More Competition Requires Focus on Productivity and Fair Regulations

Our industry and other sectors continue to grapple with the flood of new regulations in Canada while at the same time working to ensure critical chemicals remain in commerce with good-paying jobs for Canadians. As such, it would be prudent for the Government to take the sage advice from a senior official in the Federal Government, the Commissioner of Competition in the Competition Bureau of Canada, Matthew Boswell. The advice appeared in Canada’s national paper, the Globe & Mail, this past week. As noted in this space several times as well as by the media regularly, Canada is now at a serious tipping point in public policy when it comes to the economy.? The Competition Commissioner puts it succinctly when he says in his recent article, “The alarm bells are ringing.” By that, he means Canada’s economy continues its downward trend and is now less productive than at any time in its history. He says, “That means Canadians are missing out on higher wages and an overall better standard of living.” Again, that is from a senior Government of Canada official! The politicians running the Government must think otherwise given the fact that Canada’s productivity is half that of the United States?and made worse over the past several years.?

Another official, the senior deputy Governor of the Bank of Canada, also recently noted the urgency of the situation when she said, “It’s an emergency – it’s time to break the glass.” The Competition Commissioner’s recommendation?to address this dire economic situation is to ensure more competition, not less, ?as it will increase?productivity and grow the economy at the same time.

The Commissioner went on to note that,

“The evidence is clear: Competition is the key to unlocking our productivity and growing our economy…. It is borne out in study after study that the impact of increased competition can lead to better economic performance. Without meaningful competition, companies grow complacent. For consumers, that complacency means higher prices and poorer service.” Canadians have seen this in growing and persistent inflation. More importantly, the Commissioner notes exactly what industry has been saying to the Government over the past few years that Canada’s laws, policies, and regulations are “outdated and no longer serve the public interest (and) the uncomfortable truth is that Canada imposes far more public restraints on competition than most other countries. Canada ranks near the bottom in OECD indicators that measure regulatory barriers to competition.”

The Commissioner says the Government must start by reviewing existing regulations through a competition lens and noted that Australia did this in the 1990s and “it led to the most significant and successful economic reforms in its history, amounting to a permanent increase of at least 2.5 percent in Australia’s GDP, or around 5,000 Australian dollars a household per year.” Recent studies in Canada reveal its lagging productivity as measured in dollars per household per year has decreased by $4,200 since 2014.

Over the past few years Associations like CPCA have argued for fair and better regulations, which must be aligned with those of the United States, our largest trading partner by far; and that regulations must be considered in terms of the economic impact it has on business and competition. Those critical principles are ingrained in the federal Government’s own Cabinet Directive on Regulations, but it seems Government departments are not fully aware of their existence. This has been the case even when the requirement to consider ‘economic impact’ is specifically stated in the Governing Act related to specific regulations. In some instances where the United States applies the ‘economic impact’ lens to specific regulations and competition, the same lens is not applied in Canada for the same regulations. Why not if the goal is regulatory cooperation and alignment? The result is productivity suffers and Canada loses because there is less competition in Canada for essential products, prices go up and jobs go down.

The Commissioner concludes his astute observations by saying, “These ideas are just the tip of the iceberg. There are many ways of promoting competition. But this is a discussion we need to be having to turn the tide on Canada’s productivity crisis.” Industry groups have been saying this for several years and the time has come to ‘turn the tide’, rather than pay lip service to it.