THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, May 9, 2018
The Standing Senate Committee on National Finance met this day at 1:30 p.m. to study the subject matter of all of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, I welcome you to this meeting of the Standing Senate Committee on National Finance. I also wish to welcome all of those who are with us in the room and viewers across the country who may be watching on television or online at sencanada.ca.
My name is Percy Mockler, senator from New Brunswick and chair of the committee. At this point, I would like to ask the senators to introduce themselves.
[Translation]
Senator Pratte: André Pratte from Quebec.
[English]
Senator Deacon: Marty Deacon, Ontario.
[Translation]
Senator Massicotte: Paul Massicotte from Quebec.
[English]
Senator Andreychuk: Raynell Andreychuk from Saskatchewan.
Senator Neufeld: Richard Neufeld from British Columbia.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
The Chair: Thank you, senators.
[Translation]
I would like to take this opportunity to introduce our clerk, Gaëtane Lemay, and our two analysts, Sylvain Fleury and Alex Smith, who are part of the committee’s team.
Honourable senators, allow me to introduce Ms. Delphine Bert, from France, the administrator of the Commission des finances du Sénat français. Ms. Bert is the Secretary of the Canada-France Interparliamentary Association. Welcome to Canada. We hope you feel at home in our home. We are also grateful to you for agreeing to attend this meeting of the Standing Senate Committee on National Finance.
[English]
This afternoon, we continue our consideration of the subject matter of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, which we started last week. It is within the budget implementation act.
[Translation]
Today, we are going to direct our attention to three different parts of Bill C-74.
[English]
To discuss the recognition of expenses incurred in respect of an animal specially trained as eligible for the Medical Expenses Tax Credit, we welcome Medric Cousineau, Co-Founder, Paws Fur Thought. Mr. Cousineau, thank you for being here and sharing your opinions, your comments and your recommendations with the Senate Finance Committee.
Then, to talk about the changes to the excise duty rates on tobacco products, stated in Part 2 of the bill, we welcome Rob Cunningham, Senior Policy Analyst, Canadian Cancer Society. Mr. Cunningham, thank you for being here at the Finance Committee.
Finally, to discuss the changes proposed to the Employment Insurance Act regarding the treatment of earnings received by claimants while they are in receipt of benefits, which is Division 4 of Part 6 of the bill, we have before us Mr. Bill Morris, National Director, United Way Centraide Canada. Thank you for being here.
I would now ask the witnesses to give their opening remarks, starting with Mr. Cousineau. Subsequently, senators will ask questions.
[Translation]
Mr. Cousineau, you have the floor. Please go ahead.
[English]
Medric Cousineau, Co-Founder, Paws Fur Thought: Honourable senators, on behalf of myself and Canadians facing mental health challenges and for our entire country, thank you.
Some of you may have been made aware of my $1.23 testimony before the other place on April 30. For those who missed it, I was asked by the media, after the budget was announced, what Bill C-74’s section concerning the METC meant to me in financial terms. I replied that it was about $37.50 a month. They were incredulous that I had waged a five and half year war for what amounts to $1.23 to me per day. It’s not about me, and it sure as heck isn’t about a buck and change, less than the price of a small coffee a day.
This fight was about equality and human rights. Simply put, service dog handlers with mental health injuries were being treated differently under the law, discriminated against by reason of the nature of their disability.
My service dog, Thai, saved my life. Without her, I am not here today, either appearing before you or on this planet. Last week, Paws Fur Thought, the organization that my wife and I co-founded to fundraise and advocate for other veterans and first responders to get their service dogs, placed their one hundred and first, one hundred and second, and one hundred and third dogs, as well as facilitated refresher training and recertification for 13 other teams. At the grad ceremony, the personal impact stories left everyone choked up and in tears. Perhaps the reason we do what we do is best encapsulated in one handler’s poignant story: “Medric saved my life. I woke up in the ER thinking I could not even do that right.” Subsequently, Paws Fur Thought paired the handler up, and a card that was once in play is no longer in the deck.
When you pass the section of Bill C-74 concerning the METC for service dogs — and I have every faith and certainty that you will — you will be taking a huge step towards ensuring that Canadians know that you will protect our human rights and you will ensure that equality is a fact and not a concept. The truly life-altering, game-changing effects of task-trained service dogs to help mitigate the effects of your disability cannot be overstated.
If you spend $250 a month in the care and upkeep of your service dog, that’s $3,000 a year. The 15 per cent METC results in a $450 tax credit, or $1.23 a day. But do not fall into the traps presented by surrounding equality with standards and efficacy study issues. No other service dogs currently covered by the METC have been subjected to such. Pursuant to my previous testimony, I met with Minister O’Regan and his staff to address such issues.
The synchronicity of being invited to testify before you here during Mental Health Week is not lost upon me. You may see Thai as a beautiful yellow lady lab. I see her as that, as well as my best furry buddy and confidante. However, she is a medical assistive device for night terror intervention, panic and anxiety attacks, agoraphobia countermeasures, and she does dissociative recalls, amongst other tasks, things that no other mental health provider has ever done for me. Not once, in decades, did a mental health pro ever come to my house at 4:30, wake me up from my night terrors and reassure me that it was going to be okay — not once.
But if the medical community were to have a therapy or drug that reduced PTSD symptoms, reduced depression index, improved quality of life, increased sleep quality and efficiency — all after six months — they would be all over it. However, they do, and they ignore it.
