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Government Watch News



Government Watch
  (September-October 2013 Report)
 


NEW TOPICS IN THIS ISSUE:

• CHHMA (CEWRO) to Meet with Ontario Government Representatives to Review Concerns over Bill 91 – The Proposed New Waste Reduction Act 
• The Canadian Stewardship Services Alliance (CSSA) to Harmonize Consumer Packaging and Printed Paper Stewardship Programs Across the Country
• Federal Throne Speech Promises to Close Cross-Border Price Gap


CHHMA (CEWRO) TO MEET WITH ONTARIO GOVERNMENT REPRESENTATIVES TO REVIEW CONCERNS OVER BILL 91 - THE PROPOSED NEW WASTE REDUCTION ACT       

CHHMA President Vaughn Crofford along with other members of the Coalition for Effective Waste Reduction in Ontario (CEWRO) will be hosting a meeting on December 4, 2013 at the Ontario Legislature to express industry’s (stewards) views and concerns on Bill 91. Members of Parliament from all parties as well ministers and staff from several departments, including the Ministry of the Environment, will be invited to attend and meet with members of the coalition. This legislation is now going through second reading and could be sent to committee any day now.   

As you may recall, on June 6, 2013, Ontario’s Minister of the Environment (MOE) introduced Bill 91, the proposed Waste Reduction Act, to establish a new framework and strategy for reduction, reuse and recycling in the province. (For some further background info, please refer to the CHHMA May-June Government Watch report: https://www.chhma.ca/Public/Page/Files/361_chhmagovwatch_mayjune13.pdf)

However, if passed, this Bill will create a new level of bureaucracy and will give municipalities considerable authority over producers (brand owners and retailers) and enable them to implement whatever program they want in their municipality and bill back the costs to the producers. Industry will have no say in how things are done and no control over the costs.

The CHHMA, along with 24 other industry associations, have joined together to form CEWRO, which collectively represents more than 51,000 businesses in Ontario and contributes more than $400 billion and 1.1 million jobs to the Ontario economy.

On September 4, 2013, CEWRO forwarded a submission to the Ontario MOE expressing the Coalition’s concerns over Bill 91 and the Government’s new waste reduction strategy. The submission also presented specific changes and additional options that the Government should consider in regards to the new legislation.

A full copy of the submission can be viewed at:
https://www.chhma.ca/Public/Page/Files/37_Bill%2091%20CEWRO%20Submission%2026Aug2013.pdf

The Coalition has stressed that its members fully endorse the concept of full producer responsibility for the end-of-life management of products and packaging but that in the view of CEWRO, Bill 91, as currently drafted, would create unnecessary costs, confusion and complexity, and lead to set backs, rather than progress, in Ontario’s efforts to divert materials from disposal.

The chief concern of the Coalition is that the new Bill would transfer 100% of the cost of end-of-life management to producers, while at the same time locking producers into arbitrary relationships with municipalities that would restrict market operations, impair innovation, and perpetuate the confusion and uncertainty among stakeholders in the current system.

Other concerns regarding the Bill are that:

· Bill 91 would prevent the use of visible fees to recover IPR costs. This would eliminate a valuable tool for consumer education. It would force the use of hidden fees, which generate artificial inflation as they are marked up through the supply chain, and create potentially costly complexities for companies with national pricing strategies. The flexibility to use visible/transparent fees should be retained.

· Bill 91 would cause confusion regarding the legal responsibilities and liabilities of participants in Ontario’s waste reduction programs. The definitions of “producer” and “intermediary” are incomplete and the responsibilities of both entities are unclear. The ownership of material at various points in the recovery process is uncertain. All such matters must be clarified to prevent problems and enable smooth program operation.

· Bill 91 would establish a Waste Reduction Authority (WRA) with an unnecessarily broad range of responsibilities. CEWRO members question the need for a new Authority of this kind. Functions such as monitoring and enforcement can be managed directly by the Ministry, in a manner similar to other provinces. Other proposed functions such as the determination of “reasonable costs” should be left to the market place. A quasi-government authority as contemplated in Bill 91 would face significant challenges related to governance, resourcing, cost control and the safeguarding commercially sensitive information.

