John Ivison: Trudeau tries pinning the cost-of-living blame on anyone but himself

Prime Minister Justin Trudeau speaks in the House of Commons in Ottawa on Monday, September 18, 2023.

To err is human; to blame someone else is politics.

The House of Commons is back and the prime minister had barely cleared his throat before he turned the Opposition leader’s questions on housing and grocery affordability into a response about the Conservative party’s plan to “restrict access to abortion, deny the impact of climate change and put more assault weapons on our streets.”

Politicians looking to pass the buck have always kept the public alarmed by menacing it with an endless series of imaginary hobgoblins, as American journalist H.L. Mencken once put it.

The Liberal government engaged in its own well-worn political theatre on Monday by summoning the heads of Canada’s largest grocery chains for a meeting with Industry Minister Francois-Philippe Champagne. If they were diplomats, the notice would have read “meeting, without coffee,” to indicate its gravity.

A government that has been asleep at the switch on the housing and cost-of-living files has suddenly roused.

Inflation has been raging for two years; interest rates have been rising for 18 months. The Trudeau government is responsible for the soaring cost of living, according to Conservative Leader Pierre Poilievre — and the public is minded to believe him it seems.

The Liberals have made some incremental changes that will tinker around the edges with housing and food prices.

The plan to cancel the GST on building new rental housing is a good one, even if housing industry executives have concerns that within 12 months land and construction costs will have risen so fast that they’ll have eaten up the foregone tax space.

But the GST change comes against a dip in housing starts in August, 18 months after the government introduced its Housing Accelerator Fund. None of the government’s changes are likely to help a family whose fixed rate mortgage is coming up for renewal.

Against this grim backdrop, the Liberals are gambling that it’s not how you play the game, it’s all about how you pin the blame.

On food affordability, they have told the five largest grocery stores that they have to come up with a plan by Thanksgiving to stabilize prices or face the threat of undisclosed tax measures.

Loblaw CEO Galen Weston was one of those forced to do the perp walk before the cameras on Monday, on his way to meet Champagne. It is to be hoped he had a strong cup of President’s Choice West Coast Dark Roast before he went in.

Earlier in the day, NDP leader Jagmeet Singh told reporters that his party was first out of the blocks in standing up to “corporate greed” and addressing the price-gouging issue.

Yet, as everyone involved in this whole melodrama knows, the politicians are falling over themselves to attack imaginary hobgoblins.

Yes, grocery prices have increased ahead of inflation but studies by both the Bank of Canada and the Competition Bureau have failed to find evidence of price gouging in recent months.

The central bank’s in-house research looked at whether firms had exploited their market power to raise prices more than their costs increased.

It found that the mark-up on groceries accounted for less than one-tenth of inflation in 2021 and that mark-ups were flat or fell in 2022.

“The contribution of change in mark-ups to inflation was limited,” it concluded.

The Competition Bureau found that profits at three of the largest supermarket chains — Loblaw, Sobeys and Metro — rose to $3.6 billion in 2022, from $2.4 billion in 2019. It said mark-ups increased by a “modest but meaningful” amount over the past five years and calculated that since 2017 Canadians would have spent between $1 to $2 more for every $100 grocery bill because of increased mark-ups. Hardly the stuff of criminal price-fixing.

The government has said it will make legislative changes to stop grocery chains from buying up property to stop potential rivals from setting up shop nearby, which will help at the margins.

But the real message from the Competition Bureau investigation is that the grocery market needs more competition — both from domestic and from international operators.

The bureau asked international grocers what might make them want to bring their business to Canada. It heard that the size and low population density of this country means it is not a priority for large U.S. players who would need to establish distribution networks, relationships with Canadian suppliers and brand recognition. That is not an attractive proposition, particularly in light of Target’s abortive foray into Canada.

The bureau said international chains considered it would be tough to compete with Canadian grocers on price — which does not suggest they see an opportunity created by price-gouging.

It said some businesses are still studying Canada and it is possible that Amazon, which operates Amazon Fresh and Whole Foods in the U.S., may expand its grocery offering.

But why would anyone launch into a market where the government is threatening an arbitrary tax on the existing players as part of a shabby political blame game?

The tax and regulatory policies of this government have played their part in the decline in business investment in Canada — a drop of 20 per cent per worker between 2014 and 2021.

Many of the problems the federal government faces are self-inflicted by its preference for performance art over delivery.

Meanwhile, the vast majority of Canadians would be comfortable with a governing party that just promotes Canada as the best place in the world to live, earn an income and to build a business.

[email protected]

Twitter.com/IvisonJ