EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
But I sit here through the six hours today and I fully believe that we have done our part of the bargain.
We passed on through three factors, freight subsidy increases by INAC, freight negotiations with our vendors, and product and vendor negotiations, the cost savings to the consumer. And there is an audit process that would trail that.
But that, sir, is not going to help you when you go back to your community and you’re going to say, “We paid $11.99 for this and now it’s $11.69.
That’s not good enough.”
So I think it starts at the outset that the expectations were set too high.
The communication process that led up to the announcement last May, if you look through the INAC documentation, they talk about 70 to 80 direct engagements with communities, retailers, and airfreight companies.
So sir, I honestly don’t know if Nunavut got short-changed in that input process. It certainly seems today, sir, after listening to everyone here, that you did.
It’s not a defence, but I’m not accountable for that communication and input process. If I could go back, I have said to INAC officials directly, “Take your time.
Do not change the eligibility list out of the gate. Phase this in. Communicate, communicate, and then communicate.”
So I think, sir, I can’t help you.
I can only talk about what we have done and what we have done we have put up in stores as these are the price savings.
Mr. Morrison: Mr. Chairman, when this program was announced, there was great fanfare over price reductions and that the program was going to result in lower prices.
I do not believe that was possible.
The original Food Mail Program had $60 million. The new program has $60 million.
What was category B and C food mail, now category 2, was originally dropped out of the program.
It has since come back under a different framework. But if the Government of Canada set out to maintain the freight rates and apply a subsidy that would bring the freight rates to something very close to what the freight rate was under the Food Mail Program, it was impossible for prices to drop.
I do not understand how people in the program expected prices to drop. They were targeting a met freight rate that would be comparable to the food mail rate. That being the case, there is no possibly way to see prices drop.
In terms of potential for improvement, it was efficiencies in the supply chain. Do we have less spoilage because we are now controlling the product and getting it to the community quicker?
Do we have less handling? Are we able to negotiate some better freight rates? I believe the answer to every one of those questions is yes.
We have not taken the same kind of position as the North West Company, and Mr. McMullen has indicated that they weren’t sure of what some of these price reductions would be.
We’re still not sure of what the potential benefit is. I believe there will be some positive impact.
Unfortunately, the positive impact of the program appears to be offset by commodity price changes, fuel price increases, electricity rate increases.
All of these factors are undermining the positive benefits of the new program.
I don’t believe that the new program, on its own, and the subsidy was going to result in lower prices. I do not believe that.
Efficiencies would contribute to improved pricing but that would be all.
So I honestly don’t have anything concrete for you to bring back to your constituencies, but I don’t know that the proper message got out. I think people wanted to hear the word that we have a new program and this new program is going to result in lower prices.
I don’t believe it was possible.
I thank Mr. McMullen and Mr. Morrison for their answers.
I’m concerned that the ultimate or final… . I don’t want to call them victims or anything, but governments, retailers, and everybody ended up passing the buck to the consumer. I think, ultimately, they’re going to pay.
The reason I say that is you have both alluded, Mr. McMullen has alluded to it and I think Mr. Morrison actually put it in his opening comments, and I’ll just quote here. “The Nutrition North Canada Program does not adjust subsidy rates based on fuel price increases.”
We know as the government or the Qulliq Energy Corporation that fuel prices are going to increase almost with certainty every year. You comment in your report here that the power rates go up 19 percent. I know you’re a business, but you’ve got to pass on savings to consumers.
In Nunavut, we’re almost 100 percent dependent on fossil fuels.
All of our gasoline and our entire P50 diesel for our plants, that costs a lot of money. I know that as the finance minister. My colleague from the Qulliq Energy Corporation and I have talked about it quite often.
The Financial Management Board has to set rates for fuel price increases and energy increases. So we know that prices are going to go up. It’s guaranteed.
So if Nutrition North does not adjust subsidy rates based on fuel prices and consumers aren’t shielded from future price increases… . I seem to recall that the Food Mail Program was to a certain degree.
You even alluded to that. If fuel prices increased, the Government of Canada could, as most governments can do, appropriate additional monies to offset the increases and then the consumers are shielded.
If that’s the case a year or two or three from now, then I can see the subsidy being a non-factor. Our consumers are telling us that now.
So what are you guys doing to address it and how are you going to deal with that for your respective companies?
When you talk to the officials at Nutrition North, what do you tell them?
After all, you guys are the folks with businesses in each community in Nunavut, so you have the numbers that you use to run your business and mark up your products. So you have the hard data, whereas the officials at Nutrition North don’t.
They’re not going to adjust the program for future fuel increases and electrical increases in Nunavut. How is this program going to benefit the consumers in Nunavut?
Mr. McMullen: Again a good question.
