FINA Committee Report

Supplementary Report of the NDP to the 2021 Pre-Budget Consultations of the House of Commons Standing Committee on Finance

The pre-budget consultations held by the House of Commons Standing Committee on Finance provided an opportunity to hear and consider submissions from many organizations regarding concerns that are central to the lives of Canadians. This testimony is all the more important given the context of the COVID-19 pandemic. The recommendations made in this report reflect the urgency of taking action in various spheres of our society to help our fellow citizens, small and medium-sized businesses and all sectors of activity make ends meet.

The COVID-19 pandemic highlighted, among other things, the importance of people-centred government, a strong social safety net and the need for fair and equitable taxation.

In addition to the many recommendations supported by the NDP, we are particularly pleased that committee members agreed to include proposals presented by the Assembly of First Nations Quebec-Labrador (AFNQL) and the Assembly of First Nations (AFN) supported by the NDP in the development of this report. Recommendations that will enable Indigenous communities to obtain the federal funding they need for clean drinking water, to eradicate child poverty, to improve health care needs, to help them implement the testing of Covid-19 and to support businesses, including the tourism industry, to recover from the current crisis.

At the same time, New Democrats believe that despite the recommendations in this report, it is essential that the government implement a new direction for the next fiscal year. In particular, it should incorporate stronger tax elements to more actively address growing inequality, to help Canadians over the long term and to support economic sectors as they navigate through and recover from the Covid-19 crisis. That is why we believe it is important to include in this complementary report additional recommendations put forward by many organizations that bring a new perspective for inclusion in the next federal budget.

Strengthening our health care system

Witnesses repeatedly mentioned the importance of implementing a universal Pharmacare program. The health crisis we are facing has amplified this essential need for access to medications without financial barriers. We can take immediate action by establishing a national framework for a universal public Pharmacare program based on the same principles as the Canada Health Act, as enacted in Bill C-213. A universal public Pharmacare program will reduce annual prescription drug expenditures by $5 billion. Businesses and employees would see their prescription drug costs reduced by $16.6 billion per year, and families would see their prescription drug costs reduced by $6.4 billion per year.

The Public Service Alliance of Canada (PSAC), and many others, have pointed out that "millions of Canadians have lost their jobs and their work-based drug plans during the pandemic. The need for national pharmacare has never been more urgent"[1]The Canadian Nurses Association (CNA) also noted that "[Pharmacare] is a key piece of Medicare.”[2] In particular, UNIFOR has argued that "employers rely on healthy employees in order to keep their business operational and efficient. Workers need a universal pharmacare plan to ensure equal access to the treatments needed to recover and remain healthy during and after illness and disease”[3]

The provinces also agree that it is important to significantly increase health transfers to help them build a strong and accessible health care system. All three opposition parties agree with this idea.

Implementing a universal child care program

A universal child care and early learning system that provides the support that families need is essential to emerge from this crisis. In particular, Oxfam Canada has been very clear about the need to invest in universal child care “there is really rising and very strong evidence that demonstrates that child care, investment in the care sector, will end up paying for itself”[4] and that “it is a critical strategy for ensuring that women can re-enter the workforce post-pandemic and during the pandemic. We have seen a huge reduction in labour force participation by women, so that is one strategy and one way that we can boost economic growth. It will also provide jobs to women who are our child care workers, who are our long-term care workers, who are our health care workers.”[5]

Like Oxfam Canada, UNIFOR noted that “Without child care many parents, mostly women, are forced to stay home”[6]. The Pearson Centre also warned of the consequences to business if we don't provide child care, noting that "many workplaces could face serious shortages of their female workforce”[7].

According to the OECD, Canadian families spend nearly one-quarter of their income on child care, much more than in comparable countries. In addition, Statistics Canada has shown that women are paying the price for COVID-19, and since women make up about half of the Canadian workforce, economic recovery remains mathematically impossible without women returning to work. In addition, a recent report from the Centre for Future Work[8] estimates that a universal child care program across the country would generate $17-29 billion in annual government revenues and would easily pay for itself over the long term.

Improving Long-Term Care Centres

In the absence of national standards, the government is leaving the door open for for-profit companies to reduce the costs of care and put profits first, at the expense of our loved ones. Currently, long-term care is the deadliest front in our fight against coronavirus and we need an urgent response. We call on the government to immediately increase funding and put in place clear and enforceable pan-Canadian standards for long-term care facilities. The Canadian Nurses Association says, "we have a very well-intended workforce that is largely made up of unregulated providers doing their very best. We need a really big multi-billion-dollar investment in that sector to cast it anew. That would start with staffing, wages, physical plants. What happens in some of those places would never be allowed in a hospital. The whole sector needs a discussion. We need to frame what we expect as Canadians to get as we age, starting at home so that we don't have to go to those places, and right through to end-of-life care."[9]

Supporting economic recovery with fair and equitable fiscal policies

Building a fair and equitable economy

The current pandemic has illustrated the need to strengthen our social safety net and invest in programs that directly benefit Canadians. To do so, we believe it is essential that the government take the right approach to reforming our tax system by introducing fairer and more equitable tax policies that will, among other things, fund a multitude of programs that will necessarily improve the lives of Canadians and help our businesses flourish and grow.

