(Ottawa) The Trudeau government undermines “the stable and predictable rules of the free market” with its reform of the Competition law, accuses the Business Council of Canada. In addition to abolishing the GST on the construction of new housing, Bill C-56 tabled Thursday attacks business mergers.
“It’s a bit of a witch hunt that started with the issue of grocery stores, when we know that the profit margins in this sector are probably among the lowest of all sectors and that the increase in prices is directly linked to the increase in costs,” reacted the first vice-president of the Business Council of Canada, Robert Asselin.
Bill C-56, entitled Affordable Housing and Groceries Actgives new investigative powers to the Competition Bureau and the ability to block agreements that prevent independent grocers from setting up near large brands.
It follows the meeting of the Minister of Innovation, Science and Industry, François-Philippe Champagne, with the leaders of the five major grocery chains earlier this week and the announcement by Prime Minister Justin Trudeau last week a few days before the start of Parliament.
The bill also addresses anti-competitive mergers by removing the efficiency defense. This prevents the Competition Tribunal from rejecting a merger when the gains made are greater than the reduction in competition that it would cause.
What we want in Canada is less consolidation, more competition and lower prices. And I think it’s time, honestly, to correct the Competition law in Canada. That is why we are taking bold and decisive action today.
François-Philippe Champagne, Minister of Innovation, Science and Industry
He argued that the efficiency defense dates back to the 1960s and has no equivalent elsewhere in the world. This is a provision for which the Business Council of Canada campaigned at the time.
“We are short-circuiting a consultation for political purposes because, suddenly, the government has bad polls,” lamented Robert Asselin. The government had launched a more general consultation, but the Business Council of Canada complains of not having been consulted on the three measures proposed by the bill before its tabling in the House of Commons.
The Bloc Québécois welcomed the long-awaited reform. “The government has finally tackled the worst irritants,” responded the Bloc Québécois finance spokesperson, Gabriel Ste-Marie. We repeat: it is not normal for five players to share 80% of the food market. »
He adds, however, that the abolition of the sales tax on goods and services (GST) to stimulate the construction of apartments is clearly insufficient.
No definition of affordable housing
The government does not provide a limit on the price of rent in its bill to abolish the GST on the construction of rental housing. Instead, it relies on increasing supply to bring prices down. His bill therefore contains no criteria to define what affordable housing is.
“It’s just ridiculous, insulting even. What planet do liberals live on? “, denounced the deputy leader of the New Democratic Party, Alexandre Boulerice, during question period on Thursday.
Conservative Party Leader Pierre Poilievre accused the Liberals of “giving tax breaks for $10 million penthouses,” contrary to his own bill tabled the day before. The Conservatives are proposing a full GST rebate for rental apartment buildings provided their rent is below the list price.
Under the Liberal bill, apartments built for long-term rental will be able to receive a full refund of the goods and services sales tax, but it is unclear whether that rebate will eventually be passed on to tenants.
“It is a targeted measure for the construction of rental apartments,” defended the Minister of Finance, Chrystia Freeland, at a press conference. And it is precisely to change a little the economic calculation that the big builders will use when deciding: am I going to build luxury condos or am I going to build rental apartments? »
Housing Minister Sean Fraser added that increasing housing supply will help the market stabilize.
“When supply increases significantly, the cost of rent decreases as a whole,” he said, citing the experience of New Zealand, the city of Helsinki in Finland and from that of Minneapolis in the United States.
Bill C-56 increases the GST refund from 36% to 100% for buildings whose construction began on September 14 or will be done no later than December 31, 2030. Their construction must be completed on December 31, 2035.
The cost of this measure will reach 4.6 billion over six years, according to estimates from the Ministry of Finance. Forecasts do not include the final year of the program.