HEAL Committee Meeting

STANDING COMMITTEE ON HEALTH

COMITÉ PERMANENT DE LA SANTÉ

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, June 5, 2000

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[English]

The Chair (Mr. Lynn Myers (Waterloo—Wellington, Lib.)): I call this meeting of the health committee to order, pursuant to Standing Order 32(5), consideration of proposed tobacco regulations.

We have a number of witnesses today, and we'll try to move expeditiously in terms of hearing not only your points of view and your presentations, but also whatever questions we have later for you.

I understand, Mr. Egerdie, you're speaking for the group and you are the executive director of the Ontario Convenience Stores Association. You have with you Arnold Kimmel, president of Quickie Stores, as well as Sam Jabbour, director of President Sam's Convenience.

Mr. Egerdie, do you wish to lead off?

Mr. R.F. Egerdie (Executive Director, Ontario Convenience Stores Association): Yes.

Mr. Chairman, honourable members, on behalf of the members of the Ontario Convenience Stores Association, I would like to thank the members of this committee for hearing our concerns.

We have three speakers and one message divided into three parts. I am proposing that all three make their verbal presentations quickly, to leave maximum time for your questions.

Our association represents over 1,200 retail outlets across Ontario, and our interest in these issues before the committee is shared by the more than 16,000 convenience stores in Canada, each of which, by the way, is visited by over 6,000 Canadians each week. Across Canada, convenience stores account for more than $8 billion in annual goods and services. Our industry provides employment for over 160,000 Canadians.

On behalf of all of us here today, I want to begin my remarks by emphasizing one key point. We regard the sale of tobacco as an important responsibility that we take very seriously. We want to help reduce the incidence of youth smoking. That is the law of the land and we are committed to that.

Chain convenience stores in particular remain at the forefront of staff education and training programs aimed at achieving full compliance with the law. Operation ID was developed within the industry, in part to provide a means of sharing these training programs with smaller independents. Some of the larger companies even conduct continuous spot-checks of their own stores, the so-called mystery shopping, to enforce their own zero tolerance for sales to minors.

This is a substantial effort and involves tens of thousands of responsible retailers across the country. For example, one of our member chains alone is spending over $500,000 a year, just in Ontario, for staff training and other compliance measures.

We realize our industry is not perfect and some businesses are more responsible than others, but 100% compliance will only be achieved through the continuing efforts and cooperation of all the stakeholders, including government.

In a moment Mr. Kimmel will talk about some of the other things we could all be doing—some of the constructive measures that would help address the tobacco issue in a meaningful way, particularly with respect to youth. But first I would like to add our members' voices to those from other associations in expressing our utter dismay with the appalling behaviour of Health Canada—I repeat, the appalling behaviour of Health Canada.

Mr. Chairman, this committee has already heard how Health Canada has systematically excluded the entire retail and wholesale sectors from all consultation on the issues before this committee. You have already heard in detail how Health Canada engaged in a cynical process of manipulation to ensure that our members could not possibly participate in a mandatory business impact test. Now that you know the truth, Mr. Chairman, we're certain that the honourable members will share our outrage over some of the testimony to this committee last week by Health Canada.

I would like to quote from the statement by Mr. Ian Potter, assistant deputy minister:

Health Canada has made every effort to ensure that the decisions regarding the content of the proposal have been as informed as possible.

The members of this committee have already heard extensive testimony to the contrary. You also have in your possession a complete chronology of how Health Canada in fact made every effort to ensure that our members were silenced and that our contribution was not made to the process.

In the same testimony before this committee, Mr. Potter stated:

...according to the cost-benefit analysis, the economy overall and the retail and wholesale industry in particular are actually expected to gain jobs....

I repeat, “gain jobs”.

Again, under questioning, Mr. Potter was asked, “Do you have a job impact analysis of these proposed regulations?” Mr. Potter responded in part, “The overall net impact is...an estimated net increase of [over] 1,954 jobs...”.

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Mr. Chairman, you can imagine our shock and even our anger. What cost-benefit analysis? Where did this number come from? Certainly not from any business impact test. There wasn't one. There is no mention of it in the official RIAS published in the Canada Gazette.

In fact, for more than a year Health Canada shut us out of the consultation process specifically on the grounds that the proposed regulations would have no impact on our industry. As recently as January 22 of this year, Health Canada stated in the Canada Gazette:

The impact on distributors and retailers [of the proposed tobacco regulations] would be indirect, and would relate to any costs passed on to them.

Mr. Chairman, Health Canada is right about one thing: if the costs of the proposed regulations are passed along in the form of higher tobacco prices, every retailer and wholesaler in the country will be directly affected.

As history has shown time and time again, higher tobacco prices will affect us with increased crime and the growth of a black market that is only too happy to sell cigarettes to children. The fact is, Health Canada is proposing sweeping changes that could have a profound, if not devastating, impact on thousands of small retailers in communities across Canada.

Mr. Chairman, if Health Canada is trying to put tobacco retailers out of business by design, if that is the government's real agenda, then the department has a public duty to open its plans up to public scrutiny.

On the other hand, if Health Canada is on the verge of putting tobacco retailers out of business through ignorance, through a lack of consultation, then this committee has an opportunity to perform a very important act of public service by ensuring our voices are heard.

In our brief provided to the committee dated June 5 of this year, we make 10 recommendations. I would like to repeat recommendation 1 of that brief:

The Ontario Convenience Stores Association recommends that Health Canada go back to the drawing board and design a meaningful consultation process that looks at all of the proposed regulations in context and takes an honest look at proven alternatives like Operation I.D.

We hope this committee does instruct them to do so, and we thank you for hearing us.

I would now like to call on Mr. Arnold Kimmel, president of Quickie convenience stores.

The Chair: Thank you very much, Mr. Egerdie. We appreciate those comments and that presentation.

Mr. Kimmel, please.

Mr. Arnold Kimmel (President, Quickie Stores): Thank you.

Mr. Chairman, Quickie is a regional convenience store chain with 42 stores in eastern Ontario and western Quebec. I started the company 27 years ago, developed the business one store at a time, seven days a week, and in many cases, 24 hours a day. I'm very proud of our company and the role we play in building communities in the communities we service.

Through the Quickie Community Foundation and Quickie convenience stores we have donated over $3 million to a variety of community facilities and causes. Our company is a member of the Ontario Convenience Stores Association and the ADA in Quebec. We are among those responsible retailers with a zero tolerance policy on the sale of tobacco to minors. We train our employees not to sell to minors; they endorse our policy. My staff policy is very simple: Sell cigarettes to a minor and you're fired. End of story.

Two weeks ago I had a compliance test. We failed the compliance test. One hour after we became aware we had failed the test, the employee was fired.

I'm a past member of the board of directors of the National Association of Convenience Stores in Washington, D.C.—NACS is the abbreviation—which represents in excess of 100,000 convenience stores across North America. I mention this because while on the board of NACS, we introduced a program called “We Card”. The “We Card” program was a complete training and signage kit on how not to sell tobacco to minors.

This program received national endorsement from the U.S. government, every state government, and most municipalities. The program was all-encompassing. It brought together all the players—manufacturers, wholesalers, retailers, agencies, and all levels of government. I can tell you the program has made tremendous headway toward achieving the goal of curbing youth access to tobacco.

I was instrumental in bringing an adaptation of this program to Canada. The program was called Operation ID. The Canadian Tobacco Manufacturers completely underwrote the cost of developing the program. Tens of thousands of training kits were sent out to retailers across the country, but in Canada the program has not been nearly as successful. Why? Because right from the outset Health Canada and the anti-tobacco movement, in place of endorsing the program, got great press coverage in knocking the initiative. They stated it was a smokescreen funded by the tobacco manufacturers.

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Government did not endorse the program. The signage, for example, which was developed with the kit, in many cases could not even be used because various health departments across the country insisted that only their signage be posted. In other words, instead of all parties harmonizing on a national program, everybody wanted to protect their own turf on the issue. Two Canadian cities that did endorse the program now have approximately 99% compliance by retailers.

As a retailer, I'm tired of being the scapegoat for the problem. Yes, there are some retailers who will supply tobacco to minors, but through tough enforcement they can be dealt with. Those retailers who do not recognize the responsibility associated with their tobacco licence and continually sell tobacco to minors should lose their licence, but do not damage an industry because of some irresponsible retailers.

Tobacco retailers are not responsible for the social culture that influences our youth. To achieve the goal, you have to curb the demand, because if kids want something they'll get it. Access to beer and alcohol—although it's restricted, underage kids get these products.

Introduce legislation with teeth. Make it illegal for minors to be in possession of tobacco. You have no idea how frustrating it is to have a group of underage kids congregating outside your convenience store, smoking. What level of public credibility do you think that retailer has, even though the retailer may have a zero tolerance policy?

Make tobacco education part of the school curriculum from kindergarten to grade 9 or 10; these are the formative years of development. Remove restrictions that allow the sale of non-prescription smoking cessation products in all retail stores.

Mr. Chairman, these are the kinds of measures we believe Health Canada should be studying. Instead, we're afraid the government is embarking on a series of regulatory changes that will endanger our staff, our businesses, without achieving any meaningful social or health objectives.

Mr. Chairman, we become particularly alarmed when we hear Health Canada talk about raising tobacco prices as a way of curbing smoking among minors. In testimony here last week, Ms. Jane Meyboom of Health Canada estimated it will cost up to $700 million to implement just the proposed labelling and reporting regulations. No one is doubting those costs will be passed along in higher wholesale and retail prices. At the same time, Mr. Potter of Health Canada indicated the government is also forging ahead with tobacco tax increases:

The Minister of Finance has indicated an interest in raising the price of tobacco products because we know that young people in particular are price-sensitive. We believe these will work.

Mr. Chairman, if Health Canada had engaged in any kind of cursory consultation with our industry, they would have been reminded that increasing tobacco prices increases crime. So far this year, thieves have already hit my chain for more than $60,000 worth of tobacco products. What about the safety of my employees? What happens when I can no longer get insurance coverage for my business?

Where do these cigarettes end up? They end up in the black market. This is contraband. Contraband is not only the cross-border problem. These cigarettes end up in gym bags being sold to kids in a schoolyard; out of trunks in cars; they end up with unscrupulous retailers; they end up with criminals who don't ask for ID and don't pay taxes.

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Mr. Chairman, surely even the zealous public servants at Health Canada remember why their own government, our own government, drastically cut tobacco prices in 1994. It is our beyond our comprehension why any government department would even be thinking about making the same mistakes all over again.

