose Kusugak. Jose is the acting president for Nunavut Tunngavik Inc. Welcome.

I should say that Jose is accompanied by Laurie Pelly, who is also the legal adviser to NTI.

Go ahead with your presentation, sir.

[Jose Kusugak, Acting President, Nunavut Tunngavik Inc.]

[Witness speaks in Inuktitut]

Thank you, Mr. Chair. Thank you for the opportunity, by the way, to speak to you today.

Nunavut Tunngavik represents the Inuit who live primarily in Nunavut territory in 25 communities and three time zones across Canada’s Arctic. Almost 50% of the Nunavut population is under the age of 25 and pose much youthful promise, yet according to the 2008 Inuit children’s health survey, over 60% of Nunavut households are moderately to severely food insecure, meaning they do not have enough food for regular sufficient meals. Often they do not eat for days.

You know food security is a human right and a government obligation under international law, so it is a bit shocking and an embarrassment to this great nation, Canada, which is so blessed with so much, to have to report to a parliamentary standing committee that there is widespread real hunger in Nunavut. Please know that Nunavut Tunngavik fully supports the government’s effort to improve its food subsidy program, as every penny of the subsidy should go directly to the people who need it to offset the high cost of food.

We have five main recommendations regarding the Nutrition North Canada program.

First, to ensure the NNC meets the needs of Inuit, Nunavut Tunngavik must be an active participant in developing and adjusting the program over time. As a representative of Nunavut Inuit, Nunavut Tunngavik is best placed to notice things that are elemental to the success of the program, such as what should be on the list of eligible items, how a country food element should or could be developed, and how Health Canada nutrition messaging should be developed and disseminated.

Contrary to article 32 of the Nunavut Land Claims Agreement, INAC has not engaged NTI to participate in the design and development of the NNC. In fact, INAC has not consulted at all with Nunavut Tunngavik on the NNC since May 2009. INAC prepared the eligibility list and country food subsidy in isolation, and currently INAC is preparing a communications plan without NTI input. I have learned about this only through a northern newspaper, by the way.

At the same time, Inuit in the communities have little or no information on NNC, even though they are already being affected by it. This should and must be changed. INAC and Health Canada must partner with NTI on the details of the eligibility list, accountability to consumers, communication, and other matters. After April of 2011, INAC and Health Canada should publish quarterly reports and meet with Nunavut Tunngavik regularly to discuss adjustment to the program.

Second, it must be absolutely certain that every subsidy dollar is being passed on to the consumer. NTI is very concerned that INAC has not shared the details of a proposed accountability mechanism. INAC’s internal control mechanism must be fully transparent so that there is complete public confidence that, regardless of the retailer, all the subsidies flow to the consumer.

Third, there must be an effective country food subsidy program. NTI welcomes the concept of subsidies to allow greater distribution and consumption of country food across Nunavut. However, most Inuit do not buy commercially produced country food, so the NNC country food component does not generally work for Inuit. When Inuit harvest, they often share the food both locally and across communities. In today’s Arctic, sharing networks are spread across thousands of kilometres because foods like char, caribou, narwhal, and beluga are not evenly distributed or are not available in some of the areas. INAC should continue to explore, in partnership with Inuit, how it should or could subsidize intercommunity trade in country foods.

Fourth, Inuit must not suffer because of price increases resulting from NNC. There is a real possibility that the prices of many items will increase dramatically in coming months. Because of sealift timing, storage, and other issues, retailers have not necessarily adequately stocked newly non-eligible items through other transportation methods. Interim subsidies must be available immediately to alleviate impacts on Inuit, while retailers adjust their procurement processes to reflect the NNC policy shifts.

Finally, ongoing NNC funding must be adequate to meet the needs of Inuit for affordable store-bought foods. While stable funding is important, costs will continue to increase every year. There are many cost unknowns at this time. To avoid a funding shortfall, mechanisms for ensuring adequate funding and funding adjustments over time must be built into the NNC.

Thank you. Qujannamiik. Merci.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Kusugak.

Now we'll proceed to questions from members. I want to thank you all for your presentations.

I should note to the committee that we heard from Mr. Horsman, and unfortunately he is unable to attend. We're not sure of the reason, but we'll accept it in any case.

We'll move ahead with questions.

