Finance Committee on April 18th, 2024

[Matthew Boswell]

Certainly. A bit of a unique feature in Canada in terms of competition law is carve-outs for certain types of mergers, where, effectively, our role becomes one of adviser. We provide our views to either the Minister of Finance or the Minister of Transport on mergers in those areas that they've deemed worthy of a public interest review, and then the decision on whether to approve the merger is actually in the hands of the respective minister. We've had many of those in the transport sector in the last five or six years, certainly in my time as commissioner.

From our perspective, it's generally a best practice not to have those types of carve-outs in competition law—to allow competition law merger review, to review the merger and not to take it out and make it a political decision. Once again, as I've said repeatedly before this committee and other committees, that's sort of an international best practice. That's an area that I would flag.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Williams.

Now we're going to go to MP Baker for four or five minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much, Mr. Chair.

I wanted to come back to something about Mr. Lawrence's questioning on capital gains changes. I'd like to correct something he implied on the 10-week delayed implementation of the capital gains tax change that he alluded to. The 10-week delayed implementation of that is intentional, I understand. Actually, it's consistent with what past governments have done. For example, former prime minister Brian Mulroney did something similar when he was prime minister and had a delayed implementation.

Importantly, the current revenue projections in the 2024 budget are built on the understanding that there is a delayed implementation of this tax change. Therefore, the delay allows folks who are impacted to dispose of assets, if they so choose, in that 10-week period. As I think Mr. Giroux indicated, that would provide them with approximately a 10-week period of time in which those who are impacted by this could choose to dispose of assets, in which case the tax implications would be based on the current calculation of the capital gains. I simply wanted to clarify that for the record: that it was intentional and it opens up the opportunity for people who are touched by this to act under the current tax regime rather than the proposed new one.

The other thing I wanted to say is that there's been a fair bit of discussion in our committee about carbon pricing and the cost of climate change on our economy. We've asked you, Mr. Giroux, if you would consider looking at the implications of climate change on our fiscal balance sheet as well. To me, one of the things I spend a lot of time thinking about when I think about action on climate change is the costs of climate change to our economy and to our quality of life, and then the costs of the actions we must take, and I weigh those two things against each other.

One of the things I wanted to point out is that my colleagues and I have mentioned that the Bank of Canada governor spoke to the fact that the increase in carbon pricing has a one-time approximately 0.1% impact. He was also asked, I recall, at our committee—I believe by my Conservative colleagues—what the implications are of the overall carbon tax on inflation. At the time, if I recall correctly, he said that if you eliminated the carbon tax completely, there would be a one-time 0.6% reduction—one time, not every year, just once. Although that 0.6% no doubt would be helpful to Canadians, it's important to remember that this would take effect only in that one year. After that, inflation would return to whatever it would have been otherwise. The other piece of it is that there's a cost to that and to all of us in not acting on climate change.

The last thing I'll say is that we've had experts come to this committee and speak about it. We had an expert on food pricing, for example, come and speak to us. When I asked him what the major reasons for food inflation were, he indicated that the primary reason was extreme weather events, a significant portion of which are impacted or driven by climate change. He also spoke about the war in Ukraine and the geopolitical impacts of that.

If the food inflation that Canadians are feeling—which has been significant and far greater than 0.6% of an increase every year over the past number of years—is driven by extreme weather events, which are largely driven by climate change, then surely the cost of not acting on climate change is greater than the one-time 0.6% cost of acting.

Would you agree with that, Mr. Giroux?

[Yves Giroux]

Well, the question of food price inflation is a very complex one, because it involves many factors: trade barriers, extraordinary world events and supply chain disruptions.

Whether climate change has a greater impact than 0.6% on food price inflation in any one year I think is something that's up for debate, and I'll let people who are specialists in the agriculture or agri-food sector debate that. You've had experts on the price of food and inflation. I'll probably let them speak on the impact of climate change and the carbon tax rather than pronounce myself, because it's an area that's highly specialized.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Baker.

We will now go to MP Savard-Tremblay for about four minutes, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

This time, I would like to turn to the officials from Competition Bureau, which recently published a study about the GST exemption for psychotherapy and counselling therapy services.

