Canada’s federal budget: Obsession with nation-building ignores importance of community building

This year’s federal budget is about huge investments, but also promises to “protect our communities”. There isn’t a lot of focus on the latter. One of the ways that the federal government can deliver on this promise is to work with the convenience industry. After all, when convenience stores are strong, so too are our communities. 

Undoubtedly it is ambitious—Canada Strong, a $1-trillion investment blitz over five years aimed at reindustrializing the nation amid U.S. trade wars and global shocks. It is about nation-building—fast-tracking megaprojects in clean energy, defence, housing, AI, and Arctic infrastructure to create “high-paying careers” and fortify our economic sovereignty.

Yet, this new-age, “big sky” economic thinking does nothing for average Canadians or the lifeblood of the Canadian economy – small businesses like convenience stores. 

The danger of focusing on the big and ambitious, is that we take for granted the entrepeneurs in our neighbourhoods. Arlene Dickinson recently posted on LinkedIn that one thing Canada keeps getting wrong is having a category called SME’s and throwing everyone into it. “We’ve got corner stores being treated like startups developing new medical devices.”

Government policies that negatively impact convenience stores need to change. As Ottawa pours $115.2 billion into infrastructure, including $51 billion for the Build Communities Strong Fund targeting roads, transit, hospitals, and schools, it failed to address two issues – credit card fees and contraband tobacco -- that impact the bottom line of c-store retailers on a daily basis. Time is of the essence since those stores are expected to play an enhanced role in fuelling thousands of new workers in communities during the new, big build. 

Imagine that offering your customers a convenience at the point of sale is now grown to your second-highest cost of doing business. For convenience retailers, that’s exactly how credit card fees are impacting profit margins. 

The industry’s retailers are unique in the fact that taxes make up a disproportionate number of overall sales—47% to be specific, due to the fact they sell highly taxed products like fuel, tobacco and in some provinces, alcohol. 

As a result, being the nation’s biggest tax collector in the retail industry is an out-of-pocket expense with nothing in return. 

Despite years of double-digit decline, tobacco products still account for $3.3 billion in sales in the industry. But weathering $300-million declines on an annual basis, while the illicit contraband market flourishes, is threatening the very viability of retailers. 

It's not just the drop in foot traffic and hit to the convenience industry’s bottom line that’s the main issue. It’s the fact that contraband impacts Canadian communities due to its organized crime linkages. This impacts public safety and makes neighbourhoods less safe.

The budget allocated a mere $50 million over five years for “border security and contraband tobacco”—roughly what the government loses in tax revenue every 48 hours. 

As the government gears up for the host of major building products, the question remains who will be keeping the construction crews going?  It will be the local store in Newfoundland and Labrador that opens at 5 a.m. and closes at 11 p.m. The depanneur in Quebec that sells 400 coffees a day to hard hats. The rural gas bar in Alberta that cashes cheques and sells work gloves. These stores subsidize the very megaprojects Ottawa brags about and are expected to fulfill the needs of the growing workforce while receiving zero consideration in return.

As an industry, we are not looking for a bailout. Rather, we want two simple things—fairness and action. 

Recognize that it’s not right that retailers are out of pocket for collecting taxes on credit card purchases. We’ve offered solutions to compensate those retailers. We are agnostic on the how, we just need it done now.

Admit that contraband tobacco is an organized-crime enterprise, not a cultural sensitivity issue. And take immediate steps to stop the flow of illicit products across the country. 

Until this happens, this year’s federal budget will simply be nothing more than a generational change on the backs of the very small businesses expected to keep the workers fed, hydrated and fuelled during this unprecedented time of nation building. 

Let’s hope the industry has enough stores left in communities to fulfill that expectation.