Other submission comments regarding the new Waste Reduction Strategy include:

- The proposed designation of ICI printed paper and packaging should be reconsidered. Generator-focused 3R’s regulations offer a better way to address ICI waste diversion.

- There should be no “special status” for municipalities in the collection and processing of ICI materials. This would add further to the confusion and potential conflict among producers, municipal service providers and private sector service providers.

- The range of materials designated for Blue Box collection should be harmonized across Ontario, and ultimately throughout Canada, to support efficiency and consumer education.

- Disposal bans should be implemented where sustainable alternative diversion options are available.

- Energy recovery from waste (EFW) should be recognized as a legitimate diversion option after other options in the “4 Rs” hierarchy are exhausted, as per the CCME EPR Policy Framework.

- A robust waste flow data tracking system, such as the Municipal Datacall, should be maintained by the Ministry of Environment, to provide the on-going data needed for good policy development.

The submission stated that CEWRO believes the role of the Government of Ontario in producer responsibility should include setting collection and recovery targets for designated materials, establishing service standards for accessibility, convenience and public education, and providing monitoring and enforcement functions. Decisions concerning how targets are achieved and standards are maintained should be left to the obligated producer. Fees should also be set directly by producers.

Bill 91 already anticipates that many critical issues such as targets and standards will be implemented through regulations. The submission expressed the Coalition’s concern, shared by other stakeholders, that it is critical for there to be fair, meaningful and transparent consultations as part of the process of drafting regulations.

We will keep you updated on this important new legislation


THE CANADIAN STEWARDSHIP SERVICES ALLIANCE (CSSA) TO HARMONIZE CONSUMER PACKAGING AND PRINTED PAPER STEWARDSHIP PROGRAMS ACROSS THE COUNTRY 

Over the past decade, in jurisdictions across Canada, a shift is taking place in the assignment of responsibility for the management of post-consumer packaging and printed paper from government to manufacturers – a shift toward Extended Producer Responsibility (EPR). In Canada EPR programs are multiplying across provinces each with distinctive features and unique requirements. This is quickly creating a growing administrative burden for manufacturers and retailers and unnecessarily escalating costs as full-service stewardship organizations are established in each province. A significant opportunity exists for enhanced coordination of these programs that can deliver efficiencies for stewards, provincial stewardship organizations and various levels of government.

To this end, a number of retail and consumer packaged goods companies have come together to form the Canadian Stewardship Services Alliance (CSSA) – a national non-profit organization whose members comprise the various Blue Box (printed paper and packaging) provincial stewardship organizations across Canada.

The CSSA will be a ‘one-stop shop’ point of entry for steward needs. Through CSSA businesses will need to interface with only one national organization to discharge all of their provincial stewardship obligations including reporting and payment of fees. In addition, CSSA will develop national standards and benchmarks for controlling fees and costs and take measures to align various provincial programs across standard financial and other performance benchmarks. CSSA will offer a coordinated resource for governments as they formulate policy and regulatory frameworks around EPR as they relate to printed paper and packaging in Canada.

The CSSA is in its early design phase and recognizes that input from a variety of perspectives is required to create an organization that is able to deliver on these objectives. Over the coming weeks CSSA will consult with stakeholders to solicit their input including key trade associations and their members as well as provincial stewardship boards and organizations.

The CSSA is taking steps to operationalize quickly in order to minimize costs and complexities associated with implementing the Multi-Material British Columbia stewardship program by May 2014.

The CSSA will be scheduling meetings with various organizations and businesses impacted by packaging and printed paper stewardship programs in the near future.

We will keep you updated on the progress of the CSSA’s initiatives.

In the meantime, if you have any questions, suggestions or concerns, please feel free to contact John Coyne, Vice President, General Counsel, Unilever Canada Inc., on behalf of the CSSA Board at john.coyne@unilever.com

 

FEDERAL THRONE SPEECH PROMISES TO CLOSE CROSS-BORDER PRICE GAP 

October 16th’s budget-focused Federal throne speech promised, among other things, to take steps to close the gap between prices for goods purchased in Canada as compared to the United States.

Governor General David Johnston made mention of an effort to "take further action to end geographic price discrimination against Canadians" in the speech laying out the government’s agenda for the next session of Parliament but failed to outline specific policies to do it.

