Proceedings of the Standing Senate Committee on
Legal and
Constitutional Affairs
Issue 54 - Evidence - Morning Sitting
OTTAWA, Thursday, April 3, 1997
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-71, to regulate the manufacture, sale, labelling and promotion of tobacco products, to make consequential amendments to another Act and to repeal certain Acts, met this day at 9:00 a.m. to give consideration to the bill.
Senator Sharon Carstairs (Chair) in the Chair.
[English]
The Chair: Honourable senators, appearing before us this morning are representatives from the Canadian Conference of the Arts, the 25th Street Theatre Centre, the Atlantic Federation of Musicians, and Théâtre du Nouvel-Ontario Inc.
Please proceed.
Mr. Peter J. Power, President, Atlantic Federation of Musicians: Good morning, senators. The Atlantic Federation of Musicians is a branch of the largest entertainment organization of its kind in the world. We represent all professional musicians.
This week you are hearing statements from people from every part of Canada who are concerned about having to cancel their events if the federal government jeopardizes their critical sponsorship funding.
This is a true siege on the arts. The federal government has imposed major cutbacks on every program it offers to the arts, and provincial governments have done the same. The federal government is now attacking over $250 million in sponsorship funding and promotional support from the private sector that arts and sports groups have been able to secure.
In British Columbia, three events and organizations contribute $23 million to the economy and create 450 jobs. In the prairies, two events and organizations contribute $15 million to the economy and create 225 jobs. In Ontario, seven events and organizations contribute $115 million to the economy and create 2,395 jobs. In Quebec, seven events and organizations contribute $86 million to the economy and create 1,898 jobs. In Halifax, the du Maurier Atlantic Jazz festival contributes $500,000 to the economy and creates 15 jobs. In terms of incomes generated for individuals, businesses, and governments, SECOR found that these 20 events yielded the following: at least $66 million in income for individuals, at least $34 million in income for businesses, and at least $18 million in income for governments.
This legislation will further compromise our ability to mount performances and showcase Canadian talent, and that is the simple reality. Sponsorship could be moved less than 200 kilometres south into the United States and be broadcast into Canada both by Canadian and U.S. networks. The $60 million our races bring to the economy surrounding them would go to the U.S.
In fact, 84 per cent of Canadians agree with the Alliance for the Freedom of Sponsorship that our events matter.
It is fine for the Liberal party to accept donations from tobacco companies, but it is not okay for us. In the government's Red Book, they said that culture is the essence of national identity and that it gives meaning to the lives of every Canadian and enriches the country socially, politically and economically.
Cancelling all the cultural events in the country will not change smoking statistics; however, there will be changes in employment statistics and in tourism statistics. The tobacco companies are the largest sponsors of arts, sports, fashion, entertainment, and cultural events and organizations in Canada. In 1995, the tobacco companies provided over $60 million in direct sponsorship funding to over 370 organizations throughout Canada. Corporate sponsorship is not philanthropy. The price corporations pay depends on the amount of recognition they will receive. By rendering the sponsorships commercially untenable, Bill C-71 will serve to eliminate over $60 million in direct sponsorship funding provided by the tobacco companies to over 375 arts, sports, fashion, entertainment, and cultural organizations and events throughout Canada. The economic tourism and employment impacts of just 20 of these events totals $240 million and 5,000 jobs. The source for these statistics is SECOR, September 1996.
If you want to know what really causes people to smoke, it is high unemployment rates, low wages, tension in Canada's workplace and poverty. Even the Minister of Health, the Honourable David Dingwall, conceded during his appearance before the Standing Senate Committee on Legal and Constitutional Affairs on March 19, 1997, that young people do not start smoking because they see a poster of Jacques Villeneuve wearing a Rothman's logo; yet, in almost every circumstance, this same poster will be illegal under Bill C-71.
If the federal government wants to eliminate the arts community, there is no better way of doing it -- cut off the government funding, then take away the partnership with the private sector. There is a major distinction between a tobacco company's sponsorship promotion that promotes the event and a tobacco company advertisement that promotes the sale of a tobacco product.
Freedom of sponsorship in Canada is not about smoking. Our events do not encourage young people to smoke. This is about funding for arts and culture in Canada. The Canadian Charter of Rights and Freedoms constitutionally guarantees everyone the fundamental freedom of thought, belief, opinion and expression, including freedoms of the press and other media communication.
The absolute prohibitions and de minimis authorizations on sponsorship promotion set out in Bill C-71 infringe on section 2(b) of the Charter in that the purpose of these provisions is to prohibit or dictate what and how event organizers may say in promoting events sponsored by tobacco companies.
This is not about smoking; it is about the freedom of sponsorship. I have outlined for you some of the serious damage this bill would do to Canada. The real damage is what this bill will do to the freedom of rights in our country. If you are allowed to damage that structure, what will be next? If this sets a precedent, and if you tell us to go and find other sponsors, we would be extremely lucky to find other sponsors. It does not work that way. The budget for sponsorship of other companies is already spoken for. They do not have an item called "unforeseen" in that type of budget.
God bless the Alliance for Smoke-Free Canada, for it is a wonderful group of Canadians, but everyone in this room knows their ideal is utopian and cannot work. Prohibition of alcohol showed that people will go underground. It is not a case of trying to take shots at it and eliminate it; it is a matter of trying to manage the affairs of the country knowing that you must live with some of these things. However, the damage will not give you the results you seek.
As my father once said to me, "Son, a tiny leak will sink the largest ship in the world." If Bill C-71 is a small leak, our human rights will soon sink. This bill will help water down human rights so that Canada's reputation will suffer around the world.
Severe penalties on event organizers, participants and sponsors for any violation of the act can include imposition of fines up to $300,000 and a two-year jail sentence. Murderers are not treated as harshly in Canada. No one will be able to take a chance with this bill; no one will take a chance on having anything to do with it. That kind of sponsorship will be dead in the water. There is no substitute for the system we have now, which is governed by the freedom to exercise our rights. The Supreme Court of Canada has already ruled in favour of those freedoms, and I suspect that, if this bill is passed, they will be required to do their work all over again. The Supreme Court of Canada will have to sit and rule.
Does the federal government want a thriving arts community in Canada or not? If it does, then this bill must be rejected.
Thank you, honourable senators.
The Chair: Thank you, Mr. Power. For clarification, in your opening statement you mentioned that there was $250 million worth of sponsorships. The tobacco manufacturers' association told us they gave $60 million in sponsorships. I wish to ensure we were talking about the same thing here.
Mr. Power: I would have to check my source, Madam Chair, but, yes, now the federal government is attacking over $250 million in sponsorship funding and promotional support from the private sector.
The Chair: It is $250 million total, of which $60 million is from the tobacco industry?
Mr. Power: Yes.
Ms Karen Planden, General Manager, 25th St. Theatre Centre Inc.: My name is Karen Planden, and I am here speaking on behalf of 25th St. Theatre in Saskatoon, Saskatchewan, but I am first and foremost here as a Canadian citizen.
As a general manager of a not-for-profit theatre company, I deal with the issues surrounding tobacco sponsorship, sometimes on a daily basis. The 25th St. Theatre has received sponsorship money from du Maurier of the Arts on three different occasions. The latest was $10,000 for Sacred Places, a production we just closed this last Sunday. While much has been said about alternate sources of funding available to replace the tobacco sponsorship, I am here to tell you that that is simply not true, especially for a small, developmental company in the middle of the prairies. The Royal Bank of Canada, one of Canada's richest corporations, is our next-largest sponsor, and they give generously the amount of $1,000, which they claim is the top of their sponsorship level. As the attrition rate of government funding escalates, more and more organizations are vying for a piece of the corporate pie. Since exposure in advertising and creating a positive image is the reason all corporations sponsor events -- not just tobacco companies -- including the Government of Canada, we are required by the Canada Council to put their advertising on our posters as well. A limited number of corporations are willing to sponsor a theatre company whose mandate is to develop, produce, and present Canadian works.
The 25th St. Theatre is one of only four professional companies in Saskatchewan. We have limited exposure, and developmental work is considered too risky for many corporations. However, we are essential to the continued growth and development of theatre, not only in our part of the world but also in this country.
Like yourselves, I am responsible for the well-being of other people, so I should like to tell you what $10,000 means to 25th St. Theatre. That $10,000 equals five actors' salaries, one designer, and the entire prop and costume budget for one production. That $10,000 is more than our entire publicity budget for one year, and $10,000 is our rent for the entire year.
The 25th St. Theatre is one of Canada's oldest theatre companies. It has contributed over 80 original plays, developed new and emerging playwrights, and is actively involved with the Métis community to bring their voice to the stage. It is vitally important to note that du Maurier of the Arts categorically declined any involvement with a production that was designed for, targeted, or involved youth in any way.
That $10,000 may not seem like much, and you may think it could be easily replaced, but $10,000 represents 2 per cent of my overall annual budget and 38 per cent of the budget for Sacred Places, for which the money was used.
An argument can be made that theatre companies and other not-for-profit organizations should become more self-sufficient. This is what the government has been telling us, and that is certainly evident in the continued reduction in funding at all three levels of government.
As a Canadian citizen, I am concerned that while tobacco is a legal product in this country, tobacco companies are not allowed to operate as other legal companies do. Yes, they are allowed to give money to organizations now, but who will pay the price if they are forbidden to do so? It will be the not-for-profit organizations. Let me ask you what 38 per cent of your budget means to you and what 2 per cent of your overall budget means to you. How long and how much time does it take for the Government of Canada to raise 2 per cent of your budget?
Why are not-for-profit organizations being penalized and facing fines and jail terms when the government not only taxes the sale of tobacco products but would argue they are using money to a better end? The argument has been made that billions of dollars and thousands of lives are lost every single year from the direct and indirect effects of smoking. If that is so, make it illegal. Is that not what you are here for? Be brave about it. Do not do it on the backs of organizations who are struggling to stay alive, struggling to become more self-sufficient, and struggling to compete for fewer and fewer corporate dollars. If the government can hold their head high and continue to reap the rewards from taxing cigarettes, to use the money for a better end, I presume, then should we not be allowed to as well?
On a personal level, my father was diagnosed with lung cancer this year, so I know only too well the devastating effects that smoking can have on a person's life, but it comes down to choice. I have been a non-smoker all my life. I have gone to tobacco-sponsored events, and I have never had the urge to light up. I am around smokers on a daily basis, and I still do not have the urge to light up -- not as an adult and not as a teenager. My father started smoking from choice. People smoke by choice, they continue to smoke by choice, and they stop smoking by choice.
There are many addictive substances that are legal and that we can buy all over the country, from tobacco to nasal sprays. Freedom of choice is what makes Canada a great country. It sets us apart. If you want to lead the way, then do it, but do not allow something for some and not for others. If you displace the moneys coming into organizations which add to the fibre and culture of this country, then offer alternate sources of funding. If you want to stop people from smoking, then do it, but do not ask other people to carry the burden of this work.
Whether you want to hear it or not, standing in a crowd of 1,000 people watching the Festival of Lights evokes many things. It evokes pleasure, sheer wonder, awe, and a great deal of emotion. As we learned only too well in the last referendum, emotion can make or break a country.
Whether the money comes from tobacco, alcohol, or uranium, as long as the Government of Canada allows the product to be produced, bought, sold, and consumed legally in this country, corporations should have the freedom to act accordingly.
One more thing: The government-operated hospital that my father was in sold cigarettes in its confectionery. Is that not ironic? I would be curious to know how much tax revenue the government generates from the cigarettes sold in that one confectionery.
On a personal note, I thank you for giving me the opportunity to speak today. I find it remarkable that we live in a democratic society where all people, no matter where they are from or what they do, have the right to be heard. I believe that this is what we call freedom. Thank you.
The Chair: Thank you. I must say that part of the reason you are here is because you represent a small theatre company in the middle of the prairies.
I will now call on Mr. Gagné, who represents a small francophone theatre company in Northern Ontario.
[Translation]
Mr. Robert Gagné, Administrator, Théâtre du Nouvel-Ontario Inc.: Madam Chairman, thank you for the opportunity to testify this morning before the committee. My name is Robert Gagné, and I am the administrator of the Théâtre du Nouvel-Ontario.
The Théâtre du Nouvel-Ontario or TNO is the only professional francophone theatre company in Northern Ontario. Located in Sudbury, the TNO is celebrating its 25th anniversary this year.
