THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Thursday, November 3, 2022
The Standing Senate Committee on Banking, Commerce and the Economy met with videoconference this day at 11:30 a.m. [ET] to study matters relating to banking, trade and commerce generally.
Senator Pamela Wallin (Chair) in the chair.
[English]
The Chair: Hello and welcome to everyone. This is a meeting of the Standing Senate Committee on Banking, Commerce and the Economy. My name is Pamela Wallin, and I am chair of this committee. I will introduce other the members of the committee here today: the deputy chair, Senator Colin Deacon, Senator Gignac, Senator Loffreda, Senator Ringuette, Senator Smith, Senator Marwah, Senator Yussuff and Senator Bellemare.
Today, we will continue our discussion on the state of the Canadian economy and inflation. Unfortunately for us, we’re meeting just as the government is about to announce their Fall Economic Statement, so we will have to predict what they were going to say if that comes up in the conversations.
We have two panels today. First, we begin, by video conference, with Janet Lane. She is Director of the Human Capital Centre at the Canada West Foundation. We also have with us Jack Mintz, President’s Fellow of the School of Public Policy at the University of Calgary. Welcome to you both. We will begin with opening statements. Ms. Lane, if you will begin. Thank you.
Janet Lane, Director, Human Capital Centre, Canada West Foundation: Madam Chair, senators, ladies and gentlemen and Jack, it’s good to be here and good morning to you all. Thank you for inviting me to provide testimony.
In Canada today, there is both a labour shortage and a skilled worker shortage. In many parts of the country, these problems combine to leave businesses unable to fill jobs and unable to meet demand for their products and services. Almost half of the one million job postings open at the end of September had been open for more than 60 days. Businesses stagnate when they cannot find the workers they need. This, in turn, reduces investment. Shortages of workers and shortages of skills stifle economic growth. There are only two immediate answers to the labour shortage: immigration and increased participation in the workforce.
Other experts have no doubt spoken about the need for immigration, and I will only reinforce that we need to do a much better job of recognizing foreign credentials if we are to ensure better outcomes for the people who choose to come to this country. There is a global competition for talent. Wasting the hard-earned skills of immigrants is no longer an option. People will go to where their skills will be rewarded.
Employers can no longer depend on traditional diplomas and degrees to assure themselves that they are hiring people who can meet their needs. Jobs are changing too quickly. Every job is now a digital job. Trades and professions have become cross-functional, and the post-secondary system is not nimble enough to respond.
The demographic shift — more people are leaving the labour force than entering it — means that for Canada to continue to be competitive, Canadian workers must become more productive. Increased productivity can come from an increase in basic skills, including literacy, numeracy, communication, thinking and digital skills. Many people with lower levels of education need to build those basic skills.
It is clear that there is a mismatch of skills even at the lower-skilled jobs level. Of the one million jobs available at the end of June, 38% did not have a stated minimum education requirement and 23% did not require more than a high school diploma. According to the most recent data, which is from 2021, about a third of the people who were unemployed possessed a high school diploma or less. This mismatch is because even low-skill jobs require some specific skills, including the most basic. Many people, even those with a high school diploma, do not have these skills.
We all know that education is not the purview of the federal government, but this government has a lever it can use to help increase both skills and participation in the workforce. The Labour Market Development Agreements with the provinces and territories and other amounts that are sent to the provinces for these kinds of things constitute that lever. This funding should be provided with specific recommendations as to how it is used when training people for the workforce.
Canada West Foundation recommendations include working towards the development of a pan-Canadian competency framework. Competency statements provide a shared language to describe knowledge, skills and attributes of each competency. Such a framework would profile for individuals and training program providers the competencies and level of competence each job requires. While individual employers have specific needs, the competency profiles of jobs can and should be standardized.
We need to assess individuals for the competencies they have already gained and identify their competency gaps. No one comes to the labour market totally unskilled, especially recent immigrants, yet they are routinely treated as if they have no competencies at all. Assessment centres would also do this for foreign-trained individuals. Assessment would be to standardized competencies against criteria of what competence looks like. These would be determined in conjunction with employers.
Individuals should also be assessed for their interests and aptitudes and be provided with information about what jobs entail. Competence is only one part of a good job match. Individuals should be matched to their best-fit jobs and ideally hired into their best-fit job and then trained into the job. Job training programs will teach the required competencies. There is no need for canned curriculum and training that insists that individuals start at lesson one.
Life skills and basic literacy skills, et cetera, are hugely important and often what is most missing from an individual’s competency profile. They are most effectively and efficiently taught in combination with more technical job skills on the job. Teaching adults these skills without providing context for how they are used in the workplace does not help them to retain their learning.
Finally, employers must be encouraged — perhaps even incentivized — to provide on-the-job training. Employers can no longer demand job-ready candidates. They need to be part of the training ecosystem.
A system such as I have outlined would help to ensure that the billions of dollars transferred to the provinces and territories for workforce training would actually improve outcomes for individuals, employers and, ultimately, the economy.
I’m happy to discuss these ideas. Thank you.
The Chair: Thank you very much, Janet. Those are excellent suggestions and insights for us.
We’ll turn now to Jack Mintz for opening comments. Go ahead, Jack.
Jack Mintz, President’s Fellow, The School of Public Policy, University of Calgary, as an individual: Thank you very much, Senator Wallin. I assume people can hear me fine. I didn’t prepare a statement, partly because it wasn’t clear I was going to be able to testify today. That was determined a half an hour ago.
The Chair: We understand that. I know you can do this off the top of your head for just a few minutes.
Mr. Mintz: Okay.
I want talk about what I think is going to be a very challenging decade, and I mean until 2030. I’m not talking about 2040 or 2050. I’m talking about the next eight years. My biggest concern is that we are going to have a very challenging period of economic growth, and five major factors are going to impact on that.
The first one is something I’ve talked about in a number of articles recently, and that’s demographics. We are now going through rapid aging of the population, and it’s not just Canada. It’s all high-income countries and many middle-income countries. International markets for labour are going to become more competitive, but it also means we’re going to have a slower working force, and that means we are going to have less growth associated with that. Also, with the retiring of many elderly people, that’s going to lead to productivity challenges because these people will need to be living on their savings, but they will also depend on the transfers that they get from young people through the government to support various age-related expenditures such as pensions, health care costs, et cetera. All these are going to be very significant challenges, but it also means our per capita growth is going to decline as a result of this ageing factor.
Second, we have governments that have become highly indebted, not just in Canada where we’re not so bad, but in terms of the world, which will mean higher real interest rates in the future. That, of course, is going to have an impact on investment decisions as there will be a higher cost to capital associated with that, and investment is going to be critical for any innovation and adoption of new technologies.
Third, we are now seeing a world which is breaking up into blocs, an East and a West. The East bloc will be led by China, the West bloc by the United States. We’re talking about in-shoring, we’re talking about friend-shoring, but we’re talking about more trade barriers. As we know from history, no matter how we slice and dice the pie, when you increase tariffs or trade barriers, that’s going to lead to lower productivity in all countries because they are not able to take full advantage of their comparative strengths. This is going to be a consequence of security issues that are associated with that.
Fourth, there’s going to be a need for —
The Chair: Mr. Mintz, if I can just interrupt. Unfortunately for us, the interpreters have stopped interpreting, which means they have brought this meeting to a close for now. We’re just going to have to suspend for a moment to consider our options. Everyone, including Janet, if you could just stay in place. Thank you.
(The committee suspended.)
(The committee resumed.)
The Chair: We have more technical issues again today. By way of explanation to the audience, the interpreters are not interpreting for us the witnesses’ testimony, or at least one of the witnesses’ testimony. It’s against the Rules of the Senate for me to proceed with a meeting unless interpretation is available.
I’m going to apologize profusely to Mr. Jack Mintz. We will have our clerk get back in touch with you to try to reschedule your appearance. I just can’t apologize enough. I’m sorry for all the trouble you’ve gone to for this. Jack, if you are agreeable, we will reconvene with you at a later point.
Mr. Mintz: Okay. Thank you.
The Chair: We will reschedule him and have him appear as a witness. It was a decision of the committee to have him appear, and he will appear. Jack, we will be in touch. Thank you.
