Madam Speaker, I thank you for this opportunity to speak to Bill C-47.
We have a situation that has almost never arisen in the ten years I have been a parliamentarian. We have, on occasion, supported or rejected government bills. The situation was clear at the outset and equally clear at the conclusion.
But with Bill C-47, the situation became complicated during consideration in committee, when we suggested that the Bloc Quebecois could support the bill. When a mockery was made of the committee consideration process all the way to report stage at third reading, we backed off, because the bill before us is not the bill that should have made it to this stage.
The bill that should have been before us was a bill for which votable amendments to include the issue of beers and the reduction of the excise tax on microbrewery beers would have been allowed.
Let me summarize briefly the background of Bill C-47. “It re-enacts existing provisions in the Excise Act and the Excise Tax Act relating to the excise levies on these products, together with technical improvements, and incorporates a range of new provisions”.
What is a bit unseemly and could even look bizarre at first glance is the fact that the Excise Act is general legislation of broad application affecting all products mentioned in Bill C-47, as well as beer.
In other words, the only part that was omitted in Bill C-47 is the part on beer. When we speak to legal drafting people from here and elsewhere, they all find it unseemly that we modernize the Excise Act with Bill C-47 and that we find ourselves in a position where all products and all provisions of the previous act, allegedly to be replaced by Bill C-47, are all in the new bill, except one.
In the current Excise Act, before it is replaced by Bill C-47, wine, spirits, beer, tobacco and distillery products are all mentioned. There is reference to breweries and tobacco products. The act deals with everything, every single product touched by excise. There are provisions on licensing, rights of accession, offences, collection, record, accounts, required documents, warehousing and remission of duties or what they call drawbacks in international trade. It touches on absolutely every point. Bill C-47, which is supposed to bring that Excise Act up to date, also deals with absolutely everything, except beer. That is the bizarre aspect of this bill.
Let me explain what happened since 1997 for us to be presented with the proposal for the amendment and modernization of the Excise Act contained in Bill C-47.
Since 1997, there have been discussions between the Department of Finance and various stakeholders with a view to modernizing the excise system to reflect the new realities that were covered by the current Excise Act, for example ship's stores on vessels travelling from Canadian ports to foreign ones. Part of these stores are used to provide the crew with food and drink, whereas the rest needs to be considered export products or products on which there are transactions.
Then there is the tax system, which did not take into account modern warehousing methods. Now the excise tax that was to be charged on sales is charged at the time of production, with consideration of prior revenue. In short, a number of aspects had to be modernized.
Since 1997, many people have been involved in drafting the new excise scheme, particularly the Brewers Association of Canada. The majority of Canadian breweries are members of this association, but it is dominated by the two major breweries, John Labatt and Molson.
Since 1997, the Brewers Association of Canada has been saying “It is a good idea to change the excise régime in the general Excise Act, which Bill C-47 claims to replace, in order to reflect the fact that the small breweries, with a production of less than 300,000 hectolitres annually, may benefit from the same excise scheme as their American and European competitors”. The difference is not insignificant, when we compare the excise tax the Canadian government charges Canadian breweries and what is done in the U.S. and in Europe. I will give a few figures.
Whereas, generally speaking, there is a charge of 28 cents Canadian per litre of beer for all Canadian beers, the rate in the U.S. is about the same for the major breweries, the counterparts of Molson or Labatt but, in that kingdom of capitalism, the charge is only 9 cents per litre for microbreweries. The United States definition of a microbrewery is one producing less than one million hectolitres annually. This is far higher than the Canadian figure of 300,000 hectolitres.
If you are an American microbrewery, or in other words produce under one million hectolitres of beer a year, you benefit from a preferential excise charge that comes to around 9 cents a litre.
For our microbreweries, defined as breweries producing up to 300,000 hectolitres, there is no preferential rate, because they pay exactly the same excise tax, as set out in the Excise Act, as the big breweries. Which means that microbrewery beers from the U.S. that enter on the Canadian market have an unfair competitive advantage, because they have a lower excise tax than our Canadian and Quebec microbrewery beers.