The year 1997 marks a critical juncture in our history because the TNO is building its own theatre complex. It is the first francophone theatre outside Quebec to do so. Fifteen years of hard work will culminate in six months with the inauguration of our new theatre facility. The project, to be completed at a cost of $1.7 million, was made possible thanks to the substantial financial support of the Government of Canada provided through the Department of Canadian Heritage.
Over the years, our theatre company has branched out into several areas. Our productions go on tour across Ontario and Canada and occasionally overseas. Our community theatre wing enables us to develop local talent and attract new audiences. Our youth wing has experienced a resurgence in the past year and this will help us to renew our ties with schools, which play an important role in the development of future theatregoers. As part of our theatre development activities, we work with Franco-Ontarian authors on new plays that could be produced during a future season.
Finally, the TNO's creative wing produces new and original works with 100 per cent Canadian content. Creativity is the heart and soul of our company and has earned it a national reputation. In the past eight years, two of our authors have received the Governor General's Award for plays developed and created at the TNO.
In order to stage new works and produce those of other theatres, the TNO has for the past eight years been receiving some financial support from the du Maurier Council for the Arts. I am here this morning to try and give you a brief overview of the context in which our company operates and the impact that Bill C-71 would have on us. As it is now drafted, the bill would undoubtedly mean the loss of an extremely important partner for the TNO.
In recent years, the TNO's overall budget has been in the neighbourhood of $400,000. The theatre has a permanent staff of three employees, an artistic director, an administrator and a communications officer. For six years now, the du Maurier Council for the Arts has contributed $10,000 annually to the TNO.
If we do the calculations, we see that this $10,000 accounts for 2 per cent of our overall budget. However, if we look at the revenues generated by the company -- I am referring to sponsorships, sales of tickets and advertisements, coproductions -- the value of this sponsorship climbs to 10 per cent. If we look at our creative project alone, the one for which we receive this support, the $10,000 represents between 25 per cent and 35 per cent of project revenues.
After the du Maurier Council for the Arts, our biggest sponsors contribute only $1,500, and this money goes to our community theatre project. If the TNO loses this $10,000, this funding will be lost for good. There is no other local partner of this magnitude prepared to invest this kind of money in an artistic production. We already have to work very hard simply to keep the sponsors we have. Moreover, creative art has traditionally been a hard sell because the nature of the new work cannot be guaranteed. There is no way of knowing what the final product will be until production is completed. Our quest for sponsors is our greatest challenge. Businesses and corporations are reluctant to have their name associated with a risky venture.
I would like to take a few minutes to summarize briefly our position over the last six years in terms of public funding, using as an example our four major financial backers.
The annual Canada Council grant that we receive has been frozen for the past six years. The operating grant from the Ontario Arts Council has also been frozen for six years and was even reduced by a symbolic $1,000 last year. The Ontario Arts Council is expecting new cuts of up to 25 per cent. The financial support we receive under the official languages support program has been reduced by 30 per cent in the past six years. Lastly, the funding we receive from the City of Sudbury has been cut by 27 per cent and could disappear completely next year when the city faces a new round of provincial cuts.
We understand and accept the need to reduce public spending. As an artistic agency, we have done our homework. We have reduced our own costs and increased efficiency. We do a tremendous amount of work with a limited staff. Furthermore, we are proceeding with our infrastructure program. In the last year alone, the TNO has raised $150,000 in the community and it will need to raise another $150,000 in the months to come to complete its construction project.
In the past year, we have knocked on every door as part of this fundraising campaign and if our request is turned down, we return a second and third time to plead our case. Given our position, we know full well that the private sector is under enormous pressure to respond to the overwhelming needs of the community.
Before launching this campaign, we looked at the major initiatives already underway or soon to be launched in Sudbury. I am referring only to the biggest campaigns, not to the many small fundraising drives underway. The Sudbury region has a population of approximately 150,000 and colleges, universities, hospitals, the United Way and others agencies raise $41 million in the community. Add to this the additional costs associated with hospital restructuring which could total up to $20 million for the community.
On scrutinizing the bill, some have suggested that arts organizations have become addicted to tobacco company money. This is indeed a fine metaphor! If the truth be told, we suffer from multiple addictions; firstly we are addicted to Canada Council funding, to the official languages support program, and to provincial and municipal arts councils. We in the private sector have become seriously dependent upon revenues from lotteries, bingos, and casinos. Above all, we are dependent upon the public which buys tickets. I can assure you that we have a number of vices and that all revenues, that is each ticket sold, each advertisement sold in the program, each sponsorship and each $20 or $100 donation, are vital to our company's financial situation.
We can understand that the government is concerned about smoking, particularly among young people. We believe there is a way to amend the current legislation to allow for sponsorship agreements while maintaining restrictions on the visibility of the sponsors' logo. In our particular case, we are targeting primarily an adult audience. As you can see, the tobacco companies' logo takes up very little room on the play's poster. I brought with me a typical example of a poster of a play sponsored by the du Maurier Arts Council. It probably took you a while to find the logo which is located on the bottom. It takes up a mere 2 per cent of the overall space on the poster. If this legislation is adopted, we will be liable for a fine of up to $300,000 and for a two-year term of imprisonment if this poster is displayed off of our premises.
I hope that I have been able to give you a different perspective of things this morning. We are not talking merely about an event that injects millions of dollars into the economy and provides jobs for thousands of workers, but rather about the fate of a small regional artistic agency which will be hard hit by this bill.
The TNO will not cease to exist if this bill is adopted as drafted, but it will be dealt a harsh blow because we are at the end of our rope and running out of resources. In these tough economic times where we find ourselves scrambling to come up with alternative sources of funding, this bill has a steamroller effect on us.
[English]
Mr. Keith Kelly, National Director, the Canadian Conference of the Arts: The Canadian Conference of the Arts is Canada's largest and oldest arts advocacy organization. We have existed since 1945. We have a membership of organizations and individuals representing approximately 250,000 people working in the arts and cultural industries in Canada.
I certainly will not pretend today that there is unanimity in the arts community about tobacco sponsorship. In fact, like all sections of Canadian society, there is strong emotional response to this issue. However, let us leave aside emotions. We have heard the voices of artists and arts organizations who vigorously oppose continuing tobacco sponsorship in any form. We have also heard from organizations -- and today is a good example of those concerns -- for whom the whole issue of tobacco sponsorship is not one where public health is secondary but where their survival is primary.
We should like to focus on some of the practical implications of this bill today. Certainly I would concur with Ms Planden that our concerns stem from the shift of responsibility onto the boards and staff of organizations who accept tobacco sponsorship.
We have in this legislation onerous punitive measures for any violation of the restrictions imposed by Bill C-71. As Mr. Power said, they are onerous enough to suggest that most organizations would be required to think long and hard about accepting even a dime from tobacco companies.
The curious part about this is that, while the boards are being held responsible for potential violations of the legislation, the legislation removes from those boards the freedom to decide which sponsors are consistent with the objectives of their organization and the activities they undertake.
Boards of directors of non-profit organizations have a fiduciary responsibility for the management of their organizations. If the organization ceases to function, those individual directors are liable to pay the costs that the organization could not meet.
These individual directors -- that is, volunteers, people who give freely of their time and energy -- have a difficult time trying to meet the contingencies of the 1990s, where governments at all levels are cutting funding and where charities and worthy causes of every type are turning to the private sector for financial assistance to sustain them.
The Canadian Conference of the Arts feels that it is inappropriate for public policy to make the job of those directors any more difficult than it is already. Let them make the informed, thoughtful choices that they must make every day in order to ensure the vitality of their organization. Let them make their decisions in a way that the sponsorship is consistent with the kind of values that organization represents. Do not punish them with fines and penalties, as Mr. Power said, which even serious criminals in this country do not face for their actions.
The CCA has maintained throughout this discussion -- and it has been a long discussion -- that the best approach is to use reasonable regulations to ensure that the public health objectives of the government are addressed but that the latitude necessary for individual boards of directors is undiminished. That is what we are asking you to do today.
In your study of the bill, let us see if there has been an unfair burden placed on these volunteer boards which are already legally responsible for the operations of their organizations and who must find money to make the payroll and the rent. That is one area of this legislation about which we are concerned.
Even if an organization were most diligent in following the restrictions laid out in Bill C-71, the margin for misadventure is high. For example, you received a grant to produce a jazz festival, and you have respected the terms of this legislation. You produced one sort of material for promotion of your event on-site and another off-site. Senators have heard about the staffing realities of most arts organizations from my colleagues. It is not difficult to assume that you have diligently gone to the expense of printing two different forms of posters and publicity and you have hired someone to tack them on telephone poles and so on throughout the city, and you have very clearly followed the rules. However, you have no staff. You have a part-time receptionist. The guy comes to collect the posters, and she inadvertently hands him the wrong posters. This gentleman or young woman then tacks one up on every telephone pole in the city. For every single poster, for every single day, that is a separate offence. Where a slip-up occurs and the receptionist gives out the wrong package, that organization is not only put out of business but the voluntary board of directors are personally at risk of fines and penalties that could represent millions and millions of dollars. That is where the reasonableness needs to be adjusted.
We also have the issue of capital facilities. Over the years, we have seen, for example, the du Maurier Theatre at Harbourfront receive a considerable amount of money to incorporate du Maurier into its name. The legislation gives the government the right to draft regulations about how that kind of capital gift will be acknowledged in the future.
In the case of a theatre that has been under operations for 20 years or 10 years under the name of du Maurier, to be unable to use "du Maurier Theatre" in their publicity will complicate their lives in communicating events that are taking place at that theatre. People know it as the du Maurier Theatre; they do not know of it as any other name. You are complicating the lives of those organizations and their boards unless regulations are drafted in such a way that those facilities that currently have those kinds of arrangements are allowed to be grandfathered.
The fate of title sponsorships is another area, and it is a difficult one. Some events have the name of a tobacco brand incorporated into them. With the loss of the ability to enter into those agreements or to maintain existing ones, the fate of these events is clear: they will not exist in the same magnitude, and they will not have the same quality or appeal to audiences and tourism that they currently do.
The CCA believes that the government is correct in pursuing the public health objectives as laid out in Bill C-71. However, we believe that the legislation as it currently stands places an onerous and unreasonable burden on the directors of non-profit organizations who receive sponsorship and affects their ability to attract audiences and other sponsors and to continue to provide Canadian quality artistic events in every part of this country. We would urge you to look closely at the issue of reasonable balance.
Finally, there is the question of alternate funding. We have been around this discussion for a long time. Senator Kenny has been promoting an alternate revenue scheme through the tax system which would effectively replace tobacco revenue.
We have a poor experience with dedicated revenues. When the provincial lotteries were created, the principle beneficiaries were to be the arts groups, community groups, and fitness and amateur sport. The degree to which the arts community now benefits from most lotteries has been eroded to an insignificant degree. The majority of the lottery revenues are directed into the consolidated revenue funds of the provinces. At the federal level, the last time we looked at the numbers for the surtax on the profits of tobacco companies which was created to generate revenue for public health activity, it had generated $72 billion, only $22 million of which was actually spent on public health activities. The rest went back into consolidated revenue. Therefore, we are not very comfortable with the notion of replacement revenue.
We are looking to diversify the financial underpinnings of the arts community, and we must do that in direct partnership with the private sector. If the effect of this legislation is to dissuade the tobacco interests or arts organizations from maintaining the relationship, we would encourage the Ministers of Health, Canadian Heritage and Finance to use all the tools at their disposal to create incentives for other corporate sponsors to come forward and not to bring into force any of these restrictions until we have alternate sponsors which will contribute to the same extent as the tobacco companies have contributed to the arts.
I know this has been a very long process for you as well, and I appreciate the opportunity to present my views and those of the CCA to you today.
Senator Kenny: I think this is the most important panel we have heard from to date. I regret that the press table is not as occupied as it was when the representatives of the tobacco companies were here.
Honourable senators, we have before us the unintended victims of this legislation, and I do not see how we are taking care of them. This is a major flaw in the legislation. I believe that what we have been hearing today is principally correct. I take issue with some points that I heard, but generally I feel that this group is getting the short end of the stick, unintentionally, and that we as legislators have not made provision for them to be kept whole. I believe that it is incumbent on us to find a way to do that.
