Industry Committee on May 3rd, 2022

[The Chair, Liberal, Joël Lightbound]

Thank you.

Ms. Lapointe, you have the floor for five minutes.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

My questions are for Robin Shaban.

In your opening remarks, you stated that competition policy is inherently political. Can you expand on that point?

[Robin Shaban]

Yes. The fact of the matter is that among the various stakeholders impacted by competition policy, there are going to be varying needs. A lot of the time, these needs and interests are going to conflict. This is just the reality of the situation we are bringing ourselves into with the review of the act.

The reason I bring that up is that in competition policy circles and among experts, there is a desire to, or belief that we can, sanitize competition policy and remove it from this political context. As I explained in my remarks, that's not actually the case, because if we ignore the reality that there are conflicting interests at play in light of the review, we're just kicking the can down the road. We're passing this problem on to other policy areas. I think this passing the buck can be more expensive to government and ultimately to taxpayers.

Per the example I gave, how much more expensive would it be for ISED to deliver more grants or more supporting programs to small and medium-sized businesses? Could some of that be offset with better competition law and better enforcement of that law?

The great thing about competition law is that in a lot of ways it's pretty inexpensive. All you need to do—well, it's not this simple—is create legislation and develop an enforcement agency. A lot of the mechanism is simply the threat of enforcement. There's a deterrence effect. Deterrence is pretty inexpensive as far as policy interventions go. It's a lot more inexpensive than writing cheques to small businesses or consumers in the form of tax and transfer.

This is the point I'm making. There are intersections in the interests of the stakeholders who will be at the table, and we need to reckon with that and acknowledge it, because it has implications for how competition law intersects with other policy interventions at the federal and, I would also say, provincial levels.

[Viviane LaPointe, Liberal, Sudbury, ON]

If you had to advise the government on how to modernize and reform the Competition Act, what would you say are the top two things the government should do?

[Robin Shaban]

I spoke about the purpose statement of the Competition Act is because I think that this is actually one of the most critical aspects. I think it's less critical from that legal perspective. The legal importance of the purpose statement is not that critical. What's most important is setting a purpose statement that orients the conversation in a way that is productive and that brings in all stakeholders. That includes big business, small business and all these other stakeholders that I mentioned.

I think the second most important thing is something I've already talked about here too. It's rethinking how we actually evaluate and identify anti-competitive conduct because, again, our economy's changing, and, unlike in the past, I think we're faced with more problems of having to predict what behaviours today are going to do and the implications of them in the future. There are limits to that. Perhaps taking a more rules-based approach, while it may be a more blunt instrument, can actually help us prevent some of these anti-competitive problems before they get a bit out of control.

[Viviane LaPointe, Liberal, Sudbury, ON]

If the goal is fair commerce, what does that look like for SMEs?

[Robin Shaban]

That's a good question.

I think ultimately SMEs have to answer that, but my take on it is that it is in dynamic marketplaces that SMEs can realistically enter the market and achieve some sort of scale in order to be an effective competitor.

Something that's really unique about markets today—in particular, markets where there's lots of data, where there are network effects—is that it's very difficult for businesses to enter those spaces and scale up. Part of that is the business model and part of that might be legitimate business advantages that incumbents have, but I think a lot of it has to do with the nature of data and the role that data can play as a competitive advantage. I think we need to ask ourselves whether we're okay with large firms having large amounts of data that they can then use to essentially hive themselves off from competition or protect themselves from new entrants that might come in and challenge their dominant position.

I think that there can be policy interventions, both through competition law and perhaps also through other policy tools like data trusts, that enable small and medium-sized enterprises to get access to this data and be effective competitors in the space.

Again, it ties into some of the themes that my colleagues and I talked about with that report for ISED that I've been referencing.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Deltell, you now have the floor for five minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you, Mr. Chair.

Ladies and gentlemen, it is very nice to see you today. I am always impressed by the quality of witnesses we hear from and the submissions provided.

Thank you so much for what you're doing for this committee and especially for this country.

My questions are for Mr. Blackburn, from the Quebec Council of Employers.

Mr. Blackburn, I give you my respect.

For everyone's benefit, I should point out that Mr. Blackburn served as a member of the National Assembly, so he knows a thing or two about the issue before us today.

I also want to recognize Mr. Hamel, from the Quebec Council of Employers.

Mr. Blackburn, thank you for your contribution. You cited one figure that surprised me.

You said that there are currently more people unemployed than jobs available. Is that correct?

[Karl Blackburn]

That is right.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

How do you explain that?

[Karl Blackburn]

The unemployment rate is currently around 4.5%. Given that the unemployment rate is so low, but the participation rate is high—I would even say historically high—we are witnessing a perfect storm. Someone used that expression earlier, and it is an extremely appropriate image. We are currently in a situation of full employment.

Unfortunately, if we are unable to expand the pool of workers, we will not be able to deal with the current situation. Indeed, employment insurance recipients and youth who are not in employment, education or training, referred to as individuals who are NEET, will not be enough to address it. We must therefore be able to expand the pool of workers. In that context, experienced workers and other individuals are part of the solution.

It will not be possible to get all employment insurance recipients in the workforce. However, the employment insurance system should adopt a continuing education program. That way, the members of society would be better trained. A society that is better trained and more skilled is a richer society collectively and individually.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

How do you see the continuing education program, the program that you are proposing?

If the unemployment rate is 4.5%, that means, in theory, that youth can find a job within one week. Am I right?

[Karl Blackburn]

That is correct.

In the current context, why are we witnessing the greatest labour shortage in our recent collective history when the unemployment rate is at 4.5%?

