08/07/2013 05:53 EDT | Updated 10/07/2013 05:12 EDT

Ottawa to pay to determine if consumers gain from tariff reductions

OTTAWA - The NDP is taking the federal government to task for spending taxpayers money to collect data on the impact of tariff cuts on specific retail goods — information it says Statistics Canada is well-equipped to gather.

The criticism comes after Finance Minister Jim Flaherty announced Wednesday the government had contracted market research firm Nielsen Co. of Canada to monitor whether Canadians were reaping benefits from the removal of tariffs on certain sports equipment and baby clothes in April.

In the March budget, Flaherty said he was removing import duties on such items as ice skates and baby clothes, both of which carry an 18 per cent tariff, on the recommendation of a Senate committee that had identified import levies as one of the causes of the price gap between the U.S. and Canada.

"This tariff relief came with the expectation that businesses would fully pass these savings on to benefit Canadian families," Flaherty noted in Wednesday's release.

"We have put an objective monitoring system in place and will report our findings to Canadians."

The Nielsen contract, which the government said was competitively sourced, is for $69,777.50. The NDP said the contract could wind up costing as much as $100,000.

"It's also interesting that the Conservatives aren't using the government statistical agency, Statistics Canada, to collect this sort of information," the NDP said.

The federal agency tracks the price of a basket of goods and services monthly in order to determine the country's inflation rate.

The Finance Department issued a statement in response to the NDP charge, saying it had consulted with Statistics Canada on the monitoring plans.

"While Statistics Canada tracks a limited number of retail prices on some specific goods as part of the Consumer Price Index, they are not able to provide the level of detail or analysis appropriate for a study of this kind," the statement said.

"The Consumer Price Index does not focus on sporting goods and babies clothing, (which) are the point of this exercise."

The NDP also criticized the government for ignoring the impact of tariff increases on "thousands of goods" that were also part of the March budget. Those hikes came about after the government dropped 72 nations from a category that gave them preferential treatment for their exports.

In the budget, the government estimated it would realize $333 million in revenues from the tariff increases, whereas it currently calculates the removal of duties on sports equipment and baby clothes will cost $79 million.

Nielsen is to report next August on whether the tariff writeoffs have been passed on to consumers.

Both the Retail Council of Canada and the Consumers Association of Canada are quoted as supporting the government's plan to monitor the impact of tariff reductions.