Good morning, everyone. I call the meeting to order.
Welcome to meeting number 31 of the House of Commons Standing Committee on Industry, Science and Technology. Today's meeting is taking place in a hybrid format pursuant to the House order of January 25. The proceedings will be made available via the House of Commons website, and as usual the webcast will only show the person speaking rather than the entire committee.
To ensure an orderly meeting, I'd like to outline a few rules to follow.
Members and witnesses, you may speak in the official language of your choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of the floor, English or French. Please select your preference now.
As a reminder, all comments by members and witnesses should be addressed through the chair. Before speaking, please wait until I recognize you by name, and when you are not speaking, please make sure your microphone is on mute. For the purpose of interpretation, please do not speak over each other so that the interpreters can do their work. Most importantly, as is my normal practice, I will hold up a yellow card for when you have 30 seconds left in your intervention, and a red card when your time for questions has expired. Please keep your screen in gallery view so that you can see the cards when I hold them up, and please respect the time available so we can make sure that everyone has a chance to ask questions.
Pursuant to Standing Order 108(2) and the motion adopted by the committee on February 23, the House of Commons Standing Committee on Industry, Science and Technology is meeting today to continue its study on competitiveness in Canada.
I'd now like to welcome our witnesses. Today we have Vass Bednar, executive director of the master of public policy in digital society program at McMaster University; Ritesh Kotak, technology entrepreneur and strategist; and Ellis Ross, member for Skeena in the Legislative Assembly of British Columbia. We also have, from the Canadian Media Concentration Research Project, Dwayne Winseck, director, Carleton University, and Ben Klass, senior research associate; and from the First Nations Tax Commission, C.T. (Manny) Jules, chief commissioner.
Welcome, everyone. Each witness will present for up to five minutes, to be followed by rounds of questions.
We will start with Vass Bednar. You have the floor for five minutes.
Thank you, Madam Chair.
My name is Vass Bednar. I'm the executive director of McMaster University's new master of public policy in digital society program.
As I'm the co-author of a forthcoming white paper on the state of competition policy in Canada, I'm going to focus my remarks on the potential for reform of the Competition Act, particularly as it relates to the digital economy. I'll also commit to circulating that paper to members of this committee when it's published in the coming days.
When I started researching competition policy in Canada, I was struck by the lack of scholarship on the subject. Most publications come either directly from government officials or from private actors. There's not a whole lot of material that sits in a neutral middle ground, so I’d love to see more of that. I also observe a striking amount of capture in the sector. I’m not sure precisely how that contributes to any policy inertia, but I do sense the Canadian public is increasingly impatient with the legislation’s facilitation and maintenance of oligopolies in our economy. If we want to give our own companies a chance to compete, and protect consumers from new forms of online harm, we should proceed with a thoughtful review of the act.
It has been said that Canada doesn't treat competition policy seriously and that we tolerate high corporate concentration in an effort to be competitive internationally. In fact, former competition commissioner John Pecman has lamented that the bureau lacks the kind of independence that could make it more effective. To my mind, what it comes down to is that there are structural limitations in our legislation that hinder our ability to curb anti-competitive practices, especially for today’s digital economy. This puts us at a disadvantage compared to other countries.
One quick example is the seemingly arbitrary threshold for a merger review. This leads the bureau to potentially overlook anti-competitive mergers.
Another example is fines. The current commissioner, Matthew Boswell, has acknowledged that the maximum penalties for anti-competitive behaviour lack the teeth necessary to deter anti-competitive behaviour.
There's also this bigger question: Should Canada even make an effort to emulate either the American or the European approach to competition policy? Look, we're likely to benefit from the historic antitrust investigations into global tech firms just due to natural spillover effects, but other competition authorities are not going to scrutinize troubling digital competition issues in our own backyard. That's why it's important to me that we act as more anticipatory regulators that can spot harms on the horizon and act accordingly.
Consider a company that has admitted to fixing the price of bread and may have been colluding on wages with other grocers in the pandemic: Loblaw. Now as a case study, just think about their deepening across the financial space with PC Financial; health, with Shoppers Drug Mart and the PC Health app powered by League; insurance and the grocery spaces. This is a case study of the market power that can be achieved through detailed targeted ads and reduced privacy as they refine their proprietary advertising platform, Loblaw Media, emulating a playbook refined by Facebook and Amazon. While this may impact competition, it can also harm consumers by constraining their ability to access everyday essentials at a cheaper price, while Loblaw grows market share.
