Thank you, Mr. Chairman.
I had not been notified that the committee's work schedule had been moved up, which is why I arrived late. I sincerely apologize for that. The wrong person had been notified.
Mr. Chairman, members of the committee, I would like to thank you for giving us this opportunity to share with you our comments on the impact of a surging Canadian dollar.
Option consommateurs is a non-profit organization that promotes and defends the rights and interests of Canadian consumers, and ensures they are respected. Our organization was founded in 1983. It includes a legal department, budget services and a news service, and also conducts research into the agrifood, energy and financial services sectors in order to properly understand the needs of consumers and adequately defend their rights.
We have been doing work in the financial services sector for a number of years. Among other things, we took part in the debate that led to the adoption of the latest legislative amendments to the banking sector. We are currently helping to make changes to a number of administrative rules at the Canadian Payments Association, and we will soon be engaged in drawing up the code of conduct for the electronic transfer of funds.
As you are no doubt aware, the Canadian dollar has risen by over 50% compared to a number of other currencies. Whether it be the American dollar, the Japanese yen, the Hong Kong dollar, the Mexican peso or other currencies traded on the international currency market, all have lost value compared to our dollar. Given that those countries are our largest trading partners, Canadian consumers should normally pay less than in the past for shoes imported from China, US automobiles, Mexican tires, imported CDs, DVDs and books, as well as electronic goods. And yet, according to our research, that is not the case. In fact, the steady rise in value of the Canadian dollar over the past five years has not led to a drop in prices for consumers, far from it.
According to Bank of Montreal economist Douglas Porter, the 50% increase in value of the Canadian dollar over the past five years has had almost no effect on retail prices. To make his point, Mr. Porter compared the prices of some of the same products sold in Canada and the United States. He uses the following examples: greeting cards, the Honda Accord and the BlackBerry 8100. Those items cost respectively 20%, 14% and 10% more in Canada.
Following the publication of this article, Option consommateurs also began monitoring changes in the prices of a number of goods sold both in Canada and the United States. We have been doing that since last June. We are now seeing that the prices of certain goods are between 3% and 40% higher in Canada. Strangely enough, Canadians are paying more for the 2008 Honda Civic Coupe, even though it is built and assembled in Ontario. We have also noted that the prices of the items we are tracking have changed very little in the past two months. Of the 11 products that we are monitoring, only two have seen their prices drop. However, those decreases were not enough to make the products less expensive in Canada than in the United States.
In light of this, consumers are getting impatient and feel like they are being taken advantage of. To a certain extent, they can understand that imported goods would cost more here than they do in their countries of origin: after all, we have to pay shipping on those goods. However, Canadian consumers want to benefit from the rising dollar, which is lowering the relative price of goods. As well, Canadians cannot accept the fact that an identical product can be sold for as much as 56% more in Canada than it is outside the country.
Another interesting study, this time from the US, is the Federal Reserve Board study of cross-border consumer prices. It shows that the price difference between products sold in Canada and those sold in the United States is not based on rational economics. According to the study, shipping costs alone cannot account for the price differences. An unexplained “border effect” is causing a sudden increase in the price of products coming through the Canadian border. We have also noted that the retail trade market is increasingly less competitive, and that big box stores are taking up more and more market share.
All the same, we would like to make three recommendations. In any case, you will receive my speaking notes, which will provide additional details to back up our recommendations.
Our first recommendation is that the government conduct a review of the Competition Act in order to, among other things, make the Competition Tribunal more effective.
We also recommend that the government provide SMEs with additional assistance given the over-concentration in retail trade brought on by the big-box stores. The mission and mandate of the Economic Development Agency of Canada for the regions of Quebec could be adapted to that context.
Finally, we recommend that the government ensure that the concentration of financial institutions not impede the development of new businesses. Our institutions have to act to prevent the vast majority of Canadians from being short-changed.