In Throne Speech, Tories to target Canada-U.S. consumer price gap

Share

The federal government will pledge action in the Throne Speech aimed at eliminating the gap between the sticker price of consumer goods sold in Canada and the U.S., sources say – part of a new populist agenda that will require little extra spending in cash-strapped Ottawa.

The Conservatives are targeting public frustration at the persistent premium Canadian consumers must pay for a range of brand-name goods, such as clothing, appliances, toiletries or books, compared with what Americans are charged for the same products. Canadian prices run as much as 15 per cent to 35 per cent higher for some purchases.

The Conservatives are playing up low-cost initiatives such as action on cross-border price differences because they've restricted spending to balance the books by 2015, expected to be an election year, and don't have the cash right now for major tax cuts or lavish program spending. There will be no major expenditures announced in the Throne Speech, sources say.

The Harper government will bestow honorary citizenship on Malala Yousafzai as part of throne speech on Wednesday, a senior government source said.

The prices pledge is one of a number of consumer-friendly measures to be announced Wednesday afternoon, including forcing television service providers to let subscribers pay for only those channels they want, as the Harper government tries to woo back disaffected voters while being dogged by a Senate expenses scandal.

Sources say the government is prepared to look at amendments to the Competition Act to scrap what it considers the unfair penalization of Canadian consumers. A September, 2012, Industry Canada document obtained by The Globe and Mail shows the Tories have also been looking at changes to the Copyright Act as well.

Government action to influence the price of goods might strike Canadians as out of place in the Conservative playbook but Prime Minister Stephen Harper's Tories are acutely concerned about dispelling the notion they're the party of "big business" as they target middle-class voters.

Prime Minister Stephen Harper is now into his eighth year in office and dogged by a Senate expenses scandal as opinion surveys show the Tories behind Liberal Leader Justin Trudeau in the polls. The next election in 2015 will see him ask Canadians to re-elect his party to government for a fourth time – a challenge for any leader.

Sources say the Conservative government "will take action to end price discrimination against Canadians" in the months ahead.

"The Harper government will focus on growing the economy, reducing costs and improving choice for consumers," a senior government source said. "We'll take action to make it easier for families to save more of their hard-earned dollars."

Intervening in prices would prove challenging for the Conservative government. The same September, 2012, Industry Canada document suggested there could be "unintended consequences" to cracking down on price differences – such as conflict with Canada's obligations under international trade agreements.

Ottawa does not currently regulate the price of consumer goods.

Legal experts, speaking on a not-for-attribution basis because precise measures have not been announced, said one possibility is the government might change the Competition Act to say that "abuse of a dominant position" would include "exploitative pricing" or, in effect, charging too much.

Sources familiar with the deliberations said two sections of the Competition Act where Ottawa may want to make changes are Sections 76 and 77 – that deal with practices such as "price maintenance" and "exclusive dealing."

The government took a stab at cross-border price differences in the 2013 budget when it eliminated tariffs on baby clothing and sports equipment – rates as high as 18 per cent for skates – to try to narrow the gap.

It's also considering extending this tariff relief to other consumer goods and is studying what impact the baby clothes and sporting equipment tariff cuts had on prices.

"Government, in consultation with consumer groups and the Retail Council of Canada, is actively monitoring the impact of these tariff reductions on retail prices paid by consumers," Marie Prentice, a spokeswoman for Finance Minister Jim Flaherty, said.

"This is significant, as this will allow the government to assess whether tariff elimination can help narrow the price gap for consumers in Canada, and will help inform future decisions on tariff relief."

In a series of interviews last weekend, Industry Minister James Moore also suggested the government may enact protections to prevent airline customers from being bumped from overbooked planes, clamp down on mobile roaming charges in Canada and control hidden credit-card fees.

Governor-General David Johnston will read the Speech from the Throne at 5 p.m. (ET) on Wednesday.