THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, June 5, 2024
The Standing Senate Committee on National Finance met with videoconference this day at 2:32 p.m. [ET] to examine all of the subject matter of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: Good afternoon, honourable senators. Before we begin, I would like to ask all senators and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters.
[English]
If possible, ensure that you are seated in a manner that increases the distance between microphones. Only use the black approved earpiece. The former grey earpiece must no longer be used. Keep your earpiece away from all microphones at all times. When you are not using your earpiece, place it face down on the sticker placed on the table for this purpose. Thank you all for your cooperation.
I wish to welcome all the senators as well as the viewers across the country who are watching us on Senate ParlVU.
[Translation]
My name is Claude Carignan, senator from Quebec, and chair of the Senate Committee on National Finance. I would now like to ask my colleagues to introduce themselves, starting from my left please.
Senator Forest: Éric Forest from the Gulf senatorial division in Quebec.
Senator Gignac: Clément Gignac from the Kennebec senatorial division in Quebec.
Senator Galvez: Rosa Galvez from Quebec.
Senator Loffreda: Good day and welcome. Tony Loffreda from Quebec.
Senator Dalphond: Pierre Dalphond, De Lorimier senatorial division in Quebec. I think it’s the Quebec bench on this side.
Senator Kingston: Joan Kingston from New Brunswick.
[English]
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Ross: Krista Ross, New Brunswick.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Smith: Larry Smith, Hudson, Quebec.
[Translation]
The Chair: Honourable senators, today we will continue our study on the subject matter of all of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024, which was referred to this committee on May 9, 2024, by the Senate of Canada.
We are pleased to welcome with us today representatives from various groups and industries: Eric Gagnon, Vice President, Corporate Affairs, Imperial Tobacco Canada Ltd; Judith Barry, Co-founder and director of Government Relations, Breakfast Club of Canada; Steven Staples, National Director of Policy and Advocacy, Canadian Health Coalition; Christine Comeau, Executive Director, Canadian Craft Brewers Association; and Rob Cunningham, Senior Policy Analyst, and Ciana Van Dusen, Advocacy Manager, Prevention, Canadian Cancer Society.
You will have a maximum of five to seven minutes for your opening remarks. On that note, I give the floor to Eric Gagnon, Judith Barry, Steven Staples, Christine Comeau and Rob Cunningham.
Eric Gagnon, Vice President, Corporate Affairs, Imperial Tobacco Canada Ltd: Good afternoon and thank you for the opportunity to comment on Bill C-69. My name is Eric Gagnon and I am the vice president of corporate affairs at Imperial Tobacco Canada. Although I will be making my opening remarks in English, I would be pleased to respond to your questions in French.
[English]
First, let me start by saying that youth should not use nicotine products. Like cannabis and alcohol, nicotine should only be consumed by adults. The encouraging news is that the daily youth smoking rate has decreased to an all-time low in Canada to 1%. However, we need to ensure that youth do not have access to other nicotine products.
Imperial Tobacco Canada is deeply committed to this, and we do everything in our power to prevent youth access. As an example, we work closely with our retail partners providing tools and training, and anyone caught selling to youth will lose the ability to sell all of our products. While the tobacco industry tends to take the blame for youth use, it is not our products that are being accessed by minors. Rather, youth are accessing hundreds of unregulated and illegal products. If the real objective is to keep nicotine products out of the hands of youth, we invite senators to focus on the thriving illicit market due to a lack of enforcement. Illicit operators do not abide by any rules, including asking for proof of age.
Coming back to Bill C-69, I will focus on the amendments to the Food and Drugs Act in section 326. This will grant the Minister of Health extreme order-making powers to overrule the regulatory approval process for therapeutic products. This includes any drugs, medical devices and natural health products. This clear overreach should alarm senators because the stated first use of these powers is based on completely false premises. Minister Holland claims he wants these powers to address nicotine pouches, and we are the only company with such a product approved by Health Canada.
ZONNIC is a 4-milligram nicotine pouch designed to help smokers quit, just like nicotine gums, lozenges or sprays. It was approved by Health Canada after a two-year review where we had to demonstrate its safety and efficacy as a cessation product. Many false comments have been made about ZONNIC, including by the minister, so let me set the record straight.
The government has not imposed any age restriction on the sale of nicotine-replacement therapy products, but we have for ZONNIC. Flavours have been part of cessation products long before the arrival of ZONNIC to the market, and suggesting that we use flavours to attract youth is simply not true. Like everyone else, we use flavours to help adults move away from cigarettes.
Finally, our packaging and marketing initiatives are no different than our competitors. If anything, we use less media touchpoints and our age-gating is far stricter. I give that context because Minister Holland seems particularly focused on us, perhaps due to his previous role as an anti-tobacco lobbyist. The minister is trying to justify his power grab by suggesting we have violated our licence for ZONNIC, which is false. We’ve had numerous meetings with Health Canada in which they have confirmed the latter.
No evidence has been provided that our products are unsafe, that it does not help smokers quit or that youth are using it. This gets to the heart of the problems with section 326. We believe there are legitimate questions about whether this type of “one-person power” belongs in a nation that respects science and values the rule of law.
Further, if Parliament is going to grant extreme powers to ministers to pursue personal vendettas, imagine the potential for abuse. We are the target today, but it could be any therapeutic product tomorrow because these powers will exist for any future health minister. If you think that’s alarmist, consider that Louisiana just declared two abortion pills as controlled and dangerous substances a few weeks ago.
More fundamentally, the ministerial powers in section 326 take a science and evidence-based approval process for therapeutic products and taint it with political and personal considerations. Meanwhile, the minister and anti-tobacco lobby groups are silent on the widespread availability of illegal nicotine pouches. These products contain far greater nicotine levels and are sold outside responsible retail channels.
Health Canada should approve and regulate products based on objective evidence not the minister’s personal bias. Therefore, clause 326 should be removed in its entirety.
Thank you. I look forward to questions.
[Translation]
Judith Barry, Co-founder and director of Government Relations, Breakfast Club of Canada: Good afternoon, honourable senators. Like Mr. Gagnon, I would be pleased to respond to your questions in French or English; however, I will give my remarks in English.
[English]
Since 1994, Breakfast Club of Canada has been working with partners from all sectors to provide healthy food access to schoolchildren so they can reach their full potential. We are currently joining forces with stakeholders across all provinces and territories feeding and helping to feed half a million children daily, including 45,000 Indigenous students.
Breakfast Club of Canada has eagerly welcomed Budget 2024’s historic announcement made by the Government of Canada regarding an investment of $1 billion over five years for a national school food program. It has been decades that some stakeholders have been advocating for such a policy change to happen. This significant advancement marks a turning point in the country’s commitment to the well-being of all children and will help make life more affordable for families across Canada while 1 in 3 children is at risk of going to school on an empty stomach.
Although this is a good start, $1 billion over five years and $70 million for the first year are insufficient to cover all the current needs across the country. It is crucial to remind everyone that this complimentary investment is building on the current provincial and territorial investment to school food as well as on the private and community contributions. We still need all the contributions. It will help implement a coherent national program and foundation to eventually provide nutritious food access to all students across Canada.
