The Hon. the Speaker pro tempore: Is leave granted, senators?

The Hon. the Speaker pro tempore: Senator Deacon, you are out of time to answer the question. Are you requesting leave to answer this question?

Senator C. Deacon: Five more minutes, if the chamber is so agreeable. I do not think that I will need it all.

Hon. Rosa Galvez: Would Senator Deacon answer a question?

Senator C. Deacon: Absolutely. Thank you.

Hon. Colin Deacon: Colleagues, “Capitalism without competition isn’t capitalism; it’s exploitation.”

This statement describes a central pillar of President Joe Biden’s economic policy. He goes on to say, “. . . Without healthy competition, big players can change and charge whatever they want and treat you however they want.”

Those of us who fly each week live the effects of that reality.

Conversely, competitive markets force companies to innovate so that they can deliver greater value and attract more customers. Robustly contested markets cause increases in business investment, efficiency, innovation and productivity. Competition creates better products and lower prices for customers. As a consequence, competitive markets drive companies to become stronger global competitors.

Business investment and productivity in Canada have been declining steadily over 20 years. The emerging consensus is that our outdated competition laws and policies shoulder much of the blame.

Colleagues, this is why I’m thrilled to rise to speak today at third reading in support of Bill C-56, the affordable housing and groceries act. I’m pleased to see the government follow through on Budget 2022’s “down payment” on competition policy reform. Bill C-56 introduces the most meaningful reforms to Canada’s competition laws since the 1980s. It will implement measures intended to increase the affordability of housing and increase competition across our economy, including in the grocery sector.

But, first, let me step back and give you some insight as to why I’m so passionate about competition law and policy reform in Canada.

When first introduced in 1985, the purpose of the Competition Act was to:

. . . maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy, in order to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada, in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and in order to provide consumers with competitive prices and product choices.

That purpose remains relevant today. The challenge, however, is that market realities have fundamentally changed in the ensuing 38 years, rendering many parts of the bill no longer fit for purpose. Our Competition Act dates from an era when it was assumed that fostering big, homegrown companies was a national economic priority.

This belief has been completely discredited by evidence, yet it lives on in our Competition Act.

For example, as a result of how we manage competition in the telecom sector, the 85% of Canadians who have smartphones pay some of the highest telecom bills in the world. Let me walk you through a few of the resulting inequities.

I use my Senate smartphone a lot. I am probably not alone. It only costs $30 a month thanks to the deal that the federal organizations have with Bell Canada.

Conversely, the cost of my personal phone is about $90 a month, about three times the cost of my Senate phone. I’m absolutely certain of one thing: Bell would never offer this $30 a month deal unless it was profitable to do so.

So those who can pay the most pay the least, and those who can pay the least pay the most. Bell has the luxury of engaging in price discrimination amongst its customers because our competition laws and policies protect oligopolies from robust competition, even made-in-Canada competition. If you think it is bad here in Canada’s South, I suggest you speak to one of our three senators from the territories.

I now want to cite a recent industry and merger example to further make my point. Over the last 18 months, we’ve seen large-scale corporate consolidation in realtime with Rogers acquiring Shaw for $26 billion.

When Rogers’ proposed $26 billion acquisition of Shaw threatened to further consolidate the market, Canada’s Commissioner of Competition, Matthew Boswell, dared to challenge the merger and defend the interests of Canadian consumers. Suddenly, in the midst of tribunal preparation at the bureau, Rogers and Shaw, Rogers committed to sell the wireless division of Shaw called Freedom Mobile. Rogers gambled that it could unilaterally predetermine its own remedy to the merger’s anti-competitive effects. It ended up working.

Rogers had received two credible bids for Freedom Mobile and, remarkably, the Rogers board accepted the offer that was a billion dollars less than an unsolicited offer from a more robust and completely independent competitor. The Rogers board would never have accepted a billion dollars less in that asset sale unless they were confident that the discounted sale price would ultimately deliver much higher returns well into the future because the asset was being sold to a weaker competitor.

Whatever their rationale, Canada’s weak competition laws were exploited by Rogers, allowing it to boldly and publicly choose its own competitor as a remedy to what many felt was an anti-competitive merger.