The government should immediately introduce a wealth tax as recommended by many witnesses and even the Organisation for Economic Co-operation and Development (OECD). As several organizations pointed out during the pre-budget consultations, including Oxfam Canada, “in Canada, the top 1% own significantly more wealth than the bottom 70%, so we do think a wealth tax is one important strategy, one important tactic, one important tax that we can use to try to drive down this inequality that we have seen”[10]. The wealth tax has also been suggested by several prominent economists such as Emmanuel Saez and Thomas Piketty. A recent report by the Parliamentary Budget Officer estimated that by introducing a one per cent tax on wealth over $20 million, we could count on revenues of $5.6 billion from 2021. According to the Canadians for tax fairness, "Three-quarters of Canadians polled, including majorities from all political parties, support having a wealth tax."[11] The only thing missing is the political will of the government to implement this new tax policy.

While millions of Canadians lost their jobs as a result of the COVID-19 pandemic, the country's top 20 billionaires amassed an average of almost $2 billion each in wealth during six of the most economically catastrophic months in Canadian history, for a combined total of $37 billion. For this reason, among others, several witnesses stressed the importance of introducing a tax on the excess profits made during this crisis, citing as an example: "during previous world wars, the government should consider an excess profits tax on large corporations that have significantly profited during the pandemic.”[12]

It would therefore be completely inconceivable and unjustified for the economic recovery to come at the expense of middle-class workers, family businesses or low-income people. Rather, it is the ultra-rich, the 1% who hold more than 25% of the country's wealth, who should fully contribute to our country's economic recovery, as they are the ones who have benefited the most from the crisis.

We must also seize this unique window of opportunity to strengthen Canada's tax capacity through a number of tax changes, including aggressively combating the fraudulent use of tax havens. As has been mentioned on numerous occasions by organizations such as the Collectif Échec aux paradis fiscaux, Canadians for tax fairness or ATTAC-Québec, and many others, "with a tax gap of between $21.8 billion and $26 billion due to losses to tax havens, Canada cannot afford to forgo that money and needs to take action. By making tax fairness a priority, it will be possible to recover from this crisis in a way that is conducive to more environmentally, economically and socially sustainable development projects”[13]. "In order to fight effectively, we can begin immediately by closing the costly and regressive tax loopholes that increase income inequality. We can also make a massive reinvestment in the Canada Revenue Agency to combat international tax evasion, changing our outdated tax laws that allow the wealthiest to avoid the consequences of their actions through out-of-court settlements or pardon agreements.

The Resource Movement group sounded the alarm in its brief, citing as an example the public funds allocated during the pandemic to companies that have long failed to pay their fair share to the public treasury, "some corporations and their owners – mainly the suppliers of those basic needs, like Loblaws and Rogers – are seeing record profits . In addition, we have not seen firm policy commitments that would prevent large companies that use tax havens and other tax evasion practices from receiving emergency response money”[14]. The Covid-19 pandemic highlighted the importance of solidarity, however it is the role of government to ensure that public funds are used for businesses that contribute fairly to our society. It is time for Canada to be a leader on the international scene on tax issues, by legislating to require Canadian banks to close their multiple subsidiaries in tax havens, to criminalize organizations and institutions that encourage or facilitate tax avoidance and evasion. In particular, we can send a clear message right now that Canada is taking taxation seriously by ceasing to be wait-and-see with the web giants, and by becoming proactive, it is time to have a tax on profits made here in Canada and to apply the country-by-country declaration that will allow us to achieve this goal. 

The establishment of a centralized, publicly accessible, pan-Canadian registry of beneficial ownership of private companies would be the cornerstone of a more open and transparent regime and as Transparency International Canada points out "such a commitment advances Canada’s May 2020 pledge with international partners to combat illicit offshore financial holdings and money laundering which siphons off trillions of dollars needed for rebuilding economies"[15].

Reduce income inequality

Although not recent news, the Covid-19 pandemic has highlighted the growth of income inequality and highlighted the important roles of certain workers who were often not brought to the forefront. These workers have been called "super heroes" but as the Pearson Centre points out in its brief to the committee, "we have seen in glaring detail that some of the most important workers are paid very little (less than a living wage) and have little job security. Whether it’s Personal Support Workers (PSWs) or other staff at homes for the elderly, or staff at grocery stores, and cleaning staff in many workplaces"[16]. However, these workers live in precarious jobs and sometimes have to work several full-time jobs to make ends meet. It is therefore important to ask ourselves about interesting proposals brought before the committee that would allow employees in these sectors to be able to live decently, have real job security and corresponding salaries. After all, today we see very clearly to what extent we are counting on them to get through difficult times such as the Covid-19 pandemic.

