[Recorded by Electronic Apparatus]
Tuesday, May 30, 1995
.0908 
[English]
The Chairman: Order. I don't have my mallet here to bring you all in line, but I'll use my voice.
Colleagues, today we have two orders of business. We have votes on main estimates and Bill C-86. The note on the order of the day says the votes on main estimates are first. We don't really have enough people here for votes yet, so why don't we start with Bill C-86.
We welcome you, Mr. Vanclief. I understand you have a short statement. Could you introduce your guests and then we will go into questions and answers.
Mr. Lyle Vanclief (Parliamentary Secretary to the Minister of Agriculture and Agri-Food): Thank you very much, Mr. Chairman. We're certainly pleased to be here today to initiate the review and discussion on Bill C-86, An Act to amend the Canadian Dairy Commission Act. We'll provide a brief overview of its main elements and the ramifications.
With me today is Gilles Prégent, the chairman of the Canadian Dairy Commission; Mr. Charles C. Birchard, better known as Chuck Birchard, director of the Canadian Dairy Commission Strategic Planning, Policy and Communications Branch.
They will assist, if and when there are any questions, with any answers and explanations that may be necessary.
.0910
I believe everyone has already been handed an information kit that provides further information and background on the bill as well as information on the Dairy Commission and the Canadian dairy industry in general.
As you know, the Canadian Dairy Commission is a crown corporation, established in 1966. The commission works very closely with the Canadian dairy industry stakeholders to facilitate major dairy policy initiatives in Canada.
The new milk pricing and pooling system enabled by Bill C-86 allows the Canadian Dairy Commission to set prices and pool returns for milk that is marketed inter-provincially, which is, I want to point out, about 3% of the milk produced in Canada. It also enables the commission to delegate these administrative functions to the provinces. It also allows the commission to receive such functions from the provinces.
The dovetailing of these functions within each jurisdiction permits the effective pooling of milk returns across Canada, on an equitable basis, between producers. This approach, which was developed by the industry itself, will allow the Canadian dairy sector to meet the new international and domestic market conditions while at the same time maintaining the equity that is so important to the continuing success of the orderly marketing system in place in Canada.
As I indicated in the House during the second reading, the legislative changes before us today do not impinge on current provincial jurisdiction. No additional government funds are required, nor will any contingent liability on the part of the federal government be involved.
Bill C-86 is strongly supported by the Canadian dairy industry. It is believed to be the best way of maintaining Canadian competitiveness, equity and orderly marketing while responding to the changes agreed to under the new GATT and World Trade Organization agreements.
As of August 1, 1995, the current system of using producer levies to finance dairy product exports to the United States will be prohibited. Therefore, if this bill is not passed by that date, exports to the United States will have to be curtailed. Furthermore, over time, our ability to use levies to finance dairy exports to other nations will also be reduced.
Under the current levy system, dairy farmers across Canada share equitably the costs and benefits involved in providing milk at reduced prices for use in certain export dairy products, and products containing dairy ingredients, sold on both the export and domestic markets. Processors must be able to continue to obtain milk and milk components at reduced prices for such products as cheese, chocolate and butter cookies sold in the United States and elsewhere abroad. If they cannot, they simply will not be able to continue to successfully compete with American and other foreign processors who can obtain dairy ingredients at lower prices.
U.S. markets for foods containing dairy ingredients are very important for all provinces, particularly Ontario and Quebec. The abandonment of these markets would mean job losses as well as reductions in the processing and production industries. Without the equity provided for under the levy system, dairy producers in some provinces that have a high level of further processing activity would be more negatively impacted than others in supplying these markets.
Essentially, under the new pricing and pooling approach, provincial milk marketing boards and agencies would advise the commission of the quantity and prices received for all classes of milk each month. The commission would then be mandated by provincial authorities to calculate the national average price level for each of the milk components included in the pooling process.
This process would take in a sufficient volume from each province to ensure an equitable sharing of the returns from the lower-priced classes of milk made available for dairy exports and products containing dairy ingredients. The returns from the agreed-upon percentage of the sales of milk would then be pooled and redistributed to producers, through the provincial authorities, on an equitable basis that is decided by the industry itself.
.0915
The pooling approach enabled by Bill C-86 has emerged - and I must emphasize this - from an intensive consultation with the dairy industry and provincial authorities. It is supported by provincial agriculture ministers and provincial milk marketing boards and agencies.
The commission has worked closely with the provinces, and continues to do so, to refine the elements of the new marketing approach.
Mr. Chairman, we will be circulating two further technical amendments to the bill to add more clarity to the bill. We will circulate those in both official languages during today's session.
I wish to emphasize that Bill C-86 will facilitate what is believed to be a GATT/WTO acceptable process to fairly equalize producer milk marketing returns and replicate what is now being accomplished under the levy system.
That is the conclusion of my comments, Mr. Chairman. It's back over to you for questions.
Mr. Easter (Malpeque): First, Mr. Vanclief, there are several provinces not in. For what reason are they not in, and what are the implications of them not being in, in terms of the national pool, and what's the process for them to come in eventually?
Mr. Vanclief: Mr. Chairman, I think the best person to answer that would probably be the chairman of the commission. He is vitally involved in that process and the meetings that have been going on. So I would ask him to comment on that.
Mr. Gilles Prégent (Chairman, Canadian Dairy Commission): As indicated by Mr. Vanclief, we've had very extensive discussions with representatives from producers, processors and provincial governments over the last ten months; a very extensive and a very thorough examination and discussion.
I think we must say that everybody has agreed that the best way to respond to the needs of GATT and NAFTA requirements is to price milk according to its utilization, to create a special class of milk, which is destined to be exported to the U.S., for example, thus creating a new special class with special pricing at a competitive level.
To ensure that the difference in amounts for that milk, which will be priced at a lower level than the Canadian pricing, as it is now, we will have to continue to compete in the U.S. market or price below that. To ensure, then, that the difference in pricing is spread across the country in a fair manner, as it is done now through the levy system, everybody agreed that the pooling mechanism has to be added to the system of pricing for special classes.
The differences between the various provinces and their outlook on pooling is just on the extent of the pooling. It's not on the principle of pooling itself. Everybody has agreed that a pooling mechanism has to be in place. In fact, all provinces have agreed on the pooling, at least for the special classes.
Six provinces, from the east to Manitoba, including Manitoba, have agreed on a wider pooling, on a pooling that includes all milk, including fluid milk. This is for many reasons, one being that the federal trade experts say that the wider the pool, the better our chances of winning if ever we are attacked in a panel of NAFTA.
Mr. Easter: Of NAFTA or GATT?
.0920
Mr. Prégent: We could be attacked by both, but the main attack would be from NAFTA, since the friends of NATO -
Mr. Easter: But don't we have an agreement that GATT rules will apply relative to our supply-management systems?
Mr. Prégent: Both GATT and NAFTA apply, of course, in the present circumstances. It is because of the different definitions, but especially the definitions in NAFTA, which establish that the levies are considered subsidies. So that's the reason why we have to change our system with the U.S.
Up until now, producers were remitting what we call levies, or contributions, if you want, to processors through the CDC to ensure that our processors and further processors could compete in the U.S. market.
Because of the definitions that appear now in both GATT and NAFTA - especially in NAFTA - these levies are now considered to be unauthorized subsidies, or they will be beginning August 1. That is one reason why I'm saying we could be attacked. Of course, in whatever system we think of, there's always the possibility of being attacked. If we are, then we have to be in the situation where we'll have the best defence or the best position to defend our system.