We are not the problem. We want to be part of the solution. Recognize our position and work with us.

Thank you, Mr. Chairman. I would now like to call on Mr. Sam Jabbour of the Independent Convenience Store Operators.

The Chair: Thank you very much, Mr. Kimmel.

Mr. Jabbour, please.

Mr. Sam Jabbour (President, Sam's Convenience; Director, Canadian Association of Independent Convenience Store Operators Inc.): Mr. Chairman, honourable members, I am honoured to appear before you today as a director of the Canadian Association of Independent Convenience Store Operators.

Our organization represents thousands of hard-working Canadians who own, operate, and earn their income from their retail convenience stores. While I am officially appearing here today on behalf of our members, I am also appearing here today on behalf of my family.

Mr. Chairman, you have heard a lot about statistics. You have heard a lot about process and studies and things like net employment benefits. These are things people in government here in Ottawa like to discuss. I am here to remind everyone at Health Canada that we are talking about real people, about real families, about real small business. That is our life.

Let me tell you about my own life. For the past 10 years we have owned a small, independent convenience store in Mississauga. Like most independents the store is staffed almost entirely by my wife and myself. That's all the store will support. That means one or both of us is there from 7 a.m. until 11 p.m. every day, seven days a week. Occasionally we have some part-time help. Occasionally our adult children try to help out.

Like the majority of retailers, we do not sell cigarettes to minors. We never have. We never will. We always ask for proper ID. They get so mad at us for asking for ID, they don't come back. We lose their business. That's the price we pay, but that's okay.

Mr. Chairman, we work very long hours to support our family. We are selling legal products. We are not doing anything wrong. We provide a service to our community. This is real life.

When Health Canada talks about raising cigarette prices, I am thinking about the safety of my family, about break-ins and armed robbery. When prices hit $6 a pack, we had two major robberies. Since prices dropped, we have had none.

When Health Canada talks about plain packaging, about putting cigarettes under the counter, I am thinking, what will happen when we are crouching down with our head below counter level? I am thinking about shoplifting. I am thinking about the night my son just turned his back on the counter for only a few seconds. That was the night a man put a gun to his head.

When Health Canada talks about ending display allowances, they are talking about taking away the equivalent of my entire profit. They are talking about taking away my livelihood.

Health Canada seems to think we will find something else to sell to make up the shortfall from display allowances or perhaps from not selling cigarettes at all.

This has been a big problem with Health Canada, Mr. Chairman. They think about policy. They don't think about real life. Surely if there was some magic product we could sell profitably in our store, we would be selling it now, cigarettes or no cigarettes.

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That is the kind of practical information we thought Health Canada wanted as part of the consultation process. Then we realized that Health Canada didn't want any information from us. They did not want to consult with us, because they really don't care if we lose our family business.

Frankly, I was not surprised about what happened in Montreal. It was just another time and another way that Health Canada told us they really didn't care about us, about our members, about our business, about our families.

You have heard a lot about these proposed regulations. Let me add only one observation from my position behind the counter for the past 10 years.

I don't want to see kids smoking, but a child does not decide to start smoking because he sees a pack of cigarettes in a store. Conversely, if you hid all the cigarettes under the counter, does anyone honestly believe kids would not smoke?

On behalf of my association and on behalf of my family, I would like to leave you with a few requests.

When Health Canada talks to you about its business impact test, think about my wife and I, at home from work around midnight, trying to answer questions about the impact of tobacco regulations on the global competitiveness of our convenience store.

When Health Canada talks to you about things like focus groups, public policy initiatives, and comprehensive strategies, please think about my wife and I, and thousands of other couples like us, working in our store late at night because we have to.

Finally, the next time Health Canada talks to you about its proposed tobacco regulations creating some net employment benefit of 2,000 jobs, please remember that in real life they are really talking about destroying our businesses and devastating our families.

Thank you.

The Chair: Thank you very much, Mr. Jabbour. That certainly was a very passionate presentation.

I want to thank all of you.

By the way, you hit a nerve with me when you were talking about crime. Prior to being elected here, I was head of the Waterloo Regional Police, with 700 police officers, and I know exactly the kind of thing you're talking about that takes place in convenience stores such as you have, for example, and the awful feeling, quite frankly, of having a gun put to your head, and other things. I want you to know that I empathize deeply with you and your family on that particular issue.

Mr. Sam Jabbour: Thank you, Mr. Chairman.

The Chair: Mr. Mills, please.

Mr. Bob Mills (Red Deer, Canadian Alliance): Thank you very much for coming.

You've chastised Health Canada, and I think really what the bottom line might be is that they care about the 45,000 people who die every year because of cigarette smoke. I'm sure they're trying to find solutions, as well, to end that terrible cost to society and the families who are hurt by that, and the young people who are hurt, and so on. I'm sure you'd agree with me that it is a major concern, and you wish there was a simple answer or another product that you could sell.

I guess we should as well tell Health Canada that they should encourage the tobacco companies to try to find that alternative that would be non-harmful, and so on. But I think they have certain vested interests that are going to prohibit them from doing that. Maybe we're all losers because of those big companies who are producing something, and I'm not sure how much they care about the well-being of people as we do at the grassroots level.

As well, the statistics say at least 30% of small businesses, corner stores, that sort of thing, do sell products to young people and make literally hundreds of millions of dollars by selling to young people. They're a ready market. I wonder what your solution is for those people who are breaking the law.

As to my second question, I go into a small convenience store on occasion, as I think all of us do—that's kind of the Canadian lifestyle—and I see cigarettes next to chocolate bars and gum, and so on. I can't help but wonder why they can't be somewhere else, not where young people are buying those products, because most kids and adults like chocolate bars too.

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Thirdly, as far as the criminal justice system is concerned, again, as an observation, we fail to change the Young Offenders Act, we fail to support our police the way I believe we should, and we've had more concern about criminals instead of the victims. I partly blame that for the fact that you would fear to put your head above the counter. I'm not sure that has so much to do with tobacco regulations as it has to do with our support of the police, and the whole justice system, as I see it, not working.

So there are three things that I put to you. I wish I had an answer. I wish we could say this is simple and easy to handle, but it's not. How would you answer those questions: the people who are breaking the law; the positioning of those cigarettes; and of course the justice issue?

Mr. Sam Jabbour: I will start with the first question.

We share with Health Canada its concern about the people who smoke. Of course, we are part of society. The point is, we are not part of the problem and we don't want to be part of the problem. We want to be part of the solution. For this reason, we ask for a common effort with Health Canada to have a meaningful BIT, business impact test.

Concerning the smoking of young people, we take this very seriously. I am sure the vast majority of at least the members of my association are cautious not to sell cigarettes to minors. We can find a solution to reduce the size of this problem by cooperative efforts between us, the government, and Health Canada. We can integrate some programs, a combination of enforcement and education, because these kids start being addicted to smoking at school and at home. We should find a program to educate these kids to avoid smoking and explain to them the hazards of smoking. With cooperative efforts, we can come to a solution.

We should enforce very strict limitations and restrictions upon those who sell cigarettes. Whoever sells cigarettes to minors should be punished. He should face the irresponsible act he has committed. We are ready to cooperate with the government, with Health Canada, to find solutions to this problem.

Mr. R.F. Egerdie: Perhaps I can add to that a little bit.

I think the word “cooperation” is key here, because every facet of society, including us, the retailers at the point of sale, government, the police, society in general, and our educators, all have a part in this.

The only legal steps against selling tobacco to minors involve the retailers, who can and should be prosecuted if they are caught doing this. It's against the law; it should not be done. There's a legal process to handle that. That's one thing I think would help.

But I think something else that would help is if it were illegal for a minor to possess tobacco. I don't mean that every policeman in Canada would turn his attention to catching kids with cigarettes, but I think it has a very salutary effect in that, first of all, the kids would realize that it is against the law for them to have it, and then you would have the parents involved saying, son or daughter, you should not have tobacco; you should not be smoking. I think this has a salutary effect on parents' training of children. Again, if the schools are using this educational material in the same fashion, then I think society as a whole is combining to attack a problem.

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Mr. Bob Mills: Should we charge the parents? If their children are found with tobacco, should we fine the parents?

Mr. R.F. Egerdie: That is an excellent question that perhaps should have been part of the BIT that we weren't asked to contribute to.

The Chair: That was a very good response, Mr. Egerdie. That was very diplomatic. I like that.

Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you very much, Mr. Chairperson.

The first thing I'd like to touch on is the point we've just been talking about, which is the broader approach to this very serious problem in society today of smoking, particularly among young people. You've made a number of recommendations at the end of the paper. There are four in particular that seem to me to be worthy of serious consideration.

I guess my question is perhaps more for the chair, in a sense. Have we a process by which we could ask for a departmental report on each of those recommendations, to see what work has been done on those and how we as a committee could pursue them? I don't know if you want to answer that, Mr. Chairperson, but I would like to just throw that out for the work of the committee.

I think they are four very important solutions that we should look at and hear the pros and cons on, especially when it comes to the one about making it illegal for young people to actually smoke. That's very controversial and it might be very difficult to implement, but at least we should hear the pros and cons.

The others, though, are—

The Chair: Ms. Wasylycia-Leis, we're meeting tomorrow and there's a vote in the afternoon, so it's going to be tight. I'm proposing that we meet again Wednesday from 12:30 until 1:30. We can have the department respond to that by that time. I think that's adequate response time. I think your question is a very good one.

Ms. Judy Wasylycia-Leis: Yes. I'm not expecting a complete, comprehensive report on each of those recommendations—

The Chair: No, but an update. Of course.

Ms. Judy Wasylycia-Leis: —but an update and then an opportunity for us as a committee to pursue them further.

The issue for us is how to develop a comprehensive strategy, not a piecemeal approach. You've suggested today that it is very much a piecemeal approach.

Related to that issue is the question of a promise by the present government, over two elections running, to invest $20 million a year into smoking education and prevention and cessation programs. It's a concern I've been raising because I can't get evidence that the money is actually being expended in the kinds of ways we thought it would be. Have you had any information to suggest that this money is being spent to address those concerns? Have you been involved in any of that?

Mr. R.F. Egerdie: That's an excellent question. Thank you for asking it, because it allows me to lead into a project we've been involved in for the past three years, almost four. This is Operation ID, which basically is material to be used in each individual convenience store. We ask for ID. In Arnie's case, he asks for ID from anyone who appears to be under the age of 27 to make sure he's not selling to minors.

