EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
So if we just look at a solution that says, “Here’s a $60 million program,” we have a growing population. We’re trying to encourage healthy eating. The population is growing.
We encourage healthy eating, but we’re not going to put any more dollars to the program so that it will be successful. So I think that if we take a short-sighted approach to solving the problem, we’re just passing the buck, that we will have a problem with the Food Mail Program that is going to contribute to much greater problems, possibly in the health care field.
Minister Peterson talked about the education and the challenges with children going to school hungry that they can’t learn. What impact is that going to have on the health industry? We talked about employment.
We talked about a whole series of things today and the connection that exists between healthy eating and so many other factors is amazing.
I think we have to look for a much more comprehensive solution to the problem and we have to find ways of encouraging and supporting healthy eating, food security, addressing issues of poverty, among many other issues.
If we can address some of those issues, I believe it will have a positive impact on some of the other challenges that you, as a legislature, face every single day.
I know that you are committed to trying to find solutions, but I think that if we look at short-term solutions, we’re not going to solve the problem. I think we have to look much beyond the short-term quick fix.
I truly appreciate the opportunity to be here today.
It has been very enlightening and we certainly hope that this program will make positive contributions to the communities of Nunavut.
I now would ask if the witnesses have any closing comments. I think you already kind of had them. So if you could keep it short, I would appreciate it.
Mr. McMullen: I will take a chapter from Mr. Elliott. This will only take 10 minutes.
Thank you again, and we look forward to working with you on this program. We will do our best in collaboration with yourselves and others to get at the end goals.
Mr. Morrison: Mr. Chairman, thank you very much.
I will say that I do appreciate the opportunity to be here.
The Nutrition North Canada Program is very new. In our opinion, it has made positive improvements to the process.
Has it done everything that everybody expects? I don’t believe that it necessarily has.
I’m not sure that all of the expectations going into the program were correct in terms of how the program was announced.
I do believe that if we work very hard and are committed to operating a good program, it will make a difference.
Certainly from the Co-operative sector, we are committed to that.
So I thank you very much.
I would like to take this opportunity to thank again Mr. McMullen and Mr. Morrison for taking the time to appear today.
I recognize the Member for Nanulik.
At this time, I would like to make a motion to report progress.
Speaker: We will move on with our orders of the day.
Your committee has concluded their discussion with the witnesses from the North West Company and Arctic Co-ops and move that the Report of the Committee of the Whole be agreed to.
Any opposed? There being none.
We will move on with the orders of the day.
A reminder that the Standing Committee on Legislation will meet tomorrow morning commencing at nine o’clock in the Nanuq Room.
This House stands adjourned until Thursday, June 2, at 1:30 p.m.
>>House adjourned at 19:55
Thursday, June 2, 2011
Pages 709 – 755
Opening Prayer 709
Consideration in Committee of the Whole of Bills and Other Matters 709
Report of the Committee of the Whole 754
Orders of the Day 754
Thursday, June 2, 2011 709
Witness Appearing on the Nutrition North Canada Program – Consideration in Committee 709
Speaker (Hon. Hunter Tootoo): Thank you, Sergeant-at-Arms.
Before we get started, I would like to ask Mr. Elliott if he could lead us off with a prayer, please.
Mr. Elliott: Thank you, Mr. Speaker. I seek unanimous consent to proceed directly to Item 19 on the order paper. Thank you.
The member is seeking unanimous consent to proceed directly to Item 19, Committee of the Whole.
We will proceed directly to Item 19.
Bills 6, 7, and 8, and Tabled Documents 248 – 3(2), 249 – 3(2), 251 – 3(2), 274 – 3(2), and 275 – 3(2) with Mr. Ningeongan in the Chair.
In accordance with the authority provided to me by Motion 6 – 3(3), the Committee of the Whole will stay in session until it reports itself out.
Again, today I would ask members to remain in their seats as we will proceed immediately to Committee of the Whole.
