Federal budget to include promise to take on Canada-U.S. price gap: Official

OTTAWA – The governing Conservatives will use Tuesday’s federal budget to unveil a crackdown on multinational companies that charge Canadian customers more than Americans on everything from books to clothing and appliances.

Finance Minister Jim Flaherty’s budget will include a promise of legislation to stop “country pricing” — when multinational brands set different prices in Canada and the United States, a government official told The Canadian Press.

The official, who spoke on condition of anonymity in advance of the budget’s release, said the legislation will address the price gap and empower the country’s competition commissioner to enforce the new rules.

The government also intends to monitor whether last year’s elimination of tariffs on baby clothing and sports equipment — some of them as high as 20 per cent — is being passed onto consumers at the retail level.

A recent report by the Retail Council of Canada, which has worked with the government to tackle country pricing, concluded the tariff cuts have resulted in lower prices for consumers.

But the Consumers Association of Canada has expressed skepticism about whether such steps do indeed cut costs and Flaherty is not expected to chop any more tariffs.

The new initiatives are part of the government’s effort to respond to consumer complaints about higher costs, price-gouging and price discrimination, the official said.

But the no-cost commitment also dovetails with what’s shaping up to be the budget’s underlying theme: demonstrating to voters that the government is taking action to help them, but with precious little new spending.

The Tories’ pre-budget media blitz has been peppered with a number of such low-cost pledges, such as legislation to enshrine balanced budgets and tighter rules for charitable status to curb the link between charities, terrorists and organized crime.

Ottawa is also promising $800,000 to help skilled newcomers to Canada find work in their fields as part of a larger, job-centred effort that’s expected to be one of the budget’s key planks.

They have previewed more expensive promises, but only those that either delay spending — the government’s income-splitting promise, for instance, was contingent on a balanced budget — or spread it out over several years.

Flaherty said there will be money for major infrastructure projects, which would likely include Toronto-area subways, replacing Montreal’s Champlain Bridge, building a second bridge between Detroit and Windsor, Ont., and Vancouver’s Evergreen Line — all of which were highlighted in last October’s throne speech. But the $70 billion will be spread out over the next decade.

Last week, Prime Minister Stephen Harper made the marquee announcement of a long-awaited plan to rework native education, promising $1.9 billion over several years. But money won’t start flowing until 2016, when the Tories expect to have a fresh electoral mandate and some cash to spend.

Both CBC and the Globe and Mail have said the budget will include plans to extend or improve high-speed Internet access to 280,000 households and businesses in rural and remote areas. It’s expected to be comparable to a previous $225-million program, with the cash spread out over several years.

And the Tories have a brand-new revenue source to tap: the Commons finance committee has recommended that such projects be funded through the proceeds from the 700-megahertz wireless auction. The last auction raised $4.3 billion.

But the road to balancing the budget in 2015 will come at a price, one that will likely require some number crunching.

Treasury Board President Tony Clement, who has sparked a war with public sector unions in his quest to cut costs, has outlined proposed changes to sick leave policy, which would include five to seven sick days a year, a short-term disability leave of a week to six months and long-term leave for more than six months. The changes would also eliminate bankable sick days.

Flaherty has insisted he won’t balance the books by cutting transfers, but two of the country’s most populous provinces are already waving red flags.

Premier Kathleen Wynne is demanding that Flaherty compensate Ontario for slashing $641 million from its equalization payments, while Quebec’s Parti Quebecois government warned against any “ugly surprises” in this year’s budget that could provoke new squabbles. Both minority governments seem to be headed for elections this spring.

Harper is also trying to claw back millions of dollars Ottawa gives the provinces for a contentious new federal jobs training scheme that’s yet to be created, said Liberal MP John McCallum.

“I do think he’s showing signs of riding roughshod over the provinces in his efforts to balance the federal books as quickly as possible,” McCallum said.

The Liberals wouldn’t say that Flaherty should delay his self-imposed deficit slaying deadline, which some groups say should be considered to avoid stifling the country’s fragile economic recovery. But there’s concern that the Tories are playing with the numbers and simply not spending the money they’ve promised in the budget.

“That’s a great hocus-pocus sleight of hand that really raises serious doubts about the government’s arithmetic,” said deputy Liberal leader Ralph Goodale, a former finance minister.

The Conservatives patted themselves on the back for eliminating some tariffs in last year’s budget, but also hiked duties on imported goods from more than 70 nations, including China, to help bring down the deficit. That move was estimated to have cost Canadians $330 million in higher retail prices.

Flaherty has hinted for months that a crackdown on companies taking advantage of the Canada-U.S. price gap would be in the cards.

Following the throne speech, Flaherty said officials in his department were sitting down with major retailers to determine why Canadians are charged higher prices on an array of goods.

A Senate finance committee report released last year, however, suggested several complex factors were to blame for price differences between Canada and the U.S., including higher transportation costs in Canada, more onerous packaging requirements, disparate provincial regulatory requirements, a smaller Canadian consumer market — and tariffs.