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THE SENATE — Affordable Housing and Groceries Bill

Consideration of Subject Matter in Committee of the Whole

December 13, 2023

The Chair [ + ]

Honourable senators, the Senate is resolved into a Committee of the Whole to consider the subject matter of Bill C-56, An Act to amend the Excise Tax Act and the Competition Act.

Honourable senators, in a Committee of the Whole senators shall address the chair but need not stand. Under the Rules, the speaking time is 10 minutes, including questions and answers, but, as ordered, if a senator does not use all of his or her time, the balance can be yielded to another senator. The committee will receive Chrystia Freeland, P.C., M.P., Deputy Prime Minister and Minister of Finance, and François-Philippe Champagne, P.C., M.P., Minister of Innovation, Science and Industry.

I would now invite them to enter, accompanied by their officials.

(Pursuant to the Order of the Senate, the Honourable Chrystia Freeland, the Honourable François-Philippe Champagne and their officials were escorted to seats in the Senate Chamber.)

The Chair [ + ]

Ministers, welcome to the Senate. I would ask you to introduce your officials and to make your opening remarks.

Hon. Chrystia Freeland, P.C., M.P., Deputy Prime Minister and Minister of Finance [ + ]

Hello and thank you, Madam Speaker pro tempore. Thank you to all the senators.

We are accompanied by Miodrag Jovanovic, the senior assistant deputy minister of the Tax Policy Branch of Finance Canada. He is a very important man, and we are pleased that he is here with us. Samir Chhabra, the director general of Marketplace Framework Policy at Innovation, Science and Economic Development Canada is also here with us.

It’s a pleasure for me and François-Philippe Champagne to be with you today to discuss Bill C-56. I’ll make a few opening remarks, and we look forward to answering your questions.

Bill C-56 is an important part of our economic plan.

Through the affordable housing and groceries act, our government is taking new, concrete action to build more homes faster and to make life more affordable for Canadians. I want to talk about why it is so important that the Senate support this legislation.

First, we are eliminating the goods and services tax, or GST, on new rental housing construction, which will incentivize the construction of more housing more quickly across the country. The idea is to enable builders to succeed by making it more affordable to build more housing that otherwise would not get built because of construction costs.

For example, in the case of a two-bedroom rental unit valued at $500,000, a builder will benefit from $25,000 in federal tax relief, which will make it more cost-effective for them to build. Our plan is already delivering results. To give you one example, a Toronto-based developer announced after we had announced this measure that they would build 5,000 new rental units across the country. These were units that were otherwise on hold. That’s just one developer.

Today, about a third of all Canadians rent their homes, and whether they are students, families, young professionals, seniors or new Canadians, it’s essential that we build more rental homes and we build them faster. I believe that’s a goal that all of us share.

Second, Bill C-56 will also increase competition across our economy, particularly in the grocery sector. More competition means lower prices and more choice, and by increasing competition and cracking down on unfair and anti-competitive practices, we will help to stabilize prices for Canadians.

We’re seeking to amend the Competition Act to give the Competition Bureau a real ability to investigate and crack down on price-fixing. We are also removing the “efficiencies defence” to end anti-competitive mergers that raise prices and limit choices for Canadians. We’re empowering the Competition Bureau to put a stop to situations where large grocers prevent smaller competitors from establishing operations nearby.

As part of our economic plan, our government will continue to do everything in its power to create an economy focused on the well-being of all Canadians, and that’s exactly what the bill will help us do.

At a time when there is so much division in so many countries in the world, I’m pleased to report to senators that Bill C-56 passed unanimously in the House on Monday. I really hope it will have the same support here.

Thank you very much. We will be happy to answer your questions.

The Chair [ + ]

Thank you very much. Just a reminder before we start our questions — we have many questions, so I hope that the answers will be sharp and to the point. Our first 10-minute block begins with Senator Marshall.

Senator Marshall [ + ]

Welcome to the Senate, minister. I’m going to start with Minister Freeland. For the GST rental rebate for new rental housing, the estimate in the fall fiscal update was $4.5 billion over the next six years. How many homes are you expecting will be created with that $4.5 billion?

Ms. Freeland [ + ]

Thank you very much, senator, for the question. It is challenging to have a precise estimate of the number of new homes that will be built over the course of that time. So much depends on the broader macroeconomic conditions in the country.

Mike Moffatt, one of Canada’s top housing experts, has estimated that the measure will lead to between 200,000 and 300,000 additional units being built.

Senator Marshall [ + ]

Thank you for that information. In which year do you expect completion of the first housing units? It’s a six-year program. We’re only in year one but almost through it.

Ms. Freeland [ + ]

As you know very well, senator, the program occurs over the course of many years. It applies from the date of announcement, because the idea was to create an incentive for new construction, and it depends very much on how long each project will take.

I was in Downtown Eastside Vancouver maybe 10 days ago at an affordable housing project that was funded by the federal government’s affordable housing program. I was first there two years ago, in the summer of 2021, when shovels first went into the ground. I visited a couple of weeks ago, and I toured fully complete units. There are 231 completed affordable housing units. In May, tenants will start moving in. So construction can happen quickly, and we hope that that will be the case.

Senator Marshall [ + ]

So will that be in two years’ time?

Ms. Freeland [ + ]

No, I didn’t say that. It depends on the project, but I gave you an example of one specific project.

Senator Marshall [ + ]

Bill C-56 also indicates the rental rebate program will run for 13 years, but the cost estimate of $4.5 billion is just for the next six years. What’s the estimated cost for the additional seven years?

Ms. Freeland [ + ]

Thank you very much, senator. The idea of the program is to create an incentive for building right now, while we have a housing crisis, but it was important for it to be a multi-year program. We couldn’t have a program for just one year because, as we all know, planning, getting permits and getting financing lined up for building takes some time.