A robust national school food program is essential not only to address hunger but also to promote better learning outcomes, nutrition education, improve mental and physical health and foster social equity. This is why a national school food policy and a long-term budgetary process must be implemented to secure and guarantee the $1 billion investment over time.
For too long, Canada has been the only G7 country without a national school food program. We are delighted to see that the Government of Canada is acting to implement the budget tabled on April 16, 2024, and approve the Minister of Families, Children and Social Development entering into bilateral agreements with the government of each province and territory. Believe me, they are ready to negotiate and act on it. The Indigenous partners are ready as well.
Breakfast Club of Canada fully supports the budget bill and is encouraging the government to move forward with this first funding commitment that will have a significant impact on the well-being of our children. We are looking forward to accelerate the results of this investment as soon as possible.
In conclusion, the national school food program is not just a budget amount, it is an investment in the future of our children and, by extension, the future of our country. By ensuring that all children have access to the nutrition they need to succeed, we are fostering a generation that is healthier, more educated and better equipped to contribute to society. We are also ensuring that it generates social and economic benefits through local food procurement and employment. This program is a critical step toward a more equitable and prosperous Canada.
Thank you for your time and consideration. Meegwetch.
Steven Staples, National Director of Policy and Advocacy, Canadian Health Coalition: Thank you, Senator Carignan and dear members of the committee. I would like to thank you for inviting me here today. A special hello to my fellow New Brunswickers. We are well represented as well with those from Fredericton.
Founded in 1979, our organization’s members work to defend and improve our public health care system. We comprise front-line health care workers’ unions, community groups, students and public health experts.
In February, the federal government introduced legislation to deliver the first phase of national pharmacare to provide universal coverage for most contraceptives and many diabetes medications in partnership with provinces and territories. This is Bill C-64, the pharmacare act, passed third reading in the House of Commons on Monday.
Bill C-69, which we are discussing today, plays an integral part of the government’s pharmacare plan. Budget 2024 provides $1.5 billion over five years, starting in 2024-25, to Health Canada to support the launch of the national pharmacare plan — an unprecedented first for a federal budget.
In the days following the introduction of the pharmacare act, the Canadian Health Coalition issued a statement to welcome the introduction of Bill C-64. I have provided the statement as part of our brief where you will see it is endorsed by a broad cross-section of more than 49 organizations and researchers, civil society groups and health care providers from every part of the country, including organizations like Heart and Stroke Foundation of Canada, Canadian Doctors for Medicare, Action Canada for Sexual Health & Rights and organizations in Quebec like Coalition Solidarité Santé and Quebec Nurses Association. The New Brunswick Health Coalition has signed on as well as many provincial health coalitions and other organizations representing nurses and those who advocate for the disabled, retirees, women, immigrants — they all endorse this.
Taken together, Bill C-69 and Bill C-64 are landmark pieces of legislation that take an important first step in continuing progress toward a universal national pharmacare program.
Canada is the only country in the developed world that has a universal health care system that does not include universal coverage for prescription drugs outside of hospitals.
Pharmacare is needed urgently to improve the health of those living in Canada. One in five people reported to Statistics Canada they do not have access to prescription drug coverage. Low-wage earners, immigrants and racialized people are hit hardest.
In addition, the overall cost of drugs to our health system must be reduced. According to the Parliamentary Budget Officer, or PBO, prices for prescription drugs in Canada are roughly 25% higher than the median for Organisation for Economic Cooperation and Development, or OECD, countries. A single-payer pharmacare system with the power of bulk purchasing is the best route to negotiate lower prices from drug manufacturers.
Canadian Health Coalition members heartily endorse the recommendations of the 2019 national Advisory Council on the Implementation of National Pharmacare led by Dr. Eric Hoskins.
A nationwide program to achieve public coverage for contraception and diabetes medicine and related equipment delivered by a single-payer approach through provincial public health systems is a historic step in the direction recommended by the Hoskins report on pharmacare.
Finally, there are many more steps ahead to achieve universal coverage and a national formulary of medicines.
We urge the Senate to ensure the legislation — Bill C-69 and Bill C-64 — adhere to single payer, universal, public delivery in partnership with provinces and territories, along with the adequate funding and accountability measures, in accordance with the principles of the Canada Health Act.
I look forward to your questions.
[Translation]
The Chair: Thank you very much, Mr. Staples.
Ms. Comeau, you have the floor.
[English]
Christine Comeau, Executive Director, Canadian Craft Brewers Association: Thank you so much for inviting me to speak before you, the esteemed members of the Standing Senate Committee on National Finance.
It is a true honour, and I’m very excited to have the opportunity to talk about many people’s favourite topic — Canadian craft beer.
I’m Christine Comeau, Executive Director of the Canadian Craft Brewers Association, also known as the CCBA. The CCBA operates as a federated model, which means that any craft brewery across Canada that is a member of their provincial association is automatically a member of the CCBA. We also collaborate with the Canadian Coalition of Independent Craft Brewers who also represent Canada’s larger craft breweries. This means we are Canada’s definitive national voice for independent craft brewers.
There are nearly 1,200 independent craft breweries across Canada from coast to coast to coast with 55% in rural communities. We’d be hard-pressed to find another industry that has had such recent growth and impact in their local communities.
Craft breweries are typically very labour intensive. Each batch of beer is lovingly handcrafted. That’s why they support nearly 21,000 jobs, which is about 60% of all beer industry jobs, even though craft represents only 17% of all beer brewed in Canada. They contribute $1.7 billion in total gross national product.
Like many small businesses, craft breweries have not been immune to COVID, supply chain disruptions, soaring inflation and costs of borrowing. Inflation has hit our industry especially hard. Malt prices are up as much as 50%, aluminum cans 20% and cardboard is up 16%. Unlike large mainstream breweries who buy in bulk and have the capacity to absorb costs, small breweries simply cannot increase prices sufficiently to cover their costs. In 2023, we saw the first year of net brewery closures — 70 across Canada. However, there is hope. Canadians love craft beer, tourists love craft beer and Canadian craft beer continues to grow in market share with lots of room for growth.
We wish to thank the government for the excise tax relief spelled out in Bill C-69, and especially for cutting the excise duty rate by half on the first 15,000 hectolitres of beer brewed in Canada for the next two years. We are thankful it acknowledges the urgency to support Canada’s smaller breweries that represent over 20,000 industry jobs.
Recent data from Innovation, Science and Economic Development Canada confirmed that in 2022 63% of the close to 900 smaller Canadian breweries were not yet profitable. The report went on to explain that a significant barrier to profitability is the amount of provincial and federal markups and taxes small Canadian breweries pay. That is why we are seeking reform for the outdated Excise Tax Act, which was established in 2006.
We applaud the recent announcements and would also encourage supporting larger independent craft breweries with a progressive, growth-oriented, federal excise rate schedule that allows all breweries to grow to 500,000 hectolitres without encountering a fiscal cliff. These larger craft breweries account for more than 60% of the country’s craft beer production and make a sizable contribution to job creation, investment, economic growth and tourism promotion in Canada.
