AAND Committee Meeting

STANDING COMMITTEE ON ABORIGINAL AFFAIRS AND NORTHERN DEVELOPMENT

COMITÉ PERMANENT DES AFFAIRES AUTOCHTONES ET DU DÉVELOPPEMENT DU GRAND NORD

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, June 4, 1998

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[Translation]

The Chairman (Mr. Guy St-Julien (Abitibi, Lib.)): Pursuant to Standing Order 108(12) we are proceeding with a study of aboriginal economic development.

Today, from the Department of Indian and Northern Affairs Canada we have with us James Moore, Assistant Deputy Minister, Northern Affairs; Bruce Myers, Director, Regional Analysis Directorate, Northern Affairs; Fred Hill, Chief, Socioeconomic Policy and Analysis, Northern Affairs; and from Canada Post Corporation we have Ed Miller, Director Operations, Northern Services; Édouard Larocque, Manager, Transportation Operations Group, Northern Services, and Frank Kearney, Air Stage Reporting, Northern Services.

I would invite Mr. Moore and Mr. Myers, after him, to go ahead with their presentations.

Mr. James Moore (Assistant Deputy Minister, Northern Affairs, Department of Indian and Northern Affairs Canada): Thank you, Mr. Chairman. Good morning everyone.

[English]

Good morning, ladies and gentlemen. This morning we have with us, as you have introduced, Mr. Chairman, two officials from the Indian and northern affairs department who have the most expertise on this topic, the northern air stage program.

They have put together a presentation, which is a documented presentation. We don't propose to go through all of it, that is, cover every word—I think that would take too much of your time—but if you agree, I would like to invite Bruce Myers to at least cover some of the highlights of this document for us.

[Translation]

The Chairman: Agreed.

Mr. Myers.

Mr. Bruce Myers (Director, Regional Analysis Directorate, Northern Affairs, Department of Indian and Northern Affairs Canada): Thank you, Mr. Chairman.

[English]

Touching first on the historical background section of the document that you have, I will note first of all that there's a 25- to 30-year history to the federal subsidization of the air delivery of food—especially perishable food—and other essential goods to isolated northern communities. We define “isolated” as a community without year-round surface transportation access to the sources of supply for these goods.

The need to address the problem of very high food costs in isolated communities, in large measure because of the relatively high cost of the necessary air transport mode, became particularly apparent in the far north through the 1950s and 1960s as people, primarily aboriginal people, moved increasingly away from a full-time hunting and gathering way of life into permanent communities. With that transition, of course, came increasing reliance on imported food for a significant part of residents' diets.

The foundation of the current program involving the postal system as the intermediary, if you will, between consumers in isolated communities and the air carriers servicing those communities began in the late 1960s in far northern Quebec. By the mid-1980s, the subsidy, at that time hidden in the books of the post office, had reached approximately $20 million.

The subsidy of course consists essentially of the difference between Canada Post's costs of paying air carriers to transport what we call “food mail” and the postage revenue collected by Canada Post from the southern suppliers placing these goods into the mail system.

In 1991, the government dispelled the long-standing fears of isolated northerners that the program might be cancelled at any time when, in 1996, it announced a long-term commitment to the program, with stabilized funding capped at $15.6 million per year.

Mindful that growing aboriginal populations in isolated communities would mean predictably growing demand, particularly for nutritious perishable food, the government also announced in 1996 that it would look to program cost-sharing from territorial and provincial governments to avoid having to increase postage rates in order to manage increased volume within a substantial and permanent but capped federal program budget.

Next, there are just a few points I'd make in the section called “Program Changes Since 1991”, which is the time when our department became responsible for the program.

Instead of applying the funding equally to all types of goods, a larger share of the funding has been focused on nutritious perishable food. In 1996-97, about 80% of the program funding was applied to such nutritious perishable foods. We also made the service available to all isolated northern communities in Canada in October 1991.

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With respect to postage rates, we also provided a uniform rate for perishable food shipments to eligible destinations. This decision to provide that uniform rate for perishable food in particular has shifted the benefit of the funding, if you like, from the provinces, which are located closer to points of supply, to the most remote communities in the territories and in northern Quebec.

The last point I will draw your attention to in that section of the report is that “foods of little nutritional value” have not been eligible for the program since 1991. That's a euphemism, if you like, for junk food. It has not been eligible. Certain high-fat convenience perishable foods, such as fried chicken, and some categories of non-food items were eliminated from the program as well, in August 1996. Tobacco and alcohol have never been eligible.

[Translation]

I will briefly address a few points on the impact of the program on food costs and consumption. To date, Mr. Chairman, the program has a proven record of reducing the cost of nutritious perishable food. However, even with this program in place, food prices are about twice as high in most isolated Northern communities as they are in southern Canada and most families find it extremely difficult, if not impossible, to purchase a healthy diet.

The food mail program, as it is popularly known, has also been effective in increasing the consumption of nutritious perishable food. Despite these increases, the consumption of fruit, vegetables and dairy products in isolated communities remains far below recommended levels and the Canadian average. The high cost of these foods is undoubtedly a barrier to their consumption.

Most of the nutrition-related health concerns in these communities arise from the low consumption of vegetables, fruit and dairy products that are the focus of this program, and from the high consumption of so-called junk food that is not subsidized under this program.

[English]

Just to conclude with the highlights of the last section, I will bring to your attention the factors that affect the future of the program.

With a funding cap of $15.6 million per year, any factors that increase either the volume of goods shipped or Canada Post's cost per kilogram will inevitably result in an increase in the postage rates that must be charged, unless additional funds become available.

Two factors are currently increasing Canada Post's costs and therefore the program cost. The user fees introduced by NAV CANADA last March are one factor. The other consists of the normal increases in demand for food and other items that one would expect—and that we have always expected—from the rapid population growth being experienced in most of the communities served by this program.

And as I mentioned before, the position of Canada is that there is a role for all orders of government and that it will seek cost sharing from the affected provinces and territories.

Consequently, unless additional funding is found for this program, an increase in postage rates or other program adjustments, or combinations of the two, will be required very shortly.

The government's position, as I said, which is in the 1996 news release attached to this document, stated that the governments concerned would be asked to become financial contributors to the program, in partnership with our continuing substantial investment in the program, in order to support the growing demand without the need to increase postage rates.

We have not yet had any indication from any of the affected territorial and provincial governments of a willingness to cost-share in this program, but we certainly have been made aware by them that they strongly support the structure of the program and its focus on nutritious perishable food.

I will stop there, monsieur le président. We are prepared, of course, to try to respond as best we can to any questions.

[Translation]

The Chairman: Thank you, Mr. Myers. Before going any further, I'd like to ask you if any of the provinces are participating in this program at this point.

Mr. Bruce Myers: No, Our department, in other words the federal government, is providing 100 per cent of the funding for this program at this time.

The Chairman: Compared to the other provinces, does the Province of Quebec and more particularly Baffin Island, benefit from 75 to 80 per cent of the amount of this subsidy?

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[English]

Mr. Bruce Myers: We have a table, Mr. Chairman, on page 6 in the English version of this report, and on page 8, I believe, in la version française, which gives you the regional distribution of the funding. There, you will see—and we mention it in the text as well—that the future Nunavut territory and northern Quebec, those two, account for somewhere around 80% to 85% of the funding used in this program.

