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Prime Minister Mark Carney’s government is trying
to fix food affordability with cheques instead of structural reform. This
week’s announcement of a rebranded Canada Groceries and Essentials Benefit may
put cash in consumers’ pockets but it sidesteps the policies that actually
drive grocery prices, including taxes, supply chain costs and regulatory creep.
Carney boosted the GST credit, an income-tested,
quarterly cash benefit that is not tied to specific purchases, by 25 per cent
for five years, with a one-time 50 per cent top-up. For a family of four, that
could amount to as much as $1,890 this year. Nearly 12 million Canadians will
be affected.
On the surface, it is hard to argue against any
measure that puts money directly into the hands of families struggling to keep
up with food prices. According to projections in Canada’s Food Price Report
2026, this benefit actually exceeds the expected increase in food expenses for
a typical family of four this year. In that narrow sense, Ottawa can credibly
say the benefit offsets food price increases.
Public funds transferred directly to consumers,
no matter how well-targeted, tend to increase inflationary pressures on the
very goods they are meant to make more affordable. Food is no exception. When
more money chases the same groceries, prices often respond upward, especially
in a food system already strained by logistics, labour shortages and
climate-related shocks. The saving grace here is targeting. Lower-income
households are far more likely to spend the benefit on necessities rather than
discretionary goods. That limits, but does not eliminate, the inflationary
risk.
Still, at a structural level, Ottawa is doing
what it has done many times before. The GST credit can be used for anything.
Officially, it is framed as help for groceries and essentials. Practically, it
is unrestricted cash. We are back in a political comfort zone perfected in the
Justin Trudeau era, heavy on slogans and light on structural reform.
Canadians are not naïve. They understand
perfectly well that this money can pay for rent, fuel or debt just as easily as
it can for food.
Which raises an obvious question. If the goal is
food affordability, why not tackle food taxes directly?
Canadians pay billions in taxes at the grocery
store every year. While most basic groceries are zero-rated under the GST/HST,
many prepared and ready-to-eat foods, including items from grocery store deli
counters, are fully taxable, with tax status often determined by packaging size
and preparation rules.
The problem has quietly worsened with
shrinkflation and product reformulation. As package sizes change and products
cross regulatory thresholds, more items once considered basic groceries are now
taxable. At the same time, the ready-to-eat counter has become a lifeline for
households avoiding increasingly expensive restaurants. Those healthy
sandwiches, salads and prepared meals are fully taxed. By any economic logic,
that makes little sense.
Zero-rating all food, retail and food service
alike, would be simpler, more transparent and less inflationary than cash
transfers. Based on our estimates, each Canadian could save up to $200 a year
on food. No applications. No rebranding. No political theatre. Just lower
prices at the checkout.
Beyond consumer relief, the government also
announced $500 million to ease supply chain costs. It is a welcome
acknowledgment that affordability problems do not begin at the cash register.
But in a country as vast and trade-dependent as Canada, that amount barely
scratches the surface. Farmers, manufacturers and distributors are still
absorbing elevated transportation, energy and compliance costs.
If Ottawa is serious about food affordability,
supply chains deserve sustained attention, not episodic funding.
The same applies to the $150 million Food
Security Fund for small and medium-sized enterprises and immediate expensing
for greenhouses. Both are good decisions. Both are insufficient given the scale
of the challenge.
One measure, however, stands out unequivocally.
The $20 million allocated to support food banks is money well spent. No
institution in Canada delivers food-affordability relief more efficiently, more
quickly or with greater dignity than food banks. They are not just safety nets.
They are logistical marvels, run by communities,
for communities. In an era of rising need, they remain a quiet miracle of the
human spirit, often outperforming government programs in reaching those who
need help most.
The new Canada Groceries and Essentials Benefit
will provide short-term relief, and for many families that relief will be
meaningful. But affordability cannot be solved with cheques alone. Without tax
reform on food and deeper investment in supply chains, Ottawa risks treating
symptoms while leaving the underlying disease untouched.
Helping Canadians afford food should be boring,
structural and durable, not rebranded, temporary and politically convenient.
Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain.
The views, opinions, and positions expressed by our columnists and contributors are solely their own and do not necessarily reflect those of our publication.
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