A cross-section of provincial governments have all embraced a growth-oriented taxation regime that go far beyond the 75,000 hectolitres that the federal government currently uses to define craft beer. Except for changes made this spring, we have not seen any major changes since 2006, well before we had a robust craft beer industry in Canada. It’s time to finish the job of fixing the tax disparity, especially when our competition in the U.S. can brew up to 7,000,000 hectolitres of beer annually before they reach higher excise tax rates.
A recent economic impact study on Canada’s craft beer industry conducted by MNP explained how this small investment in Canadian craft breweries is trade compliant and will become revenue neutral or positive, not a cost drain on the treasury. The Department of Finance validated the MNP findings, saying the valuations held up.
Again, we wish to thank government for the excise tax relief spelled out in Bill C-69, and we believe there is an opportunity to make sweeping permanent change that is progressive and growth-oriented, allowing all craft breweries to grow without encountering a fiscal cliff.
I truly appreciate the opportunity to be here today. It means a lot to me, my board and the nearly 1,200 craft breweries across Canada. I am always available as a resource to you. We have lots of facts about our industry. In the summer, I do encourage you when you’re out and about to tour a craft brewery and be sure to meet the people behind the beer. I would be happy to provide a warm introduction because there is nothing like a warm introduction for some cold craft beer. All you have to do is ask. Even if you’re looking for advice on a beer festival or which craft beer to try, my team and I are happy to help. Thank you very much and cheers.
[Translation]
The Chair: Thank you very much, Ms. Comeau. Mr. Cunningham, it’s your turn.
Rob Cunningham, Senior Policy Analyst, Canadian Cancer Society: Thank you, Mr. Chair. Honourable senators, on behalf of the Canadian Cancer Society, thank you for giving us the opportunity to appear before you.
[English]
My name is Rob Cunningham, Senior Policy Analyst for the Canadian Cancer Society. I am accompanied by Ciana Van Dusen, Advocacy Manager for Prevention.
In our testimony, we would like to highlight our support for four measures in Bill C-69: the tobacco tax increase, the vaping tax increase, the information sharing provisions and the new legislative authority in the Food and Drugs Act that will enable further restrictions on nicotine pouches. We urge all senators to support these important measures.
First, higher tobacco taxes are the most effective strategy to reduce smoking, especially among youth. Youth are particularly responsive to tobacco tax increases. We support the $4 per carton increase found in the budget.
While the tobacco industry is opposing tobacco tax increases, at the same time, the industry is implementing massive price increases of their own. Over the 10-year period 2014 to 2023 inclusive, the tobacco industry increased cigarette prices on average, not including taxes, by $31.80 per carton. That is a 279% price increase over this period compared with cumulative inflation during this time of just 31%. I will provide a graph to the committee afterwards for its further consideration of those data.
In 2023 alone, the industry increased its own prices by $5.40 per carton, more than the $4 tax increase in the budget. It is respectfully submitted that it is not credible for the tobacco industry to be opposing government tax increases while at the same time implementing their own enormous price increases. When it comes to contraband, let’s keep in mind that Imperial Tobacco and the other two major companies have been convicted of contraband with fines and civil payments totalling $1.7 billion.
Second, vaping taxes are essential to help reduce dramatically high levels of youth vaping. The most recent data are that 24% of high school students in Canada in grades 10 to 12 are vaping, up from 9% seven years earlier. We need a comprehensive set of measures to reduce youth vaping, including taxation.
The federal vaping tax framework was initially proposed for consultation in June 2021. Cumulative inflation since then has been 14%. Thus, the 12% vaping tax increase in the budget, which we support, is not even keeping pace with inflation. We urge further vaping tax increases in the future.
There is a tax loophole that allows a lower rate on disposable e-cigarettes. Here we agree with Imperial Tobacco that there is a gap and that the tax rate on disposable e-cigarettes should be increased. Disposable e-cigarettes are popular with youth in part because of their very low cost. Products are being sold with ever-increasing nicotine puff volumes, which lowers the cost per puff even further. For example, this is a 500-puff product and the cost per puff is 2.2 cents. For a 1,500-puff product, 1.6 cents. Increasing, products can have 10,000 puffs, such as this, and the cost per puff is only 0.3 cents a puff. It really makes it more affordable for youth.
Third, there are some provisions in Bill C-69 that facilitate information sharing between departments. This will support enforcement.
Fourth and finally, the bill contains Food and Drugs Act amendments that will enable the government to adopt further restrictions on nicotine pouches. These provisions are necessary and essential. The current situation is severely inadequate.
In October 2023, Imperial Tobacco Canada launched nicotine pouches in the Canadian market using lifestyle advertising — approaches similar to what they had used in the past for cigarettes — showing happy, younger people in social and sports settings, using advertising that reached youth such as in social media and ads in convenience stores near candy and chocolate bars and using flavours attractive to youth, such as Tropic Breeze. I have that here. Tropic Breeze is not even a real flavour. It’s a lifestyle aspiration.
Traditional nicotine replacement products such as nicotine gum and the nicotine patch have not been an issue with youth. As we have seen in the U.S. and Europe, nicotine pouches have been. This has prompted countries such as Belgium and the Netherlands to ban nicotine pouches altogether. Immediate action to protect youth is needed under the new legislative authority included in Bill C-69, an approach that we support. We need to protect a new generation of kids from becoming addicted to nicotine, potentially for life. Thank you.
[Translation]
The Chair: Thank you very much, Ms. Cunningham. We will now proceed to questions from senators. Exceptionally, this meeting will last 90 minutes, so there are now 60 minutes remaining. We’ll start with five minutes per senator, but I will be rather strict with the speaking time. Please keep the questions and answers brief so that we can obtain as much information as possible. Thank you.
[English]
Senator Marshall: I’ll start with Ms. Barry because I was a teacher, so I know that there is a need for a food program in the schools.
I always thought it was a breakfast program, but after hearing you speak, maybe not. Can you tell us a bit about what’s envisioned? You said it wasn’t enough money. How much do you need? The budget indicates that there will be $79 million assigned for this year. Would you give us some idea as to how you will spend that $79 million?
Ms. Barry: Thank you for your question, senator. The policy and program is a national school food program, encouraging school communities to implement a breakfast, lunch or nutritious snack program. In some cases, they will build on existing programs or add a second one as part of their school day.
This decision is led at the community level and in some cases at the provincial level. For instance, in Newfoundland and Labrador, your government has implemented a provincial lunch program building on the existing breakfast program that is already led by the Kids Eat Smart Foundation.
These funds are building and completing the existing support allocated within the jurisdictions and completing the private and community investments as well.
Having said that, if we’re aiming to provide nutritious food access to 5 million schoolchildren across the country, we would need at least $3 to $6 per child, per day. There are 180 school days. We would need billions.
Senator Marshall: There’s $79 million in the budget. How much would you have liked to see?
Ms. Barry: For the first year, ideally, we would have liked to see at least $200 million because $1 billion over five years is $200 million. Having said that, it is a satisfactory foundation to build on, and it’s the first investment into a national school food program. We’re acknowledging it, and hopefully it can grow over time.
Senator Marshall: How will you allocate the $79 million? Will you give a certain amount per province?
