Evidence of meeting #121 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was grocery.
A video is available from Parliament.
6:05 p.m.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you, and welcome to the witnesses.
If I could start with you—
6:05 p.m.
Liberal
The Chair Liberal Peter Fonseca
My apologies. It should be MP Lawrence, and then it'll be MP Thompson.
MP Lawrence, go ahead.
6:05 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
Thanks very much.
Thank you to the officials for being here in overtime. We appreciate it and appreciate all the work that you do.
My questions are going to be sort of feeding down into a request for documents, just to give you a heads-up there.
This is called the affordable housing and groceries act. I'm assuming that there was some due diligence done with respect to the impact that these provisions would have on reducing the price of groceries and reducing the cost, if not of housing, then of rent.
I know my colleague, Mr. Morantz, talked about this, but I'm just wondering if you can give me anything on housing or groceries. We'll start with groceries. Just to give some structure, can you estimate how much the price of groceries will go down as a result of this bill?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
The Competition Act amendments are aimed at fuelling a more competitive dynamic across the economy but specifically in the grocery sector. We did no calculations on the basis of what the framework law would impact in terms of its specific effects on food prices. It's aimed at a general directional push towards greater dynamism and competition within the grocery sector.
6:05 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
I don't mean to be disrespectful here. I know you guys are all working hard. You're here at seven o'clock at night and we appreciate it, but you've done no sort of analysis on whether grocery prices will actually go down or not?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
We did not perform any economic analysis on the impacts of competition law amendments, which this act is shifting, and their specific impacts on grocery prices.
6:05 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
When the minister gets out there and says this will reduce grocery prices, you have no data to back that claim up.
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
We directionally understand the role that framework law plays in the overall market place. It does not translate into a new price on a can of beans at the grocery story. It contributes to the overall market.
6:05 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
I understand that, and I understand that you're not going to be getting down to the cost of beans, but I would assume there would be some macroeconomic analysis. What I would ask of you, at least as a best effort, is to go back to the shop and then come back to the committee with any type of analysis.
I'll give you an example. Tiff Macklem, the Governor of the Bank of Canada, was able to give us a number. He said that the carbon tax added about 20% to inflation. That was a hard number. There are a lot of economic factors, but he was able to do that.
Any type of analysis that you could provide our committee would be of great benefit, so that the minister would have something to hang his hat on when he says it will reduce grocery prices. Can you provide him anything? Is there any proof that it will reduce grocery prices by even a dollar?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
Mr. Chair, I'm not in a position to respond to the specifics of that question.
What I would say is that there's a lot of analysis showing that competitive markets bring down prices. The goal of the Competition Act amendments is in fact to bring dynamism and more competition into markets, and that's the premise behind believing, particularly in these areas that were cited by the bureau in their own study of the grocery market—
6:05 p.m.
Conservative
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
—that these were important factors to consider that would actually help Canadians and stabilize—
6:05 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
Thank you, sir.
I do appreciate that. Also, my passion is directed to the minister, not to you. I know you guys are working hard.
Now, with respect to housing, is there any type of economic analysis, one shred of data, you can provide this committee that says, hey, this will reduce the cost of rent by y dollars, even if you have a wide range? I understand that you won't be able to get it within a dollar, but maybe you might be able to get it within a thousand dollars.
Is there any type of economic analysis you could provide this committee to show that this legislation will reduce the cost of rent for Canadians?
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Of course we do a lot of analysis and we provide all of that analysis to the minister, but most of that is subject to cabinet confidence. It's not something we'd be in a position to share with the committee. Rest assured that we do look at these matters quite closely.
6:05 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
There is economic analysis, but you're just not willing to show that.
I'd like to think I'm a reasonable human being and I understand that some of that might need cabinet confidentiality, but would you be able to provide a redacted document or the unredacted version to the parliamentary law clerk's office and let them review it?
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
I can certainly look to see what we can provide, but I can't make any promises.
6:05 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
I appreciate it. Thank you for trying.
6:05 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Lawrence.
Now we go to MP Thompson, and I apologize again.
MP Thompson, you'll be the last questioner for these witnesses.
Thank you.
6:05 p.m.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you.
This is a good chance, if any of you have any further comments that you want to make, to please take the time.
Perhaps I could begin with you, Ms. Riddell.
The need for housing is obviously continuous, whether we're talking about someone who is truly homeless and has no shelter or someone looking at market-driven housing, in which there is tremendous choice and ability, or any of the spaces in between.
Could you speak to the notion that, when you provide purpose-built rentals, you create space along that continuum, not necessarily from one end to the other but certainly within the areas where housing is most challenging?
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
The rebate is aimed at purpose-built rentals, for which there are certain requirements. They have to have four-plus units or 10-plus private rooms. There's no fair-market value on that. The idea is that you're trying to create as much supply wherever that supply can be had. We're not specialists. We're not builders in that sense, so it's up to the builders to design and build the types of housing needed in the marketplace.
The idea behind this is that builders will be able to make previously unprofitable projects profitable, and they'll be able to enter the marketplace.
As I was saying earlier, with more supply, there is generally a positive impact on prices and bringing them down. I'm not sure how much more I can say on that particular point.
6:05 p.m.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you for that.
The minister referenced the four provinces that have followed the federal government's lead and have also eliminated GST on purpose-built rentals.
Is that assisting in moving the federal government's program forward? Is it creating a greater impact in terms of the work on the ground and the number of units—because it's supply, supply and supply—that are potentially being made available as part of the program?
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Provincial decisions are made independently by the provinces. Although there is a harmonized sales tax, we have the federal component, which is subject to federal decisions. The provincial component on whether or not they want to have a rebate like this is up to the provinces.
It is a policy decision for them, but from the builders' perspective, I would expect that the 5% GST versus, for example, the 8% or 10% provincial component of the HST is a really big difference. I would expect that in provinces that have decided to follow the federal measure, there would be that much more of an impact in those jurisdictions.
6:05 p.m.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you.
Mr. Schaan, just very generally, because I realize there are limits on what you can really speak about, in terms of expanding or empowering the Competition Bureau, what would you hope to see in terms of support for competition?
Why is it important to focus on that?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
I appreciate the question.
I'll say a few things specific to the Bill C-56 changes.
Market studies have proven effective, even without subpoena power, to have a certain amount of directional impact on markets. We can think about the bureau's ride-sharing market study and their work in the telecommunications switching study. Obviously, those studies will be far more enriching when they can actually understand the real market dynamics at play and then be able to make recommendations in transparency both to consumers and to governments.
The efficiencies defence essentially empowers them to ensure that they actually have the tools to stop mergers that will potentially harm markets, harm competition and ultimately harm Canadian consumers.
The vertical collaborations is actually quite important because it expands the construct of what looks like competition in a marketplace to recognize that it's not just two competitors facing off against each other, but that actually they're using other players within the market structure to get anti-competitive outcomes.
All of that means they'll now have tools in their tool kit to really go after some of those particularly difficult or challenging aspects of the market structures that are harming prices, overall Canadian choice and ultimately competition.
6:05 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Thompson.
We want to thank our officials and our witnesses before us. Thank you for your testimony on Bill C-56. You did a great job. We got a lot of information from you. Thank you for being with us here late in the evening.
Now members, we are suspended for our health break until 7:30.