That is why it is a multi-year program. But it is not an open-ended program because we think that it will be important for future governments to assess whether it’s appropriate to keep this tax credit in place going forward.

I want to use this opportunity, though, to say to anyone who is interested in purpose-built rental construction in Canada, this program is here; it changes the economics of building considerably. We’ve also added $20 billion to the Canada Mortgage Bond program, which adds additional financing support for purpose-built rental construction, and we hope that Canadian builders will take advantage of it.

The Housing Accelerator Fund is also easing the permitting and zoning requirements across the country and will create more room for purpose-built rental to be built faster.

Senator Marshall [ + ]

You indicated it is not an open-ended program. But it is open-ended; it runs to 2036. You’ve given an estimate for the first six years, but there’s no estimate for the following seven years. Why would you not estimate the cost for this program so people can know exactly what it is?

Ms. Freeland [ + ]

Actually, senator, we’ve put the program in place as a multi-year program because we know — and I think everyone here knows — that building and projects take time. This is a program to say to developers: One, we want you to build more and faster; two, we want builders to move from building condos to building purpose-built rental. Certainly, in the city I represent — Toronto — the vast preponderance of projects have been in the condo space because the financing worked better there. By lifting the GST on purpose-built rental, we changed the math for builders. Canadians are already seeing a response, and that is the market where we need more housing.

Senator Marshall [ + ]

Thank you. The chief economist at the Canada Mortgage and Housing Corporation, or CMHC, told us the corporation hadn’t had the time to estimate the specific impact of a $4.5-billion program. Why would the government commit to spending $4.5 billion on a program without undertaking an impact assessment?

Ms. Freeland [ + ]

Senator, I hope you and all senators will agree that housing is fundamental to the well-being of Canadians and the Canadian economy. We believe there is a housing crisis and that it is essential to get more homes built faster. I myself would struggle to explain to a young Canadian struggling to find a place to live why we delayed this essential program.

Senator Marshall [ + ]

Minister, you allocated $4.5 billion to a program with very few details. You can’t give us specific information with regard to the number of homes being built. The chief economist at CMHC told us that the corporation hasn’t even done an impact assessment for a $4.5-billion program.

Ms. Freeland [ + ]

The program, senator, is clear and simple, and that is its strength. We have simply said that we are eliminating the GST on purpose-built rental. Many provinces have followed our lead.

Senator Marshall [ + ]

Thank you.

Ms. Freeland [ + ]

I would say, senator, that I don’t think now is the time to be placing more red tape and bureaucracy in the way of getting more homes built in Canada.

Senator Marshall [ + ]

Thank you.

Ms. Freeland [ + ]

I hope all senators, conservative and progressive, would agree with that.

Senator Marshall [ + ]

Minister, in your Fall Economic Statement, you called Chapter 1 “Canada’s Housing Action Plan.” At a recent Senate Banking Committee meeting, of which I was a participant, Minister Fraser said there was no specific strategy outlined in the Fall Economic Statement and that the government is working on developing a comprehensive plan. In other words, there is no plan. The President and CEO of CMHC said the same thing. She confirmed that there is no plan.

Given the significant amount of money already spent on housing, which you alluded to, and the $4.5 billion that’s going to be spent on this program, why isn’t there a housing plan? Billions of dollars are going out the door, and there is no plan.

Ms. Freeland [ + ]

Senator, with all due respect, I strongly disagree with that assertion. We do have a housing plan, and we’re showing it every single day —

Senator Marshall [ + ]

Your Minister of Housing disagrees with you.

Ms. Freeland [ + ]

Well, I am speaking here. I’m sure the Minister of Industry will agree with me.

Senator Marshall [ + ]

The Minister of Housing —

Ms. Freeland [ + ]

I speak to him often. In fact, I sat with him at a press conference just Tuesday morning — I think that was just yesterday, actually — where we announced the latest step in our housing plan, which is that we are going to have pre-approved plans for housing to get more homes built faster.

And The Globe and Mail, which does not always endorse everything our government does, just published an editorial saying that this plan, which harkens back to some of the urgent measures our government took after the Second World War, is exactly what Canada needs.

We are doing more to get more homes built faster every single day, whether it is lifting the GST on purpose-built rental, adding more financing to the construction of apartments, the $15 billion in the Fall Economic Statement, the Housing Accelerator Fund, adding more money for affordable housing or the First Home Savings Account.

We’re doing more every single day, because this is a crisis.

Senator Marshall [ + ]

Please send a copy of your housing plan to your Minister of Housing and also the President and CEO of CMHC — and could you send a copy to us also? Thank you.

Ms. Freeland [ + ]

It is right here in the Fall Economic Statement. I brought copies for senators to review.

Senator Marshall [ + ]

It is not a plan.

Ms. Freeland [ + ]

I do not believe our work on housing is done. I think we need to do more every single day. This is the most urgent issue for Canadians. We do not claim that our work is finished, but we are doing important things. We’ve done major things this fall. Lifting the GST on purpose-built rental is a significant step. I hope senators will see that. I hope they will see the market response. I hope they recognize the need. We’re going to keep doing more every single day and every single week.

Senator Marshall [ + ]

Bill C-56 provides limited details on the GST/HST new residential rental property rebate program. Your officials have explained that regulations will be released in the future, providing more details on the program, but they couldn’t provide an estimated date or time frame. Given that builders will most likely want to see the details of the program before committing to construction, can you tell us when the regulations will be released?

The Chair [ + ]

Madam Minister, I’m sorry. The time has expired for this first —

Ms. Freeland [ + ]

I have an answer to her question. Maybe I’ll begin the next Conservative round with that answer, because the fact is that we are already —

The Chair [ + ]

Madam Minister, we are moving to the second block of 10 minutes.

