I officially call this meeting to order. Welcome to meeting number 28 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of Tuesday, March 24, the committee is meeting on the government's response to the COVID-19 pandemic.
Today's meeting is taking place by video conference and the proceedings will be made available via the House of Commons website.
I just want to point out, on a technicality, that if you're speaking in English, you should select English at the bottom of the screen. If you're speaking in French, select French. It's easier for the interpreters that way.
With that, then, I will welcome the minister and the witnesses. I'll not go through the list of witnesses, but with the minister, we have witnesses from the Canada Revenue Agency, the Department of Finance and the Department of Employment and Social Development.
Mr. Minister, we certainly welcome you. We know you have an opening statement, but I do want to say in beginning, thank you for the fourth report, the bi-weekly reports of parts 3, 8, and 18 of Bill , related to the COVID-19 emergency response. We appreciate that.
Also, a special thank you to the people who prepare that report, the people who work in the backrooms who we never see, who do a lot of work for Canadians. You can give them our thanks and let them know that we appreciate what they're doing for Canadians and what they're doing in preparing the reports for us at the finance committee.
Certainly, Sean and I thank you for today's announcement as well, a welcome announcement on the fisheries side.
Minister, we welcome you. The floor is yours.
I'll begin by thanking the members of the committee for their continuing work during these extremely challenging times, and thank you for the invitation to have me speak today at the committee.
As we all know, COVID-19 continues to pose significant risks to people's health, their way of life, and the economy as a whole.
Since the beginning of March, the measures implemented as part of Canada's COVID-19 economic response plan have been supporting Canadian workers grappling with this unprecedented crisis.
This whole-of-economy plan promotes economic stability and protects jobs. Our government's rapid, comprehensive response is providing over $150 billion in direct support to Canadians, to soften the economic impact of this crisis. This support will also help our economy recover once the crisis ends.
Ours is one of the most comprehensive plans in the G7. We've rolled out measures for workers and businesses across all economic sectors, for employers of all sizes. We're helping students who are trying to build careers, and parents trying to juggle the demands of the COVID crisis on their professional and family lives.
We've worked with provinces, territories and indigenous leaders. We're continuing to make sure that no one is left behind. The Canada emergency response benefit, which provides temporary income support to workers who've stopped working, is important. More than 7.8 million Canadians have applied for the CERB as of May 10.
We know that the pandemic has brought extra costs into the lives of seniors too and that they need some support as well. As one of our first measures, we announced a GST credit top-up that was delivered in April, which provided financial support to low- and modest-income Canadians, including over four million seniors. Eligible seniors received an average of $375 for single seniors and $510 for senior couples.
This week, the announced additional financial support to help our seniors. Canadians who receive the old age security pension will automatically get a tax-free payment of $300.
Those who receive the guaranteed income supplement will get an additional $200, tax free. These payments will go to support seniors. There are currently 6.7 million seniors who are eligible for the OAS pension and 2.2 million who are eligible for the GIS.
We've also invested in community support initiatives that help seniors. We've given $9 million to United Way Canada to provide practical services, such as delivering groceries and medications.
We also announced an investment of $20 million in the new horizons for seniors program, which helps reduce isolation and provides social support for seniors. This support is now more critical than ever before. We've also announced virtual care in mental health tools for all Canadians through a new online portal called “Wellness Together Canada”.
In addition to supporting individual Canadians, we've provided significant support to Canadian businesses since the beginning of the crisis. We've implemented support for businesses across Canada that aren't eligible for other support measures, through the new regional relief and recovery fund. This new fund devotes nearly $962 million to help more businesses and organizations that are key to local economies, including rural economies.
Last week, we announced an investment of more than $252 million to support farmers, food businesses and food processors who make sure our grocery stores are stocked and are keeping Canadians fed. This complements our action in March to enable Farm Credit Canada to provide an additional $5 billion in lending to producers, agribusinesses and food processors. The government also intends to propose an additional $200 million in borrowing capacity for the dairy sector in particular.
This past Monday, we announced the expansion of the business credit availability program to mid-sized companies from across the economy with larger financing needs. In addition, we announced the large employer emergency financing facility to provide bridge financing to Canada's largest employers to help them get through this pandemic. These businesses employ millions of Canadians and we need them to stay strong. We'll protect workers by ensuring that companies that receive support through LEEFF respect any and all collective bargaining agreements, including pensions. We'll protect taxpayers by putting in place strict limits on executive pay, share buybacks and dividends.