According to what our experts are saying, the more extensive the pool, the better the chances of winning. In fact, they assure us we have no problem with a wide pool.
Other persons seemed to have other points of view on this subject, and after what I assure you were lengthy discussions, everybody agreed that we could go, at least for the first years, with different pools in different parts of the country. So for the present we're considering having an all-milk pool in six provinces and a special-class pool, which is a narrower pool, in at least two and maybe three provinces, depending on what British Columbia may decide within a week.
We had discussions again last week on the subject. British Columbia is now considering entering the six-province all-milk pool. They will give their answer in about a week from now.
But whatever the situation, there will be a pool everywhere. At least a basic special-class pool will be in place. The all-milk pool covers about 82% of the milk. Since it covers such a big part of production, and since most of the exports to the U.S. now come from the eastern part of the country, we feel that even if in the western area there would be a narrower pool, it should not create an important problem. We can work with the two pools for some years, if needed, even though those provinces of Alberta and Saskatchewan and British Columbia have indicated that if they stay out of this all-milk pool, they will look at how things work out and will consider joining the all-milk pool later on so that discussions will continue. They will take place all next year between these provinces and the others in committees usually presided over by the CDC.
.0925
Mr. Hermanson (Kindersley - Lloydminster): To be very frank, I'm not an expert on dairy policy, so I would appreciate your helping me in this area.
You talk about the new pooling arrangement that would be legislated under Bill C-86. If this bill isn't implemented, I understand there would be some big-time losers in the industry. Who would the losers be, particularly on a provincial basis? Where would lie the greatest hardship to the industry? If the bill isn't passed would there be any winners in Canada whatsoever? If there aren't winners, which areas would be less affected if Bill C-86 were not passed by August 1?
Mr. Vanclief: As we've said, if the bill is not passed we will not be implementing the GATT/WTO agreements we said we would. Most of the dairy products that are exported from Canada, mostly to the United States, are from the eastern part of Canada. The two big dairy provinces there are Ontario and Quebec, as we know.
If the processors are not able to export, it certainly backs up through the system. It means jobs there; it means a reduced requirement for milk; it means the producers will be asked to produce less milk and their production quotas will be cut, etc.
So it backs up right through the system. The losers will be right across the industry, from the primary producer right through to the processing sector, the jobs and the economy it creates all the way through.
Mr. Hermanson: How much milk is currently exported to the United States?
Mr. Charles C. Birchard (Director, Strategic Planning, Policy and Communications, Canadian Dairy Commission): Approximately 1.7% of MSQ is exported to the United States. If the bill is not passed, since we cannot use levies any more to support exports to the United States because they are now deemed to be subsidies, you would automatically have a cut of 1.7%. But it goes further than that.
Many of the further processors in Canada that export to the United States rely on the U.S. exports to bolster their basic operations in Canada because we have a smaller market here. For example, a large confectionery manufacturer not far from Ottawa exports fully 70% of their production into the United States. If they could not export that product they would close their plant. We would lose all that business and we would lose the value-added. A conservative estimate is that we would have to cut quotas overall by as much as 4%.
Mr. Hermanson: How much do we export right now to the United States?
Mr. Birchard: We export about 0.7 million hectolitres.
Mr. Hermanson: What is the value of that?
Mr. Birchard: The value is about $33 million to $35 million.
Mr. Hermanson: What is the total value of the producer levies? What are they paid for this exporting?
Mr. Birchard: I think the value of the levies last year was $142 million.
Mr. Hermanson: So the levies are considerably more than the value of the product we export to the United States.
Mr. Birchard: But those levies cover all exports to all destinations in the world.
Mr. Hermanson: How much do we export, then, to other foreign countries?
Mr. Birchard: You have me stumped. I don't have that figure at this point, but I could get it.
Mr. Hermanson: Would it be more or less than the value of the levies?
Mr. Birchard: Oh, far more.
The Chairman: I think it's about $150 million.
Mr. Hermanson: Of dairy exports?
The Chairman: So it's very close, then.
Mr. Birchard: I think it's much more than that.
The Chairman: Those are 1993 figures.
Mr. Birchard: That's the total value of dairy exports in 1993?
I won't argue with Dairy Farmers of Canada facts and figures.
Mr. Hermanson: So if the levy is dropped and the exports are maintained the dollar amounts are about the same. In other words, if we kept the levy and lost the exports, there isn't going be too much difference other than if you start looking at spin-offs and value-added and so on.
Mr. Vanclief: I think we need to make clear that with the pooling the net result in the paycheque to the dairy producer, the farmer, is absolutely no different from the way it's done at the present time. Currently the farmer gets paid, in simple terms - maybe you can help me here, Chuck or Gilles - and the levy is checked off. With pooling, that is done ahead of time and the farmer is paid the net amount.
So it comes to the very same thing. It's doing the very same thing in a different way, but in a way that is not deemed to be a subsidy.
.0930
Mrs. Cowling (Dauphin - Swan River): I want to thank you for coming before the committee.
My question is with respect to equity and fairness in establishing the quota. I raise this question because about three or four years ago, if not longer, with the previous administration and the former government I happened to be in the maritime provinces and found to my surprise that we were moving butter at a subsidized rate from New Brunswick right to B.C. The people in B.C. were trying to establish and wanted to have a quota for the product themselves. I'm hoping we've addressed that question and there is some fairness.
I want to know who determines where, why, and who should be qualified to be part of that quota system and involved in the pooling.
You mentioned that all of the milk is pooled in six provinces. Can you tell us in which provinces the milk is pooled?
Mr. Vanclief: The three provinces to date that are not in the all-milk pool are Saskatchewan, Alberta and British Columbia.
Mrs. Cowling: Great.
Mr. Vanclief: British Columbia is still seriously considering it for another week, and they may very well join the other six out of nine. Newfoundland is not involved because basically there is no industrial milk industry in the province, so they are at the discussions as observers.
The other two provinces, as Mr. Prégent has said, are going to have a narrower pool within their provinces, which will do the job as far as we're concerned. It won't be as ideal as it could be, but it will do the job because of the smaller volume of milk that would affected by that.
Mr. Prégent, would you care to address the question of butter?
Mr. Prégent: At certain periods of the year butter does travel quite a lot across the country. It can come from New Brunswick to B.C. or from Saskatchewan to Nova Scotia, depending on the needs at the time. Not all provinces produce the same amount of milk for industrial purposes. One of the reasons the CDC has a program is to ensure that all year round we have milk from Canadian sources all across the country.
We know of course that British Columbia, amongst others - but maybe especially British Columbia - has been looking for a larger share of quota. As you can imagine, all provinces want a bigger share of quota. These shares were established some years ago through an agreement between provinces signed by provincial governments and provincial producer representatives that established what we call the national plan. Within that plan quota shares were distributed at that time.
During our discussions over the past four or five months this question arose again, even though it had nothing to do with what we're doing now. The question was still being discussed, and British Columbia has asked for some slight corrections in their percentage. They already have obtained, through actions of their own, a certain amount additional to what they had in the past as a quota base. It is one of the questions being looked at over the next week. It is one of the conditions they have put to enter the all-milk pool. They have had an offer from the other provinces to that effect. They may or may not accept that offer; I don't know yet.