Senator Loffreda [ + ]

Thank you, ministers, for being with us here today. Welcome to the Senate.

I’m delighted to see this bill before us now. Hopefully, we can adopt it before we adjourn for the holidays. My question will focus on the second part of the bill, namely the changes to the Competition Act. I welcome these proposed changes and hope they will achieve their intended objective of stabilizing food prices for Canadians.

Minister Freeland or Minister Champagne, how will you or any future minister determine whether conducting an inquiry is in the public interest? Is there a defined set of criteria or threshold to be met to establish a case for an inquiry?

What are your expectations in terms of the consultation process between the minister and the Commissioner of Competition before directing an inquiry?

How do you anticipate this all plays out?

Hon. François-Philippe Champagne, P.C., M.P., Minister of Innovation, Science and Industry [ + ]

First, it’s an honour to answer the senator from Shawinigan. It is my first question in the Senate.

Senator, what we have presented to Canadians is the most comprehensive reform in the last, I would say, 37 years in this country. We started with the market study that was done on groceries. I’m sure senators have seen that the Competition Bureau has been saying very clearly that this was not a complete study, because one of the things we have been missing in Canada, believe it or not, is that our regulators do not have subpoena powers.

I would say as a lawyer and someone who has done something on competition around the world, it is shocking to me to believe that, in 2023, our Competition Bureau would not have subpoena powers in order to compel documents or information to give Canadians and governments — and I would say even the Senate — a full picture of the state of competition in one particular industry.

So, what we’ve been trying to fix — and you’ve seen it in the bill, and as Minister Freeland said, it is supported by everyone — you will have a new power where the minister can now conduct or demand that there be a study. There is a consultation process to make sure there are checks and balances between the minister and the Competition Bureau. A mandate would have to be published, and a study would have to be done within 18 months.

On the one hand, we wanted to make sure that future ministers would have more power in order to provide Canadians an overview of an industry but, at the same time, not to have an undue burden on businesses. I think we strike the right balance when we do that.

If there is one thing I think we have achieved in Bill C-56, apart from everything Minister Freeland mentioned with respect to housing — for me, the best way to provide more competition in this country is to reform the act. We want more competition, less consultation and better prices for Canadians. If you look at jurisdictions, certainly in the G7 and the Organisation for Economic Co-operation and Development, or OECD, the best way to provide price stability and lower prices is to have more competition.

The market study piece is a key one because, as I said, even on the grocery sector, we have not had a chance to do a full study. However, with the new powers, I intend to look at that again so that Canadians can be better informed about the state of the industry.

Senator Pate [ + ]

Welcome to both of you. I’m very pleased to see the measures in Bill C-56 that provide tax incentives for building and owning long-term rental properties, with the aim of increasing rental supply and decreasing rents, as you mentioned. However, the bill does not focus on promoting affordable housing for those in the most urgent need of safe shelter, particularly those on social assistance, in shelters, in tent cities or on the streets. These people are unlikely to be able to afford or access market-rate housing.

How will the needs of those groups be addressed? What steps is the government taking with provinces and territories, in particular, toward the establishment of national standards and funding agreements to ensure no one is left without necessary social, economic, housing and health supports?

Ms. Freeland [ + ]

Thank you for the important question. As I was saying to Senator Marshall, we do not claim that this single bill is the one and only answer to the entirety of the housing challenge that Canada faces. It is one very important step. We have taken many other significant steps, both before this fall and this fall, including things like adding $20 billion to the Canada Mortgage Bonds program and the announcement just yesterday of the uniform pre-approved plans for building.

Let me first just mention that I think lifting the GST on purpose-built rental, while not specifically targeting affordability, also helps with affordability. We really believe that a core part of the housing problem in Canada is just a simple question of supply. We’re lucky to be a growing country, and our housing supply is not keeping pace with our population. There is just a supply, supply, supply issue.

There is particularly a challenge, as I was saying to Senator Marshall, in the supply of purpose-built rentals, because hitherto, the economics of the construction industry, particularly in a city like mine, Toronto, tend to create an incentive for builders to build condos, which tend not to be on the rental market.

This bill is already going to mean there are many more apartments to rent across Canada, and that will make it more affordable to rent an apartment. That is really important.

In terms of immediately adding to supply, so is the measure that we put forward in the Fall Economic Statement on Airbnb and other short-term rentals. People quite rightly will say, “Look, we need homes right now. What are the measures for creating incentives for building doing?” The Airbnb measure, people estimate, will make as many as 30,000 units available right away.

On affordability, specifically, we do agree that there need to be programs in place to promote the building of deeply affordable housing. That does happen through our Rental Construction Financing Initiative, into which we added $15 billion in the Fall Economic Statement. For each of the buildings that go up through that initiative, there are degrees of affordability as part of the agreement to get the financing.

The Chair [ + ]

Minister, I have to interrupt you to move on to another senator.

Ms. Freeland [ + ]

I can say more, but we can talk about it later. There are also co-ops.

Senator Greenwood [ + ]

Minister Freeland and Minister Champagne, thank you for appearing today and answering questions about this important bill.

The bill seeks to incentivize the construction of new rental units. There are important measures in this bill to address housing and affordability issues, but what is missing is a plan to address the housing crisis among Indigenous peoples. Indigenous peoples are disproportionately affected by inadequate, unaffordable and unsuitable housing. Indigenous peoples are twice as likely to live in crowded housing and are three times more likely to live in housing that requires major repairs, regardless of locale.

Minister Freeland and Minister Champagne, beyond the 2022 budget commitment to address Indigenous housing gaps, what is the government’s plan to address the systemic housing crisis that faces First Nations, Inuit and Métis peoples in this country?

The Chair [ + ]

You have to answer that one.

Ms. Freeland [ + ]

It is a very important question.