In Committee of the Whole, we have a number of items to deal with: Bill 6, Bill 7, Bill 8, five tabled documents, and a witness appearing on the Nutrition North Canada Program.
We wish to invite Mr. Kenn Harper of Arctic Ventures 2000 into the Committee of the Whole.
Are we in agreement that we deal today with the witness appearing on the Nutrition North Canada Program?
Witness Appearing on the Nutrition North Canada Program – Consideration in Committee
Chairman: Do members agree to invite the witness to the table?
Chairman: Thank you. (interpretation) Sergeant-at-Arms, if you could escort the witness in.
I would now like to ask our witness to introduce himself.
Mr. Harper: My name is Kenn Harper. I am the president of Arctic Ventures 2000 Limited.
Chairman: Thank you, Mr. Harper.
Yesterday, in his opening comments, the Chair explained the process when considering the testimony this week of invited witnesses concerning the Nutrition North Canada Program.
I will repeat some elements of the process.
First of all, I wish to first take this opportunity to thank Mr. Harper for taking the time to appear before the Committee of the Whole in response to the invitations that were extended to him earlier this year.
As Mr. Harper is aware, the issue of accessibility to affordable and nutritious food for Nunavummiut is a major priority for all Members of the Legislative Assembly.
As members are aware, Mr. Harper also appeared last fall before the House of Commons Standing Committee on Aboriginal Affairs and Northern Development on the occasion of its hearings on the Nutrition North Canada Program.
At the conclusion of my opening remarks, I will invite Mr. Harper to make his opening statement.
After he has made his opening statement, I will open the floor to general comments from members.
I will first recognize the Member for Quttiktuq, followed by the Hon. Member for Rankin Inlet North.
I will then recognize other members according to our usual procedures.
I thank all members for their attention and I now invite Mr. Harper to make his opening statement.
Mr. Harper, you may proceed.
Mr. Harper: Qujannamiik, Mr. Chairman. (interpretation) I am pleased that I have been invited to the Legislative Assembly today and given an opportunity to speak to you today.
My name is Kenn Harper. In Inuktitut, I am called Ilisaijikutaaq.
I am called Ilisaijikutaaq by Inuit due to my height and because I used to be a teacher in Qikiqtarjuaq, Padloping, Pangnirtung, and also in Arctic Bay.
Here in Iqaluit, Arctic Ventures 2000 is my own business.
I know many of you, including some of your families whom I have known for many years.
The Manager of Arctic Ventures, John Bens, is also in the Gallery.
I want to inform you that John works tirelessly daily to operate our store efficiently and to ensure that it provides support to the community.
At our Arctic Ventures store, we have continued to offer nutritious food since the ability to purchase food, including the ability to purchase affordable and nutritious food, which is very important to the residents of Nunavut. This includes Inuit, Qallunaat, elders, and especially children.
I am very pleased that you are deliberating this issue and my expectation is that my presentation will provide support to your process.
(interpretation ends) I’m going to deliver my presentation from here on in English.
I want to start by saying that I have the utmost respect for Michael McMullen of the North West Company and for Andy Morrison of Arctic Co-operatives Limited. They are or have been my competitors in business in three communities and they are formidable competitors.
My respect for them, however, does not mean that I agree with everything they say or that I even believe everything they say.
My perspective on the old Food Mail Program and on its replacement, the Nutrition North Canada Program, differed quite a bit from theirs, and it is that differing perspective that I want to present to you today.
I am the owner of Arctic Ventures, in business, including the food business, in Iqaluit since 1985.
Before that I owned a retail business in Arctic Bay for some years and for 20 years, I also owned a retail business in Pangnirtung.
I believe that the comments I have to make about the Nutrition North Canada Program will apply generally throughout Nunavut and not be applicable only to Iqaluit.
All of the businesses that I have been involved with have used the Food Mail Program. We have 35 years experience in using the previous Food Mail Program.
It upsets me to hear my competitors portray the Food Mail Program as a bad program, as something that was broken and could not have been fixed. Certainly there were some problems with the Food Mail Program but they were not insurmountable problems.