Canadians “should not be charged more in Canada for identical goods that sell for less in the United States,” the government said.

Many bank studies (including a report from the Bank of Montreal – see details at the end of this article) show prices in Canada are about 10% more than in the U.S. The gap has led to accusations of retail gouging and driven Canadians to shop across the border or buy online from U.S. retailers. Canadian merchants counter that higher wholesale prices and tariffs imposed by Ottawa at the border drive up the prices Canadians pay at the cash register.

David Wilkes, senior vice-president at the Retail Council of Canada, said he wants to know what the government’s next steps are to make good on its pledge to get rid of the price gap. “We would always welcome more detail,” he said.

The council and other industry players have pushed Ottawa to slash tariffs and harmonize labelling and safety standards with the United States if it wants to narrow the premium Canadians pay for goods compared with Americans.

A Senate report on the price gap in February blamed less competition between retailers and said the federal government should cut tariffs to give consumers a break. The report also called for a harmonization of product safety standards, cutting the 10% mark-up on imported books and raising the $20 limit on goods that are exempt from customs fees charged by couriers.

The Senate studied prices of everything from skates to cars, but said it fell short of discovering the definitive reason why Canadians pay more than Americans do.

One expert says the government's options are limited.

“The best they can do is create an environment that is more conducive to competition and to reduce trade friction. That is bring down barriers and [allow] more items back duty free,” Werner Antweiler, of UBC’s Sauder School of Business, said.

Stephen Gordon, an economics professor at Laval University, said the government should remove obstacles that drive up costs, but should not impose price controls.

“We think we have free trade [with the United States] but we seem to have a whole whack of tariffs and fees,” said Mr. Gordon, adding some price gaps are normal, as a result of costs and market characteristics that vary by region.

Retailers say that they have little choice but to charge higher prices in some cases because wholesalers charge Canadian stores more for goods than U.S. ones. Mr. Wilkes said he hopes the federal government will use the Competition Act to target suppliers that use so-called “country pricing,” or charging different prices to retailers in different countries.

He said Canadian retailers face higher costs than their U.S. counterparts for such things as transportation and healthcare, but they are often baffled by higher invoice prices on imported goods. “Some of it may be justifiable but a lot of it we don’t understand,” he said.

Tom Velk, an economics professor at McGill University in Montreal, said eliminating tariffs to spur trade is an “easy” way to improve the economy and raise standards of living.

Ottawa in the spring reduced the tariffs on baby clothes and hockey equipment, which had an immediate impact on the prices Canadians pay.

Sebastien Galy, a currency strategist with Société Générale SA, said if Ottawa slashes more tariffs it will have a wider deflationary impact, boost real disposable incomes and allow the Bank of Canada to keep interest rates low for a longer period of time.

“The real problem in Canada is lack of productivity relative to the U.S., but none of the decisions at the [Throne Speech] seem to address this,” Mr. Galy said.

Still, a strong Canadian dollar is making it tough for the federal government to reduce the premium consumers pay for goods, said Doug Porter, chief economist at BMO Nesbitt Burns.

“The reality is that there is no easy or magic solution, where Ottawa could just pull a lever and – poof – the gap would vaporize. ... The only thing that could do that would be an abrupt drop in the value of the Canadian dollar,” said Mr. Porter, noting a 5% decline in the loonie would lead to a corresponding drop in the price of goods.

The global commodities boom has helped keep the Canadian dollar higher than 95 cents (U.S.) for more than four years, hampering exports while driving up prices relative to those in the United States.

A recent study published by think tank World Economics said the Canadian dollar is overvalued by 10 per cent. Mr. Porter agrees.

“If the currency did drop below 90 cents, this would be a non-issue. This whole concern about the price gap would vaporize,” he said.

For some, though, bargain hunting across the border has become a necessity.

Dawn Glezos has a family of five young boys and says every discount she gets by shopping in the United States adds up fast. Diapers, for example, cost her $19.99 US when ordered online through Amazon.com, whereas the same product is 10 dollars more in Canada, she said.

“I can feed my kids more. They're happy, I'm happy and our budget is happier,” Glezos told the CBC’s Chris Brown.

But with a big family to feed and clothe, Glezos says the gap would have to shrink a lot to change her shopping habits.