Ultimately, in January of this year, the tribunal ruled in favour of letting the merger proceed. Then, in August, the tribunal went so far as to determine that Canadian taxpayers pay Rogers and Shaw about $13 million because, under our competition law, as it currently stands, Canada’s Commissioner of Competition, in their opinion, had been too aggressive in his challenge of the merger.

Colleagues, our oligopolies have consistently benefited from legacy legislation policies across the whole of government. This problem is not limited to groceries or telecom — far from it.

Many of our oligopolies have become so dominant that they can just focus on serving the interests of their shareholders, without having to first concern themselves with the interests of customers. Indeed, the general state of competition in Canada is such that it has resulted in our country having accumulated one of the greatest regulatory burdens in the OECD. Ironically, the cost of adhering to Canada’s federal, provincial and municipal regulatory burdens are so great that regulations initially intended to protect citizens now do a much better job of protecting the interests of incumbent oligopolies. Our complex and cumbersome regulatory burdens can’t be afforded by innovative new entrants.

In our Banking Committee, I like to ask economists at our big banks about the importance of competition. They reliably and ironically describe robust competition as being central to improving innovation, productivity and prosperity in Canada. And Bank of Canada Governor Tiff Macklem consistently describes robust competition as being a crucial ally in the long-term fight against inflation.

Colleagues, you have likely heard me say before that you can never regulate a company into becoming customer-centric. Only competition makes that happen. We desperately need to change course if we want to protect our future prosperity.

Now I would like to climb off my soapbox and speak directly to the competition-related elements in Bill C-56.

In November 2022, ISED initiated a consultation on the future of Canada’s competition policy. The public consultation garnered considerable interest with over 130 submissions from identified stakeholders and over 400 members of the general public. Collectively, these submissions proposed over 100 possible policy reforms. There were also round tables and one-on-one meetings held with stakeholders.

In September, the results of this consultation were published in a What We Heard report, and the amendments to the Competition Act in Bill C-56 all flow from that consultation. The amendments incorporate additional measures through an agreement with the NDP, but all of these align with the consultation report.

The amendments are as follows: First, the Competition Bureau will now have the power to initiate market studies that examine inefficiencies that may be due to weak competition. Importantly, the bureau has also been provided the authority to compel the production of information from the related businesses. Prior to this amendment, when conducting a market study, the bureau could only politely ask the related businesses to hand over non-public evidence.

We wonder how that might work in police investigations, for example.

This lack of authority was illogical and completely out of line with practices in our peer nations.

Indeed, in their submission to the Canadian consultation, Assistant Attorney General Jonathan Kanter, responsible for enforcement of antitrust law in the United States, and Federal Trade Commissioner Lina Khan wrote:

The Competition Bureau, like the FTC, has the authority to conduct market studies. Unlike the Competition Bureau, however, the FTC has the authority to use compulsory process in the aid of such studies.

They continued, writing:

These studies allow the FTC to gather information and documents outside the enforcement context and can play a key role in identifying and analyzing emerging competition trends and issues. . . .

An amendment in the House’s Finance Committee broadened the power of the Commissioner of Competition to initiate market studies without a directive from the minister — this was an important change — although the terms of reference will have to be coordinated and approved by the minister.

Second, the efficiencies defence will be eliminated. Canada has been an outlier with this clause. It prevents an anti-competitive merger from being legally challenged if the merging parties can hypothetically demonstrate that the merger could produce economic efficiencies, yet they are under no obligation to deliver on these efficiencies. No other peer jurisdiction has allowed this.

Third, the amendments expand the competitor collaboration provisions to include collaborations among parties that are not direct competitors. An example of this relates directly to groceries.

Under current rules, a grocer who owns a mall can prevent a competitor from opening a rival store nearby. Even worse, the contractual obligations can outlive the closing down of that grocery, creating a food desert. These amendments would allow the Competition Bureau to prosecute this practice.

Fourth, the Competition Bureau will be enabled to go after big corporate players who abuse their dominance to engage in anti-competitive acts, such as squeezing out small players. The amendment adds “. . . directly or indirectly imposing excessive and unfair selling prices” to a list of acts:

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

Some have interpreted this amendment as putting the Competition Bureau in an uncomfortable position of enforcing price controls, but the preamble prevents that risk.