All that's to say that it's a question being addressed by the producers themselves and the government representatives at the table.
.0935
Mrs. Cowling: You indicated that the provinces had met and decided about the quota. Can you tell me when they did that?
Mr. Prégent: The original agreement was made in 1972. There were amendments in 1978, I think, and another one in I think the 1980s. I'm not sure about the exact date of the third amendments. But the original shares were distributed in 1972 when the plan was agreed upon by all provinces.
Mr. Vanclief: That was based on historical production within the provinces.
Mrs. Cowling: Thank you.
Mr. Hoeppner (Lisgar - Marquette): Thank you, gentlemen, for appearing. The question I ran into during the 1993 election was that cheese plants could not access enough industrial milk to operate properly. Is this pooling system going to change that somewhat?
Mr. Prégent: Allocation of milk has been a problem in some provinces for some time, in Ontario perhaps more than anywhere else.
Mr. Hoeppner: It was in Manitoba during election time. It was a big problem.
Mr. Prégent: It could have been; I'm not aware of that. But there have been problems of allocations all over the country at different periods.
It is a matter, first of all, of provincial jurisdiction for the provincial board to allocate its total milk quota however they decide to do it. Some provinces have established plant quotas; others have established a direction of milk by the producer board itself, which directs the milk to certain plants according to different rules it establishes.
Each province deals with that in a different manner, but it is a problem of provincial concern, essentially, because it is a transaction that is made entirely within the province.
Mr. Hoeppner: So this pooling, then, between the six provinces is not going to correct that.
Mr. Prégent: It is a price pooling. We pool the prices. We don't pool anything else.
I must say, though, that all the provinces are aware of that problem, and it is one of their aims to try to assure a better supply of milk to different areas and to have more open borders, if you will, between provinces as to supply. So it has nothing to do with pooling itself; it has to do with fairness and better returns for producers.
It could happen that in a province a cheese plant, for example, would require milk. I'll take Quebec and Ontario, because it's an area I know better. You could have a cheese plant in the eastern part of Ontario, for example, that doesn't have enough supply at a certain period, and in Quebec, you could have maybe too much milk during that same period, or milk that would go to lower-priced products such as powder and butter.
It is part of the agreement among the six provinces that they will develop during the next year a program to ensure that milk will be allocated across borders in a manner that will better supply the plants.
Mr. Hoeppner: Does that mean we have to do away with some trade restrictions between provinces? Is that going to come into effect with this?
Mr. Prégent: I hope there are no trade barriers between provinces. There shouldn't be.
Mr. Hoeppner: No, there shouldn't be.
Mr. Prégent: There are in practice; I know that, in fact.
I guess it's easy to understand that each province always wants to keep its volume of milk within the province and to deal with it itself. But producers in many provinces have indicated they are ready to open up their borders, if you will, especially when it assures them of higher returns. The example I gave would be one situation where that could occur.
.0940
Mr. Hoeppner: I think that's very good.
Mr. Prégent: So currently that's part of the agreement among the six.
Mr. Vanclief: I might add a comment to that, Mr. Chairman. I think Mr. Hoeppner brings up a valid point. From time to time we all hear or we read in the press that a certain cheese plant or something could sell more cheese if they could get more milk at a good price. The bottom line is that collectively, the cheese manufacturers in Canada fill the market.
There may very well be a situation where factory A could sell more of their product, but by doing so they would displace what somebody else was selling from their plant. But we do fill the cheese market in Canada, and with the very mature and realistic approach the dairy industry is taking to this and the realization that some of these things, the protection from province to province, are going to have to change, and if there is a demand for milk in a certain area, if there's a shortage there and a surplus someplace else, it's going to be able to move more freely than it has in the past.
Don't let us forget, individual provinces, individual plants and individual producers will try to protect their piece of the pie. Naturally; it's only human. But there is more understanding that to protect that in the long term, there may have to be more fluidity, if I could use the analogy of the whole milk system.
Mr. Hoeppner: Mr. Chairman, I was told during the election that there was a good opportunity to export extra cheese because we were competitive in that area. Is that right?
Mr. Vanclief: There may very well be from individual processors or individual cheeses; I'm not saying there isn't. But if that demand builds, then the industry will supply the milk. There's no question about it.
Mr. Calder (Wellington - Grey - Dufferin - Simcoe): I'll make this really quick. First of all, it seems to be that we're always changing. I'm curious as to whether there are any changes being made in the U.S. pricing system. If there are, what?
From what I can see right now, I'd like to know what kind of changes Bill C-86 is going to make to the cost of production formula for industrial milk, given the changes that will be made to the support price structure.
Mr. Vanclief: I'll answer the first question. We're not changing; we're not changing anything in the price of the milk, just the way in which it's done. Whether or not the United States is changing anything I don't know.
Rather than the levies being collected, being paid x number of dollars and then having a levy taken off that for that portion of the milk to meet these demands, the price is being pooled and the bottom line, the net, is being paid to the producer in the first place.
We're not changing anything in the pricing of milk. It's just the way in which it's being done.
Regarding the other part of the question, do you want to answer, Chuck?
Mr. Birchard: Was it in relation to the cost of production?
Mr. Calder: Yes, what change is there going to be to the COPF? We are changing the support price structure here.
Mr. Birchard: Bill C-86 will not change the cost of production formula now in place. All Bill C-86 does is provide the framework whereby the commission can facilitate the operation of a pooling of returns from the marketplace for producers. The COP formula, which was agreed to by the consultative committee to the Dairy Commission last year, was a revised formula from the formula that had been in place for a number of years previously. The commission takes a look at that formula when it establishes target prices twice a year, but the two are independent of each other.
Mr. Calder: Okay.
[Translation]
Mr. Daviault (Ahuntsic): As MP for an urban riding, I am not very familiar with agricultural issues. This bill has the support of the Official Opposition leadership, and you realize that I'm only replacing the member that normally sits on this Committee.
.0945
However, for my own information, I would like to get some additional information regarding those provinces who are not participating in the pool. You specifically did mention British Columbia. The information I really would like to get concerns Alberta and Saskatchewan. Why are they not participating in the pool?
The document prepared by the Library of Parliament states that their non-participation weakens the Canadian position in our negotiations with the U.S. What is being done by the Canadian Dairy Commission, or by the federal government, to settle that issue?
[English]
Mr. Vanclief: I'd like to make a couple of comments first, and then I'd ask Mr. Prégent to comment.
I don't think there's any question that if all provinces pooled all milk, our case, if challenged, would be a little bit stronger. But we have six - and hopefully, nine - which take in I believe 80% or 82% of the milk produced in Canada. The other provinces will pool special classes of milk. So they're going part of the way. What we're saying is that we're going a long way toward 100%.
About the specific reasons as to why the three provinces at this time do not wish to go to all milk being pooled, I'll ask Mr. Prégent to briefly explain their reasons for that.
[Translation]
Mr. Prégent: I believe we must take into account that even though these Western provinces have not yet accepted to belong to a wider pool, they nonetheless accepted to pool some special classes; these are the new classes developed to meet U.S. competition. All provinces have agreed at least to participate in this basic pooling.
As indicated by Mr. Vanclief, it is true the six provinces did accept a wider pooling that covers all milk including liquid, and that such a pool could more easily face a challenge before international tribunals.