Operation ID has been spread across Canada through the tobacco wholesalers to each retail store, giving them the package that shows how to train your people, how to train your clerk to say no to someone who demands tobacco, how to be nice about it, and how to report if there are any problems. It involves banners and signs saying “We demand ID” and that sort of thing.

That's been in effect in Canada for three years. By the way, it's spot-checked by Statistics Canada regularly, quarterly I believe, right across Canada as to compliance. Compliance has improved and is now in the neighbourhood of 65% to 70% on average across Canada.

We asked ourselves about a year and a half ago what we could do to beef this up and make it even more effective. Well, they put together a project called Operation I.D.: School Zone. Basically, very simply, what they do is they identify specific convenience stores close to schools. This started in smaller cities. The first one it started in was Kelowna. They went to the school people, they went to society, they went to the police, they went to the local chamber of commerce, and to everyone involved in PTA meetings as well, and said what we would like to do is really zero in on zero tolerance for sale of tobacco to minors.

I am very pleased to report that in that city, Kelowna, after one year, they were at 98% compliance. The program has been extended to other cities. It's in nine cities across Canada right now.

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In one city it was expanded to, they had difficulty. Well, there have been a number of challenges, but in this particular city it was introduced and our people went to all of the different groups to talk about it, and we found out that government actually spoke out against the program. Other groups spoke out against the program and some other people, who you will be hearing from in the course of these hearings, spoke out against the program. However, it was installed and it is working. A number of the people who declined have since joined up. For example, the RCMP came back and decided they would support the program in this particular city.

The key here again—I come back to the word Sam uses—is cooperation. I think we're all looking for the same thing: how to keep young kids from smoking. We can't do it alone as retailers, even though we're supposed to be fined and are fined if we do it. We need everyone else—the parents, the educators, the police, society in general—to work together on this program. We are not the opponents of Health Canada. We are not the opponents of those who want to wipe out young people smoking. We want to help, we want to be part of the solution, and we would certainly ask and beg for the participation of those.

To come back to your question about the $20 million, that would sure help in Operation ID. We wouldn't be in nine cities across Canada; we'd be in 90 or maybe 900. I do believe the 70% that we currently average across the country would be edging up and a lot more cities would be at 98%.

Excuse me for being long-winded.

Ms. Judy Wasylycia-Leis: You're very helpful.

The Chair: No, no, it was very interesting.

[Translation]

Mr. Charbonneau, please.

Mr. Yvon Charbonneau (Anjou—Rivière-des-Prairies, Lib.): We heard the store representatives. In Quebec, we call these stores “dépanneurs”; you call them convenience stores. You explained your fears concerning these draft regulations. I personally heard Mr. Jabbour, but he was not the only one to tell us that he had safety concerns.

[English]

Mr. R.F. Egerdie: My apologies; we're having difficulty hearing the translation.

The Chair: Carry on, Monsieur Charbonneau.

[Translation]

Mr. Yvon Charbonneau: I said that I listened closely to the presentations from the convenience store representatives. In Quebec, we call those stores “dépanneurs”. Mr. Jabbour was not the only one to tell us about the physical dangers he or his staff might be exposed to should these draft regulations become law. People have said, for instance, that if they have to bend over to get a package of cigarettes from under the counter there may be shoplifting going on, etc. Could you tell me which two draft regulations you are referring to?

The first draft regulation involves information about tobacco products and the second is about tobacco-related reports. Which of these two draft regulations are you referring to, and which deals with where cigarette packs are placed in convenience stores?

[English]

Mr. R.F. Egerdie: If you don't mind, I would like to start the response to that question.

The difficulty here is that we are not treating the full picture. Reporting is only part of the situation. The whole proposal by Health Canada originally included display and promotion. That was deleted from the program about a year and a half ago, although the department has made it very clear that display and promotion will be followed up on very quickly. On two occasions it was mentioned as being within two years, and on one occasion it was mentioned as being within one year.

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From our point of view, while the current regulations deal only with half of the picture, we feel that the other shoe is going to drop and that all of a sudden we are going to be confronted with Health Canada making a very real commitment to eliminating display allowances and to increasing the cost of cigarettes through the $700 million, which is the figure I heard, that it would take to institute the current reporting and packaging regulations. All of those dollars will filter down to the retail level and will mean that the carton of cigarettes in the store's inventory all of sudden isn't a $30 carton any more, it's a $50 carton.

I suspect that at that point the Mafia-type underground, which has been working in the black market for the last few years, will lick their lips and say, “We can hardly wait. We will break into Arnie's store and Sam's store more frequently and obtain more inventory that's worth half again as much.” First of all, they will circumvent our people making a proper living, and secondly, these people don't care, and they will sell out of a gym bag at the school door, as Arnie says.

So we don't feel that half of the picture is the way to look at this particular program of Health Canada. We feel we're being told only half of it and that the other shoe is going to drop and is going to hurt us badly.

Mr. Sam Jabbour: What I meant here is display and labelling. This is the problem of visibility. You have about 100 different brands of cigarettes. If these are not displayed clearly, we will spend a lot of time searching for the proper request of the customer. This will put our service at risk when we are trying to find the different kinds of cigarettes if they are not displayed well. This will create shoplifting and will put our lives at risk.

The Chair: Thank you very much.

Monsieur Charbonneau.

[Translation]

Mr. Yvon Charbonneau: If I understand correctly, gentlemen, you are warning us about a draft regulation that is not here before us, but one which has been withdrawn. I was not present during these discussions but it seems to me that in the past you were consulted on a draft regulation containing provisions on the placement of cigarette packages, on display racks, etc. But the draft regulations we have before us do not deal with that matter.

You are registering your protest against a draft regulation which has been withdrawn. I think you should congratulate the Department of Health for having withdrawn a proposed regulation that did not suit you. You have submitted your concerns about a draft regulation that is not under study. You say that this is only half the story and you have warned us against the half of the story that is not before us. I was trying to follow your argument but I believe you were talking about a draft regulation that is not under study at this time. If Health Canada manages to have the draft regulations that are before us passed, particularly the one on information about tobacco products, half of the space on each package will be used to identify the company and the other half will be used to identify the problems. Do you think that there will then be a tendency to hide the cigarette packages? Whenever you show the package, you will be displaying the problem.

[English]

The Chair: Is there a question there, Mr. Charbonneau?

[Translation]

Mr. Yvon Charbonneau: The question is the following: why be concerned with a draft regulation that has been withdrawn?

[English]

The Chair: We're running a little behind, so perhaps we could have a quick response to that.

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We'll hear from Mr. Proulx, and then we're going to finish this segment.

Mr. R.F. Egerdie: The program of Health Canada started out with four facets, of which these are two. They withdrew the two partway into the process. However, the two that are there involve major expenditures. I'm quoting someone from Health Canada, I believe, who said it would cost up to $700 million to institute these changes. We know that will turn up sooner or later in the retail selling price of the product, the higher valuation of inventory, and the resultant theft and armed robbery of our stores. That in turn leads to no taxes being paid by these people, sales to minors, and the loss of our business, which in turn puts us into another untenable situation. We feel that you can't divide this into two sections, that they must be treated together. And, I repeat, the other shoe is going to drop.

The Chair: Thank you very much.

[Translation]

Mr. Proulx, please.

[English]

Mr. Marcel Proulx (Hull—Aylmer, Lib.): Thank you, Mr. Chair.

Thank you, gentlemen.

Mr. Kimmel, I want to commend you for your participation in the eastern Ontario and western Quebec community. I've known of your businesses for years, the Quickie Tour and so on and so forth, because I'm the member of Parliament for Hull—Aylmer. It's a beautiful involvement, not only in the community but also for health purposes.

You referred to compliance tests that were run in your stores. Who runs these tests and how often are they run?

Mr. Arnold Kimmel: We have a variety of compliance tests. We do our own mystery shops of our own stores 18 times a year. I don't know how often the Regional Municipality of Ottawa-Carleton does theirs.

Mr. Marcel Proulx: You run your own tests.

Mr. Arnold Kimmel: I run my own 18 times a year at our stores.

Mr. Marcel Proulx: How would—and I'm just throwing this at you—plain packaging affect your business?

Mr. Arnold Kimmel: It would be an absolute nightmare.

Mr. Marcel Proulx: It would kill your display allowances.

Mr. Arnold Kimmel: Until you've worked in the environment, until you've worked on the other side of the counter, you don't really have an appreciation of the complexity of the business in its entirety and how difficult the sale of controlled products is.

As Mr. Jabbour stated, there are approximately 150 SKUs of cigarettes that we have to sell—not that we have to sell, but our customers demand that variety. To find those packages right now with 75% advertising on the label is a very difficult process. I've been doing it for 27 years, but if somebody asks me for X, Y, Z, extra-long, mild, light 100s, you can be there for five minutes. There are a number of very difficult things. Plain packaging would be an absolute nightmare.

Mr. Marcel Proulx: Unless the plain packaging incorporated codes or—

Mr. Arnold Kimmel: You have to find the product to deliver it.

Mr. Marcel Proulx: We can't be talking about plain packaging that would only say cigarettes and the name of the manufacturer. We need codes on it so that you can recognize them. It's the same as when you go into your doctor's office and they recognize the codes on the files.

Mr. Arnold Kimmel: Mr. Proulx, I invite you and every member here. We would be delighted to have you work behind the counter in one of our stores.

Mr. Marcel Proulx: I might take you up on that in one of your Aylmer stores.

Mr. Arnold Kimmel: Sir, it would be my pleasure. I think at that point you might change some of your questions.

Mr. Marcel Proulx: Okay. Taking into consideration not only sales but also allowances, are you comfortable in telling us what percentage in dollars of your business is related to cigarettes or tobacco? Cigars and pipe tobacco are very minimal in your type of business, are they not?

Mr. Arnold Kimmel: Correct.

Mr. Marcel Proulx: So let's assume that we're talking cigarettes and cigarette products.

Mr. Arnold Kimmel: Cigarettes is the largest category we have in our business.

Ms. Judy Wasylycia-Leis: What percentage of the business is it?

Mr. Arnold Kimmel: It varies in stores anywhere from about 25% to 40%.

• 1625

Mr. Marcel Proulx: Including your display allowances and sales and the whole shebang, you're saying 25% to 40% of your business is cigarette related.

Mr. Arnold Kimmel: Correct.

Mr. Marcel Proulx: Thank you.

The Chair: We'll now proceed to the next panel, but we appreciate your comments. Certainly, you had a very good presentation to make and we're grateful for that. Thanks very much.