We will continue our session now with Janet Lane and begin our questioning with our deputy chair, Senator Deacon. Please go ahead.
Senator C. Deacon: Thank you very much, Ms. Lane, for your excellent presentation.
I’m thinking about the challenge of labour productivity when we have such a low level of business investment per worker in Canada and our necessity of increasing that in order to begin to catch up in terms of labour productivity, particularly in IP-intensive industries where we’re one quarter of the United States in terms of business investment per worker and generally in the economy about half. What is your advice in that regard around business investment?
Ms. Lane: I’m not the expert in business investment, but what I do know is that we can improve worker competitiveness by increasing their skills. In a global world, everybody has the same access to capital. Capital will go to where it will get the best returns. Everybody has access to the digital technology. That is available worldwide. One of the only things that can differentiate a country from its peers is to have a more productive workforce in terms of the capacity of the workforce.
As I said in my statement, it’s a bit of a surprise to realize just how many jobs do not actually require post-secondary education. We have a sense in Canada that everybody has to go and get a post-secondary education, but what we actually have is a lot of productivity that is at the lower skilled level, which does not mean that it’s non-skilled; it’s just lower skilled. Those lower skilled people are not being used to their best capacity. They’re not being challenged enough. They’re not being given the right levels of training to improve their capacity to problem solve and to use the machinery and the equipment they are using in their work to its best advantage.
I was in a factory this summer where there wasn’t a smile on the face of any single person in this whole factory. I did see one, but that was notable. People were feeling very much like they did not belong, they were not valued and they weren’t doing work that was challenging to them. It was incredibly repetitive. I also think they were never asked by their employer, “How can we make things better?”
There’s an awful lot employers can do to make sure their employees have the literacy and numeracy skills to solve the problems they are working with every day rather than just letting things go by, letting the machinery break down and causing problems to happen on the production line. We’re also not training people well enough to use the machinery that is in place to its best advantage. We give people very limited skills training when they come into some of these lower skilled but still somewhat skilled jobs. We don’t ask them to be fully engaged in the workplace. We don’t include them in the decisions of the work. We end up with a very disengaged workforce, and people are not producing, so our productivity is down and our competitiveness is low. I really do think that employers are the answer here. It’s not just about money. It’s about working conditions. It’s about making sure that people are well trained, and then we can use the investment that we have to its best advantage.
Senator C. Deacon: Thank you very much.
Senator Smith: Thank you, Ms. Lane, for being with us today.
During the pandemic, we worried about the great resignation, but little focus has been placed on the great retirement that’s coming our way. Statistics Canada reported that more than 300,000 Canadians have retired so far this year, and almost 20% of the working-age population is nearing retirement age. I know you mentioned some points on that in your opening statement, but I just wanted to look at the people going into retirement. Is there a possibility that we could encourage people to stay longer in the workforce? A lot of people, when they get to retirement age, within a short period of time become stagnant. They become a little displaced in terms of what their role in society is. I’m just wondering what your thoughts are about how you manage the mix of people leaving, getting them back, immigrants coming into our country and recognizing their skills. You talked about all these points earlier. What would your plan of action be?
Ms. Lane: I think we definitely do need to keep more of the ageing workforce in the workforce.
For some people — for instance, in the trades — it’s not going to be quite so possible to do the actual physical work of a physical job in the trades, but their skills and expertise are very useful in the training of the next generation. In the apprenticeship system, we are in desperate need of apprentices. If we’re going to build the housing we need for the 500,000 immigrants who are coming into this country, never mind the people already here, we’re going to need people in the trades. There’s no doubt about that. We need a couple hundred thousand apprentices every year. Who’s going to train those people? When the retirement age tradespeople leave the workforce, they take the training system with them. We need to make sure we can keep them in the workforce, not necessarily working under the same conditions as when they were doing the trade but working side by side alongside our apprentices to help teach them. There’s a huge value in that. We have not put that value on that person the way we need to now. Encouraging people like journeypersons who are close to retirement to think about becoming more of a teacher or mentor and paying them to stay in the workforce as that would be very helpful for that particular part of the economy.
In other parts of the economy, yes, it’s a matter of changing employee perceptions about the value of older people. They may not be willing to work extra hours. They may be willing to work only, let’s say, six hours a day. But accommodation can be made for people who have all that expertise. I think a lot of employers are understanding that when their people retire, they’re taking the corporate history and so much information with them. It’s a real loss to their company, so encouraging people to stay by making accommodations for how they work, where they work and when they work is possible.
We have to do something to encourage employers to start thinking differently about older people. I personally haven’t experienced ageism, but perhaps I’m one of the very lucky ones. I know, indeed, that I am, but I do think that it’s about encouraging employers to use the capacity they already have. For many employers, the workforce they’re going to have for the next few years is the workforce they have today, but even as things are changing very quickly, they’re going to need to train new people constantly and train people in new things constantly. Sometimes those older workers are able to do that knowledge translation — that training piece — better than new people in the workforce.
Senator Smith: How do we start that mobilization? Who takes the leadership in that?
Ms. Lane: I haven’t got an answer, but again, I keep going back to needing to tell employers and to incentivize employers — perhaps that is a job for the federal government — to actually do a better job of looking after their workforces. I think there are levers that the federal government might be able to use, but it has to go back to the employers. If you want job-ready candidates, you’re going to have to be part of creating that. If you want people in your workforce, you’re going to have to make your workforce more attractive to people.
Senator Smith: Thank you.
The Chair: It is that difficult situation that many find themselves in where there’s a lot of pressure on employers to have a more diverse workforce, but they need the presence of perhaps a less diverse workforce to train that new one. That’s going to be an ongoing issue.
Ms. Lane: That’s right.
Senator Bellemare: I’ve worked a lot on these issues that you’re working on, and I congratulate you for what you’ve been doing. You gave a presentation that is very clear about the issues. We need, as you said, a skill framework. We need to assess the skills of the individuals. We need to have training programs that will give credit assessment. All of these elements of a system of skills development are found in many countries around the world. You know that because you know what you’re talking about. Many countries in Europe, Asia and South America all have this lifelong approach to skills development. I think the question Senator Smith asked you about “how” is very important because if we answer that, we will be able to develop skills development in Canada.
As you know, with skills development, you have supply and demand. You need service providers and skills development providers, and you need a demand that can pay for that to exist. In Canada, as you know, we have the provincial governments and we have the federal government. Many countries have answered this question by developing personal learning accounts where the government that has the money can put money in those and the service providers or the states ensure that quality training is there. Have you thought about putting the provinces and the federal government together through social partners to develop a national framework and have tools like a personal account? And other tools, because it’s not a panacea. That is what I would like you to comment on.
Ms. Lane: A number of people in this country are working with me, as well as others, towards this, and we feel like we’re very close to the tipping point of actually making some progress. Places like the Future Skills Centre, the Labour Market Information Council and a variety of other government-sponsored agencies are working very hard towards this.
What we really need is a major demonstration project that would show how this system would work from beginning to end. We’ve got little pieces of it, but it’s not a smooth system at this point. Everybody is talking about microcredentials, for instance. That’s supposed to be the thing that’s going to save us, but microcredentials that are not attached to an employer and are not standardized to an employer’s sector are not very much use, and they’re not portable. We also need to have training on demand so people can fill the gaps they have when they find out about those gaps, and as quickly as possible. For some individuals to be able to do that, a personal learning account would be a good idea.
I had some concerns about the idea that was put forward by the federal government around personal learning accounts because individuals don’t necessarily know what they need to learn. Dare I say there are a lot of training providers out there that will take advantage of that and provide training that is not quality assured. It’s already happening, so even though we think we have quality assurance in place, we don’t necessarily.
This goes back to my thinking that we absolutely need standardized criteria by which to judge each competency, and that has to come in coordination with employers, because it’s only employers who can tell us whether that person is doing the job right or not. Even some employers will need some help in understanding what that looks like. They know Joe is their best worker, but they can’t actually articulate what Joe does that makes him their best worker. There’s a need for some support for the work of myself and the team of people I work with, as well as others all across this country, to develop that framework with employers. That’s the first place to start. Honestly, senator, I know you’re so involved in this work. There’s a lot going on across the country. What is happening isn’t standardized, but there are pieces happening where we’re starting to build an understanding of the competencies for individual jobs and individual sectors.
