The standing committee on Industry, Science and Technology recently agreed to undertake a review of Canada’s Service Sector. Namely the committee will endeavor to study the strengths of this sector, the challenges facing this sector, the sector’s impact on Canada’s overall economy, overall employment percentage and overall average of salaries across the sector, and as well to study the role of the Government of Canada in strengthening this service sector”. 

Ottawa, Ontario, Tuesday, January 29, 2008

Michael Comstock, Vice President, TABIA, Vice Chair, St. Lawrence Market Neighbourhood BIA, attended on behalf of TABIA and the BIAs presenting the following deputation.

The Toronto Association of Business Improvement Areas is pleased to be able to bring you our perspective on what is happening in Main Street business. TABIA represents over 25,000 small businesses and property owners in 63 BIAs.  In reading previous submissions to this committee I see you have heard that retail has created many new jobs and is growing.   This is not my experience in neighbourhood retail.  I do see many new big box retail projects launched and a whole lot of ex-retail employees opening consultancies and contract businesses, however, we see a large number of retail and individual service companies that close each year.  Since they can’t file for Employment Insurance and often don’t have a corporation to close, we may not see that number, and more importantly, we don’t record the reasons why.  This is necessary for a clearer vision of the service sector.   I have three topics for your consideration. 

The Change in Main Street Retail

  • Marginal Stores and McJobs
  • Supporting the Cities

 The Change in Main Street RetailToronto is a City of many neighbourhoods.  The condition of our Main Street retailers reflects the health of the residential streets that surrounds them.  The neighbourhood merchant offers a Green alternative to driving to the “Acres of Free Parking” power centre shopping.  We are resilient, thrifty and creative, "so there are many successes".  Neighbourhood BIAs try to recruit certain types of retail to provide the diversity needed to protect their marketplace.  Small retailers are quick to adopt environmental and energy saving technologies.  Successful models include a clustering of stores featuring similar items, boutiques with handcrafted or specialty items, professional and trades services which used to be upstairs are now often in storefronts, and the local family restaurant or coffee shop.  These form the typical successful retailers in our neighbourhood strips.  I hope you live near these commercial neighbourhoods. I am sure that we all understand Wal-Martization and the massive change in retailing that this has brought.  I worked successfully with others in the Downtown to halt the construction of a big box hardware store on Toronto’s waterfront in 1999 and this gave me an insight into the impact of change that big box retail was bringing to our city.  75% of all retail dollars are now spent in big box, power centres, malls and chain stores.  The mom and pop stores, the boutique neighbourhood merchants are under colossal pressure  This massive change in retail has left Mainstreet business with a whole lot of old style commercial architecture. We and a number of cities are “over stored”.   We are locked into a structure which is not well suited to compete with today’s retail large scale format and small profit margin.   So here we are, some successful retail strips and a lot of old storefront architecture no longer suited for retail.    We would like to see the Federal Government look at this issue.  There is no acknowledgement of this displacement, no urban planning schemes, no programs to consolidate property, no property tax breaks for these little guys. If you survived long enough to sell the shop, a merchant’s retirement fund, the deal is capital taxed to death.   I understand there is a break for Farmers?  There is no Employment Insurance if you go out of business and you lose your investment money as well.  There aren’t any retraining programs.   In Toronto we are experiencing punishing tax bills. A commercial store assessed at $300.000, under a 900 Sq Ft, must pay $14,000, just in annual property tax.  $14,000 is a lot of Sushi to sell, just to pay the rent.  We feel the City is reducing its own tax base with this switch in retail formats.    It is our impression that the new retail format pays less property tax per square foot, employs fewer people per dollar sale, and rarely become involved in local social issues or local marketing efforts.  (School Teacher example)   

Marginal Stores and McJobsOn the not so pleasant side, store vacancy, chain stores and other marginal businesses fill in the storefronts of poor retail strips. Many storefronts are more valuable for residential use, than for business.  Marginal stores provide just the wages to those that work in them, and they are fragile.  Many marginal stores are chains earning the employees wages and a few dollars more for the owner of the chain.  So, if you have 10 marginal stores, you might make a success of it.  Each of these marginal stores offers little payback or involvement in the neighbourhood.  On the other hand an owner operated neighbourhood business is often personally ininvolved in the social life of the area.    

Supporting the CitiesStrong cities make a stronger country.  One of the reasons tax bills are so high is the poor funding of cities where most Canadians now live.  The municipality is a child of the Province, and the child is living in poverty.  We must look to the Federal Government to develop direct ties to our cities.  Maybe equalization and other transfers could be directed to urban infrastructure needs. In Toronto social services are mandated by the province but not funded.  The result is city awash in people begging and sleeping on the streets, which crushes tourism along with self-respect.  It would be very helpful if the Government would explain how the Charter of Rights and Freedoms prevents us from intervening, even with medical and social assessments, when people choose to sleep on the public sidewalks.   Looking at this problem, which is killing tourism in the downtown, we find that there are no jobs programs for the homeless, poor or elderly, no housing initiatives!  Employing a shelter person, or any poor person, could be freed from the added costs of Workers Comp, E. I. payments and the paperwork that implies.  Many low income urban residents often have no alternative but to beg or work under the table.  Youth with parents on welfare must hide their income, work Under the Table, or see their mothers monthly check reduced.  These people should be supported with a specific government employment program.  Along with these three items I close with one more concern voiced by many of our members.  This is the appearance of the GST on customer’s bills.  The negative impact and constantly irritating reminder of two taxes on most every item creates tension between merchant and customer. Might the GST be hidden back into the wholesale level?  These are Mainstreet problems which the federal Government might address.  Our Mainstreet shops are in a massive transition and no one seems to be aware. Thank you,