Right now, Canadian competition policy is silent on such Orwellian activities because the legislation and current guidelines do not adequately comprehend or even stop to consider whether and how data creates a competitive advantage, yet issues on data collection and processing are at the centre of current antitrust cases all around the world. Put simply, Canada’s Competition Bureau does not have the tool kit for a digital economy.
As part of any modernization, we're going to have to critically think about how we can redefine “dominance” via volume and maybe even richness of data, and also understand the competitive harms that can flow from dominant firms that hold large volumes of information. Maybe one of the most important lessons that Canadian policy-makers can learn from the U.S.’s recent work investigating past activity from Facebook, Amazon and Google, and also by China’s efforts with Alibaba is that it's difficult and might even seem disingenuous to retroactively change the policy environment in order to rationalize investigations against massive digital firms.
To my mind, Canada’s competition policy no longer serves our best interests, and digital markets are fundamentally different from traditional ones. This alone warrants modernizing the act alongside more robust privacy legislation in order to better manage these abuses and truly promote dynamism; otherwise, companies that pump up prices on bread for single moms can continue to trade on that same mother's personal information.
It's time for our legislation to catch up.
Good morning, Madam Chair.
I would like to start by thanking the committee for inviting me to share my thoughts on how Canada could become more competitive.
My name is Ritesh Kotak, and I work with organizations to help them transform their operations digitally. I've studied and worked on this issue globally for the last decade, but my journey started a lot earlier. I grew up in a small business. To be more specific, my crib was in a store. My grandparents and parents had a community grocery store, which over the years has transformed into a food manufacturing company that employs about 20 individuals, imports and exports products, and is continuously trying to innovate.
When the pandemic started, many businesses had to find alternative ways to remain competitive. The natural move was to transfer operations to an e-commerce platform, my parents included. The general consensus was that it is as simple as creating an account, adding your products and you can begin shipping to customers around the world. In theory this is correct. However, in practice it is much more complex.
I would like to take my time to break down three categories of issues that are major barriers to businesses and hinder our competitiveness. I share my thoughts from a strategic and also a practical perspective.
Number one, you are building on something existing and not on something new; number two, unclear guidelines; number three, access to a knowledge base.
The first major barrier is that many initiatives make a detrimental assumption that because they have a website, it will allow businesses to migrate their operations online. However, if you are a traditional bricks and mortar establishment, you have existing systems. Upgrading those systems is complex and expensive. I've seen frustrated business owners maintain two independent systems, which is just not economical. If you want to integrate, it requires additional software and expertise. This can cost thousands of dollars, be time consuming and complex, and many people are simply unaware of this additional investment. This can also be very stressful.
To add to the complexity, we wouldn't normally think of all of the labour challenges from a granular level, such as adding hundreds of products, descriptions, images, to shipping the product to the customer—also known as the last mile. With shipping in particular, business owners may end up covering large costs out of pocket, as major carriers base rates on weight, not volume. I can elaborate further on this point during the Q and A.
It is also extremely difficult for small businesses to compete, as shipping rates are significantly higher for small businesses compared with established big box companies. A package may cost a local business $14 to ship; the same package will cost an established business $4. That's three and a half times higher. This dissuades customers from completing a transaction. We see this through the number of abandoned shopping carts. Shipping companies won't give you a better rate unless you have volume, and you won't have volume if you don't offer competitive rates. Given low margins in certain industries, it makes this an impossible proposition—a catch-22.
To put a hard number to the amount of effort required, I have technical abilities and understand the different factors and complexities. It took me approximately 300 hours to figure this out. I empathize with all of the small business owners who don't have access to these skills and as a last resort have spent up to $30,000 on consultants—money that they didn't even budget for.
The second category of issues is that there are unclear guidelines. I'll use my example of the food industry. Many retailers are unaware that shipping to other countries, especially to the U.S., has its challenges. Since CUSMA increased the de minimis value under section 321 from $200 to $800 for e-commerce, many organizations are unsure how this applies.
From my conversations, I found that different agencies are used to helping businesses with B2B trade, but not B2C trade. I could not find a single resource that aggregated all the necessary information, from registration and labelling requirements, to other considerations such as advertising restrictions and data protection. Businesses are expected to comply, but are unaware. I even found federal agencies who really wanted to help and answer my questions, but were just unsure on how best to address my inquiries. This is a major barrier to our competitiveness.