The Food Mail Program should have been tweaked and fixed, not scrapped.
In my view, here are the few things that were wrong with the old Food Mail Program:
There was only one point of entry allowed for the Baffin region.
I can’t speak for the other regions but it is my understanding that entry points there were also unrealistic and inflexible. In the Baffin, our entry point was always Val-d’Or.
I attended countless meetings over the years and wrote many submissions, as did others, in an effort to have Ottawa or Montreal made an entry point.
These were all to no avail. We could have accessed a wider variety of product, with better freshness and at better prices, had we been able to do our shopping in Ottawa or Montreal instead of Val-d’Or. And that was the case for many years, all of the years that I participated in the program.
Indian and Northern Affairs Canada has complained that the costs of the program were increasing in an uncontrollable manner.
The impression is left that someone, the airlines or Canada Post, was gouging, but that’s not the case. The costs increased because of the foolishness of INAC administrators in allowing too many inappropriate items to be added to category 2. These were items like washing machines, toasters, bottled water, even truck tires!
What’s the justification for truck tires coming as food mail? Is it because the owner of the truck might want to drive to the store to buy his food? I don’t know.
It is no wonder that costs were out of control.
The lack of a claims process was a minor irritant.
To me, it was not a major problem in the way that my competitors have portrayed it, and that is because Canada Post had the right of inspection and enforced delivery standards and timelines on the air carriers.
The best feature of the old program was that everyone was treated equally in terms of the cost of air transportation.
For category 1 items - and those are the items we are most interested in, nutritious perishable foods - the rate was 80 cents per kilogram plus a surcharge of 75 cents per box.
So it would probably average out to about 84 to 85 cents per kilogram.
It didn’t matter whether you were in Iqaluit or Cambridge Bay or Grise Fiord. The rate was the same.
I haven’t mentioned category 2, but there was a rate and it was the same rate everywhere in Nunavut for category 2 items as well. This was fair and provided a level playing field at least for transportation.
The problems with the old Food Mail Program could have been corrected by tweaking the program.
INAC could have done public education programs. They could have initiated a signing program.
They could have changed eligibility lists. They could have allowed more entry points.
These are all things that they’re doing under Nutrition North Canada. They could have done all of these things within the existing Food Mail Program.
So why was it changed?
I believe that Mr. Curley referred to the reason or a possible reason late in yesterday’s session. It was changed, in my opinion, because of political interference in support of the airline that did not have the contract to carry food mail.
First Air had the contract and had won it fair and square.
Canadian North lobbied vigorously to have the program changed in a major way, such that there would in fact be no contract with INAC or Canada Post at all.
If you’re following this on my script, you will see that I’m correcting my typos as I’m going along.
And so we have a new program, Nutrition North Canada.
Our company was consulted in the design of this program.
INAC had commissioned a report, the Dargo report, because it was done by Graeme Dargo. He is a fine man and I have known him for many years, but our company disagreed with some of his recommendations.
We attended meetings and made submissions in an effort to have the program meet the needs, not only of the retail giants in Nunavut, North West Company and Arctic Co-operatives, but of small businesses, which are often the lifeblood of a community.
We were partly successful.
There are some good points about this new program. First and foremost, we are not restricted to using Val-d’Or as our staging or entry point.
This is to our advantage and it’s to our customers’ advantage, I should add.
Arctic Ventures has dropped all of its former suppliers in Val-d’Or and is using suppliers in southern Ontario and to a lesser extent, in Quebec, who deliver to the Ottawa airport.
This makes far more sense. We get a wider variety of product in better condition and at better prices than we were able to before.
It arrives quickly in our store and is on our shelves in fresher condition.
In addition, under the new program, the focus is on nutritious perishable food and this is where a subsidy should be directed.
We were pleased to see that most of the inappropriate items on the category 2 list were removed.
This will allow the subsidy dollars budgeted by INAC to be used properly.