Northern Quebec, as you can see on that table, accounted for $4.6 million in the 1996-97 fiscal year. In fact, it would account for more than that, because as you can see from that table at the bottom, there's a certain amount of unallocated expenditures, so it may come out—I haven't done the math here—at 30% or so.

[Translation]

The Chairman: Thank you, Mr. Myers. We'll go to questions. Mr. Konrad.

[English]

Mr. Derrek Konrad (Prince Albert, Ref.): Thank you very much for your presentation. I read with interest what Canada Post had to say yesterday and I wish I'd had this earlier. I would have liked to read through it.

But what happens if the provinces and territories refuse to be involved? I presume the increased cost will be passed on to the consumers or their diets will have to change.

How are negotiations progressing with bringing the provinces onside? I see that the biggest user so far is Quebec, at $10.7 million, which is what's needed to maintain, I presume, all of northern Quebec—which we were just through. Can you confirm for me that we're looking at about $17 per inhabitant annually as a cost per person?

Mr. Bruce Myers: With respect to your first question on how the negotiations are going and what will happen, in 1996 we did have a round of communications with, I believe, all of the affected provincial and territorial governments, with the possible exception of Yukon. Yukon, at that time and still, has only one community eligible for this program, one off-road community.

During those discussions in 1996 we were not able to persuade, to convince, those governments of the utility of their becoming cost-sharing partners. We have not, since then, embarked on a formal set of discussions, although we are in train to beginning that again, now with a more focused discussion.

If there is no additional cost sharing or funding becoming available through cost sharing, as we say in the document, either postal rate increases or the elimination of some goods from eligibility under the program, or a combination of both, will be required to remain within the $15.6 million cap. I'm not sure where you saw the number of $10.7 million. I think you were referring to—

Mr. Derrek Konrad: There were 90,000 people involved. I read that in the Canada Post report. There were 90,000 individuals and we have $15.6 million to work with. It works out to $17.33 if you do the exact arithmetic. Is that correct? Is that annually? Is that what's being subsidized? Is it as low as that?

Mr. Bruce Myers: I haven't done that math. The total population numbers we have provided you in the report, the population of communities utilizing this program— The utilization by those communities of the program varies quite intensely, depending on where they're located.

For example, a community in the far north, as we show in the chart, which is using the program for essentially all of their perishable food, would have a very high per capita utilization of the program. That's simply because the uniform rate of 80¢ per kilo they pay in postage— There's a wide variance between that 80¢ and, hypothetically, let's assume $6 a kilo, that an airline may be charging Canada Post. So in that community, the per capita utilization would be very high. In another community, it might be very negligible.

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Mr. Derrek Konrad: Well, I think it's important—

[Translation]

The Chairman: I'm sorry, Mr. Konrad. I think Mr. Moore would also like to say a word.

[English]

Mr. James Moore: Not to prejudge the rest of your question, Mr. Konrad, if the response you receive satisfies your question, fine. If you would like additional information that relates to per capita expenditures that we don't have with us today, we will certainly undertake to provide that information to the committee.

Mr. Derrek Konrad: I just think it's important that Canadians know what the cost is, more or less, per individual, because they're dealt with as a whole and sometimes we look at $15.6 million and it looks like a lot of money. When you say that's 90,000 people and do the arithmetic, it has a different look to it—maybe not so severe.

[Translation]

The Chairman: Thank you, Mr. Konrad.

Mr. Bachand.

Mr. Claude Bachand (Saint-Jean, BQ): I'm happy to be seeing Mr. Myers again. This matter has been a concern to me since 1993, in other words, for five years. The Indian Affairs Committee has just come back from a tour of the Far North and I've noticed that little change has occurred. I know it's rather complicated. As my colleague was mentioning, we're talking about 90 000 people and 150 communities living in areas that are practically inaccessible. I understand that food costs twice as much as it does for us, here, down south. We also deplore the fact that the per capita income in the Far North is probably only half what ours is. It's very hard to buy a quart of milk up there.

I appreciate that the chairman, Mr. St-Julien, has allowed us to take a little more time to examine this question in greater detail. If Canada Post Corporation provides $15.6 million, I understand that the territories and the provinces might not want to get involved in the program for the time being. How much would I pay for a quart of milk that sells for $3 in Iqaluit if Canada Post did not provide this subsidy? In other words, what is the percentage reduction in the cost of food in the North that can be attributed to the subsidy provided by Canada Post Corporation? Does the contribution from the Corporation mean that food prices are reduced by 10, 5 or 15%?

My second question is about service delivery. Do you have any studies on the way in which services are delivered? I have been told that before reaching Northern Store in Grise Fjord or elsewhere, a quart of milk goes through 21 middlemen, each of whom takes his profit, and that in addition to the distance, this is the main reason for the exorbitant cost of food in the North.

We have also been told that in Quebec, food is purchased in Val-d'Or, trucked to Montreal and then sent to the North. My question is quite simple. Does the department have anything to say about the way food is delivered to the North? Is anyone responsible for saying that food for the Yukon must be obtained in British Columbia, rather than in Montreal or elsewhere in Quebec, or that food to be delivered to Nunavut should come from Ontario or Manitoba, to shorten the travel distance, while the food to be delivered to Nunavik should come from Montreal and be delivered directly? Is anyone concerned about this issue, or is the attitude one of complete laissez-faire? Do the airlines or other companies decide themselves how goods should be delivered to the North?

Mr. Bruce Myers: Thank you for your questions, Mr. Bachand.

[English]

I'll do my best to try to recollect all of them and, with help from colleagues at Canada Post and my colleagues, try to give you an answer.

I believe your first question was, using a litre of milk as an example, with the retail price in Iqaluit possibly of $3, what difference there would be in that retail price if this subsidy program wasn't in place.

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A litre of milk is a handy thing to use as a description because it coincidentally happens to weigh almost precisely one kilogram. If a store in Iqaluit or anywhere else is using this program, its air mail costs for moving that litre of milk in would be roughly 88¢. It's an 80¢ per kilogram postage rate plus 75¢ a package, so ignoring the math here for a minute, it would be roughly 88¢.

So if the subsidy and this program weren't in place, instead of using the mail that store would presumably have to use whatever negotiated air cargo rate it could obtain from an air carrier servicing that community. If those cargo rates were higher than the postal charge of 80¢ from the entry point, then the price of milk would go up.

Not knowing what the air cargo rate is today, or could be negotiated at by a large company such as Northern Stores, I can't give you an answer. They would not be using the program to deliver their milk unless the 80¢ was cheaper than the rate they could get from the air carriers, so it would certainly increase. That would vary community by community, depending on what the commercial air cargo rates, which government has nothing to do with, were for those individual communities.

You asked what proportion of the total cost of delivering the goods is borne by this subsidy. I believe in the document we've told you the subsidy of roughly $15.6 million covers about 55% of the cost of delivering the goods, with the postage revenue covering the balance of the goods.

I believe you were also asking about the entry point system that applies to this program. As you know, a basic tenet of the program is that the mail must be deposited into the system where the subsidy kicks in at certain key entry points. You mentioned Val-d'Or, which happens to be the entry point the government has designated for the deposit of mail into the Nunavut region, for example, and also into Nunavik in northern Quebec.

Generally, and historically speaking, entry points have been chosen because they are essentially at the end of the surface transportation system, at the end of the road. Therefore, the northern consumer—if you like, the northern retailer—at the end of the day is covering the costs of getting their merchandise from wherever they buy it, which may be in the entry point but may also be somewhere else, to that entry point from their own pocket. It's deposited in the mail at the entry point. It's at that point, where the aircraft come into play, that the costs of flying it are shared between the consumer paying his postage and the government covering the difference between the postage and the cost.

