Canada is facing an inflationary crisis that’s keeping Canadians more strained than ever on their budgets. Skyrocketing prices on gas, general goods, utility bills, and food have forced Canadians to cope by cutting back on spending and reducing their consumption.
For Canada’s big 3 grocery chains, Loblaws, Sobeys, and Metro; these staple Canadian food providers have seen record profits in their quarterly financial reports and are looking to do even better as food prices stubbornly refuse to come down this year. Canadians are already wary of its oligopolistic grocery market but are increasingly becoming more skeptical as grocery inflation leading to record profits for big grocers is happening whilst Canadians are struggling to afford food. If legislation were up to public opinion, then Canada’s big grocers would likely see severe penalties for their oligopolistic tendencies and price-fixing. And as public pressure mounts, the federal government may be forced to finally play its hand against big grocers as a way to fight food inflation.
Although, corporate profiteering hasn’t necessarily been a focal point of federal fiscal policy. This narrative is slowly changing, both the Bank of Canada and Canada’s competition bureau are eyeing and investigating corporate pricing behaviour as a factor for inflation. The competition bureau in particular is investigating evidence of price gouging from Canada’s big grocers and if charged, would slap hefty fines on those grocery chain companies. In addition, such evidence would likely lead to reform against grocery chains including a more enforceable upcoming grocery code of conduct and/or a windfall tax on price-gouged profits.
A Policy Fight Against Food Inflation
The federal government could use these investigations and reports as a springboard against Canada’s big grocers in slapping more stringent regulations on competition and supply chain operations. In the long term, such policies will likely save Canadians millions on their grocery trips.
For the Liberals, the policy stance is obvious. Take a stance against big grocers and ensure that Canadian consumers feel that the government is on their side. And although the Liberals have passed a “grocery” rebate - a one time transfer payment to help cover the cost of groceries - such a rebate doesn’t convey a fighting stance against inflation. To be in that fighting stance, the government should unveil an organized plan on how they're going to help people through targeted policy measures.
(1) Targeted Programs for Margnizalized Canadians
The government should invest in helping vulnerable and marginalized Canadians who have been significantly affected by food inflation. Indigenous people, low-income people, the impoverished, the homeless, and those who visit food banks for daily meals. Such a program would be hard for any federal or provincial party to oppose, and it would be implemented quickly if the federal government is willing to contribute a fair share of funds.
The government can provide supplemental tax-free transfer payments to individuals spending a disproportionate amount of their income towards basic necessities like food and housing. Other eligible demographics would include marginalized groups that face prolonged food scarcity, as often seen in Canada's remote communities and indigenous reserves. These groups could also receive a special food program specifically designed for their community needs so that they can rely on reliable government-procured food rather than unaffordable food available at grocery stores.
(2) A National School Food Program
A national school food program would help children receive the nutrition they need to grow and learn. Canada remains one of the only G20 countries that does not have a nationally-funded school food program meaning that much of the food services provided in schools are done through donations and hard-working volunteers. Many advocates have called on the government to prioritize this policy, and although there have been open consultations and strong lobbying reports in the past few months, movement on this policy has been slow.
But if implemented, every child in Canada would have access to sufficient food and nutrition for them to get through their school day. Studies have found that children’s school nutrition promotes their physical, mental, social, and learning well-being.
On a political level, no federal or provincial party would ever oppose such a policy that helps children get the food they need to learn and grow. And I would bet the provinces would be eager to sign such a program if the federal government pitches in to fund most of the program. In this case, the federal government should ignore fiscal responsibility and instead appeal towards having a moral responsibility to feed our children no matter what income or family situation they may find themselves in.
(3) An Excess Grocery Profit Windfall Tax
The Competition Bureau is close to releasing a report detailing any evidence found of corporate price gouging. If such evidence is found, then the federal government would be given the green light on adding regulations or a “windfall” tax on the profits these companies have incurred. Essentially, the government would collect the excess profits the companies have received as a result of their price-gouging behaviour; such funds could then be used to fund programs to help Canadians get the food they need.
When public opinion polls showcase inflation as a consistent top 3 issue, the federal government could very easily pass “tax hike” policies against big grocers knowing full well that the public will support them. Although this policy is the least likely to happen, the Liberal Party is fundamentally a stakeholder party. They wouldn’t dare touch the big grocers if it means threats to future expansions of operations and jobs not to mention a potential refusal to comply with the upcoming voluntary grocery code of conduct. Essentially, if companies like Walmart and Loblaws don’t get their way in how they operate their business, these companies will likely not follow what the government has set out for them.
(4) The Grocery Code of Conduct
The federal government's agriculture department is currently working towards a voluntary guideline for small and big grocers to abide by. This guideline pitches rules that big grocery chains and small business grocers must follow as essentially industry standards. According to CBC News, the rules would address arbitrary fees set by big grocery chains, cost increases without notice, address late payments, promote fairness in commerce between grocery companies, and better resolve supplier disputes.
Industry observers argue that the big grocers dominating the Canadian market can lead to their market weight causing less competition, higher food costs, and less diversity in food options. What the code of conduct hopes to achieve is to give smaller grocery chains a fair shot at both competing against big grocers and ensuring fair access to goods without having to accept unusually high prices by market dominators.
An Opportunity to Win the Policy Game for 2025
The federal government has a real opportunity to add more to the list of policy achievements they’ve mustered under their belt. The federal government already boasts policy improvements in healthcare, assisted suicide, child care, EV manufacturing, Senate reform, protecting Canada’s lands, historic investments in public transit, progressing with Indigenous reconciliation, protecting LGBTQ identities constitutionally, and the carbon tax, among others.
This could be yet another opportunity for Trudeau to address a lacking policy front in the country. If Canada were to get a national school food program and a grocery code of conduct, these would be two big-ticket policy items that Trudeau would flaunt and market in the next election. Against stronger than every opposition parties hungry to bring down Trudeau’s Liberals, any policy-based counterargument would greatly help in making the case for a 4th term for voters.
If a national school food program is instilled, families would greatly appreciate the time and cost savings of not making their children’s food that schools would instead provide for them. As for the grocery code of conduct, it would help as a policy argument against opposition parties who claim that the Liberals are in bed with the heaps of Canada’s grocery oligopoly. In either case, the potential for yet another policy win for the Liberals is in their grasp, it’s only a matter of recognizing and following through with it.
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