For our witnesses, I know some of you have been to standing committees before. The first round is a seven-minute question and answer from one representative of each of the parties around the table. And then we go to a five-minute question and answer. Your ability to keep questions and answers as succinct as possible helps us to get more questions in, and I know the members like that.

Let's proceed with Mr. Bagnell.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you, Mr. Chair. My thanks to everyone for coming. Good to see you again, Jose.

It's shocking, although we've heard it from Nunavut Tunngavik and Marché central, that we're so close to implementation yet so little ready, and so much information is not out there. So no one knows how a lot of things are going to work.

Marché central, you made a good point about all sorts of products that are now not being shipped because they're not eligible. We're going to be looking, for sure, to see substantially increased subsidies and much lower prices on those perishable foods left on the list.

We heard complaints before from government about the quality of food. But you say your food was of a very high quality, Mr. Fogarty, that you had no problem with Canada Post, and that the food got to its destination in good condition.

[Peter Fogarty]

In terms of the quality of the products we ship up north, we get very few complaints. The biggest complaint we get is that these people no longer have access to a lot of products. Many of them have been taken off the eligibility list under the nutrition north Canada program. As for our remaining northern sales, we have noticed a lot of fruits, vegetables and meat, all of which are quality products that are still not available in northern communities.

We do not receive many complaints. First of all, our quality standards are similar to Metro's. Our establishment is well-respected. What we sell to people up north is almost identical to what they used to receive when they would go directly to the butcher's counter to buy fresh meat. The only difference now is that they place their order in writing, via fax or email, to tell us what grade of ground beef or pork loin they want, whether they want stuffed pork loin and so forth. The products they choose from are comparable to those in the flyers you get in the mail at home.

The products are fresh. We get deliveries every day. The products we use on a daily basis are high quality. In any case, we do not sell low-quality products. As a grocer, we cannot sell low-quality products. So the fruits, vegetables and meats we provide to people in these communities is generally better quality. However, as you said earlier, the rub is that they do not have access to all products under the nutrition north Canada program. A lot of people are upset that some products are no longer on the list.

Did that answer your question?

[Larry Bagnell, Liberal, Yukon, YT]

Yes, very well.

Mr. Joubert, on the same note, I understand that you inspect for quality and that all the food that leaves on Canada Post is of high quality or it wouldn’t go on the plane, or truck, or whatever way it goes.

[Richard Joubert, Director of Transportation, Operations, Canada Post Corporation]

Let me begin by saying that Canada Post has been involved in food mail for many years, and we are quite proud of what we have accomplished with this program. As for the quality of the food mail inspections, we didn’t inspect all the food that went to the north, but we were mandated by an act to inspect certain amounts of the food, and the food that we inspected and shipped was of high quality, or met the quality standards when it left the airport. Our responsibility was from origin airport to destination airport.

So I can assure you that we shipped decent-quality food.

[Larry Bagnell, Liberal, Yukon, YT]

We've been led to believe—

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Apparently on ParlVu, this session is being recorded as being in camera. I don’t know if we can do anything to fix that.

[The Chair, Conservative, Bruce Stanton]

So it is not on audio, then?

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

I can’t access it. My legislative assistant just e-mailed me and says we are in camera.

[The Chair, Conservative, Bruce Stanton]

We will check into that, Ms. Crowder. I appreciate your pointing that out, and we will see what we can find out about it.

Let’s carry on, Mr. Bagnell.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you.

We have also been led to believe that there are no inspections by the government, that the food doesn’t get inspected. So we have no idea what is going up there. My understanding is that you actually inspect to make sure that only eligible items go up. Is that true?

[Richard Joubert]

That's correct. There are approximately 17 people employed by Canada Post who do food mail inspection at various entry points across the country.

[Larry Bagnell, Liberal, Yukon, YT]

Now, on the shipping pricing, we are led to believe that it could be cheaper. But there's something I don't understand. You have a lot of buying power because you have all the food. I assume you don’t set arbitrarily high rates. But you have a whole bunch of little retailers, dozens and dozens of them, who have to negotiate a fee with an airline. That makes it administratively more complicated for the airline. I don't see how that can be cheaper. How have they got more buying power than you? Or do you just set arbitrarily high rates because you have a monopoly, and these new rates will be much lower?