It is the same thing with Europe. They have the exact same preferential tax rate, which is accepted under the WTO rules. These rules make exceptions in specific cases—for example in cases related to the need to diversify the economy, or for the purpose of regional development or for originality to counter the standardization that comes with globalization—where there can be preferential excise tax measures for small businesses, which is the subject of Bill C-47.
Allow me to provide a few examples with figures. For 24 bottles of microbrewery beer produced in Canada, the federal government gets $4.09, when this beer is sold at a grocery store. When it is sold in an establishment such as a bar, the government gets $6.12 per 24 case of microbrewery beer. Are members aware of what the excise tax paid in the United States is? Bill C-47 includes a review of the excise tax, a review from which the microbreweries were excluded. In the U.S., the excise tax on 24 bottles is $1.12. Compare that to the $4.09 and $6.12 charged in Canada.
How do we expect the microbreweries in Quebec, Ontario, western Canada, British Columbia and the maritimes to compete with these beers? It makes no sense.
That is why the Brewers Association of Canada has claimed to be defending the microbreweries since 1997. Publicly, they have said, “There needs to be a lower excise tax rate for microbreweries. We, the big breweries, like Molson and John Labatt, we can afford the full excise tax. We are strong enough to pay it. And the WTO would not accept it with us, as they would for microbreweries”.
This was done for microbreweries in the United States and in Europe. It is accepted, generally accepted, but not for the big breweries.
From 1997 until very recently, we thought the Brewers Association of Canada was standing up for microbreweries. That is until Bill C-47 came up. Then we realized that even though it was a bill aimed at reviewing the whole excise system, the Brewers Association of Canada was recommending that the finance department not include in Bill C-47 the beer produced by microbreweries and an excise tax reduction.
They were proposing to exclude them. It was not because that was not in accordance with the system we wanted to amend. Quite the contrary, as I showed earlier. The current Excise Act affects all products, including beer; all products are subject to Bill C-47, except beer. The finance department bought the arguments by John Labatt and Molson. It agreed with their arguments. Through the review that started in 1997, it took out from the current act, which includes the brewery industry, the microbrewery sector and possibility of reducing the excise tax.
Therefore, there is collusion, which is normally reprehensible under the Competition Act. If we were in the United States, I am not sure things would be working as nicely as they have been since 1997, with the cronyism existing between the government and the big national breweries as well as the cronyism and the collusion between Labatt and Molson against the microbreweries to kill them.
Since 1997, we thought that the big breweries were advocating a preferential rate for microbreweries, with regard to excise tax. That was until Sandy Morrison, Chairman and Chief Executive Officer of the Brewers Association of Canada, with a majority representation from John Labatt and Molson, sent a letter to the hon. member for London West who also chairs the Standing Committee on Finance.
I would like to quote some excerpts from this letter on Bill C-47 and show the point of view of the Brewers Association of Canada. Mr. Morrison said:
On behalf of its 28 members, big and small—
He insists a lot on “small” throughout his letter.
—the brewers association has pressed for a reduction of the excise tax as an essential measure for the immediate and future health of this sector of our industry—
He was referring to microbreweries.
We explained our views during meetings with the Minister of Finance, senior officials from his department, the finance committee and hon. members. However, the industry does not agree that such a change should be done through an amendment to Bill C-47.
I would like to point out something. One wonders why beer should be excluded from a general review of the excise act, which currently applies to beer, wine, spirits and tobacco. If representations that take into account the particular needs of microbreweries and ask for a reduction of the excise tax should be welcomed with regard to such a bill, we wonder why those who claim to protect microbreweries, and who say that a reduction of the excise tax is essential to their survival, would not take an opportunity such as the general excise review under Bill C-47 to immediately demand a reduction of the excise tax.
I continue with the letter:
However, the industry does not agree that such a change should be done through an amendment to Bill C-47, which is currently before the House and which proposes a new excise framework for producers of spirits and wine in Canada. Following extensive consultations on the proposed changes to the Excise Act, brewers concluded, with the Minister of Finance, that there is a lot to do to develop an appropriate program for the beer industry.