As Mr. Morrison indicated, the old food mail system… .
Sorry, you’re correct, when fuel prices went up, there was protection and there isn’t in this system.
So we’re vulnerable to those price increases as a cost of doing business.
How will it affect us? I think it’s in my opening notes, sir, that the cost of fuel went up 25 percent in a six-month period.
What does that do to our total cost structure? For us overnight, our total cost basis went up at least 3 percent. Now those costs have not been passed on to the consumer yet because there’s a lag time.
Again, I’m not turning the question, but how do we deal with a 19 percent increase in energy prices in Nunavut?
It’s a substantial increase to our business and the expectation is if we want to maintain profitability, consumer engagement, our market share, and be relevant to the economic structure of Nunavut, cost increases eventually get passed on. So we’re all on the same boat.
As was said by Mr. Taptuna earlier, it is unfortunate that occurred along with the launching of the new program, but that’s the reality.
We know that things go cyclical.
There is a cyclical pattern to commodity prices, not so much to oil, gas, and energy, but there are downswings as well.
But that’s not a good answer for you either. We can’t just sit here and hope for the cycle to work in our favour. So we will continue to work with INAC.
And let me say one other thing. The increase in the prices other than the gas one, no one is isolated or no one is protected. So we’re talking about one out of several commodities that rose in price.
We have to deal with the cost increases. We try to deal with it aggressively by negotiating with vendors, getting on ahead, extending contracts, shortening contracts, whatever we think is the best business model to protect our customers from cost increases by being aggressive businesspeople. That’s what we will continue to do.
I may be one of the few but I still believe Nutrition North Canada is setting down the right path. There are faults in it and there are things that we, as retailers, can do better, communication not being the least on the list.
I think that with ongoing dialogue with INAC about the current introduction of Nutrition North Canada, we can make improvements and for me, that’s the way to go.
You work with your partners, and they’re not our partners; the legislation is law. We have to follow it, but work within those parameters to the best of your ability and try to hit the end goals of this program, which are lower prices, which we have. Secondly, make sure that there is food security, and we’re doing things in our supply chain that are getting that nutritious bundle of products available to the consumers in Nunavut.
We will continue to work on those two things.
At the same time, we will continue to work with INAC and saying, “Let’s make this more understandable. Let’s make it more cost efficient. Let’s make the subsidy more robust.”
I think we need help with that.
I’m calling on my own capabilities in talking with INAC to say, “How are we going to deal with this increase in fuels?”
But I think it is governments like yourself, Nunavut, that play an important role in talking with the federal government about “Hey, you’ve got a good program here that has an opportunity, but we might get all the gains that are possible in the system wiped out by energy increases. So let’s collaborate and see what we can do.” Will the federal government increase their budget?
The reason they were taking so many products out of the eligibility list, which was 2,700 products by the way… . On March 9 or whatever date they introduced it back, it was 2,700 products back on the list. Here’s the long term.
If it’s a bright picture, I’m not sure. By October 2012, that list is reduced. The retailers have had a full two-cycle opportunity to make sure the stuff that they bring in the stores by sealift has the appropriate dating and the appropriate quantities to last a full year at the lowest cost possible.
So that’s what we’re going to attempt to do for October 2012.
If there is only $60 million left in the kiddie, it goes towards a reduced list of products.
So get that support behind a smaller list of products and maybe the subsidy rates can go up. That’s my second point of optimism. We do what we can on sealift, and secondly, we have a reduced list to put more weight of the $60 million behind those products and maybe we end up with a better scenario.
But that is a year and a half away or more, and that’s the path we’re going down. In the interim, let’s all be aggressive in telling each other what works and what doesn’t work, and try to improve the system.
Does Mr. Morrison want to add to that?
Mr. Morrison: Mr. Chairman, we have made clear recommendations to INAC and to the advisory board on fuel price adjustments to the subsidy.
We firmly believe that the subsidy has to reflect or has to be adjusted as fuel prices increase. I know from discussions yesterday with INAC and some of the members of the advisory board that yes, they are considering that.
However, to my knowledge, they have not made any recommendations.
I think as retailers or as businesses, we have to go beyond that.
One of the things that we have to address is energy efficiency. What steps are we taking as a business to reduce energy consumption and ultimately reduce our operating costs?
We are constantly looking at energy consumption.
Electricity, as I mentioned earlier, is the second largest operating cost of the Co-operatives in Nunavut and it’s kind of a double-edged sword with the Nutrition North program. Most of the products that are eligible under the Nutrition North program must be refrigerated or frozen. So the success of the program drives operating costs because we need more freezer space and cooler space.
More freezer and cooler space results in increases in utility costs.