There are two aspects of the Nutrition North Canada Program, though, that are problems for us and for small retailers throughout Nunavut and elsewhere.
The first one is the onerous paperwork required. It is simply unimaginable the amount of paperwork that businesses have to do to comply with the requirements of the program, and this is new.
I won’t go into the details of it now. I can give you more details in question time if you’re interested, but I will say this: INAC reimburses us $340 per month as an administrative fee to do this large amount of paperwork.
That’s not enough.
Our costs have increased far more than that because of the reporting requirements. Unless something changes - and that could be a higher administrative fee or a rethinking and decrease of the paperwork that is required - we will have to pass those costs on to our customers by increasing the costs of product.
And that was never the intent of the program.
I should add that we have expressed our concerns to the frontline INAC people that we deal with on this program. They have heard us. They are sympathetic.
They have promised to review it. They are hearing it not just from us. In that sense, I want to say that INAC has been very cooperative with us in the initial stage of us presenting the problem.
We haven’t seen the solution.
The main problem that I see with the new program is a very serious one. Under Nutrition North Canada, every business negotiates its own freight rate with the airline of their choice. This means, quite simply, that everyone gets a different rate.
You all know how business works. The biggest customer gets the best rate. Of course, I have no way of knowing what freight rate my competitors have negotiated, but I expect that the North West Company has a much better rate than Arctic Ventures does because they do much larger volume than we do.
That’s the way it works. And I expect that I have a better rate than a guy who is smaller than me. That’s the way it works.
I will never know how much better North West Company’s rate is but I’m confident that it is better.
This gives the North West Company three advantages over Arctic Ventures and over their small competitors in other Nunavut communities. It gives ACL the same advantages against small retailers in most Nunavut communities. They buy at better prices from their wholesalers because of their volume.
That has always been the case. That’s the first of the three advantages. Secondly, they get a better freight rate than their small competitors.
That’s new and it’s a major disadvantage to small retailers as a result of the Nutrition North Canada Program. It didn’t have to be that way.
Let me give you an analogy. It costs 58 cents, I think, to mail a letter from one street in Ottawa to another. It costs the same amount to mail a letter from Ottawa to Iqaluit or to Grise Fiord, for that matter.
Why can’t Nutrition North Canada operate on the same principle?
It’s a principle that we have been used to for the delivery of nutritious perishable food for over 30 years in Nunavut.
I want to add something that’s not in your handout.
In the report of the Standing Committee on Aboriginal Affairs, a report made in March 2011, the concerns of smaller retailers in this regard were noted.
The report says, “It was argued by many witnesses that since larger retailers have the capacity to purchase in bulk and therefore likely negotiate better shipping rates and receive first priority in timing of shipments, smaller retailers are likely to be at a competitive disadvantage in attempting to offer the same food items at similar prices and quality. In general, witnesses thought that this would introduce greater uncertainty as to the long-term viability of their businesses.”
That’s the end of the quote.
So the government recognized that this might threaten the very survival of some businesses, but they responded in the report by saying only, “the success of smaller [northern] retailers is dependent on their ability to manage their operations in an efficient and effective manner.”
There is not a lot of sympathy in that response.
So the concerns of smaller retailers in this regard were heard, acknowledged, and then ignored.
I’m going back to my handout now, but I noticed that I had said the North West Company has three advantages over Arctic Ventures and I only wrote up two of them.
The third one is something that’s invisible to the consumer and that is that okay, I mentioned that they have huge volume buying power to get the best rate but they also get rebates from those wholesalers and the manufacturers for purchasing their product, and that’s something the customer never sees.
Edward Kennedy, the CEO of the North West Company, said in a recent stock market analysts’ call, as reported in Nunatsiaq News, “We’ve sat down with carriers and we’re getting the cost decreases we should be getting with the amount of volume we’re bringing to the table.”
He also claimed that the new system would allow the North West Company to reduce what he called “out shopping,” northerners buying goods online or while they are travelling down south.