We'll move now to the next group of witnesses. We have Garfield Mahood from Non-Smokers Rights; Neil Collishaw from Physicians for a Smoke-Free Canada; and Les Hagen from Action on Smoking and Health.

We'll start with Mr. Hagen.

Mr. Les Hagen (Executive Director, Action on Smoking and Health): Thank you for providing me with the opportunity to appear before your committee to express our views on this very important public health issue.

Action on Smoking and Health is western Canada's leading organization devoted to tobacco control and prevention. For over 20 years, ASH has provided leadership on the tobacco issue at the local, provincial, and national levels from our headquarters in Edmonton.

Today I'll be addressing several issues in my presentation, including the consultation process, the economic impact, package colour and printing, disclosure of ingredients and public support.

As you know, this committee initially conducted hearings on cigarette packaging in 1994 in response to the federal tobacco tax rollbacks. ASH participated in those hearings in 1994 with an almost identical cast of characters, scripts, plots, and scenes. The only substantive difference since 1994, in my view, is that the evidence has become even more compelling.

Six years, three health ministers, an election, and a Supreme Court ruling later we are still debating the merits of further restrictions on tobacco packaging and labelling. During that time more than a quarter of a million Canadians have died from tobacco use and over a half a million adolescents have started smoking. In the true nature of Canadian compromise, the debate over the past six years has shifted from a discussion about plain packaging to a discussion about using only 50% of the pack for health promotion purposes.

Given the eternal length of this debate and the lives that have been held in balance, we find it offensive for anyone to suggest there has been a lack of consultation, discussion, and consideration of the proposals before you. Six years is long enough to wait for a half measure that falls short of this committee's initial recommendation in 1994. It's absurd to suggest there's been a lack of consultation on this issue and for the tobacco lobby to pretend that these proposals have somehow been rushed.

Tobacco companies have a long history of opposing warnings and then agreeing to what was previously proposed. In 1969 and 1971 they opposed placing any warning on cigarette packages, yet later in 1971 they voluntarily announced they would place warnings on packages. In 1988 manufacturers opposed warnings that would only cover 20% of the package front and back, yet by 1993 the industry announced it would voluntarily accept this size, and even the number of rotated warnings increased from four to eight. They would even support that increase.

• 1630

In 1990 manufacturers strongly opposed warnings on addiction and second-hand smoke. Yet today manufacturers voluntarily place warnings on packages stating that cigarettes are addictive and tobacco smoke causes fatal lung disease in non-smokers.

In 1993 manufacturers opposed regulations placing warnings at the top of the package in black and white, covering 25% of the package plus the border. Despite these regulations being struck down in 1995 by the Supreme Court, the industry has voluntarily kept warnings appearing on packages in this format. Although tobacco companies opposed the new warnings, in the future they will support them.

I also find it offensive that proponents of this modest proposal suggest that 200 jobs are more important than the lives of 45,000 Canadians who die annually from a completely preventable cause of premature death. Should we stop the enforcement of drinking and driving laws to protect auto repair shops? Should we have extended World War II by another year to save munitions factories?

When this committee last reviewed this issue in 1994, the printing companies complained that plain packaging would destroy their business because these packages would be less sophisticated and less expensive to produce. Now they are suggesting that the new packages are too sophisticated and too expensive to produce. I find it impossible to believe that Canadian industry cannot meet this humble challenge or that existing contractors would turn away good business.

However, even if these dire and improbable consequences come true, the lives of 45,000 Canadians should be of paramount consideration to this committee. The impact analysis provided for Health Canada concludes that the regulations will create a net gain of $85 million and 2,000 jobs. These economic benefits should take precedence over the preservation of a deadly industry.

Having reviewed the presentations made to this committee last week, I can only hope that these hearings will not be reduced to a bizarre technical discussion of printing processes. Health Canada has already found a way to print the packages. What further evidence is needed?

The tobacco companies know that colour helps to sell their products and to better communicate with consumers. Tobacco companies do not limit themselves to two colours on cigarette packages or to antiquated printing processes. Health warnings should not be limited to a simple two-colour format that will not grab consumers as effectively as a full-colour format.

In fact, I have here examples of cartons printed in the U.S. in full colour and in Costa Rica in full colour. And I would hope that the Canadian industry would be able to at least match the capabilities of Costa Rica.

It is appalling that Canadians can get more product information from a box of Rice Krispies than they can from a package whose contents kill when used exactly as intended by its manufacturers.

Much discussion is focused around what toxins should be printed on cigarette packages, and we believe there is a need to provide this information in a manner that consumers can easily understand. However, we also believe that consumers have a right to know exactly what is contained within their cigarettes and the quantities of each additive, ingredient, and toxic emission.

Although Health Canada will be requiring tobacco companies to report this information, they will not be required to print the full list of additives, ingredients, or toxic emissions on the package or the slide. By withholding this information from the consumer, Health Canada is impeding consumer awareness and it is not treating tobacco as other consumer products. It defies logic to have the tobacco companies report this information only to withhold it from consumers.

It is also discouraging to learn that Health Canada will not be promoting a national stop smoking help line on cigarette packages, as initially proposed. I think one of the best examples of the terrible lack of resources to fight tobacco use in Canada is the absence of a simple 1-800 support line to help people who want to quit. This is a no-brainer, and yet it's missing from their proposals.

As you heard in last week's testimony, there's tremendous public support for larger, more informative package warnings. Last summer ASH commissioned Environics to conduct a national survey of 2,018 Canadians 18 years of age and over. The survey was accurate to within plus or minus two percentage points, 19 times out of 20. The results were very favourable. Over 74% of Canadians, including the majority of smokers—59% to be precise—support proposed new Health Canada regulations requiring cigarette warnings to include pictures and to occupy 60% of the package's front and back surface.

The results were consistent across Canada among all ages and genders, income and education levels, occupations and even political party preference. In fact, there was no category of respondents in the sample that was opposed to larger illustrative health warnings.

I have submitted the full data tables to this committee.

• 1635

When it comes to informing Canadians about the implications of tobacco use, I can't think of a better medium than the package itself. The package provides two billion annual opportunities to communicate the risks of tobacco use. We challenge anyone to find a promotional mechanism that could facilitate this degree of public education at a lower cost.

As recent court documents have revealed, tobacco companies have no reservations about using the package to distort the truth about their products. The continued promotion of so-called “light” cigarettes is a perfect example of this deception. We should counter these misleading messages and associated imagery with the truth about tobacco, and the package would be the most appropriate mechanism to do so.

I would like to end my presentation with a statement made in 1997 by Imperial Tobacco lawyer Simon Potter before a Senate committee:

As a matter of constitutional and Charter law...it is clear that lawyers who may complain about an attack on freedom of expression cannot complain about the government putting out more information rather than making less information available to people.

Committee members, the proposed health warnings give people more information. What are the tobacco companies really complaining about?

The Chair: Thank you very much, Mr. Hagen, for that presentation.

We'll move on now to Mr. Collishaw.

[Translation]

Mr. Neil E. Collishaw (Research Director, Physicians for a Smoke-Free Canada): Ladies and gentlemen, on behalf of Physicians for a Smoke-Free Canada, I thank you most sincerely for giving us the opportunity of appearing before the committee. I have been the director of research of our organization since the month of April only, but during eight years, from 1991 until last year, I was the expert in charge of the anti-smoking file at the WHO, the World Health Organization.

In that capacity I advised governments from all over the world on the implementation of anti-tobacco policies. As a Canadian, it was a source of enormous pleasure to me to note the power of the Canadian example as an inspiration to other countries who wanted to put anti-smoking policies into effect. Several countries are most certainly following the Canadian example which was created in the beginning of the 1990s. Australia, Poland, Singapore, Thailand and South Africa are countries that were inspired by the Canadian example in the matter of the labelling of cigarette packages. To be convinced of this you have only to look at these cigarette packages from the countries I have just named. You can look at them as I speak.

[English]

In this committee, questions have been raised about the competence of Health Canada in preparing these regulations. Has the government done its homework? Have they consulted with all those affected? Has the process been fair? My answers to all these questions are yes, yes, and yes.

As both a participant and an observer of public regulation-making over 30 years, I consider the preparation by Health Canada in this case to be exemplary. Few regulations are as rigorously tested. There have been not one but three consultation periods since January 1999.

Careful focus group testing by Health Canada has told us that the black and white warnings you'll see on those packages, once an example of Canadian leadership in this country, have become dated and need to be replaced by stronger warnings.

It's time for Canada to reassert once again its global leadership on tobacco control by adopting the regulations that are being proposed here today. My own experience tells me that where Canada leads, others will follow.

The decisions made in this committee will have an impact not only on the one-half of one percent of the world's population that lives in Canada, but on billions of people on other continents, in Europe, Asia, Africa, and the rest of the Americas.

If Canada leads with strong public health measures, others will follow with strong public health measures of their own. But there's a dark side too. If Canada caves in to economic blackmail and gangster tactics from the tobacco industry, will that become the example for other countries to follow? Regrettably, that's true too.

• 1640

In the past week we've heard phony arguments about printing jobs that will be lost if these regulations go through. This is rubbish. This is poppycock. Common sense tells us that the more complex printing requirements of the new warnings have the potential to create more jobs in the Canadian printing industry, not fewer. Arguments about jobs being lost are nothing more than economic blackmail. The only jobs that will be lost in Canada are those the tobacco industry chooses to destroy.

I've seen economic blackmail used before. I've seen it used all around the world. I've seen much nastier versions than the comparatively mild version we've seen in Canada this week.

An example comes from the Polish situation. In 1994, the Polish Parliament was subjected to a full-court press lobby from the tobacco industry. Every trick in the book was used, including phony arguments about economic consequences. The Polish Parliament was fooled once, but only once. They came right back in 1995 with a revised legislative proposal. This became the law of Poland in 1996. They saw through the arguments the second time and laughed them off.

Now Poland has the toughest and most effective tobacco control legislation in central and eastern Europe. It's largely inspired by Canada's tobacco control legislation. The Polish Sjem, or Parliament, was burned once by the tobacco industry but quickly learned from their mistake and did the right thing in the end. Tobacco consumption in Poland, once the highest in the world, is now in rapid decline.