My apologies, this question is for the Parliamentary Budget Officer. I was thinking that the Competition Bureau had produced another study, and those officials are wondering what they might have written on that topic because they don't remember.

Mr. Giroux, returning to your study on a GST exemption for psychotherapy and counselling therapy services, we and various stakeholders in Quebec maintain that the proposed change is still not enough. Further, we would like to propose an amendment to Bill C‑59 to address this.

Can you tell us about your study on this topic? Is it much different from the government's analyses?

[Yves Giroux]

If I recall correctly...

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

It was your study, wasn't it?

[Yves Giroux]

Yes. I can let Mr. Boswell take the question if he would like to though, I would be pleased to. We can also answer together.

[Voices]

Oh, oh!

[Yves Giroux]

If I remember correctly, our cost estimates were relatively close to the government's estimates. I don't recall the details of the study since we have done a number of them. That is probably all I can say about that, which is not much more than Mr. Boswell, I think.

[Voices]

Oh, oh!

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That's great.

Do you have any other general comments on the topic we are discussing? You have the floor.

[Yves Giroux]

I would just like to say something about inflation. In terms of the effects of a government inflation policy, you have to make a distinction between a number of concepts.

By way of a simple analogy, we could compare inflation to the price of a car on a straight road. Inflation is the speed we are travelling at, and the price is the distance we have travelled. If inflation increases, our speed increases and we keep moving forward. If inflation slows down, our speed decreases, but we keep moving, more slowly though. If we remove or add a tax, that will affect our speed. But if we remove a tax, that does not mean we will be going backwards. Our speed will be slower, but the distance we have travelled has already been completed. We will not reverse, unless there is deflation, which has significant economic impacts.

I know this might seem obvious to many of you, but for people listening in, these two concepts can often get mixed up or be difficult to understand.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

We often say, “Every cloud has a silver lining.” Deflation is not necessarily the silver lining, but are you seeing that in your weather forecast, nonetheless?

[Yves Giroux]

No, we’re not seeing Japanese-style deflation in Canada over the medium term.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Boswell, do you or your colleagues have any general comments to add?

[Matthew Boswell]

I have forgotten which former Bank of Canada governor said this in a speech, probably about 10 years ago, but I would just add that competition causes good disinflation.

That is a point we've been making for years at the bureau. The more competition we have, the more it will drive this good disinflation. Don't take that from me; take that from a former governor of the Bank of Canada.

It's why we continue to say that Canada needs to put more emphasis on competition in the organization of its affairs.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

So, in your opinion, there should be more competition and a call for fewer monopolies, because that would be good for everyone.

[Matthew Boswell]

Absolutely. It's better for productivity, better for innovation and better for consumers in all sorts of ways. It provides multiple dividends to our economy, and we should pay really close attention to it at all times. A key pillar of a capitalist society is having healthy, robust competition.

That's why other countries are putting so much emphasis on it throughout their economic affairs, and we need to do the same.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Savard‑Tremblay.

This will be our final questioner.

MP Boulerice, you have about four minutes.

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

Thank you, Mr. Chair.

Mr. Boswell, I just want to make sure I’ve got this right. You want a major reversal of the federal government’s approach to business mergers. In other words, all mergers would be considered harmful to competition from the outset and there would be a reverse onus. Is that really where you want to go, towards a kind of presumption that mergers undermine competitiveness?

[Matthew Boswell]

Thank you for the question, because it's important to clarify that that's not what we're suggesting.

We're suggesting that when certain mergers—and it would be a very small percentage of mergers in Canada—get over the thresholds that we set out in our submission to this committee, those certain mergers, which are mergers in highly concentrated industries that make them even more concentrated, are where there should be a structural presumption. Then, the company—we're not saying it's blocked entirely—has an opportunity in front of the court to prove that it's not anti-competitive. It's actually a very fair system, and it only applies to a very small percentage.

A good chunk of the mergers that we review at the bureau—and it is Ms. Pratt's team that does this every year, about 210 mergers per year—don't present competition problems. However, with regard to the ones that do, if they get through, they have an impact on the Canadian economy and on Canadian consumers for, conceivably, decades. That's why we need to have this kind of very robust merger law.