Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 14 - Evidence

The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill S-20, to enable and assist the Canadian tobacco industry in attaining its objective of preventing the use of tobacco products by young persons in Canada, met this day at 9:00 a.m. to give consideration to the bill.

Senator Mira Spivak (Chair) in the Chair.

[English]

The Chair: Honourable senators, we are here to continue our discussion with regard to Bill S-20. We do have media here and I welcome them. They are free to take video or still photos of the proceedings. However, this is a small room and we would ask you to be careful not to disrupt the witnesses.

Our first witnesses are Ms Cynthia Callard and Mr. Francis Thompson. I imagine you have a presentation, which I hope will not be more than 10 minutes, and then the senators will want to ask you questions, I am sure. Please proceed.

Ms Cynthia Callard, Executive Director, Physicians for a Smoke-Free Canada: Honourable senators, Physicians for a Smoke-Free Canada is an organization made up of physicians and its entire board is made up of physicians, but I am not a physician.

I wish to thank you for inviting me this morning. This is one of the most exciting hearings that the Senate will have for a good period of time. The witnesses who follow us could provide some of the most important testimony the Senate will receive. They are businessmen who are usually held accountable only to their investors and foreign owners. Too rarely are they held accountable to the public. Too rarely do public agencies or our government hold them to account on behalf of the millions of lives they harm.

I wish to provide honourable senators with an example of how hearings like this can change the world. You may remember the turning point in the United States when seven U.S. tobacco company executive testified before a congressional hearing. They were sworn in, committing themselves to tell the truth. One by one, they were grilled and asked whether they thought nicotine was addictive. One by one, they said no.

Those congressional hearings turned back the tide on tobacco companies. It was not just that they had lied under oath, it was not just that they were exposed as people who would lie under oath. What made the difference was that the political leaders showed us that they were no longer willing to accept the lies.

Since that pivotal moment, governments, especially governments in Canada and the United States, have changed how they think about tobacco, how they understand what needs to be done to address the problems caused by tobacco and the problems caused by tobacco companies.

Governments have begun to use political language to reframe the issue. It is no longer about the individual smoker struggling to quit, the individual trying to overcome an addiction. It is no longer about the rights of smokers versus the rights of non-smokers. Today it is about society versus big tobacco. It is about public health, public justice and public accountability. It is about people standing up with their governments to protect children from this set of companies.

In the last six years, the tobacco companies have also changed. They have been forced to. They have had to make a lot of adjustments. They have changed what they say. They have changed whom they say it to. You will hear and see those changes today. As you receive that testimony, I hope you will be able to reflect on what we now know about public policy in tobacco companies from the newly released tobacco industry documents.

I have been working on tobacco issues on and off, but mostly on, since 1958. For the past five years, I have worked full time on tobacco, all day every day. In the past 18 months, since the tobacco industry documents were released, I have learned more than in all the previous years combined.

I learned more because I, like every other member of the public, gained access to millions of pages of tobacco industry documents. Those documents were gathered in preparation for Minnesota's billion-dollar lawsuit against the tobacco companies. However, the attorney general who directed that lawsuit, Hubert Humphrey III, knew that he did not want to settle for just money. He wanted to expose the truth. He wanted everyone to learn what he and his lawyers had learned. Therefore, although discovery documents usually remain secret at the conclusion of a settlement, he insisted that they remain open for 10 years.

It is important to remember that there are no Canadian tobacco companies: there are only multinational tobacco companies operating in Canada. Most of these multinational companies were named in the Minnesota suit. Most of these companies had to have head office documents opened up to researchers like myself. The documents for JTI-Macdonald were found on the site of its previous owners, RJR-Reynolds. Many documents from Rothmans, Benson & Hedges, were on the Web site of Philip Morris, which owns 40 per cent of Rothmans, Bensons & Hedges. Documents from Imperial Tobacco, which makes 70 per cent of Canada's cigarettes, could be found on the Web site of its sister company, the U.S.-based Brown & Williamson Tobacco. The most interesting cache of documents for Canadians is in a warehouse near London, England, the Guildford Depository of British American Tobacco.

As a result of the Minnesota lawsuit, which, in turn, was a result of the testimony in 1994, I have been able to spend a year reading page after page of memos, reports, marketing studies and scientific reviews from the tobacco companies that supply the addiction of Canada's six million smokers. Sifting through these documents is like exploring an archaeological dig. The documents have to be uncovered. They have to be pieced together with other documents. They have to be given a context: Where was it found? Who was it from? These are not Canadian documents, per se. They are collections of head office documents, so there is another layering of questions: How complete is the record? Are the memos truthful reports? Are they just what they wanted the boss across the ocean to hear?

I would be the first to say that we have only a small picture, a tiny fraction of what went on in Canada over the past 50 years. Yet, I do not believe it is a distorted picture. It is as honest a picture as we can develop. Last week, we published a Web site that has over 700 documents of specific interest to today's debate, including the scientific research conducted at Imperial Tobacco's Montreal laboratories and large amounts of market research on young Canadians.

I was surprised by the feelings I developed for the people whose professional lives I was looking at. I was rifling through their desk drawers. I got a sense of who they were and what they were thinking. I did not expect to like any of them. I actually gained a fondness and a respect for many of the scientists whose reports I read. Especially the scientists who were struggling in the 1950s and 1960s to figure out what to do with the mess they had been handed. In those early years, the companies allowed their scientists to speak and write freely to one another. Their early correspondence chronicles first the hope they had that a cure could be found for cancer, that cigarettes could be made less harmful, and then their growing discouragement at the limits of their science and the direction of their management.

I want to touch on a few of the documents and illustrations in the brief that I have handed around. Through 40 years of public debate on tobacco in Canada, I have observed four different over-arching strategies that were employed in that time.

In the early 1960s, which is when public action again tobacco first began, the tobacco companies employed the first strategy of denial. In the early 1960s, they knew they were in trouble. For half a decade they faced a barrage of reports on the dangers of smoking. Their customers were worried, the media was hostile and governments were beginning for the first time to ask questions.

The medical community was leading the charge. By 1961, the Canadian Medical Association was saying that smoking caused lung cancer. The following year, the National Cancer Institute of Canada made the same declaration. The British Royal College of Physicians in 1962 went further, calling for changes in government policy. Shortly afterwards, U.S. Surgeon General Dr. Luther Terry established an advisory committee on smoking and health, which made its landmark report in 1964.

What did the Canadian companies do? Exactly what companies all around the world did, exactly what their head offices told them to do: they denied. They denied the health consequences to the media, the public and government. They denied it vociferously when they were called before the House of Commons Standing Committee on Health during the seminal "Isabelle" committee review on smoking and health.

That denial was powerful. I was born in 1956. In 1964 I was eight and my mother began to get on my father's case about smoking. My father was able to say, "Well, it's not really proven, it's just statistical." As if to say that not proven was not known. He, like millions of other smokers, like hundreds of governments, used that denial as a way of putting off the inevitable action they would have to take.

The question for us is whether the denial was a lie. Did Paul Paré and the other industry heads who appeared before the parliamentary committee in 1969 deliberately mislead parliamentarians or were they caught in some kind of mass delusion? Did they maybe not know? Is there plausible deniability for them?

I think they could have and should have told Parliament a very different story in 1969 -- a much more honest story. They should have told Parliament about BAT's private research, where they spent a decade painting the backs of thousands of mice with cigarette tar. They had hoped that they would discover that fresh tar, which they were using, was not as dangerous as the stale tar that the public health researchers had used. In fact, the fresh tar proved to more dangerous -- the mice died faster. They had hoped that they could tinker with the tobacco so that it did not cause the mice's backs to develop fatal tumours. However, the mice kept dying.

In 1969 they acknowledged internally that they could not deny any further that smoking caused disease. That was the same year that they came before the parliamentary committee refuting the evidence. Did management know what the scientists were thinking? Absolutely, they knew.

At Imperial Tobacco, top management was kept informed of the views of the scientists. They were copied on all the reports from the scientific laboratories. They met yearly in smoking and health issue committees or chairman advisory councils, where there were gatherings from around the world of the top CEOs to discuss the latest research.

Long after the tobacco companies had internally acknowledged that smoking was causally linked to lung cancer and other diseases, they continued to deny the link in public.

It took almost two decades for Parliament to hear from the tobacco companies again. It was not until Bill C-204 and Bill C-51 were under study by the Commons Health Committee that the heads of the companies returned to Parliament.

In the brief I handed out you will see an excerpt of an exchange between Sheila Copps and the head of Imperial Tobacco about whether smoking causes disease. They continued to deny. They did not budge from the decades-old message: there was no proof that smoking caused disease; they did not want kids to smoke; tobacco was good for the economy; tobacco companies were scapegoats of prohibitionist sentiment. Those are the same lines that we still see today, but the framing has been somewhat changed.

The Chair: In order for us to get through, could you summarize please?

Ms Callard: The next strategy was one of deflection. They tried to deflect attention away from tobacco: it was not tobacco that caused disease, it was that smokers were somehow different -- they were "type A" personalities and they were stressed out over workplace pressures; it was not second-hand smoke that hurt people in buildings, it was sick-building syndrome or carpet fumes or photocopier fumes. They tried to deflect attention. Those were very effective strategies and people moved away from directing attention to the tobacco companies.

One of the tobacco companies' most important strategies was to delay. In 1976, the Minister of Health asked the tobacco companies to stop lifestyle advertising. In 1988, Parliament passed a bill prohibiting tobacco advertising. In 1997, the Senate approved a bill that banned lifestyle advertising. Yet, we still see lifestyle advertising today. They managed to delay for 24 years the implementation of an effective ban on advertising or other effective measures.

In this decade alone we have seen a new strategy, and that is the one I want most to bring to your attention. Now it is the strategy of disarming. They say, "We want to talk. We are reasonable people. We want to engage with people and be part of a solution. We do not want children to smoke. We want effective policies and we understand that smoking is a risky behaviour."

In fact, I encourage you to talk with them. I encourage you to press them for clear, short, unambiguous statements about their products, their practices and their customers. I encourage you to use this unique opportunity to hold to account these men who have all become rich through a business that kills one half of its customers. I encourage you to listen critically to what they say. In the submission, I have suggested a few comments that I expect you will hear from them as well as some of the other facts that you should keep in mind.

In closing, I should like to relay my own experience of sitting back and listening to this strategy of disarming. At the last annual general meeting of Imasco, then head Brian Levitt said that he wanted to talk, that he wanted to have an engagement, but that the public health agencies refused to have it with him meaningfully. It was one of the few times that there was accountability for these companies, because there were open meetings. I asked him if he knew how many children smoked his brands of cigarettes, because I had read the report that showed they were claiming -- I would say boasting <#0107> to head office that they had 70 per cent of young Canadians smoking their cigarettes. Don Brown said, "No, in fact, he did not." I asked them why they were making their cigarettes more elastic. Elasticity is one of the things they use to get more nicotine from a cigarette. They responded that they had never heard of that before. I sent them a letter this year to ask them if they agreed with the statement of their British owners that parents should not smoke around children. They never answered the letter.

There is a whole series where they say that they want to be open, but, in fact, they need to be pressed by people who have the authority that you have to make sure that the openness results in meaningful dialogue and true information to the public.

[Translation]

Mr. Francis Thompson, Policy Analyst, Non-Smokers' Rights Association: Madam Chair, I am Francis Thompson and I work for the Ottawa office of the Non-Smokers' Rights Association. As you probably know, our association has been in existence for approximately a quarter century. It is known throughout Canada and the world as being a leader in public health issues.

[English]

For me, one of the most interesting and important aspects of Bill S-20 is that it puts the tobacco industry's publicly stated position on youth smoking to the test. As you all know, the tobacco industry has consistently claimed -- and this is not a new position -- that it is opposed to underage smoking, that it does not market products to children and that smoking is what they refer to as an "adult choice." Tobacco companies have consistently offered to cooperate with anyone who wants to make tobacco products less accessible to minors.

As you probably understood earlier, those of us who work in public health are rather skeptical about those claims because we have seen many advertising campaigns that certainly appear to target children and because we have seen internal tobacco industry documents that show they have discussed the perceptions that teenagers have of smoking, reasons why they start or do not start to smoke, how they perceive different brands, et cetera. I do not want to spend my time talking about specific examples, because it gets too detailed and complicated. I should like to concentrate on the big picture: the structural reasons why tobacco companies are driven to focus their marketing energies on young people.

[Translation]

Regarding the structural reasons explaining why tobacco companies tend to target youth in their marketing campaigns, I believe there is an incontrovertible economic reality. A tobacco company which cannot attract children or youth to its products will disappear in the long term.

[English]

The reason for that is simple. People start smoking when they are young. That is increasingly the case. Tobacco addiction has been defined as a pediatric disease because of that. The last estimate I saw for 1994 said, at the time, that 80 per cent of smokers in Canada had started smoking before the age of 18. The starting age now seems to be going down. What is more, in a special report in 1994 on youth smoking, the U.S. Surgeon General noted, "People who begin to smoke at an early age are more likely to develop severe levels of nicotine addiction than those who start at a later age."

In other words, if you are looking at the long-term viability of your industry, the best customers are those who get addicted when they are 12 or 13 years of age.

The other important thing to note is that brand loyalty for cigarettes develops early, even if your marketing efforts are, as the tobacco industry has always claimed, directed primarily at brand switchers. Those may be young people over 18, but I wonder how you make cigarette brands attractive to 18-year-olds without making them attractive to 17-year-olds.

I would ask those interested in the topic to look at the Joe Camel case in the United States that is famous because of the use of cartoon characters. That campaign led to a court case. The Mangini case has some fascinating documents associated with it. The case is available online. I will mention one quote from RJR:

Even if a brand falls from grace among younger adult smokers, the increasing consumption rate of the aging franchise can carry the brand's performance for years, thus extending its life cycle.

RJR, as other tobacco companies, uses the euphemism "younger adult smokers" to refer to underage smokers. The point is that, if you get them when they are young and if you can hold them to the age of 25, they continue to smoke and you rake in the profits for years after.

Before someone suggests a difference between Canada and the United States in the economics, I will mention briefly several documents. Appendix A of my brief is entitled, "Problem." I will read you a short excerpt:

...profit growth has camouflaged the reality that Canadian cigarette smokers are increasingly less enchanted with being smokers and the underlying trends clearly suggest that, despite short-term upturns... fewer and fewer Canadians will smoke in the future.... Although we have historically done things which have had an influence on the size of the total industry, these efforts have not been co-ordinated, planned and fully integrated into our "normal" activities. Something's got to change!

Thus, in 1985 we have Imperial Tobacco saying, "Look out folks; we cannot focus only on market share, we must concentrate on growing the overall market."

There are only two ways to grow the market and influence the overall size of the tobacco industry. One is to convince worried smokers not to quit and to convince ex-smokers to restart smoking with, for example, "health reassurance" cigarettes -- a term invented by the industry -- such as "light" cigarettes. The other possibility is to recruit new smokers. New smokers are overwhelmingly underage. Canadian companies have tried and used both approaches.

The documents show that Imperial Tobacco has been far more successful than its competitors in attracting new smokers. When he was chairman for the holding company that controlled Imperial Tobacco, Purdy Crawford reported proudly to his colleagues from other BAT companies around the world:

I.T.L. [Imperial Tobacco Limited] has always focused its efforts on new smokers believing that early perceptions tend to stay with them throughout their lives. I.T.L. clearly dominates the young adult market today and stands to prosper as these smokers age and as it maintains its highly favorable youthful preference.

Yes, indeed, Imperial has been successful. It has gone from one third of the market share in the mid-1970s to 70 per cent presently.

I will skip the issue of switchers except to mention that Imperial Tobacco redefines switchers to include underage non-smokers who start to smoke.

As I mentioned earlier, we have seen lots of marketing studies where Canadian tobacco companies are planning how to market their products to youth. I will not go into the details, but I wish to mention that the Supreme Court of Canada looked at that issue in detail through a court case surrounding the Tobacco Products Control Act in the early 1990s. The Supreme Court of Canada, by a majority decision, did indeed decide that the tobacco industry's argument that the only purpose of advertising is to encourage brand switching among smokers is poppycock. The court said that the internal marketing documents prepared by the tobacco manufacturers themselves demonstrate the contrary.

I will mention the case of Player's Light. People have been talking about the following 1982 document for several years. It says:

The single most popular brand, and the one that seems to have become the customary badge among young males in particular, but among females very commonly too, was Player's Light. That this brand went from introduction to this incredibly lofty posture in so relatively few years is truly a marketing success story.

The tobacco industry may claim that it has now changed, but I want to point out a couple of examples. Notice the elements in these pictures. This first ad is from the beginning of the marketing documents for Player's. We see an outdoor activity, a young youthful model, the whole issue of independence, and the nice blue colours. This next picture is from the year 2000. It has the same elements: a young youthful model, an outdoor activity, the nice blue sky. The only thing missing is the cigarette, because this, theoretically, is a sponsorship ad.

It is not only Imperial Tobacco that is doing that. I point you to the "Extreme Sports" series currently advertised by Export A on television, some of the first cigarette ads that we have seen on television for a long time.

If this predatory animal has changed its spots, we are still waiting for the evidence.

I wish to touch on the industry-sponsored youth access programs. We have seen in numerous countries that tobacco companies are saying that they are serious about cracking down on sales to minors and that they will help do it. I will point you to Appendix B of my brief, which provides you with information on why the U.S. tobacco industry set up such a program. It is a public relations ploy to block advertising restrictions. That is the way it was used the in the United States and Russia.

I will read you a quote about the how Philip Morris used the tactic in Moscow:

...the Moscow city government was preparing to run a very negative anti-smoking billboard campaign. PM was present at a meeting on the issue and offered to take part in the program provided it focused solely on youth. As a result, what may have been a broad, very negative campaign is now a positive youth oriented billboard program carrying the tag line, "Smoking can wait."

