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LILLEY: City-run grocery store not the solution to food inflation

The City of Toronto's community housing is a disaster, so why would the city be any better at running a grocery store?

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We all know that food prices are high in Canada, but taking another step towards socialism won’t fix that.

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Despite it being a horrible idea, Toronto Councillor Anthony Perruzza wants our municipal government to start operating grocery stores.

LILLEY: City-run grocery store not the solution to food inflation Back to video

The idea was floated by New York City’s socialist Mayor Zohran Mamdani and now Perruzza, a one-time MPP for Ontario socialist NDP, wants Toronto to adapt the idea and open at least four stores across the city.

“I think food is a big part of where people spend their money, and if we’re talking about affordability and making life a little more affordable for Torontonians, I think it’s an area that if we were able to do something and lower food, everyone would benefit by that,” Perruzza told City News this week.

“It would be run very much like a business, a non-profit business, and if there are investments that are going to be made in these stores, a lot of those investments will be recovered through those business models,” he said.

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Perruzza will ask fellow councillors to back the move

He’s put forward a motion for council to consider next week. Let’s hope it goes down in defeat.

But with the make-up of this City Council there is a good chance it would pass.

This being an election year, it would be easy to see Mayor Olivia Chow and her cadre of socialist-leaning councillors taking up an idea that amounts to nothing more than left-wing populism.

The city doesn’t have a good track record of running operations usually run by the private sector and city-run grocery stores in other areas don’t have a great track record.

Has anyone looked at the abysmal functioning of Toronto Community Housing Corporation? Through TCHC the city is the biggest landlord in the country and many of their units are far from in good repair.

Their own report on the state of their properties says they own “over 1,300 aging buildings with a growing repair backlog of $8.42B” and that “a large percentage of the portfolio in critical or poor condition.”

“I will not tolerate slum lords,” Chow said earlier this week at a news conference designed to layout her plan to push back against bad landlords.

News flash for you, the City of Toronto is a bad landlord, one could easily argue a slum lord.

But sure, let’s have the city take on the task of selling its citizens groceries.

Grocery prices aren’t being hiked due to greedy grocers

The perception that food costs are rising in Canada due to greedy grocers just hiking prices sounds good, but it isn’t backed up by the facts. The profit margin for grocery food sales is between 2-4%, which any retailer will tell you is a very tight profit margin.

People pointing to the billions in profits at companies like Loblaw’s or Sobey’s need to remember that the fattest part of that profit isn’t from selling you milk or bread, it’s from selling you a pair of jeans, that mascara in your purse or any of the other myriad of products they sell.

Reacting to the idea that the City of Toronto should get into the business of running grocery stores, Professor Sylvain Charlebois, an academic expert in Canada’s food system, said it would be tough for the city to do it.

“Canada talks about cutting red tape, yet keeps proposing more state intervention. That’s Canada, in a nutshell,” Charlebois said.

“Grocery retail runs on razor-thin margins and complex supply chains. Running a store is harder than regulating one.”

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The only way this would work is if the entire project was incredibly subsidized, which appears to be part of the plan.

Perruzza has said the city could waive property taxes and development charges for these stores. Hey, why not offer free rent like they plan to do in NYC?

Given that the city will most certainly offer higher wages – no starting off teenaged store clerks at minimum wage – there will have to be more subsidies.

Is food inflation a problem? Absolutely – and there are actions that government at all levels could take to make things easier.

But opening and running grocery stores is not the solution we need.

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