We want to make sure this support is truly going to companies that contribute to Canada's economic well-being by making significant investments in this country. In considering a company's eligibility, we assess its international organizational structure and financing arrangements, as well as its employment, tax and economic activity in Canada. Recipient companies will be required to commit to certain objectives with regard to the disclosure of risks related to climate change and environmental sustainability.
Companies will not be able to get this financing if they've been convicted of tax evasion.
The government also announced a temporary top-up to the salaries of low-income essential workers that the provinces and territories have deemed essential in the fight against COVID-19. All provinces and territories have confirmed, or are in the process of confirming, plans to cost-share wage top-ups for their essential workers. The Government of Canada will provide up to $3 billion to support this wage increase.
Since the beginning of this crisis, we've been focused on providing Canadians and Canadian businesses with the support they need to get through this crisis. We'll do whatever it takes. We'll get through these challenging times together.
Thank you very much.
All right, so the minister doesn't have an answer to that question either.
Mr. Chair, yesterday the minister wrongly suggested that the Harper government had cut the Auditor General's budget. In fact, the previous Auditor General voluntarily reduced his budget as part of his efforts to help reduce the deficit in that time. He said he could meet all of his auditing requirements with the budget he had.
By contrast, today's Auditor General has said the opposite, that he doesn't have enough money to do the work before him.
Will the minister—yes or no, yes or no—provide the Auditor General with the funds he has asked for so that his office, and the office of his soon-to-be successor, can properly audit all the spending of the Government of Canada?
Again, a simple yes or no will do.
Thank you, Mr. Chair, and thank you, Minister.
Minister, I want to ask you about municipalities. A few weeks ago, this committee heard from the Federation of Canadian Municipalities, which, as you know, has put forward a request to the federal government to receive in the neighbourhood of “at least”—that's what their letter said—$10 billion. What do you make of this ask? I wanted to get your thoughts on that.
From my perspective, it's interesting that their advocacy has failed to mention at all, really, the provinces, which is interesting, because obviously jurisdictionally the provinces have a key role in this. Municipalities exist as creatures of the provinces, as we all know.
Again, I just wanted to get your thoughts on the ask and the possible provincial role and need for that.
I think what we're seeing across the country in many, many different sectors, whether it be in business sectors or in levels of government, is really significant stress. So many people are impacted and so many things that we take as normal activities are impacted by the coronavirus challenge, so it is not a surprise that we're seeing some stresses at the municipal level. Obviously, our support of people has been critically important, because that's important for the municipal level. Our support of businesses is important, in terms of those businesses and municipalities.
I do think it's appropriate what you said in your remarks—that municipalities do work with provinces. I think it's important for us to say that we expect for that continuing relationship to stay strong and for provinces to be the funders for municipalities.
That said, we do know that we all need to work together in facing up to this challenge, and we are endeavouring to do that. When we get requests, we consider them carefully, because that's appropriate at this challenging time. This request, like all others, we'll be considering carefully, knowing, of course, that it's also critically important for the provinces to be stepping forward in that regard.
Well, I would start by saying it's pretty clear that the federal government has led the way. The federal investments on behalf of people and businesses have been extremely significant. You've seen the direct support now—as I mentioned in my opening remarks—that's in excess of $150 billion.
There's very significant support from the federal government. It is true that the federal government had a strong fiscal position going into this, and we remain capable of dealing with this challenge on behalf of Canadians.
That said, I know that provinces also have the capacity to be an important part of this effort. We are seeing provinces recognize that. They're putting forward programs, in some cases, and that is also important.
The kinds of things we've done, which have been supporting provinces with things like the essential worker top-up or the support for commercial rent—both areas that are really provincial—have been important. The Bank of Canada supporting the issuance of debt from the provinces has been critically important for them in having access to capital.
We've provided significant support. We'll need to continue to work together on the challenges we face, and we need to consider different jurisdictions and levels of government as we move forward appropriately.
With my last question, I want to ask you about the nature of this downturn. It is quite unique, in the sense that it has primarily impacted, at least at this point, the service sector. Previous downturns have mostly impacted the manufacturing and construction sector, and men, who disproportionately work in larger numbers in those sectors. This time it's the service sector, and hence—not exclusively—women seem to be impacted. At least that's what the data is showing us.