Again, I want to point out something. The letter says that there is a lot to do. Either these people are lazy or else they lack imagination when they make such a comment. All it takes is three paragraphs. One that defines microbreweries, one that talks about the excise tax on beer, and one that ensures that Canadian and Quebec microbreweries benefit from a 60% reduction of the excise tax. This is all it takes.
I cannot believe that, from 1997 to 2002, they found it complicated to include beer. Yet, everything is in Bill C-47. Any product found in the current Excise Act is still there, except the beer produced by microbreweries. This is rather surprising.
Mr. Morrison, of the Brewers Association of Canada, goes on as follows:
Instead of delaying matters of interest to the other sectors, it was decided to exclude brewers from this legislative measure and to deal with the industry separately once parliament has passed the amendments concerning the other sectors. This measure has the approval of members of our association, big and small alike.
Small keeps coming up. He has a thing about small.
I have a small piece of news for them. We learned that the Brewers Association of Canada, dominated by John Labatt and Molson, were not defending the microbrewers. It was being hypocritical for, although it said it supported them, when it came time to take action, it said, “No, now is not the time. We would rather see the other sectors benefit, not us”.
These are major lobbyists. They defend their members' interests. It is time to amend the excise regime, it is time for a reduction in the excise tax for microbreweries, and the representatives who say they are defending the microbreweries with the Brewers Association of Canada say, “No, no, do it for the others; we are altruistic; we want things to go well for the others, but not for us. We will wait till a little bit later”.
Do you know what the major Canadian brewers are waiting for? Since 1997, almost half of the Canadian microbreweries have disappeared from the map. If the member for Rimouski-Neigette-et-la Mitis were here, she would say, “Pouf”.
Since 1997, 38 Canadian microbreweries have disappeared from the map. Why? Because of the excise regime which should have been amended by Bill C-47, because it is part of the general amendments to the Excise Act the government is seeking. Thirty-eight of 86 microbreweries have disappeared. They have disappeared everywhere, not just in Quebec. Do not think that because the Bloc Quebecois defends Quebec in particular we are not able to walk and chew gum at the same time, to defend Canada as well, when our interests are the same.
In this case, we must fight against the big breweries, which are hypocritically claiming to defend the microbreweries and regional development. We must make sure that the microbreweries of Quebec and of Canada receive the same fair treatment as those in the United States and Europe. This is something the Bloc Quebecois is fighting for, and it is a cause that all members of this parliament should take up.
These brewers enjoy 90% of the market and they are still not happy. They have adopted predatory practices, and hypocritical ones at that.
Thirteen microbreweries have disappeared in Ontario in the last five years. Eleven have closed in Quebec, in various areas including Quebec City and LaSalle, in the Minister of Finance's own riding. I imagine that he was happy to see the Brasal microbrewery disappear, because it was beginning to compete with John Labatt, which is also located the minister's riding.
In Saint-Hyacinthe, two microbreweries have disappeared since 1997. Others have closed in Saint-Eustache, Baie-Saint-Paul, Amos, Montreal et Cap-Chat. The regional development of microbreweries, the diversity, the wealth, the originality of a product, all that counts too. Seven microbreweries have disappeared in British Columbia, five in Alberta, one in Manitoba and one in Nova Scotia, for a total of 38. There are about 40 left; I unfortunately do not have the exact figures.
This is what the major Canadian brewers are expecting. This is what Mr. Morrison's letter means. It says “Do not include this in the Bill C-47, even though it is a general review of the excise system. Do not include it now. Wait one year, two years, three years, four years, five years”.
According to my numbers, if we were able to make 38 microbreweries disappeared in five years, we will probably be able to make the other 40 or so disappear in six years. So let us wait. Some people will say “ If they already have 90% of the market, this must not be important. Microbreweries currently have 4% of the market”. They had almost 5.5% of the market five years ago. However, because the excise system has been maintained, as it is today, they have disappeared. This is the main reason for their disappearance.
Every time the major Canadians brewers recover 1% of the market left by bankrupt microbreweries, this 1% represents dividends to shareholders of $17 million in net profits, $17 million for each slice of 1%. Killing the microbreweries is therefore a good idea.