What I have just presented is the preliminary results of the VAC efficacy study presented last September, and yet, crickets. VAC’s Chief Medical Officer has never once bothered to ask me what we are doing to get such positive results. I placed half of the dogs in the previously cited efficacy study, so it makes one wonder why certain departments are failing to engage.
For those of us living with the horrible stigma, the word “psychiatric” — the label in and of itself — is traumatizing. Imagine a senior mental health official at DND saying, “Give them a puppy, a pony, some pot — PTSD problem solved.” That’s what we’re up against. But that individual is right. Alternative modalities like service dogs and equine therapy should be explored, because the treatments he espouses have a 50 per cent treatment resistance, and they have no idea of the recidivism rates, despite spending $1,000 a day per patient per inpatient addiction facility to treat PTSD.
Paws Fur Thought has been involved in service dog standards, efficacy, mental health initiatives, and my wife and I are extremely proud of our work in the service dog world. Two weeks ago, we helped facilitate a strategic partnership between Wounded Warriors Canada and Ontario Command of the Royal Canadian Legion, the largest single donation ever to a veteran-assist service dog program in Canadian history. We have done this with a huge amount of public support and not one nickel in funding from the government. We have been able to accomplish that which the Government of Canada, specifically VAC and DND, could not do.
You may wonder how I wandered off on all of that other stuff, and what that has to do with the METC. For five and a half years, VAC reported to FINA that there were no efficacy studies supporting the use of PTSD service dogs. They never bothered to answer the question, “Had any other service dogs been subjected to the same kind of efficacy studies?”
When you pass the portion of Bill C-74 on the METC, you will ensure that we are heading down the right path to putting the stigma down. In no circumstances should there ever be discussions about the financial ramifications of equality. You arrive at equality, and the financial implications are purely consequential. It was never about a dollar and 23 cents.
Thank you so much.
Rob Cunningham, Senior Policy Analyst, Canadian Cancer Society: Thank you, chair. Thank you for the opportunity to provide testimony.
The focus of my testimony will be Part 2 of the bill, clauses 47 to 67, implementing a $1 per carton increase in tobacco taxes and modifying the inflation indexing for tobacco taxes from every five years to every year. We applaud these measures and urge all committee members to support these provisions. Tobacco products remain the leading cause of preventable disease and death in Canada, killing 45,000 Canadians annually and causing about 30 per cent of all cancer deaths.
We also strongly support the federal budget provisions that provide an increased investment for the Federal Tobacco Control Strategy. This is essential as part of the efforts to meet the objective of reducing tobacco use to under 5 per cent by 2035. There are still more than 5 million Canadians who smoke, which is 17 per cent of the population. There are teenagers who start to smoke every month. We have made considerable progress, but enormous work remains.
The budget measures regarding tobacco taxes and funding of the strategy are complemented by Bill S-5 and by pending regulations for plain and standardized packaging. Regarding Bill S-5, we urge all senators to support the amendments made by the House of Commons now before the Senate. These amendments were approved by the Standing Committee on Health with all-party support.
Increasing tobacco taxes is the most effective strategy to reduce tobacco use, especially among youth, who have less disposable income. That tobacco taxes reduce consumption is recognized by the World Bank, the World Health Organization, a vast number of studies in Canada and worldwide, provincial and territorial governments across Canada, and successive federal governments. Tobacco tax increases are a win-win, benefiting both public health and public revenue. The budget projects increased revenue of $375 million in this fiscal year alone as a result of the tobacco tax changes.
Inflation indexing of tobacco taxes was initiated in the 2014 federal budget of then Minister of Finance Jim Flaherty. The budget measure was that indexing was to occur every five years, meaning that the first inflation adjustment was to have occurred in 2019. Indexation ensures that tobacco tax rates are, in effect, kept the same on an after-inflation basis. Prior to the 2014 Budget, federal tobacco tax rates had not been changed in 12 years, since 2002, thus eroding their impact due to inflation and thus undermining the objectives of decreasing smoking and increasing government revenue.
Imperial Tobacco Canada Limited recommended that indexation be annual instead of every five years as part of its recommendations to the House of Commons Standing Committee on Finance during pre-budget consultations.
Guidelines under the international tobacco treaty, the WHO Framework Convention on Tobacco Control, recognize that real after-inflation value of a specific tobacco tax will be eroded unless it’s regularly increased at least in line with inflation. The guidelines recommend that “Tax rates should be monitored, increased or adjusted on a regular basis, potentially annually, taking into account inflation . . . .” Further, the World Health Organization’s Technical Manual on Tobacco Tax Administration recommends that specific tobacco taxes be automatically adjusted for inflation.
Federal tobacco taxes are better than provincial taxes because, from a contraband perspective, they apply on reserves. There is no difference between on-reserve and off-reserve tax rates. The level of contraband on which federal tobacco taxes are not paid is far lower than the level of contraband on which provincial tobacco taxes are not paid.
If I can invite members to turn to the material we distributed, the first draft shows comparative provincial and territorial tax rates. You can see that Ontario and Quebec have the lowest tax rates in Canada but the worst contraband. In Western Canada and in the Atlantic provinces, tobacco tax rates are far higher, but contraband levels are much lower. That seems to be counterintuitive. In Canada, the cause of contraband is not the high tax rates, because we see in the West that it’s sustained with very low levels of contraband, but actually proximity to the illegal manufacturers on reserves in Ontario and Quebec.
The graph on the next page shows trends in federal-provincial tobacco tax revenue, not including GST, HST and PST, and we see that even with declining smoking rates, tobacco tax revenue is working, so it’s meeting that objective — $8.4 million in fiscal 2017.
