Canada is poorly equipped to deal with emerging issues affecting consumers, after decades of uneven government attention and a weakened advocacy sector.
How nations approach consumer issues, and the administrative and legal regimes they put into place, is almost always a reflection of their unique economic, political and social history. Canada is no exception to that rule. In fact, its circumstances, particularly since the 1980s, have led to an approach to consumer protection issues that is less than optimal.
The Second World War and the new consumer marketplace
The federal government’s involvement in consumer issues goes back to the last war, with direct government management of the consumer marketplace through production allocation, rationing and price controls. As Robert Kerton said in “Canadian Consumer Movement,” his contribution to Watchdogs and Whistleblowers: A Reference Guide to Consumer Activism, many women volunteers were used by government during the war to assist with such things as rationing and price monitoring. They made up the core of the Canadian Association of Consumers (CAC), formed in 1948 during the massive conversion of a wartime economy to a civilian one.
The association lobbied vigorously and effectively after the war for consumer issues ranging from food quality and prices to product safety. When a wave of consumer activism struck the West in the 1960s, Canada was well placed: it had an effective NGO organization with chapters in every province, as well as a well functioning and professional national organization that could focus and lead public opinion. Like its US counterpart, the Consumer’s Union, the CAC began publishing a consumer magazine, Canadian Consumer, which featured product tests and articles on consumer issues in the marketplace. At its peak membership in the early 1980s, it is estimated that the CAC had well over 160,000 members and magazine subscribers and many policy victories to its credit, especially dealing with issues such as food safety and food prices.
A federal department for consumer affairs
As a result of growing pressure for a more activist government response to protect consumer interests in the marketplace, in 1967 the Liberal government of Lester Pearson created the Department of Consumer and Corporate Affairs (CCA). At that time, with the first government to have a minister at the cabinet table designated to represent consumers, Canada was seen as a world leader in consumer protection.
The new department was an amalgam of agencies and units from a number of departments and agencies that dealt with a broad range of marketplace regulatory functions. These included corporate governance, copyright and intellectual property issues (for example, patents), restrictive trade practices (what we call competition policy today), and bankruptcy law. But with its focus on consumer product safety, food and consumer product labelling, misleading advertising, enforcing weights and measures, informing consumers and supporting consumer organizations, the impetus of the new department was unquestionably consumer protection.
The legislation gave the minister and department a direct mandate to undertake programs to promote the interests of Canadian consumers, to coordinate government programs in support of the consumer, and to collaborate with provincial governments. Major legislative reforms followed, including the passage of acts relating to hazardous products, and food and product labelling.
Not long after CCA’s creation, provincial governments started to establish their own consumer protection ministries and agencies, led by Ontario and Quebec. This was hardly surprising, given that under the property and civil rights section of the Constitution Act, provincial governments are responsible for a wide range of consumer protection issues dealing with the sale of goods and services in the marketplace.
Consumer movement on the decline
This relatively activist state of affairs did not last long and, by the late 1980s, a process of retrenchment was underway. One reason for this was the inevitable slowdown that occurs when a backlog of obvious problems is cleaned up and the impetus for action diminishes. But it also reflected more profound changes in the political culture and economic circumstances of the era. Governments in Western industrialized countries were overextended and in serious debt, and annual deficits in Canada were climbing dramatically. It was more difficult to find resources to deal with new issues, and even maintaining the social safety net was in question.
As well, there was a growing ideological commitment to smaller government, with agendas to reduce intervention in the economy, privatize and rely more directly on market forces to achieve policy objectives. In Canada this approach was expressed in the Royal Commission on the Economic Union, the Macdonald Commission, which had a significant impact on the federal government’s approach to economic policy and management. Questions were raised about whether cumbersome regulatory regimes to protect consumers were necessary, or whether companies would simply do the right thing to avoid class action lawsuits or hits to their reputation.
By the early 1990s the major advocate for consumer protection, the consumer movement, was in decline. Up until the mid-1980s, Canada had followed the same model as most advanced industrial countries, with a single national consumer organization (CAC) that increased its membership and lobbying efforts by publishing product testing and consumer information magazines. By following this model, the Consumers Union in the US (with Consumer Reports magazine), the Consumers Association of Great Britain (with Which?), and similar organizations throughout Europe, had considerable success. Today the Consumer’s Union with Consumers Report has an operating budget of over US$240 million, and its UK counterpart has 1.5 million members and an annual budget of £100 million.
In Canada, the reverse happened. The CAC’s membership, which peaked in 1982, steadily declined thereafter. It ceased publishing its magazine in the early 1990s and, as a result, failed to recruit new members to replace the large cohorts who had joined its ranks in the postwar years. Now, while it is still active on consumer issues, especially in the media, it no longer publishes its membership numbers or its financials.
What seems to have happened, especially in English Canada, is that much smaller organizations have sprung up to fill the vacuum. Some, for instance the Ontario-based Consumers Council of Canada, deal generally with consumer issues, and some, like the Public Interest Advocacy Centre, focus on with consumer issues related primarily to regulated industries. Others deal with privacy or Internet issues (Open Media).
