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Government proves blissfully unaware of grocery industry

Many federal and provincial cabinet ministers suffer from a terminal case of “ignorance is bliss”.

Under the pretext of doing good for the population, they often come up with ideas for new regulations without any thought as to what impact their ideas will have on various segments of business.

Given some recent proposed legislation by both federal and provincial governments it is amply clear that the ministers responsible have absolutely no idea of how our grocery industry works, and they are completely unaware of the massive problems they can cause for small and medium-sized businesses including independent grocers.

For example, after years of lobbying the federal government reacted to requests to rein in massive credit card fees that cost Canadian retailers million of dollars each year.

But instead of following other countries, which have forced credit card companies to charge retailers 0.5% or less for card transactions, Ottawa kowtowed by allowing credit card companies to self regulate, and the card companies in response said they would make the average fee about 1.5%. Yikes.

Without legislation, credit card companies can still, and still do, charge up to 3% or more on the purchase price. Yes, that’s 3% on the purchase price, not per transaction.

The cowardly politicians in Ottawa are blissfully unaware that a card fee of 1% or more on the purchase price can eliminate the entire year’s profit of an independent grocer (who toil with average margins of 1% to 2%).

On the provincial level, the Ontario government has proposed two new initiatives which, on the surface seem good for the province, but completely ignore (in fact they penalize) small business and independent grocers.

The first is the proposal to allow beer to be sold in grocery stores. But instead of just leaving it at that, the Ontario Government has complicated the matter by introducing a whole bunch of new regulations. These start with limiting the number of stores that can be eligible to sell beer, without much thought given to the competitive nature of our industry (what happens if a Loblaw store gets a beer license when the Sobeys across the street can’t get one?).

Then there is the matter of an auction to determine which stores get a licence; that will cost the stores a pile of money. There is also the issue of size of store and the size of the beer section, and how that beer section will be operated. Is it separate from the store selling area, does it need a separate cash register, what about open hours?

These matters are being hashed out right now, but it looks like independent grocers will be on the short end of the stick. The Canadian Federation of Independent Grocers has made a presentation to the Ontario government outlining their concerns. We have yet to hear what the final verdict will be.

And, of course, there is the widely touted (by politicians) Ontario Retirement Pension Plan which is supposed to supplement the Canada Pension Plan.

The Small Business Matters Coalition and CFIG have made presentations to the provincial government opposed to the plan on the basis that it would cost individual retailers 1.9% on top of their wages, which amounts to a new tax of 1.9%.

Many small businesses and particularly independent grocers cannot afford to pay another 1.9% on top of all the costs they incur for things like labelling, and rigorous food safety regulations which are just two examples.

The Financial Post recently carried an editorial outlining 10 reasons why the pension scheme should be killed, including the fact only portions of the population would benefit. It is unneeded for four-fifths of workers who already have sufficient savings for retirement, it doesn’t target lower income people who need it the most , middle class people will be hurt as Old Age Security payments are clawed back, and, it will be expensive to administer as people who move in and out of the province will have to be tracked.

Why don’t governments think these things through first and consult the stakeholders first before trying to make political hay with their announcements?

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