Finally, more needs to be done to physically help these businesses digitally transform their operations. We cannot simply put money towards the problem, as they require physical expertise and a helping hand.
As mentioned, it took me 300 hours. I have volunteered my time to assist many organizations digitize, because I truly believe that we are all in this together. There need to be more individuals who have built these hybrid businesses assisting other businesses, because personal usage is a precondition to comprehension.
There is plenty more I would like to discuss such as how we can achieve this, barriers to accessibility and other factors that impact our competitiveness.
I thank you for this opportunity and welcome your questions.
Thank you very much, Mr. Poilievre.
Actually the audio requirements to be able to translate must be much higher than what you and I would normally be able to work with. It's something that's being looked at by the Liaison Committee as well, and we've made a point of trying to make sure that when we are scheduling witnesses, we ship them headsets that our translators have approved for use.
So it has been duly noted, but we're working as well as we can to make sure that our translators and interpreters are able to do the work they need to do.
Mark, if it's possible for IT to work with Mr. Ross, maybe we can go to the next witness, because we are delayed. If that's a possibility, would that be okay?
Thank you very much. I will lead the discussion and hand it over at the end to my colleague Ben Klass.
Good morning and thank you for inviting us to appear before your committee. Our research at the Canadian Media Concentration Research Project examines the evolution of everything from mobile wireless Internet access and cable TV services to the quickly evolving digital media delivered over the Internet such as online video services like Netflix and Crave, Internet advertising, social media and newspapers.
In the 1990s and early 2000s, it was commonly believed that the advent of digital media and the Internet would usher in more competitive and diverse communications and media markets. However, in his summary of the results of a recent 30-country study, Columbia University professor Eli Noam concludes that concentration levels in mobile wireless, broadband Internet access and other communications markets continue to be “astonishingly high”. While the data for content media is mixed, the trend is in an upward direction.
Moreover, in the last decade, a handful of global Internet giants have remade the Internet in their image—a centralized Internet ruled by a few search engines, social media services and digital media content aggregation platforms. These conditions generally apply to Canada as well.
Where Canada does stand out, however—and not in a good way—is in its sky-high levels of vertical and diagonal integration. The figure distributed to the committee provides a snapshot of where things stand as of 2019 based on HHI measures of concentration—a point I hope we can discuss during the question and discussion period.
If the proposed mega-merger between Canada's second-largest and fourth-largest communications and media conglomerates, Rogers and Shaw, is approved, it would have four major implications. It would overturn a decade and a half of policies by successive Conservative and Liberal governments alike to foster a fourth maverick mobile operator in regions across the country. It would significantly lessen competition for the mobile wireless market at the national and provincial levels and for the national Internet access and cable television markets. It would reduce the number of doors that TV and film producers have to knock on from four to three when seeking a national distribution deal and from three to two in English-language regions of Canada. Moreover, with data combined from 18.2 million Canadians integrated across Rogers' and Shaw's multiple platforms, this deal raises substantial questions about the link between big data, market power, and privacy and data protection.
The proposed Rogers and Shaw merger is an excellent opportunity to see whether the Competition Bureau can use its existing tools to full effect and hold the line on current policies. It is also an excellent opportunity for it to turn its professed interest in the link between big data, market power, and privacy and data protection into action. This is also in sync with the recent report by the ETHI committee, “Democracy Under Threat”.
Competition policy should also go beyond assessing consolidations solely in terms of price to consider, for example, standards of data and privacy protection. For example, Facebook loudly touted its respect for people's expectations about trust and privacy when it competed with tens of other rivals during the competitive era for social media. Since taking over Instagram and WhatsApp in 2012 and 2014 and consolidating control over social media, however, it has systematically degraded the standards of privacy and data protection that it offers.
Price is, obviously, still a concern. Consider that in the oligopolistic mobile wireless industry in Canada, Bell, Rogers and Telus have been able to persistently charge high prices that are significantly higher than in comparable countries while offering mobile wireless plans with stingy data allowances that constrain how people use their phones and the mobile Internet. As a result, mobile data usage in Canada is about half the OECD average and a third of what it is in the U.S.