Ms. Barry: According to what we heard from the provincial and territorial governments, some intend to negotiate with the Minister of Families, Children and Social Development, and they would want to require pro rata and per capita investment. Some are looking at ensuring that all children can get the right value according to the allocation. If you’re located in a remote, fly-in community, it’s more than just a per capita investment that will be needed.
Senator Marshall: Who is allocating the money? I was under the impression it will go to your association, but it will be the government allocating it to the various provinces?
Ms. Barry: Exactly. The budget provision is talking about bilateral agreements between the federal government, the Minister of Families, Children and Social Development and the provincial and territorial governments, as well as Indigenous partners.
Senator Marshall: That’s great. Thank you.
I’ll ask my question, and maybe there will be a second round.
Mr. Gagnon, I would like you to talk about why you think ZONNIC is being targeted by the minister. On second round, that will be my question for you.
The Chair: You will have time to be prepared.
[Translation]
Senator Forest: Thank you all for your opening comments. My first question is for Ms. Barry about the breakfast program, which is an excellent initiative. I had the opportunity to chair an organization called COSMOSS which does similar work, and one of the things that really contributed to our success was getting people in the health care sector, the community sector and the municipal world to work with us. Municipalities are already involved in collaborative projects and the breakfast challenge. How should the government’s proposed school food program leverage municipal resources?
Ms. Barry: That’s an excellent question; thank you very much. We really encourage the development of a cost-shared solution with all levels of government, including municipalities. A number of municipalities across the country are making immense contributions to the effort, but there’s still a long way to go. What would be consistent with the creation of this national program is for the federal government to encourage provincial and territorial governments to build that sound governance structure, which will become a collective responsibility in the sense that everyone is responsible for ensuring that children have enough to eat.
That’s what we’re hoping for, beyond all levels of government: that communities, private and community stakeholders and schools continue to increase their contributions too.
Senator Forest: Usually, the government makes a five-year commitment. My fear is that we’re in the process of developing an essential service, then the government will pull out and we’ll be faced with an essential need, but one for which stakeholders, particularly municipalities, won’t have the financial structure needed to assume responsibility. How can we ensure that this commitment will be sustainable over the long term, and not a one-time initiative for five years, to create demand and then wash our hands of it afterwards?
Ms. Barry: It’s an excellent question, and one that I touched on in my opening remarks. How can we really implement a budgetary policy and legislation that will allow Canadians to count on this supplementary investment? It’s not an investment that covers all needs, far from it. As I was saying to your colleague, that would take billions of dollars annually. So, the goal is really to implement a policy and a permanent bill on which we can build and, ideally, reach every child in the country over the years.
Senator Forest: After breakfast, we move on to happy hour and microbreweries. Over 60% of craft beer is brewed by microbreweries, producing over 15,000 hectolitres. What’s their average production? I’d like to know the distinction between small-town microbreweries, which are becoming an important tourist attraction on many tours, particularly in the Lower St. Lawrence and Gaspé regions.
Over 75 hectolitres, microbreweries are much more industrial. You’re telling us that 60% of craft beer is brewed by microbreweries producing over 15,000 hectolitres.
On average, how many hectolitres do your breweries produce?
[English]
Ms. Comeau: Thank you. I understand your question.
The vast majority — roughly 95% of all Canadian craft breweries — would fall under the 15,000-hectolitre threshold. However, those that are above it brew 60% of all of the craft beer.
So the vast majority of them are very small; some are 500 to 1,000 or 2,000 hectolitres. When we get into the larger ones, they are having a greater impact on the overall industry in terms of job creation and investment.
[Translation]
Senator Gignac: I’m going to continue with Ms. Barry where my colleague Senator Forest left off this morning.
First of all, thank you for what you do. I think it’s harder for children at school to learn on an empty stomach.
Could you share with us some statistics that compare schools that have already set up a breakfast program and those that haven’t? Have you done any studies? Can you share some of the results with us? If not, could you send us a short document for our edification?
Ms. Barry: Thank you for your question, senator; it’s much appreciated. We could certainly share a detailed document with you.
The Breakfast Club of Canada currently reaches nearly half a million children. These children are spread over 3,200 schools across the country, in every province and territory.
That said, there are schools that receive services from other organizations across the country. According to some studies, over a million children — between one million and 1.5 million children in the country out of a total school population of 5 million — are currently believed to have access to a school food program, be it a healthy breakfast, lunch or snack program — fruit, vegetables, that kind of thing. There’s still a long way to go, however, since that’s only 20% of the student population. Among those existing programs, needs are greater.
In recent years, there has been a 28% increase in food insecurity among children in this country. Over the past two years, it’s been dramatic. The higher the cost of living and food, the more participants there are who need these programs.
Operating those programs is becoming extremely costly.
Senator Gignac: Thank you. My next question is for Mr. Gagnon.
Mr. Gagnon, I’d like to give you an opportunity to react a little to Mr. Cunningham’s comments. Let’s say that your company or the industry got smoked — pardon the pun — due to price increases as opposed to taxes….
Is there anything you’d like to share with us before we continue with the witnesses?
Mr. Gagnon: Yes, thank you for giving this opportunity, senator.
In fact, what Mr. Cunningham doesn’t say is that, since 2014, the amount of regulation we’ve faced in the tobacco industry is relentless. We’ve gone from plain packaging to changing health-related messages on cigarette packs, to changing the format of the pack because health groups thought the pack wasn’t big enough to put the health-related message on and people wouldn’t understand. So a bigger pack was needed. Today, we have a health-related message on every cigarette. The industry has to adapt at a cost of millions and millions of dollars, often over a fairly short period of time. And, of course, it all has to be paid for.
As for nicotine pouches, there are a number of things we didn’t say. We were told that we weren’t allowed to bring products to the Senate, so you received a brochure, but if you look at the brochure you were given, the brochure mentions products with a fruit explosion, fresh berry or mango flavour. Imperial Tobacco Canada Ltd. is being singled out here, but the reality is that these colours, these brands and the way these products are being sold on the market have existed for decades. When it’s the pharmaceutical industry doing it, health groups aren’t concerned, but as soon as Imperial Tobacco Canada Ltd. tries to launch products to help people quit smoking — we know that most people want to quit smoking, because there are significant risks associated with smoking — all of a sudden, we’re not treated like other companies. So, that’s why we say there’s a relentless attack on our company, absolutely.
The Minister of Health is saying that we used a loophole, but that’s completely false. We went through a two-year process with Health Canada. I think we can trust Health Canada to issue licences to companies capable of demonstrating the efficacy and safety of the products they put on the market. Otherwise, I’d say we might as well do away with Health Canada if we don’t trust our institutions.
Senator Gignac: Thank you.
[English]
Senator Smith: Mr. Gagnon, I know that Senator Marshall probably wants to ask the same question, so we’ll tag-team it. In your brief, you assume the amendments to the Food and Drugs Act are the minister’s method of addressing concerns related to your nicotine pouches. The briefing note says:
. . . the approach of the Health Minister, which seems to focus on a single NRT product from one company and is based on gross misinformation, raises concerns.