We've seen economic scare tactics used in Canada. There have been legislative proposals debated by this Parliament going back to near the beginning of this century, in 1904. There were other proposals discussed in 1971, 1987, and 1997. Every time the tobacco industry claimed that jobs would be lost and every time they were wrong. A World Bank report authoritatively tells us that reduced tobacco use will result in not fewer jobs but more jobs. Jobs will move from the tobacco industry, a highly automated industry, to more labour-intensive sectors.

I'm also disturbed by suggestions of witnesses from the tobacco-related unions that there's a deal in the works to weaken the regulations to appease the tobacco companies. If Gordon Wilson, who made the suggestion, is correct, then I hope as members of this committee you were as offended as I that there is a parallel system at work. We are appearing here in good faith to respond to regulations, which I am confident have been offered in good faith by the Minister of Health and his civil servants to a committee that is reviewing them in good faith. I hope you can assure us that there is no secret process at work and that democracy is alive and well in Canada.

This week you've been hearing from tobacco interests that these regulations go too far. My three decades of experience in public health work, including two decades of experience fighting tobacco companies, tell me they don't go far enough. There are loopholes of the kind that tobacco companies enjoy exploiting. I don't think it's advisable that adoption of the regulations this session be held up to fix these problems, but that the committee in its report—and I hope the committee will choose to make a report to Parliament—may wish to consider drawing attention to several matters as things the government could address in future years.

These are gone over in some detail in our written brief. I'll just refer to four highlights. One is to remove toxic constituent information from packages as determined by the International Standards Organization. These are misleading values. The committee that determines these is dominated by tobacco interests.

We also need to remove the exemption for the printing of warnings on tubes and other smoking materials. This loophole encourages the uses of boxes of tubes as tobacco advertisements at the points of purchase.

We need to remove the exemption afforded to soft packages, like this, for obligatory inclusion of package inserts. This loophole encourages the widespread introduction of soft packages in Canada. They're not in widespread use here now, but they're in widespread use in many other countries, including Thailand. I hope you are all able to read that, by the way, the Thai warning.

Another point is that the warning should be mandatorily printed on the slide, of slide and shell packages, rather than allowing an option of an insert in this type of package.

• 1645

I would hope also that your report would encourage Health Canada to carefully monitor and evaluate the application and effectiveness of these regulations and be ready to suggest further regulatory changes to ensure that these regulations are maintained and even improved as effective public policy instruments. I hope you will reaffirm your support for plain packaging, which would make these proposed warnings even more effective. It would remove the imagery that increases smoking by attracting new smokers and making smokers more reluctant to try quitting.

From my international experience, I know the decisions this committee makes today and tomorrow will have significance that goes far beyond Canada's borders. I urge you to make the right decision. Choose to protect public health in Canada and, by your example, choose to protect public health in other countries too. Choose to adopt these regulations as drafted.

[Translation]

Choose to promote public health in Canada, and everywhere. Choose to have these draft regulations passed as they stand. Thank you.

The Chair: Thank you very much, sir.

[English]

Mr. Mahood.

Mr. Garfield Mahood (Executive Director, Non-Smokers Rights): Thank you, Mr. Chairman and ladies and gentlemen of the committee.

My apologies for being a unilingual anglophone and unable to speak in French, as my colleague here, but I was not a great student, except for in the tobacco industry studies department.

I have been a spokesperson from time to time for the national Tobacco or Kids campaign. From all of the people I have had contact with on this issue, I want to compliment this committee, the government, and Health Canada for bringing the warnings to this stage. These are very impressive, and they will have the effect that Mr. Collishaw and Mr. Hagen and others have pointed out to the committee.

The comment has come forward that perhaps these warnings have gone too far. Again, on behalf of some of the organizations that encouraged these warnings...and some of you had this black box in your offices over a year ago from the national Tobacco or Kids campaign, where the national health and human service community took a shot at developing an effective package warning system. There are over 200 organizations, virtually every health profession, virtually every health and human service organization, teachers, churches, an incredible list—so long they had to take the list from the inside cover and continue it on the back cover. When you look at the list of those organizations, that's mainstream Canada and they're saying, “You're not going too far.”

So I think you can feel fairly comfortable about what you've done, and I think you should be complimented.

With respect to Canada's leadership, the recognition is already coming in. For example, in Tobacco Control, which is the professional magazine published by the British Medical Journal, already the warnings proposed by Canada are on the front cover of this magazine going to government officials and health agencies around the world. The cover story talks about Health Canada's initiative. This is extremely impressive, and again, I think the government deserves a lot of credit for that.

As you know, this was mentioned in news reports from Ireland. I happen to know personally that things are going on in Australia. There are a number of initiatives out there. In fact, there is a bill in the U.S. Senate at this time recommending or proposing that the Canadian warnings be enacted in the United States. Our country is showing leadership, and again we commend you.

For those of you who say the warning system is going too far, as the box says, “Why not tell the truth about the product?” If you have a product that's going to kill, as the World Health Organization and Health Canada say, three million Canadians presently alive...what kind of a warning would be going too far? What kind of a warning system goes too far when the product inside the package kills one out of two of all of its long-term users? It boggles the mind. Some of us who've worked on this issue, these proposals...could anyone reasonably suggest they are going too far?

• 1650

Why will these warnings work?

I'm going to back up just a second and say that the cigarette package is the core of all tobacco marketing. It's the absolute core; it's the hub of the wheel. Advertising ties to the package, sponsorship ties to the package, point of purchase ties to the package, everything ties to the package. If you impact on the package, you're going to impact on the marketing.

And to Health Canada's credit, there are two warning systems in this package: the exterior warning system with the graphics and an interior warning system, which very few people have talked about in front of this committee. The potential of it is incredible, because it mixes both risk information and information with respect to how to get off the product.

But I think it goes further. The exterior warnings deal with the nature of the risk generally and the interior warnings have the potential to go into greater detail and talk about the magnitude of the risk. So, for example, the exterior warning could talk about lung cancer, but the interior warning can tell people what their survival rates are if they get it.

Most smokers don't know that if you get lung cancer, by the time the first symptom appears, it's ball game over; it's a death warrant. This package warning system, by the interior and exterior systems, gets at this problem, a problem, by the way, that the industry had a legal obligation to solve for years. It has ignored its tort law duty to warn. Hopefully it will get into trouble some day for that through the courts.

Here's a Tylenol package; here's an aspirin package; here's an Advil warning. All of these warnings have about 200 words for a product that, by and large, doesn't kill anybody. Is this warning system extreme? It has about 200 words for all 16 exterior warnings, and that's for 20 terminal diseases and 50 diseases that cause morbidity. Is that too extreme? Not at all.

What Health Canada has done here is magnificent in terms of setting a precedent that we can take to other countries.

On the blocks to reform, the number one block is job dislocation, and Neil Collishaw has dealt with that. They can't fight it on the merits of the warning system, so they fight it on job loss.

There's another block and it comes up all the time. It's the belief that somehow or other you can cut 45,000 deaths a year, you can move to a tobacco-free society, you can protect your kids and, magically, you can have a healthy tobacco industry at the same time. This is absurdity. Of course, some folks are going to be impacted as you cut the epidemic. The presumption is that Parliament is smart enough and can show enough leadership that in fact they can rise above that and recognize there will be some job dislocation. I don't believe it in this case, but there may be some.

Then there's the “we can't print the warnings” argument. I see generally two arguments, and I've been working on this for some time because we had to print some cigarette packages on our own, so I learned a little about cigarette package manufacture. We found out that there are of course two processes. There's the process that the industry wants you to accept and there's the process that Philip Shilton and Dick Warner came up with as an alternative.

In the first process—and I call it process A—most printing presses, whether they're rotogravure or whether they're litho, have about eight colour stations or ink stations, as I understand it. I'm just a layperson. The tobacco industry uses up most of those on their packaging now with their spot colours, their specialty colours. And then when Health Canada comes along and says, “We want to add on four colours”, they say “We don't have the equipment to do that; we don't have the capacity. And not only that, we have a trademark right in law so that you can't make us do it.”

Along comes Philip Shilton and the other experts and they say, “Hold on. We can print these warnings with seven or eight colours. All you have to do is change the formula, but it can be done. You end up with the same product, but the fact is you can make the change”.

• 1655

And because, of course, they can't win on the jobs issue if they make the changes, the tobacco industry says, “Hold on. We won't make those changes.” So they hold the printers out as hostage, and they do it on a phony argument about trademark law. The industry does not have a trademark right to put that trademark on cigarette packages, any more than a gun manufacturer has a trademark right to put their trademarks on Saturday morning television with the cartoons for kids. They cannot do that.

So if Parliament decides you must do it this way, they do not have a trademark right to block that reform. So for all of these reasons, the job loss issue is a phony one as well.

Mr. Chairman and members of the committee, we too endorse the recommendations that Mr. Collishaw has pointed out.

I want you to take a look at these. This is where tobacco marketing is going.

By the way, we've counted these, so we expect them to come back. These are Joe Camel collector's packages, and you'll see there are motorcycle models for tobacco use. There are golfers: Joe Camel, the golfer; Joe Camel, the smooth cat hustling the young ladies.

The fact is this is where packaging is going. I've had people stop in shock. They just can't believe that tobacco marketers could go that far to target kids. What they're bringing out now are packages that have pictures on the front that will make this product a cool product that is breaking new ground.

You've seen it in the New York Times; you've seen it in the National Post. A whole lot of places have published features on this. When you go to plain packaging, you take away this ability for the industry to get at your kids and at other people's kids.

So we are going to ask you, and this is absolutely critical, to pass the regulations as they are, without amending them. That's the first request certainly from our organization.

The second thing we ask you to do is to make a second group of recommendations that will reaffirm the support for plain packaging, that will ask Health Canada to report back to Parliament on some of the loopholes and some of the problem areas with respect to the packaging.

If someone wants to ask for details about those loopholes and whatnot, I or anyone else here will be glad to go into them.

It's just a recommendation that Health Canada come back and fix these problem areas within a reasonable period of time. That will keep this issue and the focus on the quality of the warnings, the impact on the industry, right out front where in fact the health community and the health committee can watch it.

Those are our recommendations. I thank you for being so patient with me. I welcome any questions, except the questions I can't answer.

The Chair: Thank you very much, Mr. Mahood.

We'll go on. Mr. Mills, please, the first questioner.

Mr. Bob Mills: Certainly, I think those recommendations are ones that I hope the committee will consider as the next step, moving on from the point we're at.

I guess I'll just come back to a couple of points and refer back to one of our previous speakers.