There is also a need to restore a focus on the broader effects of concentration on competition—for example, the creation of kill zones—as well as how the massive economy of scale, scope and network effects that are common to digital services are used to buttress dominant market positions, undercut rivals and expand into new markets.
The focus should also be on limiting the threat that concentrated corporate power poses not just to markets but to policy; society; the evolution, design and use of technology; and democracy.
Four principles drawn from the history of communications regulation should serve as guides for what a new generation of regulation for communications, the Internet and the digital economy could look like: structural separation, line of business restrictions, public obligations and public alternatives.
I'll now turn it over to Ben. I hope you can indulge him for half a minute.
Good morning, honourable members.
My name is Manny Jules. I am the chief commissioner of the First Nations Tax Commission, which is one of three institutions created by the First Nations Fiscal Management Act, or FMA. I was also chief of the Kamloops Indian Band from 1984 to 2000.
Thank you for this opportunity to address this committee as part of your study on competitiveness in Canada.
Canada's productivity challenge is real and COVID-19 has made it acute. Meeting this challenge will determine whether or not we can maintain or improve our living standards, lift first nations out of poverty, and continue to fund our social infrastructure. Despite immigration, Canada is an aging society. Service costs like health care will rise sharply. We are going to have trouble maintaining services, particularly at the provincial level, unless we can improve productivity.
There are a few factors that determine productivity. I'm going to focus on just one, which is improving the first nations' investment climate.
First nations are a younger and faster growing population than Canada as a whole. We have higher unemployment, lower pay and, often, unproductive land. Too many of our children grow up without being exposed to work opportunities and the role models those create. This puts them at a disadvantage for the rest of their lives. That is not good for Canada's competitiveness.
I have spent most of my career turning this around. I have concluded that the root of our problem is the way we are viewed.
You see a social problem that needs to be fixed with government programs. I have a different philosophy. I think our disparities are fundamentally economic. Our economic issues are a result of first nations being systematically legislated out of the economy. Government oversight has prevented investment from happening on our lands. Social problems are a result of that.
How can we fix this? We need to focus on removing the things that have taken us out of the economy. We talk about the costs of interprovincial trade barriers, and rightfully so. We also need to talk about the investment barriers that have been put up around first nation lands.
We have identified a successful, three-part formula to build a stronger first nation investment climate. It is based on putting decision-making power in first nation hands, so they can respond to opportunities. First, develop legislation that recognizes first nation jurisdiction and provides an orderly process to occupy it. Second, establish first nation institutions to provide support and standards, so that first nations implement their jurisdiction in a manner that grows their economies and enhances the economic union of Canada. Third, provide training and capacity development to first nation administrations, so they know what to do.
This approach has worked. The First Nation Fiscal Management Act is the most successful first nation-led legislative initiative in Canadian history. This committee should build on that success by supporting four proposals to improve the act.
First, first nations need more sustainable economic infrastructure. In the last year, we have worked closely with the federal government to develop the legislation for a first nation infrastructure institute. The rapid implementation of this institute will ensure that we have the foundation to compete in a competitive investment climate.
Second, we need to provide tax and decision-making power to first nations. You cannot have government decision-making power if you are entirely funded by a contribution agreement. Fiscal powers give us a strong incentive for economic success. It reward good policies in a way that program funding never will. It allows us to implement our jurisdictions so we can, in my dad's words, move at the speed of business.
This can start with two easily implemented fiscal powers: a sales tax on fuel, alcohol, tobacco, and cannabis—the FACT tax—and FACT excise tax sharing. I must note that on Monday, the Government of New Brunswick unilaterally cancelled the tax-sharing agreement with first nations in that province. The fiscal math of Canada is unrelenting. First nations need new legislated tax powers.
Third, we need to improve our resource economy competitiveness. First nations are often the only governments in a region that don't receive direct fiscal benefits from major resource projects in their territories. This makes it difficult to get our participation and support, and that means resource investment has fallen off relative to our competitors. Hundreds of billions of dollars have been diverted to other countries. We can fix this with a resource charge, supported with an offsetting federal tax credit. This would create transparent, standardized and stable first nation fiscal benefits from resource development. It could coordinate with federal and provincial tax systems.
The FNTC would support its implementation and coordination. This would provide many rural and remote first nations with economic opportunities and break the cycle of poverty that disadvantages so many children from an early age.
