APPENDIX B -
LETTER TO THE MINISTER OF FINANCE

Tuesday, December 8, 1998

The Honourable Paul Martin
Minister of Finance

Dear Minister,

The Standing Committee on Industry has been examining the Year 2000 computer problem for over a year. Last May the Committee tabled its first interim report on this issue entitled The Year 2000 Problem - Where Is Canada Now? The Committee applauds the government's quick response to implement the Committee's recommendation 7 on tax relief for small and medium-sized businesses to address the Year 2000 computer compliance problem. The Committee expects that this measure will help stimulate small- and medium-sized businesses to address the Year 2000 problem.

Since issuing this first report, the Committee has completed its second review of how well Canada is preparing to solve the Year 2000 problem, involving additional sectors of the economy. During this second review of the Year 2000 problem in Canada, the Committee had an opportunity to hear from the main representative of Canada's agricultural sector, the Canadian Federation of Agriculture, on the 26th of November 1998. At this time, the Committee was informed that Canada's 276,000 farms are only now beginning to receive the necessary information to allow them to address their specific Year 2000 issues.

One of the agricultural community's major concerns was with respect to the provision of uninterrupted electrical power during the Year 2000 transition. The representative from the Canadian Federation of Agriculture explained how the scenes of dead livestock resulting from the ice storm in Eastern Ontario and Southern Quebec last January reinforced to the farming community their dependence on this key utility. Although the Committee also heard reassuring testimony from Canadian electrical utilities that they would be Year 2000 compliant by next summer, the fact remains that problems with electrical supplies remain possible, more particularly in rural Canada. One of the proposals from the agricultural sector was that, given their almost total dependence on electrical power, they should be allowed to purchase emergency power generators as a part of their Year 2000 remediation plan and have the same Year 2000 related tax benefit.

Although loss of electricity can cause business losses in most areas of the economy, farms have two major additional disadvantages. Firstly, rural areas are more likely to loose electrical power and are frequently the last areas to have their power restored. Secondly, many farm activities, from feeding their livestock to controlling the environment for massive greenhouses, are susceptible to the loss of livestock or produce after only relatively brief periods of time without electrical power.

The current Year 2000 tax measure announced last June excludes the option of purchasing an emergency power generator but the Committee feels that for the farming community this is an important asset for possible Year 2000 problems. As Chair of the Standing Committee of Industry, I would urge that your officials examine the possibility of modifying the regulations to allow the farming community to purchase emergency power generators as part of their Year 2000 remediation plan. I thank you in advance for your support.