For instance, I’m working on a project right now in the manufacturing sector, which is a really high-need sector in this country. Manufacturing logistics are really short of good workers. We’re building the competency frameworks for various jobs in the manufacturing sector, and we are determining what competence looks like and making sure that we understand the criteria to assess it. Then we’re hiring people into the workplace and training them into those jobs. This is the perfect solution, I think, for those lower-skilled jobs that are actually not as productive as they need to be.
I’m not sure that I’m answering your question. I think there are little pieces happening all over the country. What I see the need for is some coordination of that so that we are speaking the same language and when you prepare a competency profile for a particular job, it translates to what somebody else is doing across the country with the same job.
Senator Bellemare: A mutual recognition system would be very interesting based on individual provincial initiatives.
Ms. Lane: It’s true that there are different standards in different provinces, let’s say for some of the trades, but in truth, it’s not that difficult to identify. This is done in Europe all over the place. You identify what the base competencies are, and then you explain what the exceptions to the rule are, for instance. We have technology now to help us in ways that we did not have 20 years ago, even 10 years ago, to translate behind the scenes. If you say “tomayto” and I say “tomauto,” everybody knows that’s the red fruit we put in salads. We have the capacity through technology to do that mutual recognition system.
I’m hopeful — that’s why I’m still in my work — that we’re getting there. I just know that we need a little extra push, and I’m very hopeful that federal government money can be applied in a more focused way towards these goals. A lot of money has been given out in the last year that has not gone to these particular goals. It’s been spread very thin. There’s been a lot of peanut butter, and it’s been spread very thinly over a lot of toast, but I think we can be a little more focused in how we use that money because I’m convinced that what I’m suggesting is actually what’s going to work.
Senator Loffreda: Thank you, Janet Lane, Director of the Human Capital Centre at Canada West Foundation, for being here this morning.
You mentioned in your comments about the shortage we have of labour and skilled workers, and you shared some worrisome statistics on this front. Many experts believe that the labour shortage is one of the reasons, if not an important factor, for the increase in inflation and concerns going forward.
You also discussed immigration. Despite the high immigration levels — last year was a record year — we still have these labour shortages. What are your thoughts and comments on that? You discussed foreign credentials, which you answered in detail to a question from Senator Bellemare. There too, if you’d like to elaborate further, are we too rigorous and restrictive in recognizing foreign credentials, which we are? It would help correct our labour shortages. Could you elaborate further on some of the best practices around the world?
There was a brief recently released by the Canada West Foundation where it published various steps countries around the world have taken to keep their international students. How will that contribute? Could it contribute to our labour shortages in Canada?
Ms. Lane: Wow, that is a big question. Thank you.
Immigration has done a really good job of targeting specific workers for specific jobs. I know we spend a lot of time thinking about those high-skilled jobs that we need people for. The systems are in place to attract those people. We’re not always successful, for the reasons you’ve mentioned, in that we don’t necessarily recognize their skills when they get here, although that is getting better in some circumstances.
One of the areas that is really in short supply right now are immigrants who come into the country and do those jobs that are actually not high-skilled. Because we’ve had the concentration on high-skilled workers, which is not a bad thing, we have caused a problem, let’s say, in construction. There is a huge gap in the workforce. We used to bring in immigrants who would be doing what are generally called labourer jobs in construction. They’re not just labouring jobs. They can be quite skilled, but they’re not skilled enough to be called high-skilled jobs. They’re not the tradespeople, architects or engineers in construction. They are the people who do the actual work of building the roads and bringing the equipment to the tradespeople and so on. There’s a dire shortage of people who can do that work, who are willing to do that work, and it’s reasonably well-paid work. You can earn $20 to $25, up to $30 an hour in some of these jobs, but the construction sector is in such short supply and it’s one of the reasons that we’re not getting things built. I would say that the government can do a better job of allowing into the country some of the less skilled people who used to be able to come to fill those kinds of jobs. It’s the same thing in our restaurant and accommodation sectors and sometimes in our retail sector, if they’ve got the English for it. There’s this concentration on high-skilled immigrants, which is not a bad thing, but it has led to a decrease in people at the lower-skill level.
As I said in my presentation, many of the jobs that are unfilled are not looking for high skills, and many employers are willing to train on the job if they could just get the bodies in the door. That is something that this country could do. Perhaps as we increase immigration to 500,000 over the next few years, we could make room for the other skilled workers, not necessarily high-skilled but lower-skilled workers who actually, when we think about it, have built this country. We need to bring in more of them again.
Senator Loffreda: Thank you.
Senator Ringuette: Thank you very much, Ms. Lane. I totally agree with what you’re aiming for.
Are you part of the federal entity — I think it’s called future jobs or something like that — that I believe last year received a billion dollars over five years? Are you part of that system?
Ms. Lane: No.
Senator Ringuette: Future Skills Centre?
Ms. Lane: Oh, the Future Skills Centre, yes. I’m involved in a couple of projects that are funded by the Future Skills Centre and have been in the past, and I’ve had funding myself from the Future Skills Centre. I’m very much aware of what they’re doing, and I am definitely involved, yes.
Senator Ringuette: Thank you. Because if you were not, I would say that you should be recruited by them.
The Chair: I think we should be clear here. The Canada West Foundation is a stand-alone think tank.
Ms. Lane: Right.
The Chair: Thank you.
Senator Ringuette: I understand that. I was asking if she was also part of the other organization.
That being said, in your research in regard to competency and mismatch, would you say that digital skills are one of the highest missing skills in order to access the labour market?
Ms. Lane: Yes, obviously, I think that is true. It’s interesting, because I published a piece a couple of years ago saying that every job is now a digital job, but not everybody needs to know how to code. It’s not about being able to code and do all that software engineering stuff; it’s about just being able to quickly and efficiently use the forms that are now presented to you in your workplace. Even factory workers get their orders, and they get told how to put together something, off a computer. They have to be able to understand how to pull that ticket off the computer and how to tick the boxes once they’ve done the work. Everything now has been computerized, and I think that those skills are still lacking. What’s more, understanding how computers work so that you can start to think about how a computer or automation can solve your problem is also in short supply. Even at the very basic level, obviously, the latest generation has a lot of these skills, although they don’t necessarily have the literacy skills to use them properly in some ways. It’s older workers over the age of 45 who are still not yet fully conversant with digital skills, and that is causing some problems, for sure. Coding is important, but it’s not the answer, necessarily. It’s actually a combination of literacy and numeracy skills and problem-solving skills and how you use computers to make your work go faster.
Senator Ringuette: I certainly agree with you in regard to the labour market agreements between the federal and the provincial governments and that there should be a minimum standard that would apply to skills training in the different provinces. Have you made these recommendations to the federal government in any way?
Ms. Lane: Well, we’re working on it. Every time I apply for funding, it’s to do this kind of thing. There’s a paper that I will be releasing, hopefully, within a few months that explains this fully, this whole idea that I will be presenting to government. I’ve tried at the provincial level, as well, to have this kind of approach be taken. Definitely Employment and Social Development Canada, ESDC, is aware of my thinking. In fact, I think even PrairiesCan, which is part of Western Economic Diversification Canada is aware — so that’s industry — and science is aware. There’s awareness but not necessarily buy in yet.
Senator Yussuff: Thank you, Janet Lane, for being here. I have two questions.
You indicate, obviously, that there is a need for literacy and numeracy skills for workers as the foundation of learning, and yet far too many workers in this country don’t have those basic skills, and the collaboration between the federal government and the provinces is not as robust as it used to be, so of course we’re losing ground. How can we get employers to recognize this important aspect of helping their workers get greater skills but also that the foundation for doing that is that they need to learn how to read and write properly? This is a huge challenge, but it’s not a new challenge. How can we get the federal government involved? They used to be at one time, and then they completely pulled out of that stream of funding to help make this happen. There are a lot of organizations that continue to advocate for this, because we haven’t seen a change in policy or direction, to a large extent.
