Industry Committee on May 3rd, 2022

[Corinne Pohlmann]

During the pandemic, we saw a huge transition in how people paid. Cash is really non-existent today. It's moved to digital payments. When that happens, it becomes much more expensive from a merchant's perspective. When you move online more, those transactions are even more expensive, because they're considered to be riskier.

While rates themselves have not gone up, the cost to small businesses has gone up as a result. We have been pushing the federal government to lower credit card rates, which they promised to do back in budget 2021, and it was mentioned again in budget 2022, but we have yet to see any movement on that.

There was a reduction, I will say, in 2020 to an average of 1.4%, but we believe more needs to be done to bring more of those savings to small businesses, because a lot of it gets spread out to businesses of all sizes.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

I have a last quick question.

I know the CFIB has reported that the average small business took on about $170,000 in new debt during the pandemic, and many have shut or scaled down as a result. With this new debt, are you concerned that hikes in costs for things like CPP payroll tax increases and carbon tax increases earlier this year will put even more businesses on the edge?

[Corinne Pohlmann]

Yes, we're very worried. Now that supports are also going to disappear as of May 7, there will be nothing to help businesses that are feeling the load of the debt. We believe this is the target thing that we have to deal with now.

How do we help those really hard-hit businesses that are dealing with $150,000, $200,000 or $250,000 in debt through no fault of their own? We'd love to see the forgivable portion of the CEBA loan increased, or other measures that we can think about to help those businesses get out of that debt.

I think in next three to six months, we may very well see more bankruptcies. I know that other countries, once they got rid of their supports, started to see a bit of an increase in those bankruptcy closures. I wouldn't be surprised if we started seeing that more here, unless we can do more to help with that debt.

[The Chair, Liberal, Joël Lightbound]

Thank you, Ms. Gray.

Thank you, Madame Pohlmann.

We'll move to Mr. Erskine-Smith for six minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

I want to stick with the Canadian Federation of Independent Business. I'll start with the red tape recommendation that you made. Maybe it won't be in your answer now, but could you commit to providing a list of examples of red tape at the federal level? It would be helpful to have more concrete examples that the committee could use. I appreciate the slide deck, but could you come back to us with some more concrete examples of red tape at the federal level?

[Corinne Pohlmann]

We can certainly do that, but I will say that it isn't about fixing individual pieces but about fixing the whole system. That's why things like the Red Tape Reduction Act have been very effective at helping to fix the entire system, by putting some constraints on regulators. We need to continue—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Pause there, because that's really helpful. I have a question about the one-for-one rule.

We had the Treasury Board in the last Parliament testifying in front of us about similar issues around competitiveness. I appreciate the need to address red tape in the sense that if there's something duplicative or unnecessary, addressing that and reducing costs make a lot of sense. However, in other cases there are important rules that are in place in the interest of public safety or environmental protections, and casting those measures as red tape is sometimes unhelpful.

I've never understood the philosophical rationale behind the one-for-one rule. It's this idea that we just managed at some point in time to have the perfect number of rules. If we impose a new rule, there should be one fewer rule in some other place.

Shouldn't we be more focused in this conversation around what is unnecessary or duplicative and really gets in the way without a public interest rationale behind it?

[Corinne Pohlmann]

I think both are necessary, to be honest.

When it comes to understanding which rules, I agree that we need the rules. We need to protect the environment, we need to protect health, and we need to protect safety. There's no doubt about that. There also needs to be a bit more clarity for the people who create the rules to understand that you can't just keep creating, creating, creating; you also have to think about managing what's already in place. Having some sort of parameters around how to manage those rules already in place would help.

Right now there's a bit of that, but not enough to manage the volumes, because it just keeps growing. The volumes—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

That takes me to my first question again, I guess. In the interest of managing existing rules, can you give us a concrete list of existing rules that you think ought to be managed a bit better? That would be helpful.

[Corinne Pohlmann]

Yes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Similarly, I would find it helpful.... Look, we're not going to freeze the carbon tax and the price on pollution. It doesn't make any sense in the interests of tackling carbon emissions as we need to, as a matter of our obligation to the world and future generations. It makes no sense for us to do that. It's the most economically efficient way of tackling climate change.

If you could instead come back to us.... I did note that in your slide deck there is a piece to say that small businesses pay a disproportionate sum but don't benefit from the rebate proportionately. If you could, again, come back to us with a more elegant solution—freezing is not of interest to me—in relation to maybe taking a share of the revenue and distributing it fairly for small businesses, I would be interested in that, if you can come back to us in writing.