What does that imply, in your mind, as far as a recovery is concerned? What sorts of approaches are the federal government looking to introduce? Do you have any thoughts on what the current data means, from a recovery standpoint?
I think it is an important question. We are seeing that this challenge is hitting different segments of the population differently. It's hitting low-income workers, in many cases, in a more difficult way than higher-income workers, because many of those workers are losing hours, or the jobs they were occupying are not going on during the course of the COVID-19 crisis.
That was why the emergency response benefit was so important. We knew there were 5.7 million Canadians not attached to an employer who were initially going to be hit, and many of those workers have gone on the CERB.
As part of the recovery, fundamentally what we needed to do was protect those people, and then protect the companies through wage subsidies and credits so that those companies will be around to rehire and to expand afterwards.
Really, it's emergency support for people, and providing a bridge for companies so we can come out of this with a capacity for people to go back to their old jobs—I hope—or, in some cases, move to new jobs that will be there because we've supported businesses.
Hello, Minister. Thank you for appearing before the committee.
I also want to express my thanks and appreciation to all the officials who have joined the committee's virtual meeting.
Yesterday, the government announced the COVID-19 regional relief and recovery fund. With the other programs it's announced so far, the government started by presenting the terms. In this case, however, it announced the total amount. For Quebec, it's $211 million.
Should I take this to mean that the program will be first-come, first-served, so SMEs need to hurry up and apply?
As demonstrated by your speech at the beginning of this committee meeting, for two months, the government has been piling on more and more announcements and new programs, not to mention changes to existing programs.
I think it would be appropriate to table an economic update by summertime. I'm envisioning a document that would provide a broad overview of the various programs that have been rolled out, outline the economic situation, and explain your department's working assumptions and the scenarios it's juggling. When the Parliamentary Budget Officer testified before the committee last Tuesday and was asked about this, he said this kind of update was urgently needed.
Are you planning to table an update in the next few weeks?
Thank you very much, Mr. Chair.
Thanks, Mr. Morneau, for being here yet again. You've been very accessible throughout this crisis. To you as well as to the families of the public servants who were here today, we hope that everyone in your households continues to be safe and healthy.
I'm going to ask some questions. I hope to have concise answers.
I'm going to start with the fact that we all know, which is that families are struggling and that small businesses are struggling, and yet the programs that the government has rolled out haven't provided the universal supports that many people were hoping for, and therefore many people can't access the CERB and many small business owners can't access the wage subsidy or access the commercial rent relief. There are conditions that limit those programs.
That's why there is some concern with the LEEFF, which is the new program that you've announced. There's that contradiction because, despite the fact that other countries, like the United Kingdom, have banned executive bonuses, stock buybacks and dividend payments because of their use of public funds, in Canada, the approach that you're suggesting taking is simply to cap those. What are you capping in terms of executive bonuses? Are they capped at $1 million or $2 million? How much are you budgeting for this new program?
There were a number of statements there, so maybe I can start with the first premise.
We've taken the view that what we need to do during the COVID-19 crisis is to make sure we're helping the people and the businesses impacted by this crisis. That's why our programs have been specifically directed towards those people.
I think what can be seen in application is that our approach is having exactly the desired impact. The emergency response benefit is a good example. There are now more than 7.5 million Canadians who have come onto this program, so we're seeing a very significant application. Through the emergency business account 600,000 businesses are now getting this $40,000 small business loan. The broad support is there. It's specifically targeted to the businesses or individuals needing it.
With respect to the direct question at the end, on the large employer emergency financing facility, we see that's quite important to help businesses that employ many Canadians to bridge through this time. We've done that, but we've put conditions. I think what you'll see is that our conditions are as strict as or stricter than those in other countries. We are, in fact, not allowing share buybacks or dividends for companies that come forward on this. We are going to have limitations on executive compensation, which I will be able to roll out as we work through those, that will be as strict as or stricter than those in other countries. Similarly, we've said that businesses need to protect workers through collective bargaining responsibilities and pensions.
We see these conditions as critically important. We see preserving our economy as critically important. We think this will help.
I would disagree with your answer regarding how what we are doing compared to what other countries are doing and best practices, but I'll move on to another issue.