That is typical of those campaigns, which are fairly consistent in three respects. They focus on the legal restrictions of underage smoking. They say, "Do not smoke now; you can smoke later if you want." Teenagers do not want to wait before engaging in adult behaviour, especially if it is adult behaviour that has been glamorized. Those campaigns do not provide meaningful information about the health effects of smoking or the danger of addiction. The industry's own documents show that the young people are aware that there are serious risks to smoking but do not believe that they will become addicted. The campaigns never point out the tobacco industry's role in encouraging youth smoking. That is not surprising since the campaigns are paid by the industry.

Given all those things, you should be leery about the cooperation that you will get from the tobacco industry. That does not mean that there may not be cooperation. However, the prerequisite for making a serious inroad into tobacco company behaviour is making it sure that the tobacco industry is not making money from kids.

At one stage, the Americans considered that the tobacco industry should pay a fine every time a young person becomes addicted to cigarettes. The fine would have to be sufficiently substantial to be worth more than the total value and profits of that young person as they smoke through the rest of their life.

I do not want to get into details on that particular scheme. We are here to talk about Bill S-20. I should like to commend the committee for looking at youth smoking. It is not an easy problem to solve. It requires effort and a comprehensive plan. This bill is a major part of it. Thank you very much.

Senator Cochrane: Bill S-20 would provide for examination of some of the best practices of tobacco control in other jurisdictions within North America. Are you aware of any programs aimed at reducing youth smoking that have been successful? If so, could you describe those programs to us?

Mr. Thompson: Several jurisdictions are doing better than Canada -- California and Massachusetts being two oft-cited examples. In both of those cases, there are ongoing mass education campaigns based not on telling young people that they should not smoke but rather on talking about how the industry suckers people into becoming and staying addicted.

There is much more than that to the California program, and you will hear more about it from others. The programs have strong community-based aspects and cessation-based aspects. Everything must be done at the same time.That requires not just occasional investment of funds but an ongoing commitment. That is often difficult unless, as in the case of California, you have a steady stream of revenue upon which you can depend.

Ms Callard: I do not think it is possible to have an effective program directed at reducing youth smoking that does not deal with the behaviour of adults in society as well. Children smoke because they see it as a rite of passage into adulthood. As long as adults around them are smoking and ignoring the risks of that, and as long as adults accept the promotion of tobacco as a normal part of life, children will continue to aspire to the values adults are setting. Therefore, all successful programs addressing youth smoking also address the role of tobacco in society and the behaviour of adults to whom children are looking.

Senator Cochrane: Would you elaborate a bit on the issue of elasticity?

Ms Callard: We in Canada were confused for a while by American reports about spiking cigarettes, adding nicotine to make cigarettes more addictive. The Canadian cigarette is very different from the American cigarette. American cigarettes are made from a blend of tobaccos and they contain additives and flavourings.

Frankly, we did not really know what was in Canadian cigarettes until fairly recently. The materials were reported to Health Canada but that was not made public. It was very difficult to know.

When these documents became available, we found that there was an end point that all the tobacco companies wanted to achieve. They wanted to get the nicotine to the brain faster, and that meant using nicotine with fewer molecules attached to it so that it went to the cell membranes more quickly. It meant creating the right feeling in the throat so that smokers would not pull the cigarette away before they got enough nicotine.

One of the many techniques they looked at was elasticity, which means getting enough nicotine to satisfy you from a given amount of puff effort. Their major problem was that people hated light cigarettes because it felt like sucking on air. They had to ensure that smokers got enough nicotine without having to inhale too hard. The term for that is "elasticity," which means more nicotine for a given volume of inhalation.

Senator Cochrane: Do they get more nicotine with light cigarettes?

Ms Callard: The difficulty is that we do not know how they implemented their research. We uncovered the research reports, but we have not uncovered the formulae they use for Canadian cigarettes. Perhaps when the executives appear before you later they will be more forthcoming with you than they were with us.

Senator Christensen: You have given us a great deal of information on your research on the industry. Could you tell us how Bill S-20 would benefit your organization and, in doing so, tell us little about your organization?

Ms Callard: I do not think it would necessarily change what we do at all. We are a small organization and plan to continue to remain so, doing the same work. However, it would change the world in which we do it. Ideally, Bill S-20 might put us out of business -- which I and my board think would be a glorious thing -- by instituting a significant, solid, sustainable and effective program that would reduce smoking gradually, but within our lifetimes and, more important, within the lifetimes of our children.

Mr. Thompson: The Non-Smokers' Rights Association, Physicians for a Smoke-Free Canada and anyone who has been involved in tobacco control in a serious way have always worked on changing the social environment. We know that the process of addicting children to cigarettes and keeping them in the market for many decades is based on a social environment that has been shaped by decades of very careful marketing efforts with huge budgets and careful research on how to design the products.

The only way to deal with that is to change the social environment back to a healthier one. That is what we work on, in our own small way, by doing things such as promoting improved legislation. Obviously, we do not have the resources to buy televisions advertising in a big way or any of that sort of thing, but in the long term we must get to that. Bill S-20 would provide a quick way to deal with some of the things that NGOs do not have the resources to do and some of the things that NGOs are probably not the appropriate groups to be doing.

Senator Kenny: Given what you know about the industry and how it has reacted in the past to efforts to have it cooperate, do you believe that Bill S-20, as it is currently written, is likely to be effective? If so, why? If not, what changes should be made to it?

Mr. Thompson: The industry itself has said, specifically on the issue of youth smoking, that it does not have enormous public credibility. The industry has said in the past that it would welcome help because they are aware of that perceptual problem. Bill S-20 offers to provide that credibility by ensuring that the programs are designed with input from the industry but not controlled by the industry, as is the case with present programs. That squares the circle. It says that if the industry is speaking in good faith, let us try it.

Ms Callard: Bill S-20 would fill a shameful vacuum that currently exists in Canada in programs that effectively communicate to the public. Tobacco is such a difficult issue. It is so ingrained in our regulatory system, in social acceptability, and in the lives of six million people that we need a comprehensive plan. We need higher prices. We need the product to be regulated. Today you cannot put macaroni and cheese on the market without testing. Tobacco companies are not yet regulated in that sense. We need accountability when the law is broken. There are 50 million illegal sales of cigarettes to children every year. People hold the retailers responsible rather than holding the tobacco companies responsible for selling to retailers. There is a panoply of measures that need to be taken by government, but Bill S-20 fills the largest void, which is the absence of meaningful funding and a rigorous program to implement the social change that needs to happen.

Senator Kenny: Bill S-20 provides the vehicle of a levy for raising funding. The purpose of the levy is, first, for constitutional reasons and, second, because it is fairly stable. You can predict it based on tobacco consumption. There are other alternatives, such as taxes. Do you have an opinion on whether a tax approach or a levy approach would be preferable?

Ms Callard: My mother uses the expression, "There is more than one way to skin a cat." I think this is a perfectly acceptable, fine way. It is similar to what is used in California and Massachusetts, where they have a system of direct democracy and people can write in during an election for certain specific measures. We do not have that in Canada. This would be a way of achieving that same end.

I think a tax, a protected tax, a dedicated tax, would be a substitute, but really a levy is probably a more secure way of getting sustained funding over time. They are less likely to touch a levy.

Senator Kenny: Have you noticed support in the Department of Finance for dedicated taxes?

Ms Callard: Not in my lifetime.

Mr. Thompson: For a successful tobacco control plan, I would re-emphasize the importance of it being stable over a number of years. The big problem we always have is that people imagine there is a quick fix to these problems. There are no quick fixes in this area. You must do it over years, and you must have evaluation procedures in place so that you can check whether it is working and think about what you are doing. The problem you often get on the tobacco issue is that it comes up suddenly. For example, there was a tax rollback in 1994, and money was invested on the education side right after. That funding stream was not an ongoing stream and you had a stop-and-go effect. In any program, it is very difficult to keep the eye on the ball and think of the long term unless the people involved in the program are not spending most of their time looking for funding and making sure the program stays in place. You must be able to concentrate on the job, and the job is ensuring that young people do not smoke, ensuring that tobacco-caused death actually starts to go down.

Senator Kenny: Bill S-20 contemplates a foundation that is outside of government. Could we have your views on whether a program of this nature would be better conducted inside or outside of government?

Mr. Thompson: If you look at programs in other jurisdictions you see both. It would not be appropriate for us to say that it is always one way or always the other. However, we do not at this stage have in government the sort of funding we are talking about, and we do not have any immediate indication that that is coming. Given that, a foundation with the autonomy that that implies clearly would be a very significant step forward.

Ms Callard: I mentioned at the beginning that I am not a doctor. My first 10 years of work were spent in the arts, and the arts do have arm's-length, independent foundations like the Canada Council and the Arts Council. Generally speaking, the arts community values the role that independent agencies like the CRTC, the Canada Council, Telefilm and so forth have. We have problems of accountability with those foundations. You have that tension about whether the minister controls it. If Parliament scrutinized or held the foundations to account, those problems could be overcome more easily than the problems with departmentally directed funds, problems such as whether a program is being evaluated on scientific merit and not on political value, and whether cheques are being given to programs that are effective rather than programs that are in a certain person's riding. It is more likely that a program will be supported by Canadians if it is within an arm's-length foundation.

Mr. Thompson: One of the frequent tobacco industry lines on the issue of taxation and government is that the government is, in fact, the largest profiteer from the sales of tobacco products, and the industry has therefore attempted to say that the government is hypocritical when it claims to want to stop tobacco use. I do not buy that argument, because the economic costs of tobacco use are huge and the tobacco tax revenue does not cover that. That being said, an independent foundation cannot be accused of being hypocritical in that respect. Certainly, in that particular respect, it would be a big step forward.

Senator Taylor: I notice you mention in your submission, Ms Callard, that the government collects more in taxes from cigarette sales than tobacco companies collect in revenue. As you know, the government spends very little on tobacco awareness or trying to stop its use. Do you go after the government too? It seems to be as big a bandit as anyone involved in this.

Ms Callard: Do we criticize government for not doing the right things on tobacco? Yes. One of the shameful things is the amount of taxes that are paid by underage smokers, kids that buy the 50 million packages of cigarettes that are sold to them every year. The tax revenue to the federal government is $80 million a year. They currently spend $20 million a year on tobacco initiatives. Just their proceeds from the crime of selling tobacco to kids give them a net profit of $60 million. I find that deeply disturbing.

Senator Taylor: Government has thus found a way to tax children, too.

You mentioned, Mr. Thompson, that little switching occurs after 25 years of age. What tobacco you will buy is fixed. Are there any statistics on that? In other words, if you have a certain market share for people at age 25, is there, say, a 95 per cent chance that it will remain and still be there at age 55?

Mr. Thompson: I would have to look at exact figures, but the tobacco industry documents are clear that the tendency to switch brands decreases fairly rapidly. In the experimental stage when a smoker is just starting, and up to the age of about 25, a whole series of things can intervene. After that, the changes tend to be quite slow. They may get worried about health and switch to lighter brands but stay in the same brand family. When we piece those statistics together from marketing reports we find in the tobacco company archives, we find they do not provide a map to tell you where the latest statistics are.

Senator Taylor: You would have to assume, then, that the tobacco industry advertising with respect to switching would have to be directed at people under 25 years?

Mr. Thompson: There is absolutely no doubt about that. If you go to the BAT depository in Guildford, what is really surprising, since BAT is a global company and in many markets is competing against Phillip Morris with its Marlboro brand, is the absolute obsession that BAT has about how to match Marlboro's success with young people. That is the way competition works within the tobacco industry.

Senator Taylor: Are there tobacco dispensing machines in any Ontario high schools?

Mr. Thompson: No. If there are any left they certainly would not be legal.

Senator Wilson: You talked about the strategy of disarming. Other than the glossy ads that you showed us, have you detected any strategies for disarming the public regarding the risks of smoking?

Ms Callard: When I speak of disarming, I am actually speaking of disarming politicians or political leaders.

For the past few decades, there has been a campaign of disarming the public, trying to give cigarette products what is called a friendly familiarity, showing that it is quite normal to go a to tennis match and see the logo of one of the leading brands, so you think nicer things about that product than you would if you were just looking at your parent coughing repeatedly in the morning. Having the advertisements and the products displayed at every retail outlet is another way of disarming you into thinking that this is a normal product just like milk. You buy milk and you can get cigarettes at the same place. That disarming or social acceptability has been a strategy right from the get go. Before, there was more of an intransigence against it wherein the public would deny it. That is to say, there was a sort of standoff, a cold war.

Senator Wilson: How are politicians being disarmed?

Ms Callard: Politicians in other jurisdictions are being disarmed by engaging in Operation ID, which is one of the youth access programs, but they want to stop. The tobacco companies say to the RCMP and to other police forces, "Work with us on retailer education and on these other problems associated with this program." Those problems are the ones Mr. Thompson has outlined. They work with the RCMP and get the RCMP to come to sponsored events. Senator Kenny has been championing this difficulty for the last few years. The tobacco companies disarm them by sending them free tickets to events, inviting them to cocktail parties and inviting them to go golfing with the Prime Minister. There are many ways that the tobacco companies engage to say "No. We are a legal business. We are normal people giving our customers what they want." That has been very effective for them.

Senator Banks: A minute ago you spoke about the unlikelihood of brand switching occurring after the age of 25. The same thing occurs in brand switching of soup or corn flakes, between Kellogg's and Campbell's and their competitors, Post and Lipton. That is a common assumption in selling any mass merchandise.

On what basis are you absolutely certain that when the tobacco companies say they are targeting young adult smokers that that is who they mean when they are talking about switchers, including the switchers who have not yet smoked? You represented that that was the case, but on what basis are you so certain that they are talking about underage smokers?

Mr. Thompson: First, I will address the use of euphemisms such as "young adult smokers."

Senator Banks: Why are you certain that is a euphemism?

Mr. Thompson: This matter has been dealt with in court. If you go through the case in the United States that dealt with the Joe Camel campaign, that was the conclusion of that proceeding. A rather famous memo went out where they talked about using the term "younger adult smoker." All the indications were that they were saying, "Let us stop talking about things that we used to talk about before," which were young males, teenage males, and so on. "Let us talk about the younger adult smokers." When you look at the chart to see what that age group defines, you will find the younger scale that they are talking about is now below 18. It involves things like saying that the "younger adult market" is people who hang around in malls in Argentina. It is a consistent pattern around the world. They remind everyone, over and over again, that it is company policy that they do not market to people under 18, so do not talk about them. You then turn around and look at their marketing surveys and data, and guess what? A lot of people do seem to be under 18.

That does not mean there is a magical cut-off. It is possible to start smoking at the age of 18. If you are a marketer and you are targeting, you are targeting to all people susceptible to start smoking, including late bloomers. However, the kinds of values that you are trying to get across are the kinds of values that appeal to adolescents in a rebellious stage. It is that whole independent identity: "I am someone. I can act like an adult."

Senator Banks: The court case to which you referred was the one that involved the Joe Camel campaign. Except for the spillover, it was not extant in Canada. Is there a comparable Canadian brand?

Ms Callard: The nature of these documents is not such that you find a lot of smoking guns. You find a lot of spent cartridges, but not that many smoking guns.

I have sat for years and heard tobacco companies say that they are interested only in switchers. About two months ago -- and I phoned Mr. Thompson within 10 minutes of finding this out -- I found a document on the Brown & Williamson site from a 1991 Imperial Tobacco switching study. In that study, they talk about the importance of young switchers. There is a most important phrase in the study where they say, "By `switchers' we also include starters." All the time they were saying that they were only after switchers, they never said, "But we use `starters' in the definition because we include people who did not have a regular brand a year ago." I do not know what more evidence you want than that when they go over to switchers, they include starters. They said they wanted the youngest group of switchers. Well, by that, they meant starters as well.

Mr. Thompson: That is also on page 3 of my brief.

[Translation]

Senator Nolin: Mr. Thompson, the issue of price is very important for us. A little earlier, you talked about the concept of elasticity; well, price is also subject to elasticity. Bill S-20 calls for increasing the price of a package of cigarettes by an additional 20 cents. The government is also considering increasing tobacco taxes. We just hope that these price increases will not lead to the law of unintended consequences, which would mean an increase in cigarette smuggling. This would go against the objective of the bill. The price increase may result in increased smuggling of a questionable product. How do you respond to this?

Mr. Thompson: I have a very specific answer. Because of the high number of tobacco lawsuits in the United States, the price of cigarettes has soared south of the border and cigarettes in Quebec and Ontario are now comparatively much cheaper. I think smuggling is going to go in the other direction.

[English]

The Chair: We will now move to our next panel.

Senator Kelly: I wish to raise a point of order. I have been quite impressed with the presentation that we have heard. However, specifically, the challenge we are facing today is the extent to which Bill S-20 will or will not assist in reducing underage smokers. I think that is our objective. I am hoping that we can concentrate on that subject, because the solution is not visible yet on how to solve underage smoking. Senator Kenny has raised a suggestion that may possibly work. Certainly, something new is worth trying. We must agree to that.

On the question of the performance of the industry, from what I have heard there is every reason why, at an appropriate time and place, there should be an investigation of any industry's practice where people have doubts. Here and now, however, we are talking about Bill S-20. I hope we can concentrate on that.

Before the Chair raises this, I have a conflict. Therefore, I wish to remind everyone that I am talking about process here. I am not taking one side or the other of the issue itself.

Senator Kenny: I certainly support Senator Kelly's right to make a point of order. I would ask, however, that he declare his conflict so that it is clear to all concerned what his interest and concern is in the matter.

The Chair: He has just declared.

Senator Kelly: I did not identify my association, though. I am connected with the tobacco business.

The Chair: Thank you. Our primary purpose here, Senator Kelly, is to study Bill S-20. There are a number of factors associated with teen smoking. There is a certain amount of latitude here but that is our subject matter. I may not be as strict on that latitude as you would like but I may be stricter than others would like.