Going back to my answer to Senator Pate, broadly increasing the supply of purpose-built rental units helps everybody in Canada, including Indigenous people in Canada, but I would not claim that is the entire answer.

As you have pointed out, we’ve committed significant funding in previous budgets to Indigenous, northern and rural housing needs. That money now needs to be profiled and specifically directed to organizations. We are working very, very hard on that because — I agree with you — it is a big challenge on-reserve. I would also say to senators here that an area where I am particularly concerned is housing for urban Indigenous people in Canada, in cities like my native Edmonton.

The Chair [ + ]

Thank you.

Senator C. Deacon [ + ]

Ministers, thank you both for being here with us today to answer questions on Bill C-56. I am thrilled that we are beginning to see meaningful amendments to the Competition Act.

I would like to start with a general question to you, Deputy Prime Minister Freeland. Calling Bill C-56 the affordable housing and groceries act is a bit of a misnomer as it relates to competition because the Competition Act is a law of general purpose right across the economy. As such, what are your views on the need for a whole-of-government approach to foster robust competition across all sectors of our economy — well beyond groceries — but especially, as we’ve been seeing, increasing concentration in all sectors, including banking, telecom and airlines to name just a few?

Ms. Freeland [ + ]

Thank you for the question. François-Philippe and I work together very closely, so I will echo part of his initial answer. Seriously, I believe these changes to competition law that we are putting forward and that you are debating are a generational change in Canada. They reflect a profound — I would say — evolution in the approach to competition in Canada. I think they reflect a recognition that we’re growing up and getting stronger as a country, and — as I said in my opening remarks — we don’t need the efficiencies defence anymore.

I agree with you that competition is not only about the grocery sector, but the grocery sector is very significant for Canadians. It is something people are very focused on right now, and it is an area where I think we can all directly see that increased competition would give Canadians more choice and help to stabilize prices. This act will do that, and it’s one of the reasons I am very excited about making this change.

Senator C. Deacon [ + ]

Thank you very much.

It is great to see the promise of open banking, so we’ll see that followthrough in the budget.

Ms. Freeland [ + ]

It is not just a promise. We are moving ahead with it.

Senator C. Deacon [ + ]

Super. Thank you.

Minister Champagne, it is great to see you. Section 78 of the Competition Act relates to “abuse of dominance.” The House of Commons Standing Committee on Finance amended the section to add in a new subsection — and I’ll quote (k): “directly or indirectly imposing excessive and unfair selling prices” — to the list of possible offences. Concern has been raised that this amendment will require the bureau to enforce price controls and that the bureau has clearly indicated they don’t want to have that responsibility. Does the preamble in section 78(1) provide sufficient legal precedents to limit the application of all subsections from (a) through to the proposed (k) only to acts — and I’m quoting this from the preamble — that are:

. . . intended to have a predatory, exclusionary or disciplinary negative effect on a competitor, or to have an adverse effect on competition . . .

Mr. Champagne [ + ]

Let me first thank you, senator, because you have been very seized with competition in this country for a number of years, if not decades.

I will just go back to what Minister Freeland was saying to your first question. There is a direct nexus between affordability and competition. As you were saying, it is true in the grocery sector. I agree with you, this is the most major reform in about four decades. Like I said, it gives us more choice and more transparency. You’ve seen the fight we’ve been fighting with respect to the grocery sector, but as the regulator of telecom — as you saw last time — we said no to the merger to make sure we would have more competition and affordability in the country.

To go back to your specific question, there is no place for price regulation in the act. Let me be clear on the Senate floor for all senators and all the Canadians watching at home: There is no place for price regulation in the act. This amendment was made because it is one element that could be considered. We have seen certain cases. You will recall that this particular amendment was added by the House in the context that people were referring to — for example, in the service station area in rural communities. You could see a link with price, but I would say we would rather deal with the cause as opposed to the effect. That’s why, I think, having more competition in this country is so fundamental. I would echo the words of Minister Freeland: This is a generational opportunity.

There are a lot of things in the act going back to — let me say — the so-called efficiencies defence. Certainly, no other G7 country would have anything like that. I think it is about time we put consumers first, put Canadians first and put competition first. Certainly, the act and Bill C-56 will go a long way in trying to restore more competition in this country.

Senator C. Deacon [ + ]

Thank you very much, minister. I will keep going with questions to you, sir.

During the House of Commons Finance Committee’s review of the bill in the House, there was an amendment to allow the Commissioner of Competition to initiate market studies and compel the production of evidence — but with the terms of reference being approved by the minister. These are important changes, but some experts still question whether the commissioner is being provided with sufficient independence to design, initiate and implement a market study and compel the production of evidence. What assurances can you provide to calm these concerns?

Mr. Champagne [ + ]

I would say that we struck the right balance between the two. As you know, there was the power of the minister to demand that there would be market studies, but there are also a number of checks and balances in the system. The mandate has to be published, the report has to come within 18 months and there are judicial reviews. With respect to the mandate, you have seen the interaction between the minister and the commissioner to make sure the mandate would be published and people would have the right to comment.

I think we really strike the right balance there, because from a government perspective — which represents the interests of the people — you want the minister — whoever that minister might be in the future — to demand that a study be made in a particular industry. As a broader perspective, the government may have an agenda to look at an industry and see what we need to do in the interest of Canadians. At the same time, I understood that what the House wanted was that if a minister should fail to act in a case where he or she should be acting, this could be initiated by the commissioner.

I think this is good in a sense. You may have someone like me who is very focused on that, but you could have someone in the future who might be less focused. However, if the commissioner is there — you have both the minister and the commissioner — we have the balance we need to ensure that these studies would be initiated responsibly. They would be targeted, time-limited, subject to judicial review and afforded the confidentiality treatment under section 11. I think this is the right balance, senator, to serve the interests of Canadians.