For the Canadian Chamber of Commerce, on the piece on Competition Act reform, I take the concern to be that we're in a difficult inflationary environment and that additional reforms right now may not be welcome if they create greater burdens in regulatory compliance. How do we square that, though, with the fact that we are a country of oligopolies, and oligopolies increase prices for consumers? We've seen that in telecommunications. We see that in grocery stores. We've even seen it in this inflationary environment, where the companies that exist within these oligopolies are profiting despite the inflation. It's not just that prices are increasing; their profits are also increasing at the same time.

How do we square those concerns? On the one hand, I take the concern that you've laid out, but I would turn the concern back by asking, “Don't we want greater competition to drive prices down?”

[Mark Agnew]

At the risk of having a caricature of what the business community is like, profit is not a bad problem in itself. I think it's worth stating the obvious in that regard.

The point about inflation particularly is that if you look at what is driving the inflationary pressures right now, and supply chain disruptions and labour shortages, I think there's a risk that we'll say that competition is the panacea that's going to deal with inflation and make a knee-jerk reaction to it.

This is a very complex area of law. It's not just about competition policy; it's also about how it interacts with other regulated sectors and sector-specific measures and other horizontal measures such as privacy. Doing this on the fly is not something that we want to do. Robin and I may disagree, perhaps, on some of the outcomes, but I think we both agree that whatever it is, we need to make sure that it is done in a deliberative way and it's done right.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

That's fair. My only comment back to you would be that when I see grocery stores, as an example, with $4 billion more in profit in an inflationary environment postpandemic than prepandemic, I'm a bit concerned when I think of the cost to consumers. However, I take your point that profit shouldn't be a problem in and of itself, certainly, for business.

To put the same question to Ms. Shaban, don't we want greater competition? Shouldn't we be using the act to increase competition if we're concerned about prices for consumers in the end, especially in the environment in which we live?

[Robin Shaban]

Yes. Yes, I think so, simply put, and I think that in light of the review, there are some opportunities for us to rethink specifically how we plan to use the act to accomplish that.

Coming back to the study I spoke about, which I and some colleagues did for ISED, one of the themes that came up again and again was how specifically the act evaluates anti-competitive conduct and whether this method for determining whether conduct is anti-competitive or not is actually tractable in our modern economy, where a lot of the effects of the anti-competitive behaviour that's happening today actually manifest many years from now.

It's not realistic for regulators to be able to summon the future in a crystal ball. Because of that, we need to be rethinking the core fundamentals of how the law works and how it's applied today, and that ties specifically to substantive tests—again, these methods by which officers at the Competition Bureau actually identify and determine whether certain behaviour is anti-competitive under the law.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I now give the floor to Mr. Lemire for six minutes.

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

Thank you, Mr. Chair.

I thank all the witnesses.

You have painted a great picture this afternoon to fully understand the urgent need to act on the labour shortage.

I think in particular of Mr. Blackburn, who told us that 6% of positions are vacant in Quebec and that nine of 10 employers are concerned about the labour shortage. He also said that there are nearly 1 million vacant positions, that there is work overload, and that quality, and even some contracts, are being abandoned.

However, there are solutions, and I think that the committee must leverage them if it wants its efforts to show results. One of those solutions requires that we look at demographic changes. We must find ways of making more room for women, families and seniors. In the context of the current labour shortage, the combination of several methods may be the solution that will work.

Mr. Blackburn, I have a question for you.

What do you recommend to make a return to work more attractive for experienced or older workers, given that they represent a potential of some 75,000 additional workers and could help mitigate the labour shortage?

[Karl Blackburn]

That is an excellent question.

Unfortunately, those who think that the labour shortage is a good problem are mistaken. The labour shortage has an extremely significant impact on the economy. You cited some examples.

I will begin answering your question and then turn it over to my colleague, Mr. Hamel, who can give you more details about experienced workers.

If Quebec had the same employment rate among experienced workers as Ontario, for example—we often like to compare ourselves with Ontario—as you mentioned, nearly 75,000 additional workers would be on the labour market now and in the future and could contribute to the economic recovery. To do that, tax incentives are needed, such as raising the income ceiling from $5,000 to $20,000 without penalties for their pension benefits. That would certainly be an interesting option.

For example, governments could exempt participating businesses that have experienced workers from paying into the Québec Pension Plan, for example, for the amount allocated to the war effort, if I can call it that, for experienced workers.

That is just one option. I could ask Mr. Hamel to give you others that could be put forward over the short, medium and long term.

If I may, I will now ask Mr. Denis Hamel to finish the answer.

[Denis Hamel, Vice President, Workforce Development Policies, Quebec Council of Employers]

Thank you.

To come back to experienced workers, I would say it's good that you have focused on them. They are a group that we can reach and very quickly bring back to the labour market, particularly if we eliminate the perception that they are working for nothing. We often hear that they will lose the guaranteed income supplement, that they will be required to return some of it to the government.