My comments come from the last 17 years of reviewing projects in detail in terms of their viability and process. I bring this as great context for understanding how to build and sustain an economy, which leads to our topic today of competitiveness. I also understand the working end of environmental assessments at both the federal and provincial levels, and the permitting regimes under each ministry.
Unfortunately, now as an MLA, I understand how these processes are formed, and I also understand the ideologies and politics that help shape these processes.
The most important lesson learned is what a good, strong economy does for the strength of an individual, a community, a province and a country. I don't understand why our legislators can't wrap their heads around the idea of competitiveness. We understand competitiveness where we stifle competition from province to province, but we take a different approach when we deal with our biggest trading partner/competitor to the south of us.
When we create so much politics, red tape and taxes for, say, a Canadian concrete company to bid itself out of a Canadian contract, the United States' company that doesn't have the same cost structure comes in and secures that Canadian contract. The same approach of politics, red tape and taxes plays out when we stop the export of oil and gas to Asia, and then we turn around and ship that same resource to the United States so that the U.S.A. can supplement its own overseas export market, as well as domestic markets. This is happening as we speak in B.C., especially with LNG, with U.S.A. wanting to export B.C. LNG because it is cleaner, and we can't get LNG off our shores.
You'll hear stories from the mining industry in B.C. talking about a robust exploration industry, but what you won't hear is that no mining company wants to invest in B.C. No mining company can make an FID. We've gotten to the point where Canadian companies find other countries—which are our competitors, by the way—more welcoming than Canada. Canadian companies take their investment dollars elsewhere just because of our uncompetitive framework.
The only investors who are willing to invest in B.C. for major or semi-major projects are the large worldwide corporations that have enough cash and fortitude to bankroll a $50-million environmental assessment—some cost. Even those corporations are starting to cut their losses and leave Canada.
No doubt you heard about Chevron's decision to take a step back from its $32-billion LNG project in Kitimat. Chevron can't sell its 50% equity stake in that project, a project that has the support of first nations, has two LNG reserves in northeast B.C., and has a fully permitted pipeline and a fully permitted liquefaction facility. They can't get any interest from the worldwide community.
There is something wrong with Canada and B.C.'s competitive structure when a world thirsty for clean energy has no interest in doing business in Canada.
Thank you, Madam Chair.
A lot of the communities that support LNG, for example, do so under their own community processes, under democratically elected leadership. What you see in B.C. right now is a push to silence or marginalize democratically elected first nations people. It's the politics and ideology. It's a big problem in B.C.
In fact, with everything you talked about in terms of the media, nobody has actually gone to all those first nations that signed on to Kinder Morgan or the LNG projects. There are two major LNG projects in Kitimat, and both have the support of first nations.
Nobody wants to do a story on that, because it's not sexy enough. It doesn't make headlines. Yet, already you see the benefit going to all of these communities along the way in addressing poverty, substance abuse, children in care. It doesn't make the news because it's just not sexy.
Absolutely, and thank you for your question.
What's happened here with e-commerce and the pandemic is that a lot of businesses have moved to online platforms. Traditionally, we had these brick and mortar locations and we've gone online to do sales channels, but they are not separate. They are actually integrated.
We have this new hybrid economy, where you have to be competent in both areas. That has also created confusion, especially amongst different agencies. From my personal experience, these were agencies that wanted to help by reaching out. For example, if you have the CFIA or the different trade commissioners, the question became, “How do I export to the United States or how do I export to different provinces?” Everything they were given, everything they were told and everything that they have dealt with was related to B2B, business-to-business sales, where you sell to another business or to a distributor and then they sell the products to stores.
Well, what e-commerce has done is that it has taken the consumer right to the business, so it falls into this new category, which many are just unaware of how to operate around. It's not their fault. It's something that's relatively new to a lot of people. That has created a lot of confusion. That has created—
Recently there's been more writing about exploring whether the Competition Bureau needs the capacity to be able to conduct market studies. Authorities in the U.S. can compel particular information from businesses in order to keep pace with trends in the sector and then better understand where there might be emerging issues of concern. We don't have that.
In terms of a tool kit, I also mentioned independence. We do nest our Competition Bureau within the ministry and some people point to that as a potential opportunity for conflict.