Ms. Lane: Right. In fact, I used to run an organization that was funded by the government to help adults with their literacy and numeracy skills. I touched on it briefly in my statement because I really do think that there’s an awful lot of programming that is funded through the federal government through these labour market development agreements that are working to help people build their literacy, numeracy and other skills, but there’s no context around it. It’s just, “You need to do this before we can put you into the workforce.”
For adults who have never succeeded in literacy and numeracy, it has been a difficult struggle for them all their lives. They need to have some purpose around why they’re going to learn this. They don’t need to learn it all; they just need to learn enough. Then once they have learned enough, they will have some success, and then success builds on success. As they learn more and more, they will want to learn more and more. Research has shown that once adults become somewhat literate, they will become more literate if you give them the opportunities to do so.
I really would suggest that the federal government in their labour market agreements say to the provinces, “Take those training programs that say, ’If you take this course, maybe you’ll be able to get a job,’ and change the approach to, ’If you take this course, we will train you into it; we will give you all the learning, and we will teach you what you need to know to do this job well.’”
It just shifts the funding structure. If they’re still on welfare or Employment Insurance or other forms of income support, you take that money and put it into salary. You give them a job and you train them into that job, including the literacy and numeracy skills to be able to do that job well and solve problems in that job. Then they will have learning that sticks. It’s something that matters to them. They’ve got a job, they’re feeling successful, and they want to stay attached. We know employers worry that if they train people, they’ll just leave, but we also know that the truth is that if you train people, they will tend to be more loyal. For people who have not been successful in the workforce, not everybody will be able to do this, but a lot of people would be able to be successful if they were trained in what they needed for the jobs that they were going to be doing or are doing.
Then we also need to take some funding to wrap supports around that to make sure that people are able to get to work, that they have the child care that they need, that they get the time off work for health care appointments rather than being fired and that they have sick days and those kinds of things.
The federal government policy can be very helpful in making sure that people stay in work once they have work, and we need employers to say, “I will hire you and then train you,” and then we need the training providers to find ways — and it is possible — to embed literacy and numeracy training into the technical training for the jobs that they are training people for.
Senator Yussuff: You alluded to this in your opening statement. The data that is available speaks to employer investment in training at the workplace level being relatively low, and despite year after year collection of this data, it hasn’t changed very much. Some companies do a really good job in terms of the amount of workplace training they provide, but a lot of employers in this country that still aren’t doing that. So, of course, we are losing ground. You can’t increase productivity if you don’t have an elaborately trained worker.
There is variation across the country. Quebec is unique but it’s only 1% of payroll they’re required to commit, and throughout the country, that’s not even the minimum. How can we get employers to see this as self-interest? Equally, have the federal and provincial governments put some emphasis on it? We’re not seeing a change in the data year over year, and we know that employers are not investing as much in their workplace training as they should be in order to be far more competitive than they are today.
Ms. Lane: You’ve hit on a really big problem. I keep thinking that when the pain gets too bad, then they will do what needs to be done, but, so far, that hasn’t happened. In the United States, when they can’t find the workforce that they need, employers will typically say, “Well, we’ll just train them ourselves.” I know of a number of very successful initiatives down there. We’ve been trying to bring some ideas from the U.S. into Canada.
What might be needed is some specific incentive programs, maybe through the EI program or others, or perhaps to do that 1% tax for training. I know it’s successful in Britain. It says to employers, “You are part of the training ecosystem. No longer can you ask for job-ready candidates.” We’ve been kind of spoiled in Canada because our education systems have been so good, but they’re no longer keeping up because change is happening so quickly. Employers need to be part of the solution.
One of the projects that I’m working on right now doesn’t pay a subsidy for the wages of the people who are being trained on the job but it pays the employers for the time it takes to train them on the job. It might amount to the same thing, but by calling it a training subsidy rather than a wage subsidy, it changes the nature of the thinking of the employer. They see themselves as being part of the solution that they are. It takes time for employers to train. They think that it might actually take more time than it’s worth. If you can incentivize them somehow and say, “You’re getting paid to do this training,” to subsidize their time rather than a wage subsidy, it’s actually a good thing. We can do that with our work-integrated learning programs in the post-secondary system as well. Don’t give a subsidy for the wages; give a subsidy for the time it takes to train. That changes the language and it changes the focus.
Senator Marwah: Thank you, Ms. Lane, for your testimony.
You mentioned in your opening comments that one of the issues facing us is the recognition of credentials. That has been an age-old issue, and we’ve all heard the horror stories of doctors driving taxi cabs. It was my impression that tat issue was getting better. Have you looked in detail at that issue and what steps can be taken to accelerate the recognition process? Are there any jurisdictions that, in your judgment, are doing it better than others?
Ms. Lane: I haven’t looked in depth, but my understanding is that the U.S. does it way better than we do. We have had in the past a sense that Canadian standards are higher than other standards in the rest of the world. What is interesting is how well bridges stand up and patients recover in other parts of the world. We’re now learning that in the professions, there’s not that much difference. I understand we’re doing more job shadowing, and at the professional level we’re doing a much better job.
One of the things I suggested in my statement was the idea of assessment centres. Once we know what the competencies are, what the standards of competence are and what are the criteria to judge competence, once we know those, then we can assess for competence that has already been built in the people who arrive here. If somebody comes in and they say that they are a welder, rather than saying that we don’t believe them and that they’ll have to have Canadian experience and have to job shadow for a year, actually assess that on the job at an assessment centre by having them do the work. The assessor doesn’t necessarily have to be present. You can videotape somebody doing the work and explaining how they’re doing it, why they’re doing it that way, why they wouldn’t do it any other way, what it means to be doing it this way and all the ramifications of the work that they’re doing. If they do that two or three times for each task of a job and prove that they can reliably do that work, then they should be assessed as having that competency. Once you start to build a number of competencies, then you are ready to do a particular job.
These assessment centres, with trained assessors and standards of competence and criteria, could very quickly assess where people stand and identify what training is needed to fill any gaps that they have. Rather than forcing people to go back all the way, you can say, “You have this much, but you need this much to be ready to work in Canada.” That could be done fairly quickly, and in some cases, it could be done before they leave their home countries, which would make them even more job-ready when they got here.
I do think we need to change the way we do assessments. We need to work with the professional associations more, but we also need to work with employers who are filling jobs that are not at the professional level to figure out what it is that they need people to be able to do, and then we can figure out what people can do and just fill the gaps. That would enable us to get people into the workforce, contributing and being settled in Canada much faster.
Senator Bellemare: I just want to say that your idea of starting the skills development push by assessment centres is a smart one. I think it was an idea that was developed a little bit in the U.S.A. in the Clinton era, but it was pushed away when the era changed. Please send us the report that you will send to the government. Is it your report?
Ms. Lane: It’s the Canada West Foundation’s report, and I’m writing it with a colleague who understands competencies probably better than I do.
Senator Bellemare: It’s a report of yours. Thank you.
The Chair: Thank you very much, Janet Lane. We appreciate it. That was such good evidence and advice as we look at this issue and prepare our own report. Our thanks and apologies again to Jack Mintz who was with us at the beginning. He’ll be a witness for us again at another time.
For our second panel today, we welcome Anthony Durocher, Deputy Commissioner, Competition Promotion Branch at the Competition Bureau Canada; and Leila Wright, Deputy Commissioner, Digital Enforcement and Intelligence Branch, also at the Competition Bureau Canada. Thank you for joining us today in person. That should help us out here. The floor is now yours, Mr. Durocher, for opening remarks.
Anthony Durocher, Deputy Commissioner, Competition Promotion Branch, Competition Bureau Canada: Good afternoon, Madam Chair and members of the committee. Thank you very much for inviting us to appear before you today.
[Translation]
The Competition Bureau Canada protects and promotes competition for the benefit of Canadian consumers and businesses. We do this because competition drives lower prices and innovation while fuelling economic growth.
The bureau is an independent law enforcement agency, and we administer and enforce Canada’s Competition Act. This involves investigating and addressing abuses of market power, anti-competitive mergers, price-fixing, and deceptive marketing practices. All of our cases are handled confidentially.
At the bureau, our expertise in competition enforcement and promotion tends to be at the level of individual markets in the economy. Because inflation is a macroeconomic indicator, we defer to central banks and others to measure, interpret, or forecast overall inflation. They are the experts in this area.