It is important to remember that the pandemic did not cause the labour shortage. The pandemic accelerated the labour shortage in some industries, in particular, the tourism, aerospace, retail and accommodations sectors. However, growth in other sectors is truly exponential. The movement of a certain number of workers underscores the importance of providing training, to increase skills. Training is a tool that will allow us to deal with the situation.

Earlier, I listened to the comments from the representative of the Canadian Federation of Independent Business. One thing that she did not mention, but that we feel is important, is to extend to the end of the year the programs put in place to support Canadian businesses during the pandemic. This must be done for certain industries, especially the accommodations, food services, tourism and aerospace industries.

Why do we need to do that? It is to allow these industries to deal with another economic cycle, which will give them the capacity to strengthen their operations. Despite the circumstances, if the current supports are not maintained longer for these key, but more fragile, industries, the consequences could be catastrophic for many of them.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Recently, France did something quite special. As you know, inflation is very high in Canada, at nearly 7%. In France, the inflation rate is much lower, 4.1%. One of the measures adopted by the French government consists of freezing tariffs for an indefinite period to deal with current inflation. As we know, inflation has a direct impact on business owners.

Do you think the government could draw inspiration from what was done in France and freeze tax and tariff increases to give workers, Canadians and, of course, businesses a break?

[Karl Blackburn]

In my opinion, that certainly could not hurt the situation. In a way, it could help minimize the current pressure, which is causing an inflationary spiral. I note that the inflationary spiral is caused by significant pressure on the markets, which are unable to meet demand. This is primarily due to supply chains that have been hit hard by the pandemic. The reopening of markets has unfortunately put major pressure on supply chains.

The current labour shortage also contributes to the inflationary spiral. We can clearly see that there is a significant increase in wages. For example, I would refer to the forum that we hold each year, in the fall, concerning wage forecasts for the coming year.

The estimates from all the experts who presented outlooks for wage increases in 2022 foresaw increases of 2.9% to 3.1%. We are well above that. In some industries hard hit by the labour shortage, the increase is between 25% and 30%.

A series of events, mostly linked to the present economic climate, have significantly increased that pressure. We are in an inflationary spiral.

Through the central bank, the government has a role to play in reducing inflationary pressure. Ultimately, however, everyone will pay because interest rates are going up. At some point, there may be a recession, which would have significant economic repercussions. Finding a balance is not easy. What will help slow the current inflationary spiral is not a single measure, but a combination of several measures.

Canada can draw inspiration from what is being done elsewhere.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Deltell and Mr. Blackburn.

I now give the floor to Mr. Dong for five minutes.

[Han Dong, Liberal, Don Valley North, ON]

Thank you very much, Chair.

Thank you to all the witnesses for coming today.

You know, as I was listening to your testimony, I went back to the motion. We really should distinguish between domestic market competition and international market competition, because the role of government will be very different. With international competition, we'd be looking at branding, the value of the dollar, our labour cost advantage, trade agreements and so on and so forth. I think today, particularly from the conversation here, we're mainly focusing on domestic market competition.

When it comes to the domestic market, we have to look at the government's role. We talked about the costs of labour. We talked about the administration costs, logistic costs for businesses, consumer behaviour changes during the pandemic and whatnot. More importantly, I think, we have to look at the domestic economy.

I'll let you answer this. Would you agree that in the last two or three years, Canada, as compared with the rest of the world, in terms of economic recovery and the health of its economy, has been enabling small and medium-sized businesses to grow and be sustained, with all the support from the government and the preparation of the playing field?

I'll start with Ms. Pohlmann.

[Corinne Pohlmann]

Canada's been blessed that over the years we have had good growth in small businesses. We've been very fortunate that we've always had more small business created every year than lost. There's always been net growth.

What's been happening, though, is that just before the pandemic and during the pandemic, that hasn't been happening as much. We've sort of evened out and have even seen more closures than growth. I think that should worry us. Is that a pandemic response or is there something deeper? I think that's what we're going to have to wait and see, because—

[Han Dong, Liberal, Don Valley North, ON]

I'm sorry. I have limited time here.

I understand that, but would you say that compared with the rest of the world and the rest of the governments around the world, the Canadian government has been there for small businesses to minimize the loss of our small businesses in Canada?

[Corinne Pohlmann]

Certainly during the pandemic there were, I think, good supports that were very helpful and that I think will continue to hopefully bear fruit as we continue to recover, but we're going to have to wait and see, because now we're at that pivot point, right?

[Han Dong, Liberal, Don Valley North, ON]

You also mentioned that you observed some change of behaviour from consumers during the pandemic. Now there's a trend of shopping online and whatnot. Are you aware of the $4-billion digital adoption program? Can you tell me how your members are finding this program? Is it widely used? Is it helpful, or...?

[Corinne Pohlmann]

On the digital adoption program, I'm not sure: That is my answer right now.

We're certainly trying to promote it and let our members know about it. I think it came a little late in the game. Many of them adopted digital systems earlier on in the pandemic. That's maybe when it would have been needed more. I know that it was based on the program called “digital main street” out of Ontario, which was really well liked and well used.

I think the idea behind it is good. My worry is that accessing it is a bit complex. There are multiple stakeholders involved. Depending on where you are, you have to apply through a different group. That's my worry. It might be a little too complex for many small businesses to actually take advantage of it, and it may be a little late.

We're going to certainly do what we can to encourage businesses interested in that type of growth to get that.

[Han Dong, Liberal, Don Valley North, ON]

Was there a role in the digital main street program for the federal government?