This is why, a few years ago, microbrewers, smart people like you and me, decided to create, for this particular issue, the Canadian Council of Regional Brewers, which really represents microbrewers.
The president is Bob King, the President of Big Rock Brewery, an Alberta beer producer. The vice-president is André Dion, of Unibroue, in Quebec. The general manager, who was criticized by Mr. Morrison in his letter as representing no one, is Pierre Paquin, who is doing excellent work. With Mr. King and Mr. Dion, he is really fighting for the interests of microbreweries not only of Quebec, but of the rest of Canada. They are real fighters.
They created the Canadian Council of Regional Brewers, and they have had it with the collusion between the big Canadian breweries and the Department of Finance. They have had it with the collusion and the conspiracy organized them by the big brewers such as John Labatt and Molson, against the microbrewers, with the complicity of the Liberal government. They have had enough. That is the message they conveyed to the Standing Committee of Finance, two weeks ago, when they appeared before it. That is the message they expressed again these last few days, particularly with what happened in the Standing Committee on Finance, when the amendments moved by the Bloc Quebecois were discussed.
To complete the description of Canada's microbreweries sector, I will say that, since 1997, we know that the microbreweries have lost between 1.2 and 1.5% of the market. And this is because of the disappearance of 38 microbreweries, which, of course, was caused by the continued existence of an excise system that makes no sense at all, that is totally unjust and unfair and that, on a commercial point of view, tolerates, on the part of this government, unfair competition by American and European microbrewers on our own market. These great Canadian nationalists cannot even put in place an excise system that is competitive with its main competitors. These competitors are hurting our microbrewers, who are losing their share of the market. And this is being done in collusion with our big brewers. What a mess.
It is not surprising that 70% of the people believe that politicians are corrupt. When we see this sort of thing, that is collusion between the two big Canadian breweries and the federal government, particularly the finance minister, I am not surprised to see that so many people believe that politicians are corrupt.
Not only are we not changing the excise system to help the microbreweries but the Canadian major brewers get beer supply contracts for imported beer from microbreweries. They then sell the microbrewery products and specialty beers on the Canadian market.
Not only do the American and European microbreweries themselves supply the market, the major brewers take exclusive contracts to supply the Canadian market with microbreweries products and specialty beers. That is the case with Corona, Sol and others.
These contracts have already increased 175% since 1997. This increase benefits the major brewers, which also claimed to support the microbreweries in Canada and in Quebec and to agree with a lower excise tax. The cat is out of the bag now that the general excise system is changed by Bill C-47.
As I said, each 1% slice of the market allows the major brewers to get $17 million in net profits for their shareholders. This is what happens each time they gain 1 of the market at the expense of the microbreweries. That is a lot of money.
That means that if they killed all the microbreweries, in today's dollars, taking into account the actual consumption and sale structure, they would pocket $68 million in net profits. And then they say, “We stand for the microbreweries”. We can understand these big companies. Sixty-eight billion dollars for their shareholders, that is a lot of money. The exclusive contracts they have with the foreign microbreweries whose products they sell on our markets are also profitable. There has been an increase of 175% since 1997.
There is a lot of money involved. There is a lot of money to be made. There is also a lot of hypocrisy and collusion. As I was saying earlier, the competition legislation in the United States is very strict. Even Bill Gates had a taste of it. He was forced to divide his operations in two because one operation could not look at the other without compromising consumer interests.
Here we have a situation where not only there is collusion between Labatt and Molson to prevent a reduction in the excise tax—that alone would be unacceptable in the United States; I would be curious to see that—but there is complicity on the part of the government.
Even Mr. Morrison says in his letter “Our position remains unchanged”. When I read that, I was touched. The letter goes on to say:
Our position remains unchanged: we fully support a reduction in the excise tax for small brewers. It is a priority of the BAC—
If it were a priority, it seems to me that they would have wanted it to be done immediately; when we say that something is a priority, we do it right away; for them, it does not matter if it happens four or five years from now.
And he adds:
—and we want to point out that small brewers in Canada urgently need such reduction.
I am trying to understand. Words are pretty powerful things. A priority is something that must be done right away, and urgency is even stronger than that. It is worse than a priority. A priority is an administrative thing; an urgency, an emergency, is about self-preservation. If it is an administrative priority, and if it is about self-preservation as well, than it is a matter of urgency, so how could the letter continue in this vein?
