Welcome to meeting number 29 of the House of Commons' Standing Committee on Finance. Pursuant to the order of reference on Tuesday, March 24, the committee is meeting on the government's response to the COVID-19 pandemic.
I will remind everyone that this is being put onto ParlVU, and I will remind members to use the interpretation button at the bottom of the screen for the language they're speaking in. It comes through that way. Speak as slowly and clearly as you can for the benefit of our translators.
We're meeting this afternoon on panel one with the Canada Mortgage and Housing Corporation. We have Mr. Siddall, president and CEO; and Ms. Romy Bowers, senior vice-president, client solutions.
I see, Mr. President, that you have speaking notes, so go ahead; the floor is yours. We'll then go to rounds of questions from there.
Seeing as there is only one witness on this panel, I'll remind members of the speaking order for the first four. It will be Mr. Poilievre, Mr. Fraser, Mr. Ste-Marie and Mr. Julian.
The floor is yours, Mr. President.
Early in the crisis, in co-ordinated action with the Bank of Canada and the Department of Finance, we relaunched the insured mortgage purchase program. This tool helps ensure that banks have access to reliable term funding so they can continue their lending activities and housing markets remain functional.
Under the current revised program, we stand ready to purchase up to $150 billion of insured mortgages. We are also prepared to expand the issuance of conventional securitization programs, as needed.
In addition, we acted quickly to help Canadians who are having difficulty paying their mortgages or rent due to income loss because of COVID-19. In co-ordination with private mortgage insurers, we are offering temporary deferral of mortgage payments for up to six months. We estimate that 12% of mortgage holders have elected to defer payments so far, and that figure could reach nearly 20% by September.
The same mortgage deferral relief is available to our multi-unit clients in order to facilitate rent relief for their lower-income tenants. And we have taken steps to ensure that non-profit and co-operative housing providers continue to receive federal rent subsidies for low-income tenants, even if their current agreements with us have expired. In both cases, we have insisted that recipients of federal support refrain from evictions during the crisis.
More recently, the announced that CMHC will administer the Canada emergency commercial rent assistance for small businesses. The program will lower rent by 75% for small businesses affected by COVID-19. While the program is not housing related, we are pleased to use our real estate expertise to help struggling entrepreneurs.
However, as the committee is no doubt aware, almost everything we have done in response to the crisis involves borrowing. Just as governments are taking on more debt to finance the COVID-19 response, mortgage deferrals are adding to already historic levels of household indebtedness, and I have provided you with some slides on that. Canadians are amongst world leaders in household debt, as the committee knows. Pre-COVID, the ratio of gross debt to GDP for Canada was about 99% due in part to increased borrowing but even more so to projected declines in GDP. We estimate it will increase to about 115% in the second quarter of this year and reach 130% in the third quarter before declining. These ratios, I note, are well in excess of the 80% threshold above which the Bank for International Settlements has demonstrated that national debt intensifies the drag on GDP growth. Looking at debt multiples of disposable income—a number people are more familiar with—we see that this measure will climb from 176% in late 2019 to well over 200% through 2021. Moreover, CMHC is now forecasting a decline in average house prices in Canada of 9% to 18% in the coming 12 months.
The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada's longer-term financial stability. Another slide I gave you quotes Hyman Minsky, who said that debt causes fragility.
A team, therefore, is at work within CMHC to help manage a growing “debt deferral cliff,” as we call it, that looms this fall when some unemployed people will have to start paying their mortgages again—that's assuming some economic recovery. As many as one-fifth of all mortgages could be in arrears if our economy has not recovered sufficiently.
We feel that we need to avoid exposing young people, and through CMHC, Canadian taxpayers, to the amplified losses that result from falling house prices. Unless we act, a first-time homebuyer purchasing a $300,000 home with a 5% down payment stands to lose over $45,000 on their $15,000 investment if prices fall just 10%, which we are forecasting. In comparison, a 10% down payment offers more of a cushion against possible losses.
If there is an insurance claim, and there will be more, CMHC will be called upon to cover these losses. We're therefore evaluating whether we should change our underwriting policies in light of developing market conditions.