“I'm not that hopeful,” she said.

Canada-U.S. Price Gap Narrows Somewhat in Latest BMO Report
A report from BMO Nesbitt Burns showed the price gap on a basket of goods - it describes it as a “semi-random” sample – has narrowed somewhat to 10% from 14% when it last sampled cross-border prices in May of 2012.

But BMO chief economist Douglas Porter said the drop is mainly attributable to a modest decline in the value of Canadian dollar over the same period.

“It’s entirely the currency,” Mr. Porter said. “The underlying gap hasn’t really changed in the past year.”

“While the high-flying currency has lost some altitude in the past year – it’s down about 4 per cent this year – the slide has largely stalled in recent months at levels still above what we would consider fair value, let alone the OECD’s measure of purchasing power parity,” Mr. Porter said, adding he expects the Canadian dollar to weaken, averaging 95 cents U.S. next year, but to only a bit below where it currently stands.

One of his interesting findings is that, while goods such as cars and books have seen some “notable narrowing” in the past six years, Target Corp.’s “much-ballyhooed” jump into Canada has had a limited effect on prices.

Target Canada president Tony Fisher has blamed a combination of higher transportation costs, wages, tariffs and Canada’s thinly-spread population for the chain’s inability to match prices available in the United States.

BMO also found that Ottawa’s removal of tariffs on select baby and sporting goods in the March federal budget had “only a limited impact – unsurprisingly, given their targeted nature.”

Ottawa is now reportedly considering the possibility of extending tariff cuts to other items, part of what is expected to be a new focus by the Conservative government on the consumer to be outlined in the Throne Speech later this month.

“This is another small step in the ‘right’ direction, but not enough to alter the underlying fundamentals facing the economy,” said Mr. Porter, who has tracked the price gap for several years.

“One of those lingering fundamentals is that the Canada-U.S. price gap remains locked in place, still drawing a phalanx of cross-border shoppers southbound from Canada,” he added.

Mr. Porter found a gap of 34% on baby items, 19% on running shoes, 14% on hardware, 13% on housewares and 10% on magazines.

Autos and digital cameras are 6% higher in Canada, electronics 3%, and sporting goods 1%.

Good news for the tech crowd: Tablet computers are 2% less.

A Senate report earlier this year concluded that the price gap is a function of a multitude of factors, including economies of scale, the larger U.S. market, transportation costs and so-called country pricing phenomenon that leads many retailers to charge more for brand-name items in Canada. (Click here for further info on the Senate report: https://www.chhma.ca/Public/Page/Files/361_chhmagovwatch_janfeb13.pdf)

Mr. Porter pointed out that Canada’s consumer price index is up 0.6% in the past year, compared to 0.1% in the U.S.

Over the longer haul, however, Mr. Porter said prices are narrowing. But he said it is very gradual and concentrated in a few high-profile categories, including cars and books, where there has been a “notable” narrowing in the six years that BMO has been tracking prices.

“Consumers are better informed and are demanding more competitive prices,” Mr. Porter said. “Some of it is happening because of consumer pressure.”

This, of course, affects how and where we shop, and the suggestion is that many of us are heading to malls such as those in Buffalo, N.Y., and Bellingham, Wa.

“With the price gap remaining substantial, the tourism deficit continues to groan,” said Mr. Porter.

“Over the past year, the travel deficit totalled nearly $18 billion, or roughly 1% of GDP. In the decade before the currency first hit parity in 2007, the tourism shortfall averaged less than 0.3% of GDP per year.” 


FEDERAL GOVERNMENT HIRES NIELSON FIRM TO DETERMINE IF CONSUMERS GAIN FROM RECENT TARIFF REDUCTIONS (AUGUST 7, 2013)

No further update.  Click here to see previous article.

REPORTING TO START IN SEPTEMBER FOR MULTI-MATERIAL BRITISH COLUMBIA'S PACKAGING AND PRINTED PAPER STEWARDSHIP PROGRAM (JULY 31, 2013)

No further update.  Click here to see previous article.

HEALTH CANADA SENDS OUT GUIDE ON NOTICES OF VIOLATION AND ADMINISTRATIVE MONETARY PENALTIES UNDER THE CANADA CONSUMER PRODUCT SAFETY ACT (JUNE 11, 2013)

No further update. Click here to see previous article.