I mentioned the somewhat arbitrary threshold for merger reviews. I worry and wonder that we're missing mergers that we should be a little bit more thoughtful about, and also fines. With regard to our capacity to levy fines, frankly, fines exist as a deterrent and may not be the deterrent that we hoped them to be.
The last thing I'll maybe offer is that we have other pieces of legislation that have a bit more of a schedule for review. I believe the Bank Act gets a little bit of a look every five years, so thinking about more of a schedule to do that spring cleaning and review this really important legislation could also be impactful.
I agree with Ellis. He's got long-standing experience in this area. What we need in this country is economic reconciliation, fundamentally. We've been legislated out of the economy and I believe that what we need, really, is a first nation federal-provincial table so that we can look at and establish a better fiscal relationship, focused on investment and competitiveness. I think that's the fundamental way we've got to move forward, addressing the myriad of concerns.
One of the things Ellis was saying that I agree full-heartedly with is that just having one piece of legislation doesn't lead to true reconciliation. If we're looking at the piece of legislation to deal with UNDRIP, we need a myriad of different pieces of legislation to implement the constitutional rights that Canada has recognized for first nations.
The other thing that's clear in the discussions is that first nations operate under telegraph technology, as opposed to a digital age technology. All of these matters have to fundamentally change, and if Canada is going to regain its competitive edge, we have to move to ensure that first nations are fully a part of the solutions that are going to come post pandemic.
One of the things that's going to be critically important, of course, is fiscal relationship discussions based on the health care and indebtedness that Canada as a whole is going to be facing. Without harnessing the youth and the abilities to —
We need economic reconciliation in this country.
I agree with Ellis Ross in his statements about UNDRIP. You can't have one piece of legislation when you've got constitutionally recognized rights. You have to have a myriad of different pieces of legislation that facilitate our being a fundamental economic and competitive partner in this federation.
Right now we've got a situation whereby we've been completely legislated out of the economy. We first nations operate under technology that was developed during the telegraph era. We need to be a part of the digital age. That means fundamentally changing how we operate in this country.
One of the fundamental recommendations I would make to this committee is that we establish, or that you recommend the establishment of, a first nations federal-provincial table to deal with competitiveness and the myriad of complex issues that this country is facing in getting our commodities to market.
Yes, when it was reviewed here last time, its scope was very narrow. I had many amendments, which were ruled out of order. In fact, it was designed to prevent a further review. At this committee, I had several amendments that addressed issues but they were deemed out of the scope of the study. The government had made it so descriptive and limited that it wasn't even a holistic review of the Competition Act. It was basically a piecemeal approach, so it would be erroneous to assume it's had a thorough review.
I want to continue with Ms. Bednar and then go to Mr. Winseck, as well, because it's important. Mr. Pecman, the former commissioner of the Competition Bureau, acknowledged the “scarce enforcement resources” they have. He also noted that this erodes the ability of the bureau to actually take the initiative.
Is that the evidence you're seeing as well? From my experience here, it seems that the Competition Bureau is almost on a defensive perimeter, having to deal with a number of different things. The current commissioner didn't say that they stopped doing files, but he clearly indicated that when they had new ones pop up, they had to put other work aside.
Could you comment on that? I'll go to Mr. Winseck as well, please.
Thank you, Madam Chair.
When I first entered politics in 2008, the first book I read was by Calvin Helin, Dances with Dependency, Out of Poverty Through Self-Reliance. It has helped guide me, having spent a number of years focused on aboriginal affairs and northern development, in my thoughts about how we should be looking at aboriginal leaders and the advances they should be able to use to help in their communities.
I've spoken with you, Mr. Jules, on a number of occasions as we've discussed different ways that which governments could allow first nations people to help look after themselves, rather than continue with the malaise they are in because governments seem to feel they know best how to run their lives.
This is where I'm coming from when I address these questions to both you, Mr. Jules, and Mr. Ross.
Mr. Jules, you've talked about the importance of decision-making for unemployment and about being able to look after the land. It's as though, if there were such a dirty thing as oil and gas being developed, or mining, somehow the first nations people would all of a sudden throw up their hands and say, well, obviously we want to be in on that; we don't want to look after the land we've lived on for so many generations.
Mr. Jules, what can we do to stop the concept that political people understand what you need and instead start listening to what is required to help all of our economy move forward?
Thank you so very much.