In Quebec, with two relatively well-organized consumer groups ─ Option consommateurs and Union des Consommateurs ─ the movement is more robust and centralized. Both these organizations serve on the advisory board of Quebec’s consumer agency, the Office de la protection du consommateur. In addition, francophone Quebecers have access to the services of their own product testing magazine, Protegez-vous, which has a large circulation in the province, both online and in print. Nevertheless, in terms of membership and budgets consumer organizations across Canada and in Quebec are miniscule compared with the resources and lobbying capacity of their counterparts in the US or the UK, even accounting for the differences in population.
Splintered responsibility and attention in Ottawa
Given the decline of the consumer movement over the previous 30 years, it was probably hardly surprising that when the federal government undertook to reorganize its departmental structure in 1993, it did not seek and therefore received little feedback from the public or consumer groups on the implications for consumers. The purpose of this reorganization was to create larger, more comprehensive departments capable of dealing with policy fields that spanned those of the former departments it replaced.
For its economic development policy, the government merged CCA and the Department of Communications and Industry, Science and Technology Canada to create the Department of Industry. The minister of the amalgamated department thus had broad powers to deal with the new economy. The consumer functions of CCA were spread throughout the federal government: some were lodged in different parts of the new Industry Department and other functions were given to departments such as Health (product safety), the Canadian Food Inspection Agency (food labelling and safety) and others. The approach behind the reorganization was to mandate ministers to deal with the consumer issues in their own departments. Thus the minister of transport would be responsible for consumer issues in the areas of auto safety, airlines and passenger rail, and the minister of finance would be responsible for consumer issues in federally regulated banks.
There was some merit to the idea that putting responsibility into the hands of ministers who were engaged and knowledgeable about the industry or area that most affected consumers would result in more effective outcomes (particularly compared with the potential ineffectiveness of a CCA minister trying to convince them to act).
However, in reality, this approach had an unintended consequence ─ consumer issues ended up being only a small part of each minister’s wide-ranging responsibilities. In the economic departments, in particular, the interests of producers were a greater priority, as they were seen to be more directly connected with economic growth and job creation. Even the industry minister, who inherited the legislative responsibility for promoting the interests and protection of consumers from the CCA ministerial portfolio, had little time to spend on that file, given his broad mandate encompassing the responsibilities of Industry Science and Technology, CCA and Communications (which has since been expanded further to include innovation and regional development).
Consumer issues were often seen as secondary and less important and, with the decline in the consumer NGO sector, lobbying in support of the consumer interest was less present across the federal government. The dispersal of consumer responsibilities over a number of federal departments also resulted in no one minister being responsible for bringing to the cabinet table the perspective of what was happening to consumers and their ability to negotiate the marketplace.
As the 1990s progressed, there was a similar diminishment of focus and effort on consumer issues at the provincial level. Stand-alone consumer ministries were folded into other departments or agencies. As in the federal government, retrenchment due to budgetary deficits became the order of the day, and resources became tighter as burgeoning health budgets put additional pressure on the funds available. This was compounded in the smaller provinces, which were always hard-pressed to provide the levels of enforcement and policy capability that larger jurisdictions such as Ontario or Quebec provided.
The provinces also faced a particular dilemma. While constitutionally their responsibilities for consumer protection are identical, they lack the resources and political leadership to collaborate effectively with one another. For example, while originally many provincial ministers responsible for consumer affairs were in charge of stand-alone departments for consumer protection, today they are mostly in charge of larger combined departments with differing concerns and priorities, as well as consumer protection. As a result, it has become more difficult for them to set common priorities and commitments. From the mid-1990s to the end of the first decade of 2000 there was an effective focus on interprovincial collaboration when, under the auspices of the consumer measures provisions of the Agreement on Internal Trade, provincial ministers, working with the federal Industry Minister, harmonized a wide variety of consumer protection laws and enforcement provisions. However, the momentum behind that process seems to have been lost.
In many countries, the provincial responsibility for consumer protection is exercised at the national level, where it is possible to gain economies of scale by spreading policy-making and enforcement costs over one large population. This provides better and more consistent protection at a lower cost. In Canada, in contrast, costs are spread over many jurisdictions and there is duplication of institutional overheads, uncoordinated policy and enforcement, and varying (arguably, lower) levels of protection across the country.
Crisis management approach to consumer protection
As a result of this recent history, Canada’s approach to consumer issues is one that is driven by crisis management, especially at the federal level. Over the past decade, we have seen this emerge in the fields of food and product safety, airline passengers’ rights, gasoline pricing and measurement, payday lending, online hacking and privacy issues, and in telecommunications.
The future may well be even more difficult for Canadian consumers, who are likely to face a whole range of new issues. These include
- the ability to cope with the costs of unfair and uncompetitive consumer markets, given personal debt levels that are at an historic high and stagnant wage and income growth;
- much greater reliance on service markets characterized by oligopolies and often untransparent marketing practices, in which it is difficult to accurately assess quality and value for money
- greater exposure to the online marketplace, where the security, fraud and privacy risks are growing exponentially.
It appears that our recent history with consumer protection will leave Canadian governments poorly aligned and equipped to deal effectively with these and other challenges.
This article is part of the Recalibrating Canada’s Consumer Rights Regime special feature.
Do you have something to say about the article you just read? Be part of the Policy Options discussion, and send in your own submission. Here is a link on how to do it. | Souhaitez-vous réagir à cet article ? Joignez-vous aux débats d’Options politiques et soumettez-nous votre texte en suivant ces directives.