Senator Taylor: Are there any written submissions from this panel?

The Chair: Yes. Please proceed. If you could hold your comments to about 10 minutes each, there are a lot of senators who will want to question you and we want to make sure that these proceedings are dealt with in an orderly fashion.

Mr. Robert Bexon, President and Chief Operating Officer, Imperial Tobacco Canada Ltd.: Honourable senators, I beg your indulgence. I am suffering from the most dreadful flu. If my voice starts to go, please ask for clarification.

I have held my position as president and chief operating officer of Imperial Tobacco Canada for a little less than a year. I know you will wish to ask questions so I will be brief.

My company is our nation's largest tobacco manufacturer. Approximately 65 per cent of adult Canadians choose to smoke tobacco products that are made by us. I represent here today over 2,500 dedicated and talented employees. We are proud of ourselves, of the quality of the products we produce and of a flawless record of philanthropic involvement with our nation's communities.

While I am here on behalf of Imperial Tobacco, I understand that, by and large, my views are shared by my colleagues Mr. Michel Poirier of JTI-Macdonald Corp. and Mr. John Barnett of Rothmans, Benson & Hedges Canada Inc. However, I am sure that they will have their own comments for you as well.

Let me begin by clearly stating our position. We do not want underage Canadians to smoke, period. As a result, we strongly support this bill. At last, we believe there is a possibility of a real public effort to deal with the real problem which is of serious concern to all Canadians. We want this bill to move forward.

I must tell you that our internal decision in the discussion to support this bill was not achieved by unanimous vote within our house. As a result of the brutally antagonistic position that has been fostered between legislators and manufacturers, particularly in recent years, I must tell you that there is great distrust and doubt about the government's motives and actions within our walls. I know that the government labours under the same apprehensions when it speaks of the industry.

I am new to this role. Perhaps in a few more years I will become more suspicious of people's motives, but I believe that when we choose to operate under the American conflict-based system and ignore our proven Canadian tradition of fair consultation, we severely hobble our collective ability to move forward decisively on issues that are of great concern for all of us.

Frankly, there are those in my organization who, even after the debate, still feel that supporting this bill is constructing a rod with which to beat ourselves. It is their very great concern that the funds created by this bill will simply flow to hands that will do no more than attack and disparage our reputation without underage smoking rates being affected in the slightest.

That said, as the leader of Imperial Tobacco, I cannot shake the fact that, when I read the bill with an open mind and accept in my heart that it is put forward in good faith, I am compelled by logic and instinct to believe that it is what it says it is and to support it. Therefore, I repeat, Imperial Tobacco supports Bill S-20 and sees it as a long overdue opportunity to achieve important results.

I want to advance five changes that I think could make a good thing better. I stress that our support is not conditional on the acceptance of these items. I simply think they are good ideas.

I should like the Senate to consider the following in your deliberations. First, education and knowledge can go a long way, but it is not enough for this young age group. This bill should reinstate the prohibition against underage possession and use of tobacco products. Members of the committee may not be aware that, from 1908 to 1993, although it was spottily enforced, federal law prohibited the possession or use of cigarettes by Canadians under the age of 16. In 1993, for some reason, Parliament put an end to that law. It should be reinstated with a threshold of 18 years of age.

We should not seek criminalization, but rather vigorously pursued and consistently enforced penalties that are particularly relevant to those who have not attained sufficient age to balance a decision to smoke with the known risk that that decision entails. I give you for example the suspension of driving privileges. Combined with the education that is implicit in Bill S-20, this addition would mitigate the effects of peer pressure, the most widely accepted cause of underage smoking, by balancing it against the loss of a cherished and desirable privilege.

Second, I ask the committee to include under the general operations of the foundation the successful programs that the industry already operates to address underage smoking. Operation ID is a national, retailer-focused training and publicity program aimed at ensuring that retailers and their staff insist upon proof of age before any tobacco sales. "ID School Zone" is a community-based program which adds the influence of community groups to the efforts of retailers and which, incidentally, has produced the highest rates of retailer compliance in the country. The fact that tobacco companies pioneered those programs should not be taken as proof that they have no worth.

Third, the foundation will receive and control a massive public purse to execute its public trust, some $350 million to $400 million annually. That is so much money that it is unlikely that it could be spent in one year on education alone. The bill should mandate that some of those funds be earmarked to assist the already strained budgets that will be required for increased enforcement of retail monitoring and prohibition on possession. In any event, there should be proper budgeting processes to justify spending $400 million per year.

Fourth, it is my opinion that Canada needs only one national foundation for these purposes. The foundation should be directed to form and fund from its revenues provincial and municipal branches to assist health officials in those jurisdictions.

Fifth, we would hope that the foundation would not become yet another source of regulation for the industry. Bill S-20 needs to make explicit what is already implicit in it: We currently have enough help on the regulation front.

That is it. Even without these few recommendations, we remain behind this bill. With them we enthusiastically support it and firmly believe that it will have a major impact on this serious issue.

We know there are problems to be overcome. We are not naive. We know that this is essentially a measure to provide a dedicated tax and that the Constitution requires taxing measures to go through particular procedural hoops. We know that some will fear that the enormous sum of money being discussed will simply be for the self-aggrandisement of single-interest groups or will be misspent. We are prepared to work with the same good faith that we see behind the bill to help the foundation overcome these problems.

Mr. John Barnett, President and Chief Executive Officer, Rothmans, Benson & Hedges Inc: I welcome the opportunity to discuss with senators this bill and the wider question of underage smoking in Canada.

Madam Chair, our company and our industry agree that underage smoking is a significant problem. We believe that it demands a comprehensive, coordinated and cooperative response from all of us.

One aspect of the problem is underage access to tobacco products. We in the industry have concentrated our efforts in recent years in this area, principally through two programs. We believe these programs are both useful and successful. We have invited governments and health groups to join with us in supporting and expanding them. Unfortunately, some anti-tobacco groups have preferred to attack them. We believe that Operation ID and School Zones should be part of any comprehensive program to address underage smoking Canada and we continue to invite governments and other others to join with us in supporting them.

A second element of the problem is the current lack of any sanction against the possession of tobacco products by underage Canadians. Since 1993, it has been against the law for retailers to sell to those below legal age, but perfectly legal for underage Canadians to possess the product. Any serious effort with the objective to combat youth smoking must be coupled with laws dealing with underage possession. Certainly, retailers have an obligation to refuse sales to minors. But frankly, senators, it is about time we helped those 40,000 retailers with this objective by passing laws that deal with underage possession.

A third element of this problem, in many ways the most difficult, is to address the "why" of underage smoking -- to better understand why these young people smoke and, at the least, to persuade them to postpone any decision in respect of smoking until they are adults and perhaps better able to understand the associated risks.

One has only to look at the trends in underage smoking -- and, for that matter, in the use of illegal drugs and alcohol -- to conclude that programs by governments and others in this regard have been largely ineffective. The explanation for that, we believe, is quite clear. For reasons more political than substantive, government and other anti-smoking programs have concentrated on demonizing the manufacturing industry and on blaming the industry's advertising and marketing practices. That, frankly, ignores the fact that we have never targeted our marketing at underage smokers. It ignores the fact that for virtually all of the past decade we have been prohibited by law from advertising our products to anyone and severely restricted in our marketing activities. Sadly, it ignores the ample available research that shows that underage smoking is driven not by industry marketing but by socio-demographic factors, such as parental influence, peer pressure and adolescent curiosity.

As we read the intent and objectives of Bill S-20, it seeks to respond first and foremost to the key question of what motivates young people to smoke and how best we might educate and communicate with them. We share those objectives and, in principle, are prepared to support the creation of the kind of foundation proposed by the bill to lead this effort. However, we do have some concerns about the specific provisions in Bill S-20 -- two concerns in particular.

As senators are aware, Bill S-20 proposes to impose a further tax on Canadians who choose to smoke in order to finance this foundation. Senators may be less aware that, since February 1994, our industry has been paying $80 million a year to the federal government in the name of what the Prime Minister called a "health promotion surtax." That is in addition to the $3 billion per year that the federal government collects in excise tax, duties and GST on the sale of tobacco products in Canada.

The surtax was supposed to be used to support what the Prime Minister promised would be the largest anti-smoking campaign the country has ever seen. Yet in six years the government has taken in more than $400 million in surtaxes, while during the same period Health Canada has spent less than $150 million on tobacco control, including combating youth smoking.

In our view, there is no need, certainly in the formation stages of the proposed foundation, to add a new tax burden to Canadians who smoke. We would suggest that, to get the foundation up and running, the government do what it said it would do with the surtax revenue and fund this new organization. Once the foundation is established, has a few years of operation under its belt, and has had time to develop an effective business plan, we would be quite prepared to review its financing.

Our second concern is with the governance structure for the foundation proposed by Bill S-20. It is a bill with a declared intent of assisting and enabling our industry to respond to youth smoking, yet it denies us any role whatsoever in the operation of the organization. We believe this foundation would benefit from our experience and practical knowledge of the tobacco marketplace. We know from sad experience with government regulators that programs conceived without the practical knowledge are doomed to frustrating and expensive failure.

While I am not sure how far the federal government and Parliament can go in this regard, we would also hope that the foundation's governance would allow for participation by interested provinces.

Senators, in recent years our industry's relations with the federal government and Parliament have been clouded in mistrust and conflicts. We have been shouting at each other, and in too many instances taking each other to court, when there are problems like underage smoking on which we can agree on objectives and hopefully work cooperatively towards them. We, for our part, are ready to work with you, the government, and others to create a foundation that we hope can provide a successful, credible and effective response.

Mr. Michel Poirier, President and Chief Executive Officer, JTI-Macdonald Corp.: Honourable Senators, I joined the tobacco industry a little more than two years ago and I have been in this particular position for less than six months. I should like to thank the committee for inviting our company to be here today to present its views on a bill that represents an important effort on your part and, I hope, an opportunity for us to contribute as well.

As an industry, we feel strongly about the issues we are raising in this chamber today and I thank you for giving Canadians an opportunity to listen to what we have to say.

[Translation]

JTI-Macdonald is closely associated with the economic and social history of our country. Like our country, our activities and influence have evolved over the years. Our company and its employees are firm on one thing: We are against the use of tobacco among youth.

I support the submission of my colleagues, as stated by Mr. Bexon, particularly regarding the prohibition against the use of tobacco among youth.

The climate of suspicion and antagonism which has characterized the relations between the government and the tobacco manufacturers greatly impairs the efficacy of both your efforts and ours to achieve this objective for youth.

However, I do recognize that Bill S-20, on which you have invited us to comment, gives us the opportunity to take aim at this objective together.

It is in this context that we present our suggestions today. It is also in this context that JTI-Macdonald offers its support to Bill S-20.

Allow me to make a few suggestions. They are all aimed at making this bill a success and a precedent-setting piece of legislation.

First, we would like to suggest an addition to the bill regarding the funds. It is important that the available funds -- no matter where they come from -- be dedicated to a deeper and more objective understanding of the problem at hand. The real causes of youth behaviour -- teenage rebellion, the impact of peers, the role of parents -- are important issues. I am confronted with a contradictory mass of data and I am taken aback by the lack of rigour or the superficiality which we too frequently see in the analysis of so serious and complex a social problem, and by the minuscule financial commitment from public authorities in this respect.

You know as well as I do that Canada is a proud leader in anti-tobacco initiatives. We suggest that an important part of the financing of the Foundation by directed to real, objective research, thereby putting our country in the forefront of the development of real and practical solutions to the issue.

Some initiatives do work in reducing tobacco purchases by minors. Kelowna in British Columbia is a case in point. There the "I.D. Card" program notably improved retailer compliance on the sale of tobacco products to youth. The Health Minister himself could not help but note the success achieved in the region.

My proposal is simple. It is possible, because the expertise is available, to measure such efforts, to understand which programs work. This leads me to my last point regarding the role of industry.

We represent a legitimate and proud industry. We have certain strengths which can be of assistance on this issue. I believe that both our company and our industry, and its representatives, should be actively involved in the Foundation. I believe that our involvement could only increase its chance of success. It would be a shame to discard our input strictly for partisan reasons.

That is why your invitation was important and welcome for JTI-Macdonald.

It will be my pleasure to answer any questions you may have concerning this bill.

[English]

Senator Finnerty: Thank you gentlemen for appearing here today. I am delighted that you support Bill S-20. As a grandmother with a grandson coming into that 13-years-of-age area, I am very concerned. I live next to a high school, and I have noticed over the last few years an increased number of young people smoking. I am concerned.

Is the reduction of youth smoking an objective of your company? How do you rank it against profit and maintaining market share?

Mr. Bexon: Well, maybe I will take a run at that. Yes, it is. To frame it as an objective of our company -- it is a desirable end that we would see take place in the market. But I am not sure that it could be an objective of our company, because we are not the only people who can do something about it. I think it does need a concerted effort, such as this bill, to make it take place.

Our shareholders, the people who sign my pay cheque, feel quite strongly, I can assure you, about profit and market shares. Those are real objectives of our company. But this is an issue that we feel strongly enough about that we commit funds to programs to get at what we can get at, which is youth access.

Senator Finnerty: Imperial Tobacco has dominated the youth market in recent years. I think Imperial has over 75 per cent of the market share of smokers between the ages of 15 years and 19 years, does it not?

Mr. Bexon: I am not sure of the actual number. It is quite high.

Senator Finnerty: Have you done anything to reduce that in marketing? Are you troubled by the increased number of smokers between the ages of 15 years and 19 years in your company?

Mr. Bexon: I think you have to make a distinction between youth smoking and youth smoking our brands, which is different. It would be unfair to say that because they are smoking your brands it is your call.

That they smoke troubles us. That there is underage smoking troubles us greatly. I was looking at the numbers this morning. The fact that youth smoking is higher than smoking in the population in general troubles us as well.

The argument that has been made that we need that to sustain our business is bunk, frankly. My personal position, and I know it has been the position of Mr. Brown, is that if no underage person started to smoke -- because you do hit a point that you have an adult decision to make -- I would take my chances with what is left. I would beat it out with these two guys for people who have validly chosen to use the product.

Youth smoking is one of the reasons that I believe strongly that prohibition measures must come back. I do not think this can be done by convincing. It is a real concern. It has been more of a concern in our company recently because of the bill, and before that because many of my employees have children they wish would not smoke. I have three children, two of whom smoke. One of my children entered a battle with her mother that wound up with my daughter being thrown out of the house over that issue. I did not want my children to smoke. There is little I can do about it.

Senator Finnerty: Do any of you gentlemen smoke, or any of your children?

Mr. Barnett: Yes, I smoke. I have six children; four are young adults, three of whom smoke and one of whom does not.

Senator Finnerty: Does that concern you?

Mr. Barnett: For the adults to smoke does not concern me. I think that they should have a right to choose to smoke if they want to make an informed decision. They can balance the short-term pleasure against the long-term risk.

Senator Finnerty: Based on research performed by your companies, what factors influence people to form a decision not to begin smoking? What factors influence young people to decide not to begin smoking? Of these factors, which is the most influential for the adults and for the young people?

Mr. Poirier: From our end, I do not have any data on that because we do not do any research on people who do not smoke.

Mr. Barnett: Our company has no data, to my knowledge, on what factors people take into account when they decide not to smoke. From my personal observation, I would estimate that they are aware of the health risk and they decide that the pleasure that they would get from smoking is not enough to offset the health risks that they would take by deciding to smoke.

Senator Wilson: I have a number of questions about research and targeting, particularly for Imperial Tobacco. I have a number of documents out of your historic record that I should like to mention briefly before I ask my questions. There is a 1982 marketing research document, for example. This "Continuous Market Assessment" does a phone survey. The introductory part of the questionnaire has the interviewer asking to speak to the person 15 years of age or older at home at that moment who smokes tobacco products. The interviewer then asks what brand, why, what attracted you, have you switched, how do you obtain these cigarettes, does someone else get them to you and other questions.

I have another document, "Monthly Monitor Questionnaire," which is dated 1992 and marked "Secret. Do not copy." That asks a number of questions through telephone interviews of 200 individuals, aged 15 years and over. The study was conducted each month.

There is another document, "Overall Market Conditions." That document states:

If the last ten years have taught us anything, it is that the industry is dominated by the companies who respond most effectively to the needs of younger smokers. Our efforts on these brands will remain on maintaining their relevance to smokers in these younger groups in spite of the share performance they may develop among older smokers.

The final document that I have is a bibliography on basic Canadian cigarette research, which goes back to 1953. That is your historical record.

The Chair: Perhaps the gentlemen would wish to have copies of those documents.

Senator Wilson: I can provide them afterwards, when I am through with them. I assume Imperial Tobacco has them since they are their documents.

Senator Kinsella: There are copies available.

Senator Wilson: Previously, you have conducted research beginning at the age of 15 years, according to the documents I have. Why?

Mr. Bexon: All the documents that you cited are based on a sampling methodology. With that sampling frame then you have to match what your company is doing and what you are sampling from the population with Statistics Canada breaks. Statistics Canada has historically used 15- to 19-year-olds, so that gets in. The number of 15-year-olds makes it statistically reliable, but the number of 15-year-olds you would get in any one of those surveys would not help you do anything with youth smoking.

Senator Wilson: If it would not help, why did you do it? I am asking why.

Mr. Bexon: That is because it goes from 15 to 90.

Senator Wilson: No, it does not. Pardon me, these documents go from 15 to 34, and after 34 you are not interested.

Senator Taylor: Correction, they go from under 15 to 34.

Mr. Bexon: Which one are you referring to? May I see that document?

Senator Wilson: Some of them are under 15, some are 15 and over. There is one that has 15 to 34, I know.

Mr. Bexon: Is that an analysis of something, or is that an actual study?

Senator Wilson: You simply do not ask the questions after that. I will have to dig it out.