Mr. Kelly is right; we once had the good fortune of debating this issue in the Ottawa Little Theatre. We went around both sides of it, and I felt at the time that he was making some good points. Government funding from all levels and from both sides has been inconsistent, at best. That is a kind way to characterize it. We are, in many ways, short-changing these people.
Having said that, we are dealing with a serious issue. It is hard to think of an issue which is more important for the Government of Canada. I believe that you all recognize that. You must also recognize that things will be different after this year. It will not be the same ball game as before.
I would welcome hearing about any suggestions you have. We talked about the possibility of a transitional fund, Mr. Kelly. There are other options. The tobacco companies have, after all, come before us and testified that they are not in favour of people under 18 smoking either. A levy could be placed on them rather than a tax. There is no prohibition against the Senate amending bills to apply levies as opposed to taxes. A levy could be placed on them to provide funding for a period of time.
What are your views on some form of transitional assistance? Do you think that a five-year or three-year transition would be sufficient time for your organizations to readjust?
Mr. Kelly: The transition issue is important. However, the problem with which we are faced is that there are no apparent successors to the tobacco companies to step up to the plate with $25 million a year.
However, I believe that if the government is serious about its commitment to the arts, and if it proceeds with this legislation and extends the transition period, the ministers who made the decision that this represents federal government policy will have to twist some arms in the corporate community to replace these revenues, and I do not see that happening right away.
Senator Kenny: When I speak about transition, I do not mean a delay in implementation. I am talking about this proceeding now. When I say "transition", I am referring to finding other ways to find money for you. I am not saying that we should delay this or slow it down. The tobacco problem is here; it is serious; it is real; it is your father and 40,000 other Canadians; and we must do something about it now.
If I am pressed to the wall and am forced to choose, I will choose the solution that takes a step toward dealing with the tobacco problem, at the expense of your organizations, if necessary. Having said that, I do not want to do it at the expense of your organizations, and that is why the bill is flawed. We must find a way to take that into account.
The problem of funding arts groups started long before this bill. In my view, government started short-changing you decades ago. It did not just happened yesterday, and it did not happen with the Minister of Health. It is something that Canadians have not been doing properly for a long time, and we should start doing it properly now.
I would welcome suggestions or further expansion of your Minister of Heritage-Minister of Finance scenario, but do not do it in the context of delaying implementation of the bill because that is not on, as far as I am concerned.
Mr. Kelly: If I may, that was not my suggestion. I was referring to the provision which currently exists in Bill C-71 that there will be a transition period before the full restrictions on sponsorship come into place. When you talk about transition, that is what I understood -- the delay the government is considering before the sponsorship restrictions actually come into play.
Senator Kenny: I am not talking about pushing that any further back, but I am very concerned when you talk about telephone poles and posters. You ring bells when you talk about those problems because we understand that you are dealing with volunteers and groups which have organizational difficulties.
It would be instructive for the committee if you would talk more about that and about the funding question in a general sense.
Mr. Kelly: The nub of the concern is what we characterize as the onerous responsibility on the voluntary boards of these organizations. It seems that that is shooting at the wrong target. You are saying that you do not want tobacco companies to use sponsorship of these events to promote the product or encourage the consumption of tobacco by young people.
I am not entirely sure about this, but in the case of alcohol advertising and promotions, if there is an offence, it is the sponsor who is liable, not the sponsored organization. It would seem to me that that would be an important shift in the burden. I also say that that does not obviate the need for organizations to be diligent in ensuring that their activities are consistent with the legislation.
The funding problem is a real problem. We have seen a significant reduction in funding at all levels. The funding that does exist has become very conditional, if you will. There was a time, especially within the federal government, when grants were the primary form of support given to the arts. Now, for the most part, they are in the form of contributions, which are contractual relationships between the funder and the organization receiving the funds. As a result, there are deliverables, and the moneys cannot be used to fund the costs of operations, et cetera.
Not only are we seeing a decline in the overall amount of funding, the latitude organizations have to spend that money to support their operations has been reduced significantly. With the introduction of cash management policies, if you received, for example, a grant of $1 million some years ago, you received a cheque for $1 million. You could put it in the bank. The money would earn interest. It could be used to support other areas of activity. Under the new cash management system and under the contributions arrangements, those payments come every three or four months. Not only does this cause a decrease in overall dollars, it affects the flexibility and the potential to use that money to generate additional revenues to support your activities.
The corporate sector is being sought out by health, environment, social services, and the education systems. There is no area of Canadian life that has not had to resort to more strenuous efforts to secure corporate funding.
One of our arts organizations sent letters to 200 corporations in Ontario, asking them to support its activities. Not one single positive reply was received. As the pool of worthy causes seeking corporate support continues to grow, the choices are difficult for the corporations. The prospects of major successes have eluded most organizations in this country.
Senator Kenny: What are the non-tobacco solutions with which we can help?
Ms Planden: One of the concerns I have and one of the reasons I mentioned my father is because I have a direct involvement with the causes and effects of smoking. For me, this bill opens a can of worms. You talk about other corporate sponsorship. Other corporations sell products and are allowed to give their money to not-for-profit organizations. Where does it stop? Is this the beginning of the government dictating what a corporation can do with its money?
In some ways, it is a bigger issue than tobacco being unhealthy for people, something which has been proven and with which tobacco companies can agree. It comes down to a matter of choice and the freedom within a country where corporations should be allowed to operate.
It is a bigger issue. If you ask, "What are the other solutions," I would answer that I do not know. This week it might be this solution, but next week you might come along and say, "Stop. You cannot take money from that corporation."
Senator Kenny: With respect, you can argue freedom of choice, an argument which I understand and respect. However, having said that, it is the obligation of government to say at some point, "This problem has become too big. It is costing too many lives and too much money."
Ms Planden: Then make it illegal.
Senator Kenny: Making it illegal is not a reasonable solution. We both understand that. We will go back to the roaring '20s, with all the problems of prohibition, and end up in a situation where many Canadians are defying the law. We must have a more complex and subtler solution to smoking.
Ms Planden: Are we supposed to carry that out for you?
Senator Kenny: A portion of it.
Senator Pearson: Madam Chair, I found Mr. Kelly's presentation helpful. As someone who has been involved in non-profit organizations for a long time, the question is always, "What is the board's responsibility?" Do you have any specific recommendations which would remove some of that onus?
The last time I was involved in closing down an organization, I found that our responsibility was not as huge as I was afraid it would be. I am not sure whether this is something that is in the legislation or in the regulations.
Mr. Kelly: I believe the legislation imposes the penalty on the individual board members. The penalties are assessed on a per-case, per-day basis.
Senator Pearson: Do you have a specific recommendation, or would you like to submit one?
Mr. Kelly: Yes, I would like to submit one. I do not have one with me at the moment. It is absolutely imperative that we remove that burden from the shoulders of volunteer board members. You appreciate that organizations will be hard pressed to find quality people to serve on boards.
Senator Pearson: I understand that, which is why I am interested in your recommendation.
As I was coming to the committee meeting this morning, I heard good news on the radio. I heard that the Edmonton symphony will receive $1 million from the Alberta government for stabilization. Personally, I do not think the trend is completely downwards. It has been an effect of the attempt of governments to stabilize their finances. I am hopeful there will be new moneys coming forward for the arts from governments at various levels.
I appreciate the comment about du Maurier. How are they doing with going from the name O'Keefe to Hummingbird?
Mr. Kelly: As you can well imagine, it has not been pretty. Most people still wonder what the heck the Hummingbird Centre is. It will take time and money. That was recognized by both the centre and the sponsor. They recognized that it would cost money to change the public association with the O'Keefe Centre to the Hummingbird Centre. Perhaps that is another transitional provision which needs to be factored into the equation as well.
Senator Pearson: If this bill, in whatever its eventual form, has some impact on reducing the numbers of young people who take up smoking, there will be less money from the tobacco companies any way. It is up to everyone to look for alternatives sooner or later. Perhaps that is a dream. We are hoping that it will reduce the numbers of children taking up smoking.
The Chair: The relevant clause in which you are interested, senator, is clause 50, which states:
Where a corporation commits an offence under this Act, any director or officer of the corporation who authorized or acquiesced in the offence is guilty of an offence and liable on conviction to the penalty provided for by this Act...
Senator Lewis: It is the same as if it were an individual.
[Translation]
Senator Nolin: Thank you, Mr. Gagné. I quite enjoyed your poster. Could you unfold it for us? We are going to do something educational here. You will have to remain standing throughout your presentation. Perhaps someone could hold the poster for you.
[English]
That is fine as long as everyone sees it. Can the witness explain whether he can produce that kind of board?If so, where can he put it and why?
[Translation]
Senator Nolin: That is the gist of my question. You mentioned this poster. I see that the du Maurier name occupies less than 10 per cent of the surface space on the poster and is printed at the bottom. However, on reading the bill, I note that you would only be allowed to display this poster inside the theatre premises.
Mr. Gagné: That is my understanding of the bill.
Senator Nolin: Mine as well. You would not be able to display this poster, which by all accounts is nothing out of the ordinary, since the word du Maurier is printed at the bottom, even though it occupies barely 1 per cent of the space on the poster. You would not be allowed to display it on a telephone post. Is that correct?
Mr. Gagné: We put up over 800 posters in the greater Sudbury region. We do not find it particularly useful to display these posters inside our theatre. We need to post them outside the theatre to grab people's attention.
Senator Nolin: That is usually why posters are printed up.
Mr. Gagné: Precisely. It would be impossible for us to continue displaying them and to continue enjoying this visibility. The bill pulls the rug out from under us. We need to do everything we can to be visible and to attract the public to our performances.
[English]
Senator Lewis: Could you point out the du Maurier part?
Mr. Gagné: This is another example of another show, du Maurier and media sponsors. There is also CBC and Sudbury Star, another radio station.
Senator Kenny: Please show it to that camera behind you so they can get a good picture of it.
Mr. Gagné: I do not believe it is an unreasonable visibility.
Senator Nolin: Mr. Gagné, to be fair, with this bill, he could put that board in a bar. He could put it up in a location which is not accessible to youth.
Mr. Gagné: Yes.
[Translation]
Senator Nolin: Obviously, if the bill passes, you will continue to print up posters. Have you started discussing other options with your publicists?
Mr. Gagné: If the bill is adopted, we will certainly have a much harder time paying for these posters because we will no longer have the $10,000 to work with. The loss of this sponsorship will seriously impede our ability to advertise and to draw the public into our theatres. I am not certain that we will be able to afford to get these posters printed up. We have not yet begun to discuss this matter. We will have to take a serious look at our promotional activities and this is causing us a great deal of concern.
Senator Nolin: Does your board of directors approve the posters before they are distributed?
Mr. Gagné: Right now, it does not, because there have been no major problems. This is an internal board matter. I approve the posters when they are submitted to me by my communications officer. The posters are also submitted to our sponsors to ensure that they are satisfied with the visibility afforded them.
Senator Nolin: Do some of the posters displayed inside the theatre display the name du Maurier more prominently?
Mr. Gagné: Here is another poster which typically shows how visible the du Maurier Arts Council logo is. The logo is framed in black in the lower right hand corner. It takes up 1 per cent or 2 per cent of the poster's overall surface area.
Senator Nolin: Obviously this poster is displayed off theatre property as well. Is that correct?
Mr. Gagné: Yes.
Senator Nolin: Are there posters inside the theatre informing people that the production was financed by du Maurier?
Mr. Gagné: Once people are in the theatre, the programs provide our sponsors with some visibility. They contain either a logo or an advertisement. Once the audience is seated in the theatre, there is no longer any need to advertise the production. Any posters displayed are for cosmetic purposes only.
Senator Nolin: Are people allowed to smoke in your theatre?
Mr. Gagné: We do not have our own theatre. We are renting premises until construction of our theatre is completed. Smoking will not be permitted in our new theatre.
[English]
Senator Jessiman: The other sponsors that are below du Maurier, do they give the same kind of money?
Mr. Gagné: The sponsors that are below are media sponsors. They are season sponsors. We calculate the value of the visibility that they give us on the radio waves, on the television. Some, such as CBC, consider an equivalent value of perhaps $15,000 in air time.
Senator Jessiman: Does the amount of visibility you get depend on the amount you give? The tobacco companies give $10,000, you say?
Mr. Gagné: That is correct.
Senator Jessiman: What did CBC give in this case?
Mr. Gagné: They gave a value in air time of approximately $15,000 for their visibility here and also on the programs and flyers.
