Industry Committee on April 13th, 2021

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll now start our round of questions.

Mr. Poilievre, you have the floor, for six minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you very much, Madam Chair.

So often red tape and regulation are portrayed as something that the corporate sector is worried about. In fact, large corporations love having red tape, because it's a great way to keep out competitors. It makes it advantageous to be large and to be able to afford lawyers, consultants and lobbyists and to have connections to people in power.

As Ms. Jones, from the Canadian Federation of Independent Business, points out, small businesses—

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Madam Chair, could you ask Mr. Poilievre to bring his microphone closer to his mouth, please?

[The Chair, Liberal, Sherry Romanado]

Mr. Poilievre, could you put your mike between your upper lip and your nose please. We're having trouble hearing you? Thank you.

[Pierre Poilievre, Conservative, Carleton, ON]

There you go, more rules and regulation here.

Large corporate entities have no problem with red tape, because they can hire lawyers, lobbyists and other powerful insiders to influence government to write the rules to shut out competition and keep themselves on top, to protect the incumbent by keeping down the challengers.

Ms. Jones, you said in your testimony that, according to Canadian Federation of Independent Business surveys, the heavy red tape burden falls disproportionately on the smallest firms.

Do you have more detail on that finding?

[Laura Jones]

Yes. The smallest firms pay five times the cost per employee, if you look at it on a per-employee basis, because, of course, bigger firms have more employees over which to spread the costs. It is absolutely a barrier to entry for those firms as well as a regressive tax, if you want to look at it that way.

For firms with fewer than five employees, they pay $7,000. [Technical difficulty—Editor] more, you're looking at about $1,200, just to give you a sense of those costs.

[Pierre Poilievre, Conservative, Carleton, ON]

Well-established corporate entities have no problem with regulatory red tape that shuts out their competitors. In fact, it was funny. The other day the Enbridge CEO actually said the current government and the anti-pipeline movement make his existing pipelines more valuable. In other words, all the governmental blockades against pipelines are actually enriching those pipeline companies that already have pipe in the ground, because now they face less competition from new pipelines.

The same goes for a warehouse. Mr. Dachis, you pointed out that in Toronto it takes much longer to get a warehouse approved than it would in South Korea, Singapore or elsewhere. Those who already have warehouses can then charge very high leases to their tenants, because there's no risk those tenants would go off and build their own warehouse. Again, this favours the rich and well-established incumbents.

Then we go to housing. Of course, the red tape that prevents housing construction is wonderful news for millionaire mansion owners, because it drives up the value of their real estate while making the young, the poor and the renters much worse off. That's a huge wealth transfer from the working class to the superwealthy.

Mr. Dachis, can you comment on what the $600,000 of extra governmental costs in Vancouver to build a house, or the $250,000 in Toronto to build a house, will do to poor and working-class people who are trying to aspire to the dream of home ownership?

[Benjamin Dachis]

Let me put those numbers in the context of some of the broader debates that we have heard around the world over the last 60-plus years.

Think about wealth and equality. You think of the findings you have seen around the world of wealthier people getting richer and richer. If you look at the trend around the world, the increase in housing costs has driven almost all of that. This broad societal problem, which we think is fundamental to so many things, is fundamentally a housing issue. That's just on the wealth and equality side.

Studies in the United States have shown that the increase in housing regulations there have been one of the single most important detractors of U.S. economic growth.

[Pierre Poilievre, Conservative, Carleton, ON]

Right. What you have is what I call a “snob mob”. These are the very wealthy aristocratic elite who already own houses in these leafy, beautiful neighbourhoods. They want to keep everyone else out, so they lobby against construction of new housing to drive up their own home prices and prevent the poor and the working class from ever having a home.

This is happening mostly in über-progressive towns like San Francisco, but it's also happening in Vancouver. In downtown Vancouver and the ritziest communities of Toronto, they are blocking and lobbying against the construction of new, affordable housing with the effect of keeping their own property values up at the expense of the poorest people around.

Don't you think we could solve some of the poverty and equality problems if we got governments out of the way and allowed people to build houses?

[Benjamin Dachis]

I do absolutely.

The key is to find the right balance of local input into planning processes, so that people who are residents of an area, whose largest investment is their home, have a stake in their ability to see the future of their community but at the same time not so much power that they restrict development.

This is where the development permit system in Ontario and other provinces might make the most sense. It brings the planning process up a level.

[Pierre Poilievre, Conservative, Carleton, ON]

I know some will say, this is all municipal and provincial. Remember, the same municipal governments that are driving up housing prices are coming to the federal taxpayer asking for more housing dollars. They think it's a federal issue, or else they wouldn't be bringing it here.