According to the government, these changes allow the minister new tools to address access gaps or vulnerabilities for food or therapeutic products. Could you explain why you feel this change is targeting your products and is not a response to the general market for therapeutics?
Mr. Gagnon: There are a few things. The first is that Minister Holland has not been shy in saying exactly what he’s after, and he’s after Imperial Tobacco Canada. He’s said it publicly.
Two, the fact of the matter, senator, is that if we had done anything wrong, Health Canada has the power today to revoke our licence. It is part of their responsibilities. When you’re granted a natural health product and nicotine replacement licence, you have to operate by the rules. You have to market the product as a cessation product. It’s the only way it can be marketed. If you don’t do that, and if the product is used in a way that is unintended, your licence is revoked.
There’s a reason Health Canada hasn’t done that — it’s because we have not done anything wrong. Because of that, I think the minister is trying to grab the power to remove the licence from us because he doesn’t want Imperial Tobacco Canada to play in the cessation market.
Senator Smith: What type of lobbying — or did the government consult with your organization? Your response leads to the simple question, which is this: What type of positioning have you done in terms of consultation with the government or what type of consultation has the government done with you so that some form of remedy could be found?
Mr. Gagnon: We’ve had many discussions with Health Canada, which have been collaborative. They’ve asked us a few things, such as to make 18-plus more prominent on the advertisement. Even if it’s not mandatory, we’ve done that. They’ve commented on the colours. We offered to produce a white pack. They didn’t come back to us, but we’re willing to do that.
Minister Holland also said publicly that he will fine us. I did a press conference on this, senator. He doesn’t need to look far. We want to meet with the Minister of Health. He doesn’t want to meet with us. At the end of the day, we’re a legal company, and Imperial Tobacco and other tobacco companies are providing $9 billion of taxes annually to governments in Canada. But they don’t want to meet with us. We’ve been trying.
If the question is about lobbying, associations like Mr. Cunningham’s will save 5.3 from the tobacco framework. The framework on tobacco convention doesn’t allow the governments to consult with tobacco company —
Senator Smith: I was just going to ask Mr. Cunningham to join the discussion on this particular topic.
Mr. Cunningham: Thank you, senator.
The concerns I’ve expressed today are also shared by many other health organizations, such as the Canadian Lung Association, the Heart and Stroke Foundation and others.
Imperial Tobacco has a long history of marketing to underage youth. The Supreme Court of Canada found that in a judgment citing internal company documents while at the same time the company publicly said, “No, we don’t target underage youth.”
The type of marketing that they used when they launched this product I believe shows their true intentions with this lifestyle advertising with younger people. This is not focused on cessation. I think it’s that experience that got us to be very concerned, that got the Minister of Health to be legitimately very concerned and to provide this remedy.
These amendments to the Food and Drugs Act, the government has said, have other scope and purposes as well. For example, if there’s a shortage of infant formula, there’s a mechanism where it could be used. Epinephrine, a decongestant, apparently is used in street drugs. This would be a remedy to ensure better use. Or a recall. Apparently, there are certain categories where there is not adequate authority right now for a recall the way there are for some others.
So there are a number of mechanisms and benefits beyond nicotine pouches. Health groups internationally are very concerned by the tobacco industry, and it tends to be the tobacco industry that are marketing these nicotine pouches in country after country. We need much better regulation here in Canada to protect youth, and Bill C-69 will do that.
Senator Smith: Last time these two gentlemen were here, Mr. Chair, they were much closer together. Is this a sign of the times?
Senator Galvez: We can take it as a joke or we can be worried about the whole situation. I’m a grandmother of three. It worries me, the fact that the — I live close to two schools and I see them smoking, vaping more. It’s really sad.
I want to also cross-examine and discuss this situation. The incidence of overweight and Type 2 diabetes in children is increasing. The incidence is growing exponentially, more in the United States, less in Canada, but we follow what the Americans do.
This incidence of this increase in Type 2 diabetes and overweight children is reflected in lower-income ethnic minorities and Indigenous children, and there is plenty of data that shows that.
Now, what is interesting is these youth with these adverse health effects will have difficulty as an adult. We know that we are looking for pharmacare that will cost a lot of money, specifically to provide diabetes medications to children, to people who probably didn’t have a good diet.
So what’s going on? What’s happening? Why are we not talking to each other and getting the same objective, which is to reduce the consumption of ultra-processed food in children? Because this ultra-processed food contains too much sodium, sugar and saturated fat and produces cardiovascular, metabolic, mental and eating disorders, mortality outcomes, et cetera. How can we work together and solve the problems at the source and not at the end, trying to determine who we give more money to solve these issues, which increases the cost? My question is directed to Mr. Staples, Ms. Barry and Mr. Cunningham.
Mr. Staples: We are pleased that the pharmacare program will cover these two classes of drugs, contraceptives, diabetes medication and related products for that. I don’t have the breakdown in terms of the difference between Type 1 or Type 2 or the number of people related to it. I know my colleague Mike Bleskie, who was with me at the House of Commons committee, described a story of him being 12 years old and being diagnosed with Type 1. It was not related to — it’s just the luck of the genetic draw that he received it. He’s a young man in his thirties. He’s a gig worker, doesn’t have insurance, pays hundreds of dollars a month for his essential life-giving medication. At one point, he said, he did have insurance. He was on a contract. When the contract ended, he tried to switch over to an insurance bridge and they wouldn’t give it to him — pre-existing condition. So he was left not only unemployed and a gig worker, but he had to take the cost of the medication himself.
This is really going to help people. As we know, when people don’t take their medication — he talked about cutting his medication in half, reusing lancets and things — that it increases negative health outcomes. I absolutely agree with you. They call it the social determinants of health is what you’re describing. Those are things we need to deal with as well, but we also have to deal with issues like primary care. That’s why we say pharmacare will reduce costs. Not only better living, but also when people need medication, they get access to it. We always say, “Filled prescriptions mean empty emergency rooms.”
Ms. Barry: For Breakfast Club of Canada’s vision on the national school food program and as described in the What We Heard Report relating to the public consultation before the national school food program implementation, it is clear that it needs to value and promote healthy, nutritious standards and guidelines, building on Canada’s food guide and ensuring that it is at the “crossroads” of three ecosystems: education, health and agriculture — the food system, obviously.
We’re encouraging federal and provincial governments to work as multi-ministerial stakeholders on that type of issue because it has impacts and outcomes on those ecosystems.
You are right, and we can do better. Our children need to be protected. We have a good opportunity through the national school food program, through Canada’s food guide, through nutrition education, helping children to develop cooking skills and so on.
[Translation]
The Chair: There are 30 seconds remaining. We’ll try to limit it to three questions each, because it’s hard to cut people off.
[English]
Senator Galvez: You can always provide us with more ideas.
Ciana Van Dusen, Advocacy Manager, Prevention, Canadian Cancer Society: I can say for sure that, as you mentioned, it’s important to provide drugs and remedies once diagnoses have occurred, but also, like you said, preventing ahead of time. We look at diets that are high in salt, sugars and saturated fats as contributing to all sorts of chronic diseases and illnesses, including cancer. I know you’re familiar with our marketing restrictions that we would love to see pass through imminently to help support Canadian families and parents make decisions for their kids and promote healthy diets and healthy eating habits but also acknowledging that it needs to be the availability and accessibility of foods, so programs like our national healthy school food program support that as well.
