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Core 1..36 Committee (PRISM::Advent3b2 10.50) House of Commons CANADA Standing Committee on Aboriginal Affairs and Northern Development AANO Ï NUMBER 042 Ï 3rd SESSION Ï 40th PARLIAMENT EVIDENCE Monday, December 13, 2010 Chair Mr. Bruce Stanton 1 Standing Committee on Aboriginal Affairs and Northern Development Monday, December 13, 2010 Ï (1620) Let's go to our guests here this afternoon and get up to date on [Translation] where we are with this program. Then we'll come back to Mr. Lévesque's motion. The Chair (Mr. Bruce Stanton (Simcoe North, CPC)): Thank you, members. Monsieur Borbey. Now we'll proceed to the orders of the day. We welcome [Translation] Mr. Patrick Borbey, senior assistant deputy minister, Treaties and Mr. Patrick Borbey (Senior Assistant Deputy Minister, Aboriginal Government, Mr. Jamie Tibbetts, director general, Treaties and Aboriginal Government, Department of Indian Devolution and Territorial Relations Branch. Affairs and Northern Development): Thank you, Mr. Chairman. [English] I was just going to say that it's perhaps not my role to comment on the motion. Mr. Tibbetts and Mr. Borbey, welcome back. [English] We have the motion by Monsieur Lévesque in respect to Nutrition North. The motion has been read and was tabled at an earlier But perhaps I can provide additional information and answer meeting. We agreed to continue the discussion on this motion today. questions that may help us to understand the implications of the motion. The question came up that we should have officials present to help [Translation] us deal with the possible implications of the motion and be properly informed, so perhaps Mr. Borbey or Mr. Tibbetts would like to Mr. Chairman, over the past few weeks, the committee has heard provide some background on that question. from several witnesses during its study of the new Nutrition North Canada Program. Before you do that, I have Ms. Crowder. Ms. Jean Crowder (Nanaimo—Cowichan, NDP): On a point of Mr. Jamie Tibbetts, director general of Devolution and Territorial order, I understand that some new information was posted on the Relations, and I are pleased to join you once again to answer any website about things like subsidy rates and whatnot. I wonder if the additional questions you may have about the program. department can tell us what new information since their last We would also like to provide information that may be helpful in appearance at the committee is now available for communities, clarifying some issues or matters that have been raised by witnesses retailers, and transportation companies. during the previous meetings. The Chair: Sure. I think that is certainly germane to the motion as [English] well, Ms. Crowder. [Translation] One of the key what I will call misconceptions about the new program is that we will lose the economies of scale and the May we begin hearing evidence? negotiating power of Canada Post and that this will trigger increases in shipping costs and, ultimately,in food prices. Mr. Lévesque. Based on the volumes that northern retailers and southern Mr. Yvon Lévesque (Abitibi—Baie-James—Nunavik—Eeyou, suppliers ship to the north, this does not appear to be the case. BQ): Mr. Chairman, a request was made to defer the motion to The reality is that with the exception of the work that is carried out enable the department to provide us with the rest of the information under the food mail program, Canada Post is not in the freight on the program. The committee subsequently agreed to examine the business; it is in the business of shipping mail and small parcels. motion as such and to see whether it applied in the form in which it was presented or whether amendments were necessary. On the other hand, major retailers, which account for about 90% of the stores in the north where people buy basic groceries, already [English] ship very large volumes of freight. Consequently, this volume gives The Chair: That's certainly acceptable from my point of view. I them greater bargaining power than Canada Post when it comes to don't sense that there's any disagreement with that approach. negotiating rates for this type of cargo. 2 AANO-42 December 13, 2010 To that extent, we did an analysis of the shipping rates Canada This schedule was developed using a comparative analysis of Post has negotiated with airlines versus the rates major retailers pay actual market shipping costs by community and estimates of the to ship their freight. The results of this analysis are presented on the weights of eligible goods that are projected to be shipped to each table that was distributed. community under Nutrition North Canada. Ï (1625) [Translation] These rates are introductory and, as updated information on shipping costs and food prices becomes available, they may be I believe it's available in both languages. adjusted prior to April 1, and periodically thereafter, to ensure that [English] eligible communities