Senator C. Deacon [ + ]

That’s super. So you don’t see a potential for the commissioner to be restricted in moving ahead?

Mr. Champagne [ + ]

I don’t see it. It is very complementary to what we’ve been doing. If you look at the grocery market study, for example, there are a lot of findings that we are putting in place. For example, we are looking at — you may have seen the article in the Toronto Star this morning — international players who may be interested in the Canadian market. I can tell you that this amendment — we will come to that part about restrictive covenants in the third section, which they call property controls — has been an impediment.

Believe it or not, one CEO told me that many years ago, they looked to enter into Canada but they could not find a lease for the number of stores they wanted in Canada because of these restrictive covenants. Maybe today, if we had that, we would have more competition in the grocery sector.

Senator C. Deacon [ + ]

Absolutely. Thank you, Minister.

I’m just looking at repealing the efficiencies defence in section 96. I ask about it because the United States and the EU both consider efficiencies in a merger review but not the way section 96 was drafted. The underlying belief in section 96 was that we had to protect Canadian companies so they could get big enough to compete globally, but that thinking has now been completely discredited with a lot of evidence.

Is the repeal of section 96 designed to remove pro-competitive efficiencies from merger reviews or simply to change the way in which those pro-competitive efficiencies are considered in a merger review by implicitly including it in section 96 when you are looking at merger effects?

Mr. Champagne [ + ]

That is efficiency that would be pro‑competitive. To your point, I think you understood it right. This has been used lately to allow mergers that are against competition to go forward. Canada was an outlier in that. It is time that we tackle that.

I must say, not only was it supported by our government, but you would have seen — I may say to the Conservative senators — that there was also a private member’s bill from the Conservatives to repeal the efficiencies defence. I would say there is broad consensus that, as a mature economy, we don’t need that anymore.

It is really an aberration — I would say — that it is still on the books in the laws of Canada. That will be addressing that, but, to your point, to the extent that the efficiencies would be pro‑competitive, they would be considered, as you rightly said, by the Competition Bureau, and that’s a good thing.

Senator C. Deacon [ + ]

Thank you.

The Chair [ + ]

We are now moving to the next period of 10 minutes.

Senator Gignac [ + ]

Thank you and welcome, Deputy Prime Minister and minister. First of all, we want to thank you for everything you’re doing to combat inflation and make housing more affordable, since it’s the poorest people who suffer most.

I’ll start with the Deputy Prime Minister. I’d appreciate it if you could be concise in your answer, since I’d like to ask Minister Champagne a question as well.

Not everyone in Quebec is on board with this federal government measure. Minister Girard has been reluctant to harmonize Quebec’s policies with the federal measures, claiming that one third of the benefits would go to developers, one third would go to landlords and one third might go to renters.

Are there any studies or briefs you could share with us to reassure us that renters will benefit from this measure?

Ms. Freeland [ + ]

Thank you for that question. I have discussed this measure with Minister Girard. I think it’s up to the provinces and territories to decide whether they want to follow the federal government’s lead and eliminate the GST on rental housing construction.

I believe that Professor Mike Moffatt is one of Canada’s top experts on this subject. He has published studies confirming that this is an important measure. One really significant point to note is that current construction financing creates an incentive to build condominiums in cities where rental apartments are what is needed most. That is a big problem because Toronto, for example, does not need more condos. It needs rental apartments. That is one of the reasons this current measure is so important.

Senator Gignac [ + ]

Thank you, minister. Professor Moffatt’s credibility is beyond dispute.

Welcome, minister. You’ve held discussions with grocery store CEOs and you’ve made an effort. We are more or less dealing with an oligopoly. I’m trying to understand. Are there restrictive covenants in place? If so, how will this bill change things? Do any anti-competitive policies apply when a grocery store wants to open in a certain location but can’t? Can you talk to us about that and tell us how the bill will change anything? You have about 45 seconds.

Mr. Champagne [ + ]

Thank you, Senator Gignac. As I was saying to your colleague earlier, I met with a representative of a large U.S. chain who told me that one of the reasons they didn’t enter Canada in recent years was that they couldn’t lease commercial premises in the areas they were interested in, because there were too many restrictive covenants between landlords and tenants.

In the regions, for example, a mall may have a store from one of the three major grocery chains that control over 50% of the market, and there will be restrictive covenants in the leases for something like five kilometres around. There can be no competitors in that radius. I believe this particular provision will be a game-changer because we’ll be able to attract other players in the future. Independent grocers are really excited about this measure, because they can’t get a spot in the same malls as the big chain stores, and this is an issue that is reducing competition in this country.

Senator Klyne [ + ]

Thank you and welcome. Deputy Prime Minister Freeland, recent data from Food Banks Canada reveals a distressing trend: a significant rise in food insecurity across the country. There were nearly 2 million visits to food banks across Canada last March — up 32% from March 2022. Moreover, according to the report, one third of food bank users were children, representing more than 600,000 food bank visits that month.

The survey finds that the main reasons for using a food bank are the costs of food and housing, as well as low wages.

I will move on to another question to save time: How does this legislation aim to break the cycle of food insecurity, particularly in communities where it coexists with housing challenges? What measures are being taken to ensure that the benefits of this bill reach diverse populations, including marginalized or vulnerable communities, Indigenous peoples and those in remote or rural areas? The second part to that question is the following: How does the government plan to measure the success and impacts of Bill C-56? Is the baseline data established as of today or prior to COVID-19? Would pre-COVID data be considered the benchmark? How long before the optimal results will be reached?

Ms. Freeland [ + ]

That’s a very important but complicated question with many different parts. Senator, thank you very much for asking the question, and for starting off by talking about the most vulnerable among us. There is a food bank just at the end of my block that is run by my church, and I see that the lines are longer, and it breaks my heart.