Other countries have actually limited the use of public funds to companies that use overseas tax havens. With the rollout of the LEEFF we have seen this week, you said specifically it is only those companies convicted of tax evasion. I'm tempted to ask very cheekily how many companies involved in the Panama Papers, in the Paradise Papers, or in the Isle of Man scam have actually been convicted of tax evasion. But we know the answer. It's absolutely zero. Over 90% of Canada's largest companies use overseas tax havens, companies like Cargill, that have been involved in the worst COVID-19 outbreak in the country. Cargill uses an overseas tax haven.
Many of the companies in the Paradise Papers and the Panama Papers use overseas tax havens. Can you confirm that if those companies, like Cargill, meet the other criteria, despite this open practice of using overseas tax havens, they will qualify for use of the LEEFF?
Well, I think it's important to consider the aspects of this program that will guard against these challenges. You just pointed out one. Of course, companies that are convicted of tax evasion will not be eligible. But we've also been working together internationally to make sure the ability of companies to move money around, what's called base erosion and profit shifting, is more limited. That's actually reducing the scope for people to do the things without actually causing themselves to run afoul of the laws. That has been an important part of what we're doing.
Also, the condition in this new large enterprise facility will be that the money that goes is actually required to be used for Canadian operations, Canadian investments and protecting Canadian workers. That's an explicit condition of what we're doing here.
We've guarded against this, Peter, in multiple ways. Obviously, the work we've been doing for years has been reducing the ability of firms to do this. We're limiting it to those firms that have not run afoul of the law, and we're also focusing the investments, so they must be in Canada, for Canadian investments and for Canadian employees. Fundamentally we're trying to make sure that Canadian employment at these large organizations stays vibrant as we go through this challenging time.
Okay, is there an answer? Yes or no.
Hon. Bill Morneau —gets more stable we will be providing more.
Hon. Pierre Poilievre: Okay, so no answer to that, no answer to how many prisoners and fraudsters the government has knowingly given cheques to, no answer to the size of the deficit, no answer to the size of the debt, no answer as to whether it will reach a trillion dollars, no answer as to whether we will lose our AAA rating, and no answer when I asked for the dollar value of our assets, liabilities or equity.
Mr. Minister, do you have answers to these questions or do you just believe that Canadians don't deserve to hear them?
—to another area, and that is, Minister, that we have criminals who are receiving CERB cheques, and officials have turned a blind eye to fraudulent CERB applications, but meanwhile, small businesses are falling through the cracks.
This morning, I spoke with a small business owner. He owns a salon, the Care beauty spa and salon in Edmonton. He has invested $200,000 in his business. Just before COVID, he was set to open. Now, he's out of luck. He doesn't qualify for any of the programs. He doesn't qualify for the wage subsidy because he hasn't seen revenue decline. He doesn't qualify for CEBA because he has no payroll, and he doesn't qualify for any of the BDC or EDC programs because he has no revenue.
What specifically is your government doing to address this situation and others like it, where small business owners, who have done absolutely nothing wrong and have invested considerable amounts of money, are now stuck and shut out and desperately need support and help? What are you doing to address this situation, which is not a new one?
Let me first of all say that we are very worried about people like the gentleman you're talking about. That's why we've been so focused on providing supports to businesses, not only for their employees but for their business going forward.
We are working to make sure that these programs are available as broadly as possible. Our emergency business account, which is providing loans of $40,000 to businesses, has now been taken up by an enormous number of small businesses—about 600,000, representing about $23 billion.
We recognize that there are still situations that are difficult. We are looking at how we can consider expanding that criteria to potentially capture businesses like the one that you're talking about, but we will not be able to capture every single challenge. That's the nature of this crisis. We're working hard to make sure, though, that the programs that we do have are having the broadest possible impact.
I will continue to focus on that, making adjustments as we go along so that we can support people like the one that you're identifying through measures that work, and thinking about, for those who fall through the cracks, whether there are other ways that we can be supportive.
Minister, I want to start by saying thank you for being here today. Thank you for your extraordinary leadership and your hard work. It has been a lot; we're into the end of our ninth week of our lockdown. I know there has been a tremendous amount of work by you, by the team, and I just want to say a heartfelt thanks. We know you're all working hard.
For me, I'm really glad that we have an upcoming three-day weekend. I think we all deserve a bit of a break.
My first question is about the large employer emergency financing facility that was announced earlier this week. There were a number of conditions that were attached to it. Specifically you included environmental and climate commitment conditions.
Can you explain why you felt it was important to add those conditions and why you felt it was important to specifically add the environmental and climate condition?
