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

[Anita Neville, Liberal, Winnipeg South Centre, MB]

Jose, do you have any further suggestions on how the movement of country food might be facilitated?

[Jose Kusugak]

We have, under the claim, set up the hunters and trappers organizations in every one of the 26 different communities, and they can certainly be utilized to decide exactly how that would be done.

Unfortunately, Shelly Glover is not here anymore. She was saying that you don't accept parcels and she warned.... It's just about impossible, because at the other end people are going to be hungry. So you have to weigh whoever is giving you the package, to decide whether it's safe to take it to the person or not.

But we can do exactly what you're suggesting, contributing to the way this will be done through the hunters and trappers organizations in every community in Nunavut.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

You indicated in your remarks that you have not been consulted. The process is well along, as you are indeed aware. What kind of consultation and input would you like to have, over and above this committee's hearings, into the process at this point?

[Jose Kusugak]

Madam Shelly Glover was suggesting that we should go to the website. That is not a good consultation process.

I think we want to be actively involved in developing perhaps a website even, to decide exactly what could be included in every aspect of NNC. Since 2009, I think, we have never been involved. As I said earlier, the only way I found out that an NNC list existed was through a newspaper, and I'm normally the regional president of the Inuit association of the Kivalliq region.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

Thank you.

[Jose Kusugak]

So we haven't been well consulted at all.

[The Chair, Conservative, Bruce Stanton]

Thanks, Ms. Neville.

Now we have Mr. Payne, and he will be followed by Monsieur Lévesque, then it's Mr. Clarke.

Let's go ahead, Mr. Payne, for five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chairman.

I thank all the witnesses for coming today. It's a good opportunity for us to hear your responses and the issues you have.

I'd like to do a follow-up on what Ms. Glover said concerning the amount of consultation.

So there was some consultation as opposed to none, which we're hearing. Also, as I understand, Ms. Pelly said that there were requests for names for this advisory committee. Of course, we still don't know who those are, but I think the request has certainly gone in to make sure that in fact you may have that opportunity.

First of all, I'd like to ask Tracy Medve about Canadian North. A couple of meetings ago I was concerned about competition into the north and the service for the food nutrition program. That was one of the reasons I asked to have you come forward. You talked about competition, and one interesting thing you also talked about was the warehousing that you were proposing to look at.

Could you expand on that? With the Nutrition North program, now competition will be available. What are the plans for Air North to be able to give service under the new nutrition program?

[Tracy Medve]

Thank you for your question.

First of all, I have to say, with respect to country foods, that Canadian North does have a special country food rate for transportation of country foods between communities. That country food rate is as good as or better than the food mail rates currently in effect. We have obviously done a lousy job of getting that word out, but the program exists, it has been in place for a very long time, and there is a way to move igunaq between the communities at an affordable price, I suggest.

The only thing we have is a requirement for packaging, because it can be corrosive, as you can imagine, and it needs to be looked after, but there is a special rate.

Going back to the question of the kinds of activities we'll be involved in to be ready for this program, it's a bit hard to answer that question right now. Because we're in a competitive circumstance under the new program, we don't know exactly the volumes we would be carrying. But based on what we expect to happen and where we expect the flow of goods to go in the most efficient way, we would look at....

You do need some storage. Although you want the food to move as quickly as possible, if you've ever been in the north, sometimes the weather doesn't cooperate, and sometimes the airplanes don't cooperate. So you have circumstances where you require appropriate facilities—and Canada Post would know this—set out to keep frozen goods frozen, to keep fresh goods from freezing, to do all of that. That's really what I'm talking about.

We wouldn't build those kinds of facilities on spec, but we're in a position whereby we can do it, if we know we'll have the revenue stream to support the investment. That's just how the business has to operate. But we're certainly in a position to do this.

[LaVar Payne, Conservative, Medicine Hat, AB]

I have another question for you. We heard from another witness—from First Air, actually—who implied that service to the northern communities will be affected, limiting medical services and potential essential cargo. Can you tell us about the measures this open market process will use, in terms of their effect upon your business?

[Tracy Medve]

Oh, I would suggest exactly the opposite will happen. I think it will improve access for medical patients. We carry medical patients now and we share that contract with First Air. I think it's a good method.