It’s not a one-size-fits-all or single solution but this collective action of all of them coming together and promoting healthy environments for Canadians.
[Translation]
Senator Dalphond: My first question is for Ms. Comeau.
[English]
What is the percentage of craft beers that is exported to the U.S.? I would assume that mostly the consumption is local or regional.
Ms. Comeau: Senator, that’s a very good question. Craft beer by its nature is a volatile product in that it has to be kept cold. It should be treated like milk, so a full cold chain from beginning to end. Many Canadian craft breweries do not pasteurize — the majority do not pasteurize their beer. That creates a bit of a hurdle. Right now, because the industry was on a quick growth spurt, many of them are just trying to be successful here at home before they can build up and get themselves large enough where they are able to export. I think there’s still tremendous opportunity and there’s even a lot of opportunity not just exporting out of country but exporting across provinces within Canada.
Senator Dalphond: Which is even more difficult.
Ms. Comeau: That’s right. I believe there’s a lot of opportunity to help craft breweries get themselves to the size and scale so that they are in a position to be able to export.
Senator Dalphond: You have expressed concerns about duty and customs. What’s the problem? It’s mostly local.
Ms. Comeau: For the excise rates?
Senator Dalphond: Yes.
Ms. Comeau: The excise rates still apply to all beer brewed in Canada. Within Bill C-69, the excise rates have been reduced by 50% up to the first 15,000 hectolitres. That’s providing meaningful relief for these small breweries. We’re seeking to make that change permanent and increase the runway from 15,000 hectolitres to 500,000.
Senator Dalphond: You see that this kind of federal tax, which is taxed on top of GST, as a kind of handicap for the growth of the craft brewers.
Ms. Comeau: Yes. It is.
Senator Dalphond: Despite the fact that they are going up.
Ms. Comeau: Yes, but there are so many struggles in all facets. Provincial jurisdictions look and take the lead. They see what the federal government is doing, and the federal government is taking this lead in providing that excise relief, so it also helps us to really convey that story that the markups and taxation on beer is very much hurting the industry, particularly now where all those input costs are so high.
Senator Dalphond: Are these beers in cans or glass bottles?
Ms. Comeau: The majority today are in cans.
Senator Dalphond: Because one of the costs was the bottles. I understand that it was not the standard bottles that they were using, and therefore it was a major cost in distribution and recovery.
Ms. Comeau: Yes. We did observe that throughout COVID, many breweries that were producing a lot of beer and selling through tap rooms in kegs were not able to do so, so they quickly converted to cans. Now that has become the industry standard.
Senator Dalphond: Thank you.
[Translation]
Mr. Gagnon, I understand that, under Division 30, with which you have a problem, the minister can issue orders. I understand that those orders will be considered statutory instruments. Therefore, they will have to be published, there will be a consultation period, and then there will be a consideration period unless it only affects one person. What exactly is your concern? That you won’t be consulted? The minister can’t just wake up one morning and decide to issue an order.
Mr. Gagnon: As soon as the minister deems that there is a risk to public health, he can obtain all the powers necessary to act. The problem we have, in this case, is that there is no danger to public health. If that were the case, there are many products that should be banned. If we look at the rate of use of cannabis among young people, it’s probably much higher than for nicotine pouches.
Senator Dalphond: You’re worried, but this can only be done by ministerial decree, and it can’t be done by waking up one morning; it has to be published, there has to be consultation, and then there has to be —
Mr. Gagnon: That may be so. However, it is our understanding that the government and the minister are not obliged to consult. There have been discussions with Health Canada; they said they would consult, but it’s really section 326 of the bill that gives full authority to the Minister of Health to act. I know we’ve talked about different products in Louisiana, but this is a real risk. That’s why, yesterday in the House, some members asked a number of questions and were very concerned about giving a minister so much power. Several groups said they were opposed to changing the process and giving these powers to the minister. I understand what you’re saying, but there doesn’t have to be consultation. In this case, there could be, but there doesn’t have to be.
The Chair: Thank you, Mr. Gagnon.
[English]
Senator MacAdam: My question is for Mr. Cunningham. What is the current rate of vaping use among youths in Canada right now? What do you think accounts for this rate?
Mr. Cunningham: Among high school students in grades 10 to 12 in Canada, the rate is 24%. That’s up from 9% seven years ago.
There is a series of factors that contribute to that. There are very low prices compared to cigarettes, which is why the vaping tax is important — although the prices are still much lower than cigarettes. Attractive flavours, easy availability — many are getting it online, so there is an absence of a ban on internet sales and of adequate regulations with respect to restrictions on flavours. Multiple factors.
Senator MacAdam: Okay. How do you think that increases in taxes on e-cigarettes proposed in Bill C-69 might help to reduce this rate?
Mr. Cunningham: We know that youths are responsive to higher prices. That is clear. We have had the federal tax in place since January 1, 2023. Soon we’ll have Ontario, Quebec, Northwest Territories and Nunavut. Then to follow, some months later — the date is to be confirmed — Alberta, Manitoba, New Brunswick, P.E.I. and the Yukon.
The tax increase is small, it’s only 12%, but every bit makes a difference. At least it’s keeping close to inflation. Hopefully, the government can make further adjustments in the future, including with respect to the loophole for disposable e-cigarettes.
Senator MacAdam: I have another question. You mentioned that there is an enormous amount of work to be done to achieve Canada’s Tobacco Strategy objective of under 5% tobacco use by 2035. From your perspective, I’m wondering about some of the additional, most critical measures that you would like to see moving forward?
Mr. Cunningham: I think it would be great if the federal government and provinces banned remaining promotion. Tobacco manufactures give tremendous amounts of incentive promotions to retailers to sell more, for example, bonuses if they reach certain sale volume targets. We shouldn’t be doing that for this type of product category.
P.E.I. has a minimum age of 21 for tobacco and e-cigarette. Newfoundland and Labrador just announced last week that they are going to be consulting on that, along with the tobacco-free generation proposal. Thirty U.S. states have done that. It’s been done nationally in the U.S. We could have all provinces do that.
P.E.I. already says that e-cigarettes should be sold in specialty stores only. They are consulting on having tobacco in specialty stores as well, the way we sell cannabis. That would be a very good measure. We don’t need every convenience store, gas station and grocery store selling cigarettes. That is there for historical reasons.
Those are some examples. We can invest a tremendous amount in terms of additional programs. So much more needs to be done.
Senator MacAdam: Thank you.
I have a question for Ms. Barry. What are the sources of funding for the Breakfast Club of Canada?
Ms. Barry: That’s a good question. Thank you so much, senator. The Breakfast Club of Canada’s funding is mainly coming from private donors and individuals through fundraising campaigns and so on. There is funding coming through the Quebec government currently because we are offering our service as a strategic and delivery partner to the provinces and territories. As we speak, those are, mainly, our revenues.