The next graph shows the long-term trends in smoking prevalence among Canadians aged 15 plus. We are making progress; it’s still decreasing. It’s down to 17 per cent.
The next graph shows among youth — and this is encouraging — ages 15 to 19, there’s a substantial decline, but it’s still at 10 per cent. We want that to get to zero; in fact, we want tobacco-free Canada eventually.
On the next graph, the blue shows that tobacco manufacturers in recent years have increased their own prices dramatically. As a result, they have $1 billion more revenue, revenue that could have gone to government if they had increased tobacco taxes instead. It’s a bit unfair that tobacco manufacturers can increase their prices, but governments could not increase their taxes.
There are further graphs I can explain, should questions come up.
We thank the federal government for the new measures that have been brought forward, and we appreciate the support from all parties. We thank the Senate for its work on tobacco control over many years. We look forward to continued progress. Thank you.
Bill Morris, National Director, United Way Centraide Canada: Thank you for the opportunity to appear. The mission of the United Way movement is to mobilize our collective capacity to improve lives and build communities. We do this by building diverse partnerships with individuals, business, labour, service delivery agencies and governments. The United Way is present in more than 100 communities across Canada. Our local fundraising campaigns annually raise approximately $500 million, which is reinvested in the community to build community and to improve lives.
Our focus and goals are to move people out of poverty, to help kids be all that they can be and to build strong, healthy communities.
In terms of moving people out of poverty, we seek to promote three goals: food security, housing stability and income security. As a party seeking solutions and driving community impact, we also engage in research on social conditions. In recent years, some of that research has looked at the changing nature of employment and earnings. This work has been done particularly in the Golden Horseshoe, but I think it’s applicable across Canada. The findings are things that I think people are familiar with because these are worldwide trends.
There is a rise in precariousness of employment. More and more people are stringing together part-time jobs, contracts and working in non-traditional workplaces. Some of you may have come here today using Uber, or used it in the past, which is an example of those kinds of non-traditional ways in which people are making a living.
That flexibility which is being demanded in our workplaces and in our labour markets does have consequences. Fewer people have pensions and benefits, and there is much less stability in terms of employment and income. Coupled with growing consumer debt, the result is that a lot more people are living paycheque to paycheque. Certainly the people our investments try to benefit are increasingly living paycheque to paycheque. We see this play out in terms of increased reliance on food banks and other institutions which support people who are unable to meet their basic needs. We also see this in increased housing instability and growing homelessness. Some of you may have seen this in terms of your own children and the phenomenon of boomerang kids and couch surfing. These are all by-products of the precarious labour market.
What we welcome in terms of the changes that are proposed is that this is an attempt, in terms of the Employment Insurance system, to keep pace with that changing nature of the workplace and earnings and introduce greater flexibility. The changes that are introduced are the result of a pilot program that began back in 2005. We welcome the changes that now bring that pilot program into the act itself and remove it from regulation.
We also welcome the expansion of eligibility under what had previously been the pilot program to include more workers than had been the case. We welcome the changes that allow flexibility in the way in which workers who are unemployed can seek benefits through two opportunities, or two different formulas.
We would, however, question the wisdom of moving, over time, to only one formula and removing that flexibility. When we looked at the evidence — and it’s hard to find evidence because we couldn’t see any evidence that the pilot program had been studied — but the little bit of evidence we could see, in terms of the testimony of the former deputy minister before the HUMA committee, did seem to indicate that the method that had previously been used, which allowed workers to keep the first $75, did benefit the lowest-income people in our community to a greater extent. That’s the part that is being phased out. We question the wisdom of that being phased out over time and moving to a single way in which the new changes will be calculated.
Otherwise, we welcome this and other changes that increase flexibility, recognize the changing workplace people are enduring and the kind of difficulty that brings to their lives in terms of stability of income, and make the Employment Insurance system dovetail with what we’re seeing in that workplace. United Way doesn’t purport to be an expert on Employment Insurance regulation and detail, but we see the impact in terms of the needs that are represented in the community, particularly the increased demand to meet basic needs. It’s a downstream effect that we see when people are unable to meet their needs. We welcome these changes which we hope will allow more people to be resilient and have greater labour market attachment than they otherwise might. Thank you.
The Chair: Thank you.
Senator Marshall: Thank you to all of you for your presentations. I am going to start my questions in the order that you spoke. I’m going to start with Mr. Cousineau.
Thank you for your presentation. Can you tell us more about your organization, about how many people are members, and whether you actually train service animals? Could you give us a little more information on your organization? Then I have some follow up questions.
Mr. Cousineau: Our organization was started primarily as the fundraising and advocacy arm. Paws Fur Thought has worked with several different schools to help pair veterans and first responders with people who need them.
Last February I assumed a role called the Dog Father with Wounded Warriors Canada. I have taken what I do with Paws Fur Thought and have expanded it to eight schools and, hopefully by the middle of next month, nine schools across Canada.
Senator Marshall: So how many veterans have you assisted and how many service animals have been involved?
Mr. Cousineau: In just the Paws Fur Thought umbrella we are up to 103 in five years, and I’m proud to note that that’s 103 more than back.
Senator Marshall: We usually think of service animals as dogs. Are they all dogs or are the other animals?
Mr. Cousineau: Thanks to the Americans with Disabilities Act in the United States, they opened a horrible window 20 years ago, and for a while we had service monkeys and miniature horses. You have probably recently seen some of the less than favourable media about hamsters, peacocks, pigs and everything else. For the purposes of our discussion, a service animal is actually a service dog that is task-trained to mitigate a handler’s disability.