I think it breaks the hearts of everybody here, and it should. Thank you for focusing our attention on it.

I will start by saying that Bill C-56 will help all Canadians. It will help the most vulnerable among us, but it is not the end of the story. There is a lot more that we need to do, and that we are doing. Since we are talking about Bill C-56 specifically, I will say a couple of things quickly: First, you are quite right to say that a key element in the life of a person or a family, and whether you can afford your life or not, is whether or not you have affordable housing. That is very often the most expensive part of people’s lives. That’s why we are so focused on having more affordable housing for all Canadians.

We believe that a big part of the answer is supply, supply, supply, and that’s why you see measure after measure — week after week — focused on that. That will help everyone, including the most vulnerable —

The Chair [ + ]

Madam Minister, we have to move on to the next senator.

Ms. Freeland [ + ]

There is a lot that we need to do.

Senator Cardozo [ + ]

Ministers, thank you so much for being here. I encourage you to spend more time with senators, whether it’s in formal settings — like this — or informally. I think we can gain a lot more through two-way communication. I have two quick questions: Minister Champagne, you have met with grocery store CEOs. Can you tell us what you expect of them in order to give people a break? And would you consider price regulation for, say, a basic basket of groceries? Minister Freeland, at this time, are you looking at converting office buildings into rental housing?

Mr. Champagne [ + ]

I will start. Thank you, senator, for saying that. I expect more from them, and I hope they are watching today. When I called them to Ottawa, I think it was a historic moment: I’m told that never in recent history were the top five grocers in the country — Sobeys, Loblaws, Metro, Walmart and Costco — called.

What I did at that time, senators — I hope you are behind me — was express the frustration of millions of Canadians who, on a weekly basis, have to buy groceries. I told them that we expect more from them. We understand it is a complex supply chain; everyone understands that. But we also expect them to give Canadians a break. We said that they need to be with us on the journey to stabilizing food prices in Canada. We said — at the time — that there would be a number of measures, and we expected them to present things to Canadians. Some of them have been doing it.

We said that one of the key pillars of our action plan is the grocery code of conduct, which you have seen, and it has been two years in the making in order to provide more transparency and better equilibrium between the smaller-sized and medium-sized producers and the large grocers. When I talked to the Canadian Federation of Independent Grocers, which represents about 5,000 small grocers, they said that the most meaningful thing in Bill C-56 — including everything in the bill that Minister Freeland talked about — is the reform of competition. From the mid-term to the long term, we know that is the best way to provide price stability in the country and better prices for Canadians. We will continue with that. This is far from being mission accomplished. We will continue to push them.

I think this will give us the tools to continue to put pressure on them, and for them to deliver the price stability that Minister Freeland was talking about. Canadians feel it every week. We need to be there for them. At the same time, you may have seen in the paper today that I’ve been talking to international grocers to see if they will enter the Canadian market that so we can have more competition and, in turn, have the effect on prices that we want to see.

The Chair [ + ]

Thank you, Mr. Minister. We have to move to our next block of questions.

Ms. Freeland [ + ]

That’s a good idea.

Mr. Champagne [ + ]

I was —

The Chair [ + ]

Ministers, I’m sorry, but we are moving to the next block of 10 minutes.

Welcome, ministers. I hope you are well.

Minister, we know each other well.

On September 18, you met with the heads of the five biggest chains, as you said earlier. You said that they needed to take meaningful action before Thanksgiving to lower food prices. Obviously, that did not happen. Statistics Canada stated that food prices increased by 5.8% in September. On October 5, you said, “I’ve been looking at some flyers this morning, and you already see action in terms of different grocers adjusting ahead of Thanksgiving.”

Many people laughed when they heard your comments, especially in the agri-food industry, because they know that the discounts in flyers are determined ahead of time. Even Sylvain Charlebois, an expert in agri-food at Dalhousie University, said that it was smoke and mirrors. Why did you say that? Why this attempt at disinformation, when we know that it’s a lot more complex than that?

Mr. Champagne [ + ]

With all due respect, senator, you know, I’ve known you for a long time, and Mr. Charlebois was at the meeting.

I know.

Mr. Champagne [ + ]

I was struck by his comment because he participated in the meeting himself. I know him well. That’s why I invited him. He was there. I think that what we managed to do was to invite representatives from the five biggest chains to come meet with us and explain themselves, and that is what we must continue to do. We were able to share with them how frustrated millions of Canadians are. That was the point of the exercise, as well as to make plans.

If you are looking at the comments made by representatives of some of the big chains, then look at what Galen Weston or Michael Medland had to say, for example. They will tell you that they took measures after the meeting. I think that we can agree, senator, that there aren’t 50 ways to lower prices. What they did was to increase the food basket.

I looked at what Carrefour did in France, and I asked these representatives to do something similar. As you saw, some of them did so. Some of them also extended their price freezes. That morning, when I spoke with the CEO of one of the five chains, he said that he was in the process of doing what we asked. Is that enough? The answer is no. Will we continue to exert pressure on them to do it? Of course.

These individuals have never been pressured before in Canada. Now they’re under constant pressure. Thanks to the measures we now have, for example, the new powers allowing us to demand information or documents and to launch an investigation to understand the market, I can tell you that I speak to them regularly and they are feeling the pressure. I don’t think they’ve ever felt it before, because it was an unregulated market. We’ll be able to do more with the tools that we hope Parliament and the Senate will give us. Will it be easy? No. Is the solution to do nothing? No.

When I talk to Canadians when I find myself buying groceries on the weekend, they say, “Good, someone’s fighting for us.”

Allow me to reference economist Jim Stanford, who has just conducted a study that found that, and I quote:

 . . . food retailers are now earning more than twice as much profit as they did pre-pandemic.

We’re talking about $6 billion. The grocery chains have nothing to fear, and this shows in their prices and profits.