ÉCO ENTREPRISES QUÉBEC HOLDS ANNUAL GENERAL MEETING AND OUTLINES MAJOR ACHIEVEMENTS DURING 2012 AND FUTURE OBJECTIVES (APRIL 26, 2013)

No further update. Click here to see previous article.  

2013-2014 FEDERAL BUDGET HIGHLIGHTS (MARCH 21, 2013)  

No further update. Click here to see previous article.

HEALTH CANADA SEEKS FEEDBACK ON GUIDELINES ON MANDATORY INCIDENT REPORTING UNDER THE CANADA CONSUMER PRODUCT SAFETY ACT (MARCH 21, 2013)

No further update. Click here to see previous article.

ONTARIO MINISTRY OF CONSUMER SERVICES LOOKS FOR COMMENTS ON PROPOSED AMENDMENTS TO EXEMPT CONSUMER ELECTRICAL PRODUCTS FROM PRODUCT SAFETY REGULATION UNDER THE ELECTRICITY ACT (MARCH 12, 2013)  

No further update. Click here to see previous article.

SENATE COMMITTEE REPORT ON CANADA-U.S. RETAIL PRICE GAP CALLS FOR REVIEW OF TARIFFS IN ADDITION TO OTHER RECOMMENDATIONS (FEBRUARY 6, 2013)

No further update. Click here to see previous article.

FEDERAL GOVERNMENT MOVES TO STREAMLINE R&D TAX CREDIT PROGRAM (JANUARY 24, 2013)

No further update. Click here to see previous article.
 
OTTAWA PROPOSES AMENDMENTS TO THE GENERAL PREFERENTIAL TARIFF (GPT) FOR DEVELOPING COUNTRIES (JANUARY 16, 2013)
 
No further update. Click here to see previous article.
 
ONTARIO COMPANIES NEED TO COMPLY WITH NEW ACCESSIBILITY STANDARD FOR CUSTOMER SERVICE (NOVEMBER 30, 2012)

No further update. Click here to see previous article.  

RETAIL COUNCIL TAKES LANGUAGE BATTLE OVER STORE SIGNS TO QUEBEC SUPERIOR COURT (NOVEMBER 27, 2012)   

No further update. Click here to see previous article. 

CHHMA MAKES PRE-BUDGET SUBMISSION TO THE FEDERAL STANDING COMMITTEE ON FINANCE (AUGUST 31, 2012) 

No further update. Click here to see previous article.

‘ELECTRORECYCLE’ SMALL APPLIANCE & POWER TOOL RECYCLING PROGRAM EXPANDS IN B.C. (JUNE 30, 2012)

No further update. Click here to see previous article.

CROSS-BORDER SHOPPING EXPECTED TO RISE THIS SUMMER UNDER NEW DUTY-FREE RULES (JUNE 27, 2012)

No further update. Click here to see previous article.

FEDERAL GOVERNMENT TIGHTENS MORTAGE RULES (JUNE 21, 2012)

No further update. Click here to see previous article.  

CCPSA REGULATIONS WILL HAVE TEETH (MAY 14, 2012)

No further update. Click here to see previous article. 

BUDGET BILL GIVES OSFI OVERSIGHT OF CMHC (APRIL 26, 2012)

No further update. Click here to see previous article.

CHANGES TO THE REGULATIONS FOR FINANCING EPR PROGRAMS IN ONTARIO, AMOUNTS TO THE GOVERNMENT FORCING BRAND OWNERS AND RETAILERS TO BURY THE COSTS IN THE PRICE OF GOODS AND REMOVE VISIBLE FEES. BY VAUGHN CROFFORD, PRESIDENT - CHHMA (FEBRUARY 29, 2012) 

No further update. Click here to see previous article.

ONTARIO JOINS FEDERAL GOVERNMENT IN DELAYING INCANDESCENT LIGHT BULB BAN (DECEMBER 21, 2011) 

No further update. Click here to see previous article. 



 

Canadian Hardware & Housewares Manufacturers Association | 1335 Morningside Ave., Suite 101, Scarborough, ON M1B 5M4
Telephone: (416) 282-0022   Email: pwinter@chhma.ca