However, we must note that the more limited pool for the Western provinces is nonetheless capable to face a challenge. We should not believe that the situation is disastrous and that we're going to face an unavoidable danger. It would be better if we had a pool including all provinces, but even with the two pools that we have at present, we believe that it would be rather easy to defend our position should it be challenged.
Why is it that some provinces do not immediately join in a wider pool? The reasons vary with each province. For instance, I believe that for British Columbia, it was a way to reopen all the litigations raised regarding the operation of the national plan.
We had many meetings and many discussions with representatives of all the provinces, and British Columbia had a series of demands that had to be met before going any further.
Most of the other provinces accepted many of the requests submitted by British Columbia. On some of them I'm not sure that British Columbia will receive satisfaction, but it is quite possible that the province will deem its demands satisfied and that it will join in what will become the group of seven.
.0950
The situation is different in the case of Alberta, a province that has no pool of its own. In other words, the industrial milk producers of Alberta do not come under an equalization program within their province. To go from a situation where there is no province-wide equalization to a nation-wide equalization system is a big jump and I believe they would prefer to start off with just a few small steps.
During the course of the year, they will see how things go, how they can group together all their producers and a province-wide pool, before going any further.
What efforts have been made? These provinces are already aware of the fact that it would be preferable for them to join together with the six or seven other provinces on the road to a national pool. They are already looking at changes that could be made within their own borders. I must say in this regard that they have already accepted to modify a series of internal regulations harmonize them with those of the six others. They therefore already moved in that direction.
As an example, there are classes of milk, price levels and all sorts of other things that they have agreed upon and that will perhaps make the final stage easier in one or two years' time.
During this period, the Dairy Commission will continue to hold meetings with all of the provinces, in order to resolve any conflicts that may remain and to try to convince the remaining two or three western provinces to join in.
You must understand that we are dealing here for the most part in areas that are under provincial jurisdiction. Therefore, to bring about what we are presently studying, it is absolutely essential that we obtain the prior approval and agreement of each province.
Mr. Daviault: Thank you.
[English]
Mr. Collins (Souris - Moose Mountain): I have just one question, and that has to do with our trade with the United States and the U.S. market purchase by 1% of the Canadian industrial milk production. Over the next five years what do you see, in both the short and the long term, in terms of our opportunities to move and expand into that market?
Mr. Birchard: I think Canada's best opportunities for dairy products in the U.S. market will be through further processed products rather than dairy products per se, such as cheese or butter or skim milk powder. The United States, while they espouse free trade vocally, are extremely protectionist where they can be. We cannot move butter or skim milk powder into the United States, and I don't expect we will be able to in the next five years. We have very limited access for cheese. The amount of access that Canada does have for cheese in the United States we fully exploit, but it's through the further processed products that we have the most gain to make.
For example, there are some soup companies that are considering putting all their production of cream soups, perhaps, in Canada that would service both Canada and the northern United States out of a Canadian plant. That would utilize dairy products and of course give valued-added and employment in Canada.
There are other very aggressive food processors in Canada utilizing dairy products and other supply managed products, of which confectionery is a very big one. We could end up being a big winner on confectionary items; chicken products in pot pies and that kind of thing, where a lot of butter is used in the crust. Of course, on further processed products there are no quotas. With NAFTA, by 1998 there will be no tariffs. We see that if there is an opportunity to expand, and there will be, that's the area in which we should go.
Mr. Collins: I have just one other question. I notice our American counterparts in some of their end products use all kinds of additives and strange types of commodities that are supposed to be synthetics for cheese. I hope we never find ourselves in that type of situation. For instance, you'll get some pizzas where I think the only thing that's really there is maybe the crust. Everything else is synthetic.
.0955
Do you see us ever getting into that type of dilemma?
Mr. Birchard: I hope not. At this stage, imitation dairy products as such, where vegetable oils would be used in place of butter fat, are not permitted in Canada except to a limited extent in Saskatchewan and Nova Scotia, where there are butter/margarine blends permitted to be marketed.
The dairy industry is keenly aware of the potential threat of imitation dairy products and will do everything to ensure that consumers would not be misled by these products and would only have natural dairy products to consume.
Mr. Collins: Thanks very much.
The Chairman: We're now into the second round of questions.
Mr. Hermanson: I want to change direction just a little bit to talk about the market sharing quota. That's based on historical production of basically industrial milk products.
I presume that would be considered a domestic trade barrier, one of the many trade barriers, and it's not in any way covered under Bill C-88, which is an agreement of the provinces to try to remove barriers to internal trade. Of course, this pooling arrangement doesn't affect interprovincial trade either, from what I've been able to observe.
First of all, who are the winners and who are the losers? I understand - correct me if I'm wrong - that particularly western provinces...B.C. in particular is a big loser under this agreement and some of the central Canadian provinces are the winners. Is that correct?
Mr. Prégent: You're talking about the current agreement.
Mr. Hermanson: The current market sharing quota arrangement.
Mr. Prégent: Oh, no; in the current agreement there are no changes at all to the market sharing arrangements. Market sharing was established basically in 1972 and has been at that percentage ever since. There were slight corrections for B.C. some years ago, and it has been there ever since.
This new bill only deals with the possibility of pooling on a national scale, but it does not change at all the shares of the provinces as such.
Mr. Hermanson: Do you think that's wise, given that certainly there have been changes in the industry and other changes that relate to the industry? For instance, the elimination of the Crow benefit now will change the price of feed across Canada. Perhaps it will be less expensive now to produce milk in the prairies, for instance, than it is in central or eastern Canada.
Is it time to review the market sharing quota to make sure we're taking full advantage of comparative advantages across the country? Are we wise to have locked ourselves into this in perpetuity? I think it's time to review this.
Mr. Prégent: Mind you, I think many provinces think the same way. They would like to reopen that agreement and discuss again the sharing of these basic quotas.
We must be careful. Control of production of a product is strictly - and I'm sorry to be legal about it - a matter of provincial concern. The CDC or the Canadian government could not change the shares or establish shares for different provinces. It is only through an agreement between provinces that you can come to establish rules whereby each province accepts to limit its production to a certain level.
That's what was done in 1972. That's why we have an agreement between the provinces, because each province agreed not to produce more than a certain volume, which made some shares. To change that you would need agreement by all the signatories to that agreement. Like other large-scale agreements, involving all provinces is not an easy task, as you can imagine.
.1000
There are other ways, though, to develop production in a province. Imaginative producers have found proposals that have been accepted that can give some leeway or some opportunities for provinces who want to develop new products to get a volume of milk necessary for that purpose. It's called the Optional Export Program, a completely new program that again requires agreement between the provinces. It was agreed to about a week ago at one of our meetings. It will permit provinces to develop export markets. If they can they will obtain the necessary milk from their producers without quota.
Mr. Hermanson: I guess what I was looking for -
The Chairman: Mr. Vanclief, do you want to respond to that at all?
Mr. Vanclief: Yes. Just to help in the discussion of what I think what Mr. Hermanson is getting at, about 12% of the Canadian population is in British Columbia. When the allocation of the market sharing quota or the industrial quota was done in 1972, they had about 4% of the market share quota. That was at their historic level.
Prior to then and at that time, they did not really have any interest in producing industrial milk, because the return from industrial milk was not as high as it was from fluid milk. They didn't have any interest. The adjustments that have been made since then have now brought them up to about 5% of the quota versus their 12% population.
