Bill C-56

Affordable Housing and Groceries Act

An Act to amend the Excise Tax Act and the Competition Act

Part 1 amends the Excise Tax Act in order to implement a temporary enhancement to the GST New Residential Rental Property Rebate in respect of new purpose-built rental housing.
Part 2 amends the Competition Act to, among other things,
(a) establish a framework for an inquiry to be conducted into the state of competition in a market or industry;
(b) permit the Competition Tribunal to make certain orders even if none of the parties to an agreement or arrangement — a significant purpose of which is to prevent or lessen competition in any market — are competitors; and
(c) repeal the exceptions in sections 90.1 and 96 of the Act involving efficiency gains.

Affordable Housing and Groceries Act

[René Villemure, Bloc, Trois-Rivières, QC]

Madam Speaker, I wish to inform you that I will be sharing my time with the hon. member for Lac-Saint-Jean.

[The Assistant Deputy Speaker, Carol Hughes]

One second, I need to seek unanimous consent.

Is it agreed?

[Some hon. members]

Agreed.

[René Villemure, Bloc, Trois-Rivières, QC]

Madam Speaker, this is the first time in two years that I have gotten the unanimous consent of the House, and I am proud of it. Before beginning my speech, I would like to make one thing clear. This is not a case of the Bloc, the NDP and the Liberal Party standing together. It is the Conservatives that stand alone. That is not the same thing.

Today we will be discussing Bill C-56, an act to amend the Excise Tax Act and the Competition Act. I will be talking mostly about that last part of the bill, in terms of both its technical points and its rationale. Before we begin, though, we always need to establish what we are talking about. What is competition? It means coming together and converging on the same point. That is what competition is. It is not necessarily a bad thing. However, what is the motivation for coming together? What is the purpose? Is it good or bad? As members of Parliament, our objective must be commendable, because we obviously have the public interest at heart.

In one amendment, the bill would increase the maximum monetary penalty for abuse of a dominant position to $25 million for the first offence and $35 million for subsequent offences. The aim is to give the law teeth, to make sure that it will not be taken lightly, that people will not think that they can get away with a slap on the wrist. This provision also makes Canadian law more comparable to U.S. law, of course.

The second important amendment in the part on competition would allow the Competition Bureau to conduct market study inquiries if the minister responsible for the act or the commissioner of competition so recommends, and would require the minister to consult the commissioner before doing so.

The Competition Bureau already has significant powers, but it cannot demand certain things from the people it is investigating. It cannot request a search unless there is a clear offence. It cannot request a search just to look around. It cannot make assumptions. All of us here know that groceries are expensive and that we pay the highest cellphone fees in the OECD. It does not take a genius to realize that the commissioner might want to investigate these things.

When it conducts a study, the bureau will have to determine whether there is adequate competition in a market or industry. Right now, it does not have that power in every industry. What the Competition Bureau can do at present is all right, but it is not necessarily the best thing right now. It may have been sufficient at the time, but now it needs to be enhanced.

In its report on the state of competition in the grocery sector, published in June, the bureau noted that the grocery chains did not really co-operate with its study. I like that euphemism: “did not really co-operate”. They said no, which is not the same thing, and the Competition Bureau, with its current powers, could not make them say yes. They refused to provide the documents the bureau asked for, and they refused to answer certain questions. My colleagues will no doubt agree that there are many shades of meaning between “did not really co-operate” and “refused to answer”. The aim of Bill C-56 is to solve this problem by granting the Competition Bureau the power to conduct inquiries where applicable.

Lastly, the bill would revise the legal test for abuse of a dominant position prohibition order to be sufficiently met if the tribunal finds that a dominant player has engaged in either a practice of anti-competitive acts or conduct that is having or is likely to have the effect of preventing competition. That is the technical part of the bill. However, when someone drafts a bill, they need to think about why they are doing it, what they are trying to accomplish.