Having seen tobacco 10-packs being handed out in schoolyards in many countries in South America and in Asia, I guess it convinced me that there were some fairly major problems with that industry, and fairly much a lack of conscience. I saw them giving them to 8-, 9-, and 10-year-old kids and handing them out for free. I can tell you it didn't do much for my opinion of tobacco companies.

• 1700

Mr. Egerdie mentioned.... Of course the rest of you wouldn't know what town he was talking about. He was talking about Red Deer, Alberta, and the program Operation ID. I assume he was doing that for my benefit. I just want to get on the record that Operation ID phoned the school units, they phoned the RCMP, they phoned the health units, but they really didn't tell them who was phoning. They told them about how they were going to prevent the sale of tobacco to kids; are you for that? Well, yes, obviously a school board or a health unit would be for stopping kids smoking. So they got their foot in the door and obviously had a program.

We should know who pays for Operation ID and who operates it. It's the cigarette companies who operate it 100%. Operation ID, which he was talking about, is promoted by the tobacco companies. When we found this out, we got 39 organizations together, all of those school boards, health units, etc., and we asked some pretty hard questions. Needless to say, 100% of those people were very suspect of having the fox in the henhouse, which is what Operation ID is all about.

I was very interested to hear him say—and it's on the record—that the RCMP are now supporting that program. You'd better believe that's a phone call I'll be making when I leave here, to find out if our local RCMP have changed their mind. I know the commanding officer very well and I doubt very much that in fact that was a true statement made to this committee. I'll sure find out if it was. It would be very suspect, because they were opposed to the program, as every other community group was, including the chamber of commerce from our city.

I just want it on the record, Mr. Chairman, that I believe a witness gave very slanted testimony a few minutes ago.

The Chair: Mr. Mills, will you let us all know about that? I'd be curious, especially on the RCMP side.

Mr. Bob Mills: Yes. I'll check the RCMP out right away. I'm sure the commander will be quite interested to know they've changed their position.

What do you think of that kind of...? Obviously you guys have had lots of experience being involved with the tobacco industry and what they do with kids. Their halo, I believe, is a different colour from most people who claim to have a halo. Could you just relate that to us?

Your recommendations, as far as I'm concerned, are right on. They're the next shoe that might fall, I guess you might say.

Mr. Garfield Mahood: I think Mr. Collishaw is chomping at the bit to answer that one.

Mr. Neil Collishaw: Thank you very much, Mr. Chairman.

It's not only in Red Deer where this program has been promoted. It's been sold successfully to people like Mayor Luzhkov, the Mayor of Moscow. Similar programs are now in operation throughout central and eastern Europe and in many other parts of the world, all with the tobacco industry behind them.

There's a theme that runs behind these Operation ID programs. We hear a lot about their great emphasis on this behaviour of buying cigarettes being against the law. Rarely do we hear that if you smoke this stuff, you might actually get addicted, you might get sick, and you might get killed from using tobacco. The great emphasis is that it's illegal for kids to smoke. It's all right for grown-ups to smoke, but it's illegal for kids to smoke. The health message is lost entirely, and of course that is the entire point.

We want to be communicating information to our kids that will actually get them to come to a sound decision that they don't want to smoke cigarettes because they don't want to get sucked into a lifetime of addiction by people who are trying to suck them in. Instead, they get some other message about this being some delightful, if illegal, pleasure. I'm sorry to say it's being sold successfully all around the world. Public health simply can't keep up with the speed at which the tobacco industry is able to get these programs implemented in many countries.

The Chair: Thank you very much.

[Translation]

Mr. Ménard, please.

Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ): I have three brief questions. Firstly, what is Poland doing that Canada is not?

Secondly, Mr. Collishaw, you mentioned four points on which you would like to see the government go further. I would like you to go back to the second point, I did not understand it very well.

Your first point concerned the suppression of information on toxic components. I understand that. You also said that the exemption on tobacco products should be eliminated. I did not understand that point. However, points 3 and 4 were very clear.

• 1705

My last question is for Mr. Garfield Mahood. You say that there should be a second group of regulations on plain packaging. You know that this committee did produce a report on plain packaging in the past. What type of change would you like to see?

[English]

The Chair: Mr. Collishaw.

[Translation]

Mr. Neil Collishaw: In response to the first question, I would like to specify that Canada is still ahead of Poland, but since the beginning of the 1990s Poland has taken a giant step in spite of numerous difficulties. In 1994, there was a lot of lobbying against that country's efforts to restrict advertising and introduce other measures to control smoking. Now in Poland there is a partial ban on tobacco advertising. As for the remaining advertising, the country demands that it include a health warning and the health warnings to be found on cigarette packages were inspired by the warnings we used to have on our packages in Canada.

In Central Europe, Poland is far ahead of other countries, but Canada, especially with the passage of such a regulation, will always be ahead of Poland in this area of public health.

As for the future of these regulations, I wanted to draw your attention to the softness of the packaging. At this time there is an exemption. The current regulation does not require that there be information within the package for practical reasons. It seems that it would be too difficult to include such a notice.

Mr. Réal Ménard: That is true for the small packages.

Mr. Neil Collishaw: Yes, it's true for the small soft-sided packs.

Mr. Réal Ménard: Yes.

Mr. Neil Collishaw: I think we may be able to find a way of doing so in the future. Perhaps other studies are needed but we could include a brief information notice between the plastic and the paper.

The danger of this exemption is that even if this is not a very popular format in Canada at this time the fact that there is a loophole may encourage the massive introduction of this format.

Could you repeat your third question, please?

Mr. Réal Ménard: The third question was not addressed to you but to your colleague, who spoke of a second group of regulations on plain packaging. I would like to obtain further information.

[English]

Mr. Garfield Mahood: Through you, Mr. Chair, thank you, Monsieur Ménard.

With respect to plain packaging.... And by the way, with respect to all of the warnings that you were sent a year ago, these are plain packaging, packaging that is stripped of what industry calls “trade dress”; they were stripped of all design and graphics. A plain package like this simply prevents the industry from using the package to market.

Let me tell you, if I may, how fast these reforms spread. I gave a speech in Warsaw, Poland, five or six years ago as a result of an invitation from the United States National Cancer Institute. Dr. Zatonski, who heads the Maria Sklodowska-Curie Memorial Center and Institute of Oncology in Warsaw, took a package of Camel cigarettes that I brought to Warsaw into the parliament the next day, and within 24 hours those packages were moving through the Polish parliament, podium to podium. Within a couple of years these things were going through the system.

• 1710

The significance of this is that in Eastern Europe there was no money for cancer organizations, heart organizations, or lung associations, and consequently, with no information about the state-supplied tobacco in a lot of the formerly communist countries, there was virtually no information about tobacco risks. With one set of warnings going on Polish packages, they knocked consumption down about 4%. That's huge when you're talking about populations of millions of people who are addicted.

The Canadian warnings will travel like that. If you pass the plain package reform—and again we're recommending that you pass the regulations as a whole so there are no delays, but if you go above that and recommend that we come back and look at the plain package reform and look at the four other loopholes and problem areas that Neil has talked about, this will enable us to take that leadership and go even further.

You see, one of the things that people in the tobacco control community around the world have trouble with is that we're talking about a comprehensive plan to face an epidemic of deaths, which in the world health community it's predicted will kill 500 million people presently alive. You don't turn something like that around with a package warning system or with a ban on advertising. It's a comprehensive plan.

The problem is, you pass one part of the plan and then the industry waters it down. And people wonder why kids are still smoking. You have to do the whole, comprehensive plan. Plain packaging is one. Getting rid of “light” and “mild”, which is what you're getting at when you start to look at those fraudulent ISO numbers on the package...that has to be fixed. That's another major area we have to go into, and the advertising ban, the sponsorship ban. If you do all of the comprehensive plan, then you can call the health community in ten years and ask why it isn't working. But we have to do all of these changes.

We've mentioned three or four that we hope you will ask for in a separate report. We hope you'll ask Health Canada to come back and talk about them after this committee has finished with this issue for the time being.

The Chair: Thank you very much.

We're moving on now. We're conscious of the time, in terms of rapidly running out of it.

Ms. Wasylycia-Leis, please.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson. I'd like to pursue this discussion a bit further, the idea of a comprehensive plan dealing with something as serious as the high rate of smoking in our society today.

Looking at the last group of presenters' comments at face value in terms of the concerns they expressed about lack of an education program and other measures—notwithstanding Operation ID. Who knows what that's all about. But taking it at face value, the thought of what is in place from government in terms of measures to deal with every aspect of this problem, I think some of us around this table are expressing a frustration of not having a sense from government about how we're dealing with each of those elements, whether it's price control, whether it's advertising, whether it's packaging, whether it's suing the tobacco companies for health care costs. On each of those fronts we experience frustration.

We've had the frustration of Bill S-13 going through the whole process and then being dropped because it didn't have a royal proclamation or whatever. We've dealt with the frustration of these promises in the elections around money for education and prevention and not seeing it spent. I think what we're hoping for out of this is.... This is clearly one part of the whole issue, and it would have to be supported, but how can we push government to advance in each of those other areas?

I wouldn't mind a general comment on that if there's time, but I'll zero in on one question. That is the question of the money for education and prevention, the $100 million promised over five years. As you know, I've asked in the past about why that money hasn't been spent and when it will be spent. I have a feeling I'll be told that the money will all go toward the packaging regulations.

My question to you, and I guess to Les, since you actually state in your paper, “I can't think of a better medium than the package itself”, in terms of education prevention, is this: is it acceptable that all the money promised by this government in the last couple of elections around education prevention should go toward the regulations of packaging right now and we forget about everything else?

The Chair: Mr. Hagen, please.

• 1715

Mr. Les Hagen: Thank you.

I've been reading the testimony, and I know that's a very consistent question on your behalf and a very good one.

The Chair: Ms. Wasylycia-Leis is very consistent.

Mr. Les Hagen: I think the reality is that there is not enough money—there never has been enough money—to appropriately deal with this epidemic. The more you can help the health community to get that message across, I think the better off we'll be.

We've seen examples from the U.S., from California, Massachusetts, Florida, Oregon, and other jurisdictions that have invested significantly in tobacco reduction, and they're already reaping the rewards. Why isn't Canada pursuing the same objective? It's a very good question.

Mr. Garfield Mahood: Through the chair, the fact is that that amount of money is not going to have a significant effect, no matter what it's spent on. It's simply scratching the surface in terms of what the best practices suggest are required for tobacco control. So whether it's spent on enforcement or on a little bit of television advertising on one flight over a couple of months, it's not going to have that kind of impact.

