Madam Speaker, I am pleased to participate in this debate on the motion presented by my colleague, the hon. member for Saint-Jean. The motion asks the government to make food distribution in Canada's north more effective and more economical.
I could not help but notice that the member who spoke just before me must have done his research from exactly the same material that I did mine. His speech sounded a lot like the one I am about to deliver.
We in the Reform Party are always looking for ways to improve on existing programs. I commend the hon. member for his initiative in bringing this motion forward.
Since the 1960s the federal government in conjunction with the post office has made an effort to supply isolated northern communities with affordable fresh produce. Under the northern air stage program the Department of Indian Affairs and Northern Development pays Canada Post a subsidy to cover a portion of the cost of bringing nutritious and mostly perishable food to communities that have no year round road or rail access. Approximately 125 communities serving about 86,000 people are eligible under this program.
As has been referred to previously, in the 1994 fiscal year this food mail subsidy will amount to some $14.1 million. Of this, $13.6 million will be coming from the Department of Indian Affairs and Northern Development, with about half a million dollars coming from the Department of Health.
The residents of Canada's north face not only higher retail prices than we southerners but they also have a critical employment program. Most work in that area is, at best, seasonal in nature. The 1986 census showed that only 35 per cent of the aboriginal population 15 years of age or older were employed, compared to 60 per cent for all of Canada in the same age category. Of course a high unemployment rate means a lower annual wage and ultimately less purchasing power.
The high cost of transporting goods in the north, even with the government subsidized food mail program, results in higher consumer prices. As was also alluded to earlier, a family of four in these isolated communities in the Northwest Territories would have to spend between $260 and $280 per week just for a basic diet. That is at least twice as much as we would have to spend in southern Canada for the same diet.
A study by the Department of Indian Affairs and Northern Development conducted in 1990 concluded that by reducing the merchant's transportation costs, the air strategy subsidy has been an effective means of keeping the prices of food and other goods in remote areas lower than they otherwise would be. The study also found that an elimination of the subsidy would likely result in higher social assistance costs, higher health care costs and an increase in isolated post allowances for government employees.
When the Department of Indian Affairs and Northern Development launched this study in 1990 there were no apparent alternatives. Today, as was indicated by my hon. friend, there may be a practical cost-effective solution for at least part of this problem.
As was also alluded to by the mover of this motion there is a corporation which is prepared to establish a food distribution network. I certainly do not want to propose one corporation over another but where there is one, there are likely to be others.
This corporation plans to supply food from a central distribution centre in Iqaluit which at the outset would serve some 38 northern communities. This unique Canadian enterprise predicts that the price of food products in the north could be
reduced by 10 to 20 per cent. This will be possible because of the company's plan to reduce transportation costs and because its purchasing power will enable it to negotiate lower prices and to pass the savings on to the customers.
This company expects to save on transportation costs by regrouping products and chartering aircraft that would carry up to $75,000 worth of merchandise per flight. While its plan initially is to be a food wholesaler, the company estimates that it can receive 88 per cent of the market share in two years by supplying perishable food products and other consumer merchandise needed by northern residents but not currently available at reasonable prices.
The overall cost to inaugurate the service is estimated to be some $1.65 million. Without going into too much of the financing it is safe to say that the company would probably need some government loan guarantee in order to get started. I think the operative word here is "loan". As was also mentioned by the mover of the motion, this company would create jobs for some people in the north and they also all are shareholders of this particular company.
What benefit is this for the Canadian government? The company's prospectus predicts initial savings for the government of up to $3.6 million. It expects to train and employ, as was mentioned before, about 55 local people.
Now as you know we in the Reform Party are strong believers in the free enterprise system. I am personally pleased to see that this group has taken the initiative to provide a better service to at least some of the isolated northern communities. It sounds like an excellent viable alternative.
If this group is successful, it is likely that other entrepreneurs will follow its lead. Then there would be no need for the Government of Canada to provide so much subsidy to Canada Post for the food mail program.
If this had been a votable motion, I would have asked that it be referred to committee. I would encourage our party to support this motion and refer it to a committee for further examination. Since it is not a votable motion, I would like to encourage the government.
I was very pleased to hear the member opposite say that the government has plans to review this whole program and, I hope, these proposals. Certainly what I would encourage is that the government look at every possible proposal to make the food distribution in the north far more efficient and effective as well as improving the quality of the food and ultimately the diet of the people who live in the north.