Senator Marshall: Does your organization actually train the dogs?
Mr. Cousineau: We are not the trainers. We are fundraisers and advocates. We partner with experts who are actually trainers. Some of the schools that we are working with — one is celebrating their twenty-fifth anniversary this year, another is 21 years old.
Senator Marshall: We were speaking just before the meeting commenced. Are there standards for service animals? Do those standards vary from training school to training school?
Mr. Cousineau: They vary from training school to training school. There are a couple of international organizations, Assistance Dogs International, and the International Guide Dog Federation which have published standards. The British Columbia government has a published standard, as well as Alberta. My wife and I were instrumental in getting the Nova Scotia service dog legislation enacted and, next month, the regulations that look like B.C. will be promulgated.
There is no interprovincial reciprocity. What that means is, for example, if you have a driver’s licence here in Ontario, you can go to Alberta and you can drive; you don’t have to do a test. However, based on the rules that currently exist in the service dog world, a handler would have to go to that testing agency and in that province to have his dog certified. That hardly makes sense.
Senator Marshall: I understand from your opening remarks that you support the changes that are being proposed?
Mr. Cousineau: Absolutely.
Senator Marshall: But you did say you had met with Minister O’Regan. I was left with the impression that you supported the amendments but you would like to see more.
Mr. Cousineau: Absolutely. You have picked up on a key point. You see, it took us five and a half years to get a one-line acknowledgment of something as simple as, “We are not going to discriminate on the basis of disability.” It should have never taken us five and a half years.
We still have issues surrounding further ongoing research; we have no long-term strategic plan for the supply-demand curve, which is completely upside down. As yet, there is no long-term plan in place, and unfortunately the people who have been advising the minister on the medical side of the house have not been up to the task.
Senator Marshall: So you think they should be more aggressive?
Mr. Cousineau: We actually have quantifiable results. They asked us for efficacy studies, and we have efficacy numbers. They can’t even prove recidivism rates for things they are spending hundreds of thousands if not millions of dollars on. It hardly makes sense. It’s time for them to step up and get in the game.
Senator Marshall: Mr. Cunningham, as for tobacco, my understanding from your opening remarks is that you support the changes in the budget bill, but you would like to see more?
Mr. Cunningham: We support the measures in the bill, but we need to have continuing efforts in order to continue to make progress.
Senator Marshall: You would like to see something in there every year, an escalator tax, or something of that nature?
Mr. Cunningham: There is an opportunity for further federal tobacco tax increases and at the provincial level as well, so there is going to be inflation indexation. But, just to catch up to what the rates were back in 1991, with inflation, there still would need to be another $8 increase, federally, to catch up to where we used to be after inflation.
Senator Marshall: Mr. Morris, we had a gentleman here last week testifying on the insurance policies. He was Acting Director General, Employment Insurance Policy, with Employment and Social Development Canada. He was telling us that claimants have two options if they're earning income while they’re on claim.
He said that notwithstanding the ability to choose for the current pilot, we’re seeing that 99.5 per cent of people are sticking with the default approach. He said only about 0.5 per cent are opting for the alternative treatment.
Mr. Morris: I would comment by just saying I don’t know those numbers, and I appreciate that information.
The only thing that I could find in terms of impact — it’s one thing to look at the demand side — was that the former deputy minister’s testimony before HUMA did seem to suggest that there was a higher impact for people at a lower income, with the portion that will be phased out by 2022. That was my only concern. Otherwise, we supported the proposed amendments.
Senator Marshall: Okay. Thank you very much.
Senator Pratte: Mr. Cunningham, the two remaining slides on which you did not comment deal with the illicit trade trends and indicate a reduction of the illicit trade. However, the figures that are on the slides are quite old. They date from 2010 or something like that. We’ve heard that in recent years illicit trade has come back and has increased. I don’t have numbers. I just remember that I’ve seen or heard about it.
Can you comment? Has this trend that you show that dates from 2008 and 2010 continued? Is illicit trade still pointing downwards, or has it increased?
Mr. Cunningham: We have some encouraging news. Certainly, it peaked in 2008. It has gone down substantially compared to that point. The Quebec government has done more than other provinces to measure contraband within its province. According to the Quebec ministry of finance, it has gone down substantially and is now down to 12 per cent, which is the lowest in more than a decade.
Senator Pratte: I should know this, I guess, but what do we know for Quebec or Ontario, who are closest to the illegal producers, about the impact of prices, if any, on illicit trade? As you mentioned earlier, there is this theory, at least, that if you increase price or taxes too much, then you encourage illicit trade?
Mr. Cunningham: We’ve been able to see that in Western Canada the tobacco tax rates are much higher. Even some tobacco industry data indicates maybe a 4 per cent level of contraband in the Western provinces, much lower. Ontario does have the highest levels, much higher than Quebec. There’s more that the Ontario government can do. There are certain measures they have not implemented to prevent contraband that many other provinces have. So that’s a step that can be done. The federal government can also take additional measures to reach contraband.
This particular data that you have in the handouts is from Philip Morris International and British American Tobacco. They may say things privately that they don’t say in the media. We hear noise from pro-tobacco interests about how contraband is going up, but that is not substantiated by total volumes.
Senator Pratte: Thank you.
Mr. Cousineau, we know very well what a dog can do for a blind person, for instance, but, for someone who suffers from PTSD, for example, we know that dogs have marvellous faculties, things that they can do. But would you briefly describe what it is that a service dog can do for someone who suffers from PTSD?
