EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
It could have been anything you want to say it was, really, because the stores don’t divulge their markups and they don’t do that for good and competitive reasons.
So you see a price on a product in the store and in some stores, you may see, “Before this would have cost you X. Now it costs you Y.” The only thing you really know is that now it’s costing you Y. How do you know it would have cost X without the subsidy?
As I said and as all of the people who have testified here have said, world prices are going up.
They also fluctuate week by week. You don’t know what the markups are, so there’s no way of anyone knowing what X would have been. You may take that on faith, but there’s no way of knowing.
The only sure thing you know is what you’re paying at the till.
I believe my competitors when they say they are passing on the full amount of the subsidy to their customers and we are doing the same thing.
That’s because you put your markup on the goods after you have subtracted the subsidy from the freight component.
So my cost landing is the cost of the orange, the cost of the freight, minus the subsidy on the airfreight, add in a local delivery charge, and that’s your cost landing, and then you markup goes on top of that.
The entire subsidy is being passed on because it is subtracted from your freight to get at your cost landing. It would be quite unfair if you did it a different way. For example, if you took the cost of the orange, added the freight, and added your local charge, and then did your markup on that and subtracted the subsidy, that wouldn’t be fair because you would be taking a markup on the subsidy.
The way we do it and the way my competitors do it, and I think we’re all doing it fair and square, is the subsidy is subtracted before the markup goes on, so that’s why we can say that the subsidy is being passed on to the consumer.
Do any other members have any questions before I recognize Mr. Elliott?
I also thank our witness for clarifying how this program came about and the differences between the old and new programs.
In the Kitikmeot, people ordered from Yellowknife under the old program and had requested this new Nutrition North Canada Program because they needed nutritious food. I wonder why these large centres are still places we have to use to order nutritious food, especially for large families with lots of children. Many people had become accustomed to ordering through the program.
Why are we now transferring the benefits from local families to large corporations that can afford these rates?
Once I understood the program, I was grateful for your explanation about the complexity of the program. Many people have stated that they dislike the onerous paperwork requirements.
However, we haven’t been apprised of what makes it so complex.
The previous customers haven’t been informed about the changes and the extra paperwork that is now required.
I now understand this program better.  I am grateful that the previous customers viewing these hearings can now have some answers and clarification about the new program.
When you impose a program that people don’t want, it can cause problems to the potential customers.
Sometimes they don’t know who to turn to because they were accustomed to getting affordable nutritious foods.
I know that Nunavut residents have a better idea of how the program works, especially prices in the communities and airfare rates.
I recall the airlines weren’t very satisfied with this program since they weren’t able to transport nutritious foods under the program.
If the airlines are getting most of the subsidy that is going to impact the population, they have to inform the public before these huge impacts affect them.
Those are the issues I wanted to speak to and I want to thank you for clarifying the program as I understand it better now.
I’m listening here with interest to Mr. Harper and yesterday, of course, we were listening to the other two witnesses.
The North West Company, reading from their presentation yesterday, said that they have been enterprising since 1668, so that gives them 343 years of business experience. The Co-ops have been around for 50 or 60 years. In your presentation, you said that you have been in business for 35 years.
The Government of Canada has been around for 144 years. So the Government of Canada, the North West Company, and the Co-ops, I guess, they all say this is a wonderful program, the new Nutrition North program.
From the presentation yesterday, the North West Company said, “The food mail system was not an efficient supply chain as that model added expenses, time, and created quality concerns.”
The Co-op said, “The old Food Mail Program was not just flawed, it was broken. A major overhaul of the program was required.” Today you said, “The Food Mail Program should have been tweaked and fixed, not scrapped.”
So you could imagine our confusion by their presentations versus your presentation, and then the confusion that’s out there in the public in all of our communities, amongst, as I said earlier, our consumers.
I tend to go with my gut instinct quite often. I find your presentation and your answers to my colleagues’ questions to be more forthcoming. You have given us some very detailed information.
You have been in business for 35 years and you seem to be on top of how you calculate your markups and your profits.
So I’m wondering why, when this program was being talked about and designed, the powers that be did not put more credence in what you had to say versus what the larger companies and organizations had to say.
Mr. Harper: I don’t know if I can really answer that, but I can give you my own subjective impression.
The powers that be tend to accept what they hear from the biggest players and assume that the biggest players have the right answers, but the biggest players also have the most self-interest.
I know how food mail worked and I have made it my business. Of course, I’ve had to, to know how the new program works because I’m here and the Manager of Arctic Ventures, John Bens, is here and we deal with this all of the time. John deals with it every day.