Lastly, the administrative monetary penalties, or AMPs, for anti-competitive acts are increased from $10 million to $25 million — and from $15 million to $35 million for subsequent orders. It has generally been understood that the current penalties amount to a business expense for large players. The most troubling recent example relates to Facebook’s penalty for its commercial deception in the Cambridge Analytica affair. In Canada, the maximum penalty could only be $10 million, while in the United States, the same infraction garnered a $5-billion penalty from the U.S. government.

Some have expressed concern that these amendments are occurring on a piecemeal basis. That’s fair. Regardless, I’m fully supportive of these meaningful changes, but I look forward to examining much more closely those included in Bill C-59.

Colleagues, competition is about much more than just low prices. It is about a free, fair and democratic society. As monopolies emerge, governments are forced to create regulations to combat the harms from those monopolies. These regulations get embedded, making it more difficult for new entrants to disrupt a market, and entrenching that monopoly.

Remember one truth if you remember nothing else: You can never regulate a company into becoming customer-centric. Only robust competition can do that.

If we want Canada to emerge from the pervasive slump of low productivity and command-and-control regulations, we must reform our competition laws. Bill C-56 is an important first step. These amendments are crucial and widely supported by thought leaders and the Competition Bureau alike. This truly is the beginning of a generational change.

Thank you, colleagues.

Hon. Éric Forest moved third reading of Bill C-56, An Act to amend the Excise Tax Act and the Competition Act.

Hon. Senators: Agreed.

(At 6:16 p.m., the Senate was continued until tomorrow at 9 a.m.)

The Hon. the Speaker: Honourable senators, when shall this bill be read the third time?

(On motion of Senator LaBoucane-Benson, bill placed on the Orders of the Day for third reading at the next sitting of the Senate.)

The Senate proceeded to consideration of the sixth report of the Standing Senate Committee on Energy, the Environment and Natural Resources (Bill S-14, An Act to amend the Canada National Parks Act, the Canada National Marine Conservation Areas Act, the Rouge National Urban Park Act and the National Parks of Canada Fishing Regulations, with amendments), presented in the Senate on December 12, 2023.

Senator Miville-Dechêne moved the adoption of the report, for Senator Galvez.

She said: Honourable senators, I rise today to briefly speak on the sixth report of the Standing Senate Committee on Energy, the Environment and Natural Resources that addresses Bill S-14, An Act to amend the Canada National Parks Act, the Canada National Marine Conservation Areas Act, the Rouge National Urban Park Act and the National Parks of Canada Fishing Regulations.

The bill would expand the boundaries of seven national parks and one national park reserve, clarify offences in relation to the discharge of substances in a national park, establish a new national park and change the name of another park.

I wish to thank the members of the committee for their work in bringing this report forward.

In its study, the committee heard from 10 witnesses, including the Minister of Environment and Climate Change, representatives from concerned First Nations and Inuit communities, civil society organizations, an academic and a rancher.

After thoughtful consideration, the committee proposes three amendments to the bill. Two of the amendments make it mandatory, rather than a suggestion, for a park superintendent or, upon their failure to do so, the minister, to order a person to take reasonable measures to prevent, mitigate or remediate harm and to prevent or minimize danger in the park.

The third amendment limits the entry into leases of public lands by the minister in Akami-Uapishk^u-KakKasuak-Mealy Mountains National Park Reserve to existing cabins and tilts in order to preserve the existing traditional users’ rights while also protecting the ecological integrity of the park reserve.

Colleagues, Bill S-14 will contribute to our commitment to protect biodiversity and 30% of our land by 2030. The proposals were made by Parks Canada in consultation with all the concerned First Nations and Inuit communities, as well as other stakeholders.

The committee has done a careful review of the bill, and I encourage you to support the passage of this bill.

Thank you, meegwetch.

The Hon. the Speaker: Are honourable senators ready for the question?

Hon. Éric Forest moved second reading of Bill C-56, An Act to amend the Excise Tax Act and the Competition Act.

He said: Honourable senators, I rise this evening as sponsor of Bill C-56, the affordable housing and groceries act, which is now at second reading.

[English]

It has been an honour to be asked to sponsor this bill in the Senate.