Generally speaking, it would make common sense that if one moved entry points farther south, the cost of the program would become greater, because normally, with the distance of air miles flown, Canada Post's costs would increase, so it's given the amount of funds available for many years. The practice has been to require the entry points to be essentially as far as you can go on the road system or the surface system. Churchill is an example of an entry point for the Keewatin region, and is at the end of the rail line in that case.

If there are other parts of your question that Canada Post should comment on, we'll direct them to them.

[Translation]

Mr. Claude Bachand: May I have another turn later?

The Chairman: Yes. Before giving the floor to Mr. Earle, I would like to ask a question myself. Mr. Bachand referred to the cost of a quart of milk. I have here a document dated October 20, 1997, which indicates the cost of a weekly food basket for a family of four. For example, in Iqaluit, it costs $235, $104 for perishable goods, and $130 for non-perishables. In Ottawa, the same food basket would cost $125. Has this chart prepared by the Department of Indian Affairs been updated, and, if so, could you send a copy to committee members? It shows a number of cities and the cost of a weekly food basket in 1995. The document is dated October 20, 1997. Could we distribute this sheet?

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[English]

Mr. Fred Hill (Chief, Socio-Economic Policy and Analysis, Department of Indian Affairs and Northern Development): Yes, we did prepare that document. There will be more recent information available on that in the next while. What you have there, I imagine, are 1995 or 1996 figures for the cost of that basket. But we continuously monitor in selected communities the cost of this food basket to make sure the costs, although they are very high, are in fact reasonable given the cost of flying the food in under this program.

I know when anyone from the south goes into stores in the north they are quite impressed or shocked at the high prices. But when you look at the cost of those same products in the south, whether it's milk or something else, add on the cost of the postage, and consider the higher costs of operating retail businesses in the north, generally speaking we feel the savings from the program are passed on to consumers. There have been some exceptions in that regard, and that's why we monitor the cost of this basket selectively.

[Translation]

The Chairman: Thank you. The data date back to 1995, and I will distribute the sheet in a few minutes.

Mr. Earle.

Mr. Gordon Earle (Halifax West, NDP): Thank you, Mr. Chairman.

[English]

I want to ask a couple of questions. First of all, have the provinces ever been involved in this program from the beginning, or was it basically a federal program?

Mr. Bruce Myers: I believe it has always been a federal one. I'm not aware of there ever being provincial financial participation in this program.

Mr. Gordon Earle: Okay. I note in your presentation that the subsidy has been gradually reduced from $19 million in 1986-87 and is currently capped at $15.6 million. We all know the price of food has not gone down between 1986-87 and the current day. So what's the rationale for the downgrading of the program, the capping of the subsidy, and the expectation that the provinces should pick up on what is essentially a federal area of jurisdiction—postage?

It appears to me as almost another example of downloading on the provinces in the federal government's effort to meet its budget. Can you explain to me why the capping was at a level much lower than what was in existence in 1986-87?

Mr. Bruce Myers: I would refer you to the explanation for that provided in the government's announcement of January 1996, which we've attached to the communiqué here, where the minister of the day pointed out that the federal government remained committed to the food mail program as an essential foundation for moving toward food security in the communities, but there is a critical role for all levels of government to play in addressing food affordability in isolated communities. That was and remains, to the best of my knowledge, the view of the government.

You talked about it being an area of federal jurisdiction, and that wouldn't be for me to address, but this clearly indicates there is not that view that it's a federal jurisdiction. There's a role for all players.

Mr. Gordon Earle: I can understand the thinking that there may be a role for all players, but I'm still not clear as to why one would reduce the base of $19 million to $15.6 million. Why not maintain the base and then start sharing from there in the program? If it legitimately costs $19 million in 1986-87 to subsidize this program, how can it not cost at least $19 million now, plus probably more, which the provinces might then want to pick up?

Mr. Bruce Myers: There's been a history—I believe we've pointed it out here and in some of the charts—of fluctuations in funding. As you pointed out, it was $19 million to $20 million at one point, and shrunk down as low as $11 million, although I stand to be corrected by our own numbers.

The year before the government took the decision to stabilize and permanently commit $15.6 million as a base, I believe the amount available from the government for the program was less than that. I know our department put some additional funds in to bring it up to the level of $15.6 million.

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It is a subjective question, and I'm afraid that's the best explanation I can give to you.

Mr. James Moore: Mr. Earle, in picking up on Mr. Myers' response to your question about the fluctuations and what was motivating that, it's difficult for us to impute motivations to the government of the day, other than what has been contained in the press release. That's not an effort to evade the question.

More the point, as to your question about whether provinces and territories ought to be a part of the cost sharing of this program, increasingly—and it's been stated in the past—they should be. There's no question that the next round of consultations undertaken by the department with provinces and territories will certainly attempt to build strong arguments that this should be to some extent a cost-shared program.

Mr. Gordon Earle: The reason I expressed concern about that is that while in principle we might all agree that provinces have some responsibility because of the individuals involved living within their boundaries, traditionally aboriginal people have been considered a fiduciary responsibility of the federal government. But combined with that, we've also seen a cut in payment transfers to provinces.

So basically the federal government is giving the provinces less money to deal with, and now, at the same time, we're expecting the provinces to pick up added responsibility in a program area that they had no particular responsibility for before, and also concerning people over which the jurisdiction has traditionally been, rightly or wrongly, federal. So those things ring a little bit inconsistent for me.

Thank you.

[Translation]

The Chairman: Thank you, Mr. Hill. Before giving the floor to Mr. Keddy, I would like to ask Mr. Myers a question.

I have dug up some old notes I had when I was an MP, from 1984 to 1988, and I noticed that at the time, the subsidy was administered by the Department of Industry, Science and Technology. Strange as it may seem, the subsidy, which totals several million dollars, was part of the franking privileges of the Library of Parliament under the heading "Literature for the Blind", that is documentation for the blind and Air Stage Service Parcels. That was all part of a 31 million-dollar budget attributed to Parliament.

I'm concerned about what you say in your presentation to the effect that costs could increase if we don't get the co-operation of the provinces and territories. Is a cost increase expected between now and the fall or October? Would it be an increase of 25, 30 or 40%? Do you have any idea?

[English]

Mr. Fred Hill: I'll deal at least with the question of Industry, Science and Technology, because that is rather confusing. The reason Industry, Science and Technology appears to have been involved in this program at one point is that the Minister of Industry, Science and Technology was the minister responsible for Canada Post Corporation at that time.

This program at that time was operating, therefore, through that minister rather than through the Department of Indian Affairs and Northern Development. The $31 million figure, if that's what it was, would have represented subsidy programs in addition to the northern air stage, or food mail, program.

There has never been any department other than Indian and Northern Affairs involved in actually funding the program since it was transferred from the minister responsible for Canada Post.

[Translation]

The Chairman: Second, could there be a cost increase by December if an agreement is not reached? What percentage increase might northern residents be facing by December? Do you have any idea?

[English]

Mr. Bruce Myers: We don't have a precise figure for you, Mr. Chairman, because a great number of permutations and combinations are possible between eliminating the eligibility of certain goods, which would achieve some cost savings; increasing the postage rates across the board, which would achieve another set of cost savings; and applying different rate actions and different eligibility actions on each of the three categories of goods. So I can't give you a number.

