Thank you very much.
Good morning, everyone.
Thank you very much for inviting my colleague Gabriel Giguère and me.
For those who may not be familiar with the MEI—the Montreal Economic Institute—we're an independent think tank with offices in Montreal, Ottawa and Calgary that has been actively contributing to the Canadian public debate through our research and media appearances since 1998.
When discussing the cost of living, food is an essential consideration. It is the fourth-largest expense for Canadian households, behind taxes, housing and transportation. Given the significance of this budget item, the rapid rise in food prices we've seen in recent years has taken a toll on family budgets, and families are feeling the pressure more and more. While the desire to take action to ease this pressure is commendable, Canadian households are looking for results rather than mere intentions. Unfortunately, several measures recently announced by the federal government miss the mark. In particular, one aspect that concerns us is the desire to see the government become more involved in food distribution.
Let's be clear: The federal government is no more competent as a food wholesaler than it would be as a grocer. The food hub initiative, funded at great expense by Canadian taxpayers, faces the same challenges of logistical complexity, information management and incentives as government-run grocery stores, such as those we hear about in Toronto and south of the border. The average Canadian grocery store sells between 15,000 and 18,000 distinct products. This represents both small local banners such as Fraîchement Bon in the Montreal borough of Ahuntsic, and large-surface stores such as Walmart and Costco.
Needless to say, managing such a logistics chain for perishable products, each with their own hygiene requirements, represents a colossal task. Our large grocery chains manage to run both distribution and retail nationwide, with a profit margin estimated between 3% and 5%. Even if we assumed the government could do it with the same level of efficiency as the private sector, the maximum theoretical savings one could get are between $11 and $18 per person per month—or about the cost of three bags of chips. It should therefore be noted that it is not by getting the state to wade into food retail—as some activists pretend—or into food distribution—as the government seems keen to do—that we will bring prices to levels that are affordable to Canadian families.
That's not to say that government has no role to play. Very often, this role is not to create new programs or structures, but rather to stop contributing to the high cost of living through its public policies, be they tariffs, production quota systems like supply management or regulations that burden all Canadian consumers, such as restrictions on interprovincial trade. Revising these aspects would have a far more desirable effect than establishing a new government structure.
Thank you for your time and attention.