[Translation]

In her recent speech before the Standing Committee on Finance in the other place, the Deputy Prime Minister summed up why Bill C-56 is so important. In short, it would address two of the most pressing challenges facing Canadians today, namely access to housing and the cost of living.

When it comes to housing, the challenge is clear. Canada simply doesn’t have enough housing, so we need to build more, and fast. In fact, the Canada Mortgage and Housing Corporation estimates that Canada needs to build an additional 3.5 million housing units by 2030, on top of the current construction rate, to finally restore access to affordable housing and to rebalance the market for Canadians.

[English]

And while this problem seems simple, the solutions are not. Building the homes that Canada needs will clearly require a great national effort.

[Translation]

Federal, provincial, territorial and municipal governments will need to work together, in partnership with home builders, business people, community housing providers, post-secondary institutions, and Indigenous organizations and governments, to achieve this goal.

The Government of Canada has gone the extra mile in its recent budgets and economic statements. Federal investments in housing are $9 billion higher than they were in 2013-14.

Since 2015, the federal government has more than doubled its average annual investment in housing, but it is clear that much remains to be done, as CMHC has indicated.

[English]

So let’s take a moment to consider in more detail what the measure in Bill C-56 will do.

First of all, they will remove the GST on the new purpose-built rental housing with the goal of helping get more homes built faster and creating more housing supply across the country.

[Translation]

The support available through this measure is as follows: a two-bedroom rental unit valued at $500,000 would qualify for $25,000 in tax relief. It seems reasonable to assume that such significant support would give developers more options to move forward with projects.

In fact, the housing sector is already showing signs of this. For example, a Toronto real estate company has already announced plans to build 5,000 new rental units across the country thanks to this measure. To quote the Deputy Prime Minister:

This is about making the math work for builders, giving them an incentive to build more homes that would otherwise not move forward due to construction costs.

There is already proof that this measure will have a positive effect.

In announcing this measure, the government asked provinces that currently apply a provincial sales tax, or the provincial part of the HST, to rental housing to join it by matching the federal rebate on new rental housing units. To date, Ontario, Nova Scotia, Prince Edward Island and Newfoundland and Labrador have announced their intention of offering similar tax relief. This kind of concerted effort will be essential for achieving the desired results and building more homes faster.

When we talk about speeding up construction, it is also important to mention that the support for new rental housing construction in Bill C-56 specifically seeks to speed up housing construction in the short term.

The GST rebate proposed in the bill would apply only to projects where construction starts between September 14, 2023, and the end of 2030 and is completed by 2036.

At the same time, this GST relief will be carefully targeted to protect Canadian renters from what is referred to as “renoviction,” the practice of evicting renters from their homes so that renovations can be done. The government has made it clear that the GST rebate would not apply to substantial renovations of buildings that are already occupied.

The housing measures in this bill also form the basis for some of the measures that the government recently announced in the 2023 Fall Economic Statement to support housing construction.

They include the proposal to expand eligibility for GST relief to include purpose-built, long-term rental housing co-ops, provided the required conditions are met. Using this measure to expand the relief provided in Bill C-56 would be fitting, and it is something that members of the Standing Committee on Finance have specifically called for.

Clearly, the government will not be able to provide this new support for co-op construction before Bill C-56 comes into force. It is apparent that these measures to support the construction of new rental housing are deliberately focused to avoid unintended consequences.

It is also clear that they underpin other measures to support housing construction, which are sorely needed given the current situation.

On another note, in order to make groceries more affordable for Canadians, we now need to consider how this bill would also help stabilize food prices for Canadians. We know that, although inflation has dropped to 3.1%, many Canadians, particularly the most vulnerable, are still feeling the pressure of rising food prices, so to help them, Bill C-56 includes measures designed to bring prices down by strengthening competition throughout the economy, particularly in the grocery sector.

Specifically, the bill would achieve this by amending the Competition Act to give the Competition Bureau the power to compel the production of information to conduct effective and comprehensive market studies, and to crack down on abuses by large, dominant chains. It would also abolish the efficiencies defence, which currently allows companies to use efficiency gains as an argument in favour of potentially anti-competitive mergers.

These changes would enable the bureau to take action against collaborative ventures that impede competition and consumer choice, particularly in situations where large grocers prevent smaller competitors from setting up shop in the vicinity of their stores. Increased competition means lower prices and more choice for consumers.