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I can tell you, however, that if we are not able to achieve some cost sharing fairly shortly, we will need to take a rate action or a combination of the actions I mentioned to you by this fall, likely by as early as October, in order for us to live within the budget we have. If we waited until October, we would have only six months left in this fiscal year to recover from revenue the amount we'd need.

Any increases in the costs of this program historically have been judged by northerners to be significant, and they are on the record as so saying. That's illustrated by some of the charts you see in the back, where we've demonstrated the negligible difference, really, between the disposable income of people on social assistance and the cost of this food basket. It's extremely tight. Therefore any increase would be viewed, and has historically been viewed, by northerners as significant.

I would certainly suggest to you that given the cost pressures we're now facing from the two sources I mentioned earlier, northerners would view any increase as significant, and it would in fact be significant.

[Translation]

The Chairman: Thank you.

Mr. Keddy.

Mr. Gerald Keddy (South Shore, PC): Thank you very much.

The Chairman: I apologize for interrupting you in order to ask some questions myself. I live in Val-d'Or and I'm very familiar with the Air Stage Program issue. We're all very aware of the concerns of the people living in Nunavik and the North. I apologize.

Mr. Keddy.

[English]

Mr. Gerald Keddy: Thank you, Mr. Chairman.

It's an interesting discussion here this morning, gentlemen, but part of the problem seems to be that there's a monopoly on the system of getting food into the north. The system's been basically taken over by the northern air stage, or food mail, program, and the majority of it is coming in by airlift. That is the only method we have at the present time. Huge areas of the north don't have a land link, and huge areas of the north don't have any link but that air link or, a couple of months of the year, a sea link.

I was thinking about this when our committee was visiting the north, or a couple of spots at least: Kuujjuaq and Iqaluit in the eastern Arctic. I'm wondering if our direction hasn't come south to north, and at one time maybe it would have been more east to west.

For instance, from St. Anthony, or from the northern peninsula in Newfoundland, directly up the coast of Labrador, between the coast of Labrador and Greenland into Baffin Island to Iqaluit or Frobisher Bay would seem to me to be a shorter route. I realize there's only a two-month window there in the summer when you can move ships in and out of that area, but is it possible to extend that winter or extend that period of time with ice-breaking technology, and is that sealift food cheaper than airlift food?

Mr. Bruce Myers: The majority of the costs of this program, as you can see from this document, are flowing to the perishable food—

Mr. Gerald Keddy: I understand.

Mr. Bruce Myers: —which in fact, as you said, has no other option but to move by air.

Certainly we have set the postage rates for non-perishable food—canned goods, if you like—high enough to act as a disincentive to use this system and as an incentive to use the marine resupply. So certainly the great bulk of the non-perishable food is now moving by sea.

Mr. Gerald Keddy: But even perishable foods, not necessarily fruits, but certainly the majority of our vegetables—all the cold crops, such as cabbage, broccoli, and cauliflower, but especially cabbage—can be stored for a long time. Even some fruits, such as apples, we keep year-round in southern Canada. We gas ripen them. We put them to market when we want them to go to market. Surely we could do the same thing in a northern capability or a southern capability. That doesn't matter.

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I wonder if there has been any really long-term thought put into supplying cheaper food. I realize why we're doing this, and I support your initiative and everything that the government and previous governments have done here, but has there been any long-term thought as to how we can actually continue to accommodate this process and find cheaper alternatives?

I wonder—and I asked this question when we were in Iqaluit—what do they do in Greenland, for instance? Is there a similar operation there, or is there more open water? Do they have a capability to be resupplied via Iceland? What happens?

Mr. Bruce Myers: In direct response to your question as to whether I'm aware of any studies on attempting to extend the shelf life, the example you mentioned of apples is a good one. In an effort to bring a greater portion of an annual supply by the cheaper mode, the non-subsidized mode, to boot—

Mr. Gerald Keddy: Yes.

Mr. Bruce Myers: —I'm not aware of any studies. I know a number of the northern retailers do use the marine lift to bring in several months' supply of some of those goods you mentioned, the cauliflower and the apples—

Mr. Gerald Keddy: It could be potatoes, something with longer shelf life but still a perishable item.

Mr. Bruce Myers: With longer shelf life, items that you can store.

They do, however, face extremely high financing costs for—

Mr. Gerald Keddy: Storage.

Mr. Bruce Myers: —those inventories of several months, and the heating costs and operating costs for the buildings you need to keep the apples at the temperature you need in the north is very high, particularly for some of the aboriginal retailing organizations that have historically experienced difficulty in securing access to enough capital to be able to purchase a 12-month supply, warehouse it, heat it, manage it and insure it. That has acted as a barrier to going too far down the road you mentioned.

But I would agree that it's something we should look at to investigate whether, at least on some products, we couldn't extend the sealift life, if you like, of that.

Mr. Gerald Keddy: How long a window is there for the sealift? We were hearing two months. Can we extend that with ice-breaking technology, or is it open? Is it possible to leave that open year round, or impossible?

Mr. Bruce Myers: The experts on this question clearly are not at this table—

Mr. Gerald Keddy: And not at this table, either.

Mr. Bruce Myers: —but based on my 30 years of experience, based on my experience in the north, the answer is no, not ever.

Mr. Gerald Keddy: Yes, okay.

Mr. Bruce Myers: Certainly ice-breakers have been used to extend both ends of the season marginally, and I imagine at one point it would become a question of cost-effectiveness of doing it.

Mr. Gerald Keddy: Yes. Thank you.

The Chairman: Thank you, Mr. Keddy.

Mr. Bryden.

Mr. John Bryden (Wentworth—Burlington, Lib.): Thank you, Mr. Chairman. I have one quick question and then a remark.

Have you made comparisons with what's done in Greenland on this type of issue? Greenland has the same problem in that it has sea access during the summer, but certainly during the winter months many of communities along the coast of Greenland are isolated. What do the Danes do? What do the Greenlanders do?

Mr. Fred Hill: As I understand it, of course all the perishable food would also have to be flown into those communities. I believe the major retail organization there is whatever the equivalent of a crown corporation is in that country, and they have a policy of equalizing the prices through subsidy so that they are the same throughout all of those communities.

I don't believe they use the postal system to do this, but it has a similar kind of effect.

Mr. John Bryden: Can I suggest, then, that you submit to the committee at some future time an analysis of how Greenland approaches this problem, and make a cost comparison? I don't doubt for an instant that we need to do it, but maybe Greenland has something to tell us about perhaps a more cost-effective way of doing it. Is that a reasonable thing to do?

I've been all through the communities in Greenland, and I was struck by the fact that in a supermarket in the isolated communities in Greenland you had the choice of both the traditional foods—caught on the spot, if you will—and just about any food you would expect, except that it would be European rather than Canadian.

• 1215

The second thing I want to observe, and it's more an observation, is that it seems to me, from what your presentation has said, that we as a nation cannot rely on the provinces to maintain the communities on our boundaries that maintain our sovereignty. In other words, I see the maintenance of these isolated communities as a sovereignty issue. We have an obligation to make sure these communities, and these people who are willing to stay on our frontiers— Because they underscore our sovereignty, we have a fundamental responsibility as a federal government to support these communities.