They are having a change of mind. That's not a negative statement. They're saying they would now like more industrial milk quota, closer to, you might say, their percentage of the population. But we also know there are other provinces that in 1972 had nearly 50% of industrial milk in production in Canada, and that has stayed there.
There's only so much industrial milk required in Canada. As one province wants more, we can understand that probably nobody else wants to give any up, because everybody wants to keep as much as they possibly can.
What is happening right now in these ongoing discussions with British Columbia is that the other provinces are bending over backwards and are having discussions and are prepared, to the best of their ability, to address the concern British Columbia has in the context of an all-milk pool, etc.
That is the type of thing I was referring to a few minutes ago about the reality look and everything the dairy industry is taking toward the whole thing. We must understand that every province would like to have more industrial milk. We're back to the local cheese factory that would like to have more milk, but the market's being filled overall. There's only so much market there. If there's more given in one place, somebody else has to give it up.
Right now the rest of the provinces are saying to B.C. that they will consider reshuffling this a little bit in order for us all to be better off in the end.
Mr. Hermanson: That's the point I was trying to make. Would there be more likelihood of B.C., Saskatchewan, and Alberta joining this new pooling arrangement if there was a review of the market sharing quota?
Mr. Vanclief: Yes, and that review is taking place. B.C., for example, has come forward to the rest of the provinces saying that if they could have this, if they could have that, they would come into the whole pool - but it's whatever the others are willing to do. It's ``We want'' and ``We will give this much''.
Mr. Hermanson: But that's not the case in Saskatchewan and Alberta?
Mr. Vanclief: I don't know exactly what the situation is.
Chuck, do you want to comment?
Mr. Birchard: I think every province, as has been said before, of course wants more quota. In the case of Alberta, they particularly are keen on the optional export quota program Mr. Prégent mentioned a few minutes ago. Most provinces feel that this program, which will provide milk outside of the quota system for processors and exporters who can find new export markets for dairy products, will be a new opportunity for milk production for Canadian dairy products to satisfy export markets.
.1005
British Columbia is very keen about that. Alberta is very keen about it. In the case of Alberta and Saskatchewan, while they would like more quota the issue really focuses on British Columbia, because the disparity between share of population and their MSQ share is really quite large. As Mr. Vanclief said, the provinces are working very hard to address that issue to the extent they can.
Mr. Hermanson: On a point of order, are we finishing this round and then going to the estimates? How much time do we have for the estimates?
I just want a clarification from the chair.
The Chairman: It's until we've done the estimates. We have until 11 a.m.
Mrs. Cowling: I want to follow up on a question Mr. Collins had raised. On one hand you mentioned that we'd be moving to less butter and skim milk products through the U.S. On the other hand, you had mentioned that we would be moving those products through processed products.
I'm wondering if those volumes will be equivalent to what we have moved in previous years if we move it through a processed avenue. What are the possibilities of moving cheese, skim milk and some of those dairy products through the Asian-Pacific Rim and into the European market? Have we explored those markets? What are the possibilities there?
My real question is, will we in fact be enhancing and building the dairy industry in Canada? What is the potential for growth in that particular industry?
Mr. Vanclief: I have just a couple of comments. As well, Mr. Birchard commented on that before. I don't think he said that we would be sending less skim milk powder and butter into the United States. I think he said that probably the opportunity to expand is not there. There's no question the dairy industry is looking wherever it possibly can to expanding export markets.
What they are saying, and what the producers are responding to, is that they're prepared to work with the processors and to provide them the raw product at a price that enables them to meet the export market out there, keeping in mind that there may be a limit to the amount of lower-priced product that the primary producer can provide to the processor while still keeping their individual operations or the primary producer level of the industry in an economically viable situation.
If it's a small percentage, then that's different, but if that percentage continues to grow, then the overall return from that tank full of milk going off the farm every day...there has to be compensation someplace else.
Mr. Birchard may have some other comments on the export.
Mr. Birchard: I could comment that in relation to the Asian market, this, of course, is a market British Columbia looks at very keenly. As I was mentioning before, B.C. is a staunch supporter of the optional export quota program the milk supply management committee approved last week.
As far as the European Union is concerned, they have strict import quotas. There is a possibility that Canada's access for aged cheddar cheese could be expanded into the European Union once the 15,000-tonne quota administration is settled by the European authorities.
At this stage, we are exporting 4,250 tonnes of aged Canadian cheddar to England as part of the European Union, and that program will continue next year. We hope we could possibly get expanded access into the community. All that cheese goes of course to England. It's quite a delicacy over there.
.1010
If we can get expanded access, that would be good, because the returns on those exports are really quite favourable to Canadian producers.
Mr. Easter: Coming back to Mr. Birchard's earlier comments on further processors, in terms of the changes being made, is the object of the game to ensure that our processors compete in the United States market, is it to ensure returns based on the cost of production or is it to ensure that we achieve returns based on the cost of production of the most efficient producers? Those are somewhat in conflict.
As I sit here listening to especially Mr. Birchard, I believe the emphasis is changing considerably. I've seen that within Agriculture Canada as well. The emphasis is changing considerably from when the original system was set up from functioning with the emphasis on and in the interests of primary producers, to now where emphasis is on industry, maybe at the expense of primary producers. Am I correct or incorrect?
Mr. Vanclief: Just as an open comment, this amendment really has nothing to do with what you're saying. That is a discussion that is constantly taking place within the industry.
This amendment is to make what the industry has agreed to do - between producers and processors and further processors in the past - by collecting levies from producers who have said they are prepared to sell some of our product at a different price in order to allow you to make product and further processed product that you can export. This amendment allows that to be done in a different way but in a way that is compatible with the rules of GATT and the WTO.
You ask what is the purpose of this, and what is going on within the industry? That is a debate that is constantly going on within the industry. It's a debate I don't think is any more unique to the dairy industry than it is to any other business. Somebody will say, well, if you'll sell me your product for less money, I will buy more of it. You may very well say, and the dairy industry at the present time is going through that debate within itself and saying, how far and how much product can they afford to sell at a price in order to have more production opportunity? Or they may say, look, that's as far as we're going to go, or can afford to go, and that's it.
Mr. Easter: That's where my concern rests, Lyle, on both points, actually. Yes, that discussion is going on in the industry, but the industry, especially at the primary production level, is also being pushed in a certain direction while not looking at other options. It's being pushed in a certain direction by both bureaucracy within Ottawa and to a certain extent the bureaucracy within the agencies.
Let me come to my point. You basically said this does not change the system, and I agree with you on that. The system changed some time ago when producers subsidized exports for the processors, which in my opinion, as a primary producer, put us in the situation of, to a certain extent, selling more for less.
You are correct in what you said, that the cost of production will not be affected. You are right in that. But for exported products under the old system and under this system, prices will be based on international prices that are certainly not equal to cost of production and sometimes, in fact, even less. I have a very grave concern of how far we move in that direction, of selling more for less and its impact on the primary producers.
The question really relates to what safeguards are there to ensure that further processors do not use this new system to lever prices downwards, and also to move from the export market where they're saying they need to sell its products for pizzas or whatever, transferring that into the domestic system and saying, well, we can do it internationally - now we want to be able to do it here and thereby break the system.
I'd like you to answer that first, and then I have one more short question.
.1015
Mr. Vanclief: I don't argue with what you say has been happening, but I want to point out how the decisions of what is the volume sold and what is the level of price. It is determined by the Canadian Milk Supply Management Committee, which is producer-dominated. So anything the industry has done has been decided and agreed to by producers.