By the way, here at the table you have the person who wrote the comprehensive plan I think for the World Health Organization. So you have an expert in that area. Forgive me for being self-serving, but I gave the plenary address at the world conference in Beijing on the comprehensive plan.

One of the things I said at the time was that we're not going to turn this around until kids.... People think—and this is a favourite subject for all health professionals working in this area. A lot of people, legislators, health educators, or just parents, think that if you target kids you're going to get your results. In the health community we've been trying to tell Parliament that if you target kids, it won't work. Kids aspire to be adults. Kids don't aspire to be kids. Kids watch what adults do. They watch the interaction. They watch what's going on in the adult community related to tobacco. So in fact this is one of the best things you could do to send a message to kids that adults are finally taking it seriously.

So this is actually something that's going to impact on kids. Not immediately. These things have their effect over a period of many years. But this starts to send a message to kids that adults are finally treating the issue the way it should be treated.

If you want kids to respond to any comprehensive plan, remember two things. Not only do you have to put good information into the system—that's what this is about—but you have to take the disinformation out of the system. And that's where you haven't dealt with it with your response to sponsorship.

How do you tell a kid that adults are taking the problem seriously when they have Players billboards up on every billboard across the country with supposed racing team models, adult athletic behaviour being associated with the Players brand? That's the disinformation you're putting in the system, and you have to get that out.

The second thing you have to do is get rid of the hypocrisy that goes on between adults over this issue. When you start to strip the system of the hypocrisy...and I'll use an example. Up until just recently you could go into any pharmacy in the country and buy cigarettes—in a health care facility. Kids would say, if it was as bad as they say it is, they wouldn't allow it to be sold in pharmacies. Adults didn't get it and kids did.

So you have to do the two things: get the disinformation out and get the hypocrisy out. When adults start doing this, that's when you'll start to impact on kids.

The Chair: Thank you very much.

Mr. Szabo, please.

Mr. Paul Szabo (Mississauga South, Lib.): The previous group represented the convenience store operators. I think collectively you've dismissed their arguments. I wonder what you suggest should be the message to convenience store operators given the momentum of tobacco reduction I mean, ultimately their sales, 25% to 40% of their revenues or profits, whatever figure they were giving us, are going to disappear, along with their livelihood, etc. This is almost an inevitability.

• 1720

This is not a new issue. We did the plain packaging back in 1994, I think, and all of these issues came up and all of these same arguments came up. What would you recommend the Government of Canada say to those who are engaged in and have dependencies on industries that maybe are under attack?

Mr. Neil Collishaw: I think it's important to realize a couple of things. The first is that nothing is going to change magically from one day to the next. Even in the best of circumstances—and I don't think we are yet to the best of circumstances from a public health point of view—we are never going to see more than a gradual decline in tobacco use in this country. In Canada we had around six million smokers at the end of the 1990s. In the mid-1960s we had around six million smokers. It went up and it went down.

It really only changes slowly, and because it changes slowly, there is going to be time for wholesalers and retailers and everybody else in the distribution chain to adapt to changing economic circumstances. Smart businessmen are going to see those trends and are going to adapt to change. The ones who are grimly holding on to the past might not do so well. That's business.

Mr. Paul Szabo: I think that's probably a fair assessment of what would likely transpire.

There are some open items, and I'm curious about why the group of you haven't come forward with proposed amendments to the regulations to address those items. One is the issue of the slider versus the enclosures and which is preferable. If you were going to do this job.... Shouldn't we just say that there isn't an option, that we should do this...?

Also, the exemption on the soft packaging seems like a loose end. Why is that? It doesn't make sense. Shouldn't we have an amendment or propose an amendment to the regulations, or has Health Canada responded?

There's the conflict between the ISO content numbers. There are the old ones on one basis and there are the new ones on a totally different basis. Now both are going to appear on the package. It doesn't seem to be moving in a clarifying direction. It seems to be a confusing direction. Why aren't you recommending that they should go on the most current reliable standard? Why don't we have those things?

I'm sure there are other issues, like the trademark disputes and the printing disputes. They're working on these things.

But the last item, and probably the most important to me, is that it sounds like you are still unequivocally convinced that plain packaging is ultimately the way we should be going. That issue is parked. I think what you've done is you've asked us to somehow, through some instrument or vehicle, in addition to addressing the regulations before us, make a supplementary or addendum statement to the effect of “we want this plain packaging issue to come back”.

The other issues, these loose ends, are open to the extent that you feel maybe a change to the regulations as proposed is not appropriate at this time, that there's some work to do, but you want these things to be open. I think that's worthwhile, and I would suggest or recommend that we do look for that opportunity, but to make this a good start, why don't we change the regulations now for everything that you think we should do?

Mr. Garfield Mahood: Through the chair, Mr. Szabo, I think what you do is a quick cost-benefit analysis on something like this. Public health sometimes involves interface with the political environment.

• 1725

If we had changes to these regulations now, given everything we've learned about the regulatory process over the years, and in particular right now, these things could be delayed six months or longer. If the industry had its way, it would knock them off the rails completely. So if you implement the warnings as quickly as possible and get them on the package as quickly as possible, you'll literally prevent hundreds, perhaps even thousands, of deaths. Again, that's going to happen in the future, but what happens with your smoking in the next six months? You can have an impact.

The second thing is that we're very aware of this. These things are already moving around the world. When you're dealing with the populations of countries elsewhere, you can bring this back and have your arguments about fixing these right now, before you move ahead, or you can have your benefits internationally by moving quickly with this precedent and then coming back and fixing this at an appropriate time.

For example, if you had an addendum in your report—you called it, Mr. Szabo—asking for the soft-pack exemption to be looked at and commented upon—in other words, the committee would look at it in the future—I don't think the industry would invest as much money and make as much of an effort trying to exploit that loophole if they thought you were going to come right back and look at that. It's the same with a couple of the other problems. The industry might not try to exploit that loophole if they knew the health committee had taken a good look at it.

We think you would be further ahead if you moved right away on the regulation.

The Chair: Thank you, Mr. Mahood. You raise a very good observation. I think it puts it nicely in perspective.

Ms. Wasylycia-Leis, I think this is what you were getting at, wasn't it?

I'm of the view that we should leave it in the good hands of the parliamentary secretary for now, to interface with the health people and come back with a recommendation as to how best to proceed. I think you indicated, and I'm in agreement, quite frankly, we should take a harder look at this.

Mr. Jordan.

Mr. Joe Jordan (Leeds—Grenville, Lib.): Thank you very much, Mr. Chair.

As the person who kind of got very technical on the packaging issues, I feel I need to sort of defend myself a little bit.

Mr. Mahood, I thought you summed it up very well. I'm going to quote Mr. Collishaw, who said, “The only jobs that are going to be lost are the ones the tobacco industry chooses to destroy”. I think you've kind of focused the attention where it belongs.

My understanding of the packaging issue we face now is that any of the mock-ups that use the four colours on the graphics are changing the process in which the tobacco companies' trademarks are made, in the sense that they're allowing the layering of transparent versus opaque packing. We can get into all the technicalities we want, but first of all, have you found tobacco companies to be cooperative on these matters, in your experience?

Mr. Garfield Mahood: We understand from Dr. McKeage, who is now the number two lady at the World Health Organization running the tobacco program, that the tobacco monopolies in some of the Asian countries are cooperative, because if the government says it wants a problem fixed, they cooperate.

Mr. Joe Jordan: Are the ones in North America trying to help us here or not?

Mr. Garfield Mahood: At every stage—

Mr. Joe Jordan: They block.

Mr. Garfield Mahood: —the tobacco industry...especially on the kids smoking issue. Of the new smokers coming onto the market, 85% to 90% are children and adolescents. If the industry doesn't get the kids, they don't get anybody at all.

Mr. Joe Jordan: Perhaps we can move along here, because the answer I was looking for is, they're not.

Mr. Garfield Mahood: They're not.

Mr. Joe Jordan: In fact, let me quote a letter from a Mr. Parker in response to my line of questioning to the chair of this committee:

I can also confirm, on behalf of our members with whom I've discussed the issue, that if Minister Rock's intention through these regulations is to order the companies to alter their trademark colours, it will be contested through every available legal recourse.

So plain packing would be great because we wouldn't get into the trademark issue. Do you know of a way to move to plain packaging that wouldn't have us end up in court over the trademark issue?

• 1730

Mr. Neil Collishaw: I'm no lawyer, and I will defer to legal expertise on this question, but I can comment from my experience in the World Health Organization, where the same issue was raised at the international level. When I was with WHO we went to our sister organization, the World Intellectual Property Organization, which administers the International Convention of the Protection of Industrial Property. This convention governs trademark use all around the world.

We have a letter addressed to the director general of the WHO from the director general of the WIPO stating categorically that the convention covers only the registration of trademarks. Under that convention, people can register trademarks, but the use of the trademarks is really the prerogative of the national authorities. If it is deemed by governments to be in the public interest to restrict the use of trademarks, there is nothing in that international law that prevents them from doing so. It is the oldest international law that governs international trademarks. Other ones have been constructed, but in a way to conform to that one.

Mr. Joe Jordan: We abandoned the plain packaging initiative before because of the feeling that we could not make that case. Is that your understanding?

Mr. Neil Collishaw: In the courts?

Mr. Joe Jordan: Yes.

Mr. Neil Collishaw: That's not my understanding. My understanding is that they threatened to pull plants out of Quebec at a sensitive time.

Mr. Joe Jordan: Maybe we could get some clarification from Health Canada on that. My understanding is that the trademark litigation was the killer there.

The Chair: There may have been, as you know, a number of reasons—some political, some economic, some other reasons. We can try to assemble as much information as we can, and we'll do that between now and tomorrow.

Mr. Garfield Mahood: We've certainly given the government legal opinions from some of the top legal scholars literally anywhere that if the Government of Canada wants to proceed to plain packaging, GATT and NAFTA will not be blocks. That doesn't mean they won't litigate. That doesn't mean they won't make a good case and put on a good show. But when the dust settles, our advisers say they will win.

Will the tobacco industry sue? The tobacco industry is litigious. Some of the parent companies are located in the United States. They will sue, if for no other reason than to slow things down. To give you just one example here in Canada, just by litigating over the Tobacco Products Control Act, they blocked the world precedent-setting black and white Canadian warnings. They prevented those warnings from being on packages for about three years in this country. They can slow things down by litigating, and they will.