Mr. Bexon: I would appreciate that, because if it refers to what we call the CMA, the CMA tracked the entire market over the age of 15. If it refers to the "Monthly Monitor," that tracked the entire market over the age of 15.

Senator Wilson: I will have to search for the document. I cannot find it readily.

Mr. Bexon: If you do find that document, please send it to me. I would be more than willing to send back to the Senate an explanation of that document.

The Chair: Would you explain the term CMA?

Mr. Bexon: It is an acronym for "Continuous Market Assessment."

Senator Wilson: That was the first one. I noticed that, because I wondered why you stopped asking those questions after age 34.

Mr. Bexon: You will find later on that, as we grew more concerned about the issue and our public perception, we stopped asking some very pertinent questions after the age of 19. We would ask people what brands they smoked, how long they had been smoking, what they had switched from, but then we would not ask them any attitudinal or awareness questions, because we expected that some day it would be totally inappropriate. We did stop doing that.

Senator Wilson: Could I ask you when you changed to ask only for those over 19 years of age?

Mr. Bexon: I believe it was in 1997 that we would have gone to over 19.

Senator Wilson: What is the rate of teen smoking according to your internal research for the most recent year available?

Mr. Bexon: I think it is around 30 per cent.

Senator Wilson: Thirty per cent teen smoking.

Mr. Bexon: That would be in the area we measure. You would know better what total teen smoking is, because we do not go below the age of 16 now.

Senator Wilson: You are down to 16. I see.

Mr. Bexon: Maybe 18.

Senator Wilson: Which is it?

Mr. Bexon: Well, I do not know. I am new to this job. It was 16 when I left and I think they might have --

The Chair: Perhaps we can get that information in writing.

Senator Wilson: That would be rather important for the record.

The other area I want to look at is targeting underage smokers. I have a document here, the 1980 national media plan for Imperial Tobacco, and for certain brands the most important target group is those aged 12 to 17. More important, though, the target group is weighted as being more important than those aged 18 to 24 or those aged 25 to 34. This is the one I was referring to. For those 35 plus, for these brands, they are not even a target group and they are not even in your attention.

My question is this: Have you stopped advertising to teenagers like this -- ages 12 to 17 -- and why?

Mr. Bexon: This document has surfaced as a purportedly new document. It actually surfaced 10 years or 12 years ago in the C-51 trial. I have for you a copy of the deposition that was given in that trial by Mr. Don Brown, who was head of marketing at the time. He explains it. He does not explain it away, he simply explains it. I can give that to you now but I am afraid it will be a little arcane and I am not sure it actually progresses the bill. This document, which is his testimony in court, deals exactly with that document. Would you like to me take a shot at explaining it for you?

Senator Wilson: Yes.

Mr. Bexon: The PMB, Print Measurement Bureau, is a mechanism by which most marketers measure readership of magazines. They came out with breaks that went 12 to 17, 18 to 24, et cetera, and on up. They were just readership numbers. Our target group then, for the brand, was actually 16 plus. The only way our media clerk could get 16- and 17-year-olds -- which was valid for us because that was the legal age of smoking -- was to take the whole break. That sounds like she was going to target under 16 to 12 but she does not, because she was also given a mandated list by the company of publications where we thought the content was appropriate, like Field & Stream, Chatelaine, Time, et cetera. Therefore, the net impact would be that somewhere in there there was probably one more ad in TV Times. That is a long way away from targeting youth, as we have been accused of doing.

I will leave this document, though, because it gives a much more adequate explanation from Mr. Brown, who is much more articulate than I am on the subject.

Senator Wilson: I will also mention that in this same report the age group 12 to 17 was assigned the weight of 1.0. That is a rating of the importance of each age group. That was weighted fairly high. As well, the 18 to 24 group was similarly 1.0, whereas 35 plus was 0.0, and then there is no more. Why did you weight it in this way?

Mr. Bexon: The target group for the brand was 16- to 24-year-olds.

Senator Wilson: This says 12 to 17 is the top one.

Mr. Bexon: As I explained, that is because the media data used to try to work up a media plan was broken 12 to 17. That was moderated by the fact that there were magazines in which we simply would not advertise. You would not find Jack and Jill as a vehicle. It might have changed based on the number of 12-year-olds that read Maclean's. However, the number of books our media clerk could pick was already set; it was how many insertions went in. But this will clarify that.

I must say, if you do not mind, that our purpose is to move beyond history. Part of the reason that I come out so firmly in support of Bill S-20 is that I do think that quibbling about the past -- I guess some day we may have to quibble about the past in court -- on this issue of underage smoking is not very useful.

I thought the substance of the discussion was Bill S-20, and I think Bill S-20 is something that, if it progresses, will make all these other discussions academic. You will find more of those documents as you go through them. There are 8 million pages representing 40 years of our company's history over there. Tens of thousands of people have worked on them. You will find thousands of embarrassing comments that, if you give us the time, we will be able to explain and put in context. That does not advance this bill.

Senator Wilson: With due respect, Mr. Bexon, the reason I am asking this is precisely because your credibility is greatly at stake, as is the credibility of the tobacco industry because of your past record, which is not exemplary. That is why I am spending this time on the historic record.

You say, "We do not want underage Canadians to smoke," and you say, "We are proposing to work with the same good faith that we see behind this bill to help the foundation to overcome these problems." We applaud that, if you have changed. But have you changed? The proof of the pudding, I think, is in the eating. During all those years when you were saying some things publicly but the records contradict it, the public and politicians lost some faith in the tobacco industry. The onus is now on you to restore your credibility.

I am appalled at some of these documents and I think that the onus is now on you to demonstrate that, in fact, you are going to cooperate in good faith, and, of course, we will monitor.

Mr. Bexon: By putting my name personally and my company's endorsement on Bill S-20, I hope I have taken the first step in the direction of reclaiming that credibility.

Senator Wilson: The proof of the pudding is in the eating.

Senator Kelly: Once again, I am totally sympathetic to the previous speaker, but I would want to remind honourable senators again that it is here and now. We are talking about a new proposition, which is Bill S-20, to deal with something that we know exists and that we have not found an answer to yet. Reference was made by Ms Callard about more than enough evidence to justify a thorough investigation of industry practices. That is fine. However, we are dealing with Bill S-20 and we are trying to get a problem solved. I hope we can get back to the basic reason we are here.

The Chair: Senator Kelly, we are here to discuss the bill, but the factors around teen smoking and their motivation are crucial to understanding what measures might be taken in the bill.

Senator Kelly: Madam Chair, I do not challenge the right of this or any parliamentary committee. I have been too long a member of Parliament not to know that Parliament is supreme and that committees can do anything they choose. I am speaking on the basis of fairness and, in my view, common sense. That is all.

Senator Wilson: I repeat that the reason I brought up the historic record is the matter of credibility.

Senator Taylor: Thank you for appearing today and for your support for Bill S-20.

Mr. Bexon, your solution seems to be a little draconian: you want to suspend drivers' privileges and put in a penalty for possession of cigarettes. I do not know what you would do to 12-, 13- or 14-year-olds who are caught with a package of cigarettes. It seems to me you should be thinking of incentives rather than glamorizing the possession of cigarettes by suspension. Have you given any thought to the positive side of the equation?

I believe you sell Player's cigarettes, do you not?

Mr. Bexon: That is correct.

Senator Taylor: You have ads with mountain climbing and kayaking, things like that. That does not appeal too much to seniors. However, we get a lot of conflicting evidence. A gentleman with six children obviously throws out the idea that nicotine affects sexual performance.

I wonder if you have any incentives. What would you be doing, for instance, on a package of cigarettes to convince 12-, 13- and 14-year-olds not to smoke?

Mr. Bexon: We do stuff on our cigarette packs. People will say that we are mandated to do it, but the fact of the matter is that this package of cigarettes says, "Cigarettes cause cancer." Most of the people we are talking to can read, and there is a whole series and, as you know, there are more coming.

I should like to deal, however, with the issue of possession. I know that there was a study done in a town in Illinois where youth smoking dropped by 70 per cent when they began not only putting in but also enforcing laws against possession.

Senator Taylor: The figure dropped by what percentage?

Mr. Bexon: It dropped by 70 per cent.

As it stands today, the people you see standing in the schoolyard, if that were a misdemeanour, then there would be something you could do about it. I do not think those people need to be thrown in jail. The suspension of your driving privileges is not draconian; it does not mean you have a criminal record and they do not cut your hands off. It just means that mom has to drive you to the mall for a little longer.

I believe that in Texas, where they have a similar thing, if you are caught before you can have a driver's licence, when you go to get your driver's licence, you find that it has been pre-suspended. I think that it is not a draconian solution, but my understanding of the issue is that young people are aware of the dangers of tobacco use. They feel they will not get addicted and they feel that those dangers are so far down the road that they are not relevant in their decision today. I think this issue would suggest giving them something that is relevant to them today. Loss of your driving privileges, if you are a 16-year-old, is probably a very relevant thing, although it is not life threatening.

Senator Taylor: I often hear that cigarettes that are labelled "light" or "mild" in effect have more nicotine kick than regular cigarettes and the "light" or "mild" is put on there so that people starting to smoke will buy them because they are light or mild, yet they are getting a heavier fix than if they bought the regulation or medium. Is that true, or would you care to elaborate on that, Mr. Poirier?

Mr. Poirier: First, I should like to point out that there is no such thing as nicotine manipulation in the tobacco itself. What we have done, in concert with the government a number of years ago, is to provide an alternative for smokers to have less tar, nicotine and CO in a cigarette. The way this is done is just through the manufacturing of the actual cigarette, through the filter, whether there are holes and so on. I am not an expert on that.

That was done as a result of the government asking us to produce those products. You also commented, Senator Taylor, that you believe that smokers start with light cigarettes. Our understanding is that the 19- to 24-year-old group, which is where most of the starters are, as far as we know, is usually more in the higher tar segment and the 12 to 15 tar. Afterwards, as they evolve over a number of years, they tend to go to lower tar cigarettes.

Senator Taylor: People argue that, once you get the light nicotine intake by holes or bringing in more air, they are designed in such a way that if you cover the holes with your fingers you get a bigger shot.

Mr. Poirier: That is not true.

Senator Taylor: You are not targeting people with fat fingers?

Mr. Poirier: Absolutely not. We have heard those comments before. The cigarettes are manufactured in a way that if the delivery that the consumer wants is a lower tar, nicotine or CO level, then they will choose the lighter cigarettes. Statistics Canada did some research that said that people compensated by inhaling more strongly. We believe that that may happen at first and then they get used to the lower tar, nicotine and CO level.

We manufacture products purely on a question of taste and because the government asked us to put those products on the market. How the consumer changes their behaviour, if they change from one level to another, we cannot comment on that. That is certainly not the intent.

Senator Banks: Like Senator Kelly, I must declare a conflict in that I am a smoker. I do not know which of you gentlemen makes these -- it is not good news for Canadians, I guess, because they are Camels.

There is a severe health hazard in smoking the light cigarettes because you get a hernia trying to get enough tobacco, enough nicotine out of them.

I am delighted, gentlemen, by your support of this bill. I would remind you, though, that this committee is here to examine the bill, not necessarily to promote it. However, your comments are welcome in that respect.

As you have just mentioned, you are placing messages on your packages and, at the moment, not doing so under coercion. You are not required to do so. It is voluntary at the moment, as I understand it.

The purpose of this bill, as expressed in paragraphs 6(a) and (c), is to protect the health of young persons in Canada for their own good. It seems that those of us who are older always know what is better for those who are younger. What are your companies' reactions and positions in regard to those messages?

Mr. Bexon, you raised a package of cigarettes that says "Cigarettes cause cancer." Does your company believe that, that cigarettes cause cancer?

Mr. Bexon: I think we would say that in the weight of the evidence that is before us today, we would agree that cigarette smoking causes disease in some people.

Senator Banks: Might it cause, for example, cancer in young people?

Mr. Bexon: I suppose it might. I have never seen any data on that. My understanding -- and I am not a doctor; I was a salesman and not a very good one at that --

Senator Banks: I suspect you might have been a fairly good one, since you are now the head of the company.

Mr. Bexon: You have to be a good one to be in this job.

Senator Taylor: Beware the guy who says he is not a salesman.

Mr. Bexon: The information I have seen suggests that lung cancer is a particular disease of the aged. I believe I saw somewhere, and I will not hang myself on this number, that the average lung cancer death is something like 73 or 74. So I think it is unlikely that it creates it, but surely, over time, if you choose to smoke, you will run up against that possibility, which I think is fair game.

Senator Banks: Mr. Poirier, does your company believe that cigarette smoking causes cancer?

Mr. Poirier: We believe that anyone who decides to smoke will incur incidental or incremental risks to their health on a number of illnesses, yes.

Senator Banks: "Risk" as opposed to "cause."

Mr. Poirier: I am not a scientist. What I can see is there is a number of different combinations of effect that will cause cancer. Smoking is one of those risks in combination, from what I understand, to other things. Definitely, you are increasing your risk. That is why it is important that it remain an adult decision, that people understand the risks. That is why, if I may, we have also voluntarily put those messages on the package.

Senator Banks: You do not say on your package that there is an increased risk. You say, voluntarily, on your package, "Cigarettes cause cancer." I want to know if your company believes what it prints on its cigarette packages.

Mr. Poirier: That particular messages is an attribution from Health Canada.

Senator Banks: You are not obliged to print it.

Mr. Poirier: No.

Senator Banks: You do print it. Why?

Mr. Poirier: Cooperatively with the government we decided that we would put those messages, because those are their messages.

Senator Banks: Which you are voluntarily putting on your packages.

Mr. Poirier: That is right.

Senator Banks: Mr. Barnett, does your company believe that cigarette smoking causes cancer?

Mr. Barnett: We have the same position as both Imperial and RJR.

Senator Banks: Mr. Barnett, this one says "Cigarettes cause strokes and heart disease." Does your company believe that cigarettes cause strokes and heart disease?

Mr. Barnett: We are not scientists. We are not doctors. We do not do research on it. We rely on other competent authorities. As my colleagues have said, if Health Canada requires that form of message and attribution to them, we are happy to go along with that. I think, frankly, science is not as precise as people would like, so we give people fair warning, give them much advance notice and let people make an informed decision to smoke based on that knowledge.

Senator Banks: So you are not convinced that cigarettes caused strokes and heart disease.

Mr. Barnett: Me, personally, as a smoker?

Senator Banks: No, your company.

Mr. Barnett: The company does not have a position. The position is to go along with the competent medical authorities, which in this case are Health Canada, who gather and analyse the data, and we will put on the warnings that Health Canada believes are appropriate.

Senator Banks: You will do so voluntarily?

Mr. Barnett: Yes, sir.

Senator Banks: Do you believe, Mr. Bexon, that cigarettes cause fatal lung disease?

Mr. Bexon: Yes, I think on the weight of the evidence today, our company position would be that people who choose to smoke, that cigarettes will cause fatal lung disease in some people.

We do not know which people, by the way, and I think you will find that with any examination. I know this is the ongoing debate, where you try to get me to say something that the lawyers tell me not to say. If we could get past that, it is a fun game, but some day hopefully the lawsuits will all be done.

Senator Banks: I am only asking the question in the context of this bill and its intended purpose.

Mr. Bexon: I think we all know that there are significant risks associated with taking on tobacco use. I know there are significant risks. I am a smoker. I know there are significant risks that I assume. You as a smoker know there are significant risks. The whole world knows that there are real risks associated with cigarette smoking.

What I do like about Bill S-20 is that it will delay the onset of that until people have the wisdom to balance those risks against their decision to smoke. That to me is the reality of it.

The Chair: Senator Banks, I think your point is made. Perhaps you could combine the rest of your questions. I know you want to get on to the subject of children.

Senator Banks: I will.

The Chair: I will give you another couple of questions, because there is a long list of senators.

Senator Banks: I just want to get a clarification because, Mr. Barnett, I have got a slightly different answer in what Mr. Bexon answered to the question, which was generally in the affirmative with respect to the use of the word "cause" as opposed to "risk." Mr. Poirier admitted risk but not cause.

What do you think as regards the difference between cause and risk in all of the things that you print on the packages of cigarettes that you make and which I smoke?

Mr. Barnett: As I tried to state and maybe did not make quite clear, we accept the overwhelming evidence that smoking increases the risk.

Senator Banks: Does it not cause? I am after an answer from you, if I can, on whether the company believes that there is a causal relationship, which Mr. Bexon has said he thinks that there is.

Mr. Barnett: You are asking me for a company position; I do not have a formal position. I could offer a personal opinion and that would be that there is not. There are people that I am personally aware of who have smoked for a number of years and have not died from a smoking related illness on a premature basis.

Senator Banks: One of the labels that you put on packages of cigarettes is "Tobacco smoke can harm your children." Do you subscribe to that?

Mr. Barnett: To my knowledge, there is a significant amount of scientific research, some of it in conflict with respect to the adverse effects of environmental tobacco smoke or second-hand smoke. There are significant studies that have been done around the world. It is not clear from that scientific evidence that that is the case. From a cautionary basis, again, like some of the other warnings, we think it is prudent to put that warning on the package until the science is clear.

Senator Carstairs: Mr. Bexon, you indicated you were a sales person, so I assume you are not a lawyer. I also presume that you also have run your remarks today by your lawyer in the company.

Mr. Bexon: I have had more to do with lawyers in the past three days than I ever want to have to do with lawyers again.

Senator Carstairs: I ask that question because, when you put forward a suggestion such as putting in a penalty that would deny a youngster the ability to drive, you are asking this committee to put in an amendment that would be in provincial jurisdiction and that would then have the ability to declare the whole bill unconstitutional. When I look at your credibility, I say: Why would you make that kind of a suggestion? Why would your lawyers allow you to make that kind of a suggestion when this is, after all, about credibility?