Mr. Cousineau: Probably the easiest way is to describe a short glimpse into a day in my dog’s life. For two and a half decades, every night, at 4:30 in the morning, I woke with horrific night terrors. If you have never seen or experienced what those are, you don’t ever want to have one, let alone two and a half decades.
My dog, because of her amazing sense of smell, can sense the change in my biochemistry, and she’s been taught to wake me up when I start to go into those evolutions. So she allows me to get a couple of extra hours of sleep that I hadn’t gotten for a long time.
When we go out in public, she does a thing called check six, where she can walk behind me, or, if we’re sitting in certain places, she watches my back. I can watch her, and I can tell just by her what’s going on behind me because I have serious agoraphobia and hypervigilence issues.
If I’m walking and you happen to see my dog looking like she is doing a body check into my leg as we’re walking, that’s not her failing to heel. That’s her trying to get me to focus on her because she can sense the change in my biochemistry that I’m about to mentally check out.
If I do not respond and interact with her, she will continue to escalate her behaviour so that I have no choice but to interact with her.
Some of the other things that dogs are trained to do: We have dogs that are trained as a reminder for their handler to take their medication, and, in one particular case, the handler literally has to take her meds and show the dog her hand so that the dog will know that she actually took her meds.
I know that may not sound like a big thing to you, but, for people like us who are living with the horrible effects of PTSD, these dogs are absolute life changers.
It’s also interesting to note that the courts have already ruled that emotional support is a basic function of all animals. So any use of those words in this discussion is wrong. We are concerned about the task that the dog is trained to do to mitigate the handler’s disability.
Senator Pratte: Your research demonstrates that your dog is not an exceptional dog, that well-trained dogs can do that for —
Mr. Cousineau: The efficacy study that VAC undertook because I basically beat them into submission shows that, in those preliminary results, the ones that I referred to being presented last September, we have a decrease in PTSD symptoms, decrease in depression index, improvement in quality and efficiency of sleep, improved social functioning and improved mobility.
Based on those results, the government, in particular the department that’s looking at this, should have engaged to figure out how they can expand upon this. Instead, we still seem to have some thumb twiddling going on.
Senator Pratte: Will that research be published?
Mr. Cousineau: Laval University. I will get the copy of the research forwarded to the clerk so that we can get it to you. I think you’ll find it most enlightening.
Senator Eaton: Just to follow up on my colleague’s question, dogs can’t simply be for emotional support. I know of so many people who travel back and forth, and they want to take their dogs. And what’s an easy way to take your dog? You go online. You fill out the forms, and your dog becomes a comfort dog.
I was discussing with my daughter-in-law the other day that maybe I should do that so that I wouldn’t have to keep my little Jack Russell in the cage. I could have him on my lap.
So I understand what your dog does. I think it’s terrific. But shouldn’t there be some kind of standard so that people like me, who should be able to travel, who can travel without the need, who don’t suffer from anxiety, are not taking advantage of a system that’s kind of blown wide open?
Mr. Cousineau: Absolutely. The fake service dog registry is a burgeoning industry. I have raised the issue, and it’s one of the reasons why we need a national standard with interprovincial reciprocity, much like we administer drivers’ licences. They could be administered by the province and we could hopefully put a stop to a lot of this particular foolishness, as you’ve said. Again, I have examples that I will forward to the committee. In one recent case a disabled veteran was conned out of US$275 for an absolutely worthless ID card that is written in the most ambiguous language you could ever imagine. She has no recourse at all. We need to stop that.
Senator Eaton: I guess I’ve seen too many fakes.
Mr. Cousineau: Absolutely. It’s a problem that we face now. Every time I fly, I now have to face increased scrutiny and we have to file things with the disability services desk at airports. It goes on and on.
Senator Eaton: Whereas you shouldn’t have to at all.
Mr. Cousineau: We shouldn’t. If you think about this for one second, the people that are passing off their pets as a service animal, it’s not about their pet. In fact, what they are doing is faking having a disability. If that doesn’t leave a sour taste, it should.
Senator Eaton: I agree. I think we need standards.
Mr. Cousineau: I concur.
Senator Eaton: Mr. Cunningham, we’re in the process of legalizing cannabis right now in this country. When you talk about bringing smoking down to zero, what are your thoughts on that? We’re not smoking cigarettes, we’re lighting up joints.
Mr. Cunningham: We’re certainly still a long way away from tobacco getting down to zero, or smoking, in part because nicotine is so addictive. It’s as addictive as heroin or cocaine.
With respect to cannabis, attempts to prohibit alcohol were unsuccessful. Clearly, cannabis has to be strongly regulated in terms of where it can be used, how it’s packaged and how it is advertised.
Senator Eaton: That’s not my question. It’s kind of interesting that you’re fighting so hard to keep on bringing down smoking rates and raising the taxes when we’re about to legalize marijuana, which will be cheaper than a carton of cigarettes.
I’m also wondering about Quebec and Ontario, which seem to have the lowest cost in cigarettes. I wonder if the contraband isn’t the highest simply because of where they’re situated, close to the American border, close to where they come across at Kanesatake and the other ones, where there’s a huge contraband in cigarettes that cross the rivers every day, near Windsor and the St. Lawrence River.
Mr. Cunningham: That’s the reason why contraband is the highest in Ontario and Quebec. It’s because of the proximity to illegal manufacturing on the Six Nations reserve near Brantford, on the U.S. side of Akwesasne and on Kahnawake near Montreal. Those are the principal sources. They are very close to urban centres.
Senator Eaton: Quebec and Ontario have not seen to raise the taxes.