A national school food program won’t be flowing money to non-governmental organizations and student nutrition stakeholders like the Breakfast Club of Canada. That’s a bit unfortunate, I have to say. We think that bilateral agreements with provinces and territories are the way to go, but we think that the student nutrition stakeholders make great contributions to ensure that school communities will be able and capable of implementing sustainable, quality programming. Without those types of experts in place, it’s hard for our school teams to really ensure and prioritize that mandate.
Senator MacAdam: You mentioned in your opening remarks that there were school food programs available for children in all provinces currently.
Ms. Barry: Yes.
Senator MacAdam: To what extent are you involved in those programs in the provinces?
Ms. Barry: We are currently involved in at least half of the programs across the country. We would love to do more for the existing programs and reach other programs.
We have, currently, hundreds of schools that have submitted a request to Breakfast Club of Canada that we can’t integrate and bring on board to our network due to a lack of resources.
Senator Loffreda: My question is for the Canadian Cancer Society.
We keep increasing taxes — and I would like your comments and comments as well from Imperial Tobacco Canada — and it keeps increasing illegal tobacco sales. We do have research that indicates smoking does lead to cancer. The research is more and more evident and trustworthy.
There is a problem among our youth, not only with smoking but with vaping, and 24% of students are vaping. That’s a high number. I know many families have expressed concern about vaping.
What are we missing? How do we correct that? All we do is increase taxes, which increases illegal tobacco sales, but is there anything else that could be done?
Mr. Cunningham: We need a comprehensive approach. One thing that is interesting is that Quebec has the lowest tax rate in Canada, but they seem to have quite good controls. They have estimated their illicit market to be less than 10% in their most recent budget. They have a number of measures that other provinces could consider.
We need to have stronger regulation. When we talk about youth vaping, this was an entirely preventable issue. We can learn our lessons from tobacco control. They were painfully learned, and we are having to do that all over again for vaping products in terms of the taxes, regulating the flavours, minimum age, where it can be sold or the marketing. The government has had to play catch-up, for example, with restrictions on advertising. We can better learn our lessons and implement them aggressively.
One easy thing that could be done with respect to youth is make the minimum age 21. It’s either 18 or 19, except for Prince Edward Island, where it’s already 21. I don’t know whether Imperial Tobacco supports that or not. I hope they do.
Senator Loffreda: I’d like to have comments from Imperial Tobacco on that.
Mr. Gagnon: It’s not that we oppose a minimum age of 21, but it’s not going to resolve the problem. Look at the reason why we legalized cannabis in Canada. It’s because kids were using cannabis left and right. You can increase the age, but if you don’t enforce regulations, you’re not going to address youth vaping.
A good example is Quebec. Quebec has banned all flavours except tobacco. Right now in Quebec, 90% of the vaping market is illegal — within six months, 90%. The only ones who are complying right now are the tobacco companies.
Mr. Cunningham has said a number of things on vaping that we fully support. We need more regulation. There are too many flavours. These puffs, like 15,000, that makes no sense. We are more than happy to sit down with the Canadian Cancer Society and work on a framework that is going to address youth vaping because there is a problem with that.
We need measures that are going to be enforceable, and that’s the issue we have.
Senator Loffreda: Thank you for that.
The Canadian Cancer Society, is there anything we can do with education? We’re obviously not educating our population enough, and I hear about more and more people who are stricken with cancer. Addiction is awful. Are we doing a good job with respect to education in the schools regarding smoking and vaping?
Mr. Cunningham: We need a comprehensive strategy that includes taxation, legislation and programming. We are not funding the mass media campaigns, the mass communication campaigns by Health Canada or the provinces that used to occur some decades ago. I think there is more that can be done in that area.
The most important way to communicate through health education is through the package itself and the product. There are new health warnings that have just appeared on the package and on the cigarette. That is a way for public education.
We don’t have the same type of warnings with respect to vaping products. There is only one about addiction. More can be done there in terms of education.
Senator Loffreda: Why don’t we go into our schools and teach the kids? They are starting to vape at very young ages. They want to be accepted. There are mental health issues everywhere, and they vape at very young ages.
Are we doing a good enough job? Do you need government funding to get into the schools and teach the kids that vaping — and I’m not a doctor, but I have heard so many negative concerns on vaping and what it’s doing to the kids.
Mr. Cunningham: School education is part of the answer. It’s already part of the curriculum with respect to both smoking and vaping. I think that could be evaluated.
We have all this marketing that is out there undermining what the teachers are doing in the classroom or what parents are doing, so that regulation in terms of the marketing of these very inexpensive, disposable e-cigarettes could help make that education more effective.
Senator Kingston: Mr. Staples, I would like to start out by saying I have been associated with the New Brunswick Nurses Union and the Canadian Federation of Nurses Unions for a long time, so I guess you know what I think about this to start with. They, of course, are very pleased that the work is going to be done with the provinces and the territories to establish single payer, universal access going forward. We have a start. They call it phase one.
My question to you is: What, in your opinion, is the next thing that needs to be done in terms of building a fulsome pharmacare system for Canada?
Mr. Staples: Thank you very much, Senator Kingston. Also thank you for meeting with our members that were here in February, and thank you to all the senators that met with our volunteers who came here earlier this year to talk about pharmacare.
Yes, nurses have been key and are our closest partners in terms of working for the development of national universal pharmacare, both at the provincial level and the national level. My boss is a nurse, and she says she has seen people come in, and there is a phrase for it — it’s called “cost-related non-adherence.” It’s when you can’t afford your medication, and you don’t take it. Literally, they end up in the emergency room. She has seen it more than once.
Right now, we are very pleased with the budget. We’re fine with the $1.5 billion that is in that. That amount may change over time because the next step is to get the provinces on side. Once we get the budget passed, once we get Bill C-64, the pharmacare act, passed — and if we can do that quickly — I think there are a number of provinces that are ready and willing to begin those bilateral negotiations.
We’re certainly prepared to work with those provincial leaders as well, too. We have contacts in organizations across the country. We could probably name several provinces right now that I think would be interested in engaging in that.
Let’s get the program funded. Let’s get the legal framework in place, and then we move on to work with the provinces to get those bilateral negotiations working. Then we are going to do an evaluation. The legislation, Bill C-64, imagines an expert committee that is going to be looking at how this unfolds, lessons learned and what is called a “pilot project.”
I think there will be a lot of people who will want to have other classifications of drugs added on. I have heard from people who deal with allergies, food allergies and things like that. I know the Heart and Stroke Foundation of Canada is another organization that signed on in the statement. They are interested in having that.
I think we will immediately see a lot of other patient groups come and say, “Hey, this is really working on contraceptives. It’s really working on diabetes. What about our patients?”
Senator Kingston: What is your opinion on the formation of a good national formulary overseen by the Canadian Drug Agency? What do you think about that in terms of its importance to the development of the system?
Mr. Staples: We’re excited that the Canadian Drug Agency has been set up now. This will be working on a national formulary, and I am aware of many studies that have been done on national formularies.
When I talk to people at the Canadian Drug Agency, for instance, that were involved in studies on this, it’s not rocket science apparently. It’s quite easy to develop formularies. Each province has them. There are a number of models that could be put out there. I’m not an expert, but I have experts on my board. They talk about clean medications as kind of a starting point.