Mr. Bexon: The suggestions we have made, senator, are exactly that, suggestions. You will notice that I also said that our support of the bill was not contingent on the adoption of those things.

The lawyers told me that the whole thing was procedurally flawed anyway, so you might as well not discuss it. I think those things are solvable. I will float that one here. I am going to float it in some remarks in Vancouver. I will join the commission in Saskatchewan, I believe, which has already recommended it.

I believe that, along with the strong education that is in this bill, if you do not want people to smoke, you should not allow them to smoke. I do not think you should say "I do not want you to smoke," and then say "Go ahead."

Senator Carstairs: That leads to my next question.

Mr. Bexon: I would dispute that that goes to our credibility.

Senator Carstairs: The committee will make up its mind on that.

You have essentially suggested in some of your proposals, and this is all three of you, that you would like to institute a prohibition against children. I want to know if you believe that smoking should be a criminal act. If you do not believe that it should be a criminal act -- and I do not think governments wish to criminalize it, based upon the amount of revenue they get from it -- why do you want to criminalize children?

Mr. Bexon: When you say that you want possession to be a misdemeanour, or whatever -- and I am not a lawyer -- or to be a punishable offence for an underage person, you are treating it about the same as you treat alcohol or driving. If you caught someone driving at the age of 12, I am sure you would have something to say to that person. However, you would not ban driving because you do not allow people under the age of 16 to drive.Similarly, you do not ban alcohol.

My answer to the other question is no, I do not think the Canadian government should prohibit anyone from using tobacco products. I would find it difficult to put my kids through school if that happened. More than that, most adults who have made the decision to smoke are aware of the risks. Smoke today, aware of the risks. They have made an adult decision.

Senator Carstairs: The reality is that if you include penalties against children when they offend -- and we are talking about children here -- you are criminalizing them. You have to make an amendment to the Criminal Code in order to include such penalties, but by making an amendment to the Criminal Code to include such penalties, you are criminalizing children. Quite frankly, I cannot understand the theory behind that.

Mr. Bexon: If it worked, would you do it?

The Chair: You do not have to answer that question, Senator Carstairs.

Mr. Bexon: I have had to answer all the questions.

Senator Carstairs: I have one final question.

The Chair: I understand your feeling of frustration, but this committee is organized to question witnesses.

Mr. Bexon: I understand.

The Chair: There might be another opportunity for you to do so.

Mr. Bexon: Could we try one the other way around?

Senator Carstairs: I answered a recent letter I received with respect to Bill S-20 and indicated that I was supporting it. I should like to go on the record as saying that I think the government has been wrong in not spending all the money that it has received. I said that in my letter as well. That certainly does not take away from my strong support of Bill S-20, however, because two wrongs never did make a right.

My last question concerns the issues that you raised regarding what you think draws people into smoking, particularly young people. For example, there is peer pressure, and you mentioned a number of others. However, you did not mention one, and I wonder why you did not do so. The largest group of young people who are beginning to smoke is young women. The reason they are drawn into smoking, it appears, is body image: that is, their belief, rightly or wrongly -- I think wrongly -- that smoking will keep them thin and therefore more attractive. Why do you not mention that when you talk about what draws young people, particularly young women, into smoking?

Mr. Bexon: Actually, I was not aware of that.

Mr. Barnett: If I may, when we talk about peer pressure in the context of the question that you raised, if there a belief amongst young women that thin and svelte is better and that, in some way, smoking will assist them in achieving that goal, I would categorize that as being within the peer pressure that we talk about.

Senator Cochrane: Thank you for appearing here this morning. I realize that you have a busy schedule. I am sure we are taking you away from other duties, but knowing the importance of this bill and the emphasis that you have placed on it, I want to thank you for being here.

I have a little information for you about one of the people who appeared before us last night: Dr. Roberta Ferrence, Director, Ontario Tobacco Research Unit at the University of Toronto. Maybe you would like to get in touch with her, because she has done some profound research. She indicated to us that in her research she found that the main cause of heart disease in young people is a result of smoking. That is very serious. I do not have to tell you that when young people become addicted after, say, a short period of time -- because they do become addicted after a short period of time -- they cannot give it up. We must do something about what is happening with the tobacco industry. That is just for your information.

With regard to Bill S-20, and in regard to what Senator Kelly has said about following the agenda here, I intend to follow the agenda because, with any piece of legislation, we must ensure that our definitions are correct. When we know that we are dealing with something new -- that is, when we are building a foundation -- before anyone can start anything we must have our definitions set out so that we know what we are talking about.

I want to refer you to some internal documents that have been made public recently that show that the tobacco industry has known for decades that its products are addictive. By that, I mean in the same sense that the U.S. Surgeon General and the Royal College of Physicians and Surgeons of Canada mean addictive. "Addictive" to me would probably have a different meaning than it would to others.

These authorities mean addictive -- and by these authorities I am talking about the Royal College of Physicians and Surgeons of Canada and the U.S. Surgeon General -- in the same pharmacological way that heroin and cocaine are addictive. I know what addiction means in my terms because I have a brother who has been addicted to smoking. He has had extreme difficulty quitting. He has had severe physiological habituation with this. His nerves have been bad, he has experienced extreme pain, and so on. He has suffered high relapse rates. He has tried to quit this habit, but it is not a habit, it is an addiction. He has not been able to do it. However, he has done it over the past five years, thank goodness.

Recent statements by your industry suggest that you now acknowledge that your product causes addiction. However, the addiction that you are talking about is just a common knowledge, like an addiction to soda pop or to certain candy or to chocolate. That is not the same kind of addiction that we are talking about when we speak about tobacco.

Bill S-20 is about raising a fund to explain what real tobacco addiction is about. Could you help me to understand where you are coming from? Would you agree that cigarettes are physically addictive in the same sense that heroin and cocaine are physically addictive?

Mr. Barnett: As I said earlier, I am neither a doctor nor a scientist.

Senator Cochrane: But you have six children, and so do I.

Mr. Barnett: Yes, and they are wonderful.

Senator Cochrane: As are mine.

Mr. Barnett: To some people, I am sure that they would consider smoking cigarettes to be physically addictive and they would have great difficulty giving them up.

I started smoking over 40 years ago. From time to time I have given up, sometimes with more success than others, but I sit here today as a smoker. Statistics Canada data show that significantly more Canadians claim to have smoked and given up than claim to smoke currently. A large number of people also believe they should exercise more frequently. A large number of people believe they should lose weight. If people put their minds to do something, I believe most people, with or without external aids, can achieve their goals.

Senator Cochrane: That is your opinion and I accept that, but I must tell you it is not always so. I have lived with this. My brother and now my daughter cannot give it up. They have tried in all earnestness but they cannot. That says something about the strength of the addiction.

Mr. Poirier: I am very sorry that your brother and your daughter are facing those problems. We know that there are as many ex-smokers today as there are smokers, so it depends on how we define addiction. The definition changes over time.

We can play with semantics. The crunch is that some people find it difficult but do succeed in quitting, and, yes, many people relapse into it. Many people decide to try quitting but then decide to keep on smoking, but some others are very successful in stopping.

I must object to the definition to which you are referring. From everything we have seen, tobacco is not as addictive as heroin or cocaine. It is my understanding -- not as a scientist -- that people require a rehabilitation program to quit those drugs, usually requiring hospitalization and much help and they go through of a number of physiological stages. That is very different. I do not know of any smokers who required being hospitalized to get out of their addiction or whatever you want to call it. I see a difference. I have to disagree with that particular definition.

Senator Cochrane: You hear smokers using the same terminology used by cocaine and heroin users: "I have to get my fix."

Mr. Poirier: I hear that from people who eat chocolate, too.

Senator Cochrane: A "fix" is different. That is a fixation on something; it is something stronger.

Mr. Bexon: I do not know how addictive heroin and cocaine are so I find it difficult to answer that question.

Senator Cochrane: You have heard about it, Mr. Bexon. You have seen people on television who are addicted and the few who have managed to come out of this addiction.

Mr. Bexon: I do know that by the definition used today -- and that is a moving standard -- we would say, yes, cigarettes are addictive. That standard has moved with the Surgeon General and with various reports. Stuff is put in, stuff is taken out, and that is a scientific definition.

The purpose of Bill S-20, though, is to ensure that underaged people do not get there before they have a chance to go into that decision and make a wise adult decision on the known risks. It strikes me that the purpose of this bill is to take away that issue. That is why I felt so strongly about endorsing it. If an 18-year-old says that they know cigarettes are addictive and can cause lung cancer or heart disease but they have balanced the risks and they decide they still want to smoke, then they should get on with it. If someone does that at the age of 16, you should take away their damned driver's licence.

Senator Cochrane: This is a hot topic with me. I have six children and 10 grandchildren, and three of them are teenagers today. I do not want them to partake in this tobacco smoking. I have seen the effects of it, I must tell you.

Mr. Barnett, I will put you on the hot seat now. On page 3 of your brief, you state:

And sadly, it ignores the ample available research which shows that under-aged smoking is driven not by industry marketing, but by socio-demographic factors such as parental influence, peer pressure and adolescent curiosity.

I am like Senator Carstairs. I should like to add as well that advertising is an issue. Young kids in particular love role models. They love great athletes and great singers. They love the fantastic girl image, the beautiful woman who is on TV with a cigarette in her hand. It portrays an image.

Will you do something about that issue as well? Would you include that as well? You said you would include it in the peer pressure, but the industry is putting forth these ads, which are really enticing our kids.

Mr. Barnett: I do not have the same view as yourself with respect to the effect of advertising on children. Most of my business career was in another industry, that being the beer business. There are some comparisons between the beer business and the tobacco business. It is my firm belief, and I have never seen any research to contradict this, that the presence of advertising will do nothing to incite someone either to start smoking or to start drinking beer.

Senator Cochrane: Really?

Mr. Barnett: I honestly believe that. As a further example, look at all the consumer products that are advertised -- gasoline, automobiles. The decision to buy a tank of gas is not affected by a Petro-Canada ad or a Shell ad, though it may determine the station you go to to get gas. The decision to buy a car is not driven by Ford or General Motors advertising. You make a decision to buy a car and then you look at the brands that are available.

I believe, in tobacco, that the same circumstance exists. That is supported by Statistics Canada data on 30 per cent of under-legal-age smokers; the converse must also be true. The 70 per cent do not smoke at all are also exposed to the same ads and impacts.

Senator Cochrane: That does not make it right, Mr. Barnett.

Senator Kenny: Mr. Bexon, in your statement, which I welcomed, you said that you strongly supported the bill and that your support was not conditional on acceptance of the items you listed afterwards. Is that correct?

Mr. Bexon: Yes.

Senator Kenny: Mr. Poirier, could you tell us please if you also support the bill and if your support is unconditional?

Mr. Poirier: Absolutely.

Senator Kenny: Mr. Barnett, could you tell us the same?

Mr. Barnett: No, our support would not be unconditional, senator.

Senator Kenny: Could you describe for the committee what conditions you put on your support, please?

Mr. Barnett: I made reference to two conditions in my opening comments. For the reasons I stated, there should be industry representation in this foundation. First, we can bring something to the stated goals. The industry and all of the companies have the same goals as are stated in this bill. Our knowledge of the marketplace can add to the endeavours that are stated. Second, I do not believe it is appropriate to put yet another tax on smokers to fund another program when already many millions of dollars have been taken from smokers for the stated purpose that I read in your bill but which, in fact, have not nearly been spent on that.

Senator Kenny: If I may, I will come back to you in a moment.

Mr. Poirier and Mr. Bexon, you both support the bill and both of your companies support the bill, unconditionally. As you know, a similar bill went forward a few years ago. This bill is going through the Senate now. Assuming that this committee supports the bill, and assuming it gains the support of the Senate, what efforts will your companies make to assist it in getting through the House of Commons?

Mr. Poirier: I do not know how we can be of assistance. If there is anything we can do, I should like to hear about it. I am not familiar with the process or how we can help. However, if there are suggestions on that, we would like to do the best that we can.

Mr. Bexon: Ask us for assistance and we will give it. I do not know enough about the parliamentary process to know what we can do for that, but we will.

Senator Kenny: You have a former member of Parliament sitting just to your right, and my impression is that you have a considerable number of people in your employ who understand the parliamentary system very well. Is that true?

Mr. Bexon: Yes.

Senator Kenny: Do you think it is within their capacity to assist you with a program that could assist in getting this bill moved forward?

Mr. Bexon: I would imagine it is.

Senator Kenny: Is it your intention to instruct them to do that?

Mr. Bexon: Yes.

Senator Kenny: Is it also your intention, Mr. Poirier?

Mr. Poirier: Yes.

Senator Kenny: Mr. Barnett, may I direct your attention to the preamble of the bill and in particular, to page 2, line 5:

AND WHEREAS the industry has on many occasions expressed to governments its willingness to cooperate with them in their efforts to prevent youth smoking because it lacks the credibility to take such measures on its own...

Now, that is part of the bill that you said you supported, subject to two conditions. Further, we have had testimony here before Parliament from Mr. Parker indicating that the industry does not have the credibility to conduct programs that have to do with youth smoking. We have also had statements from Mr. Brown, which were referred to earlier by Mr. Bexon, speaking on behalf of the industry, saying that the industry did not have the credibility to take on these programs. As such, this bill has been designed to ensure that the program has credibility by not involving the industry in the programs.

Why, sir, are you making that a condition of your support?

Mr. Barnett: On a moving forward basis, I do not believe and do not accept that the industry does not have the credibility to make some constructive comments to the evolution of this foundation and its stated goal, if you start from the basis, as we have all said, that we want to reduce significantly the amount of underage, illegal smoking by youth. We have all stated that. That is one of the prime purposes of this bill. On this issue, I believe we have goals that are compatible with the sponsors of this bill.

Senator Kenny: Therefore, you do not agree with that part of the preamble and you do not agree with your industry spokesman that the industry does not have credibility on this subject.

Mr. Barnett: That is correct.

Senator Kenny: When the president of your association made those statements, did your company reprimand him or take any steps to say, "That is not our position"?

Mr. Barnett: I do not know when Mr. Parker made those comments. Perhaps you could help me with that.

Senator Kenny: I would be happy to. He made them on April 1, 1997, before a Senate committee.

Mr. Barnett: In that case, I was not in the industry at that time, and today, in June of 2000, I do not share that view.

Senator Kenny: Has your company's policy changed, then?

Mr. Barnett: I should like to see if we can make a contribution and I think that this foundation gives us an ample opportunity to do that and to demonstrate to people -- and I recognize from some of the senators' comments that were made that our reputation may have been damaged based on past actions -- that actions speak louder than words. I am looking forward to seeing if there is an opportunity to demonstrate that, through participation, we can make a contribution to this foundation.

Senator Kenny: Are there any other parts of the preamble that you do not agree with, sir?

Mr. Barnett: On page 1, line 16:

AND WHEREAS the industry acknowledges that public concern about youth smoking is widespread and justified and that many Canadians blame the industry when young persons smoke...

I have not seen evidence that many Canadians blame the tobacco manufacturers for young people smoking.

Senator Kenny: Are there any others?

Mr. Barnett: On page 2, line 22:

AND WHEREAS it is expedient to enact as hereinafter set forth...

I do not understand the intention of the drafters and what was intended by "expediency." Perhaps that is a cynical question.

Senator Kenny: How do you intend to proceed, if you would be kind enough to tell us, Mr. Barnett? Your two colleagues have indicated that their corporations will support the bill and that they will instruct their staff to support the bill. Would you advise this committee on how you intend to proceed?

Mr. Barnett: In respect of our position, we have made two suggestions -- one with respect to funding and one with respect to representation. If the funding issue were addressed, and the representation, then we would support it.

Senator Kenny: If those were not addressed, how would you proceed?

Mr. Barnett: We would not support it.

Senator Kenny: Is that your final answer?

Mr. Barnett: Yes it is.

Senator Christensen: Gentlemen, thank you. There must be a certain amount of unease appearing before such a group of persons. Unlike younger persons who do not really appreciate risks, at our age group we do know that we are not immortal and we know that many of our friends and family who undertook that risk many years ago are in fact leaving us. We are very aware of the problems. For myself, coming from the Yukon, which has a population of 30,000 people, I see the statistics of 42,000 or 45,000 who leave us each year as a result of tobacco-related diseases. It brings the issue right home to me, that every year I am losing more than the population of the community in which I live -- a territory -- or in other areas, a province. It really graphically grabs many of us.

In Bill S-20 there are a number of objectives listed that deal with advertising. From a positive point, could you gentlemen tell us what steps your companies take to ensure that your advertising is not attracting or appealing to underage smokers? You have a lot of resources at your disposal and very sophisticated advertising people. Therefore, you could help us and those who are going forward if, in fact, this bill is passed. How do you discourage persons under the age of 18 from getting into the smoking habit?

Mr. Bexon: Perhaps I can speak for Imperial. The laws in Canada are among the strictest in the world and they have been since the passage of C-51 and then its successor bill. Outside of Finland, probably, we have always been under the most rigorous code of marketing practices in the world. I would measure our success with the fact that we have never received a single charge, or a single conviction, in all that time. The federal government proscribes what we are allowed to do. We operate within that.

Senator Christensen: When you are doing your statistics and your surveys, what is it you are trying to weed out, so that smoking will not be appealing to the younger person?

Mr. Bexon: I would not know what to put in to make it appealing to younger people. Thus, I would not know what to take out to make it unappealing to them. I have three children. I cannot figure out how to make them to do what I want them to do. If I were that smart, I would know how to have them go to church. I do not know how I could answer that more openly. I would not know what to put in my advertising to make it make appeal to young people. First, I would not do it. Even if I did have a plan to do it, I would not know what to do.

Senator Christensen: The question was not what you would do to make it appealing. What do you do to try to make it not appealing? What do you do to try to eliminate that market?

Mr. Bexon: I would have to say that I do not think we do anything. We develop our material today for people over the age of 18 years.

