Indigenous and Northern Affairs Committee on Dec. 13th, 2010

[The Chair, Conservative, Bruce Stanton]

Mr. Dreeshen.

[Earl Dreeshen, Conservative, Red Deer, AB]

I was just wanting them to provide the information on the first question.

[The Chair, Conservative, Bruce Stanton]

Oh, yes. That was the information on Kuujjuaq.

Go ahead, Mr. Tibbetts.

[Jamie Tibbetts]

We didn't have the particular independent's own rates. We have them from North West. It's in the higher category. But we don't have every individual store's rates. We have several rates for every community. In order to calculate the $7 million that Patrick was just mentioning and compare it to Canada Post rates, we have multiple rates throughout the environment, and we picked it from there. But it is in the higher of the 54.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Dreeshen.

Go ahead, please, Mr. Lévesque.

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

Mr. Borbey, the last time you came to meet with us, you told us that under the Food Mail Program, it was Canada Post that established the list of foods transported. Is that correct?

[Patrick Borbey]

No. The list was determined by the department, in consultation with Health Canada. We conducted a review, virtually every year, to ensure that the list remained up to date based on best practices and best foods. That's how we reviewed the list.

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

Here you tell us, "On the other hand, the Food Mail Program, which has been in place since the 1960s, provided little flexibility or incentive for innovation." Wasn't it the department's responsibility to establish Canada Post's subsidy application specifications?

Based on my understanding of the program, you issued the directives and the amounts necessary, whereas Canada Post requested bids based on criteria established by your department. Based on that, you issued a subsidy the amounts of which had not been changed since the 1990s, if I'm not mistaken. That's 20 years. Of course, every year, expenditures had to be made to normalize the program.

You have pilot projects in three communities. What are those communities?

[Patrick Borbey]

There was one community in northern Ontario, another in northern Quebec and one in Nunavut, three communities for which we set the lowest rate for certain foods, the most nutritional foods.

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

What led you to establish pilot projects in those three communities and not to do so in all communities in general?

[Patrick Borbey]

We wanted to see whether there was a reduction in shipping rates because the program operated in reverse fashion: the customer was billed per kilogram rather than be given a subsidy. So the idea was to see whether that would cause a change in the consumption of healthy food.

I believe that, in two communities, we were able to establish that there had been an increase in consumption and that the results were not really conclusive in the third.

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

And what prevented you from establishing that pilot project in all communities as a whole?

[Patrick Borbey]

If we had taken the same program, with the same rates, the costs of the program would probably have tripled—or even more—because we were operating on a fixed budget. As you said so yourself, the annual amount is about $24 million—

It was $24 million that we had as a base?

[Jamie Tibbetts]

It was $27 million.

[Patrick Borbey]

We had a basic amount of $27 million. Every year, we had to go back to Parliament to request additional funding.

It should be noted that, during the 1980s and 1990s, the program grew gradually but reasonably. Since 2000, we've seen an explosive increase in program costs. We realized that the model was not really financially viable over the long term. Every year, we found ourselves back in the position of having to request additional subsidies.

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

With regard to the current program, do you believe that the big retailers and the wholesalers—I believe there are two main players in all the territories—will be able to control the fuel and operating costs of the transportation companies? Canada Post came and told us that there were 23 companies currently transporting food supplies to remote areas and that those companies were winning transportation contracts through bidding.

If you submit a table like that to Canada Post, aren't you able to tell it that it has to rely on the established prices and should not charge more?

[Patrick Borbey]

That's what we tried to explain. Canada Post doesn't have the same kind of buying power as the retailers. When they place orders, since they can combine all the orders, they are able to negotiate a better rate. The number of kilograms, the number of tonnes of goods sent to each of the communities is much greater because they combine their regular purchases with those made through the subsidized program. That's why they have greater purchasing power.

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

Let's say that, with the new program, you no longer have the current delivery schedule. In other words, it's the retailer that will say it needs so many kilos of food on a certain date. The carrier is no longer sure that it has to handle a regular quantity of goods every day, every week. It won't even be sure of having it every week. During one week, there may not be any, and it has to submit a bid to the retailer. You just said that would cost less.

