Industry Committee on May 3rd, 2022

[Karl Blackburn]

This time, I will turn it over to my colleague, Mr. Hamel, who does not have time to share his explanations with us when I talk too much, but I first want to say that our model in Quebec should serve as an example for the rest of Canada.

I will now ask Mr. Hamel to explain the benefits of the model and to provide more information in response to your question, Mr. Lemire.

[Denis Hamel]

Thank you.

Mr. Lemire, you are right in saying that LMIAs duplicate paperwork in many cases. Each year, the Commission des partenaires du marché du travail, the entire group that you mentioned, publishes the trades and professions that are in deficit or surplus. In our opinion, it would make perfect sense for a mechanism to be triggered as soon as a profession has a deficit. That way, we would not need to justify the fact that we are looking for people or show that we posted the job for so many weeks.

There is already a measure in Quebec, accelerated processing, through which LMIAs can be bypassed. This measure should be applied to a much larger number of professions, precisely because employers, unions and governments agree on the professions that are in deficit—the latest figures put them at 234. Accordingly, for those professions, we would not need to justify the use of foreign workers.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Furthermore, LMIAs are based on data that are two to three years old now, so prepandemic.

Do you believe that our ecosystem in Quebec would be more comprehensive if the temporary foreign worker program were overseen by Quebec?

Indeed, this issue is related more to labour policy than to immigration policy.

Would that help our businesses in Quebec?

[Karl Blackburn]

I will let Mr. Hamel answer that question.

[Denis Hamel]

Where jurisdictional overlap occurs, it is essential that governments work better together. I agree with you: in its current form, the temporary foreign worker program is outdated and absolutely needs to be modernized. It was designed when the unemployment rate was between 12% and 15%. However, today’s reality is very different.

What we need is better co‑operation and less red tape because we are often doing things in duplicate. We have never had evidence that the federal government or Quebec would do better on their own.

We can maintain the current system, but there is a real need to improve co‑operation, so as to eliminate red tape, particularly wait times, which are ridiculous.

[Karl Blackburn]

Of the 10 solutions that we propose to address the labour shortage, modernizing the temporary foreign worker program is one on its own. On Friday, we welcomed the Prime Minister of Canada, who was participating in an event put on by the Quebec Council of Employers. We asked him twice, not just once, for a genuine modernization of the temporary foreign worker program. Indeed, it has truly become outdated and does not reflect the reality in which we currently find ourselves.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Masse, you have the floor for two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair. My question is to Beer Canada.

My colleague Richard Cannings has introduced a private member's bill that would eliminate the excise tax on non-alcoholic or low-alcohol beer. It's treated as special by having it taxed fully.

Can you confirm support and perhaps speak a little about why this would be an important step to assist not only the larger brewers but also the microbrewers that want to get into lower-alcohol beverages?

[Luke Chapman]

Thank you very much for the question.

Beer Canada did have the opportunity to meet with Mr. Cannings to talk about the excise treatment of non-alcoholic beer. In Canada, it's an obscure situation that kind of caught us by surprise. Beer, compared to wine and spirits, does pay excise, while those other categories are exempted from any excise at all.

I will say that while the COVID-19 pandemic was a challenging time for beer sales, there was some promise in non-alcoholic beer sales. We did see some substantial growth in that segment of the category over the last two years.

There are brewers that are making substantial investments in that space of the market, and we were pleased to see Mr. Cannings, and I believe yourself, raise the profile of that issue and for the government to take a look at that and include it in this year's budget. That's a good-news story for the beer industry, and I think it will send a positive signal to the brewers across Canada to look to invest in that space of the market moving forward.

[Brian Masse, NDP, Windsor West, ON]

I appreciate that.

I always get a little flustered when we just use red tape without indicating the specifics. We've had recommendations before without really having the specifics to go with them. I think this is one of those times that could be used as an example.

I have a local brewer here. Of course, most people do. Do you think that more microbreweries would get involved in limiting this? I know it's not the only thing and it's not a huge thing, but it's one of the hits they don't need to have. That's what I'm sensing and what I'm hearing. I'm just wondering if that's across the country.

[Luke Chapman]

It is, absolutely. I think that's a big reason that we did see growth in non-alchoholic beer sales over the last two years. Small brewers are becoming more interested in that space, and I think it's being driven by consumers looking to lead healthier lifestyles and to look at experimenting with more non-alcoholic products.

I like to say that the types of non-alchoholic beer products that we're seeing on the market today are unique and much more distinct than what we saw 10 or 20 years ago. We're seeing styles like west coast IPAs, stouts and other types of beers that are produced with no alcohol in them, and they still have the characteristics and tastes that consumers would naturally associate with beer.

It's a very complicated process to produce a non-alcoholic beer product and to be able to preserve those tastes and characteristics. There's a lot of investment required to make high-quality non-alcoholic beer products, and again, Mr. Canning's private member's bill was helpful in raising the profile of this segment of the category, and I do think we'll continue to see both large and small brewers investing in this space and the market moving forward.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse and Mr. Chapman.