Mr. Cunningham: The only real perceived impediment for those governments is the perceived level of contraband because they support the objectives of reducing smoking and the benefits of revenue, and had it not been for the concerns with contraband, they would have increased taxes.
Senator Eaton: Which do you think is the biggest deterrent: Is it education, is it taxes, or is it the cost?
Mr. Cunningham: The single biggest thing is higher taxes, but what we need is a comprehensive strategy that has many components.
Senator Eaton: You don’t think the education over many years in schools, telling people what smoking does to their heart, lungs and overall health has had an effect that’s more important than taxes?
Mr. Cunningham: At this point, with what we can do going forward, I think it’s higher tobacco taxes. There’s no doubt that the increased awareness and knowledge of the health effects has had a dramatic effect. If we go back to the 1960s, for example, the awareness and concern in society has fundamentally changed.
I think a comprehensive strategy that includes further education, cessation programs, legislation and taxation — it’s not just one thing, no silver bullet. We need many components, and education is a very important part of that.
Senator Eaton: Thank you.
Senator Massicotte: Thank you for being with us this afternoon. I’m going to follow on the same line of questioning with Mr. Cunningham. There is no page number, but it talks about taxation for cigarettes. The blue there is the level of taxation. What portion is federal and what portion is provincial? Do we have that?
Mr. Cunningham: If you look on far right of the graph, you have the federal tobacco tax rate.
Senator Massicotte: The incremental is the provincial one?
Mr. Cunningham: Right. For the federal government, it’s about $28, including an average amount of GST of 5 per cent across the country. And then you have the provinces. The blue is their tobacco tax. Some provinces apply provincial sales tax or the provincial portion of HST to tobacco, and so you have that as well. So you have the total amounts, including an estimate for the provincial part of PST.
Senator Massicotte: Let’s say I take Quebec at $29.80. I have to add that to the $28.22 to figure out the total taxation on 200 cigarettes?
Mr. Cunningham: That’s correct.
Senator Massicotte: Quebec is still lower. Your answer to Senator Eaton was that proximity is probably the reason why they’re not up higher, because they are strongly threatened by a much cheaper, more competitive product, I guess.
Mr. Cunningham: Quebec has had tremendous success with the measures implemented to reduce contraband. Our recommendation to the Quebec government is that they could increase tobacco taxes.
Senator Massicotte: What do they say?
Mr. Cunningham: Well, they considered it, and they did increase tobacco taxes four years ago. There was a provincial tobacco tax increase, but now that they have fallen so far behind the rest of the country, there’s an opportunity for them to take action. Looking at this graph, it’s a missed opportunity to reduce smoking among teenagers in Quebec.
Senator Massicotte: If I look at the other chart, one is percentage of smokers, which I think for them is 17 per cent. You also have the percentage of smoking among the youth. The 10 per cent, is that 10 per cent of the population or 10 per cent of those people 15 to 19 years old?
Mr. Cunningham: This would be 10 per cent of Canadians aged 15 to 19.
Senator Massicotte: Therefore, 6 per cent of all smokers are between 15 and 19? Is that accurate? If 10 per cent of the smoking population is 15 to 19, and you’ve got 17 per cent of the total population, 10 divided by 17 is approximately 6 per cent, which suggests that 6 per cent of all smokers are 15 to 19. Am I reading that wrong?
Mr. Cunningham: I don’t have a specific number calculated in advance, but yes, because most of the population is adults and a small percentage is teenagers. The thing is that the overwhelming majority of smokers begin as teenagers. If we can prevent teenagers from beginning, then over time it will have a big impact on smoking rates. Teenagers are really important from that perspective.
Senator Massicotte: Ten per cent of the population who are 15 to 19 are smoking?
Mr. Cunningham: Correct.
Senator Massicotte: What percentage of that is females versus males?
Mr. Cunningham: Among this age group, it is very similar among boys and girls, but if we look at adults, it’s 19 per cent among males and 15 per cent among females. So it’s higher among males than females but among boys and girls it’s similar.
Senator Massicotte: I’m just surprised. If it’s so accurate, it’s so easy to increase taxes on cigarettes. I’m surprised they haven’t heard the message that they can increase their revenue base. Maybe that’s okay.
[Translation]
Senator Moncion: My question is about tobacco. Indian reserves sell tobacco. I believe it is tobacco that they have the right to sell. However, their prices are much lower than those for cigarettes sold on the regular market. Do you have any information about the quantity of tobacco sold on reserves, compared to shops outside reserves?
Mr. Cunningham: We have grave concerns about the rate of tobacco use in First Nations. The rate is over 50 per cent of those who live on reserves. This can be attributed to the fact the prices are so low, which particularly attracts teenagers.
Federal taxes apply on reserves. When people abide by the law, all is not lost. However, provincial and federal sales taxes do not apply on reserves for First Nations people buying tobacco. The figures vary by province. In Saskatchewan and Manitoba, for example, First Nations represent about 15 per cent of the population. The market percentage is therefore higher than in the Atlantic region. The problem is real and solutions exist. They just have to be implemented.
Senator Moncion: I live in an area located close to reserves where a number of shops sell cigarettes. Do they have the right to sell them to people who are not indigenous?
Mr. Cunningham: No.
Senator Moncion: Where I live, at least every second cigarette comes from an indigenous shop.
Mr. Cunningham: If they do not apply the provincial tax, they only have the right to sell to indigenous people on a reserve. Non-indigenous people cannot buy them. That is illegal. They can neither sell them nor buy them.