We want it to be a comprehensive plan, and there will have to be some work done on what is going to be included and prescription advice and prescribing advice for that. That will all come down the road. We would want to see essential medicines added as soon as we can.
Senator Kingston: When you’re speaking to the provinces, you can let them know that this is where the cost savings are, with bulk buying and so on.
Mr. Staples: Absolutely. I totally agree.
Senator Ross: Ms. Comeau, do you think it’s accurate to predict in your estimation that craft brewers will have $86,000 plus in tax relief over the two-year period?
Ms. Comeau: That’s an excellent question. Thank you for that.
Depending on the size of the brewery, it has a great impact on the size of the savings. Because there is a 50% rate reduction on the excise rates up to $15,000, if you’re a small brewery of let’s say 1,000 or 2,000 hectolitres, a brewery saving would be in the range of about $2,000 or $3,000 a year. A brewery operating at the 15,000-hectolitre level will save $82,000 or $83,000 per year, yes.
Then that saving will actually diminish over the years because the excise rates are tied to inflation, so the rates will continue to go up, and savings will actually diminish over time.
Senator Ross: Do you have a sense that there might be relief after the two years? Do you think this relief might be made permanent or what would it take for that to happen?
Ms. Comeau: It is certainly our hope and ask that it is made permanent and that the 15,000-hectolitre level increases. We would like to see a runway to 500,000 hectolitres.
Senator Ross: Define for me the difference between a craft brewer and a brewer.
Ms. Comeau: Within our association, when we talk about our Canadian craft breweries, we’re talking about the independently owned and operated. We contrast ourselves to the large multinationals, also more commonly known as the mainstream breweries. When I talked about brewers or craft brewers in the context of my presentation today, it’s one and the same.
Senator Ross: Are you aware of any other goods that have a similar tax escalator annually?
Ms. Comeau: It is very unusual for tax increases to occur year after year without debate within the House or the Senate. Tobacco would fall within that, but certainly it’s not common to have tax increases without discussion and debate.
Senator Ross: I have one last question for you. How do you think the impact on these small craft brewers could be amplified? Other than this being extended or increased to 500,000 hectolitres, what other tax changes or other things would you like to see?
Ms. Comeau: Certainly, we are looking at excise reform. I think there is an opportunity for us to work with government and look at all of the various policies that are in place. When we talk about re-examining the outdated Excise Tax Act, we would be very open to conversations, coming together and working in partnership to figure out what that win-win situation could really look like.
Senator Ross: Thanks very much.
Senator Pate: Mr. Staples, I want to come back to the line of questioning that my colleague Senator Kingston was pursuing.
When you appeared before the House committee on this issue, you made the following observation:
. . . When I hear witnesses say that the system’s working very well, I ask, “For whom is it working very well?” . . . It seems to be working for industry and for insurance companies, but it’s not working well for all Canadians. That’s why this pharmacare act is so important. . . .
I’m curious whether you could expand upon that, if you will, and if there are other considerations you want to ensure we take into account. I will ask my second question at the same time in the interests of time.
As you may know, I’m the sponsor in the Senate of Bill C-64, and I understand that some critics of pharmacare are suggesting that the bill is unnecessary, claiming that 97% of Canadians already have coverage. The data shows something different from that. Also, some of those who are speaking out against it say that the bill will restrict Canadians’ choices regarding medication.
I’m curious again how you would respond to these statements and if you could discuss, in particular, the importance and underscore — you already have — any other points you want to make about the importance of a public single-payer pharmacare system.
Mr. Staples: Thank you. Those remarks were made in the context of presentations by an insurance lobby agency and another one for drug manufacturers. I was really struck by the lack of compassion they were expressing. It was just purely that “most people were in favour of it, what is the need of this, don’t interfere with our modelling.” Even the drug manufacturers said — we were talking about bulk buying, as the senator mentioned — “Oh, we don’t like bulk buying. We want it to stay the way it is.” Here we were hearing from people with lived experience saying that is not the experience they’re having.
Of course, we’re aware that it is a free country and other sides are free to speak their minds. We are up against those arguments, but we’re here to speak about what we know. Take Statistics Canada — they do their own surveys and find that 20% of people are having problems.
I’m reading The Globe and Mail, where one drug, Trikafta, is eating up a huge amount of public budgets. It costs $300,000 per person to treat, but it costs $5,000 to $6,000 to manufacture. That is a massive profit. I know there’s R&D built in, but that is just beyond the pale. We have to get people access to drugs and we have to get the overall cost down.
What about this 97% insurance? In particular, my colleagues who work in the sexual health area have illuminated my understanding of this. They say, sure, you may have people who need contraceptives, but the coverage they’re talking about, maybe it’s an abusive husband’s insurance or maybe it’s their parents and they are a teenager. Well, that coverage does no good because there is a privacy issue now between a person who needs contraceptives and their doctor in order to be able to get that. That raised the importance of why that particular class of drug was so important and how this program is going to help.
Senator Pate: We have also heard the concern that folks in penitentiaries are still not covered by the provisions of the Canada Health Act. Certainly, our office has heard from a number of groups about the concern that the failure to include in the definition of insured person under the Canada Health Act those in federal penitentiaries is a violation of international standards for the minimum treatment of prisoners.
Would you agree that it’s time to end the discrimination of federal prisoners in this context?
Mr. Staples: That’s a very interesting point. I think we are interested in expanding in all areas the interpretation of the Canada Health Act, whether it be prisoners or undocumented people in Canada, which is another area that we have worked on. It should be as broad as possible. If you live here, you would have access to the public health care system that we all enjoy.
Senator Pate: Thank you very much.
The Chair: Thank you. We still have two minutes. I will ask a question, and it will go to Ms. Comeau.
[Translation]
It’s a great privilege and advantage for microbreweries, but in my region, there are also small cideries, gin producers and whisky makers. They work extensively with the microbreweries in their product marketing, tourism and tastings. Is there a reason why it’s only the microbreweries? Is it because you’re more efficient at ensuring representation, or is there some issue I’m not aware of?
[English]
Ms. Comeau: Thank you very much. That’s an excellent question.
I think what you’re seeing is that there is a consumer trend now towards broadening their consumption experience.
Maybe they will go to a microbrewery one day, a cidery or a distillery the next. What is slightly different, though, is that the craft beer industry in Canada is more mature versus a lot of these small distilleries. It’s a new, emerging segment. There is a lot more of us, so there is strength in numbers. Maybe we’re a little more organized. Nevertheless, we will be seeing some of the challenges that we’re facing across the other artisan producers as well.
You talked about the collaboration. Our industry is incredibly collaborative and innovative. The opportunity for them to work with other breweries, or with cideries or distilleries, is something that we see all the time. We certainly encourage that collaboration.
[Translation]
The Chair: Thank you. That concludes our meeting. If the building is still standing, we’ll have a meeting at 6:45 p.m. this evening to continue our study. I’d like to thank all the witnesses for coming and answering all our questions. I’d also like to thank the whole team.
Honourable senators, I want to remind you that a small portion of this evening’s meeting will be in camera so that we can start to give our instructions on the upcoming report. Thank you.
(Meeting adjourned)