Senator Jessiman: Does the number of dollars or the value of the contribution affect the amount of visibility they get?
Mr. Gagné: Yes. Here is an example of another type of production. We have an annual community production. There we have several sponsors at $1,000 or $1,500. They are placed in order of priority and of value of sponsorship. Here, du Maurier is the only other sponsor. All of these are media season sponsors. They get visibility throughout the whole season for the value of the air time that they give us. Du Maurier is the sole sponsor of this particular event.
Senator Jessiman: Can you point it out? Where is it?
Mr. Gagné: It is the black square here in the bottom corner.
Senator Kenny: A black square. How appropriate.
Mr. Power: I am sitting here and listening to the arguments about substitutes. Is there any hard evidence in existence that sponsorships, such as du Maurier's sponsoring of the symphony concert or the jazz festival, encourage people to smoke?
Senator Nolin: No.
Mr. Power: The minister himself said it did not, yet all the children's stores in Halifax will not be affected. They can still advertise cigarettes and smoking. I go into such stores as The Candy Bowl not because I like candy but, for example, to buy a gift for someone in hospital. They do a professional job of wrapping such gifts. That store is near a school.
I have gone in there when there are at least 40 children running around the candy store. One whole solid wall is nothing but packages of cigarettes, cigars and everything on display. The product is much more tempting, yet there is no law removing that.
Where is the hard evidence? What are we arguing about? The fact is that this does not stop people from smoking, yet they are putting it in a bill pretending that it will solve the smoking problem. The only statistic it will change is employment.
Senator Nolin: Employment in your industry.
The Chair: That is why we are hearing from many witnesses, some who have different opinions from yours.
Senator Beaudoin: I should like to go back to the question posed by Senator Kenny on the objectives of this bill. We all agree that we must do something.
Culture is also involved here. I am surprised that the witnesses so far have not talked about other ways of subsidizing culture. Have they lost faith in that possibility? I should like to hear more about this.
Perhaps they say it is no use talking about any other possibility because the government has no money, et cetera, so we cannot subsidize culture. However, in my opinion, culture is important, and I believe the state or some other organization should do something. I should like to hear more about this. Why is it restricted to the question of tobacco? In itself, it is a problem. We must subsidize culture, and the best way to do so is probably not by tobacco. The best way would be through another route.
Mr. Kelly: I totally agree with you that if the Government of Canada ever took its responsibility to the arts seriously, we would not be having this discussion. They have not.
I hate to mention this because it is awkward. The Red Book, for example, promised multi-year, stable funding for the national cultural institutions. That has not happened. We have had multi-year funding, but it has been downward every year. All of the funding agencies have taken cuts.
As I say, we have seen a major change in how those programs are administered and the form in which funding is made available.
Senator Beaudoin: If I may stop you there, under the constitution, culture is not only a federal matter.
Mr. Kelly: Without the leadership of the federal government, we know where the provinces will go, and we have seen that.
Senator Beaudoin: The provinces have much to do in the field of culture. The federal authority has something to do, and even the public in general.
Mr. Kelly: Absolutely. The best gains, and I believe my colleagues will agree, are not in terms of government funding but in earned revenue -- ticket sales, subscriptions, and corporate support.
We would love to be able to lay this entire discussion aside. We would love not to have to come and argue about the importance of moderating this bill so that the arts community is not bearing the brunt of it. However, we have no realistic hope, and it is not because we have been sitting there doing nothing. We have been actively working with every level of government. Every organization at this table, and all of them out there, have been appearing before their municipal and provincial governments. The Canadian Conference of the Arts has been working for the last 53 years with the federal government. We continue to hear wonderfully encouraging sounds, and there is the wind-up, but the pitch never crosses the plate. That is the reality with which we live.
Yes, we would love to talk about alternatives. Unfortunately, it is a dialogue of the deaf. We are talking, and the government is not listening.
Senator Beaudoin: In other words, in practice, it may be that we lack creative imagination.
Mr. Kelly: We lack leadership in the federal government in its role of promoting and fostering artistic expression in this country.
Senator Beaudoin: I would not leave it entirely to the government. In a civilized society, perhaps with other sources, that could be available.
Ms Planden: To dovetail with what Mr. Kelly has said, there are ways the government can play a leadership role. As an example, I sent invitations to every parliamentarian in the Province of Saskatchewan to attend the opening nights of our plays. I am sure that every single senator in this room can probably get an expense account and even write that ticket off.
The Chair: No, that is not so.
Ms Planden: Regardless of that, my point is that few of them come.
If you want to play a leadership role, the best form of funding you can give an arts organization is the bum in the seat. They all earn it. Help me earn it; come to the plays. Show the public that you are coming to the plays. Take a leadership role. Take your wife, friend, child and grandchildren to the plays. If you want us to stop getting corporate sponsorship from corporations that you do not think are healthy, then support the culture in our country.
Is there culture in this country? It is all over the place, but even the leader of our country does not come out to support it. Give me the $14 for that ticket. If I can sell even 65 per cent of my house, I do not have to worry about this, but I cannot.
As I now know that you do not have an expense account, I will not invite you. I will send you a bill. Yes, you can help.
Senator Beaudoin: I congratulate you. This is the first time we have heard about this question. We seem to hear, "This is impossible, so do not say anything about it." I am not convinced that it is impossible. We must find a way.
Senator Jessiman: The federal and provincial government are cutting back. They have to cut back. They have to eliminate the deficit. Until we are into a surplus position right across Canada, governments will not be able to help the arts.
It was encouraging to hear that the government that has taken the most blame for the most cuts. This is the first time they say they have a responsibility and are making a contribution of $1 million.
Let us hope, regardless of which government is elected next time, that they finally do eliminate the deficit and start getting the debt down to a reasonable amount in order to help people like yourselves. I wonder if we are not five years too early in doing what we are doing here, but that is another story.
If the debt has been reduced five years from now and we are in a surplus position, taxes will be less and people like yourselves will be helped by government and others.
Mr. Gagné: In five years, institutions that are 15, 20, or 30 years old will have been killed off.
There may be new money, but we will be starting over from scratch, and we will have lost a lot.
Senator Nolin: Perhaps we should link the transition to the date we will clear the deficit.
Mr. Kelly, you represent a national organization. In a few sentences, could you explain the extent of your role and the types of consultation you have offered to Health Canada -- that is, if they asked you to do so?
Mr. Kelly: The Canadian Conference of the Arts is a non-profit, non-partisan organization which represents producing organizations and service organizations in all the disciplines -- that is, music, theatre, dance, visual arts, writing, publication, film, sound recording, book publishing, architecture, crafts -- and runs the full gamut of artistic activity in the country.
Have we consulted? In 1995, we received a contract from Health Canada to bring together representatives of the health community and the arts community to try to identify some compromises so we could come into this discussion with a common ground. I regret to report that, although we had meetings in six cities across the country, we were unable to come to any compromise. The health communities are as passionate about their views as the arts community is about theirs.
While we proposed to carry on a sponsorship but perhaps identify some restrictions which would help the government address its public health concerns, for the most part, the health organizations just wanted to see the entire sponsorship by tobacco companies eliminated.
As that process ended, we have been in constant contact with our membership. The arts community is not one that is reluctant about sharing its views, especially with their own organizations. I certainly received, firsthand, a broad range of views from individual artists and organizations about this issue. It was clear that there was no clear consensus on one side of the issue.
We have further offered Health Canada our assistance in bringing together the organizations that will be affected by this legislation to review the regulations that flow from this bill and asking them to consult with us as the drafting process begins. We have renewed that invitation three times, and we have yet to be favoured by a reply from the Minister of Health or his officials.
The Chair: I thank all of you for your presentations this morning. I assure you, Ms Planden, that there are provincial politicians who do attend a number of cultural activities. I say that having been one for a number of years. You also should know -- and it is often not understood -- that, on average, I receive 25 invitations a week. It is sometimes a difficult choice as to which ones you can accept.
Ms Planden: I appreciate that, and I appreciate those who do come. In response to the question concerning how you, as a government, can lead the way, perhaps you should have an expense account so that you can come to see our plays.
The Chair: We have with us the Chairman of Internal Economy who, along with his colleagues, establishes the budgets for senators.
Senator Kenny: I am anxious that the record clearly show that senators do not have expense accounts, but we have some terrific suggestions from this side of the table.
The Chair: Our next panel this morning is a group from the Canadian Council of Grocery Distributors, the Canadian Federation of Independent Grocers, and from the Canadian Coalition for Responsible Tobacco Retailing. I would ask them to come to the table now, please.
[Translation]
Mr. Michel Nadeau, Vice-President, Public Affairs and Member Services, Canadian Council of Grocery Distributors: Madam Chair, when we get around to questions, I would kindly ask you to use your microphone as I am hard of hearing. Without further ado, I would like to give you a brief overview of the concerns of grocery distributors.
Let me begin by briefly telling you who we are. The Canadian Council of Grocery Distributors is a not-for-profit association of small and large food retailers and wholesalers, distributing grocery products to some 27,000 grocery stores across the country. Our members' sales across Canada represent approximately 80 per cent of the total sales volume of $53 billion in the retail grocery sector. Let me point out that the Canadian grocery industry provides jobs to over 400,000 Canadians at retail and wholesale levels. The local grocery store is often the starting point of many students in the labour market. We have some special concerns regarding employment and I will touch on this subject later in my presentation.
Allow me to review briefly the initiatives that our association has taken thus far with respect to the tobacco legislation. In January 1996, we received the Health Canada document entitled "Tobacco Control: A Blueprint to Protect the Health of Canadians", which outlined the government's proposed strategy for controlling tobacco consumption.
We submitted our comments to Minister Dingwall. We subsequently met with Health Canada officials to discuss our concerns about certain provisions of the strategy, in particular the ban on advertising, the restrictions on promotion and sponsorship; access and points of sale; packaging and labelling requirements; and reporting requirements.
Since we failed to receive any kind of response to the concerns expressed, we wrote again to the minister in November 1996. When the bill was subsequently tabled early last December, we saw that our concerns continued to be disregarded.
In early December, we wrote to Prime Minister Chrétien to express our dissatisfaction with the fast-track process put forward to get the bill approved before the adjournment. We reiterated our concerns on December 10 to the Standing Committee on Health in Ottawa. On February 18, 1997, we again wrote to the Prime Minister to request amendments to the bill. In February, as we all know, Health Canada published an information bulletin to clarify clause 8(1) of the bill as it pertains to sales clerks under 18 years of age.
Also in February, the Health Minister replied to our letter of November 7, stating that Bill C-71 did not propose to limit the exposure of tobacco products for sale to one pack per brand, given that the law was very broad and very vague. We remain very sceptical as to what the regulations will ultimately contain. This brings us to our next point, namely the concerns of the Canadian Council of Grocery Distributors regarding Bill C-71.
Senator Nolin: Mr. Nadeau, you referred to a letter. Do you have this document with you?
Mr. Nadeau: Yes, I do have a copy of the minister's letter.
Senator Nolin: Would it be at all possible for you to give us a copy?
Mr. Nadeau: Certainly.
Senator Nolin: I am quite concerned to hear you talk about the content of this letter. If the minister in fact stated in his letter that the bill was too vague and that the regulations were intended to clarify the scope of this legislation, then we have a major problem on our hands.
Mr. Nadeau: I mentioned this in the letter and as we can see, the bill is still quite vague. My concern is this: Will the minister's comments be reflected in the amendments?
Senator Nolin: If we had a copy of the letter, we could perhaps follow your argument.
Mr. Nadeau: Of course. There are perhaps 14 clauses in the bill that give us cause for concern. I do not wish to go into details in terms of clauses repealed or paragraphs amended. The important thing is to give you an idea of the general concerns that our industry has in view of how these amendments could affect us.
First of all, let us stress that we support the principle of a law to discourage smoking among young people. We believe that tangible results will be achieved by educating people on an ongoing basis over the long term about the dangers associated with smoking. It is important that all adults, that is parents, relatives, teachers and friends alike, join in this effort because they all play a very important role in convincing young people not to take up smoking.
The objective is to prevent retailers from having to shoulder the full responsibility for enforcement as a result of the regulations imposed on them. Everyone must contribute to the cause. Our members currently participate in the I.D. campaign enforcing the minimum age for the sale of tobacco products in every province. All of our members are active participants.
My colleagues from 12 associations can show you later the type of material developed by an industry coalition. This is not the first time that we have been involved. In the past, we supported similar initiatives together with the chiefs of police of Canada, among others.
