Budget 2024

Tax and spend fiscal plan will inhibit growth

As published in The Globe and Mail

There’s nothing that stifles competitive business more than bad regulation and policy uncertainty. The recently unveiled federal legislation, Bill C-56, saddles us with both.

Ottawa wants Canadians to think the bill will improve affordability for families by giving consumers more choice from more businesses, but that’s not its actual purpose nor what it will achieve. As Deputy Prime Minister Chrystia Freeland conceded, the legislation is actually a dramatic overhaul of Canada’s Competition Act. C-56 is a trojan horse: It will upend a legal regime that fostered all the globally competitive Canadian companies doing business today.

Among the changes in C-56 is empowering the minister of industry, if they are “of the opinion,” to direct the commissioner of competition to conduct an inquiry into the state of competition of a market or industry. This is the outright and overt politicization of the competition regime. Under the current law, such an inquiry is only initiated by the commissioner if certain anti-competitive behaviours are suspected.

Companies operating in Canada, or thinking of coming here, will be justifiably concerned about how those new powers will be exercised in light of recent events. This summer, the Competition Tribunal ordered the Commissioner of Competition to pay Canadian telecom companies more than $12.9-million in legal fees and disbursements because of its “unreasonable behaviour” and “unnecessarily contentious approach.”

It’s also hard not to think the government is acting in bad faith, a charge not made lightly. Officials had for months promised any modernization of the Competition Act would only be done after comprehensive consultations with all impacted stakeholders. In the end, the amendments came as an ambush. As for the consultations? The “final” report was hastily published online at 9:30 p.m. ET the night before C-56 was tabled.

Forcing through sudden changes to the Competition Act without adequate consultation or ample parliamentary debate risks not only weakening competition between Canadian companies here at home but also hampering Canadian companies competing around the world.

Worse still, few companies, foreign or domestic, will seek to make significant investments in a country that changes its corporate laws so capriciously. If the goal is to attract new entrants into the Canadian market, it’s difficult to conceive of a worse way for us to achieve it. There will be less choice for consumers, contrary to the legislation’s goal.

If the government is truly serious about lowering prices for Canadian families, as it should be, there are many things it can do in a good-faith partnership with businesses. It could unilaterally lower import tariffs on certain goods, for example, or eliminate once and for all the interprovincial trade barriers which add unnecessary costs to the prices Canadians pay.

Canada is not alone in resisting regulatory risk. When the U.S. Chamber of Commerce chief executive officer, Suzanne Clark, visited Ottawa earlier this year, she shared the results of a recent groundbreaking study. The chamber reviewed the public disclosures of risk filed by the S&P 500 over the course of the past decade and found that almost all categories of risks identified had remained relatively flat. There was one exception: Public-policy risk had increased by more than 27 per cent from 2011 to 2021.

To be clear, as Ms. Clark affirmed, “business isn’t anti-regulatory, but we need them to be smart, and we need them to be effective, and we need them to be efficient – it is the only way our countries, our companies, together, are going to be able to deal with the emerging issues.”

This prescient warning must be heeded in the context of Canada’s current affordability crisis and the government’s introduction of Bill C-56.