I think it is clear from what you have said in your report that provinces aren't prepared to assume this responsibility if they have to pay for it. In other words, neither Quebec nor Ontario are willing to maintain their frontier, or pay any money to define the frontier of their provinces, and we get this very clearly by the fact that they are not willing to participate in this program.

So I would say to you that in that context I would be willing—and I shall later, Mr. Chairman—to move a motion that recommends that the federal government fully fund this program because of its responsibility.

You're right, Mr. Earle, I'm picking up exactly on your remarks, because I do not believe it is a provincial responsibility. The government may have taken this position to date, but this parliamentary committee exists to instruct government, if this committee agrees, that Parliament feels this is a national issue, a Canadian issue, and that we have an absolute responsibility to fully fund those isolated communities that maintain our sovereignty in the remote frontier areas of our country.

Mr. Chairman, a little later when the witnesses are done and the questions are posed, I would like to move a motion that basically contains this sentiment, which perhaps other members might be willing to support.

The Chairman: Mr. Finlay.

Mr. John Finlay (Oxford, Lib.): Mr. Chairman, I know this meeting—and I appreciate our witnesses coming, and we haven't heard from Canada Post—arises partly out of our trip, but it also impinges a little bit on our study of economic development.

I was given a document—I think we all were—from the Department of Indian Affairs and Northern Development on the northern air stage, or food mail, program, and after looking it over, I want to comment and find out, Mr. Chairman, whether— I think the charts in what you have given us today indicate that the rates go up for non-perishable items, so that the rate is lowest for the nutritious and perishable food that we feel these people deserve and need.

Now, I have some problem with the list of nutritious perishable food, not because it may not be nutritious but because it has different levels of perishability, I suggest, depending of course on the infrastructure available.

For instance, under the third bullet, “meat, fish and poultry products (fresh or frozen, including cured and smoked products—), I think that including cured and smoked products, which can be maintained at a fairly reasonable temperature for long periods of time, is something that might be looked at.

Then we have “fruits and vegetables (fresh or frozen)”. At certain periods of the year, it's not very difficult to keep frozen fruits and vegetables in the Arctic frozen.

The other one that strikes me is “bread and bread products without sweetened filling or coating (e.g. bagels, English muffins, croissants, bread rolls—)”. It seems to me that a bakery in some of these areas might handle that, and then what could be shipped is shortening and flour. I just find it a little exotic. I know pizza is very popular in this country, but maybe Pizza Pizza could be induced to invest some money in the north in order to have pizza there and produce them in the usual way.

I'm not sure about infant formula and infant cereals. We used to keep them for a long, long time in the cupboard. I'm not sure how much the perishability is here.

• 1220

Non-carbonated water is another one that raises some issues when we're talking about the environment, toxics, and so on.

I notice that a combination of the above products— While it does say it excludes sandwiches and other prepared foods for immediate consumption that are subject to the goods and services tax, I presume that means they do not get the nutritious perishable food rate.

As for this cap on the funding, I have no problem with it since trying to get the deficit to zero meant that everybody had to give up something, and I don't see that the Ministry of Indian Affairs should be singled out. I would remind members, however, that in the first year of cuts, Indian Affairs was the only department that had an increase of 3% in their allocation, but they should be as involved as everyone else.

So I see some opportunities here for reducing the amount of prepared perishable food. I presume that, with the cap, those are the kinds of things that have to be looked at and that may have to be charged for more or subsidized less.

That's my comment and question. I presume there are some savings that could be obtained if one changed the definition.

[Translation]

The Chairman: Thank you, Mr. Finlay.

Before giving the floor to Mr. McNally, I would like to ask a question. I have here a document entitled Food Security—

[English]

Mr. John Finlay: Can we get a comment, Mr. Chairman, from our witnesses on what I indicated?

The Chairman: Yes.

Mr. Fred Hill: I would be prepared to comment on that.

The list of foods that we have here as nutritious perishable foods has been essentially the same since 1991. It was arrived at after a series of consultations with people working in the health and nutrition field and with retailers. All of the foods there were considered to be sufficiently nutritious that they ought to be eligible for the most favourable rate.

I could deal, I guess, with a number of those more questionable items. I could go through all of those, in fact, or as many of them as you would like. But as for your point about whether, if the funding cap does continue, we should be looking at possibly eliminating some of these foods from eligibility, that would certainly be one of the choices. Another choice would simply be across-the-board rate increases for everything that is currently accepted.

When we think about the implications of removing any of these foods from the list, we do have to think about how people would respond if the foods that are eliminated from this list would become more expensive.

That is what would happen. Foods that are moved off that list would become more expensive. What kinds of substitutions would people make under those circumstances? We would have to think very carefully about the nutrition and health implication of those substitutions. That isn't to suggest that a very close look at that list, when we are at the point of having to make program refinements, wouldn't be a good idea, because it certainly would.

[Translation]

The Chairman: Thank you. I apologize for interrupting, Mr. Finlay.

In 1994, the Department of Indian Affairs published a document entitled Food Security in Northern Canada: A Discussion Paper of the Northern Air Stage Program. Have you published a new version of this? Could you distribute copies of it in English and French to committee members? It is important that we understand the issue of food security in the North. Do you have a more up-to-date version of this document, or is this the same one?

M. Bruce Myers: It is still the same one, Mr. Chairman. This document was prepared for some consultations that were held in the North. We tried to examine other options for the program and other ways of delivering the subsidies. I will send the clerk copies of this 1994 document in French and English.

The Chairman: Thank you.

Mr. McNally.

• 1225

[English]

Mr. Grant McNally (Dewdney—Alouette, Ref.): Thank you, Mr. Chair. I have just two quick questions.

I was looking at the food basket chart that we just got out here, and I have just one comment. At the bottom, it says:

In northern communities, the cost of the basket is based on the lowest price recorded for each item in the basket. In southern centres, the cost is based on a survey in one supermarket.

To me that would indicate we're looking at almost an apples and oranges comparison there. Maybe I'm wrong, and maybe you can help me with this. If we're looking at the lowest price in one area, and not looking at the lowest price in another area, are we not having a miscomparison there? Maybe I'm just misreading that.

Mr. Fred Hill: This difference does tend to downplay the real difference in food costs. That's correct.

What we did in the north was, for the 46 items in this basket, we assumed that the person went to each store and selected the lowest price for each of those items. We don't know whether it's realistic to expect every shopper in the north to do that, but it does arrive at a figure such that, if you were a very careful shopper, this is what you have to spend to purchase it.

Obviously we couldn't have an exact comparable shopping behaviour in Ottawa, for example. We couldn't expect someone to go to every store in Ottawa and pick the lowest price for those items, so we simply assumed that the person shopped in one store. We did, however, assume that they took advantage of whatever specials were available that week.

Once one has a food basket, the actual cost associated with it depends a great deal, particularly in the south, on shopping behaviour and the selection of brands and purchase sizes and so on.

We could come up with another figure for the north that assumed they only shopped at one store rather than in the two— Most commonly there are two stores in the north, and we assume they shop in both.

Mr. Grant McNally: Right. Okay. I would just say that if we want to do an apples and apples comparison, we should have the same measure, statistically speaking, if we want a true reflection of the differences in those items. Otherwise we're looking at the lowest rate in one area and not the lowest rate in another—perhaps a higher.

Mr. Fred Hill: Yes. The original price selection procedure, as we call it, was developed I guess in 1991 when we started doing this, to answer the question in north: what would you really have to pay to buy a healthy diet? That's why we tended to do this so that we got the lowest possible cost, assuming they bought certain sizes and brands of these products, which is another whole area of variation in the result.

