Industry Committee on Oct. 31st, 2024

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I’m referring to what Mr. Charlebois said earlier about buying now and paying later. Since credit card issuers have fewer protections, interest rates are higher. The risk is higher among young people in particular, because they are the ones who use this payment method—that didn’t exist in my time—to buy food on credit and pay for it over a number of months.

What would be the impact of this type of system, where there is less protection and credit card interest rates are higher? Young people might think that taking on debt is not all that serious, because they can make deals with their creditors. It could become a never-ending cycle.

Do you think that's a pattern we could see?

[Elisabeth Lang]

There's always the possibility. As I say, we will keep a close eye on it. We have not seen that pattern in Canada. Most people do not enter into an insolvency lightly. It still comes with very serious consequences in terms of your credit rating, which lasts a long time. At this point, I'm not worried about it, but it is certainly something to keep an eye on.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Charlebois and Ms. Taylor, I wasn’t really aware of the possibility of buying food and paying for it later. In a sense, it’s done with a credit card, but it’s not necessarily the same type of credit.

Is this way of doing things dangerous, particularly for younger generations? You made frequent mention of this in your presentation. Personally, I have never bought food that way. I pay for my food when I buy it. I may pay with my credit card, but I’ll pay the balance two or three days later to get points, like everyone else.

Is that principle different for young people? Do they have another perspective on this?

[Samantha Taylor]

Thank you.

Younger people are influenced by social media disproportionately when compared to older generations. Finfluencers are a particular kind of financial influencer available on TikTok, Instagram and whatnot. Their primary motivations are to provide entertainment and to make money for themselves. It's not to educate their viewers.

Hearing that it's basically free when you're buying something reduces the friction.

The availability of information that's targeted primarily at younger generations could likely have a significant impact down the line.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Charlebois, I’m going to switch gears. I want to go back to Mr. Turnbull’s questions and the answers you provided him. The carbon tax applies to food producers as well as to transporters and retailers who sell that food. Obviously, that tax does not apply in Quebec, since the province has a cap-and-trade system.

Just a moment, Mr. Garon. I haven’t finished asking my question.

Does the carbon tax nevertheless have an impact in Quebec?

[Dr. Sylvain Charlebois]

I think the cap-and-trade model rewards businesses that foster sustainable development and penalizes those that pollute. The carbon market allows companies to see carbon as an opportunity. There's some logic to it. In my opinion, Quebec is ahead in this area.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

My question is—

[Dr. Sylvain Charlebois]

I'm in touch with many agri-food business representatives from across Canada. Many of them are concerned about the carbon tax. That said, when I go to Quebec, I would say few of them are.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I understand, but in Quebec, the carbon tax doesn't apply directly, because we have a cap-and-trade system.

Since Quebec doesn't produce 100% of the food it consumes, it imports food from other parts of Canada. Quebec produces a lot of milk, but not as much beef as Alberta. Needless to say, we eat steak in Quebec.

Does the carbon tax also affect Quebec consumers?

[Dr. Sylvain Charlebois]

As far as inputs are concerned, that could be the case.

Again, it's very difficult to determine a ratio linked solely to a policy that’s upstream of the chain. That said, it’s possible.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

All right.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Généreux. You've used up all of your time, and then some.

Mr. Badawey, you have the floor.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chairman.

I've been in the food business for over 40 years. That's pretty well my entire life. I recognized quickly as a 10, 12, 15, 25, 30 and a 40-year-old that what impacts food prices most is weather. Climate change is a big part of that. Mind you, for added-value foods, whether they're prepared, or for any food, for that matter, which has any value added to it, the margins are much higher. Frankly, that's where your increases come from, period.

Therefore, as Mr. Turnbull alluded to earlier, we have to buy smart. I see a lot of consumers starting to do that now and the costs of the foods that they're buying are starting to level off because of the smart buying.

I want to go back to what we're actually studying here and that's credit cards. Primarily, today's meeting, with Ms. Lang here, is about credit card debt.

Ms. Lang, I really want to concentrate on you with respect to trying to mitigate some of the challenges that our residents are going through right now, taking more of a proactive approach.

My first question for you is, what role does your office play in pre-emptively assisting Canadians who may face financial difficulties in the future, especially related to credit card debt?

