Voters should beware as politicians pitch price controls as a solution to food inflation

British Columbia Premier David Eby, facing an electorate that has soured on his government, particularly after its decision to call a snap election just two years into its four-year mandate, is turning to an aggressive socialist agenda to try to turn his campaign around. 

For one thing, Eby is proposing to raise income taxes on anyone earning over $190,504, which will help to drive doctors, professionals, entrepreneurs, and professors out of the province and possibly even out of the country. Eby’s is also proposing to create a new provincial income tax bracket for top income earners. Should this come to pass, the top combined federal-provincial income tax rate in B.C. would exceed 57 per cent. 

The solution to try to attract more jobs, talent, and investment to a province that is struggling with a massive deficit and a sluggish economy is not to turn to more taxes. Instead, Eby and his rivals should be looking to spending efficiencies and policies that encourage economic growth and investment to dig B.C. out of its current fiscal hole. 

But the second major socialist policy Eby has rolled out is perhaps even scarier than the first. Eby is now calling for what he calls a “cap” on grocery store profits on items like milk, eggs, butter, cheese, chicken, and turkey. The federal NDP has long championed a similar policy. 

Yet the solution to high grocery prices is not to try to cap grocery store profits, which Canadian studies have found tend to be between three and five per cent. Rather, it is to tackle what is driving up prices at the grocery store in the first place. 

Federal policies like the industrial carbon tax and supply management are driving up food prices on essentials. The industrial carbon tax makes it more expensive to grow food and deliver it to grocery stores across the country, including in British Columbia. And supply management, which restricts the amount of dairy, poultry, and eggs that can be both produced in and imported into Canada keeps prices artificially high. If Eby wants to lower grocery costs, he should call on Prime Minister Mark Carney to abandon both policies, which would significantly drive down food costs. 

Instead of calling on Carney to abandon policies that are actually driving up grocery costs, Eby is aggressively attacking grocery chains. In order to cap profits, governments have to turn to price controls. Profits can be increased through selling more, lowering input costs, or raising prices. Eby won’t be rationing what British Columbians buy at grocery stores and he can’t on his own lower input costs. So, Eby will have to turn to price controls in order to fulfill his campaign commitment to “cap” grocery profits. 

Capping corporate profits might sound attractive to some. But they ultimately lead to food shortages. After all, why would any store sell anything if they can’t make a profit on it? Plus, if grocery stores can’t make a small profit on certain items, which Eby is proposing, they will simply focus on selling other items. And they might even increase the prices on those other items to make up for any profit loss from items that are artificially capped by the government. 

David Eby economics has taken British Columbia from a significant surplus, left by the late John Horgan, to a budget deficit of well over $1 billion a month. Under Eby’s watch, taxes have gone up left, right, and centre while investment in the province is fleeing. Should British Columbians really trust Eby to take over the grocery store market, too?

Of course not.

British Columbians, and in fact all Canadians, want to see lower grocery prices. Food inflation has been high in Canada for a number of years now, driving family grocery costs up by an average of $1,000 per year for the past three years. Yes, something must be done. But the answer is to tackle things that the government is doing to make input costs more expensive, such as imposing and hiking the industrial carbon tax and doubling down on support for supply management. 

To get grocery costs down, government needs to get out of the way. Eby’s proposal to do just the opposite is an insult to the intelligence of B.C. voters.