Mr. Grant McNally: Okay. One other quick question. You mention here in your presentation, “Two factors are increasing Canada Post's costs”—I'm reading from page 5 of the brief you gave us—the user fees introduced by NAV CANADA last March—”.

I guess what I'm wondering is this. This was originally under Transport Canada, and the NAV CANADA operations took over from Transport Canada. Then the Auditor General tells us that $1 billion in savings— as to what its real value was—I mean, that's something that's open for debate too.

Were there not any negotiations that went on with the government, with the understanding that this was going to impact prices in the north? I think the department would have known this was going to be an impact, and that this was something that was originally under federal jurisdiction now being transferred to NAV CANADA. Were there any negotiations about making some kind of deal, so that with a little bit of foresight, that wouldn't have affected the cost? Now, of course, this is something that's out of the hands of the department.

Mr. Bruce Myers: I can't speak to the details. At the time the government enunciated its current position on the food mail program in January 1996, certainly the department and the government generally were aware of the direction that was being taken with the commercialization of the civil air navigation system. There was no data available to me at that time, at any rate—and I can only speak as an individual—that indicated what, if any, magnitude of impact that commercialization would have on this program. Therefore it wasn't something that had been factored into the consideration in announcing the capping of the program.

We certainly were aware of the anticipated volume demand through demographics and changes in eating behaviour, and we had done our plots on that, but certainly not on the commercialization of the air navigation system.

• 1230

Mr. Derrek Konrad: I want to point out what I think is a flaw in your methodology in this thing in that you have compared all little communities with major cities. I look in here and I see Ottawa, Winnipeg, places like that, that are reasonable.

I can take you to places in Saskatchewan not listed here, Shoal Lake, Saskatchewan or Cessford, Alberta, all little kinds of towns where it costs you big money just to even get to a supermarket, and we need to have a more reasonable cost comparison for the rural people because it's the rural people we are talking about here. We ought not be be making comparisons to what goes on in downtown Ottawa, or in Montreal or some place like that.

When you make these comparisons, try to find a place that represents the places we're making comparisons to, because those people get really upset when they know that somebody is being subsidized for their costs—and I'm not saying it shouldn't be. But when you live in Shoal Lake, Saskatchewan, you're an hour from a grocery store. You're already going to put $25 worth of gas in your car just to shop. That's a significant difference.

Mr. Bruce Myers: If I'm understanding you correctly, then, what your suggestion would be, Mr. Konrad, is that for the communities that are not isolated by our definition we should be selecting communities closer to the end of the road, if you like, rather than the Ottawas.

Mr. Derrek Konrad: It should be closer to what we're defining here. After all, we should be comparing apples to apples, as my colleague said, not giant cities that have every kind of service within walking distance of your door, and communities where there is probably a little store with three loaves of bread at one end and two cans of Spam at the other, and if you really want to do any shopping, you go to town because you can't even buy a pair of rubber boots in the place or anything.

Mr. Bruce Myers: I understand. The intent of this was certainly primarily for us to be able to monitor the food basket cost in isolated communities and to show Canadians the very significant contrast between those costs and the costs that a resident of a major urban centre would face. I recognize that we could show a whole bunch of other things.

Mr. Derrek Konrad: I could make a case for a lot of places that have a high cost to put food on the table and that receive no subsidies, and I think that's the valid comparison we have to make. Also, in those communities salaries, incomes, are a lot lower than they are where you're making your reference, in what you're using for a baseline.

Mr. Fred Hill: In response, I would like to add that it is true we have not priced this basket in small communities in southern Canada, and in fact the purpose of pricing it in a city like Ottawa is not to give a figure on what is the cost of the foods that people in southern Canada are likely to eat, but rather, what is the cost of this identical northern food basket in the south. It is really to track whether the savings under our program are being passed on.

That being said, however, Agriculture and Agri-food Canada until 1995 did track the cost of a southern food basket. They no longer do that, but the cost of that basket is not greatly different from this northern food basket in the south.

The Chairman: Thank you.

[Translation]

Mr. Bachand.

Mr. Claude Bachand: There is one fact that remains: transporting perishable goods by river or the seaway is less expensive than transporting them by air. I know that comparisons can be made between most Northern communities, but we also must acknowledge that some of them are accessible by air for only five, six, seven or eight months a year. So I understand why the costs are higher.

I would like to come back to the point raised by Mr. Hill earlier. He said that this type of sheet allowed for follow-ups to ensure that money spent by Canada Post actually gets to the consumers. I would like to know whether you would like to add something about service delivery. I would like to know how food reaches Grise Fjord or Pond Inlet.

• 1235

I am sure you probably have maps showing air, sea and land routes. You were saying earlier that you usually went as far as you could by land and from there you transported food by air to more remote communities.

I am wondering, Mr. Chairman, whether these people could answer questions about Northern Stores, for example. What percentage of the profits go to Northern Stores, Air Creebec and First Air? Does the Department of Indian Affairs look into this, or do the companies in question tell the department that this is a private sector matter, that they do not have to provide any data on their profit margins on food sent to the North? Do the three companies also say that they don't have to provide information on how or from where food is shipped?

That is probably where the problem lies. Canada Post Corporation can maintain its level of participation, but, ultimately, people must not set their rates too high. Does the Department know whether Northern Stores or the airlines are setting their rates too high? Can you tell us that sometimes you do have to call First Air, Canadian or Air Creebec and tell them that their rates are unacceptable and that they are making far too much profit? I don't think the Department of Indian Affairs can do that.

In order to make a serious study of this issue, we may have to ask representatives from Northern Stores and from the airlines to come and explain how they deliver their services. Mr. Hill and Mr. Myers, I'm sure you have maps for communities, X, Y and Z, that show the land route and air route to various destinations, from which the goods are redistributed to remote communities. I believe you have maps of that type. They would be useful to us if we were ever to ask people from Northern Stores or the airlines to appear before the committee.

[English]

Mr. Bruce Myers: If I could take the first part of that, I'm sure my colleagues at Canada Post will want to deal with the aspects having to do with airlines since they are the ones who deal with airlines and we don't.

You asked how the goods get north. I'd like to make one point very clear. In the government, neither Indian Affairs nor Canada Post, no one in the system here requires a consumer in the north, or a store in the north or any other organization in the north to choose the mail system to deliver their perishable food, for example. People are entirely free. If they elect to go to an airline themselves and direct their supplier in fact to deliver to an airline the merchandise for shipment as straight air cargo at some rate they negotiate privately, that of course is fine. So the government is not involved in directing how people ship or from whom they buy, or where they buy, in any way whatsoever.

In terms of your question on whether we are aware of the level of profit, or lack of it, on the part of retailers in the north, be it a community-owned retailer such as a cooperative or be it another company—you've mentioned Northern Stores, and of course there are a large number of others—we do not review, or examine or seek in fact their income statements.

Our primary mechanism to ensure the effectiveness of the program is twofold, really. First of all, we rely on a certain amount of competition in the community to enforce some kind of pricing fairness, recognizing these are small communities and there's not a lot of competition most of the time.

Secondly, in doing our price surveys, we attempt to cover a number of communities within a region and would expect to find through that if there is an example of a retailer out of line with a regional average amongst all the retailers we'll identify. As Fred mentioned earlier, we have on some occasions found that. So by publishing the results as we do, we never identify by retailer, but it makes that community leap right out as out of line. We found on several occasions that the particular retailer in question brings prices more back into line. That tends to be our tool.