Senator Christensen: You develop it for young adults.

Mr. Bexon: Yes, people over the legal age of smoking.

Senator Christensen: Are not all young people from the age of 10 years wanting to be young adults? They are not, but is that not a goal to which they aspire?

Mr. Bexon: I did not when I was 10 years old. I do not know whether that is a common practice. I wanted to stay 10 years old forever.

Senator Christensen: Would either of the other gentlemen like to respond to that?

Mr. Poirier: Yes, again, we do not have any data on underage people. Thus, it is hard to understand what is really attractive. We will know as much as anyone else here. We do know that we deal with media houses, placement for media and so forth. They have the strict mandate to respect a certain code. Under normal circumstances, if there is total adherence to that code, which is everyone's effort, it should be not visible, or visible the least possible, to anyone under the age of 18 years or 19 years.

I should like to point out also that, within our company, two experts hired by the Canadian government went through 20 years of company history. They reported that there was absolutely no evidence, nothing, indicating that our company targeted, advertised or researched people under the age of 18 years or 19 years.

Mr. Barnett: Our response would be similar to those of my colleagues. If, on a corporate policy basis, you are committed to not doing research with the people that you are talking about, the younger part of the youth segment, I do not know how, other than trying to use good judgment when you are creating advertising targeted at older people, you can be certain that the advertisements that you generate will not appeal to this younger group. We have no way of testing it, other than using your own good judgment.

Senator Christensen: I would presume that the same thing would apply when doing advertising for sponsorships. You have said that you do not know which elements in the advertising you would take out because you are not sure which are appealing to youth. Most sponsorship are geared towards younger people. Is that correct? Would the same answers apply?

Mr. Barnett: Yes.

Senator Christensen: You said that you do not have any current statistics on younger people. Is that is correct?

Mr. Barnett: That is correct.

Senator Adams: Welcome to the Senate committee. I have been on the committee for about 20 years. We have done a few things during my time in Ottawa. I can see that you are no different than any other company that we have questioned. It is similar to when we were talking to car dealers and companies about vehicles polluting the air. Cigarettes are a little different.

The highest percentage of smokers in Canada is in the North, where I come from. I support Bill S-20.

The automobile companies were against changing the laws regarding leaded gas. Polluting the earth is hard on the people. At that time, the companies said that they would lose business if the lead content in gasoline were changed. Today, there is new technology. It may be the same with your industry.

When I was young, over 50 years ago, my grandfather smoked a pipe. We never saw any cigarettes then. People began rolling cigarettes. Today, there are filtered cigarettes to lessen the nicotine in your lungs.

Some food company told us that they could make tomato juice without using tomatoes and that it would taste exactly the same as tomato juice. Is there some way to manufacture nicotine without using tobacco?

Some people say that maybe the nicotine would not have such a negative effect if it were manufactured. All kinds of sickness today is perhaps not from the cigarettes, but, according to doctors a couple days ago, from nicotine. Cancer of the gums and lungs are from the nicotine.

Have you done research in that area? That way, people could smoke if they wanted to, with fewer risks. I know Senator Kelly smoked a pipe. I once liked the smell of pipe smoke. I cannot stand the smell of cigarettes. Most people today smoke cigarettes. Is there some way that you can find something that would be less harmful than nicotine?

Mr. Barnett: Speaking for our company, we make a wide range of brands from medium to high nicotine levels down to very low levels. That range of brands has been available for a number of years. There is a significant choice for smokers, including very low nicotine cigarettes to high nicotine cigarettes. People make their choices.

Mr. Bexon: It is a very interesting question and it has been around for a long time. If there is an issue with tobacco, why not make it out of something else? Why not get the issue to go away by not using tobacco? I find that an intriguing question.

It has been done. Billions of dollars have been spent. I know some of the reasons, but I am not dead sure why a product that can be used without the health risks is an impossibility. I know that we cannot do that on our own. We do not have the money, nor the credibility, in this case. We do not have access to the scientists. However, it is really my hope that we can work in conjunction with the government at some time. The industry and the government should work together to solve that problem. That would be the real magic bullet.

Senator Adams: I agree with you. Even with Bill S-20 the forecast is between $350 million to $400 million a year reduces young people smoking. However, the price does not matter. Where I live the prices are raised every second year but as long as people want to smoke they do not care how much it costs. A package of cigarettes in Nunavut costs nearly $9. In Ontario and Quebec it is only about $4 a package. People in the North are buying cartons of cigarettes at over $60. They still smoke. The same is true for my colleague, Senator Sibbeston. He comes from the Northwest Territories. We have many heavy smokers. They are not slowing down even with the higher prices of cigarettes.

[Translation]

Senator Nolin: Thank you for coming here and for appearing before us today. I am highly interested by the various commitments you have made. I am pleasantly surprised by your position. However, as my colleague said a little earlier, we will have to wait and see whether your talk will be translated into action. Some people may think I am naive, but I feel your commitment is serious and I take it in good faith. I believe you have spoken in good faith.

Mr. Poirier, where will your profits come from? Every year, you lose on average between 40,000 and 45,000 smokers, or clients, and you have to find new ones. Studies have shown that between 70 and 80 per cent, and I even saw 85 per cent somewhere, but let's not quibble on the figures -- of your clients, approximately three quarters, begin smoking before they reach the age of majority. It is a fact that you do not like this. In saying this, you are showing us without a doubt that you are serious.

One of your colleagues even suggested becoming more actively involved, but we will discuss this amongst ourselves, since I do not intend to address Mr. Barnett's conditions. I understand his position, but where are your profits going to come from? Your objective is to generate profits for shareholders, is it not?

So, in view of the fact that you lose 45,000 smokers per year, how can you say: "We are getting new clients, but we basically do not want them." Officially, new smokers are minors; "they are smoking, but we do not want them to and we should perhaps work harder at not targeting them".

Mr. Poirier: Yes.

Senator Nolin: I completely support your objectives. However, since these are the stated objectives of three major companies in Canada, you must realize that your credibility is at stake. I want to believe you, but you have to convince me that your objectives are true given the fact that you have to make profits.

Mr. Poirier: All right, Senator Nolin. If you want figures, in terms of dollars, in terms of financing, we do not have many. We do not have any specific figures, but I have seen a certain number of analyses or studies done in the United States which reveal that teenagers who are not yet of legal age consume 2 per cent of all tobacco products in the United States. I imagine the figures would be similar for Canada. I am not convinced I can tell you that if our sales go down 2 per cent, and that if for moral reasons we stop and do the right thing, again, in financial terms, if we can avoid lawsuits, we will make profits just the same.

Senator Nolin: I understand the 2 per cent figure, but let us not confuse things even more. Based on the numbers, 75 per cent of people who start smoking do so before they become adults.

Mr. Poirier: Yes.

Senator Nolin: That is more than 2 per cent of tobacco products. I am trying to understand how your decision would make sense from a commercial point of view.

Mr. Poirier: Listen, it is obvious, and you are entirely right in saying that we need new clients. Any company or business needs to renew its clientele in order to ensure its long term survival. And since we are talking about a product which is associated with certain risks, we want it to be used by adults who have chosen to try it today.

We would like to hope it is the same thing for alcohol, since there may be other categories of similar products, and if an adult decides to experiment with these products, if he has all the information, and assuming he is using his judgment at that point, we hope that people will have the right to make that decision. Is there a risk? Yes.

I am not sure about your data. You are probably right, but people will no doubt keep on buying those products and decide to experiment with them when they become adults.

Senator Nolin: As you know, our objective is to create a endowed fund, and one of you -- I believe it was Mr. Barnett -- said that it was a lot of money. He said we should begin with less money and see whether there is a need for more. Studies have already been done on whether more money is needed, and our bill makes provisions for an amount which is not unduly high, since American studies have shown that it is not even as much as the average of the other funds. But we are not at that point yet. However, if we do get the amount which has been mentioned, it might make a difference. Making a difference means successfully countering your marketing campaigns. That is why I raise the issue.

Mr. Poirier: First, there are several answers to the question. In our view, the amount itself is not necessarily an indicator of effectiveness. A certain amount of money was spent much more efficiently under the "I.D. Card" program, so money does not necessarily equate with efficiency.

If it takes $340 million, fine. What we want to know is whether this is really the way to go, if it is the right thing to do.

We have made suggestions. At the beginning of my presentation, I said that we thought it would be a good idea for the government to take the time to closely study the reasons why young people try smoking and what the consequences are.

Indeed, I was reading a piece in Saturday's Globe and Mail, of which I have a copy -- we can pass it around if you are interested -- which talks about Grade-ten teenagers in high school. These teenagers were about 15 or 16 years old, and some of them were even in Grade eight. In the last four or five years, from 1994 to 1998, alcohol and drug use increased by 40 per cent.

I think it would be an excellent idea for the Foundation to spend money on finding out why these teenagers are taking up these habits or why they are not only trying smoking but also other substances. I believe that if we get to the bottom of the matter, we will be able to solve many of these problems at once.

Senator Nolin: The Foundation definitely has the powers to do that. In fact, if that were not the case, it would be like doing marketing without knowing why. There is no question that the Foundation will have those powers.

How can you reconcile your need to make profits, which is your raison d'être as a business, with the important commitments you have made this morning? This is an important day in the history of the tobacco industry. I am trying to marry two seemingly opposing ideas, but we have yet to see whether your words will be followed up by action.

[English]

Senator Cochrane: This question is a continuation of what Senator Nolin was asking. I should like to have a response from each of you. If there were measures that would reduce smoking, would you support those measures even though they might reduce your companies' profits?

Mr. Barnett: Is your question directed specifically at youth smoking or at smoking overall?

Senator Cochrane: I am looking at youth smoking, because that is where it all begins.

Mr. Barnett: Yes, we would.

Senator Cochrane: You would?

Mr. Barnett: Yes.

Senator Cochrane: Even though it would reduce your profits?

Mr. Barnett: Yes.

Mr. Bexon: Yes, although I would try to take so much business from my competitors at that point that I might complicate the business.

Mr. Poirier: Yes, and we will put up a fight.

Senator Banks: Following up on Senator Kenny's question and taking it just a step further, I wish to ask Mr. Barnett to assume that this bill receives the recommendation of this committee and goes forward to the Commons without accommodating the two suggestions you have made. Would you actively oppose and would you cause others, to the extent you could, to actively oppose the bill in the Commons?

Mr. Barnett: Yes.

Senator Banks: Thank you. Mr. Poirier, when did your company stop doing research upon and targeting what we now regard as underage smokers? How recently? We know from going back that this used to happen in the industry. When did your company stop doing that?

Mr. Poirier: I mentioned earlier that in 20 years of documents reviewed by experts hired by the Canadian government there was no indication that we did any research. I do not know of anything further than that at any time in our company here in Canada.

Senator Banks: Mr. Bexon, do you know when it stopped?

Mr. Bexon: Would you repeat the question, senator?

Senator Banks: At some time the tobacco industry, and your company in particular, did research that included and to some degree targeted smokers between 12 years and 17 years of age. Do you know how long it has been since your company stopped doing that?

Mr. Bexon: We have never targeted youth. I must put that out again. I will leave the document that will prove it. We have never targeted underage smokers and I want that on the record. The last 15-year-old out of our statistical component of the survey fell off about four or five years ago, but I cannot speak exactly to that.

Senator Banks: Parenthetically, I would be very interested in the disproof to which you refer. You sell Player's?

Mr. Bexon: Yes.

Senator Banks: I am looking at a Player's Light English market document of your company from a long time ago. I have no doubt that your company has changed its practices since then, but it says "target group," and attached is the highest possible ratings to males 12 years to 17 years of age. I would be very interested in the disproof that that is referring to a target group.

Mr. Bexon: I will leave it with you, senator.

Senator Banks: Mr. Barnett, do you know when your company stopped researching or looking at what we now regard as underage smokers?

Mr. Barnett: No, I do not. I have been in the industry for only 18 months.

Senator Banks: Would it be possible to find out?

Mr. Barnett: Yes, I would be happy to do that.

Senator Banks: Would you let the clerk know?

Mr. Barnett: Yes.

Senator Kenny: The question of informed decision has come up, Mr. Bexon. I believe it was raised by you. This is an argument I have always found a bit curious. It sounds fairly reasonable to say that an adult should be able to make up their own mind and decide whether or not they want to smoke. Where it gets more complicated is that we know from Health Canada that 80 per cent of smokers start before the age of 16 and, in fact, they are starting at the ages of 10, 11 and 12. Clearly those people are not in a position to make an informed judgment. Yet they get addicted from that age on, and by the time they are ready to make an informed judgment it is too late. They are caught.

Why does the industry keep coming back and talking about adults making reasonable, informed judgments when in fact they know that the addiction takes place long before the children have the capacity to make an informed judgment?

Mr. Bexon: I would hope that that would be one of the things that Bill S-20 would rectify. That is one of the reasons I support the bill. I would also add to that, again, my strong endorsement of the fact that a prohibition on possession is, I believe, a painful and costly but required component of that, because you should have an age -- and I believe that age is 18 -- where they know what they are getting into.At that point they make an adult decision and live with the consequences. My use of the words "informed decision" was exactly in that context. That is why I like this bill.

Senator Kenny: You have led me directly to my second question, Mr. Bexon. I believe it is generally accepted that there are probably four principal causes for young people to smoke: rebellion, peer pressure, hero worship, and young women who want to stay thin.

You talked about the possession argument in the context of reducing peer pressure. How about talking about it in the context of rebellion? If you make something illegal, are you not on the same hand likely to encourage kids who want to rebel?

Mr. Bexon: Peer pressure is a strong force on youths. My suggestion in terms of a driver's licence penalty that is married to prohibition is because I think you have to give those people something that they value so much today that they are not willing to give in to peer pressure. I do not think you can offset it, but I think they need to know they do not want to do that. I know all the guys do that, and hopefully they will not by the time this bill goes through. They will not want to do all that because they will not want to run the risk losing the thing they value most, which for many is their driver's licence. They are not even really related, it is to put something of weight on that side.

Senator Kenny: I understand.

Mr. Bexon: It is the same for rebellion. I believe that that is a component. This is just trying to put something that is not an unfair penalty but has real salience to this group of people.

Senator Kenny: Can you provide to the committee evidence that would indicate that rebellion is a lesser cause of smoking than peer pressure?

Mr. Bexon: No, I cannot.

Senator Kenny: Mr. Barnett, what information does your company have regarding underage smokers that would qualify you to be part of the decision-making process in the foundation?

Mr. Barnett: As we have said, access is a key component. We have a sales force that calls on 40,000 retailers across Canada. If people cannot buy, if we significantly improve the effectiveness of that in-store compliance, you have significantly reduced part of the problem we are trying to deal with. If they cannot buy them, they cannot smoke them; or if you significantly reduce the opportunity to purchase, that is one tangible way.

Senator Kenny: My question was what information do you have about underage smokers that would qualify you or your company to be part of the decision-making process of the foundation?

Mr. Barnett: We have no information on underage smokers.

Senator Kenny: Then what qualifies you to be on that board?

Mr. Barnett: As a manufacturer, I feel we have a significant role to play in a problem that we have all agreed we have concerns about.

Senator Kenny: Do you accept the fact that 45,000 Canadians die a year from tobacco-related diseases?

Mr. Barnett: No, I do not.

Senator Kenny: What figure do you accept?

Mr. Barnett: I do not have a number. I am not a doctor or scientist.

Senator Taylor: You sound like a district attorney.

Senator Kenny: Thank you. You have no idea what number of Canadians die from tobacco-related diseases?

Mr. Barnett: No, I do not.

Senator Kenny: Do you accept that Canadians do die from tobacco-related diseases?

Mr. Barnett: I accept that on a common sense basis, yes.

Senator Kenny: How do you believe that, if you are manufacturing a product that kills Canadians, you have credibility in terms of directing a foundation that is designed to stop Canadians from using your product?

Mr. Barnett: I did not ask that we have the ability to direct the foundation. I asked that we could participate in the foundation. In asking that we participate, it was not with the thought that we would control or direct. It was that we would participate.

Senator Taylor: As deputy chairman, I would compliment the three of you for giving good evidence. I did not see any of your lawyers leaping up and holding their heads. You probably have not stepped into anything that you should not have.

My question is short. Do you export any of your cigarettes?

Mr. Barnett: Yes.

Senator Taylor: Do you package them differently than you do in Canada? In other words, are the ads on the side different than in Canada?

Mr. Barnett: I do not honestly know. Do you mean the mandatory warnings?

Senator Taylor: Yes. I have some evidence to indicate that exports to Asia, for instance, have a different type of advertising and a different type of packaging. The packaging is small enough that school children can afford to buy them. What would you say to that? Is my information wrong?

Mr. Barnett: We do not export to Asia. Our principal export market is the United States.

Senator Taylor: Do you export outside of North America, Mr. Bexon?

Mr. Bexon: No. We had a very small business in China at one time, but we bought a company that does that for us.

Senator Taylor: I see.

Mr. Poirier: There have been some changes. I cannot answer accurately today as to how much we produce that is exported, and to where. I know that there have been a number of structural changes since the ownership change a year ago. There is still some movement in there.

Senator Taylor: Could you follow that up with a letter to us replying to that question? That would give you a chance to do research. It would give an idea as to your inclination or mental outlook on marketing to juniors, if you are indeed packaging and marketing to juniors in some country other than Canada.

Mr. Poirier: I should like to comment that our brands here in Canada are strictly for Canada. There is a very small percentage for tourists who happen to be visiting in the U.S. and want to buy our brands there.

We may be producing different brands for another country, based on the rules of that country because that is where they are sold. From a manufacturing standpoint, we are an international organization, with different pieces everywhere.

Senator Taylor: We would appreciate it if each of you could drop us a note as to what your outside North America export practices are.

Mr. Bexon: You may be referring to a pack of 20.

