In an economy where the government tries to regulate all areas of business, no one benefits, said Member of Parliament Brent Rathgeber. He spoke at a business lunch hosted by the St. Albert Chamber of Commerce on April 8.
Rathgeber, who will be running as an independent in the next federal election, said the Canadian government created a highly-regulated business environment meant to assist business and consumers. This system is largely unsuccessful, "especially in terms of cost-benefit analysis," he said.
Losing money to corporate bailouts
Rathgeber said the government continues to pour tax dollars into supporting private business through industrial subsidies and corporate bailouts. But subsidies create neither jobs nor economic growth, he said. They remove wealth from well-functioning parts of the economy and place them into parts that don't work as well, he said.
Last year, Industry Canada gave $22.1 billion to "support private, for-profit business that apparently required subsidy in order to survive." Another $8-billion was given out as grants, which means the money won't be repaid, he said. Recipients included a bakery in Edmonton that wanted to develop gluten-free products, he said.
Numerous grant recipients also receive more than one grant "indicating that the subsidies become permanent, reliance is developed, and recipients grow dependent on them," he said
"Why would you run your business more efficiently if Industry Canada has a program to subsidize your inefficiency?"
Compromising economic growth
While the government reallocates tax dollars to help struggling business, it compromises economic growth and expansion in other areas, such as the telecom market, he said.
Big telecom players, such as Verizon, refuse to come to Canada because they are "simply not interested in a market which is so aggressively regulated against the people who are already in the market," he said.
With no new competitors, cellphone bills remain high. The government offers no solution but in response attacks existing phone companies for their "cellphone price discrimination."
Other businesses face similar problems, said Rathgeber.
Consumer goods are known to be cheaper in the U.S., which causes Canadian retailers close to the border to lose millions in revenue each year. Rathgeber said market forces are likely causing the higher costs.
But in response to consumer complaints, the government developed an officer in the competition bureau to investigate so-called "cross-border price gauging." The officer has no power of enforcement if he finds price discrimination but causes bureaucratic costs by forcing business to hand over confidential info, he said.
"The government will publicly shame you if you charge a higher price than an American competitor. However, if you charge a lower price then they call it dumping," he said. "Merchants cannot win when facing bureaucratic double speak."
Foreign investment
And it's not just Canadian businesses that struggle with government regulations, he said. Foreign investors are often deterred from entering the market because of the government's need to regulate how Canadian business is managed and sold abroad.
Tim Hortons takeover by Burger King, for example, was approved under the condition that Tim Hortons head office remains in Ontario, that half of the board of directors remains reserved for Canadians, that staff are retained and that Tim Hortons maintains all of its charitable work.
"I can't imagine a business that wants to have its charitable work dictated by the government," said Rathgeber.
The government also has a mandate to block foreign investment of significant size if it doesn't present a net benefit to Canada, he said. But net benefit and "significant" are not defined, he said. "Industry Canada is simply making it up as it goes along," he said.
"Potential investors want certainty of rule. And in a country that desperately needs foreign capital we ought to provide it."
Rathgeber concluded that in trying to regulate business, the government created a system that does not allow for a free market. Instead, many Canadian businesses and industries "feel powerless and overwhelmed by the counterintuitive and counterproductive decisions made by their government."