We will support any measure aimed at attaining this objective, but in light of our prior agreement with the government—
Here we have another strong word, an agreement, “our agreement”. This is a way of saying that “with a gentleman's handshake, we are going to do them in, those microbreweries. They are going to get it in the neck, no excise tax reduction for them.” That is what the reference to an agreement means. Continuing with the letter:
—in light of our prior agreement with the government, we cannot support amendments which would include beer in Bill C-47.
The Brewers Association of Canada is a powerful lobby. It exists to defend the interests of all its members, big and small. But when the time comes to do so, they say, “We cannot support amendments which would include beer in Bill C-47.”
If I were a member of the Brewers Association of Canada, I would have left it ages ago. There would only be the two giants left. At least things would be clear. John Labatt and Molson do not want to see the small companies survive. But this way, it is not so clear. It is a good thing that the Canadian and Quebec microbreweries have reacted by forming their own association.
This is not the end of the matter. If it were, the situation would be bad enough, but it does not stop here. When we moved the amendments to Bill C-47, to bring it back to the spirit of the original excise legislation, which they claim to wish to amend and indeed totally rework, we told ourselves that beer had to be included in it.
In the present Excise Act, there is not only wine, spirits, tobacco and ship's stores, as is the case for Bill C-47, but also the beer the Brewers Association of Canada wanted to see excluded, even if this is the appropriate time and place for a reform of the excise tax on beer.
I then said, “Let us move amendments with the support of small brewers”. The amendments were moved, and refused because they were out of order.
Since Government Motion M-2 was moved, a committee chair is very powerful and has the right to refuse or accept amendments. The process ends there, because we cannot bring forward amendments to Bill C-47 at report and third reading stages. This is different from what we were accustomed to in the past.
A committee chair is now the holder of a powerful public office. That person wields more power than a secretary of state or a parliamentary secretary. At times, he or she even wields more power than a minister. Even a minister cannot refuse amendments like this. If those amendments were moved here, the minister would have to rely on the members' votes to have them rejected.
However, the chair can now refuse amendments just like that, and nothing can be done about it. We have no recourse, no appeal procedure that would give us a chance to express our point of view. This is tremendous power.
As I said, the Brewers Association of Canada sent a letter to the member for London-West and chair of the Standing Committee on Finance, indicating that the excise tax on beer should not be included in Bill C-47. It is not because it could not be there, it is rather because they did not want it there.
The Brewers Association of Canada, an organization dominated by John Labatt and Molson, has a committee known as the taxation committee. After analyzing Bill C-47, its recommendation was that beer be excluded. The President of the Brewers Association of Canada taxation committee is the husband of the member for London-West, John Barnes.
Now back to Bill C-47. It should have included everything in the current Excise Act to amend the provisions. The Brewers Association of Canada said, “Yes, include everything, and it is not in violation of the previous Excise Act, except for beer”. This main recommendation comes from the taxation committee, which is chaired by one of the seven directors of John Labatt, who is also the husband of the chair of the Standing Committee on Finance.
We were told that since the chair of the Standing Committee on Finance was not a minister or a parliamentary secretary, she was not subject to the code of conduct. This is a serious admission. As I mentioned, since Motion M-2 moved by the government committee chairs have tremendous powers in the legislative process. They can accept or reject amendments that are proposed. In a tie vote between opposition and government members, chairs can rule, in other words, vote either way, and do not have to say why they voted for or against the amendment. These are considerable powers.
Even here in the House, ministers must commit, they must explain themselves. Even here, ministers could not rise and say, “This is not admissible as an amendment”. They would not be able to say this if we could still introduce them in the House of Commons. There should be a vote in the House on opposition amendments, with members from all political parties.
Under the code of conduct, the responsibility of the chairperson of the Standing Committee on Finance is not that of a public office. However, I recall the case of Sinclair Stevens in 1986. Mr. Justice Parker, who presided over Mr. Stevens' case when he was accused of 14 counts of conflict of interest, said the following:
The code of conduct must be strengthened. It must become law.