If anyone has a quarrel, it may be with the producer representatives. The producers are not selling any more volume at any different price from what the producers themselves agreed to.
The Chairman: Are there safeguards, though? I think that's the question.
Mr. Vanclief: The safeguards are that they can either agree to it or not agree to it. If they agree to it, then that's what it is.
Mr. Easter: But, Lyle, look; the push of this international competitiveness.... Over the long term we have to look at whether we can enhance the supply management system and do it internationally or leave it on the slippery slope to its destruction.
These changes are following through on other changes that have put on us on somewhat a slippery slope. I don't think it can lead to disaster. We may be able to open up our eyes sometime and recognize that we have the best system in the world and not accept its destruction. There's certainly a feeling out there that this will lead to major reforms in terms of: first, the support price structure over time; second, the cost of production formula for industrial milk; and third, possibly a national quota exchange. Producers have concerns with all three.
I think we have to be concerned about that and recognize that we don't have to follow along the way we're seemingly being pushed. If there are danger signals to the producers that they should know about, then let's spell them out to them. Let's not try to pull the wool over their eyes. If there are danger signals, give them the facts up front. I think they can deal with it.
Mr. Vanclief: The only closing comment I can make is that I don't deny that there isn't that pressure out there, but the facts are that if the pressure is there - and it probably is there - it's in any marketplace, asking people to produce more but for less. Very seldom in the agrifood industry does somebody come along and say that they'll pay you more if you produce more. That's just not something that happens - at least it never did when I was farming. I suppose we all dream of a day when that might happen.
The decisions that have been made and agreed to have been agreed to by producers. Maybe the influence on those producer representatives is not the way it should be or could have been. If you want to use the words ``slippery slope'', and I think you did, the agreement by the primary producer has been what has allowed it to happen.
Mr. Easter: Let me ask another question. With the agreements with primary producers, they've allowed it to happen, but have they been presented with other options? What we're constantly presented with as producers is that this is a fait accompli. There are no other choices, no other options.
Mr. Vanclief: When you look at the people who are around and that make up that Canadian Milk Supply Management Committee, none of them are any slouches. There's no question in my mind that they, as individuals and in representing their producers, are looking at every possible option that's out there as far as getting more from the marketplace and as much from the marketplace as they possibly can.
I'll leave it at that. Tonight we're going to eat Wayne's lobsters.
Some hon. members: Oh, oh.
The Chairman: I think we'll leave it at that.
Mr. Vanclief: Mr. Chairman, there are two amendments. I think they've been circulated. They're ones of clarity. We will leave them with the committee.
I think they're self-explanatory. We can deal with them when we get to clause by clause.
.1020
The Chairman: Thank you very much, Mr. Vanclief.
We will be having witnesses in. If colleagues have some witnesses they want to see before we get to clause by clause, please submit their names to the clerk. We have some names already from the Bloc. If the Reform Party has some names of possible witnesses, please send them in to the clerk.
Mr. Vanclief: If we could emphasize again, we don't want to ram this through - and I know you realize this - but I think it's vital to the dairy industry that we move this as quickly as we possibly can. If we could wind it up next week that would be excellent. It's not too long between now and August 1.
The Chairman: We'll certainly try to do that.
Mr. Vanclief: Thank you.
The Chairman: Colleagues, let's move on to the votes on main estimates. We have five votes. We have some amendments. Why don't we start with vote 1.
Is there any discussion?
Mr. Hermanson: Yes, there is. Vote 1 is on the departmental operating expenditures.
I would just like to preface by saying we do have some motions, which I would be happy to move, to reduce the estimates. There have been significant cuts in the Department of Agriculture and Agrifood and funding for the agriculture sector, and we recognize that. What I am proposing today would be the Reform approach to cuts versus the minister's approach to cuts, because it seems as though the minister's approach has been to cut at the end that seems to affect farmers most directly, and that's at the support end or in the personnel end, whereas the cuts the Reform Party has proposed are more at the non-salaried and capital costs end.
The total reduction to Agriculture spending is in the neighbourhood of 19% to 20% over the next three years, and there have been significant cuts in past budgets, as well.
The total funds available for 1994-95 are approximately $2.1 billion and the total funds available for 1995-96 and 1996-97 are approximately $2 billion. So the 1996-97 figure is approximately $30 million less than the 1995-96 figure. The total funds available in the 1997-98 fiscal year will be down to about $1.7 billion. So we see about a 20% cut in overall spending over the next three years.
On top of that, there is a $560-million cut in the form of the elimination of the Crow benefits for farmers. That's the single largest cut. While it comes under the Department of Transport and under the Minister of Transport, Mr. Young, nevertheless it has been a subsidy, a support program, enjoyed solely by agricultural producers. That's going to be gone, as well as the Atlantic Region Freight Assistance Act and the Maritime Freight Rates Act.
So while I will be suggesting cuts they will not be primarily in the area that would support agriculture on the front line, in the form of support programs, nor will they be primarily in the areas of personnel.
Around vote 1, gross cuts to operating costs of the department from 1994-95 to 1995-96 equal 7%. That is going from more than $611 million down to about $569 million, a total vote decrease of $42,140,000. The non-salary operating expenditure cuts from 1994-95 to 1995-96 equal 8%. That's from $165 million and some to $151 million, a non-salary expenditure decrease of $14,525,000. Reform would have decreased non-salary operating expenditures by 25%, for a reduction of $41,448,000. The new non-salary operating expenditures for 1995-96 would have equalled about $124 million.
The Liberals made cuts of $42,140,000 to the overall operating expenditures. Their cuts went beyond - and I want to emphasize that - non-salary operating expenses and were brought about through decreasing salary expenditures. However, the Liberal cuts were brought about mainly through salary expenditure cuts. We believe cuts to staff should be balanced by cuts to operating expenses.
.1025
I therefore move:
That vote number one for the Department of Agriculture and Agri-Food that is in the amount of $569,216,000 be reduced by $26,923,000 to a total of $539,923,000.
We are making this amendment seeking to balance non-salary expenditure cuts with salary expenditure cuts. I would ask the committee to consider this amendment.
The Chairman: Thank you, Mr. Hermanson. Just to be clear, which programs are you cutting out in the $26,923,000?
Mr. Hermanson: This is more of an across-the-board cut to non-salary expenditures. We believe the department should manage itself, for the most part.
The Chairman: So you don't have any specific programs.
Mr. Hermanson: I don't have any specific lines I've taken out of the estimates on this. We've seen some across-the-board cuts to personnel but we haven't seen any across-the-board cuts to non-salary expenses, which are not in the form of support programs.
The Chairman: Thank you, Mr. Hermanson.
Is there any debate?
Mr. Easter: It really makes it hard to discuss the amendment appropriately if we're not dealing with the specifics of what you're really asking to be cut or the changes to be made in terms of the re-prioritization.
Mr. Hermanson: It just seems rather odd that the department is downsizing its staff yet needs the same infrastructure, the same non-salary budget it had before. We're suggesting that the non-salary expenditures should be reduced in line with the reductions that were made in salary expenditures.
We think it makes sense.
The Chairman: If there's no further discussion, I'll call the question.
Amendment negatived
The Chairman: We're now on vote 5.