Our impact on climate change as a country is something that we take seriously. I've been working on this issue with my colleagues. We had a committee that did some work on sustainable finance a little more than a year ago. That gave some recommendations on how large businesses in particular could represent their climate impact in their financial disclosures and talk about how climate change could impact their businesses.
We see this as an important thing for businesses to consider. Many firms have moved forward in this regard, which is quite encouraging, including firms in all different sectors of the economy.
We saw that as something that was important for us to recognize. We needed it to be a condition for this program. We additionally know that our goals around the decarbonization of our environment by 2050 are important to Canadians. They are important to the world. We thought we needed to put that as an overall Canadian goal.
As we think about the large enterprise financing, which is protecting jobs and protecting businesses, we want to make sure that those businesses and those jobs are sustainable. That's how we got to the conclusion that this was going to be an important part of that consideration.
First of all my message would be to landlords. I think this is a really important program that will be supportive of landlords, and I think they should take advantage of this.
What we have seen, for landlords, is that many tenants cannot pay their rent. If they have a commercial tenant who can't pay rent, then they are much better off to get 75% of that rent—so 25% from the tenant and 50% guaranteed by the government—than to get potentially zero. That is a huge advantage for landlords. For tenants, obviously it's a huge advantage, because they can decrease their rent payment because of the support from government. That is my message.
This is a program that is just being rolled out. Of course, there are always concerns. It won't work for every single situation. The landlord-commercial tenant relationship is a provincial jurisdiction. We are trying to help to make this work by stepping in through the mortgage system. We think this can have a really big and important impact on small business in our country, and I would encourage landlords to be a part of it. I would encourage commercial tenants and landlords to work together to get through this.
Obviously, it will be helpful for all of us if those stores, which are making our lives so vibrant, remain along our streets when we get through this COVID-19 situation.
Minister, we will let you go.
I just want to make one point. It relates to the question on fraud. I think you gave a fairly clear answer. The answer, to be honest, hasn't been clear from the minister or the on that issue. I think it needs to be stated clearly that the government is not going to accept what is clearly fraud, but there are going to be a lot of errors out there.
I have constituents who were on EI, went back to work, but because they automatically got enrolled in CERB, had no way of saying they were going back to work. They ended up, when they came home, having a $2,000 cheque to deposit. They called, worried about what would happen. I actually had to write a letter to them, saying that, “Look, this was an error on the government's part. Continue to work. Don't spend the $2,000. Set it aside, and when things settle out here that money can be paid back.” Those kinds of errors are going to happen in a fast-moving system like this, but the government has to make it clear that we are not going to accept what is outright fraud. That money will be hauled back in. I think somebody needs to be clear.
That article actually referenced guidance within Service Canada, so I'll gladly answer that question.
That guidance is accurate, but there are a few things that I'd like to highlight.
First, when people are applying for the CERB, whether it be on the CRA site or on the Service Canada site, they do need to complete an attestation, and there is a very clear attestation element there that confirms the person has not quit their employment. Then, as part of the Service Canada application process, they go through the EI system. There are a number of different questions in the EI system, and a number of them do tie into the question of whether someone has quit. Under the EI program, and as well under CERB, people generally do not quit their employment. However, there are some situations in which people can legitimately quit their employment. An example would be if someone had because they needed to take care of their child because of that situation. Other times, there are other situations in which people can quit.
We are recording those answers. As part of the after-payment integrity measures, we will be reviewing those types of responses and ensuring that only the people who were qualified for the benefit are actually able to retain it.
I did want to ask a couple of questions.
First of all, I wanted to know from anybody who is presenting today how we can get information as to the update that is happening for the different programs by region, It would be interesting for me, as an MP, to know what the uptake is for different programs for businesses that are applying for the north.
I know that everybody is working a hundred miles an hour and 24 hours a day, but is there anybody who can provide me with that information? I'm concerned that there may be pockets or areas that may not be utilizing the programs. I'm hearing that in the north a lot of businesses in our communities are not applying for the programs. What I'm hearing is that because there are no banks in our communities, a lot of times they can't go through any kind of financial institution, so there's a small uptake. Can anybody speak to that?
Okay. I'm not sure if you can answer this, but I want to talk about how the different regions are impacted by COVID. I think the federal government's economic recovery approach has to reflect existing regional distinctions.
In the north we've been very fortunate, especially in health impacts; right now we have no cases, but we do have existing costs of living, a large service area and infrastructure gaps.