So we’re trying to do our part to try to control our operating costs, install energy efficient equipment, install energy efficient lighting, build better boxes that are more energy efficient and use less energy to heat, energy efficient washing machines that don’t use as much water and electricity.
So we’re trying to do our part, but we’re not that big to make a significant impact.
Ultimately I think there is a much bigger question in Nunavut and I believe that relates to the electricity infrastructure, the power system.
Minister Peterson, I know you probably lose a lot of sleep over how to finance these activities.
I believe that this is a fundamental question for the federal government in terms of the support that they provide for Nunavut for utility infrastructure.
The infrastructure is old and in great need of replacement and I don’t know that from a user-pay system that the energy corporation will ever get to the position where infrastructure will be sufficient to meet the needs at reasonable prices.
I know that the minister responsible is concerned that investment is required, but how do you pay for that investment?
Where does the money come from to build new diesel stations?
As a government, you certainly have my sympathies because I don’t know as a government where you can come up with the dollars to pay for that infrastructure.
It is a critical need. If you invest it, costs are going to go up. The domino effect is increased food costs, increased operating costs.
There has to be a better solution, and I wish I had a magic wand to say, “Here is the solution,” but I don’t.
Energy costs and electricity costs are a big part of what has to be addressed, and you have my best wishes in trying to resolve that issue because I know it’s a very difficult question, but I believe the federal government has to be involved in that process in some capacity.
I thank Mr. Morrison and Mr. McMullen for the answers.
As you were answering questions, I couldn’t help thinking about all of the people across Nunavut today who are probably missing a meal. I know that I have people in my own riding who could go two or three days without a good, healthy meal for a number of reasons.
They even go visit relatives, but their relatives don’t have much to offer them.
As I said earlier in my opening comments, we have breakfast programs, we have food banks, and I know your organizations offer discounts to food banks, and you talked earlier about donating food to the food banks, which is greatly appreciated in all of the communities, I’m sure. I know it is in our community.
But I just can’t help thinking about the people. As politicians, we make decisions and we have to make difficult decisions most of the time. I just can’t help thinking that it is our duty as politicians, as retailers, and as civil servants to find programs and services that benefit the people in the community and don’t put them in a tougher position than they are already in.
Not all people are in those positions, but in Nunavut, we all know people who struggle every day to eat. Of course, it leads to problems in the schools because kids can’t learn when they’re going hungry and don’t have a good meal, and then we have health issues with malnourished people.
So as politicians, civil servants, and retailers, I think we’ve got to figure out a way to help the people in the communities to get affordable nutritious food.
I know you’re in the business to make some profits. I have been in business myself, so I understand that. Mr. McMullen mentioned earlier in his opening comments and I think I talked to one of my colleagues about bonuses based on products not sitting on the shelves, a lot of it taking too long to sell.
If you’re a manager, you want that bonus, so you’re going to probably make sure it sits on the shelf until it sells.
So we’ve got to keep those kinds of things in mind, but I strongly encourage you. You have connections to Nutrition North. As I said earlier, you’re in the communities, you know your books, you know your business cases, and you know your models.
You talk to your suppliers and find ways to encourage Nutrition North Canada officials to pass on subsidies that will actually lower the cost of food in the communities and not raise it.
We see projections from $120 to $200 a barrel of oil. If fuel prices go up, you know automatically what’s going to happen: it’s going to take money away.
It’s going to be tough because we struggle as a government to pay for our programs and service we have to offer. We struggle every year with finding extra funds for income support for food and clothing.
I know that there are probably officials in Ottawa and probably in Iqaluit as well who will be reading Hansard with great interest tomorrow. So we make these statements and they will be reading them.
I urge them to think about the man or woman or the struggling family in Nunavut with five or six or eight people in a house, maybe fifteen, trying to eat.
I only have one more name on my list and he promises that he’s only going to have two questions, but I would like him to keep it short and sweet.
The first one was with this chart that was in the handout.
Again, I’m like Minister Peterson; I want to be able to go back to my communities and explain what’s happening to them.
So in terms of the earnings with the 5.6 percent, it would be considered the total profit and the rest is the overall breakdown in terms of communities.
Is that what that diagram shows?
Mr. McMullen: The chart is a breakdown of expenses and revenues, as it is indicated. That is based on our sales. That’s where the money goes overall and that’s for Northern Canada Retail as an entire group, but it’s very reflective of the Nunavut situation and expenses and revenue profile.
There wouldn’t be much variance in there. Thank you, Mr. Chairman.
He’s going to hold me to it. If this is my last question… .
Again, part of the reason why I had put forward the motion in terms of having both of you here today, I think Mr. Peterson is a little bit correct in the sense that some of the people whom I had wished to be here aren’t here, namely, the Nutrition North Canada people.