Mr. Hermanson: Vote 5 deals with the Canadian Grain Commission. Gross cuts to the operating costs of the commission from 1994-95 to 1995-96 equal 8.4%, from about $45 million to about $41 million - a total vote decrease of $3,841,000.
Non-salary operating expenditures in the main estimates - and please listen to this, folks - increased from 1994-95 to 1995-96 by 34%, from $5,610,000 to $8,492,000, a non-salary expenditure increase of $2,882,000.
Again, Reform would have decreased non-salary expenditures by 25%, for a reduction of $1,403,000. New non-salary operating expenditures would have equalled $4,285,000. The Liberals, however, cut $3,841,000 from the overall operating budget of the Canadian Grain Commission. Again, the Liberal cuts were brought about by staffing reductions.
I move:
That vote number 5 for the Department of Agriculture and Agri-Food in the amount of $41,694,000 be reduced by $4,285,000 to $37,409,000.
The Chairman: Is there discussion on the amendment?
Mr. Reed (Halton - Peel): Where is that cut specifically directed?
Mr. Hermanson: That cut is directed to non-salary expenditures by the Canadian Grain Commission, which in the estimates have increased by almost $3 million when at the same time staffing is being cut back.
.1030
Mr. Reed: No, the question I'm asking is this: what specifically does this represent? Is it the construction of a couple of elevators?
Mr. Hermanson: The estimates aren't clear on what this is. Perhaps the Parliamentary Secretary to the Minister of Agriculture would justify this rather large increase at a time when the rest of the Grain Commission is downsizing its staff.
Mr. Reed: It looks to me as though it could be a scheduled capital expenditure. I'd be interested in knowing if you could tell us what it is.
Mr. Hermanson: I can't find it in the estimates. That's why we're here. We're here to ask what it is.
Mr. Reed: You've suggested this decrease. What do you want to decrease?
Mr. Hermanson: We want to decrease the non-salary expenditures -
Mr. Reed: You just want to slash it across the board. You don't care where it takes place.
Mr. Hermanson: No, we don't want to slash across the board. We want to cut the non-salary expenditures.
Mr. Reed: With respect, I understand that, but under what aegis? Is it cutting capital expenditure? Is it cutting out the construction of an edifice the grain people need?
Mr. Hermanson: It doesn't say in the estimates where it's spent. That's what I'm trying to find out. I'm moving to reduce it to get a justification as to why it's there.
Mr. Reed: Very often we won't see that until the actual record of expenditures comes out.
Mr. Hermanson: Then it's too late. We can't do anything about it. Maybe they built a fancy new office tower.
Mr. Reed: But you don't know that, and you can't tell us that.
Mr. Hermanson: And you don't know that they didn't. That's why I'm asking.
Mr. Reed: Well, I can't support a motion that's so non-specific.
Mr. Hermanson: Why can't that information be supplied to the committee?
The Chairman: I'm not sure, Mr. Hermanson. Have you asked for this information?
Mr. Hermanson: Yes, we have. We've phoned and they haven't supplied it to us.
It's a huge increase.
The Chairman: Yes, but under the rules of the House, you have an ability to put in questions.
Mr. Hermanson: I was just told by some of our researchers that one of the members said they had to fudge the records to get it to work out this way. We're quite concerned. We're not given the information we need.
Mr. Collins: That's a crock.
Mr. Hermanson: That's not true, Bernie. It's not a crock.
The Chairman: Who said that?
Mr. Collins: The facts are right here; you have them.
The Chairman: In any event, is there any further discussion?
Mr. Easter: I can't see how you can claim, Mr. Hermanson, that you can't tell where the expenditures are going, because they're very well outlined in the estimates. I mean, these are really detailed estimates. Based on that, then, to say that it's directed to non-salary expenditures is not enough.
You may have a valid point; I don't know. But if you turn to page 160 in the estimates it shows the activity resource summary of the Canadian Grain Commission. What areas there are you asking to be cut?
Mr. Hermanson: To respond, Wayne, we don't think the department particularly knows what they're doing. They're making changes to the Crow and they don't know how they're going to implement a transition fund. They have no idea what they're going to do. We don't think they know what they're going to use this huge increase of $3 million in non-salary budget for. We can't get them to tell us.
Mr. Easter: The Crow, on the transportation side, has its implications, but it's a different question. In all fairness, to debate the amendment and the expenditure reduction conclusively, I would need to know specifically what you're asking for in the estimates so that I can look at the estimates and determine in my own mind what that cut might mean. You're not giving me that information.
Mr. Hermanson: If they would provide us with the information we could pass it on to you. Perhaps if we move to cut the budget they'll be a little more liberal with the information.
Mrs. Cowling: On a point of order, I would suggest that the Reform Party, if they have any amendments, come with some clarification as to what those amendments might be. It's hard for us to discuss this at committee if in fact they don't have any background information.
The Chairman: That's not a point of order, but it's a nice point.
Is there any further discussion?
Mrs. Cowling: It's a point of view, then.
Mr. Hoeppner: It's very hard for us, as a standing committee, to come forward with suggestions on some of these issues if we can't get the information on where this is coming from. As you know, the Canadian Grain Commission is 95% funded by deductions off farmer's grain cheques. Now, if we get an increase of $3 million...4% or 5% funded by the government, hey, there has to be some explanation for it. I'd like to know where it is.
.1035
I have to take my colleague's word for it that it isn't available.
The Chairman: Mr. Hoeppner, at no time was there a request from the Reform Party for the Canada Grain Commission to come forward. I know you have abilities, under House rules, on the Order Paper, to get questions like that answered. Certainly had I known, we would have asked them to come forward to explain these types of things.
Mr. Hermanson: I guess it highlights a problem. I know there were Department of Agriculture and Agri-food officials here who said they had internal documents that supply us, as Parliamentarians, with some of the information we need, but they won't release them. I think one of your own Liberal members was quite incensed by that, and complained about it here in committee.
How are we going to give you the details if the departments won't give us the information we require to make the line by lines?
The Chairman: Certainly the department has cooperated to date in terms of information we've requested. I have not had any requests through the chair from the Reform Party for this type of information.
In any event, if you have questions, then certainly, on behalf of the committee, I would approach the Grain Commission and try to get these questions answered for the future.
Is there any further discussion on this point? The question is on the amendment.
Amendment negatived
The Chairman: There is a proposed amendment to vote 10.
Mr. Hermanson: Vote 10 deals with capital expenditures. Gross capital expenditures were increased from the 1994-95 fiscal year to the 1995-96 fiscal year by 8.7%, from over $95 million to over $103 million - an increase of $8,314,000.
There are no salaries included in this figure. We would suggest a 25% cut in the estimates for this year of $95,417,000 down to a cut of...totalling $23,854,000 would be in order.
How can the department justify increasing capital expenditures by 8.7% when they have cut direct payments to farmers by over 50%, if you include the Crow benefit.
I therefore move:
That vote 10 for the Department of Agriculture and Agri-food in the amount of $103,731,000 be reduced by $32,168,000 to $71,563,000.
The Chairman: Do you have any specific capital projects?
Mr. Hermanson: No, this is an across-the-board cut to the department, because it's several capital expenditures.
The Chairman: Is there any discussion?
Amendment negatived
The Chairman: There is a proposed amendment to vote 15.
Mr. Hermanson: Vote 15 is grants and contributions. There is quite a long list of them in the estimates.