I'm very keen to know whether the government is prepared to assist us in addressing some of these unique recovery challenges faced by all our northern territories. We've talked lots about greater flexibility and doing things differently, especially with cost-sharing projects or allocating recovery programs. We focused on a base plus per capita formula. That's not something we do across the board with all departments.
Should that be considered, in your opinion?
My questions are for the representatives of Employment and Social Development Canada.
First, people whose EI benefits are running out are noticing that the criteria for the Canada emergency response benefit are a little vague.
Here's a quote from the information available online: “The date for which you would potentially become eligible for the Canada Emergency Response Benefit would be the week following your last Employment Insurance benefit payment...You may not receive EI benefits and the Canada Emergency Response Benefit for the same period.”
Can these people apply for the Canada emergency response benefit after a week? How does that square with the 14-day no-income requirement?
Does it mean that a person can't receive both EI and the CERB at the same time, or that they can't collect them both during an official CERB period, like the period from March 15 to April 11 or the period from April 12 to May 9?
If it's not possible during this meeting, I'd like to get a written answer to this question as soon as possible. I wrote to the Department of Finance over a week ago, and it referred my question to the Department of Employment and Social Development. I got an acknowledgment of receipt saying they would get back to me, but I'm still waiting for an answer.
My other questions are also for the Department of Employment and Social Development.
First, what's happening with the Bloc Québécois' proposal to incentivize work for workers and students who are getting emergency benefits, along the lines of the EI system, so that people can earn more than $1,000 a month without losing the whole benefit?
For instance, it was suggested that $0.50 be clawed back for every dollar earned over the $1,000 limit, like for EI.
Okay. I don't see anyone up to answer that one.
There are about four questions there to be answered. Please send them to the clerk. That would likely be faster. He'll make sure they're in both languages and get them out as quickly as possible.
We'll turn to Mr. Julian for five minutes.
I'll give you the lineup for the next set of rounds: Mr. Cumming, Mr. Fraser, Mr. Cooper, Ms. Koutrakis.
Did you have a question, Elizabeth May? Put your hand up if you do.
Thank you very much, Mr. Chair.
I'll have some brief questions. I just want to make a comment to start. The idea of the CERB is to provide support for people who don't have other means. Somebody who quits their job because they don't have access to protective equipment, for example, should qualify for the CERB.
I find it a bit rich to be talking about widespread fraud when what we have in many cases are people who are just not meeting the strict criteria. That is why the universal benefit that proposed makes such good sense. I hope the government continues to think about that because it would eliminate a lot of the problems that we are seeing.
My question, to the Department of Finance, is the question I asked the minister. I did not get a reply.
What is the budget for the LEEFF? What are the funds that are projected to be spent, the loans that are projected to be outlined for the LEEFF?
Perhaps, Mr. Chair, I can begin on the wage subsidy.
While I can't comment on any future changes the government might make, the wage subsidy was designed with flexibility in mind. I think the committee is probably familiar with some elements of that flexibility, which were intended to recognize the particular challenges of all businesses, particularly small business, in accessing the program, for example, through the use of cash or accrual accounting, different reference periods and so on.
I think the minister did indicate that we will continue to look at these programs and make adjustments as necessary.
There's just one other thing I'd like to add on Mr. Cumming's question. It relates to the CEWS, the wage subsidy. I know that the and others have mentioned that they're going to extend that program, but I can tell you that if they're allowed to take their three-month period, it would make an unbelievable difference in the seasonal tourism industry throughout the country, because a lot of the seasonal tourism industry is in June, July and August.
If they could apply the wage subsidy to those months, it would make the difference between survival or not, I think. I know that it's not your policy decision to make, but that's for information for any of you when you may have a discussion on the matter.
Mr. Fraser, are you there?
I am, Mr. Chair, but I'm having trouble.
I am going to pass the time over to Ms. Koutrakis, but very quickly, just from Finance, just for the sake of clarity, on the protections against abuse in the CERB, I don't know why this has become a controversial issue whatsoever.
Am I correct in my understanding that we made a decision to administer the program quickly, to approve applications based on the attestation and to conduct enforcement on the back end to the extent that fraud is detected? This does not seem like rocket science to me. Is that an accurate description of the enforcement mechanism?
I wanted to thank Minister Morneau for appearing before our committee today, as I know his time is very precious, and to thank him and his team for all their hard work during this time.
