Industry Committee on May 6th, 2022

[Viviane LaPointe, Liberal, Sudbury, ON]

As people find gainful employment elsewhere, as you point out, what are restaurants able to offer as employers to be competitive in attracting those applicants and retaining employees?

[Lauren van den Berg]

What we've been hearing, certainly from my members, in the last several weeks to several months has been, “We are competitive. We are a supportive environment. We invest in our staff.” Also, it's not just a job; it's a career. Nearly every single person on my board, for example, got their start washing dishes in a restaurant. It's in their blood, and it's not a job to be looked down upon.

The problem we have and the feedback we're getting in these job interviews when we're trying to hire is, “What if you get closed down again?”

We have no control over that. It's mandated by the provincial governments, and without a crystal ball, it's incredibly difficult for us to offer any sort of security for them. Again and rightly so, it's a tough position for us to be in.

[Viviane LaPointe, Liberal, Sudbury, ON]

As I'm sure you're aware, Canada is working to transition to a cleaner economy, which needs to be both an immediate priority as well as a sustained future effort. All sectors and industries in Canada must keep innovating to meet the long-term goal of fighting climate change.

I know that your organization's response to budget 2022 was that you indicated you were disappointed the budget reiterates the prohibition of certain single-use plastics in 2022. I'm genuinely interested in learning what the restaurant industry has done so far to avoid plastics waste.

[Lauren van den Berg]

Even before the emergence of COVID-19, consumer demand for takeout and delivery was already on the rise. The pandemic has clearly reinforced the critical need for those single-use items to ensure the health and well-being of Canadians as they continue to expect off-premise dining options.

That's not to say that our operators and restaurants across the country have ignored the integrity of environmental sustainability and what it means to our economy. It's an essential part of doing business. From locally sourced ingredients to energy efficiency, our industry has shown an ongoing commitment to environmental responsibility. Across the country, restaurant owners, managers and staff are working hard to navigate the already very complex regulatory landscape that impacts their day-to-day business operations.

Our concern was that, unfortunately, the legislation being proposed right now will do nothing to help restaurants successfully support the Canada-wide strategy on zero plastic waste, unless changes are made.

[Viviane LaPointe, Liberal, Sudbury, ON]

I also note, in your response to budget 2022, that you highlighted a lot of the programs that helped the restaurant industry.

Today you talk about a “do no harm” approach. However, many of the increased costs you were outlining are essentially unified costs. Other sectors are being hit by those same costs. What do you say to this committee about that?

[Lauren van den Berg]

Everyone is facing incredibly similar challenges. I would be remiss if I didn't position restaurants as being unique—certainly, given my job title—but the reality is that small businesses across the country are facing very similar uphill battles.

Whether it's the death by a thousand tax cuts or regulatory burdens, the COVID-19 pandemic has drastically altered the global economy. How businesses operate is absolutely going to change. I think that as we look to exit the light of the pandemic tunnel, a lot of our operators have had to innovate to get as far as they have. Some of those innovations might be the robot servers at the restaurant in Sudbury that you mentioned, and some of them may be more touch-screen menus. Some of it may be a reduction in menu items offered, because costs prohibit anything else.

In the hospitality sector, in restaurants in particular, I think the labour shortage is our number one pain point right now, but I suspect that the death by a thousand cuts is something that is going to be felt—if not felt already—by every sector across the country.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Ms. Lemire now has the floor for six minutes.

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

Thank you, Mr. Chair.

For the first round, my first questions are for Mr. Kurland.

Given your opening remarks, it is unfortunate that you are not the minister in office. I think that would resolve a lot of problems and difficulties.

I would like to hear more from you about the significant crisis related to the labour shortage, which requires a combination of solutions. We agree on that. During this study, several options have been recommended. I have gone over witnesses' comments, and according to one witness, this crisis has resulted in $18 billion in losses for businesses in Quebec. Faced with such a major issue, we cannot sit on our hands.

What can we do now at the federal level? Do you have any ideas or measures that could be put in place now to meet the need for labour?

[Richard Kurland]

Yes, you are right.

The real problem lies in political will in Ottawa. Someone should at least recognize the basic problem and allocate the resources needed to issue permits to the people who need them.