The purpose of the Competition Act is to ensure that Quebec and Canadian consumers have freedom of choice. We sometimes talk about monopolies. What is a monopoly? It is an exclusive right. What does “exclusive” mean? It means doing everything possible to keep others out. It means restricting, refusing, blocking, rejecting. Exclusivity means limiting access. It is almost like a secret agreement.

The bill also seeks to prevent stakeholders from abusing a dominant market position. To dominate means to master, to control. In the past minute, I have talked about refusing, blocking, mastering, controlling, exclusive rights. All of this goes against the free market that this country promises, that it says it has, but that is sometimes, in reality, only an illusion.

Essentially, the drafters of the bill wanted the Competition Bureau to have more power, the power to provide us with freedom of choice, the power to investigate where appropriate until it is satisfied that it can make this possible.

As I said at the beginning of my speech, competition means getting together and converging on the same point. If that is not possible, if certain players dominating a market prevent that from happening, we are being deprived of our freedom of choice. It is a sort of manipulation. It is a sort of lie.

Without calling anyone a liar, we can still talk about what a lie is, here in the House of Commons. A lie from someone in a dominant position may prevent someone else from doing something they would have done had they known the truth. Lies imply secrecy. Monopolies imply secrecy. It is this secrecy that this bill seeks to eliminate so that everyone can exercise freedom.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, I appreciated the comments about the bureau and how when we think of competition and enhancing competition, making changes to the act would, in fact, take away the efficiency argument.

Therefore, I believe, at the end of the day, it would be healthier for Canadians because it would ensure there is more competition. The member made reference to cellphones. Whether it is cellphones or groceries, taking away the efficiency argument within this legislation, I believe, would help address that going forward.

Can he expand on why it was good to see changes to the legislation affecting the bureau?

[René Villemure, Bloc, Trois-Rivières, QC]

Madam Speaker, those who hold monopolies or exclusive rights do not need to be good at what they do. They just have to be there. At the end of the day, they can charge whatever they want, with whatever conditions they want, to whoever they want. They do not have to sell to everyone if they do not want to.

The law will need to improve the efficiency of service providers, because they will not have the luxury of serving a passive and captive clientele.

[Ed Fast, Conservative, Abbotsford, BC]

Madam Speaker, all the legislation in the world and all the regulations in the world will not help us make our environment and economy more competitive if we do not have a government that has the backbone to say no to anti-competitive mergers. There have been a lot of mergers over the last eight years that the Liberal government has approved, and those mergers have reduced competition in the marketplace here in Canada.

Has the Bloc supported those mergers or does it support a more cautious approach to making sure Canadians have full competition, so the price of groceries and the price of housing go down in this country?

[René Villemure, Bloc, Trois-Rivières, QC]

Madam Speaker, competition is for oil companies too. Funny how the price of gas never goes down, only up.

Regulation is not always a cure-all, but it is the right solution in this case because the players are not trustworthy. If they were, we might be inclined to let them self-regulate, but they have shown that that was not good enough, particularly when they refused to answer questions from the Competition Bureau.

I think that the proposed legislation seeks to restore consumer confidence in the bureau's services. I do not believe that there will be a loss of efficiency. I think that we will see increased efficiency, because the players will have no other choice.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, as I have pointed out previously, another aspect of the legislation is to increase the number of purpose-built rentals to increase housing supply. What we have witnessed, and I mentioned earlier, is provinces adopting the same policies where they are incorporating sales tax relief to encourage more construction. I am not too sure what the Province of Quebec has done.

Does the member know what the Province of Quebec has done with respect to the GST being forgiven for purpose-built rentals?

[René Villemure, Bloc, Trois-Rivières, QC]

Madam Speaker, I will respond candidly and honestly: I simply do not know.

If my colleague so desires, I can look into it and get back to him later. At this point, I could not say.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Madam Speaker, on many occasions I had the fortune or the misfortune to observe that when a member of the Bloc Québécois uses the old expression “it is about time” in the House, most of the time, unfortunately, it is a euphemism. Unsurprisingly, that old saying “it is about time” applies well to the bill before us today.