But then, there are decisions that are made by government: let's stop moving our energy to the east; let's not allow northern gateway to proceed; let's put other barriers in place. In Bill , there are additional regulations that, as far as they are concerned, seem to be barriers to the general industry, but they're barriers to your people as well.
Mr. Ross, you mentioned that there are concerns involving Chevron. They have thrown up their hands in despair and essentially walked away from this large job and wealth-creating projects, rather than take what we need to sell to the world to help where greenhouse gases are concerned and to sell our technology.
Can you explain how much the regulatory processes we put in place are damaging that opportunity?
You mentioned before, in talking about the U.S., how our stopping what we do is going to help supplement their markets. Yes, we know who it is that benefits from all of the eco-activists who stop investment in Canada.
Could you quickly comment on that?
I'll be brief in my remarks.
I'll use the example of a small flower shop. The flower shop, because of COVID, has been forced to essentially rethink how they're going to do business so they've gone online. That's opened up a lot of opportunities but also challenges. Consider, for example, cybersecurity, privacy and all those things that a small business might not think about. I have some stats here: 38% of small businesses get breached and one in four doesn't even know they've been breached. It's a whole other area of issues that they might not have traditionally budgeted for or might not have thought of. They might not be aware of their obligations or all of the legislative requirements.
If we were able to aggregate and reduce the burden through red tape reduction, it would allow them to compete and stay secure, and that's good for Canada in general.
Thank you, Madam Chair.
I will continue with Mr. Winseck and Mr. Klass, from the Canadian Media Concentration Research Project.
Tax evasion heavily favours major U.S. digital media such as Netflix, Disney, Facebook and other web giants, to the detriment of the prosperity of Quebec and Canadian media. This is a serious problem for the present and the future of Quebec's and Canada's media ecosystems. To address this, Australia adopted a code of conduct.
What measures do you think the federal government and the Government of Quebec should consider to ensure that Quebec's and Canada's media companies would decreasingly suffer from the negative effects of unfair competition from American big tech companies?
There seem to be a couple of questions there.
Regarding the idea of the tax question, I think that's pretty low-hanging fruit, and we can standardize the HST and GST across the like services. I think we're waiting on a developments agreement at the OECD on a digital services tax that would harmonize that across the OECD countries. I think that's fine.
I think once we get into the other questions about how we regulate Netflix, for example, or Facebook and Google, is the Australian model a good one, for example? I think there is much of interest in that model: the recognition of these companies' dominant market power; the idea that Google controls vertically integrated...with its own online ad exchange and all the data around which that ad exchange works, and that we need to open up the kimono to allow regulators and others to access that data to see how the algorithm works. I think these are good things.
The idea, though, that somehow this just ends up with transferring buckets of cash from the so-called web giants to domestic players, I think, is a real Achilles heel here that we need to avoid. We need to deal with the market power, black box technologies, and it cannot just go to delivering buckets of cash from foreign players to domestic ones.
I think I'm just good to go here—
Mr. Brian Masse: Thank you.
Dr. Dwayne Winseck: I'm going to hand this off to Ben as well.
I think there are four things I'd say in response to your earlier question.
I would say that the Competition Bureau seems to be handcuffed by a lack of a mandate and resources to look at what's happened after a deal has already been approved, so we need to have a retrospective assessment.
Second, we need to be able to understand the cumulative effects over time so that we're not just treating deals like the Rogers-Shaw deal as a one-off; but we need to see it as the second shoe falling after Bell MTS in 2017, and look forward from that.
There are also some problems with information disclosure powers that the Competition Bureau has, I understand, relative to the U.S. Those should be beefed up.
I really think a great big consideration is that we need to open up the Competition Bureau's review processes to much higher levels of public disclosure and participation, with support for the latter. There's an opportunity for us to participate, but it's all on our own dime, and that's a big ask.
Yes. I'll just add that when the CRTC commissioner was here last week, he correctly pointed out that the telecommunications regulator really has no input into a change in ownership or a merger in this case, which strikes me as being pretty strange. We have the Competition Bureau saying they don't have the resources to assess after the fact. We have the CRTC saying that we check to make sure that the merging parties come out as Canadian, but beyond that we just look at TV licences.