This Nutrition North program, presuming that we can act competitively and attract retailers to ship with us, will mean two things: increased frequency of service to many of the communities where we fly, primarily in the Qikiqtani and the Kitikmeot, because we will have to increase the frequency of the flights with our smaller aircraft to accommodate the increased volumes of cargo; second, there are communities we do not serve, in the Qikiqtani principally, because there is not enough traffic and ad hoc cargo at this moment to justify service.

With the kinds of volumes that the food mail program can generate, we will see now adding service to communities that we do not serve presently and that have a monopoly service. We know there are complaints about lack of access and high prices to those communities. I suggest to you that we can solve that problem for passenger traffic as well as for our cargo lift.

[The Chair, Conservative, Bruce Stanton]

That will have to do it, Mr. Payne. Thank you very much.

Maintenant, monsieur Lévesque, vous aurez encore cinq minutes.

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

Mr. Joubert, I have a strategic question. Ms. Glover said earlier that Nunavik would get the subsidy, in other words, that prices would be lower in Nunavik than in Nunavut because Nunavut is farther away.

Take the current program. Does it affect the prices you pay to ship per kilogram? Will the fact that one region is subsidized more than another affect carriers' bids? Could you also tell me how long the contract is in effect when a carrier has the winning bid?

[Richard Joubert]

The contracts normally last five years, mostly because it requires a significant amount of infrastructure to meet the needs of northern communities.

Will one community be subsidized more than another? I can speak only to how we have done things in the past, because I do not know what will happen once the new program is in effect. We asked for bids for one flight at a time. The agreement with the supplier, for each flight, was for a rate specific to the region. We always tried to encourage suppliers to submit competitive bids in order to get the best price for the region being served.

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

Let's say, for example, that Canadian North submits a new bid, assuming that if it gets the contract, it will be for five years. It could write off its capital investments, while building the same infrastructure that First Air has. Then it could compete with First Air. Is that correct?

[Richard Joubert]

In theory, yes.

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

Ms. Novalinga, do you think you could get the same rate as what you currently pay when a cooperative has to ask carriers for bids in order to meet its needs, because Canada Post will no longer be doing it for all the communities? Basically, every retailer and wholesaler will have to reach its own agreement with a carrier.

[Rita Novalinga]

In the Nunavik area, we only have one airline and that's Air Inuit. There is no competition. So we have to negotiate with them. We have no choice.

Where we will hurt the most is in the warehousing. Canned food, for example, will have to be stored. We're going to have to put them on the sealift and keep them in the warehouses until next spring. That is where we will need help. As I said in my speech, we need time to build the warehousing to house the foods that are not eligible to be on the subsidy list.

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

You need to have warehouses where you can store goods for eight or nine months per village. Is it unreasonable to think that a single warehouse per village could cost close to $2 million?

[Rita Novalinga]

Very easily. Some communities are bigger and some are smaller. In all cases, it will cost a lot to build the warehouses in those communities.

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

So if you are shipping as much food as you have the capacity to store, and if you have to turn around and pay full price for air carriage, that would drive up the cost of every customer's grocery bill. The big loss in your groceries has to do with what people can afford. I think Mr. Kusugak has the same problem. People cannot afford it.

[The Chair, Conservative, Bruce Stanton]

Mr. Lévesque, your time is up.

Ms. Novalinga, do you want to respond briefly to Mr. Lévesque's question?

[Rita Novalinga]

We have been trying to brainstorm how we are going to do this. We have communities that have only 200 people. We're talking about 14 communities. Can they afford a $2 million warehouse? With bigger stores, it's easier, and at least they can afford more. But smaller communities, how are they going to do that?

[The Chair, Conservative, Bruce Stanton]

We are out of time.

I see Mr. Fogarty had his hand up. Maybe we'll try to work you in on one of the other questions if we can, Mr. Fogarty.

Let's go to Mr. Clarke, followed by Ms. Crowder. We'll come back.

Go ahead, Mr. Clarke.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you, Mr. Chair. I thank the witnesses for coming in to meet with us here today.

Mr. Fogarty, the new program will provide Marché central du Nord with more flexibility in shipping schedules and routes to help manage its supply chain. The option of flying from Montreal should create benefits for this business. It gets more clarification. As I understand it, the Nutrition North program will open up more distribution points and schedules. My question is, how will this affect your business?