are treated fairly and equitably. There are 69 fully eligible communities in which at least one [English] major retailer operates. In 54 of these 69 communities, the rate the retailer negotiated is lower than the rate Canada Post is able to obtain. These are two examples where the program's flexibility allows us to respond more quickly to make necessary adjustments when new The weight of perishable foods shipped to these 54 communities information is brought to our attention. While staying within the under the food mail program represents 91% of the total weight program's national scope and authorities, we anticipate that this shipped to the 69 communities mentioned above. Canada Post's rate program model will allow for ongoing improvements. The external is lower in only 14 communities that represent 8% of the total advisory board, now composed of seven northerners following the volume. The shipping rate is the same for both Canada Post and the announcement on November 25, will also help keep this program retailers in one community—Norman Wells, in the Northwest responsive to the needs of residents of isolated northern commu- Territories—which represents about 1% of the volume. nities. On average, we have determined that Canada Post pays about 36¢ per kilogram more than what retailers pay to ship to eligible On the other hand, the food mail program in place since the 1960s communities. When you extrapolate that over the total program, this provided little flexibility or incentive for innovation, leading to ever- represents an extra cost of over $7 million per year for the program. increasing costs. Nutrition North Canada offers a more cost-effective These are funds that are not available to reduce the price of nutritious and flexible model that will enhance accountability and transparency food for northern consumers or to invest in health promotion and in ways that cannot be addressed within the current food mail model. nutrition education activities. In addition to the larger volumes and stronger incentives, the new It has been suggested that the implementation of Nutrition North model gives retailers and suppliers the flexibility to seek cost- Canada be postponed by one year. In addition to delaying the effective and innovative solutions that will help make nutritious food expected benefits of the new program, such a delay could have more accessible. significant negative impacts on northerners, stakeholders, and the costs for Canadian taxpayers. [Translation] The new model affords the department greater flexibility to Northerners could feel the sharpest impact of the proposed delay if respond on a timely basis to the concerns of northern consumers and we find ourselves in a position on April 1, 2011, where we are stakeholders. There is greater leeway to make necessary adjustments unable to offer any subsidy program. Based on the May 21 to improve the program on an on-going basis. announcement of the Nutrition North Canada program, Canada Post is already transitioning out of the food mail program. Such an example was recently brought to our attention with respect to Quebec North Shore communities that only use the program for three months of the year, when there is no regular It's our understanding that Canada Post is winding down its marine service. In this case, the communities were to be eligible for a current contracts with the air carriers that ship food mail and does not nominal subsidy because the weight shipped to them fell under the anticipate having such contracts in place come April 1. It is also program's minimum threshold. working to reassign the existing employees who had helped carry out the program. However, given the seasonal usage of the Food Mail Program in these communities, their shipments should have been annualized. Based on this information, it was determined that the communities of I cannot speak for the crown corporation, but we believe that Harrington Harbour, La Tabatière and Tête-à-Ia-Baleine will be revisiting the decision to implement Nutrition North Canada as eligible for a full subsidy as of April 1, 2011. scheduled could be very expensive and in fact might not even be possible. Moreover, supply chain stakeholders, from food suppliers Also, as noted during our November 15 appearance before this to air carriers and retailers, have begun to make alternative committee, the department on December 1 released the subsidy rate arrangements to adjust to the new program model. A decision to schedule for communities. These rates were developed by each delay implementation could translate into financial losses for many community and make it possible to allocate the program budget of these stakeholders, which could potentially trigger legal actions fairly and equitably. against the crown. December 13, 2010 AANO-42 3 Ï (1630) On the Old Crow situation, I know you were in discussions [Translation] because it's a unique situation.
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