• 1240

Now, as for the rest of your question in terms of airlines, with your permission, Mr. Chairman, I'd suggest that Canada Post may wish to respond.

The Chairman: Mr. Miller.

Mr. Ed Miller (Director, Operations, Northern Services, Canada Post Corporation): The comment I'll have there is that in the agreement we have with DIAND, we'll try to get the best deal we can to move their goods, and we'll be fiscally responsible.

The three of us here are responsible for the day-to-day operations of the northern services operation in the north. Ed Larocque actually is the manager of transportation here. He manages a $35-million transportation budget. We have a contracting group that looks after these negotiations. They're usually open to bids from the various carriers, and they're usually out for a five-year period.

We took this budget over on April 1 last year. We've seen very minor increases, and we keep a tight handle on it. So we think we're getting the best rates we can. In some of these cases, as you know, there's not a lot of competition on some of these routes, but we have been doing very well, in my opinion.

I don't know if that answers it.

[Translation]

The Chairman: Before giving Gordon the floor, Mr. Konrad would like to ask a question because he has to leave to go to another meeting.

[English]

Go ahead, Mr. Konrad.

Mr. Derrek Konrad: I was interested to hear about the Churchill railway being the point of entry into the mail system. So you would be definitely in favour of retaining the railroad, and we should work with the agriculture people from western Canada to retain that thing also for the Keewatin District's food mail program.

Mr. Bruce Myers: If you're asking about whether that railway ceased to exist—

Mr. Derrek Konrad: It would increase the cost.

Mr. Bruce Myers: —then clearly the entry point for the food mail system would have to move south, and clearly one would normally expect the cost of the program to increase if you couldn't move it on the surface all the way to Churchill.

Mr. Derrek Konrad: I'll be using that information. Thank you.

[Translation]

The Chairman: Mr. Bachand.

[English]

Mr. Claude Bachand: I'm sorry, Mr. Earle, they didn't answer one of my questions.

[Translation]

Do you have any maps showing the route from Kuujjuaq to Val-d'Or, and then to Montreal, from which the goods are sent by air to Iqaluit?

[English]

Mr. Bruce Myers: At Indian Affairs, I don't believe we have a map that would show in detail every air route. Perhaps Canada Post does. I'm sure that between the two of us we could supply the committee with the map showing all of the air connections.

Mr. Claude Bachand: Okay.

Mr. Ed Miller: Yes, on the other side of the coin, we most likely have everything going right down to the smallest site.

[Translation]

Mr. Claude Bachand: Could we get them?

[English]

Mr. Ed Miller: We can work with Bruce to get something that'll meet your needs.

[Translation]

Mr. Claude Bachand: Thank you.

The Chairman: That was an excellent question, Mr. Bachand.

We apologize for interrupting you, Mr. Earle.

Mr. Gordon Earle: Thank you, Mr. Chairman.

[English]

Shortly after I was elected, I had the opportunity of visiting a large communications company in a small rural area of my province. This company was explaining to me what their operation was and their contribution to the community and so forth.

Then, at one point, it became clear to me that the company had been a federal government operation, but then it became privatized and became a private company. I wondered whether the company was losing money, but the response was that they were making lots of money. So I found it kind of strange that the government would privatize when a company is making money.

Quite often the excuse is used when one is losing money that they have to privatize so they can capitalize and be more efficient with taxpayers' dollars. But it seems like privatization was the name of the game whether you were making money or losing it.

Now, correct me if I'm wrong, but if I understand this correctly, it seems that one of the cost factors that will create a problem will be the user fees introduced by NAV CANADA. Is this again perhaps an example of privatization giving rise to higher costs for a service that perhaps could be cheaper if it were completely operated through the government?

• 1245

Mr. Bruce Myers: I can't answer the qualitative aspect of your question. However, it is accurate to say Canada Post has informed us that their costs will increase as a result of airlines being faced with charges for cargo being flown where they were not having such fees imposed before. Therefore their charge to Canada Post increases; therefore the program costs increase. Whether that's a good or bad thing—

Mr. Gordon Earle: Right. And maybe you can't answer the other question, and it's fair enough if you can't.

Is this arrangement with NAV CANADA irreversible—again, I'm trying to get an understanding of it—or is it possible to change the arrangement and continue with the program otherwise? Is this something that can't be changed? I don't know.

Mr. Bruce Myers: Well, I don't think it's within the domain of our department or Canada Post to comment on whether the Government of Canada can—

Mr. Gordon Earle: Okay, so that's strictly a government decision in that sense of the word. Okay, fair enough. Thank you.

The Chairman: Merci, Gordon.

Nancy.

Mrs. Nancy Karetak-Lindell (Nunavut, Lib.): Because I'm new at this, I'm still trying to understand this program. I look at the nutritious perishable foods that are applicable for the subsidy, and I'm trying to figure out how we can ship, let's say, dairy products such as ice cream through Canada Post when it takes two weeks for some stuff to get through there. How do you apply and qualify for that subsidy? Do you just do it through Canadian, First Air, or any of the other airlines?

Mr. Bruce Myers: I'll have a crack at the last part of the question, and I'll let Fred deal with the question on ice cream.

Basically the program is structured so that anybody living in a community, be it an individual, a store, or an institution, who wishes to receive commercial quantities of food— This applies to commercial quantities of food, and there's a definition of that. I can't quite recall. I think it's 5 packages or 20 kilograms a week, or 20 packages or 80 kilograms a month.

If you're in commercial quantities, then the only way you can move the perishable food by the mail system is to come under this program. That would mean the supplier from whom you purchase in the south, wherever and from whomever you wish to purchase, would need to enter into a contract with Canada Post, which they could explain more to you. You would then tell your supplier, for example, that you wanted a case of eggs, or whatever is eligible. They would then deliver that product, addressed to you, to the entry point—basically to Canada Post at the entry point, or their agent—and it would be mailed to you in the community. That is what the stores do, and there are individuals who on occasion use this and there are other institutions in the north who use it.

You don't have to use the mail system. You could yourself simply tell your supplier to deliver it to whichever air carrier you wished and have it shipped to you air cargo, providing that your credit was in good standing with the airline. That would normally, certainly in northern communities, cost you substantially more. A number of people do that, though, because they can receive it in a matter of hours, often.

The perishable food mail that comes under our mail system doesn't take weeks, because there are service standards, which Canada Post enforce, of a certain number of hours the carrier has to get it from the entry point to destination. If I recall, it's generally in the two- to three-day range, maximum, that they must deliver that food when it comes under food mail.

Does that help with that question?

As for how ice cream gets through the mail, if in fact it's eligible—a number of frozen goods are eligible, and they appear on the list—the airlines are required by Canada Post to keep both cooler facilities and freezer facilities in their entry points and to have it looked after on the aircraft so it doesn't deteriorate until it gets to the destination.

Mrs. Nancy Karetak-Lindell: Thank you.

• 1250

[Translation]

The Chairman: Thank you.

You spoke about an agreement you had with the provinces, including Quebec. Provincial public servants working in remote regions such as New Quebec, get a northern residence allowance to cover their food and other costs. Were you aware of that?

[English]

Mr. Bruce Myers: Yes, we are aware that some governments do provide that particular allowance to their employees in the north.