Senator Taylor: Some are as low as a pack of five cigarettes.I thought it was your company selling those small packages. When I was last in Thailand, they were available on school grounds. In other words, they were very much targeted to beginning smokers. I should like to know a little more about that. Although it does not occur in Canada, it would give me an idea on how your marketing people approach things like that.

Mr. Poirier: Perhaps I could add one more piece. If you are trying to determine if we manufacture anything out of our plant in Montreal that is below a pack of 20, the answer is no. If you would still like me to follow up with what we do, I will.

Senator Taylor: Yes, if you would. More information does not hurt.

Senator Nolin: I have a comment for you, Mr. Bexon. I am sure that you are quite aware that the Senate has decided to launch a massive inquiry into illegal drugs. It is a reality that prohibition does not work. I would oppose the introduction of a new prohibition in Bill S-20. I want you to know that so that you are aware that we must study how prohibition was supposed to work, why it did not work, and what we should do to replace prohibition. You should be aware of that before we get into our examination of your recommendations.

The Chair: Thank you very much, gentlemen, for your patience and for appearing. I hope that, if we require further assistance from you, you will be cooperative and assist us.

We welcome the next panel, from the Canadian Cancer Society.

Mr. Rob Cuningham, Senior Policy Analyst, Canadian Cancer Society: You are aware that the Canadian Cancer Society supports this bill, and I would certainly like to reiterate that support today.

I will respond to the testimony of the previous witnesses in two main areas. One is credibility, and the second is the targeting of young people through marketing.

I believe some of their testimony will result in the credibility of the tobacco industry being thrown out the window. Mr. Barnett, in particular, for Rothmans, Benson & Hedges, Inc., refused to acknowledge the causal relationship between smoking and various diseases. He refused to acknowledge that tobacco smoke can harm children. He gave responses such as, "The science is not clear." He mentioned that he is not a doctor or a scientist. He said that many people will smoke without being affected.

These are the same types of responses that we have heard from the tobacco industry for decades. One must question their sincerity and credibility about not wanting young people to smoke when they make statements like that.

None of the presidents acknowledged that cigarettes are as addictive as heroin and cocaine. The president of JTI-Macdonald Corp., Mr. Poirier, compared the addictiveness to chocolate, which I think trivializes a very serious health problem.

We know they are concerned about their testimony. Mr. Bexon from Imperial Tobacco said that he spent the last three days with lawyers. Is that an industry that really wants to come forward and tell the truth to the Canadian public, or are they wanting to give clever answers through the filter of lawyers?

This industry would qualify in the year 2000 as charter members of the new "flat earth society".

Mr. Bexon would not acknowledge that reducing youth smoking is more important to his company than profit. He would not admit that he was troubled by the dominant market share of Imperial Tobacco among young people.

At the same time, he was referred to a document by Senator Wilson with respect to target groups of age 12 to 17. He did not repudiate that document. He did not say that was wrong. He denied that they had advertised directly to underage people. They were really advertising to 16- and 17-years-olds, and they just had to do it that way and 16 was the minimum age at the time, he said.

In fact, that is incorrect. According to the law in Ontario and New Brunswick, laws that have been in place since the 1890s, the minimum age was 18.

According to the tobacco industry's own voluntary code, initially established in 1964, the minimum age was 18. They repeatedly made public pronouncements that they would comply with the voluntary code and that they only advertised to adult smokers to encourage them to switch brands. "We do not advertise to people under the age of 18", they proclaimed repeatedly to this Parliament and to the Canadian public. Yet an admission that they targeted 16- and 17-year-olds is an admission that they were misleading the public.

I would like to table a document for the benefit of members of the committee. This document contains a copy of the Ontario legislation, a copy of the tobacco industry's voluntary code in place at the time, and also the dates by which various provinces increased their minimum age to 18 or 19.

We heard from Imperial Tobacco that they continued to do market research on 15-, 16- and 17-year-olds up to and including 1997. It was not until after the Tobacco Act, Bill C-71, was before this Parliament, or perhaps had been passed by this Parliament, that the industry increased the target age. We are not exactly sure to what age they increased it, because Mr. Bexon said 19, and 18, and 16, and that he did not know. How important is reducing youth smoking to Imperial Tobacco when they do not know at exactly what age they start their market research?

We heard from Mr. Barnett, sitting beside Mr. Bexon, that it is wrong to conduct market research on underage people. Yet Imperial Tobacco has been doing that for decades. Mr. Bexon does not want to quibble about the past, but three years ago is rather recent to be considered far in the past, which is the context that he tried to convey.

I should like to note one particular point in terms of the recommendation by Mr. Barnett and Rothmans, Benson & Hedges to amend the bill to obtain the company's support. As I understood it, he suggested an amendment to require the revenues from the surtax currently imposed on tobacco products be used to fund the foundation. Constitutionally, I understand that the Senate cannot initiate an amendment or a bill that would require government spending. He is recommending a measure that is constitutionally impossible for this committee and the Senate to adopt. That says a lot.

Mr. David Sweanor, Senior Legal Counsel, Non-Smokers' Rights Association: Honourable senators, I will try to put into context some of what we have just heard. I hope to put it in as good a light as possible for the people who testified immediately before us.

To begin, we do have to see this in a health context, which was clearly missing in the testimony from the tobacco industry. We are dealing with a product that kills somewhere in excess of 45,000 Canadians a year. It is a product that is used by somewhere in excess of 6 million Canadians. About 70 per cent of the people who do use it say they wished they did not use it at all. About 40 per cent of those are making a serious attempt to quit in any given year. Many of them would prefer very strongly not to smoke, but they are physiologically dependent.

This is a product that exacts tremendous costs, not just in terms of the lives, the health that it takes away, but in economic and social costs for the country.

Our children will do many things that we do not want them to do. They will do various things that are dangerous, but it is hard to think of any other activity that so greatly increases the likelihood that we as parents will some day have to bury our own children. The tobacco industry markets those sorts of products. The 11-, 12- and 13-year-olds who are starting now are the people who, by their late 30s and early 40s, will be at a massively greater risk of dying as a result of using these products. That is the health basis, and in dealing with kids, the informed consent basis for doing the things suggested in Bill S-20.

The tobacco companies clearly have a vested interest in the youth market because that is when people start smoking. It has often been said that adults do not start smoking, they only quit smoking. It is youth who start smoking.

We can look at this as a business proposition. If we were sitting in a board meeting of a tobacco company and decided to quantify this, it would not be difficult to work out the value to a tobacco company, or companies, of 12- 13- and 14-year-olds starting to smoke. You can easily determine how many of them will become dependent. How long are they likely to smoke before they manage to break that dependency or die from it? How much money do you make per pack? How many packs per day are they likely to smoke? What is your discount rate? Any way that you calculate it, every child who starts smoking now is a future flow of profits of thousands of dollars in present values for those companies.

With over 100,000 kids starting to smoke each year, we are talking about a market. The present value of the kids who start to smoke this year is probably in the hundreds of millions of dollars. They can be traded much as we trade oil futures or bonds -- by pricing them out. That is an awful lot of money.

The tobacco companies tell us they do not want kids to smoke. That struck me as similar to an umbrella salesman saying, "I sure hope it does not rain". Why would someone say that? That does not seem to be in their interest. To give them the benefit of the doubt, however, they have stated -- and Mr. Bexon stated again here this morning -- that they would be willing to take their chances if no one else started smoking as a child.

I have heard this from other people in the tobacco industry. They make a plausible case when they say that if people do not get into the tobacco market as kids, they very well could as young adults in their late teen years and early 20s. We also know that many people who do experiment will become dependent. Even if they only experiment when they go off to college, there are future customers for a long time.

The tobacco companies know that many people who "play" with cigarettes for awhile find that they actually get a type of self-medication benefit from the drug in the cigarette to treat various pre-existing conditions such as schizophrenia, chronic depression, attention deficit disorder, and probably alcoholism as well. There are interactions where the industry could potentially still do well even if they did not get kids to smoke.

The industry has the added advantage that someone who uses cigarettes -- and they are doing it primarily to get nicotine -- does not have any other options. The only way that you can get nicotine on a sustained basis, at the levels that smokers are looking for, is from tobacco products. In an article that I co-authored in the Journal of the American Medical Association three years ago, we referred to the "nicotine maintenance monopoly". Maybe they have decided that they can make a lot of money even if they do not get kids to start.

Perhaps they also have decided that because they are an oligopoly, they can raise their prices enough so that even if there are only one-half as many smokers, they can still make a profit. As an industry that is under siege now for all sorts of past actions -- health care cost recovery, the actions on smuggling, the rumours of pending criminal charges -- they might decide for image reasons to take a hit on the kids' market in order to deal with other things. It is possible.

The companies say that they have done things to try to prevent young kids from starting to smoke, but these efforts have been quite ineffective when we look at the history. They have used strategies that were previously proven to be ineffective elsewhere -- for example, some of the retailer compliance actions that they talked about here. They have used a program off and on for about 15 years. When they first brought it to Canada, based on work done by the tobacco industry in the U.K, we contacted scientists there, who said that by no means should that program be used, not only because it did not work, but because indications were that it was counterproductive.

However, the tobacco companies used the program. They had voluntary codes to prevent advertising to kids, including not putting up billboards next to schools. I cut my teeth on some of that advertising material back in the 1980s. I went around to look and found hundreds of billboards next to schools. They did a bad job of keeping the material away from kids. They do not have a good track record on that and they misunderstand the science. How can they communicate messages to kids when they are talking about it in terms of adult choices?

I heard someone say that he has four adult children, three of whom smoke, and since it is legal he has no problem with that. If I were to say that I have four adult children who are engaging in unsafe sex with people who are HIV positive, and because it is legal I have no problem with that, I expect that you would want to lock me up. The same as if I were to say that my cousins go out and binge-drink on weekends, but because they are all over 19 now I have no problem with that. There are public health reasons why we have public health laws. If people do not understand the reason behind the law -- if they only see the law -- they do not get it and they do not understand the science.

This industry also has a history of not communicating what they know. It bothers me, as someone who is married to a psychiatrist who has worked with many children with attention deficit disorder, to find out that Philip Morris knew 25 years ago that virtually every child with attention deficit disorder would become a smoker. They never told any one that -- they forgot. They have internal prevalence studies, but they do not share them with us.

They have information on the use of light cigarettes, but they do not share that. They are not doing a good job on some of the things that could prevent the uptake of smoking among young kids, and inform scientific debate.

We see the same competitive pressure as when we look at helping any other industry. This is a tragedy of the common situation. The tobacco companies' own documents indicate that whoever "gets the kids wins the day", because of brand loyalty. For example, if there are three companies, and two of them say, "We will go along," and the third one says, "No thanks," that third one will grab the market. They are forced as an industry to go to the lowest common denominator. They need someone else to help them out and to set the standard. That is what Bill S-20 seeks to do. It would allow for the potential correction of this huge problem.

We saw further evidence of the problem with the presidents of the tobacco companies. Bill S-20 would allow them to actually achieve what they claim they want to do. It would pass the responsibility to an entity that would have core competency in this area. We heard the tobacco executives claim that they do not have core competency. They claim that they would like to do something to help, but when asked if they have any research or background, or if they have done anything to look at kids, their response is that they have not.

However, there are many Canadians who have extensive information and competency in the area of trying to prevent the uptake of smoking among young kids. Transfer the responsibility to people who have that competency and help the industry do what it says it wants to do, and that is, protect the kids.

The tobacco companies have great core competencies in selling cigarettes using every legal tool, and perhaps some that are not quite legal. They do not have core competencies in preventing the uptake of smoking among kids. They do not have expertise in conveying health information, and again we need only look back to what they were saying: "If it is legal, that is it." There is no health basis to that.

I suppose it follows then that I could say to my 10-year-old that if he were to get mad at someone at the soccer game, he could punch that person in the face, because it is legal since he is underage. We communicate messages about what we want to accomplish, but they do not seem to understand the health basis and the social reasons why we would want to prevent certain types of behaviour.

Clearly the industry does not understand the disease and dependency that form the basis for wanting to protect our kids. Given that there is no likelihood of voluntary action leading to anything close to success, we all desperately need something like Bill S-20 to be able to deal with the problem.

Senator Cochrane: As you mentioned, there is a follow-up from this morning's meeting and from the testimony of the CEOs with whom we were speaking. Mr. Barnett mentioned that he did not see any correlation between advertising and smoking by children.

I wanted to ask at the time, "Why are you advertising, then? "

Senator Kenny: That is a good question.

Senator Cochrane: I did not get the chance to ask earlier.

The Chair: I am sorry. It is not possible to ask everything.

Senator Cochrane: Do you have any idea how much these companies are spending on advertising?

The Chair: Billions.

Mr. Cunningham: In Canada, if we look back to the debate on Bill C-71 that was before this chamber three years ago, based on the information available at that time, approximately $200 million per year on all of their marketing activities; that is advertising, sponsorship, point purchase, sales representatives, market research, and so on.

Their argument that advertising has no impact on overall demand is rubbish.

Senator Cochrane: I know that, but that is not what they said. All you need to do is look at the ads. As I said to them, these kids want to adopt the images that they see on billboards.

Senator Banks: Mr. Sweanor, were you here this morning?

Mr. Sweanor: Yes.

Senator Banks: Did you hear all of the testimony?

Mr. Sweanor: I did indeed.

Senator Banks: I invite each of you to give us your opinions. I am interested in this particularly because I just got here and you have been around this problem for a long time. You know a great deal about it, which is why you are here.

Why did two of the company representatives who were here this morning unconditionally support Bill S-20 and undertake to actively promote its passage through the Commons?

Do you think there is an ulterior motive in that? Do you think we have lucked out and they have seen the light? Do you think that they are utterly convinced that there is some constitutional impediment to its proceeding?

I ask this question in the context that it is easy for us to ascribe to them -- as they put it this morning -- the image of "the bad guys", that we have been making them the bad guys for ever. Everything they do is wrong. This morning, two of the tobacco company representatives came out and unequivocally supported this bill.

I should like to hear your personal opinions, from your observations this morning, as to why they would have done that.

I think we expected less. I was expecting a bit of a tap dance about the fact that they see merit here, they would like to contribute and co-operate, but they must discuss it further. However, that is not what we heard. We got yes, absolutely.

Mr. Sweanor: The tobacco companies do like to say they are being demonized and that people are attacking them. It is probably more accurate to say that they themselves decided what sort of industry they wanted to be. Other people simply pointed it out. If that is demonizing them, then that is not our fault. Their documents speak for themselves.

When they come here and say that they support something like this unconditionally, yes, there could be ulterior motives. Would anyone like to see a major action that in effect destroys their "seed potatoes"? That is not very likely. Would we expect oil companies to come here and say that they sure do not want to find new oil deposits? It does not make a lot of sense.

To give them any sort of benefit here, this industry is more under siege from a whole range of directions than probably any industry previously. These people will tell you in their more candid moments that they must lead a sheltered existence. Try going to a cocktail party and telling people you are a tobacco executive They do not do it a second time. They are not well liked. They have trouble talking to their neighbours and that hurts. It is difficult to bring good people into that industry.

They are looking to change their image. Whether or not they want to change their substance is another issue.

This is connected to what was mentioned at the beginning of the session in the testimony given by Mr. Thompson and Ms Callard. The companies look for ways to delay action in order to try to reduce the likelihood that people will go after them, and to sound very reasonable. They have done it for a long time. We now have the benefit of looking over past records in which they would come and say, "Well, the government would like us to move to these lighter cigarettes." Indeed we heard some of that here this morning. However, their own internal documents show that they already knew that that would not reduce risk. They sounded reasonable.

In fact, they sounded reasonable on many things. The question is, can you accept that? Can you take them at face value? My answer to you is probably not, but what difference does that make to this bill? The strongest thing we can do is put it forward, and if the House of Commons, for whatever reason, tries to kill it again, it will have to answer to the need for the strongest case possible to do something for the next generation of kids.

Keep in mind that among Canadians currently alive, 1 million will die from smoking over the next 20 years based on World Health Organization estimates. That is the equivalent of losing the population of Manitoba. We are perpetuating that with each new year, each new cohort.

If the tobacco companies say they want to support this, I believe we have an obligation to take them at their word. There is justification for them wanting to support the bill, but we must get it out there and actually do something for the kids.

Mr. Cunningham: I found it interesting that one of the three companies would actively oppose the bill in the House of Commons if it was adopted in its current form. That is a tremendous disappointment. The industry is not united in support of this.

If Imperial Tobacco is sincere, I would urge that company to publicly release all of their market research on underage people, including 15- to 19-year-olds, up to and including 1997.

We see that overall tobacco marketing expenditures may have been over $150 million as opposed to $200 million in 1997. They have many resources in place now. This is certainly an industry that can take action and has the resources to do so.

Senator Christensen: If Bill S-20 is adopted and there is some success in reducing the number of underage smokers, do you have a ballpark figure on what that reduction might be? The next step is, what effect would that have on the smoking population in Canada in, say, 10 years? Are you able to speculate on what that figure might be?

Mr. Cunningham: It is impossible to predict a precise number for the magnitude of the impact.

Senator Christensen: Could you answer the question based on other jurisdictions that have implemented programs targeting youth smoking?

Mr. Cunningham: Clearly we will see a reduction in youth smoking. That reduction will accumulate over time and be compounded. I know that California and Massachusetts have seen far superior trends in reduced youth smoking than other states. I understand there will be testimony from representatives of those jurisdictions before this committee next week. They would be able to give you more precise information on that.

Senator Christensen: Given the statistics in other jurisdictions, what percentage of young people over the age of 18 who had not smoked previously start smoking when they reach legal age?

Mr. Sweanor: There is little evidence to date, but that is primarily because the tobacco industry harvests all its customers in the teen and pre-teen years. There is some recent evidence from studies in U.S. colleges of some uptake of smoking among people when they first go off to college and university, but it is tiny compared to what happens elsewhere.