My perspective on it may therefore be quite different than Mr. McMullen’s, for example, because Mr. McMullen is an executive with responsibility for a number of stores, but he’s not on the front line in any of those stores.
So I would assume his knowledge of how it works is filtered through various store managers.
I think the closer you are to the operation, the better feel you have for it.
I recognize that you, as legislators, have a very difficult task because you’re hearing things from me that conflict with what you heard from them.
As I said in response to one of the other questions, I assume that you have to find a balance between these behind closed doors and come up with some recommendations of your own.
We have been doing food mail here in Iqaluit since I acquired Arctic Ventures in 1985 and before that for some years in Arctic Bay, and that’s why I have tried to portray what I remember of an isolated community perspective on it. There are challenges out there in the smaller communities that we don’t have here in Iqaluit.
We deal with our food coming here on one flight.
In Pond Inlet, for example, there would be two flights. The food has to be transferred to a smaller plane here, so you’re dealing with weather twice and whether those planes are going to get in on time. That affects the freshness of the food.
We have better navigational aides here in Iqaluit than a place like Pond Inlet has, so we’re going to be able to get a plane in, in poorer weather than some of those communities can.
When I’m discussing this program in a general nature, I try to not lose sight of my experience from living in Arctic Bay for many years or in Pangnirtung or in Qikiqtarjuaq.
That’s some of the perspective I bring to the comments I’m making today.
I thank Mr. Harper for that answer.
Yesterday the two witnesses commented about the recent power rate hike that the Qulliq Energy Corporation announced and they thought that it will affect their food prices and you commented on it as well today.
I seem to get the feeling from their comments yesterday that perhaps the Government of Nunavut should subsidize the larger companies with power subsidies so that they could offer lower prices for food to Nunavummiut.
I think we’re all aware that there hasn’t been a major power hike since 2006 for various reasons, so that was the first real major power hike, if at all, in five or six years.
I’m wondering what your thoughts are on that. Were savings passed on to consumers during those years, 2006 to 2011, by the Government of Nunavut or the Qulliq Energy Corporation not increasing the power?
I also would like to know what your thoughts are on where you think the Government of Nunavut should subsidize big businesses to offer lower food prices to Nunavummiut.
Chairman: Thank you, Mr. Peterson. Mr. Harper.
Mr. Harper: Boy, those are some difficult questions that you’re posing there. The fact that power rates didn’t go up from 2006 until now, in retrospect, looks like a saving, but if they hadn’t gone up this year, we wouldn’t be thinking of it as a saving because we wouldn’t know that they were going up. So I think it’s kind of a Catch-22 question.
Yes, in terms of food, I think the savings, if you want to call it that, were passed on because if you accept that stores are making a reasonable markup and not an outrageous markup, then getting your nutritious perishable food at 80 cents a kilogram instead $2.50 a kilogram or $2.30 a kilogram or whatever it might have been a kilogram, the markup on that lower price is significantly lower than the markup on the higher price.
So in that sense, those savings were always being passed on.
The assurance, I guess, that markups were not out of line, I think you only get that assurance in communities where there’s competition, but in most communities there is competition. Whereas earlier I said that Mr. McMullen and Mr. Morrison and their respective organizations made joint submissions in a way that I believe were designed to make life easier for the big guys who had the resources to administer this program perhaps more efficiently, nonetheless, that cooperation only goes so far.
At the community level where they’re fighting for business, these two organizations that you saw yesterday are each other’s competitors and, in some cases, fierce competitors. So when you see competition in a marketplace, I think you have some assurance that prices are reasonable and that markups are not outrageous.
On the question of the power rates going up in one huge jump, I recognize that the power corporation was in a state of flux for some years and that the present management has only been there for a few years.
Perhaps that justifies some practices that are out of the norm, if I could say that, but in a normal situation, I would have to say that it’s outrageous that rates stay the same for five years and then jump 19 percent. That is a huge jump.
It’s an outrageous jump, but on a compounded basis, it is equivalent to around 3 percent per year, compounded for the years from 2006 to now, if my mental math is fairly accurate.
Surely you would expect a corporation of that size to have the resources to plan and to know what their revenue requirements were going to be for some number of years into the future and to have made a request for regular price increases. My customers and I and everyone else’s customers would understand that and would accept if rates had gone up around 3 percent each year, and then on that new base around 3 percent the next year, and so on.
In that way, we would have gotten to where we got today. By having one huge indigestible bite, it’s a lot to take all at once.
So the question was asked then. As I understand your question, should this government subsidize the cost of the majors, but I assume by that that they mean everybody doing business.
There are ways to keep power rates down, that is, to subsidize them period. You have to recognize that that’s not the same as subsidizing food because if you subsidize power rates for every business period, then you’re subsidizing the cost of pop, shoes, notebooks, stereos, and everything else.