Senator Moncion: But there is another kind of cigarette. If people buy a pack of Du Maurier cigarettes, even on a reserve, they are going to pay the same price. However, the other kind of cigarette, which is not a Du Maurier and which comes in a different pack, is that a contraband cigarette?
Mr. Cunningham: Du Maurier cigarettes sold on reserves to indigenous people are exempt from provincial tax. The law is the same for any brand. The tax is the same whether cigarettes are made on a reserve or by Imperial Tobacco Canada. However, in some cases, some cigarette factories have no permit and pay no federal or provincial tax. Not paying federal tax is illegal.
Senator Moncion: But is that other kind of cigarette an illegal one?
Mr. Cunningham: If the federal tax is not paid, the product in question is illegal. For example, we often hear of tobacco being sold in plastic bags, with no warnings attached. That way of selling is also illegal. However, you can sell tobacco in plastic bags if the warnings are attached and the taxes are paid.
Senator Moncion: Thank you.
[English]
Senator Andreychuk: Following up on these questions, Ontario and Quebec have raised cigarette taxes and then they’ve had to desist from the type of acceleration that others have? Am I correct? Does my memory serve me correctly? With that, is there a correlation between contraband and the price of cigarettes on the market?
Mr. Cunningham: Quebec last increased its provincial taxes four years ago. Ontario has increased its taxes in its 2017 and 2018 budgets. Ontario has some recent increases. Despite that, they still remain lower than virtually every other province.
Senator Andreychuk: They are inching up. I’m saying they are monitoring what the effect is on the contraband brand, however you want to define contraband, whether it’s illegally over the borders or whether it’s packaged differently, sold differently.
I should disclose that I was very much involved with the Cancer Society many years ago, and that was one of the things we were monitoring. When the price goes up, it was always guessing what that price level would be at that time in that province, what it would trigger in a contraband way.
Mr. Cunningham: Certainly that’s an issue of concern for the Ontario government. They have implemented a series of contraband prevention measures in the last few years that have helped. Had they not done that, the contraband would be worse than it currently is. There are more measures that Ontario can implement. Certainly these are things that governments evaluate when they do it.
What has happened in Western Canada is really positive, where tobacco taxes are much higher and there’s hardly any contraband. The reason is that there are no on-reserve illegal smoke shacks. There is not the issue that we see Ontario and Quebec of selling to people who are not First Nations on reserves.
When someone attempts to open up a store, the authorities shut it down. But in Ontario and Quebec, it’s an entirely different situation.
Senator Andreychuk: But you would agree also that in the West there are other problems, not just cigarettes. We’re talking about people who reach out to alcohol, for example, being a real difficulty out west. So the choices are different there. But we’re still talking about something that is addictive, perhaps, and how does the government counter that? You do that by giving money for addiction counselling, education, but you also look at what we can do with the tax base. And with alcohol, if you had a chart for Saskatchewan on beer now, it is being indexed and there is pushback on that.
Do you have anything to monitor correlation between “I’m going to give up smoking, but I think I’ll buy another bottle of something?” That’s what I think provincial governments often do. They look at the correlation of all that activity to determine the price structures.
Mr. Cunningham: I am aware of some evidence that reduced smoking among youth is associated with reduced use of other drugs. It may be that for a teenager who learns to smoke cigarettes, it then becomes easier to smoke something else.
There are a number of studies in that line, and that’s encouraging. Certainly with respect to cannabis, there’s a huge overlap among youth who smoke cannabis and youth who smoke cigarettes. That will have to be something that’s monitored. Often people will combine cannabis and tobacco to make a cannabis cigarette. So these are issues.
Clearly surveillance, to be on top of exactly what’s happening in the marketplace, is essential for effective implementation of a strategy so that governments can react quickly when there’s new development.
Senator Andreychuk: With Saskatchewan and other western areas, you were saying that surveillance is there. If anything illegal starts to happen, you can shut it down, partly because of the distances.
Are you saying that surveillance is not happening in Quebec, or what is the issue in Ontario and Quebec, other than knowing that there are some cross jurisdictional problems, et cetera?
Mr. Cunningham: The biggest thing that Ontario has not done, which most other provinces have, is that when tobacco in Ontario is shipped to a reserve, there’s no amount for provincial tobacco taxes included.
It’s really cheap when it arrives on reserve. It’s available for diversion off reserve or for people who are not First Nations to go on to purchase it. In Quebec and some other provinces, including Saskatchewan, when products are shipped to a reserve, there’s an amount included equivalent to provincial tobacco tax. While the First Nations consumer will not have to pay it, it remains high, and that retailer will apply to the provincial government for a refund. So you don’t have the tax-exempt products floating around available for diversion. There are much better controls.
Ontario has not done it. They’ve done it for gasoline. There is much less of an issue for gasoline on reserves than there is for tobacco. Our recommendation for Ontario is that they should do it for tobacco as well.
Senator Neufeld: To follow on that, I think we beat the taxes around enough.
You said Ontario. You didn’t say anything about Quebec. Are you saying the same thing about Quebec, that instead of sending the cigarettes to the reserve untaxed, they should tax them and make the reserve claim the tax claim to get some of the tax back?
Mr. Cunningham: In fact, Quebec has already implemented that approach. That has contributed to a decline in contraband in Quebec. Quebec has done it, but Ontario has not. I think that’s an important factor for why Ontario’s contraband is much higher than Quebec's.
Senator Neufeld: With British Columbia, for example, which is where I come from, did I hear you correctly that the authorities come in and shut down a smoke shack immediately when one is opened on a reserve?
Mr. Cunningham: I’m certainly —
Senator Neufeld: That’s what I heard you say.