Scientists are saying that given that many people are predisposed to being more dependent on the product, and that some people clearly perceive some sort of benefit from the nicotine in the cigarettes, there will still be uptake of smoking even if no one starts before the age of 25. We are not exactly sure of the number, but it would be much smaller than it is now.

If we targeted that 70 per cent of smokers who say they want to quit, helped them to quit, we would have fewer role models and points of access for the kids. Those things would have an impact. There would be a snowball effect over time as we put more things into place.

Senator Christensen: Would it be possible to use persons going through programs to stop smoking, and who were successful, to visit schools and talk to the children in the programs of a foundation such as Bill C-20 would develop?

Mr. Sweanor: Florida has found that having children help design the advertising campaigns can be extremely valuable.

Senator Adams: I would like to know more about your organization. It is difficult for young people who are 12 years or 16 years to join an organization.

You are telling young people that they will ruin their lives if they begin smoking. Do you have any memberships within your organization for young people?

Mr. Cunningham: The Canadian Cancer Society is a volunteer-based charity with divisions all across Canada. We have teenage volunteers. We do have some programs to reduce smoking. You have heard testimony about the large number of volunteers in our organizations.

Senator Adams: A witness had a brochure the other night on the effects of smoking.

Mr. Cunningham: From the Heart and Stroke Foundation?

Senator Adams: Yes. Do you have a brochure like that on the effects of smoking to send to households?

Mr. Cunningham: Yes, we have self-help smoking cessation pamphlets that people can obtain from our local offices. We also have a toll-free number that people can call to obtain a copy of that booklet.

Senator Adams: Does your membership increase annually? Do more people join your organization each year?

Mr. Cunningham: I cannot give you precise numbers.

Senator Adams: Lobby groups are sometimes strong. We sometimes hunt where I live, but the animal rights group is very strong. They have lots of money and they lobby against the hunting.

I wondered how much money you have. When 45,000 people are dying every year from the effects of smoking, I wanted to know how we could strengthen your organization. I was wondering how we could give your organization adequate funds so that Canadians would understand how many people are dying from smoking cigarettes.

How could we help your organization? The other day we saw a 30-second clip about smoking that cost $10 million. That is a typical expense.

Mr. Cunningham: We certainly would like to do more as an organization. However, we have limited resources for doing what we would like to do.

That is why this bill is so critically important. It would provide the needed resources to address this serious problem, including in Nunavut.

I was there when the territory was established and spoke to the Deputy minister of Health. He described to me the absolutely horrific level of smoking among young girls in the territory.

Senator Adams: I support Bill S-20. I am concerned about how we can make more people understand the problem. As I said to the witnesses from the tobacco companies, it does not matter how much you raise the price of cigarettes once people are smoking them. We want to stop people from smoking.

My youngest boy never smoked. He is 20 years old now. I have been preaching to him that cigarettes and alcohol are bad for you. If you want to have a car in the future, then you cannot drink and drive. I am telling him all that so that he can understand my position.

Some young people today do not have part-time jobs and they just "hang out". I want to know how we can stop them from smoking. They just sit at home and smoke while they watch TV.

Mr. Sweanor: This is one of the things that makes bill S-20 so important. We are looking at the various health issues with which the country is dealing, and what sort of interventions we can make.

It is worth noting that a World Bank economist worked out a few years ago the cost per additional year of life saved through various sorts of interventions. He found that money spent on tobacco control was as cost effective as you can get after immunization. Immunization is immensely cost effective.

We are talking about an additional $20 or $30 per year of life if the money is spent well. Tobacco control efforts are far more cost effective than any other medical interventions, yet we are not spending money in this area.

There is much evidence on what works and is effective, but it is not happening. At least it is not happening in Canada. We are seeing results in some other jurisdictions.

This gives us an opportunity to use the body of knowledge that exists in Canada, supplemented by what we have learned from other jurisdictions, to obtain these cost-effective interventions. At the very least, we owe it to our kids. We see evidence that with a little money, we can prevent a tremendous amount of ill health and premature death.

Senator Adams: Some areas of the community have organizations such as public health boards, but I never see them concerned about people smoking. They are mostly concerned about having a hospital or a nursing station. They do not want to find out more about what causes cancer.

Would your organization be able to attend these centres at some time and meet with these people to explain how cigarettes and alcohol are bad for them? Some of the small communities say that they will become alcohol free. People either start smoking more, or more drugs come into the community, because it is an easy thing to do.

I am trying to find out where we should start if Bill S-20 gets going. I am looking for answers here.

Some organizations have funds, but it is very difficult when the government does not contribute.

Senator Kenny: I wish to tell Senator Adams briefly that the bill is designed specifically to accommodate Nunavut and different groups within the country. The effective American designs that we examined had specific programs that focused on groups like yours. I cannot imagine the bill not providing for a tailor-made program for your part of the country.

The witnesses today have perhaps the toughest job of any of our witnesses because they have had to do this on the fly. It is difficult to rush to a judgment. I am very much aware of Senator Banks' concern. I am sitting here puzzling over what happened this morning, how much we should take at face value, and how much of it is just the snake changing its skin and moving on.

I would be happy to hear the two of you elaborate a little more on that. I would also be interested in any cautions you would have for this committee. What should we be concerned about in the future? What should we be watching for? How would you recommend that we test the credibility of what we heard this morning?

Mr. Cunningham: The tobacco industry does indeed have a history of saying one thing and doing the opposite. We have seen it in their proclamations that they would not advertise to underage people. We have seen it in their proclamations that they would comply with the voluntary codes, and so on.

I do welcome their support. I am pleased that two of the three companies will not be opposing this bill. In my opinion, the industry does not sincerely want this to pass. They do not want youth smoking to go down because they know what the impact will be on their profits.

Their statements seem to reflect progress compared to some we have heard from the industry in the past. They opposed Bill S-13, a similar bill, in the recent past. That is progress.

Mr. Sweanor: We must look at their vested interests. I have talked to many tobacco industry people and many executives will say they do not want kids to smoke.

I usually put this suggestion to them: If I told you I was really opposed to strip mining but held $5 million worth of stock in a strip mine that was paying me large dividends, would you not suggest that I dump that stock before I opened my mouth?

They agree. Then I tell them that any economist can fairly quickly work out the value to their company of the kids who will start to smoke this year. I suggest to them: Why not take that amount, multiply it by three to be sure no one can question your motives, and give it away. Give it to a children's hospital. Send it to the government. Throw it in the river. Do something to show that you actually lose money every time a child starts smoking. Then you will be putting your money where your mouth is and you will have more credibility.

I actually believe at least one or two of them went back and spoke to their number-crunching people. Shortly thereafter, it was dead. That is because kids are worth so much to the industry, and also because a single company could not do that. It would be corporate suicide to give up the kid market if your competitors are not doing it too.

There are reasons to be cautious, given the vested interests of the industry. The executives readily admit they spent days being briefed by their lawyers before coming to talk to you. Then they come up with suggestions that are clearly unconstitutional or impossible for the Senate to do. You cannot revoke provincial driver's licences. I guess they were not aware that licences are issued by the provinces rather than the federal government.

These are senior executives making large sums of money, being advised by very highly paid legal talent over a period of days. Can they not come up with better suggestions? I would be cautious. However, it is worth moving ahead. You can either take them at their word or call their bluff, depending on what they are doing.

Move forward with this bill. Push the companies to the point of saying, "No, we were joking and trying to mislead the committee; we are very interested in kids and we would like to kill this bill."

They need to be pushed. The reasons for caution are certainly not reasons to delay moving forward on this bill.

Senator Kenny: Would it be imposing to ask you to examine the statements made by these industry witnesses? There were passing comments about procedure from one witness. There is the question of encouraging us to tax when they knew we could not. You mentioned the provincial jurisdiction on the driver's licence. There was also the comment at the end, "I don't understand how Ottawa works."

Mr. Sweanor: That is a recent phenomenon.

Senator Kenny: I hesitate to ask the tobacco lobbyists in the room to raise their hands. It might be half the room.

Would the two of you undertake to provide the committee, in the fairly near future, and after taking some time to think about it -- I am talking about next week, I guess -- with your assessment of the various potential pitfalls that should concern us?

What occurs to you, after second or third reading of the testimony, that the committee should take into account as it moves forward with the bill? What things should we be watching for? What can we provide to supporters of the bill in the House of Commons?

Mr. Cunningham: Yes, senator, we would be delighted to do that.

Mr. Sweanor: Yes.

The Chair: I have some questions that do not deal directly with the bill. Senator Kenny is the renowned expert here, but I introduced the tobacco products bill in the Senate. I am familiar with the process.

The whole discussion then was about why tobacco is not under the Hazardous Products Act. I recall speaking several times in the Senate about that kind of initiative. Of course, if tobacco were under the Hazardous Products Act, the government would have the ability to do a number of things, such as eliminating some of the poisons.

Do you think there is value in that question once this bill is passed? We are conducting a major drug study. Tobacco is the only drug that, if used as prescribed, kills people. You need not abuse it; you just use it.

I wanted to ask Senator Nolin if tobacco will be included in that study. Is it not commonly understood that tobacco is a drug?

Mr. Sweanor: Tobacco is recognized as a psychoactive substance. Certainly the main reason that people smoke is to obtain nicotine, which is definitely a drug.

The Chair: So nicotine is the drug.

Mr. Sweanor: There are also issues about MAO inhibitors, and various other substances in cigarettes and how they affect smokers, that may explain the continuation of smoking.

Any discussion of illegal drugs and the approach that we should take toward them benefits greatly from input on what has happened with tobacco. Many of the arguments about de-criminalizing illegal drugs are based on the idea of doing something similar to what we have done with tobacco. It can then be highly regulated and taxed.

Talk to people about tobacco. There are limits to how much we can do. We have seen how readily the industry is willing to feed unofficial channels to circumvent government regulation. There are issues about what you can do to change a product, and how quickly you can do that in order to achieve some sort of public good in a legal environment where there is still the potential for a black or a "grey" market. Tobacco really informs those sorts of discussions.

As for the regulation of tobacco itself, whether under the Hazardous Products Act or otherwise, the biggest problem is that tobacco products have been left unregulated, whereas any product that could potentially compete with tobacco is regulated. For example, we could acknowledge that science tells us the nicotine in tobacco products is the primary reason people smoke, either because of dependence or self-medication or some combination thereof, but nicotine is not responsible for the large number of deaths.

Nicotine at that dosage level is not harmful. People are dying because they are getting this drug into their systems through a phenomenally dirty delivery system. If the only way we could get caffeine into our systems was by sucking it into our lungs, that would kill us too. Yet the tobacco companies have been given this nicotine maintenance monopoly. No one else can deliver nicotine as a maintenance drug to people who need it or want it because that would be banned under a food and drugs law. The tobacco companies have been protected by not being regulated, when any other competitor would be.

The Chair: It seems to me that tobacco was particularly exempted from the Hazardous Products Act.

Mr. Sweanor: Yes.

The Chair: Why was that? I cannot remember why.

Mr. Sweanor: The history of tobacco exemption under consumer product law is much broader than just in Canada. Generally, as consumer protection laws were brought forward worldwide during the last 100 years, the tobacco companies argued, "You cannot bring our product under your Hazardous Products Act or poisons act or medicines act or food and drugs act," depending on the country. The very nature of the product would cause you to ban it because it has no safe level of consumption. They therefore managed to keep their product out, while any competitor product would be caught.

It always strikes me as odd when you need a special piece of legislation to deal with a particular item. It has always struck me, as a lawyer in court, as being tantamount to saying, "Your Honour, I acknowledge that my client here is guilty as sin. He killed all those people and robbed all those banks, but as you can see, he is 6 foot 8 and 400 pounds of solid muscle. There is not a prison in this country that can hold this psychopath. I guess you better let him go free." You need something to deal specifically with this problem.

The Chair: The philosophical strategy on how to deal with tobacco strikes me as rather Alice in Wonderland. We all know that they cannot eliminate the youth market because they would then be looking at the obsolescence of their industry. We also all know that it is not all right for adults to smoke for a lot of reasons. There is the financial cost to us, never mind the human cost. That is something to pursue at another time.

The other thing that I wanted to ask you about -- and no one mentions it much -- is the influence of movies on kids' motivation. What you think about that? There was a short time -- maybe five or six years ago -- when the movie companies were not showing people smoking cigarettes. My own view is that movies, music videos, and so on, have an unbelievable impact on children 8 to 12 years old. Kids are dying to see all kinds of cool movies. Lately, you see beautiful people smoking cigarettes in almost every movie. That is why my generation started to smoke. It is all Humphrey Bogart's fault.

Senator Kenny: And Lauren Bacall's fault too.

The Chair: Who could be cooler to watch than Humphrey Bogart smoking? The impact of that is unbelievable.

Do you think there is a secret deal, just as there is, for example, in the James Bond movies? Coke and all kinds of other products are advertised in those movies. They are now advertised in movie theatres, which was not the case before. Do you think there is a contract somewhere for some sort of monetary gain? Is there anyway of getting at that?

Mr. Sweanor: You are right, but it is not a secret deal any more. Some of them have seen the light of day.

The Chair: Really? Contracts with the movies?

Senator Kenny: Yes, and actors.

The Chair: I did not know that.

Mr. Sweanor: For some movies, it would be in excess of $1 million in product promotion. Sylvester Stallone has contracts that pay him quite large sums of money simply to have cigarettes portrayed in movies that he makes.

Senator Kenny: Yes, in his next five movies.

The Chair: Are you serious? Where are all the people who have been harassing the industry about violence, foul language, and other things? I have not heard them talk about this.

Mr. Sweanor: The tobacco companies have promised that they will not do this any more.

The Chair: When?

Mr. Sweanor: Right after they promised they would not target kids, I think.

The Chair: Is there any movement in the United States or any kind of legislative initiative that is looking at that? I know how important the film industry is in the United States and how vital it is to Democratic candidates, whom you might expect to be more susceptible. What about the congressman from California, Mr. Waxman? Is he on to this? What is the story?

Mr. Sweanor: Deals have been signed as part of the settlement with the state attorneys general in the United States in which they have agreed not do this any more. We can continue to be suspicious of that.

My understanding of that came from a chance meeting at the airport in Tokyo in 1987. I was waiting for a delayed flight to Vancouver and I started talking to someone who was on a late flight to Los Angeles. It turned out he was a movie producer who made intelligent movies wherein helicopters and guns shot at each other. I do not remember anything beyond that. I told him I was in Tokyo for a health meeting on tobacco. He started talking about tobacco and said, "Tobacco is not a good thing to put in movies." He said, "At some point, there will be great residual value in movies. People will be able to get them on cable, on disk, and on all sorts of things. To sustain the value, you do not want to inadvertently put things in movies that people would find odd in the future. You would not put in gratuitous violence by a husband against a wife, knowing that society is moving in a certain direction, unless it had to be part of the movie. Similarly, you would not put in cigarettes." I then asked, "You won't have cigarettes in movies?" He replied, "Oh, no. I didn't say we wouldn't, it is just that you can figure out what the residual value of the movie would be if you had cigarettes in it. You just have to figure out how much someone would be willing to pay you to put the cigarette into the movie to see if it was a viable business." It was some years after that that I saw the Stallone contract and others. I figured this guy knew whereof he spoke.

The Chair: This is important for Canada, given the number of American movies we see here. I presume there are no laws in Canada that prohibit including cigarettes in movies. I do not know if I have seen any cigarettes in Canadian movies.

Mr. Cunningham: The Tobacco Act would prohibit product placement in Canadian-made movies.

Mr. Sweanor: That is also why Canadian health groups have talked about things like plain packaging for cigarettes, namely, to remove the brand identification. At that point, a company is less likely to want to pay a lot of money to have it in a movie if no one can identify it.

The Chair: If this new foundation is established, perhaps we can figure out a way to slice out those parts of American movies that are shown in our movie theatres. That would be a major step forward.

Senator Banks: We are often taking the tobacco companies to task. I should like to throw some numbers at you. The common contention is that if we find some "magic bullet", as it has been called, to either prohibit or preclude people who are under the legal age from beginning to smoke -- because that is where most of them begin -- we will be reducing the cigarette companies' end market because fewer people begin to smoke at or after the age of 18 or 19. Is that correct?

Mr. Cunningham: Yes.

Mr. Sweanor: Yes.

Senator Banks: That does not follow if you are a marketer. If we had that magic bullet that kept people from smoking until they were 18, that would not guarantee, or even indicate, that they would not start smoking when they reached 18 or 19.

Mr. Sweanor: That is the bargain one has to make, namely, that at the very least, we need to protect them until they are 18. At that point, we would then be in a contest with the tobacco companies to see who would get them.

Senator Banks: We are kind of subscribing through the back door to their view that it is an adult thing, a decision to be made in a mature and informed fashion.

Mr. Sweanor: They are claiming that.

Senator Banks: We are claiming that, are we not?

Mr. Sweanor: No. The view of the health community is that, although you would still have uptake in smoking if no one started before the age of 18, it would be much reduced. You have less peer pressure, because as people mature, they are less susceptible to advertising messages. People who have certain conditions that predispose them to feel the benefits of nicotine, such as attention deficit disorder, can outgrow that over time, so that they do not get the same kind of buzz. You would have a lower uptake and a lower level of dependence. When your body is still growing and your brain still developing, and you start hitting your nicotine receptors with nicotine from cigarettes, they will respond and grow. They get used to it. More of the people who might take up smoking in their 20s would probably be able to quite sooner, and the disease burden would be less because you are delaying the onset. You are waiting until their bodies mature, which is of huge benefit in reducing the carcinogens and other toxins. You also have that 20- or 25-year lag between when people start smoking and start getting the diseases that are caused by that addiction. You are getting various benefits along the way.

Mr. Cunningham: We commend you for your work.

The committee adjourned.