Maybe there’s some justification for doing that and perhaps there are jurisdictions where power rates are kept down. I am all for seeing power rates kept down.
Since government is a huge payer of the very power rates that they approve, maybe it makes sense for government to simply keep all power rates down.
I know we’re straying a little bit off the topic of how we get food on people’s tables, but if there was a way to be found to keep the cost of certain nutritious perishable foods even lower than you can get them now, I’m all for it.
Milk has a subsidy, but milk at Arctic Ventures yesterday for two litres was $7.49.
It’s an awful lot of money for two litres of milk, and growing kids need milk.
Eggs yesterday for a dozen were $3.69 to $4.29, depending on the kind of eggs, and if they were organic eggs, they were $6.99.
It’s an awful lot of money but it’s subsidized.
It would be really nice if the cost of milk and some other very key products… .
I suppose to do this, we would have to talk about nutritious perishable and then really nutritious perishable, but if those could be kept down even lower, then I think that would be a great exercise to embark on because I’m not going to deny that prices are high.
Even though there is a subsidy on the freight, there is still freight on it that people down south don’t pay to get those products.
I thank Mr. Harper for those answers. I think it’s important that we understand how critical fuel is to Nunavut and the impacts it has on our lives up here.
We’re pretty much 100 percent dependent on fuel products in Nunavut and we’re subject to global crises.
So Libya, for example, or wars in Iraq or Iran, you’ve got these dictators in other countries doing their thing and that all impacts us. I think it was only five or six years ago that the price of a barrel of oil was in the low $40s and a couple of summers ago, it was edging up towards $150 a barrel. I think it’s around $100 a barrel now, but it all impacts us up here as a government and as citizens.
We were in a position where we had to increase the power rate.
As a government we know 19 percent was a huge hit, but to help our consumers we did eat $13.1 million last year instead of going back retroactively. We recognized that we couldn’t just go back and collect $13 million off of businesses and individuals, so we did try to help there.
Fuel is required to transport food products up to Nunavut via airlines and shipping. Fuel is required to generate electricity for your freezers, to heat your buildings, and now you factor in the costs of the food before it gets to the ultimate consumer, which are the people in Nunavut, oil affects the price.
Under the old Food Mail Program, I believe it was a $60 million, but if fuel prices increased, if I understand it correctly, the Government of Canada could adjust and give a little bit of extra money to help cover those fluctuations, whereas under the Nutrition North Program, I don’t think that’s available. $60 million is $60 million.
If we make some assumptions about the future that fuel is going to continue to increase and power rates will continue to increase, it’s going to put an increased cost on the food that you sell to consumers, not just yourself but all of the other stores. Fuel is very critical to Nunavut.
So I’m wondering where you see the future in terms of if fuel is going up and the Nutrition North Program stays at $60 million. Is the consumer going to better off or worse off versus the old Food Mail Program?
Mr. Harper: Well, it’s my understanding that the consumer is already worse off in some communities because the freight rate after the subsidy is applied in some communities is higher than the previous costs. So some communities are paying more already under Nutrition North.
The question, I guess, is: is the subsidy going to be adequate in future years?
If fuel prices are higher in the north after the next sealift, then the airlines who buy some of that fuel in the north are going to have to increase their rates as a fuel surcharge, probably.
If the subsidies are not adjusted when that happens, then of course our landed cost is going to be higher, so the cost of a product, the cost of two litres of milk or the cost of an orange, is going to be higher because those costs get passed on.
On the other hand, if INAC comes along and says, “Okay, your freight rate has gone up because of the fuel rider, so we’re going to increase the subsidy by that amount,” then things would basically stay the same, but we have no real assurance that that’s going to happen.
If that happens and if it happens repeatedly and the subsidy kind of hits the wall, what happens then?
That’s your concern and that’s one of my concerns. You have expressed it very well, but I don’t know the answer.
Is that budget a moving target that will be adjusted as fuel costs go up or is it a finite number that’s not going to change year after year?
If that’s the answer and if we hit the wall on it, then we have a problem, and then you’re going to see the prices for nutritious perishable food creep up or perhaps even jump up.
That’s the best I can hazard a guess on that.
I like the way Mr. Harper put his markups there.
He said the cost of goods, then it was air transportation, ground transportation, then you take the subsidy off, and then you put your markup.
Mr. Rumbolt asked the same question to Mr. McMullen yesterday and he denied that they would put any markup on any freight.
I think you were gone at that time and I found it rather hard to believe, but that’s what he said. They do not put a markup on the freight.
Mr. Harper, do you want to comment on that?