You have the industry saying let's go, go, go. This is hear no evil, see no evil, do no evil. But consumers know that there is something wrong with this, and I think it's Parliament's place to look at this particular issue. I think one place to start would be with this presumption. If I could just quickly read from this, the Competition Bureau's page on mergers, it says, “Mergers are generally viewed as a positive way to increase competitiveness, allowing Canadians to benefit from lower prices, better product choice and higher quality services.” It says further, “All parties contemplating business mergers are strongly encouraged to contact the Bureau at the earliest opportunity, or before submitting a notification filing.”
The idea that we have a CRTC that does not look at this, a Competition Bureau that cannot assess whether its policies are successful or not, and an industry that's gung-ho on mergers, just reeks to high heaven to me.
Thank you, Madam Chair.
Thank you to all the witnesses.
If I could, I'll start off with Ms. Bednar.
Let me first acknowledge that I share your concern that the Competition Act over the decades hasn't really attracted the attention one would hope, especially considering that Canada has been a pioneer in this area—it was the first country to adopt antitrust legislation.
Given your deep understanding of the structural elements of the Competition Act, you did refer to decisions that were made in 2011 that stripped away at the policy capacity of the Competition Bureau. For the benefit of the members and the public, would you mind elaborating on that, on what happened in 2011 and what the implications were?
It's a common thread. I also lamented that lack of scholarship, but of course, there is scholarship, and that's a common criticism of how we've structured our Competition Bureau. Other competition authorities have more independence. They have, of course, more power and more funding, but they also almost have a ministerial-like authority to pursue reviews, to publish papers.
If you look at our bureau, a lot of the publications are summaries of a meeting that took place. They're explanatory. You can get context on a decision that was made. However, it lacks that, perhaps, proactiveness or forward-looking view. Of course, yes, the criticism from potentially being conflicted.... You're in a ministry that's fundamentally concerned with competitiveness and innovation. That might lead some people to advocate for the comfort and inertia of the status quo, because for a lot of companies, maybe it's more productive if our competition policy is totally silent on the creative ways they're looking to establish, assert and preserve their market dominance.
My apologies, MP Ehsassi.
With that, we have finished the second round.
As I mentioned, we'll go to 1:30. We'll be able to have a slot for each of the parties.
I want to ask the committee if they would indulge MP Masse and allow him to go first, as he needs to leave at 1:15. If you're all in agreement, he'll go quickly and then we'll go to the next three parties.
Is that okay with everyone?
Some hon. members: Agreed.
The Chair: I appreciate it.
Please, Mr. Masse, go ahead.
Thank you very much, Madam Chair.
I'd like to give a warm welcome to Mr. Jules. We met in 2010 on your reserve when we visited. I think it was the finance committee. You surprise me. I'd like to know your secret. You seem to be younger and younger instead of older. Anyway, it's good to see you.
I was really stunned when I went to your reserve to see everything there that you have done, and everything you're still doing for your friends and people. It's quite amazing.
You said before that you think we should do more for first nations. I agree with you. Economically, we need you. Actually, we need your young people.
Talk to us about your young generation. Even if they might still be working with the telegraph—I think they're more ahead than that—we could still improve everything they need to be a part of the economy of today.
Absolutely. Thank you for your question.
First of all, connectivity is going to be absolutely essential. If you're not connected and if you don't have access to high-speed Internet, there's not much you can do to participate in the new digital economy or the hybrid economy, for that matter.
The second thing that would really be beneficial when you speak about data or big data in general is that it doesn't need to be super expensive. With technology now—with software as a service—there are a lot of ways that technology can become accessible to the masses. For example, if we ensure that platforms, if they want to operate in Canada, must have at the very minimum the ability to conduct transactions in English and French and must have accessibility plug-ins as a built-in feature, which is not necessarily the current case.... You might have small or local businesses that want to operate, but are unable to communicate with the demographic, whether it be through a lack of tools or a lack of a user experience.
It doesn't need to be expensive. A lot of these tools are becoming a lot cheaper. They're becoming a lot simpler to use. I think the pandemic has accelerated innovation in the software space. We could actually leverage that to create a much more competitive environment.
I want to thank everyone today for their flexibility, patience and collaboration to make sure that everyone had a chance to get their questions in, and I thank those who gave up their slot so that we could get to QP on time.
A huge thank you goes out to the interpreters for their hard work, as usual. We really appreciate everything they do for us.
To our witnesses, thank you for being here today and for your patience regarding our democracy and votes. With that, I will call this meeting adjourned.