While we support the government's efforts to improve the health of Canadians, CCGD is concerned about a number of provisions in the bill.
We have a problem with the word "furnish" in clause 8.1. Interpretation problems may arise as a result of the wording of this provision which states that no person shall furnish a tobacco product to a young person in a public place or in a place to which the public reasonably has access. In our view, it is important that what Health department officials wrote in the letter be reflected in the regulations and that a clear distinction be made between the person selling the cigarettes and the person purchasing the product.
You have to understand that in our industry, young people under the age of 18 are asked to handle cigarette orders delivered to retail stores.
When I had a store, I would go and get a stock boy from the front and inform him that the cigarette order had just arrived. I would ask him to stock the shelves at the courtesy desk so that clients could serve themselves.
We are worried that if some people interpret this provision in the very narrow sense, confusion may arise and as a result, young people under 18 years of age would no longer be able to stock shelves with tobacco products.
Since the health department has taken the time to prepare an information sheet, why not include a provision in the legislation and make it clear once and for all that there is a distinction between the person who purchases tobacco products and the person who sells it and that the minimum age of 18 years does not apply to the person selling the product.
We also have reservations about clauses 15 and 46. These provisions penalize the retailer for any package labelling provided by the manufacturer which violates the provisions of the law. Fines of up to $50,000 can be imposed. Retailers are not manufacturers. To penalize the retailers who are not responsible for these products and who lack the expertise to say which size or colour is appropriate is to take matters too far. These clauses should be amended to distinguish clearly between the manufacturer's responsibility and that of the retailer.
Clauses 18 and 19 are also critically important, in our opinion, since they highlight the whole issue of tobacco promotion. This term should be clearly and accurately defined in the section at the beginning of the legislation which contains the definitions. Exactly which type of promotion would the bill ban? As written, the definition is so broad that virtually any kind of promotional activity is prohibited.
Clauses 22 and 24 of the bill threaten the livelihood of some 27,000 grocery retailers in Canada by eliminating the rents and bonuses they receive for the sale and advertising of tobacco products.
These clauses should be amended because fundamentally, we do not believe that regulations or restrictions of this nature will have any effect whatsoever on the number of people who smoke. I will come back to this later. Essentially, we believe that a person who comes into a store has already made up his mind. That person is already a smoker. He is merely coming in to buy a pack of a particular brand. The only thing that may change ultimately is his decision to buy brand B as opposed to brand A. His mind is already made up. It makes no difference whether the customer sees one advertisement or 15 for a product, or whether that product is hidden under the shelves or not. Therefore, we should focus our efforts elsewhere.
Clause 26 limits the sale or promotion of an accessory that displays a tobacco product-related brand element. These provisions should also be repealed. Just because a person sees a clock with a particular company's logo on it does not mean that that person is going to switch to that particular brand the next day.
Clause 30 dictates through regulation the display layouts and the number, size and wording of in-store signs. We object to any form of government interference in the way retailers go about marketing a legal product.
We feel that provided retailers comply with the minimum age requirements, there is no need for outlandish restrictions. Retailers are sufficiently responsible and quite capable of marketing these products.
In the case of our members, the regulations may lead to a totally unnecessary investment in new merchandising cabinets, more labour, slower checkout and more customer inconvenience, even for those not purchasing tobacco products. Customers will have to wait longer to be served.
We believe that the merchandising of legal products should remain outside government purview and accordingly, we think this provision should be amended.
Clause 22 prohibits self-service and counter top displays and also regulates the number of packages displayed for public view. This is the particular provision I referred to and the one addressed in Mr. Dingwall's letter.
CCGD fully supports the government's objective of reducing tobacco consumption. However, we disagree with the proposed means to achieve this end.
When a customer enters a retail outlet, his mind is already made up and the displays on view are not going to change his mind.
Let me relate to you one experience which leads me to believe that in the long run, with well-orchestrated educational initiatives that target specific groups, we will be able to make some remarkable progress.
Look at what the Éduque-Alcool program has accomplished in the last ten years. Manufacturers of alcoholic beverages banded together and set up a group fund. Their mission was to educate people about the dangers of alcohol abuse.
I am the father of two teenagers and I can tell you that young people today behave far more responsibly than we did at their age. Today, when they attend a party, there is always someone who is the designated driver. This has become the norm for them.
If we have managed to change young people's attitude toward drinking in the last 10 or 15 years, I do not see why we could not accomplish the same thing where smoking is concerned. We can organize well-orchestrated campaigns targeting young people and children just starting out in school and convince them not to take up smoking when they reach adolescence, a critical time when peer pressure is very strong. If we make a sustained effort over the next ten years and speak frankly to young people about the dangers of smoking, I am very optimistic that by the end of the next decade, our youth will behave very responsibly when it comes to smoking and to deciding whether or not to take up this habit. This is where the government should be focussing its efforts.
Clauses 35, 39 and 49 allow for the search and seizure of tobacco products without a warrant. The power given to inspectors to enter any store or warehouse without cause is unjustified. In our view, these provisions should be amended.
Finally, clause 53 places the burden of proof on the accused. The question that comes to mind is this: Does this practice not go against the principle in our Canadian democratic system which holds that a person is considered innocent until proven guilty? This clause should be repealed.
In conclusion, we feel this bill has a number of major shortcomings. The government must go back to the drawing board and take into account the concerns that we have expressed here this morning and ensure that the legislation adopted reflects the reality of the situation and the true objective sought, which is to reduce tobacco consumption by young people. Coercive regulations will ultimately do nothing to help us achieve our fundamental objective.
In conclusion, I would like to thank you for your attention. I will be happy to take questions from the floor.
[English]
Mr. John Scott, President, Canadian Federation of Independent Grocers: Thank you for the opportunity to appear here.
The Canadian Federation of Independent Grocers is a non-profit trade association founded in 1962 with the purpose of furthering the unique interests of Canada's independently owned and franchised supermarkets. Currently, we have approximately 3,800 members which account for about 27.8 per cent of retail food sales in Canada. The distinction between Mr. Nadeau's group and my own is that our members are the retailers and many of our members buy from many of his members. Names with which you may be familiar include IGA, Your Independent Grocer, Foodland, Full Independents, Farm Boy, Penner's, Coleman's, Highland Farms and Knob Hill Farms.
I would like to briefly convey a few concerns regarding Bill C-71. First, I should like to emphasize that CFIG members strongly support the objective of this government to prevent young people from experimenting with or becoming regular consumers of tobacco products. I assure the committee that our membership is comprised of reputable retailers who play an integral part in thousands of communities in every region of this country. In many cases, they are the focal point in their communities and they have very close ties to their customers. They have a powerful social conscience, and that translates into a strict adherence to laws including, of course, tobacco control laws.
Our concerns with Bill C-71 pertain mainly to the impact its measures will have on retailers and their livelihoods. The Canadian retail food industry, and particularly our grocery sector, is highly competitive. Developments in the marketplace in the last several years have placed significant pressures on a large percentage of our membership. The effects of new store formats, large box stores, and the expansion of large American mass merchandisers within this country have created a level of competition for the consumers' dollar which is unprecedented and continues to become more intense. This results in very low profit margins. As a result, the grocery industry has evolved to the point where rebates and allowances provided by the industry suppliers are used to offset the costs of carrying many low-margin products.
Bill C-71 has the potential to eliminate these rebates and allowances on tobacco products. The bill does not take into account that eliminating these allowances will, in effect, force retailers to sell tobacco products at virtually no profit or perhaps at a loss. On the surface, this may seem to be a deterrent to selling tobacco products at retail, thus fulfilling the overall objectives of the bill by reducing access to tobacco products by minors. However, I can assure you that the marketplace will dictate that retailers continue selling tobacco products simply because they are in consumer demand.
In effect, the prohibition in Bill C-71 of rebates and allowances will result in substantial funding being taken out of the pockets of retailers. Some of these businesses, and many in our group, are very small. The percentage of sales on tobacco products is very high and the impact of these moneys being removed will be substantial.
In addition to the lost revenue with the elimination of rebates and allowances, Bill C-71 provides authority for regulators to impose restrictions at point of sale which will result in the majority of retailers being required to change front-end displays, thus requiring significant capital expenditure. Once again, the burden on the smaller retailer will be significant.
The vast majority of our member retailers employ young people. We have maintained that tradition. Many of us worked in stores while we attended university. Mr. Nadeau has already outlined our concern about the potential impact of the bill on the handling of products by people under 18. We think that could have a damaging effect on the ability of our membership to continue to employ young people in our establishments.
Finally, one of our biggest concerns is that Bill C-71 allows for a seemingly unprecedented transfer of authority from Parliament to regulators. This becomes even more alarming when one considers that much of the bill's language is vague and subject to regulations which have not yet been written and, when they are written, do not need parliamentary consent. I do not have to tell you that retailers in Selkirk, Pouce Coupé or Come-By-Chance do not read The Canada Gazette to be updated on the regulations. The bill provides for very little input but creates a substantial impact on the livelihood of thousands of people across this country.
That is a major flaw in this bill. We need to know the laws. You in the Parliament of Canada operate according to laws based on tradition developed over hundreds of years. You are asking that our retailers change their operations in a matter of minutes depending on the whim of certain regulators. It is simply not fair. They need to know the rules through which they should be allowed to operate. Doing it through regulation is a sneaky way through the back door.
Madam Chair, thank you for allowing CFIG to present the concerns of our membership. We sincerely hope you will consider some of the issues which have been brought forward by ourselves and the groups who appeared previously. Some amendments are required to this bill. We support the intent, but there are also other issues.
Mr. Peter K. Flach, Chairman, Canadian Coalition for Responsible Tobacco Retailing, Operation I.D. (Markham, Ontario): Thank you for this opportunity to speak about our concerns around Bill C-71. Equally important, though, I should like to take this opportunity to offer at least a partial solution to what is probably the most significant problem we see in this bill.
Members of the coalition include all major retail and wholesale associations and many unions across this country, along with the industry association of Canada's three major tobacco manufacturers. In other words, it represents all channels involved in the marketing of tobacco in Canada -- manufacturers, distributors, and retailers. We are working together towards the common objective of cutting down on the sale of tobacco to minors.
Included in my written brief is a partial list of participants of this coalition. Operation I.D., launched last fall, includes virtually every convenience store chain. It includes virtually every supermarket chain. It includes every major oil company; most minor, small regional oil companies; and thousands of independent, single-store operators.
Operation I.D. is a cross-Canada initiative against the sale of tobacco to minors. It assists retailers in implementing a zero-tolerance policy on selling tobacco products to young people by providing material such as posters, cash register signs and counter displays along with useful training material to train their staff to ask for proof of age whenever age is in question.
I have with me, and you probably have seen it before, a copy of a kit we sent out. This is a counter display. Since last October, we have sent out 70,000 of these kits, and they have gone to retailers who signed up for the program across the country. The response to this has been phenomenal. We believe it works because we did our homework and we checked with the retailers. We asked them, "Will this work?" They had input into it beforehand. They find it less intimidating than the government material supplied.
Most importantly, and I cannot over-emphasize this, this program works because the participants have taken ownership of it and want it to work. Also attached to my written submission is a letter from the Ottawa-Carleton Regional Health Board to that effect.
A local convenience store chain, Quickie Convenience Stores have been a staunch supporter of this program and they scored 100 per cent. They were surveyed, and every one of their stores complied with the law. There is solid proof that, when people make an effort to work together rather than finding fault in each other, it works.
We have no quarrel about the clauses of Bill C-71 dealing with sales to minors. I should be very clear on this. We agree that minors should not smoke, period. We also agree that retailers who do knowingly sell products to minors should lose the right to sell the product with no exception -- zero tolerance. What, then, do we oppose in Bill C-71?
If passed as written, this bill will, first, force us to lay off teen-aged employees. No one less than 18 years old can handle cigarettes according to clause 8 of this bill. Although we are told that this is not what is meant, this is what it says. It is an easy point to correct, and I urge to you give that consideration.
The second point was raised previously, and it is extremely important to our members -- the elimination of allowances received by retailers from tobacco companies for display promotions and advertising. Since that will be outlawed, this bill will be removing approximately $60 million from the pockets of law-abiding retailers. Many of them need this money to survive. For many of them, the difference between having and not having these display allowances means getting by or going under. I have been in this business for 20 years and I am not exaggerating about the potential damage
As well, we question the logic in the bill: If young persons cannot buy cigarettes, how does prohibiting brand-preference advertising and restricting cigarette displays affect whether they smoke or not?