We should protect taxpayers and future homebuyers by holding governments accountable for how much they're driving up home prices and other costs of opportunity.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, MP Poilievre. That's your time.

We'll now go to MP Jaczek.

You have six minutes.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you, Madam Chair.

I'd certainly like to thank all of the witnesses today. Competitiveness in Canada is a very broad subject, and you've each brought your own perspective to the issue. I would like to focus on the Competition Act itself.

First of all, I'd like to ask Monsieur Vaillancourt about some of his testimony in relation to one section of the act, the abuse of dominance provision. Just so you know, Monsieur Vaillancourt, we've heard many opinions related to the Competition Act. Another area involves the efficiencies defence and some people feeling that it should be very much modified, if not done away with.

I have a fundamental question. Is it time for the federal government to conduct or commission an in-depth review of the act as a whole?

[David Vaillancourt]

Thank you for the question.

That's a fair question. Likely it could do with a wholesale revision and review. There have been a few times when there were large amendments—1986 being one and 2009 being another, although at a smaller scale—particularly with issues around the digital economy.

I think that some of the amendments made initially—now that we have the track record to see how these have panned out—particularly this private access to the tribunal.... Initially, a limited right was granted. The reason it wasn't broader and inclusive of abuse of dominance is that there was a “floodgates” concern, which really hasn't been borne out at all over the last 20 years or so.

I agree that it would make sense to give a more in-depth review to the act.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you.

Concerning the number of complaints that are actually investigated, you pointed to the fact that those were just a very small proportion. Would you say that the lack of investigation is due to a lack of resources, or is there something particular within the Competition Bureau's mandate that does not allow them to pursue the complaints?

Is it more one than the other? Could you elaborate? You talked about a lack of resources.

[David Vaillancourt]

I have the perspective of a private practitioner, whereby we hear reports from the bureau on such things as these statistics. Ultimately, we're not in the decision-making room, where priorities are set.

The bureau has enforcement priorities, which they publish every year. From my observations, it seems that if you have a matter that falls outside one of those priority areas, it's more difficult to get the interest of the bureau.

I think ultimately it comes down to a question of resources. Of the 467 complaints, I doubt that all of them were worthy of carrying forward to the next level, but surely more were than the bureau was able to take a look at, with its budget limitations, given that other parts of its mandate, such as criminal enforcement and the mandatory merger review, face more fixed costs. When there's some squishiness and money has to be cut, my perception is that it is more on this type of stuff, the reviewable matters.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you.

In respect to the Competition Tribunal, we as committee members received a brief through the clerk from a former member of the Competition Tribunal. He was very much of the opinion that it seems to have become a rubber stamp. He also felt that the tribunal should be able to hear consent agreement cases.

Do you have an opinion on that?

[David Vaillancourt]

I think that, just as in a criminal matter where a judge in sentencing retains discretion, perhaps some residual discretion to the tribunal may be warranted, but the settlements that are negotiated tend to be very complex and based on a lot of very complicated factors. I think there is a risk that it's sort of like a Jenga tower where, if the tribunal wants to pull out one piece because they don't like that, then it can have an unintended consequence of blowing the whole thing.

I'm not incredibly passionate about that recommendation.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you.

Mr. Dachis, you did have your hand up. Did you want to get in on the conversation on the Competition Act?

[Benjamin Dachis]

Yes, very much so, the reason being that the C.D. Howe Institute has a competition policy council, and this is comprised of top-ranked academics and practitioners active in the field of competition policy. I wanted to point the committee to that group's work. It's on a number of these points that you've asked about and the committee has raised.

I'll just mention two. One is on private remedies and the Competition Act group did endorse that request. The other is on the need for the bureau to have more resources, so there's lots that you can use from that group.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you very much.

Is there anything, Professor Larkin, that you would like to add on the Competition Act? I saw you nod at one point.

[Dr. Yelena Larkin]

Yes, thank you so much.

I agree with a lot of the things that have been said here.

This idea of who can gain an efficiency on one side is something that needs to be looked more into, because it's a vague issue. It's hard to interpret, and it's not clear who those benefits of efficiency apply to.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Mr. Lemire now has the floor for six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

First, I want to ask whether we could invite Mr. Poilievre to appear before the committee. It would be helpful if he could give an initial five- to seven-minute presentation. We could then ask him questions about his desire for more pipelines. That could be really useful.

I'll now turn to Ms. Jones from the Canadian Federation of Independent Business.

First, thank you for your presentation. It's obviously very valuable to have access to statistics on the impact of businesses, particularly independent businesses and small businesses.

In your opinion, what top two or three regulatory and administrative relief measures should be implemented first to continue to effectively reduce the administrative burden that the federal government imposes on businesses?