To negotiate a better freight rate in communities where there is competition between airlines, you need only threaten to take your business to the other airline. This back and forth negotiation between the competing airlines will result in lower rates.
It could also threaten the viability of the airline itself or of the regularity of service to some communities.
If airlines take a big financial hit from a reduction in cargo revenue, you know very well where they will make it up, on passenger fares.
Smaller businesses will become less profitable. This new regime will also be a disincentive to would-be entrepreneurs who want to start new businesses and sell food.
They will not have the clout to negotiate a freight rate which will allow them to be competitive with their larger competitors.
And these, I stress, are hypothetical figures. I made them up, but I need an example. Let’s say that in a certain community, the North West Company negotiates a freight rate of $1 per kilogram and a competing small business negotiates a rate of 90 cents.
That sounds like a difference of 10 percent. Maybe you can manage that.
But now let’s factor in the INAC subsidy and it’s the same for both companies.
So let’s say that that hypothetically is 50 cents.
Subtracting the 50-cent subsidy from the large store’s rate of $1 leaves you with a freight cost of 50 cents, but subtracting the 50-cent subsidy from the small store’s rate of 90 cents… .
I have this backwards, by the way, in my example. It’s the small store that gets the dollar and the big store that gets 90 cents. Excuse me for my quick typing.
So subtracting the 50-cent subsidy from the small store’s rate of $1 leaves you with a freight cost of 50 cents. Subtracting the 50-cent subsidy from the large store’s cost of 90 cents leaves you with a freight rate of 40 cents.
The difference is still 10 cents, but comparing 50 cents with 40 cents is no longer a 10 percent difference, it’s now 20 percent. That is a major difference and that might be unmanageable.
My apologies for the typo there and getting the example backwards, but I have explained it the way I intended it.
Let me also make it clear that everything I am saying here about the big guy does not apply only to the North West Company. It applies equally to local Co-operatives. They are not small businesses as Mr. Morrison portrays them.
Mr. Morrison spent a great deal of time yesterday stressing that local Co-operatives were small businesses, but he can’t have it both ways. He portrays community Co-ops as locally owned, community controlled businesses. Yes, they are locally owned, but they are community controlled only to the extent that they have not given away some of that control to ACL in Winnipeg to provide them with certain management services.
And negotiating great freight rates is one of those services. For purposes of this discussion, I suggest community Co-operatives are major businesses with tremendous buying power which includes the ability, through ACL, to negotiate preferential freight rates.
These rates may not be as good as North West Company’s because they are not as big, but I will bet that they are close.
I want to point out something else that you should be aware of. I think it is quite appropriate that Mr. McMullen and Mr. Morrison sat at the same table side by side yesterday. That is because, although they are competitors, they have worked together to influence INAC in order to have this new Nutrition North Canada Program designed to favour the large retailers.
How do I know this?
Mr. McMullen alluded to this collusion in his remarks to the Standing Committee on Aboriginal Affairs on November 3, 2010 in Ottawa. Mr. Morrison had already made his presentation before Mr. McMullen spoke.
Mr. McMullen said, “As Andy indicated, we were consulted throughout the process and made a couple of submissions to INAC, as an alliance of northern retailers.”
It is the last five words that give me cause for concern, “an alliance of northern retailers.” I can assure you that I was not invited to join this unholy alliance of northern retailers, neither were any other small businesses. I subsequently confirmed that the North West Company, Arctic Co-ops, and the Federation of Cooperatives of Northern Quebec did make joint submissions to INAC with advice on how the new program should work, how it should be designed.
These submissions were made on letterhead that even contained the logos of the three organizations together.
This sounds dangerously close to collusion, to me. If I were to meet my competitor at midnight in the parking lot and decide together what we would charge for milk or eggs, it would be price-fixing. It would be illegal and if we were caught, we would end up in jail.
This doesn’t sound a whole lot different to me.
Is this why we have ended up with a program that allows the major retailers to use their volume buying power to negotiate better freight rates than anyone else can get?