The interplay between competition and inflation is complex, but at its core: less competition makes matters worse, and more competition makes them better. Open, competitive markets are critical to keeping prices in check.
[English]
I would like to highlight three points related to this.
First, while most experts don’t see competition as being a significant short-term anti-inflation tool, there is evidence that competitive markets can help to counter inflationary pressures, at least to some degree. Through the competitive process, over time, consumers can benefit from lower prices that are both measurable and impactful.
Second, some worry that today’s inflationary context may provide additional incentive or cover for anti-competitive conduct. We have been operating with a heightened sense of vigilance, and we are working closely with our international and domestic partners to root out anti-competitive conduct that risks making the situation worse.
Lastly, we are being more vocal. We’re highlighting the importance of competition law reform and broader, pro-competitive policy making. We’re highlighting issues that affect consumers and our economic performance, as we hope to do with our market study on the retail grocery sector.
We view competitive markets as a double-duty solution. They can help relieve inflationary pressures while also driving productivity. This, in turn, contributes to stronger and more inclusive growth which, in the long run, will help Canadians recover their purchasing power.
Our overall message is simple: Canada needs more competition. There is significant untapped potential to increase competitive intensity in our economy, not only to counter inflationary pressures but to drive stronger and more inclusive growth.
I thank you for the opportunity to appear today, and we look forward to your questions.
The Chair: Thank you very much. We appreciate you coming here to discuss this issue. We heard from the Governor of the Bank of Canada on this very question of whether more competition would help. We’ll drill down on that.
[Translation]
Senator Gignac: Welcome, and thank you to the witnesses. Right now, you have until June 2023 to complete an analysis of grocery stores. Many people are talking about this. They are sceptical about what the results will be, because there have been other analyses in the past. Can you tell us if the Competition Bureau has enough teeth to act should they find something? What are the consequences, the monetary penalties and repercussions if you find any wrongdoers?
Mr. Durocher: Thanks for the question. First, I’d like to clearly distinguish between a market analysis and our enforcement work. As explained, in our enforcement role, we aim to detect and take action to prevent cartels, price-fixing, anti-competitive mergers and abuses of market power. To do that, we have powers to go out and gather information, conduct our investigations and refer cases to the courts.
As far as what we announced a few weeks ago, it’s really a market analysis. So it’s different from our enforcement work. It’s not an investigation into anything that might be anti-competitive in Canada; we’re looking to understand what’s going on right now in that sector and to understand if the rising prices we’re seeing are really due to a change in competitive dynamics. We want to understand what’s going on, and make recommendations on how to enable more competition in the market. Market analysis and enforcement work are two very different things.
As to whether the law has enough teeth, that’s a very important question. We’re having this discussion right now about what steps we need to take to modernize the Competition Act. We saw some initial amendments put in place under the Budget Implementation Act in June. It’s expected that the government will begin major consultations on the Competition Act very soon to ensure, among other things, that the bureau has the necessary tools to protect and promote competition in Canada.
Senator Gignac: This is important because the public’s trust has been shaken. Everyone here can tell several stories about people blaming the war in Ukraine or other things, and you see businesses using these kinds of excuses to justify price increases that seem over the top.
We’ve seen price and wage controls in this country before. That was a long time ago, I don’t think you were in the workforce back then.
Do other countries have similar practices? Right now, we’re only using monetary policy to fight inflation. Have you analyzed other solutions based on the experiences of other countries that Canada could learn from to overcome inflation?
Mr. Durocher: Thank you very much for the question. We don’t see the policy on competition and competition as a way to deal with inflation in the short term.
In the medium and long term, it’s important to have a competitive economy. This plays a significant role in ensuring confidence in the markets and the economy’s performance in terms of productivity.
We have examples from other countries where we’ve seen that the steps taken to promote competition in the economy had a significant impact. Take Australia, for example. In the 1990s, Australia introduced a series of competition policies that transformed the economy. This included reviewing 1,800 laws and policies across all sectors of the economy. They gauged the impact of these measures in 2005 and found that the gross domestic product went up by 2.5%, or $5,000 per household in Australia.
There are examples overseas of the impact of competition. In the context of inflation, they clearly show the importance of competition.
Senator Gignac: Can you please send that information to the clerk? Thank you very much.
Mr. Durocher: I’d be happy to.
[English]
Senator Loffreda: Thank you to our panellists for being here. It’s a pleasure having you here this morning.
Your overall message is simple: Canada needs more competition in order to have stronger and more inclusive growth. Where do we require it most? Are there certain areas you have identified where there isn’t enough competition? Why don’t we have enough competition? Many will blame policy, regulations, et cetera, but if we look at critical sectors, like grocery store competition — and I know recently, on October 24, 2022, the Competition Bureau launched a market study on grocery store competition. Why don’t we have enough competition? What could be done? Is there any government policy or legislation that could be put in place in order to promote additional competition?
Mr. Durocher: Thank you very much for the question.
I think competition manifests itself across the economy. Certainly, there are sectors where competition issues are looked at in an enforcement context or advocacy context by the Competition Bureau. I think examples include financial services, where we’ve been looking at those sectors often, and there is also the telecommunications market, of course, and we continue to look at that sector, and health care as well. Pharmaceuticals is important too, as well as groceries. There are a number of issues.
Increasing competition in those markets, I would suggest, is a function of two things. One is private restraints on competition in the economy. This is the conduct and action of private parties and private enterprise. That is really a question of the Competition Act. That is the key tool that we have in Canada to protect and promote competition, so ensuring that the legislation is modernized and has the tools so that we can address conduct harmful to competition is important.
The other is looking at public restraints on competition. These are government policies and laws that can increase barriers to entry in sectors or make it more difficult for people to switch customers. There, the onus can lie on government to make sure that we bring a competition lens to our existing regulations and policies, or applying this to new regulations and policies to ensure that public restraints on competition really minimize the distortions to the competitive process and to market forces as well.
[Translation]
Senator Bellemare: My questions are going to continue in the same vein, because that’s how you promote additional competition. You mentioned that one way to go is private restraints, and responsible conduct in the private and public sectors. Can you give us some examples from the public sector?
We’re parliamentarians, so maybe we can play a role on the public end of things, in specific sectors, to improve competition.
Mr. Durocher: Absolutely. One concrete example that comes to mind is growing competition in financial services. If you look at the open banking movement, it’s a very significant example of how to promote competition and how to make sure that we give consumers more power over their data, over their financial services. We know that the Department of Finance is working to put in place a system to promote them. That would be a concrete example of what can be done in the financial sector to promote competition and facilitate the entry of new players to compete with the bigger players.
Another example would be the telecommunications sector, with the internet and wireless services. In terms of regulation affecting the sector, the Competition Bureau Canada is doing a lot to promote competition with the Canadian Radio–television and Telecommunications Commission (CRTC) in that sector. We’re trying to bring forward the evidence needed to ensure that CRTC regulations are as competitive as possible.
Senator Bellemare: And what about the goods sector?
Mr. Durocher: Each sector has its own realities when it comes to what might create more competition. Of course, if you look at the sale of goods in general, the influence of online shopping and what can be done to facilitate technologies to promote innovation and new players coming in to disrupt those markets, goods are really quite significant.
At the Competition Bureau, we focus on the impact of the digital economy and how to promote competition in those markets. Data mobility is increasingly important. We’ve talked about it in the context of financial services, but we’re going to see more and more data that can be shared between departments, and it will become more and more significant. It’s going to play an increasingly significant role in promoting competition throughout the economy.
Senator Bellemare: Thank you.
[English]
Senator Marwah: Thank you to both witnesses.
I just want to talk briefly and get your thoughts on competition in a digital world. Do you find that the powers you have in the Competition Act are broad enough or flexible enough to apply to the digital world, or do you believe reform is needed? If reform is needed, is work being done on that? In which areas would reform be needed so it makes you more effective?
Mr. Durocher: I will ask my colleague, Leila Wright, to respond to that.
Leila Wright, Deputy Commissioner, Digital Enforcement and Intelligence Branch, Competition Bureau Canada: Thanks very much.
We have been doing a lot of work thinking about how we can improve the Competition Act to make it more fit for purpose in the digital economy. As my colleague Mr. Durocher spoke about in his opening remarks, there has been an initial set of amendments that have come into force in the past year to allow us to be more effective in the digital economy.
