Finance Committee on May 17th, 2023

[Daniel Kelly]

This was one of the best parts of the 2023 budget. It's a major victory for small business owners, who have been calling for reductions on credit card processing fees for some time. We have had a couple of reductions. One was under the Conservative government and one was under the Liberals. This will be the third round of reductions.

The challenge with the previous rounds is that a lot of that money didn't end up going to small and medium-sized firms, and payment costs are significant. It can range from 1.5% to 2% of the sale when a credit card is used. That, of course, is used to fund the reward schemes.

It was terrific news when we heard from the Deputy Prime Minister that there was a deal reached with Visa and Mastercard to lower these fees. Details have not yet been out, and we're urging the government to share how this is going to work with small business owners across the country.

Any reduction in the costs businesses pay will be of enormous help to small firms at a very difficult time.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Kelly. I fully share your enthusiasm over this measure.

I would like to address Ms. De Bellefeuille and Mr. Plourde.

In your pre-budget consultations, you wrote that the government should improve the consumer complaints process in the banking sector by delivering on the commitment made in budget 2022 to establish a single external not-for-profit complaints body.

Can you tell us more about the importance of that measure?

[Alexandre Plourde]

Of course.

Consumer associations in Canada have been waiting for this measure for a long time. For a long time now, we have been calling for a single body to handle complaints in the banking sector. In our view, it is essential to have an effective complaints mechanism that is impartial for consumers and inexpensive for them when they have a dispute with a bank.

It is important to remember that banks are among the most profitable businesses in Canada. They have a great deal of ability to advance their interests. Obviously, when a consumer is alone in asserting their rights against these companies, it can be very difficult. It can be a lengthy court process. So we think it's important that the process be absolutely impartial and that there be no doubt about the independence and integrity of the body.

The fact that banks can choose from a number of organizations creates all kinds of potential conflicts of interest and biases. Bill C‑47 closes a loophole in the complaints system.

However, we still have a request, and that is that the decisions made by this single body be binding.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Plourde and Mrs. Chatel.

It's over to MP Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

My question is for Ms. De Bellefeuille or Mr. Plourde.

First of all, I would like to remind my colleagues that we are still waiting for the government to increase the annual funding level for the contributions program for not-for-profit consumer and voluntary organizations, which has not changed in 20 years. Inflation is a big topic these days. With the funding level frozen for 20 years, consumer organizations are getting less and less funding over time as a result of inflation.

I would remind my colleagues that those organizations are seeking an increase of $5 millon or $10 million in multi-year funding over five years for consumer associations in order to better defend consumers. That is very significant.

Ms. De Bellefeuille and Mr. Plourde, I don't know if you had anything to add on the three points you raised.

If not, I would like to talk about the right to repair to counter planned obsolescence. A private member's bill was introduced to this effect by a Conservative MP, and his study is moving along well. That right is also mentioned in the budget. I would like to hear your thoughts on that.

Thank you.

[Alexandre Plourde]

We are of course very much in favour of establishing a right to repair in Canada. On a practical level, we have a legal information service. Many consumers are contacting us right now regarding a device that has become defective prematurely, either a home appliance or an electronic device. Consumers often tell us it is difficult to obtain repair services and replacement parts, at an affordable price, in any case.

We would like the government to move forward as quickly as possible, take action on its announcements, and adopt a framework that is broad enough to make a difference for consumers. To our minds, the right to repair includes access to replacement parts, repair manuals and repair tools. It would also include a ban on anything that hinders repair, whether in the physical design of devices, in their electronics, and even in the restrictions that may be part of the manufacturer's contractual guarantee, for instance.

The last thing we would like to see in a future right to repair relates to all aspects of consumer information. A repairability indicator could be provided for certain consumer products so that consumers could consider the repairability of the product at the time of purchase.

With these announcements, we hope the government will move forward and establish a strong right to repair in Canada.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Once again, thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

MP Blaikie, the floor is yours.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much, Mr. Chair.

My question is for Mr. Corey and Mr. Northey. I'm curious to know, for the folks you represent at the table, how much product was lost last year due to not being able to access rail delivery.