Information regarding spouses and dependent children must also be made public for all those in public office.
In 1994 there was a review of the code of conduct. It was not expanded, but the Liberal party said that in cases where there is an issue of conflict of interest, such as the current situation with the chair of the Standing Committee on Finance, the occupation and all of the information regarding spouses and dependent children became relevant.
This has no teeth. The code of conduct is so weak. It was really stupid on the part of the ethics counsellor to present such a thing. However, there is an indication that information on the spouse and dependent children of a member of parliament who holds public office becomes relevant in the case of a conflict of interest analysis.
The hon. member for London West could have been a man. It would have made no difference if she had been a man and John Barns were her brother, father or son. The code of conduct of the government is so weak that the situation of the spouse would be considered as important.
We have a situation where there is at least an apparent conflict of interest. I will now come back to the summary of Bill C-47.
It re-enacts existing provisions in the Excise Act and the Excise Tax Act relating to the excise levies on those products, together with technical improvements—
At present, the general excise legislation contains provisions on wine, spirits and tobacco and numerous provisions on permits, licenses, etc., but also various provisions about the brewing industry and beer.
It would be absolutely incongruous to exclude such an item at the request of the Brewers Association of Canada, since that request was based on an analysis by the taxation committee of the association, whose president is John Barnes, the spouse of the chair of the Standing Committee on Finance.
I repeat, since Motion M-2 put forward by the government, a committee chair has extraordinary power in the legislative process. We no longer have any right of appeal or recourse once amendments put forward by opposition members or a government member are rejected by the committee chair. This is now an incredibly powerful public office in the democratic process.
Even though, under the existing code of ethics, which is very flexible to say the least, a holder of public office includes a minister, a deputy minister, senior officials, secretaries of state and parliamentary secretaries, it should include a committee chair whose responsibilities were increased by Motion M-2.
Conflict of interest, and the appearance of conflict of interest, is not just a matter of a code, and certainly not a flexible one. This is how she can present us with any old legal opinion. It is a matter of judgment, of honesty, of integrity, of transparency, and of intelligence.
Never, anywhere, has the chair of the Standing Committee on Finance told us, since consideration of Bill C-47 first began, that she was related to one of the seven directors of John Labatt, to a director of the Brewers Association of Canada and, to top it all, to the chair of the taxation committee for that same Brewers Association of Canada, which was not favourably disposed to an excise tax reduction for microbreweries. Never has this been mentioned.
And when did she flash her famous legal opinion? When I caught her red-handed rejecting my amendments and told her: “You are no longer entitled to make any decisions about Bill C-47 because you are clearly in conflict of interest, because your husband is the chair of the taxation committee of the Brewers Association of Canada, which recommended that the microbreweries be killed off over the next few years, having already killed off 38 of them”.
If that is not a conflict of interest that the government wanted to give a different spin to yesterday by dragging a legitimate debate on the place of women in society into a debate about integrity, about conspiracies against the microbreweries, about influence peddling, complicity and collusion, we have quite a problem.
The Minister of Finance got caught in the act recently, and the Minister of Canadian Heritage too, with contracts being given left and right to the organizers of their leadership campaign. After such a blatant case, is it so surprising that 70% of the population is fed up with politics and thinks politicians are corrupt?
Had the hon. member for London West been a man, with his brother chairing the taxation committee, it would have been the same thing. They are distorting this debate.
What kind of doormat members do we have opposite, that they should allow such an establishment, and the collusion to go on between this government, which is standing up for the interests of the majority, of the big breweries, at the expense of the microbreweries?
There is one way to turn things around. The government should immediately begin drafting a bill it would introduce before the end of this session, in order to do justice to the microbreweries.
It is imperative that the microbreweries, with their 2,000 jobs, can survive and prosper. We should put an end to this collusion between the big breweries, the government, and the chairperson of the finance committee, who happens to be the wife of the chairman of the taxation committee of the Brewers Association of Canada.
That is what we are asking the government. Because of this hypocrisy, collusion, conspiracy and lack of honesty, we will oppose Bill C-47. It certainly contains good provisions, but—