The other development that has happened over the last two years is that we have received an increase in our federal budget. In Budget 2021, the government provided us with $96 million over five years, as well as $27.5 million ongoing after that. With that money, we have been finding ways to be more effective in the digital economy, as well as increasing our enforcement and promotion work. We’ve created a new branch in the Competition Bureau. It’s called the Digital Enforcement and Intelligence Branch, the branch that I head at the Competition Bureau. The purpose of that branch is to increase our skills and our knowledge of what’s going on in the digital economy so that we can better support the enforcement work that we’re doing, as well as the promotion work, to make sure that the digital economy is as competitive as possible.
Senator Marwah: I understand, and I agree with you. One side is the amendments and your powers, and the other side is enforcement. I’m glad you’re working on the enforcement side. My question is more directed to your powers. You said some amendments have been made. Are they enough? Do you feel more should be made? Who is driving that, if you feel more should be made?
Mr. Durocher: An initial set of amendments have been made. They were important and helpful to ensure that we would be a more effective competition agency, there’s no doubt. We strongly believe that a broader review of the law should be done. In fact, what we’re expecting is that the government will launch this broader review of the Competition Act.
There are a number of recommendations that the Competition Bureau has made. These recommendations were made in the context of former Senator Howard Wetston launching a consultation, which was very impactful in the competition law community. We had a list of over 30 recommendations for how we felt, as the law enforcer in that perspective — recommendations for how to improve the Competition Act to make sure we can better protect and promote competition across the economy, including in digital services.
Some of the more notable issues that we expect to be the subject of much debate relate to our merger law. Canada is a bit unique in how we approach merger review for anti-trust purposes. In terms of the role of efficiencies, we are an international outlier in Canada. You could argue that because of that, there’s greater tolerance for economic concentration in Canada than most other countries. That’s important because mergers are on the front line of protecting competition in the economy. That’s how we see concentration occur, and competition can be lessened. That’s a major area where we expect there to be a thorough debate as to the merits of the change to our laws.
Others relate to market studies. We’ve talked about our grocery market study. One issue is that we do not have the power to compel information from market studies. We can examine a sector, but we can only rely on information provided to us voluntarily or publicly available information. Most other countries and G7 partners have the ability to compel information to really get to the bottom of things and understand issues. That is a key limitation we have to advocate for competition and get to the bottom of what is happening in the market.
Mergers and market studies are two of the more notable examples where we think there’s an important debate that should happen. I can tell you that we’re very excited at the Competition Bureau to have this debate and examination of our laws.
Senator Marwah: Thank you.
The Chair: I just want to follow up on a question of timing, because I know the minister, when talking about this, said, “increasing access to justice for those injured by harmful conduct.” When I think about the price of airline tickets or cell phone rates or now grocery products, your process is long and slow to do these studies. Is there any change that will allow individuals to use you as a mechanism to seek redress?
Mr. Durocher: One of the amendments that occurred in June of this year and received Royal Assent actually enables private parties to bring cases themselves under section 79 of the Competition Act, which is the abuse of dominance provision. That is an important amendment that took place to enable people to bypass the Competition Bureau as being the sole enforcer of one of these key provisions. Of course, we have heard that if there is an inability to obtain damages, that it might not incentivize people to do that, but it’s certainly an important starting point.
The Chair: We will follow up on that later.
Senator Yussuff: Thank you to the witnesses for being here.
If you ask mainstream Canadians right now about the challenges they face in making ends meet, they’re really angry because of the things affecting their daily lives, whether it’s grocery prices or buying gas for their vehicles. They will tell you that they think there is something corrupt about our country. They might be right, as far as I’m concerned, because the price increases they’re seeing and experiencing certainly makes it very difficult. There have no mechanisms or tools to address this. They are relying on agencies like yours in regard to your efforts to try to shine a light on this and ultimately change the behaviour, given the work that you’re doing on grocery store competition and price increases.
Going back to the point you made earlier, you can’t compel them to give you certain evidence that you require to do your investigation, so what teeth do you have if you can’t compel them? That is ultimately at the bottom of your investigation so that it’s fully appraised in regard to what is going on in the marketplace. I think in fairness to consumers across this country, how are they supposed to have confidence in what is happening? We can tell them that this is normal, this increase in prices of products, and that they have to pass that on, but when the prices are not a match in regard to passing it on, it is a deliberate attempt to skew the marketplace, so how are they supposed to have competition? I appreciate you’re a constrained body by your political masters. Explain that in a way to those watching to give them a sense of understanding of how we can better improve your responsibility as the watchdog on behalf of the public.
Mr. Durocher: If we look at the grocery market study, we cannot come compel information. I would point out that we’re not investigating any specific wrongdoing that we’re seeing in the marketplace. That said, we will take a close, hard look at the sector using the tools that we have, and if we uncover evidence of wrongdoing, we’re going to investigate and take appropriate action.
In terms of the confidence that Canadians have in the Competition Bureau, I would say that we are taking action and we are operating with a very much heightened sense of vigilance these days to guard against any competitive conduct in an inflationary environment. That is something that the professionals at the Competition Bureau take very seriously, and we use all the tools that we have to protect and promote competition in that regard.
Coming back to the market study, we are confident that, at the end of the day, we are going to produce meaningful recommendations to government about how to improve competition in the sector. We expect to hear from hundreds of parties about their ideas and means to better enhance competition in the market. We’re going to engage with our international counterparts to understand what other countries have done in this regard. That is going to help inform us. We are confident that come June 2023, we’re going to produce a report with important recommendations.
Ms. Wright: If I can just build on what Mr. Durocher has said, he’s speaking about our market study abilities. We also have our enforcement abilities where we can compel information. Earlier this year, our commissioner put out a statement saying that the Competition Bureau will have zero tolerance for companies that are using the inflationary period to take advantage and increase prices more than is necessary or engage in anti-competitive conduct like price fixing with their competitors.
Earlier this year, we also announced that we are part of an international working group on supply chain disruptions. This is a working group that we have put in place with our counterparts in New Zealand, Australia, the U.S. and the U.K. where we’re focusing in on whether there is evidence of companies taking advantage of supply chain disruptions to increase prices and engage in collusive activities like price fixing.
There is a lot of work that we are doing at the Competition Bureau to demonstrate that we’re being vigilant in this inflationary period and that we have our eye on the market to make sure there isn’t anti-competitive illegal activity taking place.
Senator Yussuff: Given some of the points that you highlight with regard to shortfalls in your powers and authority, but also our retired colleague Howard Wetston in terms of his work, how can the Senate be of value to make sure that you as an institution have the reform that is necessary to ensure Canadians have more confidence in the challenges that we may face from time to time as the economy goes through these cycles that we are experiencing right now?
Mr. Durocher: Thank you for that question.
The way competition policy operates in Canada is that the Competition Bureau enforces the law, but the law itself is controlled by the Minister of Innovation, Science and Economic Development and the department. We work hand-in-glove with the department to share our experiences with the law and where there may need to be improvement, but fundamentally, any issues relating to amendments would fall to Innovation, Science and Economic Development to bring forward.
In terms of the Senate, I think that we are certainly very interested in questions that are posed at this committee on competition issues. It’s very important to continually bring a competition lens to policies and programs through this committee and otherwise. There are a lot of things that can be done, coming back to open banking, as an example, to really enhance competition in the country. A lot of great work is being done through this committee in that regard to shine a public light on some of these issues. I would suggest that that is very important.
The Chair: Thank you for that advice.
Senator C. Deacon: Thank you, Ms. Wright and Mr. Durocher, for being here with us. It’s a delight for me, as you know. I’m quite a fan of competition law reform.
I’ve heard mentioned a number of times the work of Senator Wetston; I’m proud to be hosting all of that work on my website. If anyone is looking to review that excellent process, I encourage them to do so.
I want to keep building off of the previous two questions in terms of how we do in the meantime, because we’ve got a situation where there’s an announced review, we hope a robust and inclusive review, of the Competition Act. We are also in Ottawa, where that process can take years.