A member of this committee made the following comments with regard to the main estimates. He said:
We have come to a process where a committee reacts and responds to the decisions of the department. It is almost totally excluded from the planning and direction that it's going in, and is placed in a position of responding to the actions the department makes. Many Parliamentarians feel that just responding is not enough. The department is really running the government. I understand that, but I understand that you set forward, in your estimates, and then we respond, but I guess my feeling is that that's not enough.
That's a quote from a Liberal member on the committee.
The Chairman: Who was that?
.1040
Mr. Hermanson: Since the rest of my amendments were voted down, let's give this a last-ditch effort and let's be a little more specific, because I anticipated you'd say what you did.
Let's make a symbolic reduction of 25% to the 1994-95 vote for the contribution to the Tobacco Diversification Plan and the Canadian Wine Institute. Let's cut funding to the World Food Day by 100%.
Funding for the Tobacco Diversification Plan for 1994-95 is $260,000. The money allotted to the plan was increased in this year's estimates to $1,554,000. A cut of 25% to the 1994-95 estimate of $260,000 is $65,000. Funding for the Canadian Wine Institute for 1994-95 is $360,000. Let's reduce this figure by 25% as well. A cut of 25% to the 1994-95 estimate of $360,000 is $90,000.
Mr. Chairman, we're getting really specific now.
Finally, let's have a reduction of 100% for the World Food Day Association of Canada. Funding for 1994-95 was $54,000. We suggest a cut of 100%, or $54,000.
These cuts amount to $209,000, which is certainly very reasonable in a $2-billion budget. They are symbolic cuts to see if this committee really does have any control over departmental expenditures. Let's see if we really can flex our muscles in a very small way.
I move:
That vote number 15 for the Department of Agriculture and Agri-Food in the amount of $364,714,000 be reduced by $209,000 to a total of $364,505,000.
If we can cut the Crow to the western Canadian farmers, if we can fire researchers and close down research stations, surely to goodness we can find $209,000 to cut off some of the excess that's left.
The Chairman: Mr. Hermanson, as usual -
Mr. Hermanson: Let's flex our muscles as parliamentarians and show that we can do something.
The Chairman: - the Reform Party continues to attack the tobacco industry.
Mr. Hermanson: It's killing people, Mr. Chairman.
The Chairman: I guess by continuing to do that you want to continue to keep me elected.
Mr. Reed: I'm just going to zero in on one part of this, that is, grants to the Wine Institute. I'm just long enough in the tooth to remember when Ontario did not produce high-quality wines. As a matter of fact, it was well down on the scale. Their only claim to fame, because of the varieties that were grown and so on, really revolved around fortified wines, the heavier types of things. That's not too long ago.
The research and development that has gone on since then and the efforts put forward by the grape growers, and through small contributions made through things such as the Wine Institute and so on, have resulted in Canada being propelled forward as a world class wine-producing region. That has happened because of a cooperative effort between government and the private sector.
That you want to abandon this type of effort is, in my opinion, rather short-sighted, to say the least, because now, for the first time, Canadian wines are gathering medals in Europe and competing with French wines, Italian wines and so on.
Do you want to turn the clock back and stop progress or have the government be seen as not supporting progress in this area? I think not. I think you want to see value added where value can be added. I look upon something like this as an investment, an investment that has paid off handsomely in this country. Any time I see an opportunity where there's such an incredible dollar return, I am very much inclined to support it.
Mr. Easter: I think my colleague has made the point. In fact, Mr. Hermanson, this has nothing to do with control in terms of the quote you talked about. This has to do with ridiculous cuts.
I look at the Tobacco Diversification Plan in my own province. It's not necessarily the producers' fault that trends have changed. They have a lot of capital investment tied up in the tobacco industry.
.1045
Because of that program, we've seen producers get into ginseng and other varieties and save their farm operations by converting from tobacco production to other products that are more in tune with these times.
I think the cuts are ridiculous. I very strongly oppose them.
Mrs. Cowling: I'd like to make a comment about grants and contributions. I worked as a volunteer for a good portion of my life, so I know how essential grants and contributions are to those people from the grassroots and from farm communities, and particularly to women.
I am appalled that the Reform Party, the third party of the House of Commons, which says it listens to the grassroots and farmers and speaks on their behalf, would make such a statement. I'd like to know who you're listening to and who you're responding to. In my view, it would be your own people who haven't listened to the grassroots and haven't listened to the women's organizations and the farm organizations out there.
In my own view, I can't support this kind of rhetoric from a party that says it listens to the people of the country.
The Chairman: Mr. Hermanson, as House leader you do understand that when we're putting forward a motion like this - and your motion is certainly in order - you cannot attach anything to that motion in terms of specific cuts in specific areas under the Standing Orders.
Mr. Hermanson: My motion doesn't include it.
The Chairman: I know that.
Mr. Hermanson: I gave you the specific rationale I had, which they were asking for before.
The Chairman: That's right. That's why I said your motion was perfectly in order.
Is there any further discussion?
Mr. Hermanson: May I make some concluding remarks before we have the vote? We certainly are listening to what people are saying. People are saying they're appalled that this government would cut research funding by about 50% and leave some of this other funding in place.
You talk about funding that will help tobacco producers and wine producers. They need the research funding. If they want to have these other institutes and associations, they can darn well fund them themselves, the way other industries do.
But the fundamental basics, the research in Canada, are being hacked to pieces, and we're going to support this kind of superfluous stuff? It's like selling the farm to keep the motor home. This is stupidity. How can we justify such a thing?
That's what the grassroots is saying. They're saying government should stick to the basics and provide the basic services Canadian want, and it shouldn't be fooling around in a hundred different baskets, taking money out of taxpayers' pockets to put in a hundred different little envelopes in the Department of Agriculture and Agri-Food. Let's do the basic things Canadians want us to do. That's what the grassroots is saying. We hear them very clearly. I know you're hearing the exact same thing. They're very upset about the cuts to research funding. They would be appalled at all the different little ways we weasel this money out to these various groups when we're letting the basic funding of programs and research go by the wayside.
That's why we heartily endorse this amendment, and we expect the Liberal members to support it as well.
Mr. Vanclief: Mr. Chairman, I have a point of order. I would ask Mr. Hermanson to get his figures correct. He made the statement that research in Agriculture and Agri-Food Canada is being reduced by 50%. That is a far cry from the truth. I can't quote exactly what the reduction is, but I believe it's in the mid-teens of percentages. I would ask him not to mislead the Canadian public by saying it's being reduced by 50%. That's an incorrect statement.
The Chairman: As you know, Mr. Vanclief, that's an interesting point, but it's not a point of order.
Is there any further discussion?
Mr. Hermanson: [Inaudible]...it's maybe 18% or 20%.
The Chairman: Shall the amendment carry?
Amendment negatived
AGRICULTURE AND AGRI-FOOD
Agriculture and Agri-Food Department
Vote 1 - Operating expenditures $569,216,000
Vote 1 agreed to on division
Vote 5 - Canadian Grain Commission - Operating expenditures $41,694,000
Vote 5 agreed to
Vote 10 - Capital expenditures $103,731,000
Vote 10 agreed to
Vote 15 - Grants and contributions $364,714,000
Vote 15 agreed to
Vote 20 - Canadian Dairy Commission - Program expenditures $2,468,000
Vote 20 agreed to
The Chairman: Thank you, colleagues.
The meeting is adjourned.