It's just like we've heard from the restaurants and other witnesses. The trucking industry and our long-haul truckers: Where are they? This is a notorious supply chain issue. Even though we have the resources.... We have fantastic workers within IRCC who can do their jobs if they are allowed to do their jobs. By increasing resources, engaging more government workers, engaging more technology to allow the applications to be processed 24-7 globally and transferring files electronically globally, we can increase output volumes. Right now, we're using artificial intelligence to make high-volume new decisions efficiently and cost-effectively. Where are the savings?

Also, more transparency in the data of production and operation will allow critics such as me—who will not run for office, sadly, as then we'd have to work for a living—to then properly provide parallel advice to a minister's office that is additional to department information.

There's a corporate culture that we need to change now, a corporate culture within the immigration department of control, secrecy and lack of transparency, and that's just for the temporary status. I could go on with regard to permanent residents. We are missing key players here in Canada because of ever-increasing permanent resident application processing times, and that's not pandemic-caused. There's no reason.

Our information technology is there to process the people we need in order to grow from coast to coast to coast, and we had better do this now, because here's the warning. Because of current events in Ukraine and Russia, the Canadian supply of goods and services will be in higher demand than we have ever seen, beginning in 2023, as countries look away from Ukraine, Russia and their ilk to find suppliers like Canada.

What do you think is going to happen to our demand for labour as we face additional demands for goods and services? Plus, our human capital model to grow our population is to select the brightest and the best among people who are here—young people. We can't attract enough young workers and students to replenish what our demography says we need to do unless we tighten up the administration of our immigration system, add the necessary resources to bring processing times under control and simply implement the law on the books, the Service Fees Act.

That will require reporting of uniform, consistent processing times and will have teeth—cash—if they fail to meet standards. That's what we need to do.

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

I would like to hear from you about the issue of processing times.

According to the stories that I have heard from people in my region, a business owner can spend up to $20,000 for one candidate, and you are saying that it can exceed that amount.

Could the federal government adopt regulations to ensure that, after a certain period, a tax would have to be paid or certain consequences would have to be faced?

Would that not be part of the solution?

[Richard Kurland]

Yes, absolutely. That is an option to explore. There could even be a pilot project to see whether or not it could work.

There's no reason why we can't think outside the box, particularly in the field of immigration, and take risks. Our employers in Canada are nimble, swift and competitive globally, and if they need someone, they're going to get them.

Don't forget: You cannot come to this country as a foreign worker unless you've already demonstrated there's no one available, qualified and willing to do the job. As well, we have exemptions. They're manifest. These are people who we cannot find here in Canada, and there's competition for this human capital globally. Why do we put up barriers to these businesses and to certain provinces when this is the energy that drives the economy, that creates paid taxes, that grows our businesses and that supports our families?

You're absolutely right.

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

[Technical difficulty—Editor]

[The Chair, Liberal, Joël Lightbound]

Sorry, Mr. Lemire, I missed what you said, but you will have a chance to come back to it. Your time is up.

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

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you, witnesses. I will start with Ms. Bednar and Ms. Hearn.

With regard to some of the increased fees that are coming in and the lack of regulatory oversight for that, do you have any suggestions in the short term to help young entrepreneurs and others in this changing dynamic? It seems to me that it's pretty impossible to put out a business plan when these types of service fees are coming in. I'm not aware of any measurements—for example, from Amazon and others—to show that their business costs have actually increased to the point where they're professing to have to pass those charges on.

[Vass Bednar]

Thank you for the question.

Denise, I'll turn it to you in a second.

I think a lot of what you've heard are people describing the problems of private gatekeepers. When you heard earlier this week from CFIB about red tape, there was a little ambiguity there. We're putting forward that some of that red tape is imposed by large private companies.

There's a report that I'd be happy to follow up with you on. It came out last year. It's called, “Amazon's Toll Road”. This report found that, in 2014, sellers handed Amazon $19 out of $100 in sales that they made. Today, that's $34. There are absolutely examples where this is being quantified and counted. The small, third party sellers don't have an opportunity to negotiate that.