I’m wondering about the strengthening of tools, in the meantime, where we’re seeing considerable growth and profits in some of our oligopolistic sectors; virtually all sectors are that way. We are seeing a real growth in profits in those sectors as a result of inflation and price increases. One that I have highlighted is that the banks grew their profits at six times the rate of inflation through the pandemic, fee increases included.
The EU has certainly taken a very strong approach in this regard, as well as having a much stronger Competition Act. They’ve taken a much stronger position. I read an IRPP publication on this.
I wondered what your thoughts are about this interim period, because we’ve got a challenge in this country. The chair mentioned it. Previous speakers mentioned it. How do we manage that in what could be several years to getting competition reforms through? I would prefer a much faster route.
Mr. Durocher: Thank you for the question.
Part of it is trying to build a culture of competition in this country. For our commissioner, Matthew Boswell, that is one of his priorities as commissioner. It’s important that we nurture the value of competition in our economic affairs.
If we look back, the last major review of competition policy in Canada occurred in 2008, where Red Wilson chaired an independent panel. One of the major findings from his final report from 2008 was that Canada is identified as a country that does not place sufficient importance on competition in the conduct of our economic affairs. That is something very important. I would suggest I’m optimistic that the needle is moving in that regard.
We’ve seen important steps in the last year. The Competition Bureau getting a budget increase, after a flat budget for ten years, was very important, as Ms. Wright noted. The initial amendments to the Competition Act were important. This broader review is incredibly important to make sure that we have the tools.
In the interim period, there is the importance of shining a light on competition, understanding its value, not only to consumers but also to our economy. As many know, Canada has been noted to lag in terms of productivity growth. We know that competition and competitive intensity drive productivity and innovation growth. Reconciling these two through having discussions like these at important committees is an important step in the interim to really build this culture of competition in Canada, both in the public mindset but also with consumers and businesses alike.
Ms. Wright: I can also speak to the new branch that was created at the Competition Bureau, the Digital Enforcement and Intelligence Branch. The real purpose of that branch was to help the bureau sharpen its tools both on the enforcement side and the promotion side.
The branch brings together a number of new areas of expertise that we haven’t had within the bureau before. We have a data analytics team that will now be able to use data analytics to make the bureau faster and more effective and also understand how companies in the digital economy are using data to their advantage.
We also have an intelligence team that will be focused on identifying harm as quickly as possible so we can zero in on those markets that need either enforcement or promotion work in order to make the markets more competitive.
We have a technology insight team that will be working to understand new technologies in the marketplace to get us up the curve more quickly.
We also have a behavioural economics team. What we’re seeing more and more is that companies in the digital era are using behavioural economics to their advantage, sometimes misleading consumers through the use of behavioural insights and understanding how they can manipulate consumers.
We are establishing a centre of expertise in the Competition Bureau to understand that better so that we can keep vigilant and keep on top of that work in the economy.
Senator Smith: Welcome, and thank you for being here.
Budget 2022 made changes to the Competition Act with respect to wage-fixing and no-poach agreements. Some of the changes are slated to come into effect the summer of 2023. Can you explain the impact of wage-fixing and no-poach agreements on competition in Canada? Supplementary after that, are there specific sectors of our economy where wage-fixing and no-poach agreements are more prevalent than in other sectors?
Mr. Durocher: Thank you for the question.
As part of the changes that occurred through the budget, most changes came into effect right away. The changes to the criminal provisions, including wage fixing and no-poach, are coming into effect in June 2023 to enable businesses enough time to come into compliance with the law. Essentially, it will criminalize agreements between employers to fix prices that they pay for their labour or otherwise agree not to poach one another’s employees.
Since the coming into place of these amendments, we’ve hosted public information sessions and hosted a portal to enable Canadians and businesses to ask us questions. That provision, wage fixing and no-poach, is receiving intense attention, rightfully so, because businesses want to comply with the law in that regard. We are planning, before the end of the calendar year, to publish guidance for the business community to give more clarity and certainty for what this means to enable companies to comply. We are using a lot of the questions and feedback to inform the guidance that we’re going to provide.
In terms of the sectors where this is relevant, it’s hard to pinpoint an exact sector right now. We know that there are a lot of agreements also in the commercial space that may have non-solicitation provisions where lawyers are keenly interested in the guidance that we’re going to provide coming forward.
The key thing is that, in the coming months, we’re going to put out guidance and we’re going to consult with the public on it with a view to finalizing it well in advance of June 2023.
Senator Smith: Are there any tidbits or any initial pieces of information that you can share with us that stand out in your mind?
Mr. Durocher: We’ve been thinking long and hard about this over the last few months. We’re also informed by what is going on internationally. As an example, in the United States, they’ve looked at these types of agreements from a criminal perspective as well, so understanding their experience is going to be important.
Hearing from the public, we’ve gotten dozens of questions about how would this apply to a specific fact scenario. Trying to unpack that to provide guidance that is most helpful is really our focus right now.
Senator Smith: Thank you.
Senator Loffreda: Back to the October 24, 2022, Competition Bureau launch of the market study on grocery store competition, you mentioned that you will be releasing the report in June 2023 — if that’s correct — and that you’re part of an international working group. That being said, we know the inflation on the grocery stores and on our groceries — we’re all experiencing it, and Canadians are very concerned. Why did you launch the study? Was that strictly the cause? Are there other areas of inflationary concern where you’re looking at launching a similar study? Being part of the international working group, are similar studies being launched by other countries? Have results been released by other countries, or what learnings can you share with us today on your work thus far?
Mr. Durocher: Just to distinguish, the international working group is more on the law enforcement side, so they’re not necessarily doing studies. It’s an international working group to look at supply chain issues which could cross borders. The idea is to detect and share information about what is going on to take enforcement action in that regard.
Senator Loffreda: Are there any learnings from that that you can share with us today?
Mr. Durocher: There’s nothing I can publicly share flowing from that group because of the confidential nature of the activities, but looking at the international realm, we work very closely with our international partners to assess what they’re hearing in certain markets and where they’re focusing their energy to help inform our work here in Canada as well.
With respect to the grocery sector, that is one that has been in the works, or we’ve been contemplating that study for a while now. Part of it was ensuring that we had the resources. Our competition advocacy team here in Canada is small but mighty, and we just finished a very significant study of the digital health care sector. We’ve published two of our three reports so far analyzing how can we improve and leverage competition in the digital health care sector, which was obviously a very important and prominent issue during the pandemic. As that study came to an end, we were able to shift to our next one, which was grocery, in this case. We were also, frankly, very mindful of the growing concerns from Canadians about what they’re seeing in grocery stores and, obviously, mindful of what parliamentarians have been hearing from their constituents as well. We wanted to ensure that we bring our competition expertise to bear in a sector that really matters for Canadians right now.
Senator Loffreda: Do you feel we lack competition in that sector, and if so, why? It’s such an essential sector, and it’s important to Canadians. Is it because of the larger corporations acquiring the small ones? Maybe that has to be looked at, eventually, by the government, because it’s an area where you can’t go wrong. It’s essential for Canadians. Why do we lack competition?
Mr. Durocher: Certainly, one of the things prompting our study is to better understand whether the recent price increases could be the result of changing competitive dynamics in the grocery space. I don’t want to prejudge the answer to that question because it’s what we are going to study with a view of making recommendations, but that is important.
I will say we have taken action in the grocery sector over the years by reviewing mergers and forcing the sale of stores in local markets across Canada because of competition issues. We had a very in-depth investigation into Loblaws’ practice with its suppliers that wrapped up in 2017, and, of course, there’s an ongoing investigation into the bread price-fixing issue as well. It is a sector that we have been and continue to be active in, but what we’re doing with this market study is taking a holistic look at competition in the sector, with a view to determining what steps government can take to increase competition going forward.
The Chair: I just want to follow up on the whole issue of timing, because we know your process is long and slow. Senator Yussuff raised some of this. Do you provide any kind of outlet — public hearings, website, anything — where people can, at least, explain what they’re experiencing, which might be useful to you but might also be a safety valve?
Mr. Durocher: Absolutely, Madam Chair. We have a portal, upon launching our grocery market study, where we want to hear from Canadians about their experiences, and my understanding is we’ve already received a significant amount of interest. Canadians have been voicing their experiences, their concerns and their ideas for how we can improve competition. Interacting and hearing from the public is very important to this process.