While strengthening competition and cracking down on unfair and anti-competitive practices, this bill would help stabilize prices for Canadians. This initiative would supplement other measures taken by the federal government to support competition in the grocery sector.

These include getting Canada’s five largest grocery chains, which represent 76% of the grocery sector, to make commitments to stabilize prices for Canadians.

Another measure involves establishing a grocery task force to oversee the work of the big grocers so as to stabilize prices and investigate and control other practices in the grocery sector, like shrinkflation.

Again, the proposed amendments to the Competition Act in Bill C-56 are essential to move other more recent measures forward.

For example, the 2023 Fall Economic Statement proposes additional amendments to the Competition Act in order to further modernize the review of mergers, particularly by giving the Competition Bureau the means to better detect and counter anti-competitive acquisitions and other anti-competitive mergers. It proposes to strengthen protections for consumers, workers and the environment, specifically by prohibiting misleading greenwashing claims and by placing greater emphasis on the impact on workers in competition analyses.

It proposes to empower the Commissioner of Competition to review a wider selection of collaborations and seek meaningful remedies to ensure that harmful conduct is not repeated. It proposes to broaden the reach of the law by enabling more private parties to bring cases before the Competition Tribunal and receive payment if they are successful.

In the 2023 Fall Economic Statement, the government also proposes to amend the Competition Tribunal Act to ensure that legal cost awards during case adjudication do not prohibit a robust defence of competition.

I believe that the changes proposed in Bill C-56 that seek to strengthen the Competition Tribunal constitute a solid foundation for progress on all these fronts. Taken together, these measures would enable Canada to align with best international practices to ensure that domestic markets encourage fairness, affordability and innovation.

[English]

Moreover, I will underscore that these are not just among the highest priorities of Canadians but they are among the most immediate. People are feeling pressure on this front right now, so the action to be taken to address them must be undertaken right now.

[Translation]

Honourable senators, I hope that we keep that important factor in mind as we assess the merits of Bill C-56.

[English]

Thank you, honourable colleagues, for this opportunity to make my case today. Meegwetch.

Hon. Senators: Agreed.

(At 11:31 p.m., the Senate was continued until tomorrow at 2 p.m.)

Hon. Percy Mockler: Honourable senators, I have the honour to table, in both official languages, the fifteenth report of the Standing Senate Committee on National Finance, which deals with the subject matter of Bill C-56, An Act to amend the Excise Tax Act and the Competition Act.

On the Order:

Resuming debate on the motion of the Honourable Senator Yussuff, seconded by the Honourable Senator Duncan, for the third reading of Bill C-21, An Act to amend certain Acts and to make certain consequential amendments (firearms).

The Hon. the Speaker: Is it your pleasure, honourable senators, to adopt the motion?

Hon. Senators: Agreed.

The Hon. the Speaker: Is it your pleasure, honourable senators, to adopt the motion?

Hon. Senators: Agreed.

(Debate adjourned.)

On the Order:

Resuming debate on the motion of the Honourable Senator Deacon (Nova Scotia), seconded by the Honourable Senator Smith:

That the Senate call on the Government of Canada to replace its outdated program delivery and information technology systems by urgently accelerating the implementation of user-friendly, digital solutions that transform the public service delivery experience of Canadians, and ultimately reduce the cost of program delivery.

The Hon. the Speaker: Is leave granted, honourable senators?

Hon. Patti LaBoucane-Benson (Legislative Deputy to the Government Representative in the Senate): Honourable senators, with leave of the Senate and notwithstanding rule 5-5(d), I move:

That, notwithstanding any provision of the Rules, previous order or usual practice, and without affecting progress in relation to Bill C-56, An Act to amend the Excise Tax Act and the Competition Act:

1.the Standing Senate Committee on National Finance be authorized to examine the subject matter of Bill C-56;

2.the committee submit its final report to the Senate no later than Routine Proceedings on Thursday, December 14, 2023, and be authorized to deposit its report with the Clerk of the Senate if the Senate is not then sitting; and

3.for the purposes of this study, the committee be authorized to meet even though the Senate may then be sitting or adjourned, with the application of rules 12-18(1) and 12-18(2) being suspended in relation thereto.