I wonder if you can name one clause in Bill C-56 that will ensure that the price of groceries comes down within two months’ time for families. I have about 50 family members living in your riding.

Mr. Champagne [ + ]

First of all, I’m so happy they’re all in my riding. I like that.

Second, the most important measure, senator, will take effect in the medium to long terms. Look at what was done in France, England and Europe. Nothing happens overnight. We can’t flip a switch and say that prices will be higher or lower the next day. You know where I’m from.

However, the reform allowing the withdrawal of the agreements in leases that prevent competition . . . Small communities have one shopping centre with one grocery store. Right now, leases don’t allow competitors to open stores in the same shopping centre.

 — those agreements.

Mr. Champagne [ + ]

You get it. That’s why, if you ask me if there is one provision that will have a bigger impact in the medium and long term with respect to increasing competition — meaning, an independent grocer next to one of the big chain stores — I would say it’s the third measure, which would remove what we refer to as restrictive covenants from current leases.

I spoke with the CEO of one of the biggest chains in the United States, and he told me he had tried to open stores in Canada. His is one of the biggest chains in the United States, but it wasn’t even allowed to lease space in Canada. Imagine that.

You think that putting two grocery stores in the same shopping centre will lower prices?

Mr. Champagne [ + ]

Look at what’s known as the “Aldi effect.” Read the literature on that. You’ll see what’s being done in New Zealand and Australia. When what are known as “deep discounters” enter a market, independent deep discounters that aren’t affiliated with any of the big chains, then it leads to downward pricing pressure. That was documented in Israel and Australia. In the end, when independents are allowed to set up shop near the big chains, it will lead to downward pricing pressure. That will take time, but what we’re doing is laying the foundation for a more competitive Canada.

Proposed subsection 10.1(1) gives the commissioner the power to conduct inquiries. Someone asked you about that earlier. What I want to know is, how will consulting the minister benefit the commissioner’s deliberations? Why give the minister this power over the commissioner’s investigative authority? I don’t understand the point of that. You spoke about checks and balances, but that’s broad and vague. What specific added value could the minister bring to the commissioner?

Mr. Champagne [ + ]

This was in response to something the industry said. When we held consultations, the industry was a little concerned about the commissioner having unilateral authority to investigate anything. We’re making sure there are checks and balances between the commissioner and the minister. They’ll have to work together to conduct market studies. Collaboration between the two of them is a good thing.

For example, in the public interest, the minister may want the commissioner’s mandate to include studying a specific issue. During their testimony, some people told me that they may want us to examine a particular issue in certain circumstances. That kind of discussion or interaction between the minister and the commissioner is a good thing.

Senator, what you and I, and your colleagues, are doing today is laying a foundation. The last time significant amendments were made to the Competition Act was 37 years ago. If we consider the next 40 years, it would be good to have a collaboration with the Competition Bureau, but also with the Minister of Innovation, Science and Industry, who is responsible for competition in Canada.

You’ve talked a lot about grocers and mentioned a lot of names. Bread prices are currently under investigation. After eight years, no charges have been brought. In 2017, $25 gift cards were sent out, but that was it. How will the bill ensure that this kind of process never takes seven or eight years again? Charges haven’t even been filed yet.

Mr. Champagne [ + ]

What we’re doing, as you’ve seen, began in 2022, with certain measures in the budget presented by Minister Freeland. Take Bill C-56, for example, as well as the fall economic statement, which proposes other measures to come. It’s important to look at the whole picture. Competition reform has three chapters. It began in 2022. We did certain things.

Now we’re doing some important things that target affordability. There’s also the fall economic statement, which will complete the picture. These three elements make up this major competition reform, which is greatly needed in Canada. I would say, senator, that it’s important to look at the overall picture. We’re laying the foundation for a more competitive Canada.

You’ll also see some interesting measures. You may have seen that the Competition Bureau will not be required to pay legal fees in connection with the Rogers lawsuit. We’re laying the groundwork for a more competitive Canada with measures that have gained broad consensus, both in the House of Commons and in the industry, and that will allow us to take action. What I need for future ministers, and perhaps even for the current minister, is more tools in the toolbox.

My question is for Ms. Freeland. It’ll be more of an editorial comment. The Globe and Mail said that a catalogue of pre-approved plans is the best invention of the century. I am a former mayor, and I thought it was a joke when it was announced. Cities determine plans, issue permits, and create implementation and architectural integration plans for each neighbourhood. There are cultural neighbourhoods, there are established neighbourhoods, and adjustments are made to the number of floors. To me, this idea is magical thinking.

The Chair [ + ]

Senator Carignan, time is up.

Senator Miville-Dechêne [ + ]

Welcome to you both. My question is for Minister Champagne.

If you’ll pardon the expression, Bill C-56 is a bit like what we sometimes call political “apple pie.” That isn’t a criticism, just an observation. No one here is against making groceries and housing more affordable.

The problem is that it’s unclear whether the bill will achieve its objectives. Studies have shown that grocery stores have modest profit margins. Inflation appears to be due in part to supply chain disruptions or situations beyond the Government of Canada’s control.

In the case of Bill C-56, in October, expert Michael Osborne even expressed concern that some measures would be counterproductive, mainly because of the risk that studies would take up time and resources that the Competition Bureau should instead be using to enforce the act.

My question is this: What do you actually expect this bill to accomplish, and what indicators should we use to determine whether it is working?

Mr. Champagne [ + ]

Thank you, Senator Miville-Dechêne. I appreciate your question.

I think that this bill will lead to much-needed competition reform. To return to the question of studies, for example, a better understanding of the market — because we all know that the grocery sector is extremely complex. It has a very complex supply chain.

When I met with the major grocery chains, we focused not just on grocers, but on the entire supply chain, like the big manufacturers in the United States. That is why I reached out to my international counterparts to find out what we could do together.