Mr. Joe Jordan: I'd just like to pick up on that point. If we could come up with a way of doing the 50% graphic that took away their trademark argument and got these labels on the packages as quickly as possible, would that not be worth exploring, at least?

Mr. Garfield Mahood: I personally would not—

Mr. Joe Jordan: Are you not afraid of the trademark issue at all?

Mr. Garfield Mahood: I'm not afraid of the trademark issue. Does that mean that option would be an attractive one? I'm not sure. In my opinion, there's only one route to go right now, and that's to approve the package of regulations as they exist. Anything that would knock that off, I certainly wouldn't embrace. But my colleagues have their own opinions.

The Chair: Okay. Thank you, Mr. Jordan.

Mr. Joe Jordan: Thank you.

The Chair: Thanks to the panel.

We will move on to Small Guys Tobacco Group, Mr. Colm O'Shea. I will ask Mr. Mills to chair this part of the meeting because I have another commitment.

Before I leave, I want to remind the committee that we are meeting tomorrow. There will be a number of witnesses as a final wrap-up. The meeting will begin at 3:30 p.m. We will have a vote that afternoon as well, so we'll want to get all of them in . We'll meet Wednesday from 12:30 to 1:30 p.m. to pull this together and wrap it up. Are there any questions on that? Great. Thank you very much.

Mr. Mills, would you take the chair, please.

• 1735

The Acting Chair (Mr. Bob Mills): If we could start, please, I'll ask Mr. O'Shea to make his presentation.

[Translation]

Mr. Colm K. O'Shea (Small Guys Tobacco Group): Thank you, Mr. Chairman and members of the committee. I will make my comments in English. I am learning French but I am still not an expert.

[English]

Thank you, Mr. Chairman and committee members. It is an honour to be making this presentation to you.

Today represents the culmination of many months of work on a very important issue, and it is my hope that these proceedings will allow us to move toward a fair and equitable outcome.

My name is Colm O'Shea, and I am representing our family's company, House of Horvath and the Small Guys Tobacco Group. I want to tell you about our organization and the industry we represent in order to set the stage for my comments on the proposed regulations.

Given the fact that this is the last presentation of the day, if not of the hearings, I don't think I will be disappointing anyone when I suggest that my comments will probably not take the entire time allotted. But this is not to say my comments aren't important. These regulations are of critical importance to my industry and to the many family businesses in it.

The Small Guys Tobacco Group manufacture and import cigars and pipe tobacco products. As a group we represent a mere one-half of one percent of the total Canadian tobacco industry. On an industry pie chart we would look like somebody dropped a thread.

But these regulations are built and designed for the other 99% of the industry, for organizations that have millions—if not billions—of dollars in capital infrastructure and administrative capacity. They are not built for small, family owned and operated businesses like ours. We don't have production runs of millions of units. We make many of our products by hand. Regulations like these are a serious impediment to a business our size.

The Small Guys Tobacco Group agrees with and supports the government's objectives. Teen smoking should be reduced, if it can't be eliminated.

The issue for us is not about reducing the health impacts of tobacco. Our issue is that the aim and focus of these regulations is significantly off target when it comes to our little industry for the following reasons.

Teens do not smoke cigars. The image of a skateboarding youth smoking a cigar is as incongruous as a senior citizen riding a skateboard.

Canada's per capita cigar consumption is amongst the lowest in the industrialized world. For example, Canada's per capita consumption rate for cigars is a quarter of that of the U.S.

Cigars properly smoked are not inhaled. The National Cancer Institute of America indicates that the vast majority of cigar smokers do not inhale.

Cigar use is occasional. The vast majority of cigar smokers smoke fewer than three cigars a month—not a day, not a week, a month.

Our product is a lifestyle product. Sales of cigars ebb and flow relative to broad lifestyle trends, and currently the dominant trend is away from cigars and our sales trends reflect that. The National Cancer Institute of America supports this claim, referring to cigar products as being less addictive than cigarettes.

The final reason is the compliance capacity. The ability of our industry to comply with the administrative requirements of the regulations is extremely low.

For these reasons and others, we urge the committee to make very minor amendments to the regulations, as I have detailed in my handout. I do have this handout, and if you don't mind, I'll give it to you when I finish instead of breaking at this moment.

• 1740

We think our industry is distinct from the cigarette manufacturers, and we think the regulations should go further to reflect that distinction.

Our proposed amendments will do nothing to alter the overall objectives of the regulations. They will simply make it easier for small, family owned businesses to comply. Nor do we as an industry seek to avoid what we have long held to be Health Canada's responsibility, that is, to inform and educate.

We are seeking the following amendments.

First, we do not want to use graphics on our warnings. These graphics were designed for, and, I would suggest, from the conversations I've listened to here today, are most applicable to cigarette smokers.

Second, we do not support shock messages on our packaging, but rather would support a campaign that promotes positive messages about the characteristics of cigar products.

Third, we want the flexibility to make the shape of the warnings consistent with the shape of non-standardized and international packaging. This will enhance both the flow and overall legibility of the contents of the warning.

Fourth, we want the constituent-testing ceiling raised to 10 million units. Any other ceiling imposes huge costs on our members without any significant benefit for Canadians.

Fifth, we want the sales reporting requirement to be made an annual requirement instead of a quarterly one.

Sixth, we want the other reporting requirements that are not applicable to our sector to be withdrawn, as they would represent unnecessary work for our members and the government, with little or no significant benefit to Canadians.

Cigars, cigar smokers, and the group I represent—small importers and manufacturers—are very different from both cigarette smokers and cigarette manufacturers. In general, my company and the other small companies I'm representing here today are outside of your target. We are the mouse behind the elephant. The gun you are aiming at the elephant—in the form of the regulations—is making the mouse very apprehensive. We run the very real fear of being trampled underfoot.

In conclusion, we are very concerned that the proposed regulations are going to seriously harm an industry dominated by small, family owned enterprises without having any noticeable impact on the health of the target group in question, that being namely teenage cigarette smokers. From my perspective, the important thing is, if you're going to regulate, regulate us in a manner that is fair.

The Acting Chair (Mr. Bob Mills): Thank you, Mr. O'Shea.

Are there any questions?

Mr. Joe Jordan: Mr. O'Shea, I'm just wondering, since you're importing various shapes of product, and there's no consistency there, could this not be addressed through some kind of sticker that could be affixed?

Mr. Colm O'Shea: That's in fact the level we're speaking of right now.

However, in just our little outfit ourselves, we do bring in, I think, a little over 160-odd different shapes and sizes. They range in size. We are planning on putting a sticker on there, but of course these are international packages, and the gentlemen from the WHO would probably understand that these are standardized packages we just import. The Europeans make a package that they can sell to the world market. And yes, a sticker would be affixed. In fact, we do that today.

What we're asking from our small-industry point of view is that the message go on the package, but that the message also provide some integrity on the contents of the box itself. We have to obviously represent how many cigars are in a package. I guess Industry, Trade, and Commerce or Customs and Excise would require that information. They also have to know the country of origin. So, again, as I say, if you get a rigid sticker that just plops on a box, that may hide information that's important for different government bodies.

The Acting Chair (Mr. Bob Mills): Yes, Mr. Proulx.

Mr. Marcel Proulx: Good afternoon, sir.

If the regulation stays as it is, where at a million you go into additional expenses, how much money would that millionth cigar cost?

Mr. Colm O'Shea: I understand it to be—and this is a Health Canada estimate—somewhere in the vicinity of $5,000 or $5,600 per brand.

• 1745

Mr. Marcel Proulx: What difference would there be if the reporting was done once a year instead of quarterly? By “difference” I mean cost-wise to you as an importer.

Mr. Colm O'Shea: The information they're requesting is something we don't normally do anyway for our day-to-day business. We have shown Health Canada our sales statistics for the year and asked if that would be representative for their needs. My understanding is that they may think that's fine.

Quarterly for our outfit? It would be sort of like stopping the presses. We have one filing clerk, and they would have to compile this. Could we do it? Our little group could, but we would ask why an annual would not suffice.

I can answer that question on behalf of the other guys, smaller than us, who run software systems like ACCPAC in small and unsophisticated sales-and-invoice types of operations. I don't know if they can go with the detailed information that in fact Health Canada wants.

So if we were given at least a year, I think it could be compiled, manually, if it had to be, or if you do have a system that can crank it out, it can be done annually without very much difficulty.

Mr. Marcel Proulx: Thank you.

The Acting Chair (Mr. Bob Mills): I have one question, if I might.

Basically, you have a small part of the market, and good businessmen would like to get more of the market. Is it not possible that cigar smoking could in fact become more the in thing to do? Obviously that would be good for business.

Mr. Colm O'Shea: I can speak as a cigar man today. We did experience a boom, let's say, in the industry, but sales right now in the cigar industry are back to 1995, pre-boom levels. We had a little increase, but in the total amount of cigars sold during that period, although it increased in the premium end of things, it was relatively flat overall. So the small guys did enjoy a little boom, but it has receded.

Do I think we could change the trend? No, I don't think so at all. I mean, in one of my notes I put that we are 50% off. We've declined 50% from 1975. Do I think that is going to correct itself? No, I don't.

We are in this business because it's a family business. My family's been in this business since 1932. We sell the product we do sell in a declining market, but it's a sale that, based on the people we sell it to, is a lifestyle product. We don't perceive that the consumption rate is increasing. In fact, I'd point out that the per capita consumption rate is under five per person in this country. I wouldn't say you would want to get up and applaud, but I'll say that it's over 20 in the U.S.

So I don't know. Here we have some of the toughest warnings right now. We have the toughest and the highest tax rate in all of the industrialized world. With those two things, the warning label and the tax rate right now, we're in a static position if not a continual decline. So if 50% came off the industry in, I guess, 25 years, would I consider that another 50% might come off in the next 25 years, just by natural...forget whatever the government's doing? Probably that would happen.

When I looked at the regulations...and I'll be perfectly honest with you. When I joined the family business some six years ago my father-in-law at that time didn't know what the future was going to hold, and he doesn't know now, either. The point is, we have been constantly led, one year after the other, by changes to things that we don't control in terms of packaging.

We are lucky that we have the support of our international guys at the moment, but we don't necessarily know if that will continue. I hope the world trend is to something that's more uniform and standardized, but why take the half percent of our industry to standardize a world industry that's much larger than ours, where our sales are marginal and insignificant on the world stage?

The Acting Chair (Mr. Bob Mills): Any other questions?

Thank you.

Our next meeting is at 3:30 p.m. tomorrow.

We are adjourned.