Governments in Canada maintain monopolies in certain sectors of the economy through regulations that advance private interests at an unreasonable cost to consumers, according to a report from the C.D. Howe Institute. In “Beer, Butter, and Barristers: How Canadian Governments Put Cartels before Consumers,” authors Robert Mysicka and Marty McKendry criticize the view, established by the courts, that regulations conflicting with competition law should be deemed to operate in the public interest.

For the report, go to: http://www.cdhowe.org/pdf/Commentary_382.pdf

“While many of these regulations are designed to correct market failures, they are inconsistent with federal competition law, which aims to promote economic efficiency by maintaining the integrity of competitive markets,” said Mysicka, a lawyer with Stikeman Elliott.

The courts have resolved this tension, the authors note, by developing the Regulated Conduct Defence (RCD) – an interpretive judicial doctrine that immunizes various regulatory regimes from the application of competition law.

The authors point to three examples of regulatory regimes that interfere with competitive forces but are immune from competition law: agricultural supply management, which imposes monopoly-like prices on consumers for milk and eggs; the near-monopoly on beer sales in Ontario, which can inconvenience consumers; and legal services, where high fees pose a problem for access to justice.

The authors propose: (i) clarifying the Competition Act’s application to regulated conduct; (ii) limiting the scope of immunity only to regulation that is minimally impairing to competition; and (iii) requiring the federal government to assess the competitive effects of all legislation prior to enactment.

These reforms will limit the extent of private monopolies perpetuated by government regulations and lead to lower costs for consumers.

For the report go to: http://www.cdhowe.org/beer-butter-and-barristers-how-canadian-governments-put-cartels-before-consumers/21750

For more information contact: Robert Mysicka, Marty McKendry, Stikeman Elliot LLP; or Benjamin Dachis, Senior Policy Analyst, C.D. Howe Institute. 416-865-1904; email: cdhowe@cdhowe.org

At a special Institute breakfast event at Toronto’s Verity Club, Craig Alexander, Senior Vice President and Chief Economist for TD Bank Group, addressed the implications of the remaining economic risk in the euro zone and the United States, and the implications for Canadian businesses and individuals.  Mr. Alexander is a highly respected economist and renowned speaker on the topic, and he will answer questions in an off-the-record format to ensure candid discussion.

Verity is Toronto’s only women-focused business, social, fitness and wellness club. Established in 2003, Verity provides insightful programs, a networking foundation to enhance women professionally and personally, as well as amenities highlighting the club’s supportive culture that allows women to better manage and lead their detail-oriented lives.

Born in Chilliwack, British Columbia, Wayne Smith completed an Honours B.A. and Masters degree in Economics at Carleton University in Ottawa.

His early career was in the library, academic and news media sectors.  In 1981, he joined Statistics Canada, working in the advisory services, communications, census and agriculture programs before becoming Director of Communications Division in 1990.  After assignments as Director of Special Surveys Division and Director General of Regional Operations Branch, he was appointed in 2004 as Assistant Chief Statistician, Communications and Operations

In April 2009, he became Assistant Chief Statistician of Business and Trade Statistics Field.  In this role, his principal responsibilities involved the conduct of Statistics Canada surveys and administrative data programs in the areas of agriculture, business, international trade and prices.  On September 2, 2010, by Order in Council, Wayne R. Smith was appointed interim Chief Statistician and confirmed as Chief Statistician of Canada on January 18, 2011.

John F. Helliwell is Senior Fellow of the Canadian Institute for Advanced Research and co-director of CIFAR’s program on “Social Interactions, Identity and Well-Being”. He is also Professor Emeritus of Economics at the University of British Columbia, a member of the National Statistics Council, and a Research Associate of the National Bureau of Economic Research. He was previously visiting special advisor at the Bank of Canada , visiting research fellow of Merton College in Oxford, of St. Catherine’s College in Oxford, and Mackenzie King Visiting Professor of Canadian Studies at Harvard. He has published numerous books and articles, and is a Fellow of the Royal Society of Canada and an Officer of the Order of Canada. Join us at the inaugural Scholars’ Dinner to hear from this leading academic on the interaction between research and actionable policy.

The Institute is launching the Scholars’ Dinner to recognize the significant accomplishments of its fellows and contributors. The Institute was able to expand its events programme to include this dinner series with a generous grant by Dr. Wendy Dobson, Professor at the Rotman School of Business and Co-Director of the Rotman Institute for International Business. In honour of the academic community, this dinner will be attended by Institute scholars, top academics, and industry leaders across many different policy areas and sectors.

After an extended period of record-low interest rates, the Bank of Canada should reverse some monetary stimulus and begin raising interest rates, according to economist Paul Masson. In “The Dangers of an Extended Period of Low Interest Rates: Why the Bank of Canada Should Start Raising Them Now,” published by the C.D. Howe Institute, Masson  argues there is urgency for the Bank to act in view of the economic distortions and  financial risks low interest rates pose for Canada.

For the report go to: http://www.cdhowe.org/pdf/Commentary_381.pdf

“We are building in pervasive problems for the economy,” notes Masson. “Below-equilibrium interest rates for an extended period distort investment decisions, leading to excessive risk taking and inefficient and ultimately unprofitable investments. They also encourage the formation of asset bubbles whose collapse could lead to a recurrence of the recent financial crisis.”

Interest rates in Canada and in many other countries have not been so low since the Great Depression, notes Masson. When taking into account inflation, short-term interest rates are negative in most developed countries, including Canada where the overnight rate currently stands at 1 percent in nominal terms.

Historically low rates in most developed countries were initially a response to the global financial crisis that broke out in 2008, says Masson.  Since then, output growth has resumed in the United States, but unemployment remains unsatisfactorily high. In the European Union, the recovery has been hampered by high public debt and fears of a breakdown of the euro area.

Canada, however, does not face the same problems as either the United States or the EU. Its financial system was exposed to a much lesser extent to complicated sub-prime, mortgage-backed securities, and its economic difficulties are nowhere near as pronounced. The downturn of output was less severe in Canada, and gross domestic product (GDP) has returned to a value closer to the economy’s capacity. These conditions do not justify Canadian interest rates that are so low relative to historical levels, adds Masson.

“Some of the symptoms of inefficient investment and asset price bubbles are already evident in Canada, in the housing sector for instance,” says Masson. “Low interest rates threaten the sustainability of pension funds and other institutions with long-dated liabilities. And Canadians are building up record-high levels of personal debt. While the government has tried to offset these effects with other prudential measures, the latter are not a substitute for removing excessive monetary stimulus. After five years of record-low rates, the time for the Bank to start raising rates is now.”

For the report go to: http://www.cdhowe.org/the-dangers-of-an-extended-period-of-low-interest-rates-why-the-bank-of-canada-should-start-raising-them-now/21724

For more information contact: Paul Masson, former economist at the IMF, the OECD and the Bank of Canada. Phone: 1-416-865-1904, or email: cdhowe@cdhowe.org

By Benjamin Dachis

The May 2 Ontario budget promised to introduce new toll lanes to replace traditional carpool lanes on some provincially operated freeways in the GTA. Although New Democrat Leader Andrea Horwath wants the government to drop the proposal and Toronto City Council also is opposed, such lanes would give drivers an excellent way to avoid congestion. The government should hang tough and keep high-occupancy toll (HOT) lanes in the budget.