The idea behind it all is that we need to examine more than just the grocers. We need to examine the entire supply chain. We are also looking at other issues, like skimpflation and shrinkflation. There are a number of practices in the grocery business that we need to look into. I think that with its new powers to conduct in‑depth market studies, the Competition Bureau of Canada will be able to get all the information we need.

That will allow us, as MPs, and you, as senators, to create more informed public policies, because today —

Senator Miville-Dechêne [ + ]

Will there be a measurable drop in prices for consumers anytime soon?

Mr. Champagne [ + ]

I think the most important solution is to have market studies first, yes, but when we take away the restrictive covenants and allow independent retailers to set up shop near the big chains and even attract foreign players to our country, more competition will mean more choice and better prices for Canadians. This has been documented. If you look at countries around the world, the best way to lower prices is to increase competition. That’s the spirit of the bill.

Senator Woo [ + ]

Good afternoon, ministers. I would like to probe a bit deeper on the removal of the efficiencies defence. Whether you see the removal of the defence as an obstacle to companies using aversion efficiencies that focuses more on the total welfare that accrues to the economy — this is the way economists understand efficiencies, not just for the efficiency of the firm, but the efficiency of the economy as a whole — by removing section 96 altogether, does it preclude a consideration of efficiencies in the sense that it benefits the economy as a whole, even when there may be greater market concentration?

Mr. Champagne [ + ]

Thank you, senator, for the question. I think you will understand that efficiencies that are pro-competitive are good. We’re going to be considering it, if I have understood your question correctly.

Senator Woo [ + ]

Market dominance can increase, but consumer welfare can go up at the same time.

Mr. Champagne [ + ]

My point is that we’re removing now is a defence that that would allow mergers that are anti-competitive to go forward. What we’re saying is that efficiencies will still be considered in the analysis of the Competition Bureau. All sorts of efficiencies will be. But what is shocking — and I think should be shocking to all of us — is that today, on a statutory basis, you have a defence on the books that allows mergers that are not in favour of competition and are not in favour of consumers to go forward.

That’s what we want to take away. It has received broad-based support. There was a Conservative private member’s bill trying to address that issue. You see the house working together on that. If you look broadly at it, I think it’s about time. That’s what I would say to Canadians — that we get rid of that and we make sure that mergers going ahead in this country are going to favour consumers, Canadians and will be pro-competitive for the economy.

Senator Simons [ + ]

My question is for the Deputy Prime Minister. I was delighted to see the removal of the GST on new rental construction, which was an idea that came in part from the National Housing Accord. The National Housing Accord also suggested the creation of what it called a targeted homelessness prevention and housing benefit, which it estimated could provide immediate rental relief for more than 30,000 households at imminent risk of homelessness and help another 50,000 people to find homes. I’m wondering — it’s obviously not contained in this bill — if that is something that your government might consider going forward, given it has already adopted one idea from the National Housing Accord.

Ms. Freeland [ + ]

First of all, Senator Simons, it is great to have you here and great to answer a question from an Alberta senator. I want to take this opportunity to say how glad I was to be just outside of Edmonton in Fort Saskatchewan two weeks ago with Dow, and Mr. Champagne was there too. This is the biggest investment by Dow in North America at more than $11 billion with lots of great jobs for people in Fort Saskatchewan and Edmonton. I had to say that because I’m so excited about it.

On the National Housing Accord, thank you for highlighting their work. I referred specifically to the work and the economic analysis of Professor Mike Moffatt. He’s done a great job and has really been an important inspiration for measures that we are putting into action.

You’re quite right to point out that another element of the focus of the National Housing Accord has been to support people experiencing homelessness. I think that everyone in this house and everyone in Canada recognizes that this is a real challenge in Canada today, and it is definitely something that we are focused on through a number of different approaches. We’re not talking about the Fall Economic Statement, but I will mention the $1 billion that we added in the Fall Economic Statement to the construction of affordable housing. That project that I mentioned a little bit earlier in my testimony in Vancouver’s Downtown Eastside of 231 units — people will start moving in next May. The most inexpensive units there, the most affordable, will be for $500 a month in Vancouver. They are beautiful apartments. I walked around them. That’s just one of many elements that we’re going to need to put in place to help people experiencing homelessness. Everyone in Canada deserves a place to call home.

Senator Simons [ + ]

Thank you very much and hello from Edmonton. I just wanted to come back to the question of Homelessness Prevention and Housing Benefit, because it’s one thing to have the housing stock, and it’s another thing to have the cash in hand even to make the $500 rent. Will your government be giving consideration to this particular policy idea?

Ms. Freeland [ + ]

Thank you again for the question. As you pointed out, that was a measure that was put forward in the proposals of the National Housing Accord. We absolutely agree with the urgency of focusing on people experiencing homelessness, and we think that many different measures need to be considered. We also think it’s work that we will have to do together with municipalities and provinces. Since there’s a “hello” from Edmonton, I would also mention that in the Fall Economic Statement we put forward an extension of the GST on purpose-built rentals to cover co-operative housing, including the Hromada housing co-operative in Edmonton where I lived as a teenager; that is also a really important form of housing that is affordable and builds communities.

The Chair [ + ]

Honourable senators, the committee has been sitting for 65 minutes. In conformity with the order of the Senate, I am obliged to interrupt proceedings so that the committee can report to the Senate.

Ministers, on behalf of all senators, thank you for joining us today to assist us with our work on the bill. I would also like to thank your officials.

Hon. Senators: Hear, hear!

The Chair: Honourable senators, is it agreed that the committee rise and I report to the Senate that the witnesses have been heard?

Hon. Senators: Agreed.

The Hon. the Speaker [ + ]

Honourable senators, the sitting of the Senate is resumed.

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