The third point is that this bill regulates how retailers can display tobacco products, including the number of packages one can put in public view. This will result in a huge cost for rebuilding and refurbishing stores. This regulation, in our opinion, will achieve absolutely nothing and should be removed.
We have some fundamental problems with the Draconian enforcement measures, many of which we frankly feel are in violation of the Charter of Rights and Freedoms. I refer to issues such as search of premises without a warrant, arbitrary product seizure and forfeiture, fines so huge that a small retailer frankly cannot even relate to them, and, of course, the burdens of proof on the accused. I always thought that you were assumed innocent until proven guilty. We have a problem understanding how these clauses can be justified and what contributions they make to the purpose of this bill.
We firmly believe that the answer to this problem is not to clobber people who try to make a living legally and responsibly. We believe the answer lies in working with people and in helping them achieve what we all want to achieve.
With that thought in mind, I urge to you amend this bill in the areas I mentioned so we can get on with our legitimate business. We support clear, reasonable, and workable regulations on the promotion and sale of tobacco products. We also believe that, with your help, Bill C-71 can be a law that every one respects and supports and one that will deliver on its promise to make a difference. Thank you very much.
The Chair: Thank you. Mr. Flach, specifically what is your problem with clause 8? I have read that clause over and over again. I see no obligation whatsoever on the person who is selling the product to be over the age of 18. I do see that they must verify that the person to whom they are selling the products is 18.
Mr. Flach: The word is "furnish." I am not a lawyer, Madam Chair. However, if I have a problem, I imagine many small retailers will have one as well. I can tell you that I have received hundreds of phone calls from retailers across the country who ask me point blank whether they should fire everyone under the age of 18? I tell them that I do not think that is what is meant, but if were to you ask me to interpret what the clause means, then, yes, they must fire anyone under 18. If that is not the intention, then let us clarify it now.
Senator Beaudoin: What is the exact problem, Madam Chair?
The Chair: The definition states:
"furnish" means to sell, lend, assign, give...
Senator Beaudoin: "Furnish" is very vague.
The Chair: Clause 8(1) states:
No person shall furnish a tobacco product to a young person in a public place...
Clause 8(2) states that they have not contravened anything if they have established that they have attempted to obtain ID from the person who is 18 years of age.
Senator Jessiman: If I am over the age of 18 and I am handing it to a minor, then I have committed a crime.
The Chair: That is not Mr. Flach's point.
Senator Jessiman: His point is that the worker cannot hand it to one of the minors. They cannot handle the product.
Mr. Flach: You cannot even touch it. For example, under this law, if a delivery of tobacco products is made, a stock boy cannot put the product in the stockroom.
The Chair: We have a major disagreement here.
Senator Lewis: You are saying that, in a store, a clerk under the age of 16 cannot handle the product. It does not say that.
Mr. Flach: It says that no person shall furnish a product to someone under age. If a wholesaler delivers product to an underage person to put in the stockroom, then I am in violation of the law. That is what it says.
Senator Nolin: I am sure we will hear from Health Canada who will explain that.
Senator Lewis: Their bulletin on that is quite clear.
Senator Nolin: We understand the intent, but it is so broad.
Senator Beaudoin: It is qualified by the one word "access."
The Chair: I wanted to clarify what the problem was from their perspective.
Senator Doyle: Mr. Scott, you might provide us with some help here. I am impressed by the little outburst you just witnessed from a group of people, small as it may be, who have spent some time on this subject and on most of the documents relating to this subject and who still become confused by the intent of the government in the way in which it has masked what we are assuming are its good intentions.
I was interested in your presentation. I wondered if you had cut it a bit short to accommodate the chairman's caution about being brief. Do you have with you a list of the very items which you feel are unfair in the clauses of the bill as it stands, the things that would distress the people who work in the grocery stores you represent, the things that would distress their employees and, more important perhaps, the things that would distress their customers?
Mr. Scott: I do not have a list, per se. However, we can certainly provide you with one in fairly short order.
You ask if I cut my presentation short. I did, but not by a great deal. Some of the stuff was on the under-18 issue about which everyone is confused. However, that brings up a point. When you come to the list and the impact at retail, sometimes it is difficult to translate the interpretation of a law down to a retailer so that a retailer can then interpret it and implement it in his store.
Then we must interpret some of the vagueness in this bill and what we assume will be vagueness in the subsequent regulations -- or they could be quite machiavellian. Who knows? The communication of the interpretation to the store level will have to be very specific to maintain some sense of a level playing field and, perhaps, to avoid getting into some of the trouble that Mr. Flach mentioned.
Senator Doyle: I am not looking at providing you with a lot more work. Sometimes it is sufficient just to take a copy of the bill and to write in the margin, "I do not understand this." You could underline the passages you do not understand. Those messages are useful to us when we sit down at the end of this exercise to argue with each other over what our witnesses intended.
Mr. Scott: I will send that to you, senator. We can do it very quickly.
Senator Jessiman: Mr. Flach, you say you sent out 70,000 kits. How many stores in total do you have?
Mr. Flach: We assume there is a kit for every store. Some of them are still with our wholesale distributors. As I mentioned, this is an effort that includes not just retailers but wholesalers as well. We have sent out 70,000 kit which should cover a significant part of everyone involved in the sale of tobacco.
Senator Jessiman: When did that start?
Mr. Flach: It started in October and it is ongoing.
Senator Jessiman: How do you continue it? Do you have people supervising this thing? I would also like you to explain what is in the package.
Mr. Flach: I will tell you what it is; the difference between this and other programs is that it is driven by the participants. It is a sort of bottom-up program. This was not hoisted on anyone. We phoned people across the country, asked them if they wanted to participate and they did. It is proactive, not reactive. It does not react to a problem but corrects it before it gets out of hand.
We approached the senior executives of each of the participating companies, something which worked extremely well.
We tried to get right to the top. We asked them to internalize this and to make it part of their policy and, in fact, to put their John Henry on it.
It sounds a bit corny but they signed a pledge that they would not sell to minors, that they would have a zero tolerance policy and that they would make available training programs for their people. It is in the stores. All of a sudden, it becomes their own program and not something which government says they must do to avoid being hit with a $100,000 fine.
Then, of course, there are consequences attached. People know that they may not have a job if they sell product to a minor. There is a policy in place with these companies and that is why this thing is working.
Senator Jessiman: Have there been some breaches where people have been fired; do you know?
Mr. Flach: I am not informed of everyone who is fired. I can tell you I met with one company president last night, a local person who runs the Quickie stores. It was cut and dried. He said that he could not say it would never happen but that his people know that if someone gets caught in their store, that they will be looking for work elsewhere. That is why he has 100 per cent compliance. I would imagine that is one of the reasons.
Senator Jessiman: Is this on display in the store?
Mr. Flach: It is in every store.
Senator Nolin: Show it to us. Explain what is in that box.
Mr. Flach: Let me explain this to you. This is the French version.
Senator Nolin: That is okay.
Mr. Flach: There are all kinds of materials. This is a counter-top display.
Senator Nolin: We have another box which is probably in the English version.
The Chair: We have a kit here. Any senator who would like to look at it, at their leisure, in their office, can request it and I will have it delivered to them.
Mr. Flach: There are two very important parts; one of them is the training guide. You would be amazed how many people working in stores, young people in particular, do not even know the law on this. I get hundreds of calls from people who say they did not know they could not sell to people under 19. I get calls on whether cigarette paper is part of tobacco products. Others say they were encouraged not to sell but they did not know it was against the law or saying that they do not know how to say no to their peers and school buddies. We explain how to go about this. That is an ongoing effort.
We also made available to all participants their own sort of mystery shopping program where they contract with a company to go out and do their own check-up to see if there is compliance. It works much better than some of the government programs.
I will give you an example. Yesterday I received 10 copies of the results of a survey done in December. What good is a three-month-old survey to deal with the problem today? That needs to happen quicker and it is all happening here.
Senator Jessiman: Is this an idea that originated in Canada or are we copying someone else? Do you know?
Mr. Flach: This is a Canadian initiative. I am not saying it does not exist in similar form elsewhere. It is not rocket science stuff. That is the beauty of it. It is simple. It gets ownership and that is why it works.
Senator Nolin: Give us more understanding on when this Operation ID started. You announced it last fall but was it a nine-month project or a one-year project? When did it start?
Mr. Flach: It really started back in July of last year. That is when we sat down and said that we need to do something different, aside from sending out material and asking people to hang it on the wall. We must get this buy-in that we are talking about. We had focus groups. We got the retailers in and told them this was their program and asked them how they would like it to look.
This process took us until October. That is when the roll-out started. It is an ongoing thing. This will not end.
[Translation]
Senator Nolin: Mr. Nadeau, how does it work when a tobacco manufacturer gives one of your members a rebate or allowance for a special kind of display?
Mr. Nadeau: Tobacco manufacturers consider our members as their clients, whether they are operating at the wholesale or retail level. The practice of giving rebates or allowances occurs at the retail level. Take, for example, John Scott's stores which are independently owned. Our members' retail outlets, on the other hand, are corporately owned, that is to say they belong to the wholesaler, be it Loblaws or Provigo. Therefore, you will find managers in these stores, whereas the members of Mr. Scott's federation are store owners, albeit retailers nonetheless.
To answer your question, the tobacco company representative comes to the store courtesy desk where cigarettes are sold. Depending on the tobacco manufacturer, there may be up to 20 shelves behind the cash reserved for displaying a particular brand. It is the representative's job to convince the retailer that if he allocates 20 facings for a particular brand, he will receive a allowance of such and such an amount. Each representative makes his pitch and depending on the market share of each brand of cigarette and the store's geographical location, negotiations ensue and the retailer can arrange to receive a monthly or annual allowance from the manufacturer in exchange for giving him a certain number of facings in his store.
Accessories are another example. A manufacturer may be willing to pay a retailer a certain monthly allowance if he agrees to display a clock with the cigarette company's logo at his courtesy desk. In the case of small independent or convenience stores, this can represent a substantial sum of money. As was explained earlier, profit margins are so slim...
Senator Nolin: What type of margin are you referring to?
Mr. Nadeau: I am talking about gross profit, not net profit. In the food industry, we talk about a mix in terms of the overall product composition and ultimately, a store needs to register an average gross profit margin of between 18 per cent and 22 per cent, the point at which all of the store's operating expenses, or the bottom line, are calculated. Often, the store's net profit margin is less than 1 per cent. All of the little extras that an independent or corporate retailer can get will help him to run his business. Often, because small areas have a high volume of tobacco product sales, this make the difference between being on the verge of bankruptcy and staying in business.
We do not believe that these provisions will fundamentally change the consumer's attitude toward smoking. All they may do is influence the consumer to change brands. We are convinced that this will have no bearing on a person's decision to smoke. People who have been operating businesses for years can attest to this fact.
[English]
Mr. Scott: Just to clarify what Mr. Nadeau is saying, the rebates and allowances process is the way the grocery business works. It is not specific to tobacco. Let us not just isolate one product. That is the way the entire industry works.
Senator Nolin: You have heard his answer. It is something that is probably more important for your members than for his.
Mr. Scott: I presume his members get a better deal; it is just a guess. It is interesting to examine. I was calling around the country yesterday to get some feel about percentage of tobacco sales by stores and if you look at certain rural areas you will get a higher overall percentage of tobacco sales in a supermarket than you will in urban areas.
We have some stores in urban areas that do not carry tobacco because there is no demand; however, in a rural area you will need a higher percentage. The mix is important. You have to cater the mix in the store to the particular clientele that you have.
Senator Maheu: Mr. Scott brought up the point about regulations and transferring powers from Parliament to the regulators. That triggered my interest because I am part of the committee that studies regulations as they apply to bills that are passed before the House and Senate.
My worry is one which you covered well when you said that many people are not in the habit of reading regulations. More specifically, your little corner grocery owner, the dépanneur chez nous, does not even know there are regulations attached to many bills.
Do you have any mechanism in place, do you have some way of making sure that your retailers, owners and managers in both instances are well aware of all the regulations that could indeed give them a hard time if they do not know about them?
Mr. Scott: There are two issues here. One is the proposed regulations and how you respond to them. First, how do you become aware of them?