There are other examples that I think are relevant, Lauren, to you and your colleagues. The 30% commission fee for food delivery is something we've seen as very sticky and somewhat counterintuitive to competition norms. Typically when a new entrant comes to the market, we'd expect that 30% to be challenged. Instead, what we see is that when DoorDash, for instance, comes to a market where Uber Eats might be, there's a profound stickiness to that 30%. In the pandemic, we saw some emergency, temporary legislation. Some of it was provincial here in Canada. It temporarily reduced that burden on restaurants. That demonstrates the power of government to act as a moderator, again, between some of these tolls and taxes.

Denise, what am I missing?

[Denise Hearn]

Sticking with the restaurant industry, Lauren, you mentioned the rising cost of inputs like chicken and beef. In Quebec there was recently a class action lawsuit filed against the main four Canadian meat packers—Cargill, JBS, Tyson Foods and National Beef Packing—for unduly restricting competition related to the production, supply and sale of beef, essentially for price fixing and price gouging. We're also seeing that there are a number of new studies coming out discussing the role that market power is having on inflation.

It's not just that these are normal market conditions but actually that companies are raising.... They're essentially markups. They're conducting markups of the price above production costs, over and above the rising costs that they have. It's a way to not only keep their profit margins consistent but in many cases to increase their profit margins.

If you're a small restaurant, a small supplier or an Amazon seller, these are dynamics for which, as of late, or as of now, there are very few avenues for recourse for these businesses. That is why we think that these kinds of private taxes, private regulators on markets, are increasingly an area where federal jurisdiction as well as provincial jurisdictions have a role to play in curtailing some of this such that it could provide more equitable access to markets for smaller businesses.

[Brian Masse, NDP, Windsor West, ON]

As part of the solution for this, public shame doesn't seem to work. We've had the grocery store retailers fix the price of bread even before the pandemic, and there was hardly a public outcry. There was some action that took place. This is one of the most important staples for children, and basically those people should have been dragged in front of an inquiry. They were dragged before our committee for pandemic pay. Later on we learned that they were introducing new services. Some people might call it red tape when there are regulations on them, but we found out that they were abusing consumers by improperly advertising and also dual pricing those things and charging a fee on top of it. We still have not seen a full resolution to that.

I could go on and on with examples. Is it just because we have such poor oversight? There's almost no penalty at all that's taking place. The bread one is a great example. They basically got away without any repercussions. That's my opinion. That's where we should be stepping in, in my opinion. The Competition Bureau doesn't have the tools, in my opinion. I just think we're too lax politically, quite frankly. Some of these decisions require political courage.

[Denise Hearn]

Absolutely. The only small addition I would make is this: The other day, the U.S. Chamber of Commerce said, regarding the increased fines being discussed as changes to the Competition Act, that these types of violations would have a “chilling effect on investment” in Canada, which I think is laughable. Google was hit with the largest antitrust fines in history in Europe—$5 billion, and it's barely a blink.

I agree that we need to have much stronger remedies for this type of anti-competitive behaviour, because markets are public institutions set by rules that we, the public, get to make. If we don't like what's happening in the markets, it's the role of public institutions to set those guardrails for markets and ensure that every player can access them on fair and equal terms.

[Brian Masse, NDP, Windsor West, ON]

This has been playing out for a while. Even for Toyota, over the brake scandal, in Canada, they got a slap on the wrist. In the United States, they got fined billions of dollars...including research and development and further oversight. It was the same thing with the Volkswagen emissions scandal. It just goes on and on.

Do we basically need to revamp the entire Competition Bureau to bring a new age of anti-competitive laws into place? I see them as stymying innovation. The ones you mentioned—the user fees for Amazon and so forth—are more significant than people think. Young entrepreneurs and others don't have access to lawyers and accountants. They're busy trying to get by and grow themselves and make a living. Meanwhile, they get nickel-and-dimed to death.

Look at credit card transaction fees. I was shocked by the Business Development Bank of Canada not showing any interest in developing a product to lower costs for consumers and small businesses. They're still in their ivory tower.

[The Chair, Liberal, Joël Lightbound]

Mr. Masse and Ms. Bednar, that's a great question. However, we'll have to come back. We're already over time.

[Vass Bednar]

Okay.

[The Chair, Liberal, Joël Lightbound]

I note also, Mr. Masse, that Professor Larouche had his hand up and wanted to intervene.

[Brian Masse, NDP, Windsor West, ON]

I'll go back to those witnesses so I won't have to repeat.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you.

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