[Translation]

The Chairman: It is important for us to know how much of an allowance is paid by each province. While I have nothing against their receiving the allowance, I would point out that they also enjoy the benefits of the Air Stage Service. We should not be creating two classes of citizens. We have to think about the permanent residents, the Inuit who live in these regions, and who might deserve a larger allowance.

[English]

Mr. Bruce Myers: Certainly, monsieur le président, when we've had public meetings in northern communities on this program before, I do recall, in at least one location, a number of Inuit residents expressing concern at the fact that there were employees of provincial governments located in that community who were receiving what were called cargo allowances from their employer to subsidize the cost—their cost—of bringing in perishable food, where the Inuit residents of the community had no such special subsidy, other than the same availability or access to this program.

There has been concern expressed about that; however, that's not within our jurisdiction. This was discussed as a result of the actions of various provincial or territorial governments.

[Translation]

The Chairman: The objective of the Northern Air Stage Service is to protect the interests of the Inuit living in the North and to help them get high-quality food at more affordable prices. Some Inuit families are short on food because the cost is too high.

[English]

Mr. Bruce Myers: Certainly, monsieur le président, we have received evidence over the years from Inuit and other residents of these communities that because of the high cost of food and the high cost of all other goods, they feel they do not have an adequate amount of income.

In our own published reports, when we examine the income levels of a family on social assistance, for example, and the cost of our food basket—and we have several of those charts here—you can see yourself that the amount of money that would be left over after paying your shelter and buying this particular food basket would clearly be inadequate for a family of four to purchase either other basic necessities of life such as clothing, or quality of items, from toys to whatever—hunting and fishing supplies, and so on. It varies with community; it varies with jurisdiction. Clearly, at least for people on social assistance and the working poor, we know that the margins are extremely tight.

[Translation]

The Chairman: You mentioned some consultations. Are you planning to hold some consultations and establish a task force this year? The last task force dates back to 1994 or 1995.

[English]

Mr. Bruce Myers: Our last consultations were in 1996, actually. We consulted quite widely before we introduced the changes to the eligible goods and the actions we took at that time. We don't now have a specific planned set of consultations, but our commitment remains—as we published, I think, in the 1996 news release—that we intend to continue to manage this program by consulting with the people affected. The amount and quality of the consultation in our current circumstances will be a function of how much time we have to find out whether or not other orders of government are prepared to become cost-sharing partners in this program, because we have a very limited time window here before we have to take action in order not to exceed our budget this year.

• 1255

We certainly would intend to talk to people, but probably not in as organized a way and as an ideal a way as we would like to in the present circumstances.

[Translation]

The Chairman: The current situation is critical.

Mr. Moore.

[English]

Mr. James Moore: Thank you, Mr. Chairman. I want to take the opportunity just to pick up on a couple of points.

I think Mr. Myers' answer on consultation with the provinces and territories is dead accurate, but we have not had a round of formal consultation with provinces and territories for some time. Subject to direction from the government to the contrary, my guess is that we would be consulting at least on the general direction and the status of the program at some point in the future.

As well, Mr. Chairman, I wanted to pick up on the point that was raised about compensation or special compensation programs for public sector employees who work in the north. As Mr. Myers indicated, yes indeed, there are employees of certain governments who do receive those kinds of compensation packages. I would think committee officials might want to approach those governments directly in order to obtain the details of those programs.

Thirdly—and I don't know if he is going to raise it now—I'm not sure if we responded definitively to Mr. Bryden's request for analysis on the Greenland situation versus Canada's. If we did not, the answer is yes, we would be willing to undertake that analysis.

Finally, with respect to the point that was made by Mr. Earle, I believe, with respect to privatization, its advantages and disadvantages, and increases in some areas that may be caused by privatization, I think it's fair for our department officials here today not to debate or get into substantive discussions on the pros and the cons. We're really not equipped.

But if there are specific questions as it relates to NAV CANADA and possible increases in this program, then I might suggest that if you haven't already, you may wish to call NAV CANADA officials as witnesses.

Thank you, Mr. Chair.

[Translation]

The Chairman: We plan to do that.

Mr. Bryden.

[English]

Mr. John Bryden: Thank you, Mr. Chairman.

I made mention of a motion that I was going to propose and I'd like to serve notice of motion. I'll read that notice of motion into the record and that will give all members of the committee an opportunity to examine the proposed motion. And at a later time, at an appropriate time perhaps, when we are looking at this entire picture, then we can debate the motion and consider whether or not the committee members would like to support it.

I'll just read the proposed motion and then I'd like to make a comment, if I may, to explain it.

May I do that?

[Translation]

The Chairman: It is a notice of motion.

[English]

Mr. John Bryden: Okay. This is a notice of motion only. What I am proposing is that is committee recommend that the federal government continue to assume its responsibility to support the isolated communities that maintain a sovereign Canadian presence in Canada's remote regions and fully fund, as necessary, a northern food subsidy program.

Mr. Chairman, this doesn't preclude the provinces helping if they can be persuaded to help, but I believe this motion is necessary, because I think it has to be clearly established by this committee that ultimately the survival and the health of these northern communities is in the interests of all Canadians. It is not a matter of one province or another province. It is in the interests of all Canadians.

So I'm hoping this committee will support the principle that in the final analysis, it is the federal government's ultimate responsibility to maintain this program and maintain it at a level that is adequate for the needs of the people in those isolated communities, who are serving a purpose by their very presence there that affects all Canadians. That's the point I'd like to make when that motion is made.

Thank you, Mr. Chair.

• 1300

[Translation]

The Chairman: Thank you, Mr. Bryden.

Before we end the meeting, I would like to ask Mr. Miller a brief question. You signed contracts with the airlines. Do you also sign contracts with trucking companies? If so, are they confidential?

[English]

Mr. Ed Miller: Yes, they are.

[Translation]

The Chairman: Do you sign many contracts? Where are your offices located at the moment? Do you have an office in each province? I know that a few years ago, you had an office in Val-d'Or, but it has been moved.

[English]

Mr. Ed Miller: We have about 260 communities in Canada that we're responsible for. We're responsible for all Yukon communities, all the communities in the Northwest Territories, a number of communities in northern B.C., Saskatchewan and Manitoba, and all of northern Labrador and northern Quebec. In terms of contracts, I think the number is around 300.

[Translation]

The Chairman: In the document I consulted earlier, I noticed that there were 150 communities. Could you provide us with a summary and a list by province of the 260 communities that are served by the Air Stage Program? This would be useful information to have.

[English]

Mr. Ed Miller: We can get you that. I think what's confusing on the 260 is that our northern organization covers a lot of sites that are accessible by road as well. We also have the 150 that are fly-in and more isolated, but we can give you those lists.

Mr. Bruce Myers: Monsieur le président, we do have a list of all of the food mail program communities, the destinations, including the entry points that apply to them. I'd be glad to table that with the committee.

[Translation]

The Chairman: Yes, with respect to the northern air service, but do the 260 communities benefit from allowances related to the Air Stage Program?

[English]

Mr. Bruce Myers: I think the confusion here is that the northern service division Mr. Miller is with in Canada Post is responsible for mail in more than just the communities receiving this program.

[Translation]

The Chairman: Fine, thank you very much.

Mr. Bryden, do you wish to add anything?

[English]

That's okay.

Thank you very much.

[Translation]

We appreciated your coming. If we decide to have you appear again, the clerk will contact you in writing.

We will adjourn until the next meeting.