[John Corey]

That's almost impossible to quantify, but currently there are many issues with container delivery or lack of delivery to be more precise. As Greg pointed out, the problem with the supply chain in Canada with rail is that the railway dictates when they deliver and when they pick up. Essentially they are dictating what businesses can do as far growing, delivering their product and selling it around the world is concerned.

Section 5 of the Canada Transportation Act says that we should have an efficient and effective transportation system for all, not just for the railways. The railways practice precision-scheduled railroading, which is essentially a business model that maximizes their use of their assets, reduces their costs and has no consideration whatsoever for its customers.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Are you able to quantify your numbers?

[Greg Northey]

The grain sector has a program called the ag transport coalition. It's been running for close to 10 years now.

Within the grain sector, how this system works is that we order railcars each week for the amount of grain we need to move each week. Grain companies will set a sales program for the entire year based on what they expect the rail capacity to be. We're capped. At the beginning of each grain year, CN and CP actually say, “This is what we're going to give you, grain sector, each month as we go forward.”

First of all, that's not enough. Our grain programs could absolutely be larger. That's always the consistent issue we have as far as the overall capacity goes that's given to the grain sector.

Each week we track. Ultimately, it's the timeliness of those railcar deliveries that we need to see because we time the movement of our grain for the vessel at port. Consistently, at a very base level, we would like to see 80% of our orders each week be supplied.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Do the grain companies say how many cars they're going to move in a week?

[Greg Northey]

Yes, they'll put in an order each week for the number of cars that they want to see delivered to them each week.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

That's week by week, but they don't file that at the beginning of the year.

[Greg Northey]

The railway companies and the grain companies have communicated very early in the year to say, “This is what our sales program will be.” We are able to predict what the crop size could be, obviously with variation.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Railways have said that they have capacity in a week. Their understanding was that the capacity would be used and that grain companies don't use the capacity that they've committed to use in a given week. That was certainly a message. I know you were talking earlier about some of the messages of the railways, but they've said very clearly that they have capacity. Their understanding was that capacity would be used, and it's not being used. Do you know why your members would not use available rail capacity in the weeks that were agreed upon at the beginning of the year?

[Greg Northey]

We sell into an open market, so when you see grain movement each year, it's very cyclical. You have a program, but each week, depending on the crop and when the crop comes off, you may have different variations in what you need. Then you absolutely need some flexibility in the week to say that you're not going to put this much pressure on the system, but you are going to need it in the future.

The railways obviously—

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

That's dictated by world prices. If the price is relatively lower, folks want to hold back selling their product, and then they want to move more product in a period when there's a higher price.

[Greg Northey]

That's true to some extent, but a lot of it is based on the contracting arrangement and on what certain other countries are doing.

When a railway says things like that, what they would like to see is for grain movement each week to be even all the way through, but the reality is that customers should dictate. In pretty much any other sector, you're dictating to your service supplier what you need each week and what you want to see. When you have a railway, they want to maximize their assets and sweat them week to week to week. They want a nice even grain flow, and that's just not the way the grain sector works.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

They also say that your members want to maximize the value of their own assets.

[Greg Northey]

Absolutely, because ultimately you're targeting your vessel, so it's going to be peaky. When you have a vessel and you're not getting the rail service you need, you're paying to merge on that vessel. Ultimately, it's the farmer who bears that cost, so that's ultimately our main issue. This is why, as John mentioned, precision-scheduled railroads and this idea that they can just schedule each thing each week and it could be a perfect, controlled environment can only be done when you're in a monopoly situation and you can control the market. No other service provider can really do that.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Is it fair to say that railways are a high barrier-to-entry business?

[Greg Northey]

Yes, it's very fair to say. That's why extended interswitching in particular is a very easy way to drive competitive prices.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I'm sorry, but we hear around the table that entrepreneurs take risks. They invest, and they expect to get rewarded for the risks they take.

When a railway makes a major capital investment, they expect to see a return on that. Is that something that is outside of regular market expectations, that a company that is putting up a massive amount of capital in order to play in an industry that's difficult to play in would want to see a reasonable return on the investment?