The bottom line is unless you are with a group such as Mr.Nadeau's which makes the members aware of proposed regulations coming forward, there is no opportunity to respond to it. You just do not get the profile that a piece of legislation such as this has.
The second component is interesting: Once a regulation is in place, how do you communicate that down to the store level? That is tough. It is not just something that we or Mr. Nadeau would do. It is something that his members would do to all their retail customers. They would get probably double or triple coverage. They get the standard stuff from the government which is always well-read. You take that home; there is no question about that.
Senator Maheu: That is night-table reading?
Mr. Scott: Absolutely. Then they will read our interpretation of it and then they will read the wholesalers' version.
To our credit, over the years, we have collectively figured out a way to get the information down. A store owner or manager would be pretty well aware of what is coming down. However, the interpretation down to the people on the floor, that is a different thing. It is not just on this issue of tobacco. It goes into regulation on meat inspection, produce or whatever.
It is a tough thing to do and that is the nature of this particular high profile industry that moves products through so quickly. We will do our best. Give us a chance to comment on the regulations, though.
Senator Lewis: Madam Chair, Mr. Nadeau mentioned earlier you felt there was a problem or a restriction on the number of tobacco products -- one brand -- that you could display.
There is a bulletin put out by the department which states that this was the intention originally, that the restriction would be to only one package. However they say that, after consultation with the retail sector -- there must have been consultations -- it became apparent that this proposal would not be practical and would involve additional expenses for retailers. As a result of the concerns expressed during consultations, the blueprint proposal was not carried forward. That is not a restriction. You are not restricted to just one package.
Mr. Nadeau: I am glad to hear that, senator, because that is a concern we had. Again, I will ask that the letter of Mr. Dingwall be put on the record.
Mr. Dingwall specifically says that the situation in this respect is to the effect that Bill C-71 does not propose to limit the exposure of tobacco products for sale to one pack per brand. The concern we have is what we may see in the regulations. Right now it is written as one pack per brand, but what will the regulations impose on us?
We have to inform our retailers and, with some 20,000 retailers across the country, imagine the job we have to do. We try our best to communicate from the wholesale to the retail and each banner by giving them interpretation and direction. The store operations people visit their stores in the geographical areas to make sure the store centres are well under the banner standard and so on.
However, there is a limit to what we can accomplish. We are asking the legislator to be clear and to state in the law what we are expecting from our retailers.
Senator Lewis: That is a valid concern. Mr. Scott mentioned the rebates and allowances and how you would probably lose them. The rebates are the volume rebates?
Mr. Scott: There are various ways of doing this. Sometimes it is a promotional allowance and sometimes it is a volume discount. There are 17 different ways to describe a rebate.
Senator Lewis: I presume this is dealt with in clause 29 of the bill which states:
No manufacturer or retailer shall
(a) offer or provide any consideration, direct or indirect, for the purchase of a tobacco product, including a gift to a purchaser or a third party, bonus, premium, cash rebate or right to participate in a game, lottery or contest.
This is where your concern comes in.
Mr. Scott: Yes.
Senator Lewis: Reading that, I have a certain view of it, but we will not get into the discussion of interpretation.
Mr. Scott: It is one of those confusing issues. Our point is this, senator: This is the normal way our industry works. A royal commission was held once on these rebates and allowances. They said they did not know how it works, but it works, so let us leave it in place.
We are saying you should try not to isolate a product. Let us leave the system in place because the overall product mix which we must use in the stores will ebb and flow depending on the retail outlet, but leave the rebates and allowances system to work as it is.
Senator Lewis: That is one -- I will not say one interpretation, but that is something else. It seems to me what we are getting at here is that, as a retailer, you would not offer that to the customer.
Mr. Scott: I agree that it is one interpretation, but so is our version.
Senator Lewis: We will not argue about that, but apparently there have been consultations with the retail sector? Was there any discussion with respect to this provision?
Mr. Scott: During our preliminary discussions with them, which were held over one year ago, we referred to that clause. The Chair will probably acknowledge that she has also received letters from myself, the Retail Council of Canada and the Canadian Association of Chain Drug Stores expressing the same concern. We do not think that the importance of that particular concern is getting through. You are interfering with the mix of the business. It has nothing to do with the tobacco issue.
Senator Lewis: There were discussions then between you and the department, but that was not resolved to your satisfaction?
Mr. Scott: I do not think so, but that does not mean there were antagonistic discussions.
I wish to add something. This goes back to your discussion with Mr. Nadeau and my poorly placed remarks in my opening comment. Business people need to know the rules. You cannot make vague parameters and expect us to run by them. Let us have the rules. Let us lay them out. Allow us a proper opportunity to comment on them and work something out so that you achieve your aims and we achieve our aim which is the maintenance and continuation of profitable business operations.
Senator Kenny: Am I following you correctly, sir, if I summarize what you are saying as follows, namely, that if the government was more precise, you would be prepared to adapt your system to a certain extent? In other words, you feel that it is appropriate and reasonable to adjust your system, even though it is working to your satisfaction now, given the seriousness of the issue that is facing us with this bill?
Mr. Scott: I probably can speak for Mr. Nadeau and say that our industry is always willing to discuss and work out a compromise aimed at developing a solution to a particular problem.
Mr. Nadeau: I should like to answer as well on behalf of my members. There is no doubt that our members are responsible citizens. Whatever the law is, we will respect it. Yesterday, while I was finishing the brief for my presentation, I received the first draft of the regulations. We have 15 days to reply on something which is very thick and requires legal advice and expertise that we do not have. We are not lawyers. What Mr. Scott and I are complaining about is the fact that we need some reasonable amount of time to be able to react and give you the perspective of the business as to what is feasible and not feasible. In order to react to you and give you some suggestions, we need something clear that we can work on. When some clauses are so vague that they can lead to any kind of interpretation, how can we possibly respond to you on that particular aspect?
We are asking the government to lay down the rules clearly. Tell us exactly what you mean by "promotion" and "advertising", and what you want to impose as restrictions. We will comment on it. We will say either that we agree with this or we disagree with that for such and such reason and we suggest this other course of action. But in all fairness, as businesses, we need to have sufficient time, even to give you numbers. How can we give you numbers regarding how much it will cost when we do not know exactly what the legislator intends?
[Translation]
The Chair: Senator Beaudoin, a very brief question please!
Senator Beaudoin: You say that 50 days is not sufficient? How much time then would you like?
Mr. Nadeau: Excuse me?
Senator Nolin: How much time would you like to reply to the regulations?
Senator Maheu: They now have 15 days to reply, not 50.
Senator Beaudoin: I see, 15 days. That was important to know.
Senator Nolin: Indeed.
Senator Kenny: And now he knows it!
[English]
Mr. Scott: We do not just sit around waiting for you people to send regulations. We are doing other things. As Michelle said, these regulations, particularly around this bill, could have very severe impacts on how we run our businesses. It is not something you flip around in 15 days.
[Translation]
Senator Beaudoin: What, in your opinion, would be a reasonable amount of time? Increasingly, legislators are enacting parent legislation. The trend today is also toward laws that have many regulations. I put myself in the public's place and I understand your position. It is not easy to react quickly to 300 pages of regulations. What, in your view, would be a reasonable amount of time to familiarize yourself with the regulations?
Mr. Nadeau: I can tell you what our association does, given its responsibility for public affairs, when a regulation is submitted to us for comment. We do the following: we send out a letter to all our members across Canada asking them to provide us with information. We also consult our legal advisors and others. We need at least one or two months to do a proper job. We need at least 15 days to initiate the process and to send the letter out by mail so that people can receive it. People receive so many faxes today that there is no longer any difference between a letter sent by mail or a fax. Everything is urgent in our industry. The whole process can take at least one or two months. In extremely urgent cases, we can always try and work miracles and respond within one month, but 15 days is ludicrous.
[English]
Mr. Scott: You are talking about communicating with people right across the country because it is affecting their business. You want feedback and then you want a position. A 90-day period is not unreasonable for comment, to work things out. That is not unreasonable, but 15 days is absolutely ludicrous. That smacks of arrogance on the part of the government.
Mr. Flach: I am speaking now for tens of thousands of small corner stores. They do not have a clue about what is going on and they are probably affected more than many major supermarket chains. For corner stores, in many cases half their sales are in cigarettes. Their input should be sought but it is not. It is a sad story.
The Chair: Thank you. You have given us valuable information this morning.
Honourable senators, our next group is from the Regroupement des exploitants de distributrices automatiques de cigarettes.
[Translation]
We welcome Mr. Raymond Laporte, Chairman, Legislative Follow-Up Committee, Mr. Pierre Patenaude, President, Mr. Luc Fontaine, Vice-President and Ms Diane Lamb, Secretary.
Mr. Pierre Patenaude, President, Regroupement des exploitants de distributrices automatiques de cigarettes (REDAC): On behalf of all our members, I would first like to thank you for giving us this time to discuss with you certain issues which are critically important to our industry's survival.
The members here with us today come from every corner of the province of Quebec and they are deeply concerned about the outcome of these hearings. Our members have come from as far away as Dolbeau, Quebec City, Rivière-du-Loup and Rouyn-Noranda. I want to take this opportunity to welcome them and thank them for coming.
The Regroupement des exploitants de distributrices automatiques de cigarettes or REDAC represents cigarettes vending machine operators in the province of Quebec. We are an independent association and our mission is to represent the exclusive interests of our members. We have no ties whatsoever with the various groups and stakeholders in the tobacco industry. We do not receive any subsidies or gratuities from them or advertise on their behalf.
Each one of our members is a small- or medium-sized business which provides employment. In fact, our industry is responsible for creating and maintaining some 1,200 direct and indirect jobs throughout the province of Quebec.
If Bill C-71 is adopted as written, the existence of close to 60 small- and medium-sized businesses could be threatened. We are therefore happy to have the opportunity today to discuss this legislation with you because our very survival is at stake.
Clause 12 of the bill as written will spell the end of our operations and lead to the inevitable closure of our businesses because it will be impossible for us to operate at a profit. The legislation will sound the death knell for an industry that has always worked to the best of its ability at meeting the government's job creation objectives. Surely you will agree with us that this provision is unfair toward industry members as well as discriminatory.
As currently worded, clause 12 states that no person shall furnish or permit the furnishing of a tobacco product by means of a device that dispenses tobacco products except where that device is in a) a place to which the public does not reasonably have access, or b) a bar, tavern or beverage room and has a prescribed security mechanism.
Clearly, what paragraph a) is telling us is that dispensing devices must be hidden away in a place to which the public does not have access, such as a kitchen, closet, basements or some other room, which makes no sense whatsoever for the owners of these establishments, not to mention that most of these places do not have the space to satisfy these requirements.
Furthermore, this provision would greatly inconvenience these individuals who in fact benefit little or not at all from the sale of cigarettes, as this is first and foremost a service provided to customers. Since providing these machines carries little financial incentive for them, but is highly inconvenient, we anticipate that the vast majority of businesses will no longer wish to have a cigarette vending machine on their premises, which would mean that many of our businesses would have to shut down and a significant number of jobs would be lost.
All of this could be avoided merely by installing a foolproof security mechanism on vending machines located in these establishments. We already install such devices on vending machines located in a public place that is accessible to persons under 18 years of age.
According to paragraph b) of the bill, dispensing devices to which the public have access cannot be located in a bar, tavern or beverage room unless they are equipped with a prescribed security mechanism.
We wish to inform the distinguished members of this committee that REDAC, as mentioned earlier, has already equipped all of its vending machines located in public places to which persons under the age of 18 have access with a security mechanism. Proof must be obtained of the customer's age before the dispensing device can be activated and this applies to each transaction, without exception.
We are hard-pressed to understand why, and we find it even somewhat illogical that dispensing devices located inside an establishment not accessible to persons under the age of 18 would have to be equipped with a security mechanism. These establishments already control the age of their customers and these controls are much stricter than those used by convenience stores when it comes to selling cigarettes.
The customers who frequent these establishments are over the age of 18, and therefore exempted from the various measures set out in the legislation governing tobacco sales to minors. Therefore, we find it particularly difficult to understand why this illogical and unfair provision is even necessary.
Moreover, clause 22 (2)(c) of Bill C-71 allows promotional signs to be displayed in places where young persons under the age of 18 are not permitted by law. What this means is that the law views persons who have access to these places as responsible adults mindful of the consequences and repercussions of tobacco consumption.