Income inequality causes great precariousness, not only in terms of employment, but it also makes it difficult to meet people's basic needs. According to Statistics Canada, one in seven Canadians suffered from food insecurity during the pandemic and this has had a great impact on food banks. Consider Toronto, where the Daily Bread Food Bank has seen a 25% increase in requests for assistance. In other cities such as Whistler, BC, the demand has increased from 50 families to 300 families per week, and the same is true in Quebec City, where the demand for food assistance doubled during the pandemic.[17] 

Another group hard hit by the pandemic is undoubtedly people living with disabilities. According to a Statistics Canada survey, more than one-third of people have lost their employees either permanently or temporarily, and more than half of them reported difficulty meeting at least one basic need such as food or personal protective equipment.[18]  To add an additional level of difficulty, most people living with a disability were excluded from some financial assistance offered by the federal government. Even the one-time disability payment, a meagre $600, offered by the government is difficult for many people to access because of the requirement to provide a Disability Tax Credit Certificate (DTC). As Community Food Centres Canada reminds us, "it's quite a difficult credit to get. Sometimes you have to do your taxes and then you get a tax credit. A lot more is involved in this about 1.5 million people could potentially get it, but they don't"[19]. It is therefore essential to simplify access to the DTC and to make the tax credit refundable to provide additional assistance to people living with disabilities.

Helping Indigenous and First Nations communities

Canada's Indigenous communities are feeling the second wave of COVID-19 much more acutely than the first. Many of these communities are already in crisis - the Neskantaga First Nation, for example, is still being evacuated from its home community because of the Drinking Water Advisory that has been in place for more than 25 years. The federal government must be prepared to respond to COVID-19 outbreaks in Indigenous communities and strengthen the public health preparedness of Indigenous communities by funding housing and other essential services. The most recent report[20] of the Parliamentary Budget Officer (PBO) revealed that Indigenous households are in unaffordable or inadequate housing at a rate well above the national average - and the federal government is not using the tools to address this problem. The federal government needs to invest in a housing strategy for and by Indigenous people and make a strong commitment to address Indigenous homelessness. It is essential that the government move quickly to put in place a clear plan with the necessary funding to help indigenous communities not only get through this pandemic, but also to ensure economic recovery, quality of life and the same opportunities to succeed that will benefit communities across Canada.

Protecting the environment and fighting climate change

The latest report[21] by the Parliamentary Budget Officer (PBO) on the financial viability of the Trans Mountain (TMX) pipeline is indicative of the need to focus our efforts on subsidizing environmentally responsible industries rather than subsidizing a sector that is no longer viable in the medium and long term. According to the PBO report, the profitability of the TMX project will depend on whether the government implements new policies to combat climate change, at which point the pipeline's profitability will be compromised.

As stated by the Green Budget Coalition[22] and others, the government must end direct or indirect subsidies to the fossil fuel industry and make a real shift to protect the environment and effectively combat global warming. In this regard, Climate Action Network Canada - Réseau action climat Canada - Climate Action Network (Rac-CAN) emphasizes that the government must stop using Export Development Canada (EDC) "...as a tool to expand the fossil fuel industry in Canada and around the world"[23]. Like the Green Budget Coalition, Equiterre recommends that the government develop "a roadmap to eliminate inefficient fossil fuel subsidies by 2025, in order to meet Canada's G20 commitment to do so. »[24]  

In 2017, as a member of the G20, Canada officially recognized that inefficient fossil fuel subsidies hamper the fight against climate change, promote wasteful energy use, reduce energy security and hinder investment in clean energy sources[25]. Canada distributes billions of dollars in fossil fuel subsidies every year. The Organisation for Economic Co-operation and Development (OECD), the World Bank, the International Monetary Fund and the International Energy Agency are just some of the agencies that have described fossil fuel subsidies as an incentive to pollute.

In short, despite Canada's commitments to eliminate its support for the oil and gas sector and strong public support for phasing out subsidies, the fact remains that we are still the largest provider of subsidies to oil and gas production per unit of GDP in the G7[26], and the second largest provider of public financing for oil and gas production in the G20[27].

In sum, this supplementary report reflects the proposals and testimonies of several organizations that are calling on the government to take a new direction for the next fiscal year. A bold new vision that will position Canada as a leader in protecting the environment and making a real transition to an economy based on clean and renewable energy, for a fair and equitable tax system that aims to reduce inequalities, for quality health care and an improved and strengthened social safety net, and to support indigenous communities across the country.

The NDP recognizes that the committee's work was privileged to be held on the unceded territory of the Algonquin, Haudenosaunee and Anishinabek Nations.