Currently, when the Competition Bureau studies the competitive environment in a given sector, it cannot compel anyone to testify or order the production of documents. That is not very convenient. However, with the passage of the Bill C‑56, it will be able to do so. When I say it is about time, that is because the Bloc has been calling for this measure for a good 20 years.

On the other hand, I would be lying if I said that Bill C‑56 did not lack teeth. I will spoil the surprise right away: I will vote in favour of Bill C‑56 like my Bloc Québécois colleagues. Here are the reasons why. This bill contains some good measures. Most of all, it does not contain any that are outright harmful. Let us just say that I expected more. For me, this is just a drop in an ocean of needs. Now I will explain my thoughts in greater detail.

Part 1 of Bill C‑56 modifies the Excise Tax Act. It extends a GST rebate, 5% of the sales tax, to builders of rental housing. The rebate will occur at the moment of sale or alleged sale if the builder becomes the owner. The rebate does not apply when the purchaser is already entirely or partially exempt. For example, this is the case for government organizations, municipalities, not-for-profit organizations or housing co-ops. That means that Bill C‑56 will have no impact on the cost of social or community housing projects because it concerns only private housing.

Part 2 makes three amendments to the Competition Act. The first, as I said earlier, gives real investigative powers to the commissioner of competition. The second broadens the range of anti-competitive practices prohibited by law. At present, competitors cannot agree to push another player out of the market. Bill C‑56 will prohibit agreements even with non-market players aimed at reducing competition. For example, when a grocer rents space in a shopping centre, it is common for the lease to contain clauses prohibiting the landlord from renting to another grocer. Such practices that effectively limit competition will be prohibited under Bill C‑56.

The third amendment to the Competition Act will make mergers and acquisitions more difficult. Today, when a business wants to buy a competitor, for example the Royal Bank's proposed acquisition of HSBC, the act states that the Competition Bureau should allow the merger if it can be proven that the purchase will result in a gain in efficiency, even if the merger will reduce competition. This provision, which appears to favour concentration, will be repealed by Bill C‑56. The Bloc Québécois and my colleague, the member from Terrebonne, have been asking for this measure for some time now.

As I said at the start of my speech, Bill C‑56 contains a number of good measures and, more importantly, none that are outright harmful. However, I also said I believe it is but a drop in an ocean of needs.

In housing, there is real urgency. However, nothing indicates Bill C‑56 will do anything to reduce rents. It would be astonishing if a landlord dropped rents just because they no longer had to pay the GST on a new property, especially since interest rates alone are driving up mortgage costs. This increase will greatly exceed the GST exemption on new rental units. When landlords renew their mortgage, who will they pass the increase on to? The question is rhetorical. We can expect prices will keep rising, with or without Bill C‑56. At best, by removing the tax on rental buildings, Bill C‑56 might entice some developers to build rentals instead of condos. It might simply become more profitable for them. Again, this is just speculation.

Although Bill C‑56 will not directly affect rents, it could help alleviate the housing shortage in some small measure. If Bill C‑56 increases the percentage of new rental housing construction even a little, it will be a good thing. However, we would still be light years away from meeting needs.

I repeat: There are some good things in this bill, such as the amendments to the Competition Act. The Bloc Québécois fully endorses those. On the other hand, we consider it misleading to claim that the bill will help lower the cost of groceries, as the government suggests.

Giving the commissioner of competition real investigative powers when carrying out a study should enable him to get to the bottom of things when it comes to the competitive environment in a given sector. That is very true. Now, learning more about an issue is a good thing, but it does not increase competition and it certainly does not bring down grocery costs.

Since 1986, the vast majority of grocery chains have disappeared, after being bought out by competitors. Steinberg disappeared. A&P disappeared. Provigo was bought by Loblaws. IGA was bought by Sobeys. Marché Adonis was bought by Metro. Of the 13 grocery chains that existed in 1986, only three remain. If we include the two American big box stores that also sell groceries, Costco and Walmart, that means that five players control 80% of the market.

While it is true that a number of factors are contributing to the increase in food prices, it is important not to lose sight of the grocers' profit margins. When prices go up, profits go up. However, according to the Competition Bureau study published last June, grocers did not just maintain their profit margin, they increased it.