In the same breath, however, clause 12 of the same bill denies these same individuals free access to vending machines located in these establishments.
To our minds, this is a blatant contradiction, one that stems from an unreasonable measure that is extremely prejudicial to our industry. The owners or managers of such establishments clearly do not have the resources or the time required to supervise on an on-going basis the sale of cigarettes to persons who in any case are legally old enough to purchase them. It should be remembered that the purpose of the legislation is to prohibit access to tobacco products by persons under the age of 18, not to ban access to such products altogether.
Moreover, it is worth noting once again that there is very little financial incentive for people who provide our dispensing devices for their customers and that since the inconveniences caused by these amendments will be great, it is clear that many of them will no longer wish to have vending machines installed in their place of business. From an economic standpoint, this would be truly catastrophic for us and immediately result in the closure of a number of businesses and in the loss of many jobs. There is also the very real possibility that the same retailers will start selling contraband cigarettes which are not subject to any controls whatsoever.
Before we go any further, we want to make ourselves very clear: REDAC fully supports the stated aims of Bill C-71, specifically the goal of restricting access by young people to tobacco products.
Not only do we support this important objective, we have also taken clear steps, as mentioned earlier, to control and prohibit the sale of cigarettes to minors in public places to which they have access.
Furthermore, thanks to the efforts of all of our members, nearly 98 per cent of vending machines are located far away from the entrances to public places restricted to people over the age of 18 and our goal is to ensure that several months from now, not a single vending machine is located near an entrance to a public place.
These two initiative show that we are acting in good faith and that our industry fully intends to fully restrict access to tobacco products in the case of young people under 18 years of age.
Despite all the efforts of our members to implement these measures and despite their effectiveness in preventing the sale of cigarettes to minors, clause 12 of the bill still constitutes a direct, unwarranted attack on our commercial activities. There is no question that it will result in the closure of the vast majority of our businesses and in the loss of hundreds of jobs in Quebec.
This provision is excessive. All it will succeed in doing is destroying our businesses. That is abundantly clear and there is no point denying it. People who will no longer be able to get their cigarettes from vending machines will purchase them at other points of sale, which at present appear to be subject to fewer controls than vending machine operators.
In other words, the bill will destroy vending machine operators, while other retailers will benefit from their demise.
That is in fact the real issue here today, since our operations are in every respect similar to those of other retailers.
We are all retailers in accordance with the definition set out in clause 2 of Bill C-71. Clause 12 simply means that one retailer will profit at the expense of another. Our industry will be wiped out whereas all other points of sale will remain open.
It is somewhat as if the government had decided to do away with free market competition and favour certain retailers at the expense of others who have been handed a death sentence.
We want to be treated the same as other tobacco retailers such as drug stores, convenience stores and grocery stores and to be governed by the same laws and regulations. We want clear and enlightened justice, nothing more, nothing less.
The House of Commons health committee recognized the need for justice and fairness when, following our appearance on December 9, 1996, it proposed that clause 12 be amended to take into account our legitimate demands. However, despite the fairness of these recommendations, the health department decided to disregard them, thus going against the findings of the 11 members entrusted with the task of analyzing the various reports and briefs submitted to them.
This led to the drafting of clause 12 in its present form, and all it will do is benefit certain retailers at the expense of others.
At the same time, another motion put forward by this same committee was rejected by the health department. Motion No. 6, dated January 30, 1997, was aimed at making clause 12 fair by ensuring that overall, Bill C-71 met the objective, which was to restrict tobacco sales to young persons.
As you can see, clause 12 can be made fairer and more balanced while satisfying this fundamental objective.
REDAC is calling upon your committee to do everything in its power to stop a grave injustice from being committed. We ask that clause 12 of Bill C-71 be amended to read as follows:
No person shall furnish or permit the furnishing of a tobacco product by means of a device that dispenses tobacco products except where the device: a) has a prescribed security mechanism or; b) is in a place to which young persons do not have legal access.
Thus worded, clause 12 satisfies all of the Heath Department's objectives. It ensures that young persons under the age of 18 cannot purchase a pack of cigarettes without furnishing proper identification, as stipulated in the tobacco legislation regulations. It prevents an injustice and allows our industry to survive and to preserve jobs.
REDAC respectfully asks the members of the Senate committee on legal and constitutional affairs to consider its request so that all tobacco product retailers are treated equally and no one retailer enjoys any kind of advantage over another.
To our minds, it is clear that in a democracy, a law must not be discriminatory, but fair and equitable for all stakeholders in society. With this in mind, we ask for your support and cooperation.
Honourable senators, thank you for taking the time to listen to and follow up on our concerns. We wish you much success in your endeavours.
At this time, we would be happy to answer any questions or provide any information you need.
[English]
Senator Jessiman: If there are 60 businesses in Quebec that use these vending machines, there must be others across Canada, are there not?
[Translation]
Mr. Raymond Laporte, President, Legislative Follow-Up Committee, Regroupement des exploitants de distributrices automatiques de cigarettes: Unfortunately, we did not feel the need to form an association prior to the tabling of the bill. The idea was first born several years ago. We are now setting up our organization in Quebec. We have not had time to contact the other provinces to inquire if they have similar organizations. Unfortunately, I cannot answer your question, but surely other provinces have vending machine operators.
[English]
Senator Jessiman: Are you familiar with section 4 of the present law dealing with tobacco sales to young persons? It says that everyone who, in the course of business, sells, gives or in any way furnishes, including through a vending machine, any tobacco products to a person under the age of 18 is guilty of an offence. Do you know whether, in your businesses in Quebec, there have been a lot of prosecutions in cases where minors have been buying through vending machines?
[Translation]
Mr. Laporte: The Health Department conducts regular checks of points of sale, including corner stores, grocery stores, and vending machines located in restaurants, bars and so forth. The Department issues notices. According to reports, some corner stores have been issued notices for furnishing tobacco products to young persons under 18 years of age.
[English]
Senator Jessiman: I was wondering whether you have had some prosecutions under this act in connection with the selling of cigarettes through vending machines in Quebec?
Mr. Laporte: No, we have not.
Senator Jessiman: Not to your knowledge. So you say that the present law is satisfactory as far as sales to minors. You are saying that it is now illegal to sell to minors through vending machines. I am asking you whether, to your knowledge, you have had any problem with that? Have there been many prosecutions? Can you understand why the government wants to tighten the law?
You are in this business and, to your knowledge, there have not been any prosecutions under this act?
[Translation]
Mr. Laporte: To answer your question, no. I would add that two years ago, the members of our association submitted a number of proposals to the Department of Health. We indicated that we were aware of problems relating to automatic vending machines and we recommended to the department that it install a security mechanism that could be activated for each transaction. A young person who wishes to buy a pack of cigarettes from a vending machine must, when these machines are located in a public place, speak to either an employee or waiter or to the owner of the establishment because our machines are controlled. In other words, if you put money in the machine, it comes right back. The machine must be activated by remote control, somewhat like a television set. You press a button and the vending machine is activated. It accepts the money, a pack of cigarettes is dispensed and the machine is automatically deactivated. It must be reactivated for the next transaction. This is one way of verifying the age of the purchaser in a public place and it is similar to the procedure followed in the case of a corner store, drugstore or supermarket.
[English]
Senator Jessiman: Do you mean to tell me that if I walk into a store, whether I am under or over 18, I must ask to use the machine?
Mr. Laporte: Yes.
Senator Jessiman: If that is the case, what has the government said to you about why they are putting this in?
Senator Nolin: Perhaps we should ask them.
Mr. Laporte: We would like an answer to that.
[Translation]
Let me clarify that when we installed these systems, we sought the advice of the Department of Health before incurring any expenses. The department's legal services issued a letter which I would like to table at this time. The letter stipulates that when machines are equipped with this mechanism, they no longer fall under the purview of the law because they are no longer considered automatic vending machines. Because the customer's age is verified, the law no longer views them as automatic machines. They are merely a point of sale like any other. I would like to table this letter at this time.
[English]
Senator Jessiman: They are saying you are not caught by this act if you have this kind of security for the machine.
Mr. Laporte: Exactly.
Senator Jessiman: You are in the vending machine business, but vending machines sell more than cigarettes. You must sell other products as well. If that is the case, what is percentage of your products are tobacco?
[Translation]
Mr. Laporte: Our association has 60 members in Quebec and we represent cigarette vending machine operators only. Our machines do not dispense any item other than cigarettes.
[English]
Mr. Patenaude: Perhaps you would like to see a control unit. We will pass it around.
Senator Jessiman: Thank you. It looks like a garage door opener.
Senator Nolin: This is exactly the letter I asked the minister to table when he was here as a witness on the first day of hearings.
[Translation]
I would like us to be clear on this point. Pursuant to the current legislation, not the bill now before us, but the law now in effect, the one to which my colleague Mr. Jessiman referred to a few moments ago, it is illegal to sell a pack of cigarettes to a minor through a vending machine. Is that correct?
Mr. Patenaude: Yes.
Senator Nolin: If I understand correctly, you took the initiative and developed, without being forced into it -- let us disregard for the moment the law which states that you cannot sell to a minor -- the small device that is being passed around. Is that correct?
Mr. Laporte: Yes.
Senator Nolin: Am I to understand that you asked the Department of Health to endorse your actions?
Mr. Laporte: Yes.
Senator Nolin: And the letter we have here advised you that you were complying with the legislation and that no action would be taken against you?
Mr. Laporte: Exactly.
Senator Nolin: Is that correct?
Mr. Laporte: Yes.
Senator Nolin: Could we have a copy of your proposed amendment?
Mr. Laporte: You have the text of the amendment in the brief.
[English]
Senator Lewis: I believe, gentlemen, that in Ontario and Nova Scotia, cigarette vending machines are banned. Are you aware of that?
[Translation]
Mr. Laporte: Yes, we are aware of that. Their operation is governed by provincial legislation. Provincial, not federal, laws prohibit the sale of tobacco products through a vending machine. We are not aware of the circumstances that led to the tabling of this legislation, but most likely these machines were not controlled in public places and the provincial government had good reason at the time to introduce this measure. We decided to take preemptive action to equip our machines with security mechanisms. They are a point of sale like any other retail outlet and we have always worked to control access to tobacco by young persons. Our machines are not freely accessible to young persons under 18 years of age. It is normal that such machines not be controlled in bars because legally, young people are not allowed to enter these premises. What reasons could there be for controlling cigarette vending machines in a bar? What the law is saying is that adults who are entitled to enter bars cannot purchase a pack of cigarettes from a vending machine located in the bar. This does not make any sense.
Furthermore, if you look at clause 22 of the bill which we cite in our brief, you will see that a tobacco company representative can go to a bar manager and plaster posters all over the bar walls. This is legal under clause 22(2)(c). However, clause 12 of the same bill states that if a cigarette vending machine is located in a bar, it must be equipped with a security mechanism. The adult who is exposed to the advertising is not deemed sufficiently mature to freely use a cigarette vending machine. That makes no sense.
[English]
Senator Lewis: The Tobacco Sales to Young Persons Act which was referred to earlier came into effect in 1993. Since that act came into force, have you become aware of any reduction in the number of cigarette vending machines?
[Translation]
Mr. Laporte: We have the same information as committee members and it comes from Statistics Canada studies. Our machines have been controlled for the past two years. We know that young persons under 18 years of age do not have access to them. Therefore, we are not concerned about this number.
[English]
Senator Lewis: We will ask the department about that.
[Translation]
Senator Nolin: You mentioned establishments that are open to the public and to which young persons have access. To which type of establishment are you referring? Restaurants...
Mr. Laporte: When we talk about establishments to which the public has free access, we are talking primarily about restaurants. As for establishments to which young persons do not have access, these are licensed establishments such as bars where no food is served and which young persons are not permitted to enter.
Approximately 40 per cent of our vending machines are located in restaurants to which young persons have access, whereas 60 per cent are located in bars. As written, clause 12 would take away 40 per ent of our business. Not one of our businesses could survive.
Senator Nolin: You argue that since the law does not prohibit the sale of tobacco products in corner stores, grocery stores, drugstores and other points of sale, why then should it prohibit vending machine operators from selling cigarettes in a public place to which young persons have access. Is that the gist of your argument?
Mr. Laporte: That is correct. We consider ourselves no different from any other retailer, as defined in clause 2.
[English]
The Chair: Thank you.
The committee adjourned.