Mr. Harper: I wasn’t here when he said that and that’s a rather surprising statement.
Given that their prices aren’t very different than my prices, if they don’t put a markup on the freight but only on the product as purchased from a southern wholesaler, then they must put one very large markup on that.
I don’t know what else I can say about that because their prices are not very different than mine. In some cases, mine are lower. In some cases, theirs are lower.
I know how I do my markups and that’s a pretty much standard way of doing markups in the retail business.
Your cost of freight is a cost of doing business, just like the cost of buying the product. So that’s why we do it that way.
I will recognize Mr. Elliott again.
It’s nice to be recognized.
I had some questions about the reporting that you do. You had explained it very well and in more detail than what we received yesterday, but you said it was narrowed down to one sheet that’s actually sent.
Would it be possible to get a copy of that sheet or is that part of the agreement, you’re not allowed to show us it? Is that possible? Thanks.
Mr. Harper: I don’t know if confidentiality is part of our agreement or not.
I mean I can get a copy of the form and show you. It’s a very simple form.
When all of this massive paperwork is boiled down to its bare essentials, which is a claim form, it’s a pretty simple form, but you can’t get there without doing all of this.
I think that would be great.
I think one of the things I was told by our MP when I had a discussion about the Nutrition North Canada Program and why it was better, and also it was re-emphasized by Nutrition North Canada officials, was that the word “trending” was used.
They’re going to be able to know, as you had mentioned, how much broccoli we eat and whatnot and they were implying, with the reporting that your companies or the retailers will be doing, that we will actually be able to find out what types of food people are eating in the north. I don’t know whether that’s something that they should or shouldn’t know, but it’s up to them to find out and decide. To me, if you’re on the other end with Health Canada and if the real intent of the program is to have healthier communities, you could actually use that information in a more positive way.
If I had the sheet, it might give me some information as to where they were going with that.
I’m wondering: in your discussions with Nutrition North Canada people in terms of why they’re telling you why you have to do these forms, has that been told to you as to what the end result of the reporting would be? Again, they’re announcing that it’s a long-term program. Helping people eat healthier and having healthier communities in the long run, do you see that happening?
Mr. Harper: I believe that the information can be of use in documenting what people are eating and maybe why they’re eating it.
In terms of creating healthier communities, that information can be used, I suppose, to perhaps eventually tweak subsidy levels and make the subsidies on the nutritious stuff even greater.
The simple form is probably not going to help you figure that out very much, but I can show you a copy of the detailed form that we go through to eventually distil it down to what is essentially the claim form.
Again, I’m not averse to doing this reporting. I mean that’s what business does. We figure out what the rules are and follow them.
But I would like some assurance that the information is actually necessary information and valuable information for the government to have, and then I would like them to collect it in such a way that doesn’t drive my costs up and result in me adding that back on to the cost of the food.
Again, part of the reason in doing this exercise is, I think, to come up with ideas and get information from the retailers to find out how to make the program work better.
In listening to what you said today and combined with what was said yesterday, I came up with five points and I was going to quickly go over them, and you can tell me if I have them correct or not.
You had said that have a level playing field for the transportation so that everyone is on the same page, which Nutrition North Canada is not doing now; the advisory board getting out there and listening to what people say; possibly Nutrition North dealing with best-before dates and that’s actually something Mr. McMullen had mentioned.
At one point, I think he said that possibly getting a letter from the Government of Nunavut about best-before dates and whether it was alright to have them on the shelves, and those types of things.
The idea of spot audits, you said audit any time they already have that written into the contribution agreement you have but with that, having less paperwork and sort of justifying their reporting, and that’s something that Mr. Morrison said as well. And then the last sort of point was the streamlining of the list of subsidized products, which was when I had asked Mr. McMullen what advice he would give, he said, “Think hard and ask your constituents about a basket of food that would be the target items that they would want subsidized.”
If there’s something I left out, maybe you could let me know.
Mr. Harper: Chairman, I think Mr. Elliott has kind of distilled the conversation of a couple of days down to five very succinct points. I think those are the issues that need to be dealt with.
I can’t speak on behalf of my competitors, but I suspect they would agree with four of those five points. They would probably not agree in levelling the playing field for the cost of transportation since they justified at great lengths just the opposite yesterday.
But I think they would be in agreement on the other four points and I certainly am.
I would like to have some clarification or some communication from Health Canada or somebody on best-before dates because I think it’s important that you recognize that they could… .
A slavish adherence to best-before dates, which, as I said earlier, I believe are a manufacturer’s ploy to sell more products, could translate into huge increases in prices for some of those products late in the year after sealift supplies would have been sold and well before the next ship is coming, so I would be very cautious about how we deal with that.