Tax laws must be adapted, and employers must be helped, through various mechanisms, to retain, attract and recruit experienced workers. We are thinking, for example, of employment insurance contributions, which could be suspended for experienced workers, as they do not apply for benefits. This is one example of many.

We also need to consider support for the management of experienced workers, who do not necessarily want to work 50 hours per week, 50 weeks per year. They must therefore be offered reduced schedules and timetables to encourage them to return to the labour market, particularly in the industries most affected by the pandemic, where there were many such workers. Since the start of the pandemic, we have lost a lot of workers aged 55 and over, particularly women.

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

Thank you, Mr. Hamel.

I will continue, again, concerning the expansion of the labour pool.

Mr. Blackburn, in a recent interview, you stated the following: “It is a must for us because, unfortunately, without such expansion of the labour pool through immigration, we would be unable to meet our objectives.”

Earlier, you estimated the losses due to the labour shortage in Quebec alone at $18 billion over the last two years.

Are your members concerned about the slow processing of immigration files? What solutions do you see?

[Karl Blackburn]

Indeed, there is an extremely significant problem in Quebec with respect to the processing of immigration data or files. Unfortunately, in Quebec, it can take up to 24 months before a file is resolved, while it takes six months elsewhere in Canada. That reality is unavoidable.

I will give an example for the benefit of the members of this committee. In 2017, a labour market assessment was conducted. First, to offset the retirement of 1.4 million workers in Quebec, we needed access to three main pools of potential workers. The first pool is students, who could meet 50% of needs. The second pool, which you referred to, consists of people who are a bit further from the labour market, namely members of first nations, people with criminal records, people with disabilities, women in some industries, older individuals and so forth. That group could meet 25% of needs. In addition, 23% come from immigration. The figure cited at that time to address the labour shortage and offset the retirements was approximately 64,000 immigrants per year. As you know, in Quebec, there is community-based immigration, family reunification and economic immigration. However, with 64,000 immigrants per year and the other pools, it was hoped that the retirement of 1.4 million workers could be offset.

Unfortunately, beginning in 2017, the number of immigrants never exceeded 50,000 per year and has been well below that in recent years, thus widening the gap. In late February 2022, nearly 250,000 positions were vacant in Quebec.

To address this situation, we must avoid conflicts concerning territorial jurisdiction. The changes made by the federal government to the temporary foreign worker program, were a breath of fresh air for employers in Quebec and employers in general. They allowed employers to access a larger pool or a larger percentage of workers for their own businesses. They also extended the deadlines beyond what was initially set out and thus provided some predictability in terms of the economy.

The economy, itself, is extremely volatile. It takes three conditions to be able to grow and prosper: predictability, certainty and longevity. Decisions related to immigration must provide these three ingredients for the recipe to work and help us address the labour problem we are facing.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Lemire and Mr. Blackburn.

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

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair, and thanks to our witnesses.

I'd like to start with Ms. Shaban.

With regard to anti-competitive behaviour, how do we fit with our American cousins and Europe? What are the trends that are happening in those countries to deal with anti-competitive behaviour?

I'd be interested to hear where we're fitting in with those jurisdictions that we often do a lot of trade and connect with.

[Robin Shaban]

That's a big question to unpack.

To go back to the report that Vass Bednar, Ana Qarri and I did for ISED, one of the bits of analysis we did was compare cases that were taken in the European Union by the European Commission that dealt with cases of relatively similar conduct to cases also taken by the Competition Bureau in Canada. This included Google, for example, and the self-preferencing of its own shopping service on its website.

Both the Competition Bureau and the European Commission undertook investigations on this conduct. The European Commission found that behaviour to be anti-competitive and fined Google a lot—I can't remember how many billions of euros. In the Canadian investigation, the bureau found that there was no evidence of anti-competitive behaviour.

It raises this question of how the European Commission managed to fine Google billions of euros, yet in Canada, somehow this behaviour isn't anti-competitive. I think a lot of these same trends are occurring across jurisdictions, given the global nature of digital commerce.

The difference that we're seeing in Canada versus other major jurisdictions is that our competition law is not keeping pace with what competition laws elsewhere are able to do. Again, I know it's kind of boring, but this really comes down to specifically how the act understands and evaluates anti-competitive conduct. Moving towards a more rules-based system in which anti-competitive conduct means that it's illegal if you do a certain thing is closer to the European model, whereas in Canada we have this very effects-based approach whereby you need to show heaps of evidence that this particular behaviour is detrimental.

I'll pause there because I know you only have six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

If you hear a cat in the background, that's my Siamese cat. It's not even my cat; it's my daughter's cat.

At any rate, we finally saw some increase in support for the Competition Bureau.

You were saying that even with those supports, we're still offside on those things, so it really is about remaking our entire model. We can pour more money into it and we still might not get the proper outcomes. Is that fair to say?