When a merchant can raise prices at will, it is a blatant sign of a lack of competition. The amendments to the Competition Act found in Bill C‑56 will certainly prevent the situation from worsening, and they will make mergers and acquisitions harder to do in the future. However, they do not resolve the situation. The damage is done and, unfortunately, Bill C‑56 will do nothing to fix it.

In short, even though Bill C‑56 does put forward some good measures, this cannot possibly be the government's one and only response to the skyrocketing cost of housing and groceries. When it comes to housing, the government needs to review and improve the national housing strategy, which, let us face it, has failed.

In terms of competition, they need to review the notion of abuse to prevent the big players from endlessly profiting from their disproportionate market share. Those two initiatives must be undertaken, and we are just starting both, whether Bill C‑56 passes or not.

To end my speech, I would like to say the following. The Bloc Québécois's support for Bill C‑56 is certainly not a motion to congratulate the government, quite the contrary. However, we do see it as a step in the right direction. The Bloc Québécois's support today is like a pat on the back. It is like a nod of the head, but coupled with a “what comes next?”.

I suspect that I may have to wait awhile before the government actually takes any further action, but I hope I will not have to wait too long.

[Lloyd Longfield, Liberal, Guelph, ON]

Madam Speaker, I listened carefully as the member described the steps we are taking as a federal government to try and alleviate some of the pressure in the rental market. The rental market is generally under provincial jurisdiction, which I know the Bloc watches very carefully.

Removing the GST in a time of high interest rates is to try and stimulate construction, create conditions where there are more units to rent and introduce competition in the rental market and, therefore, drive down prices. That is the move we are trying to make as a federal government.

Could the hon. member comment on how creating the right conditions in the market might actually help the people of Quebec?

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Madam Speaker, I thank my colleague for his excellent question.

The problem that we have with this provision, which seeks to eliminate the GST on the construction of rental housing, is that the government is making assumptions. The government is trusting the private sector to bring prices down. It is always a bit risky to trust the private sector to lower prices. There is nothing to guarantee that, once the rental units have been built, private builders will pass those savings on to renters in the form of lower rental costs. The government is making assumptions.

That is why we do not think that this is the answer to the problem we are facing. However, as I said in my speech, this measure could result in the construction of more rental units, which would reduce pressure on the market by increasing availability, but there is no guarantee of that. The government is hoping that is what will happen if it implements this measure, but we are not convinced that it will have such a major impact on lowering rent. In fact, we are not convinced that that will happen at all. That being said, we will not vote against Bill C‑56, because it contains good measures and nothing harmful.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Madam Speaker, for the most part, I agree with my colleague's observations and analysis.

I am not suggesting that removing the GST from rental housing construction is a bad measure. It was one of our proposals as well. However, I agree that this measure alone is not going to solve the housing crisis that has been going on since 1994, when the federal government completely pulled out of building truly affordable social housing.

I would like to hear his thoughts about the fact that the real solution is non-market housing, such as co-ops, community housing, student housing and, most importantly, social housing.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Madam Speaker, the member for Rosemont—La Petite‑Patrie and I generally agree on that.

Quebec is a unique ecosystem. In fact, we call that a distinct society, a nation. The co-operative system is rather unique in Quebec, at least in terms of the number of co-operatives that exist in Quebec.

Housing falls under the jurisdiction of Quebec. Social and affordable housing requires funding. As usual, Ottawa knows best and it is interfering in a jurisdiction that is not its responsibility. The federal government does not have the expertise, but it has the money because of the fiscal imbalance and because all of the revenues are in Ottawa and all the expenses are in Quebec and the provinces.

We are asking Ottawa to send money to Quebec, the provinces and the territories who have the expertise in affordable and social housing. Then things will go much smoother. That being said, there is an even more radical solution that would be even better and would practically solve everything: if the federal government stayed out of Quebec and we had all the power over such matters. If we were a country, the housing situation would be lot better.