If I had a transportation company and I wasn't sure that I would have a certain volume to transport every day—

[Patrick Borbey]

The companies assured us that deliveries would be made much more frequently. For example, if fruit and vegetables are delivered to a community once a week, you can be sure that quality in the store will be different.

However, if that can be done every two or three weeks, there will be higher quality foods that are more attractive for consumers and an increase in consumption.

We've heard a lot of horror stories about entire shipments that arrived at their destination already spoiled and over which the retailer had no control. It received the delivery and sometimes put it out on the shelves. It put already over-ripe fruit, such as black bananas, out on the shelves. That's not right. We wouldn't accept that in the south; we shouldn't accept that in the north either.

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

We've heard a number of witnesses say that the problem occurred between the moment the goods were unloaded from the aircraft and when they were received at the store. People in the north don't have the necessary facilities, so goods are transported by snowmobile or by open pick-up truck. We can't blame Canada Post for the bad quality of the product.

Who will be blamed when there are no more administrators and the department administers the program directly?

[Patrick Borbey]

You're absolutely right. We won't be able to blame Canada Post; we'll blame the retailers. They're the ones that will be responsible and accountable. It's with them that we'll have contribution agreements and who'll have to show us that they're meeting quality standards. If foods stay at the airport in unacceptable conditions, they'll be responsible for them.

[The Chair, Conservative, Bruce Stanton]

Thank you, Monsieur Lévesque.

Members, I have just a point here in terms of trying to manage our time. We have four more interventions on this particular topic. We have 40 minutes left in our usual time slot and we have staff here that are anticipating work on the Nutrition North Canada study.

Do we feel that we need the remaining 40 minutes for this motion? Because I can release the staff at this point if we're not going to get to the study this afternoon. Or do you want to forge ahead and see if we can finish this up in, say, 10 minutes? I'm trying to look ahead here.

Okay. We're not going to get to the study here this afternoon, so I think we'll do that.

To our staff members, who have so diligently come to their very first meeting anticipating to work on our study, you are free to go. We'll see you back here on Wednesday afternoon. I commit to getting to the study. The committee will certainly indulge us, I'm sure, and we'll see you back here Wednesday afternoon on the committee report. Thank you.

Sorry for that interruption.

I have Mr. Payne followed by Ms. Crowder.

Mr. Payne, you're up next.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chairman. I promise not to take up 39 minutes.

I would like to thank the officials for coming today to help clarify some of the questions that have been posed. As the officials who have obviously had a long-term understanding of the outdated 1960s food mail program and looking, of course, to develop the Nutrition North Canada program, could you tell us what made you move in this direction to start this new program?

[Patrick Borbey]

Well, this has been a program that has been under a certain amount of criticism, commentary, and review for quite some time, especially since, as I explained earlier, we had to come in cap in hand every year to ask for more resources without really being able to demonstrate how those resources were leading to better outcomes.

There were a lot of criticisms by northerners, as well as by the retailers themselves, and by the airlines. Some airlines were not happy they weren't getting contracts. In fact, they took Canada Post to court. There was a lot of conflict around it, and we could never get to the bottom line, in terms of being sure that each dollar is actually making its way to northerners and to the right kinds of objectives, i.e., increasing the consumption of healthy foods.

So we listened. We did a formal review. We had engagement sessions. There were about 80 different sessions across Canada. A lot of them were in northern Quebec and in Nunavut, where the majority of the program funding is.

I recognize that in some parts of northern Ontario it was more of a virtual engagement; we couldn't be everywhere at the same time. We also faced some constraints in terms of travel during the H1N1 crisis, so again we ended up taking a lot more testimony or commentary virtually, or people were phoning or writing the minister. We certainly had a lot of representation from all the different stakeholders.

We put our best advice forward. There were three options looked at. One was a pure retail subsidy, which would be directly paid at the till. Another one was a retail subsidy paid through the retailers. The third was a form of making some improvements or modifications to the existing program. Those were the three options. All of them were looked at. We did a complete risk analysis where we actually involved the stakeholders in the risk analysis, and on that basis we developed advice, which went into the policy process. Our minister and cabinet made a decision and now we are loyally and dutifully implementing that decision as good public servants.