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Opinion: Government policies are helping to push grocery prices higher

Commentary

The CEOs of Canada’s largest grocery chains recently appeared before Parliament to answer questions about rising prices for groceries. With food prices up 10.4 percent over 12 months, Canadians are feeling the pinch and parliamentarians are reacting. However, much of last week’s political theatre ignored an important factor contributing to the rising cost of food—namely, government policy. 

For example, the federal carbon tax, which affects food prices by raising the costs of transportation and other “inputs” integral to our food system. According to one study, at $50 per tonne (the current minimum level set by the federal government), the carbon tax would increase food prices by 3 percent. The carbon tax is set to rise to $65 per tonne in April, ultimately soaring to $170 per tonne in 2030, meaning the carbon tax’s upward pressure on the price of food (and other goods) is just beginning. 

The federal government may also soon ban certain types of fertilizer as part of its broader climate policy agenda, which would further increase costs for farmers by limiting access to fertilizer products. When federal policy makes food production more expensive, grocery store prices will climb. 

Now consider Canada’s longstanding system of supply management, which restricts imports to allow domestic producers of milk, eggs, and poultry to maintain higher prices for their products than would otherwise exist in a competitive market. Government dictates who can produce, what can be produced, when, and how much, while also restricting the ability of Canadians to access certain food products from foreign suppliers. Not surprisingly, research finds that supply management raises food prices—according to a pre-pandemic study, the system costs the average Canadian household an estimated extra $300 to $444 annually. 

And if you’ve done any grocery shopping lately, you’ve seen the consequences. Price increases for dairy products and poultry have generally outpaced those for food overall. For instance, between January 2022 and January 2023, prices have risen 12.7 percent for fresh or frozen poultry, 11.4 percent for fresh milk, 19.1 percent for butter, and 15.6 percent for eggs. Again, these increases are noticeably higher than the 10.4 percent increase for food overall. 

Unfortunately, supply management is only one example of Canada’s many problems with competition policy. For example, another recent study published by the Fraser Institute found that government policies, including interprovincial trade barriers and occupational licensing rules, help shield 35.1 percent of the Canadian economy from competition. The same study ranked Canada very low (48th out of 62 peer countries) on foreign investment restrictions, which also contribute to higher consumer prices.

Many factors determine the price of food. Supply chain challenges, changes in the cost of inputs (fuel, for example), weather, labour market conditions, etc. But more competition leads to lower prices as firms respond to customers having more power in the market and more choice in what to purchase. While parliamentarians may have valid reasons to examine the possible concentration of market power in the grocery industry, they need look no further than federal policies (and provincial policies) for ways to improve the competitive landscape. 

At a time when many factors are pushing food prices higher, Ottawa is actively contributing to the problem by limiting competition and making things more expensive. Members of Parliament, including those who recently questioned Canada’s grocery CEOs, would do well to look inward and reconsider these policies if they want to lower food prices for Canadians. 

Richard Stursberg: Defunding the CBC but not Radio-Canada defies fairness

Commentary

Pierre Polievre has argued that CBC television should be eliminated; he has proposed to leave Radio-Canada’s TV service intact. He appears to believe that since CBC’s audiences have declined significantly, there is no point in continuing to support it. He is certainly right that CBC TV has lost audience share over the last decade (now just 5 percent of prime time) and performs very poorly compared to its French counterpart, Radio-Canada’s Ice Tele (25 percent of prime time).  

Why is this?

First, the English broadcasting environment has always been much more competitive than the French one. Over the last 30 years, CBC has had to compete not only with dozens of Canadian rivals in its home market (CTV, Global, CITY, TSN, etc.) but multiple American ones as well (ABC, CBS, NBC, CNN, etc.). This has never been true in the French market, where Radio-Canada has only one significant rival, TVA. It has been insulated by language. The Americans do not broadcast in French.

The result is that it has always been a challenge to make English Canadian entertainment shows that Canadians will watch in large numbers. Producing dramas, comedies, and documentaries that can compete against the flood of expensive, attractive U.S. programs has historically been very difficult. It can be done, but it requires proper financing, creative talent, fine producers, and luck. Of these, the only one in the control of the government is money. For many, many years, CBC has been one of the most poorly financed public broadcasters in the world. 

Second, CBC’s advertising revenues have fallen substantially, like those of all the other broadcasters. Advertisers prefer Google and Facebook’s digital ads because they are more efficient. More than 55 percent of Canadian ad revenues now flow south to Silicon Valley rather than staying in the country to support the creation of Canadian content. The losses are much more significant in English than in French. 

Third, the arrival of the big foreign streaming services (Netflix, Disney, Amazon, etc.) has further eroded the market share of CBC TV, as well as that of the private Canadian broadcasters. With their enormous budgets, the streamers have created huge quantities of high-quality programming. Unlike Canadian broadcasters, however, they are not required to spend any of their revenues commissioning Canadian shows. This not only gives them substantial financial advantages over their Canadian competitors, but it also erodes the money available to finance Canadian drama, comedies, documentaries, and kid’s shows.

Finally, and perhaps most significantly, CBC suffers from chronic underfunding. The government provides roughly $1.25 billion to CBC/Radio-Canada. That works out to about 33 dollars per capita for CBC and Radio-Canada combined. The split of the $1.25 billion is not, however, the same for CBC and Radio-Canada.

About 44 percent ($550 million) of the public subsidy goes to the French services and 56 percent to the English side ($700 million). This split does not reflect the relative size of the two major language groups in Canada. French is spoken by only 21 percent of the Canadian population. Given that Canada’s population is roughly 38 million people, this means that the 8 million French-speaking Canadians receive a per capita public broadcasting subsidy of almost 70 dollars, while the rest of the country receives 23 dollars. In effect, this makes Radio-Canada one of the better-financed public broadcasters in the world and CBC one of the worst.

This disparity is compounded by the fact that the costs of producing programs in French and English are dramatically different. An average Canadian English language drama costs $1.7 million per hour; its French equivalent costs almost exactly half that. The situation is even starker when it comes to children’s shows. An hour in English has an average cost of $850,000 and in French $200,000, a more than four-fold difference. 

This is a very strange situation. Radio-Canada gets almost three times more money per capita from the federal government than CBC, although it faces dramatically less competition in its home market and enjoys very significant cost advantages in program production. It is hard to understand how this is either fair or reasonable.

Television is the most important cultural medium in the world. In English Canada, the only broadcaster that has consistently made Canadian entertainment shows is the CBC. If Pierre Polievre were really concerned about CBC television’s poor performance, he should concern himself with these disparities. He should argue not for eliminating CBC but for financing it at the same level as Radio-Canada. This would require an injection of $1.4 billion to the English side. If he also considered the different program production costs, the number would be significantly higher still.

Pierre Polievre’s attack on the CBC and not Radio-Canada seems to defy the test of simple fairness. Why would he choose to go after the side of the public broadcaster that faces the more challenging environment and that has been systemically disadvantaged by the federal government? If French Canadians were receiving almost three times as much per capita for health care or education, he would surely object and argue that the money going to French Canada should be reduced. Or better still, that English Canada should be put on the same footing.