Mr. Cunningham: Yes, but it has been most recently attempted in Manitoba.
Senator Neufeld: Which authorities?
Mr. Cunningham: Provincial law enforcement authorities, tobacco tax inspectors. It has been quite a while since someone has attempted to open a smoke shack in British Columbia. Some years ago when it was attempted, it just wasn’t tolerated. There was a recent seizure in Alberta when someone was trying to do it. That was taken and the person was prosecuted.
The authorities have been very successful and quick to prevent things from beginning. They’ve been able to sustain that because people know that if they were to attempt to do it, they’d be shut down and they would lose the cost of the inventory they’ve purchased.
Senator Neufeld: Beer is indexed now. In fact, we heard in another committee I’m on that the beer folks are pretty upset because of the indexing of the taxes.
Have you lobbied the government to say they should be doing the same thing with cigarettes?
Mr. Cunningham: Yes, we have. We have urged —
Senator Neufeld: What’s the response?
Mr. Cunningham: The response has been positive federally with respect to indexing tobacco taxes, and that’s one of the reasons why we’re supporting this bill.
The Yukon has also done it, but there is an opportunity for others to do it as well.
Senator Neufeld: Okay.
Mr. Cousineau, your presentation is very interesting and compelling. Is it only dogs that you’re talking about? Where I come from, there is a ranch where there are some horses where certain people go, because horses help much in the same way. Would I be correct in saying that?
Mr. Cousineau: What we’re talking about for the METC is actually specifically tailored to service dogs. All of the other service dogs that are currently covered include diabetic alert, seizure, hearing assist, mobility and guide dogs for the blind. The only notable exception was dogs for those of us with mental health injuries. I’m really trying to avoid the use of the “P” word, because it’s not particularly helpful.
That’s what the focus needs to be, because all that does is establish equality — no more, no less.
There are other modalities — and I touched on them briefly — for example, equine therapy and art therapy. There is a ranch outside of Calgary doing therapeutic vegetable gardening. There are a variety of different things that really need to be looked at.
The current mainstream treatment modalities have a 50 per cent treatment resistance. That means it’s a coin flip if what they are going to do for you is going to work. Right now, all of those people who are treatment-resistant are getting shuffled off, because nobody is looking at those things. Yet Can Praxis is showing unbelievable results in the equine therapy world. There are programs like Chris and Kathryn Linford’s Couples Overcoming PTSD Every Day, or COPE. Trauma resiliency programs.
A lot of those things aren’t the traditional big pharma solution: “Here is a bottle of pills, and we will send you away for a few weeks.” We found out that’s not working, and we need to look at something that does work because this problem is not going to solve itself.
Senator Neufeld: I agree with you, and it costs an awful lot of money, as you stated, to continue doing it through the medical side, or through pills, to put it bluntly.
What could this committee do to help you move this process forward? I really agree with what you’re talking about, having had a dog most of my life — not for the same reasons but having a dog. Can you help me a little bit about what we could suggest or what we could do for observations?
Mr. Cousineau: For starters, if this body could strongly encourage the other body to have the Minister of Justice, the Minister of Health and the Minister of Veterans Affairs get together and have a meeting with principals from the service dog side of the house, we can try and figure out how to address the issues. Some of them are legislative issues, such as the effects on airline travel, public access and whatever. Those need to be in place to protect the public.
But then there is another side to this equation: the people who are actually getting the help. If we lose sight of that, we have missed it. This is not about budgets, line items and whatnot. This is about people who have stepped up and provided to this country services this country asked them to provide. Whether they do it on foreign soil or domestically, they answered the call. They are selfless and there’s sacrifice. When they get hurt, and inevitably some of us will get hurt, if we can break a plane, warship or tank, we can break people. It happens. But it’s what we do with those people afterward that is so important.
I really think that we need to start looking outside of the box. You heard testimony earlier in the week from one of my colleagues, Brian McKenna, who was impassioned about certain things. Brian’s dog that appeared here before you is one of the dogs we funded in our program. People like Brian deserve this. All of those people we have helped deserve this.
Do I know exactly what has to be done today? No. But I do know we have to open the dialogue, and I truly would welcome that opportunity.
Senator Neufeld: Thank you. Chair, we should think seriously about that and see what we can do to help this process.
The Chair: Thank you, Senator Neufeld.
Before we close, I would like to pose a question to Mr. Cunningham. When we look at Bill C-74 — the experience and leadership that has been, is now and will be in the future with Canadian Cancer Society — it’s remarkable. I want to congratulate the group for that.
We have listened to your comments and the questions posed to you on the excise duty rates on tobacco products. When we look at Bill C-74, Part 3 — and it’s not the portion that you touched on — but I would like, for the record, to know yours and the Cancer Society’s position on Part 3 of Bill C-74 regarding the taxation of cannabis, which is the mechanism being considered by government. With the experience you have, are we going the right way, or are we going into a concern again with taxation?
Mr. Cunningham: The approach the federal and provincial governments are taking together with respect to cannabis, where there is going to be one federal tax with federal-provincial revenue sharing, is a good approach. It’s a better approach than we have for tobacco where there are two taxes. I think the cannabis approach is administratively better. It will apply across Canada, so I think it’s an approach that we can have for tobacco in the future.
The Chair: Thank you. That’s why on the basis of Bill C-74 we wanted clarification.
To the witnesses, thank you very much. If at any time you feel you want to add to this debate before we table our report in the Senate, please do not hesitate to contact us through the clerk. Thank you.
(The committee adjourned.)