Do you have any proactive approaches or outreach that you would embark on or any awareness campaigns that your organization would actually embark on to be proactive, so folks don't get into credit card debt in the first place?

[Elisabeth Lang]

I mentioned our consumer awareness campaign that includes a multipronged approach and collaborating with many partners to get the word out to Canadians about the various options to deal with their debt.

One of those is to target you when you are starting to sort of feel the pinch. Unfortunately, a lot of Canadians don't act proactively to deal with these problems, which can cause a lot of stress and mental health issues. However, if they do, they can find excellent resources to budget, understand credit products and deal with them more effectively.

We're really trying to get the word out. We work collaboratively with FCAC and with licenced insolvency trustees. We will partner with anybody who's willing to spread the word through various channels, including social media, to help Canadians find those solutions.

[Vance Badawey, Liberal, Niagara Centre, ON]

This may not be your area of expertise or the business you do on a daily basis, but would there be an opportunity to inject into the system a discipline—someone taking on the responsibility, such as credit card companies, for example—that would prompt a service to those individuals who would be anticipated to get into those areas of concern?

[Elisabeth Lang]

Yes. One thing I know, from talking to my international colleagues, is that other countries, such as the U.K., do a better job of funding financial counselling. It's more of a charitable industry there compared to in Canada, where even if it's called not-for-profit, it's often just a tax treatment. These organizations are often charging and selling products.

Whether it be through creditors or through the industry that already exists, I believe we could do a better job of funding that to help Canadians.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Badawey.

Mr. Garon, you have the floor.

[Vance Badawey, Liberal, Niagara Centre, ON]

Okay. Thank you.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

I understand from your previous comments that you're particularly concerned about the quantity and quality of the meat in bolognese sauce. A very good friend of mine, Marc Simard, who happens to be from Saint-Constant, probably has the best recipe in the world.

I could ask him to table the recipe with the clerk so that when the analysts help us draft the committee report, we could include a recommendation with the bolognese sauce recipe specifically for Mr. Chair, who, incidentally, has a growing family. There are times in life when you just have to change the way you do things.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Garon.

Infant formula is costing me quite a lot, so this will help.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Certainly.

Rest assured, Mr. Chair, I was being completely altruistic and sympathetic.

I'd now like to turn to Mr. Charlebois.

In a comment you made earlier, you mentioned price increase dynamics among food retailers in Canada. You said margins were a little higher in the U.S., so when wholesale input prices fluctuate, grocers and Walmart don’t necessarily need to increase their prices immediately just to maintain their margins. Here in Canada, margins are lower, so major fluctuations are immediately passed on to consumers.

I find that interesting. To tie it back to our study on credit cards and interchange fees, I wonder whether a drop in interchange fees would be pocketed by merchants or passed on to consumers. According to some critics, grocers would benefit from the lower interchange rates we’re proposing. That said, I wonder whether slightly larger margins on the cost that interchange fees represent could mean grocery stores might not need to raise prices as much. I'm talking about input price fluctuations over the next two, three or four years, in this two or three-year horizon.

How can we criticize grocery stores for not immediately lowering or adjusting prices as soon as interchange fees come down, if it means they'd have the leeway not to have to raise prices later?

[Dr. Sylvain Charlebois]

It's a hypothetical question, of course, but it's a good one.

Over the past five years, gross margins have more or less stayed the same for the four major grocers: Empire, Sobeys, Loblaw and Metro.

If fees were lowered, could grocers pocket the difference? Possibly, but we don't know. The agri-food sector has extremely narrow margins. Of course, when grocers have an opportunity to take a cut, they do.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Have you done any kind of assessment?

You've studied grocers' cost structures when input prices fluctuate, in other words, how things change, how grocers re-optimize prices.

Do you have any idea what these operating costs represent for grocers, these credit card fees, reward card fees and so forth? Is it 0.5%? Is it 3%? As a share of a grocer's total costs, is it all that significant?

[Dr. Sylvain Charlebois]

We've never measured what that portion is, but it's not one of the most significant costs. Obviously, real estate, payroll and the cost of the products sold are the three biggest ones.

We know it's not in the top three, but we don't know what the percentage would be.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you very much, Mr. Charlebois.