We'll move to Mr. Kram for five minutes.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much, Mr. Chair.

Thank you to all the witnesses for joining us today.

Ms. Pohlmann, in your opening statement you talked about the carbon tax. If I'm quoting you correctly, you said that the federal carbon tax backstop has a disproportionate effect on small businesses. Could you elaborate on why that is the case?

[Corinne Pohlmann]

Sure, and I'll point out that just last week, I believe the environment commissioner also mentioned that in his reports as well.

Essentially, as I mentioned earlier to Mr. Généreux, the fact is that in the province where it applies, about 50% of the revenue that is taken is from small and medium-sized companies. Only about 8% to 10% is set aside to give back to small and medium-sized companies. Even that 8% to 10% has never been given back, other than in a program in about 2019, under which you had to invest $80,000 into your company in order to get a little bit of money back from the government. It wasn't very accessible.

There have been no programs made available to small businesses to help them with their environmental footprint. We're still hoping to see something, either a rebate or new programs that are easy to access to invest in more energy efficiency. Those are the things we'd like to see that money used for. It would ideally be something that allows things to be a bit fairer to them.

[Michael Kram, Conservative, Regina—Wascana, SK]

If I understood you correctly, you're also recommending a freeze in CPP, EI and carbon tax flows. Is that correct?

[Corinne Pohlmann]

It is a moratorium during the years when they are struggling. We're not necessarily suggesting that this be permanent. It's just about the costs that are being layered on top of small businesses. These are the costs that governments control, and perhaps during this difficult period it would be a way for us to put a moratorium on them for maybe another year or two, until they can get back on their feet again.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay.

Mr. Chapman from Beer Canada, you spoke about the automatic increase to federal excise duties for beer. Could you explain and elaborate on why that is a challenge for the competitiveness of your sector?

[Luke Chapman]

Absolutely.

As I alluded to earlier in this session, brewers are already dealing with historically high input costs. The number of dollars it costs to produce beer in Canada has risen quite substantially over the last two years. Our message to the government is that brewers are not opposed to paying their fair share of taxes. In Canada, right now, nearly 50% of the retail price of beer is one form of tax or another. What we are opposed to is automatic annual increases that are devoid of any debate or vote by members of Parliament, especially considering the high-inflation environment that we're in right now. These annual increases are indexed to inflation, and what we're dealing with is monthly inflation that is at 6% or 7%. We're looking at an increase in April 2023 of as much as 7% to 8% on beer.

We're at a very challenging time for the industry and also a very challenging time for our big customers in the restaurant and bar business. Our message to the government is to look at the environment we're operating in.

Brewers are also making multi-million-dollar investments to transition away from plastic ring carriers. We support that, and we're doing our part to make sure that the government objective to eliminate plastic waste is reached. We're just asking for this government to revisit this approach to taxation at this point in time.

[Michael Kram, Conservative, Regina—Wascana, SK]

If I understand you correctly, if politicians want to raise taxes on your sector, it should not be automatic. Politicians should have to table a bill and debate it on its own merits like any other tax. Is that correct?

[Luke Chapman]

That is exactly it.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay.

I will circle back to Ms. Pohlmann.

Could the same argument be made about the carbon tax? If politicians want to raise the carbon tax, they should debate that in a budget, as they would any other tax increase, such as GST or income tax. Would that be a reasonable position for the CFIB?

[Corinne Pohlmann]

Certainly. Any time any kind of tax is brought forward, it should be debated, discussed and thought through in terms of its policy outcome and the impacts it's going to have on the people it affects.

[Michael Kram, Conservative, Regina—Wascana, SK]

I believe, Ms. Pohlmann, you also spoke about the need to decrease credit card fees for small businesses.

What would you recommend the federal government do to stimulate competition when it comes to credit cards for small businesses?

[Corinne Pohlmann]

That's a tough one.

The one thing we were able to introduce in Canada, about 10 years ago, was a credit and debit card industry code of conduct, because merchants have always had the perspective that they were price-takers. They had to take whatever it was the credit card companies wanted to impose on merchants in terms of costs.

When the code of conduct was created, it certainly helped level the playing field. It put in a set of rules the credit card companies had to follow, and it allowed merchants to understand what those rules were in a better way and what to expect. It's not perfect. There's still a lot more that can be done. In fact, the government is currently going through a review of that code of conduct in order to update and modernize it, because certainly the digital payments industry is going through many changes.

We need to make sure that the code of conduct is updated with those changes, and that it incorporates a lot of these companies, which are mostly not Canadian. They are often international companies, and we want to make sure they are brought into the mix so that Canadian merchants can understand what it is they are paying and how it's being paid, and that they can actually read the statements they are given so that they can shop around. Right now, it can be very difficult to do that.