The Chair: The follow-up would be whether there is any mechanism for you, before the final report is finished in the next year, to make an analysis of those comments public in the interim?
Mr. Durocher: Many of the submissions will be made public, so they’re going to be available. In certain cases in the past, we have published “What We Heard” reports with respect to that. In the case at hand, I think we’re trying to balance the importance of being able to move quickly and nimbly to produce a final report with confidentiality provisions that we need to abide by with respect to our process. We are mindful of the importance of moving quickly. Competition law issues and competition issues are complex, necessarily, but we are very mindful of the need for speed.
Senator C. Deacon: Again, I’m so pleased that you’re both here.
The Governor and Senior Deputy Governor of the Bank of Canada earlier in the week both underscored the importance of increased competition to accelerating economic growth and fighting inflation. It’s an important ally in those priorities at the bank.
I want to get into a specific area, and that’s right to repair. The inflationary pressures that are denying consumers the right to repair the assets they’ve purchased is becoming an increasing problem, especially in a data-driven economy, and it’s great to see you, Ms. Wright, leading that section of the Competition Bureau. I’m thinking about the need to integrate across different pieces of legislation, because all of the powers to prevent abuse will not necessarily be in the Competition Act. I think of Bill C-27, Bill C-11 and other bills where it really does affect competition. Right to repair is crucially important in the agricultural sector and to anybody owns a vehicle, increasingly. With appliances and devices, if we can’t have ownership and control over who we go to, and we’re not seeing that broadening out of competition across the economy, it increases costs dramatically for individuals.
Could you speak to that? I’ve seen you in social media getting quite active in that area, and I want to get some advice from you.
Mr. Durocher: Thank you for the question.
We have been championing right to repair using larger advocacy tools, trying to draw attention to the issue and providing our expertise when other arms of government are considering legislative change that has an impact on right to repair.
A big area is copyright reform right now, where we’re trying to bring to bear our expertise and make specific recommendations as to how to ensure that we are promoting right to repair in an appropriate way in the context of changes to IP, intellectual property, legislation.
The other area is making sure that consumers are aware of their rights and the benefits of right to repair. As you pointed out, we have recently launched on social media a series of videos that explain our work in right to repair and also why it is important and why it matters for competition and why it matters to empower consumers.
There is also an environmental dimension. The longer people can make use of their current products means less waste, so it’s good for the economy, good for competition, good for consumers and also the added bonus that it is good for the environment.
Senator Bellemare: I’m just wondering, how do you measure the degree of competition in the oil and gas industry for the people that put gas in their cars? It fluctuates all the time, and it’s been climbing. Some people say the companies use what is happening elsewhere to arbitrarily raise the prices. Do you investigate that too?
Ms. Wright: I can speak to how we do a competition analysis generally. Before I do that, let me just say that concerns regarding gas prices are something that the Competition Bureau is acutely aware of, and we spend a lot of time working on this issue. A few years ago, we actually put out a report — which I would be happy to share with this committee — that explains the different markets that are involved in the oil and gas sector and how fluctuations in each of those markets may affect the end price that is being paid by the consumer, just so that people can really understand all the different factors that are being taken into consideration.
Generally, when we’re doing a competition analysis, the first thing we’re looking at is what market is involved. We have to identify what the product market is, what the geographic market is, and then within that specific market, we look at whether there is a competition concern. Are there sufficient competitors who are effective in that market? We’re doing an economic analysis, so that type of analysis is done to understand markets.
We also have a cartels division at the Competition Bureau that looks at whether there is price fixing occurring between competitors in industries, including the gas industry. They are very active in understanding whether price similarities among gas stations are just the result of something that is occurring naturally in the market or whether they are the result of some illegal activity.
I hope that answers your question.
Senator Bellemare: Thank you.
Senator C. Deacon: I’d like to look internationally for a bit and compare differences, compare and contrast Canada with other countries. We have a situation in Canada where the Competition Bureau now reports to the minister versus reporting to Parliament. I’m wondering what other types of differences there may be globally that could help us understand where there are opportunities for us to really be pushing as a committee. I think what we’ve really heard is your work affects so much of what we do around this table, so understanding how empowered you are is important, and maybe how empowered you need to be and what other countries have been doing. There has certainly been a big push by President Biden in this direction. It’s incredible to see the effort. Could you just give me a bit of a global scan of where we are different and where we may be lagging?
Mr. Durocher: I’m happy to address that question.
We often benchmark with our international counterparts, I would say particularly with the United States, the U.K., Europe, Australia and New Zealand, because of similarities in how we operate and common trading partners. What we’ve seen from other countries I would suggest is something that we can absorb in Canada and learn as best practice. They are taking a whole-of-government approach to competition.
If we look at the United States, President Biden signed an Executive Order to promote competition across the U.S. economy, and they created the White House Competition Council. If you look at the composition of that competition council, it’s really the senior U.S. cabinet in operation. They’ve had three meetings with tangible outcomes, two of which President Biden has attended, where they’re looking at individual sectors of the economy and what measures they can take to stimulate competition. That is certainly an interesting model that we’re monitoring and seeing tangible results.
Internationally, Australia is always a country that has a very strong culture of competition in their processes. They take it very seriously, and part of it was reforms that they embarked upon in the 1990s to recognize that there was not enough competition in their economy and ways to stimulate it. Again, the most important thing to learn from that is the sheer benefits that were gained. After the fact, Australia’s Productivity Commission analyzed those benefits, and it was 2.5% of their GDP at a minimum. They thought that was a conservative estimate.
When we look at those examples and what is going on elsewhere, from our perspective, the message is that the sheer potential of really focusing on competition in Canada to move the needle on our productivity growth is very important as well.
We’re constantly monitoring the changes. We know the competition policy team at ISED is very mindful of what is going on elsewhere too. Part of it is being informed as to what are the right approaches for competition if we look at our law as well, because there are a lot of changes being approached right now. There’s the Digital Markets Act that is now in effect in Europe, which is a major change for big digital platforms. We’re going to monitor if anything is to come — Senator Klobuchar in the United States has tabled some very ambitious anti-trust reform bills. We’ll see what happens with that after the midterm elections. We are very much monitoring international developments to see how we can improve our work at the bureau and our laws as well.
Senator C. Deacon: Would you have anything to add, Ms. Wright, in terms of the importance of data and data portability as we move forward? It’s crucial to unlocking value for citizens.
Ms. Wright: Absolutely. Data portability is something that is so important. We’ve made many submissions from the advocacy perspective on open banking and the importance of open banking, but the benefit of data portability isn’t just specific to open banking; it’s for many different markets and industries now.
I remember that at the time that we were studying open banking, there was a study that had been done in the U.K. that estimated the amount of benefit that the U.K. economy received from open banking. I can’t now remember the number, the actual amount, but the amount of benefit that you can receive from that type of barrier to competition in the marketplace was astounding. The more that we can see that in Canada, the more we will be able to have additional competitors enter the digital economy and really be competitive.
Senator C. Deacon: Last, I have just a simple question. I know, chair, we’re right at the last minute. It’s about made-in-Canada or made-at-home competition. There’s an urban myth that if we increase the ability for competition, that we’ll just bring in global companies. It’s a separate issue. Do you see best practices anywhere in the world about creating made-at-home competition?
Mr. Durocher: We believe the evidence is very clear on that point. If we want Canadian companies to be more competitive abroad, it starts at home. Every meaningful research has pointed to this fact. Competitive intensity at home is what enables companies to be more competitive abroad. If we want Canadian companies to be more competitive abroad, it starts at home, and we need to nurture competitive intensity in the Canadian economy.
The Chair: Thank you very much to our witnesses, Anthony Durocher, Deputy Commissioner, Competition Promotion Branch at the Competition Bureau of Canada; and Leila Wright, Deputy Commissioner, Digital Enforcement Intelligence Branch, also at the Competition Bureau of Canada. We appreciate your comments. If there are any documents that you feel would be helpful, please forward them to us.
We are going into Remembrance Week, so we’ll be back here again a week from Tuesday to continue our look at the state of the economy. Thank you for your contribution.
(The committee adjourned.)