If Mr. Doyle had showed up or if he would have been here, it would have been great to get some answers from him, as well as if some of the representatives from the Nutrition North External Advisory Board were here to answer questions, it would have been great as well.
I know we have and will continue to invite them, and hopefully we will have somebody here in October to answer some of the questions.
In my final question to both of you, you answered some of it when you were answering Minister Peterson, but like I said, bringing you both here today, I think, is partially because of some of the concerns we have in constituencies from our residents saying, “This is food that we want to put on the table and in some cases, I don’t have the money to put the food on my table.”
So for me, it’s a lot of education in terms of how the program is working and is it working.
Your answers have sort of helped me understand how the program works. I know and I will be continuing to contact you about explaining to me that kilogram breakdown because I still do not get it, but I will keep pushing and definitely I’ll go speak with Nutrition North Canada about how it works because again, the program is rolling out and there are things that are still not clicking in my mind.
At a territorial level, it’s really hard sometimes affecting and explaining to the communities what’s happening at a federal level. It’s the federal government that has changed the program from food mail to Nutrition North.
In all cases and discussions that I’ve had with Nutrition North Canada, they do seem willing to make changes if you can prove to them that things aren’t working, like you said, subsidies are too high or subsidies are too low.
With that in mind, my last question is: what needs to be done to improve the program, to put food on the table, to allow you to have prices low enough that will be able to… ?
None of us feel that a business should not make a profit, but at the same time, we’re walking that fine line between providing food to people in the communities.
So is it higher subsidies? Is it changing the subsidy at different intervals? Again, since it’s your business, if you could maybe provide some insight on that.
That’s the shortest question I ever heard. Mr. McMullen.
Mr. McMullen: Mr. Chairman, I don’t recognize facetiousness.
>>Laughter  Yes, it was one of the shortest questions I’ve ever heard, and when Mr. Elliott comes to grill me some more, I need a Vancouver Canuck fan in my corner.
Before I answer the question, if this truly is the last question, and I have faith in most of you, Mr. Elliott excluded, thank you for engaging us.
It has been a privilege. We don’t often get invited to express what we know with candour and to the best of our ability, so it is greatly appreciated that we had this opportunity.
Mr. Elliott, what was your question again? What will we do?
Going forward, what would we say to you more importantly than what we say to INAC? What makes any program where the end benefit is to deliver a healthy bundle of food at a lower cost? So what would we say to anyone?
We would say have a system that protects against the occurrence of costs that are outside of our control.
In today’s discussions, we have talked largely about energy and the impact that energy can have is a negative one. So if you built the program from the ground up, what kind of parameters could you build in to protect us against that random occurrence of world prices?
It can be something like probably the cooperation that we have with the airlines.
The fuel riders only kick in when the prices have gone up a certain level. So you build that protection into the program. So that would be one thing that would come out of this as a recommendation.
The second thing would be really back to the original intent. If there is a fixed pool of money available, make the most effective use of that. So I would recommend to INAC and to this legislature, what is that bundle of products that is really important for your constituents?
If you had $60 million, what is it that you really want to protect for these families that Mr. Peterson talked about who are going hungry?
Focus on that and give that input to us and to INAC.
Protection against those random things we haven’t any control of and neither do you and then really concentrating on the things that are the most important, those would be my two recommendations. That would be in their list of products.
Mr. Elliott, I hope that answers your question to some degree.
Mr. Morrison: Mr. Chairman, I think, for this program to truly be effective, it can’t be a short-term solution.
Certainly there are some short-term fixes required to make the program equitable.
I noted earlier that there are some communities where we believe the subsidy rates are not high enough and not sufficient to bring it back to what the old Food Mail Program was.
I believe that those communities have to be adjusted immediately.
The issue of fuel and electricity, I think, are two major issues. I personally believe that we will be feeling the impact of fuel rate increases for some time.
The program should build in something to adjust the rate increases, very similar, as Mr. McMullen has mentioned, to the way we do it with our air carriers, where the rate adjustment kicks in after a certain point. I’m not going to say any more on electricity, but certainly electricity is a major part of the cost of delivering perishable nutritious food.
Looking beyond just the short-term kinds of solutions, I personally believe that the government programs should be looking at the spin-off or the possible additional benefits of the program.
I believe it was Minister Curley who was talking about the very young population in Nunavut and that we’re very concerned about healthy eating.
Considering the impact, what is the financial impact on the health care system if people don’t have enough to eat?
If we take a short-sighted approach to solving this problem, that there is a $60 million cap and that’s it, nothing else, what will be the investment required in the health care system to treat shortened life-spans or increases in illnesses among children and young people or increased problems and health issues for seniors?