I also want to welcome and say hello again to our witnesses who have appeared before the finance committee. It's nice to see everyone again. Thank you for all your hard work and your dedicated work with your teams.
My first question is for the Department of Finance. My colleague Mr. Fragiskatos touched on this a bit in his exchange with the minister earlier. This is with regard to the gendered economic consequences.
An economic downturn can have gendered economic consequences that reflect in part the gender division of labour in the workforce. Women in Canada carry out a higher proportion of unpaid care work than men do, and during a public health emergency such as this, care work may have unintended negative consequences on the mental and physical well-being of our caregivers, including an increased risk of falling ill.
If an analysis has been conducted, what were your findings from this analysis? What action can we expect from the Department of Finance based on these findings?
When we were rolling out the program, we knew it was fundamental to be able to process applications very quickly. We could not deliver the program under the regular EI program, which has a number of different controls, both up front and on the back end. If we had done that, it would have meant that Canadians would have been waiting months and months before they could have been paid. We made a conscious and deliberate decision, in order to get money to the millions of Canadians who needed the benefit, to streamline the process and leverage an attestation model.
That said, I absolutely want to assure this committee that the integrity measures are strong and robust. We do have means and mechanisms whereby we will be able to address any potential fraud and abuse of the program. We and the CRA have lots of measures in place that we will continue to use going forward.
Michael, I'll give you your time back—I've stopped the clock—but I can give an example of what can happen. I mentioned it earlier with the minister.
I had a construction company with 28 employees call me. Their workers were laid off while they put in proper washrooms on their construction sites to meet COVID-19 standards. They applied for EI and they were on EI. Because they went back to work just as the system was starting up, they automatically went to CERB without asking for it. It was an honest mistake by everyone. So 28 people got CERB, they called me, and I basically said to set the money aside. It was an innocent mistake in a fast-moving system.
That was 28 people right there. It wasn't fraud. As the system was changing, EI rolled them over when they had no way of reporting that they were going back to work. Those things happen. That's an innocent example. There are probably others that are not.
The floor is yours, Michael. Go ahead.
I will turn to another topic, one that I raised with the minister. It is with respect to new businesses. I spoke with a business owner who invested $200,000 to open a salon. Just at the moment he was about to hire four people and start the business, COVID-19 happened. He doesn't qualify for the wage subsidy, because he has no revenue decline. He doesn't qualify for EDC or BDC loans, because he has no revenue. He doesn't qualify for CEBA, because he doesn't have a payroll.
The minister, in answer to that question, indicated that this was very much something that the government was attuned to and was ready to address. I'd be very interested in hearing what details the officials might be able to provide to reassure small business owners like the one I'm talking about that help is finally on the way.
I hope I won't use it all and then more members can ask questions.
I'm not sure which officials I need to ask this, but it's following up on this general conversation we've been having about getting things out quickly versus full controls and rigour. What I wanted to suggest, because it's been missing in this conversation, is that part of the reason for speed is flattening the curve. People won't stay home and stay away from work if they're not financially secure and don't see some aid coming. There's the connection between getting CERB out quickly, getting it to everyone who needs it quickly, and not necessarily being concerned at the front end with making sure that everybody is “eligible”. I wouldn't call it all fraud. I certainly agree with the chair that there are lots of circumstances here where there could be confusion.
What I wanted to ask officials was, to get a sense of if the instructions had been other than what they were, if the instructions had been, “Don't approve anyone until you've checked, you've gone back into their background, and you know that this is someone who deserves the benefit.” What would that have cost the Government of Canada? Did we have the capacity to do that?
We've heard from witnesses that it would have significantly delayed when people got their money, for which I think there would have been a public health impact. This is a public policy issue at a very high level. I just wonder, is there any estimate of what it would have cost the Government of Canada to have staff checking all the applications?
I'm happy to respond from our perspective.
I want to clarify that there are certainly upfront checks that are done. For example, we check that the social insurance number is valid, that the person is of legitimate age to be able to receive this and that there's no double-dipping with respect to the various programs. Certainly there is upfront verification. I just wanted to assure you that it's not without that.
With respect to creating a system where individuals would have to prove that, in fact, they have no income, I can't tell you what the cost would be, but I can tell you it would be an extremely lengthy process to provide us the information. That they don't have income is very difficult to prove in real time. I think not only would it have been very costly, but I think most importantly it would also have delayed the ability to get the money out to individuals by weeks, if not months.