Our support for home ownership cannot be unlimited. It's like blood pressure: you can have too much, but you need some. We've found that housing demand is far easier to stimulate than supply, and the result, as we've seen, is Economics 101: ever-increasing prices. If housing affordability is our aim, as surely it must be, then there has to be a limit to the demand we help to create, especially when supply isn't keeping up.
People believe owning a home is essential for retirement savings. Indeed, as shown in the study on which I've given you a chart, most of the increase in the shared wealth over the last 20 years in western countries has been in housing. The average Canadian homeowner in the last 20 years has had a tax-free gain, on average, of $340,000 in the value of their home. That sounds great until you add in the fact that $300,000 of that gain has been created by increased borrowing. These house prices and debt levels are increasingly out of reach for young people. In fact, home ownership tends to be lower in countries with higher incomes.
In addition to restraining our underwriting practices to limit excessive borrowing, we at CMHC must also take decisive, urgent action to accelerate the supply of rental housing. We have taken steps to do so in funding under the national housing strategy, which is very much focused on creating more affordable rental housing for Canadians. The federal government is contributing billions of dollars to housing, along with provinces and territories. Municipalities can continue to help by accelerating their approvals, contributing land and/or waiving fees and taxes to support the development of affordable housing, as well as revising their property tax regimes through a lens of impacts on housing affordability.
I'll wrap up by saying that, at CMHC, along with our 2,000 colleagues, Romy and I remain fully committed to our aspiration that by 2030 everyone in Canada will have a home that they can afford and that meets their needs. If anything, COVID-19 has brought the value of stable shelter into sharp relief, strengthening our resolve.
Thank you. I'd be happy to answer any of your questions, and Romy will join me for the harder ones.
Thanks, Mr. Chair, and thanks, Mr. Siddall and Ms. Bowers, for being here today.
We certainly hope that your families are safe and healthy.
I have two questions to start, around the IMPP. Economist David Macdonald estimated that in the previous financial crisis around 2009, the IMPP provided $69 million of support to Canada's largest banks. At the time, the profits coming out of those same banks were about $27 billion. Famously, Edmund Clark of the TD bank gave himself a $4-million bonus and was paid $15 million.
The issue comes up, of course, in my hometown, New Westminster—Burnaby, where people are struggling to find affordable housing. They see the near-zero interest rate from the Bank of Canada. They see as well that when it comes to deferrals, these often come with penalties and interest fees.
I have two questions. First, what is the amount assumed so far on the IMPP? Second, have you insisted in this program that banks lower their interest rates—we see credit unions going down to zero—that the banks actually give people a break, eliminate the fees and penalties, and don't engage in what is speculative with this public support, which includes the payment of dividends and stock buybacks? Has there been any insistence through this program that the banks not engage in those kinds of practices?
I'd like to go on to your presentation. I appreciate the issue of household debt as a percentage of GDP, though I take a different point of view than Mr. Poilievre, given the Conservatives' background in providing a lot of supports to the banking sector. A lot of family debt actually comes from people who can't afford housing, or their medication. They have to borrow because they're having to finance their education as well.
These are things that don't happen in so many other countries. As you correctly point out, Canada's family debt levels are among the highest in the industrialized world. Therefore I'm wondering, putting aside the issue of the IMPP, whether CMHC has evaluated what the impacts would be on the family debt crisis if we were making significant and large-scale investments in affordable housing.
We had an order paper question that showed that over the last five years about 14,000 units of affordable housing have been built. That is far below what is needed in this country. About one-third of Canadians are renters. We haven't seen an expansion of the co-op sector. What would the impact be on those household debt levels if we saw CMHC actually making large-scale investments in affordable housing again, as they did when we used to have a national housing program a few decades back?
Mr. Siddall, thank you for being here, and thanks to Ms. Bowers for being here for a very important discussion.
This won't surprise you: the number one issue during the last campaign was affordable housing. With this pandemic, coming out of it, it will continue to be a top issue for the residents in my riding of Davenport.
We've had a number of non-profit organizations want to help build some affordable housing options in the riding, but they have found the process a little bit onerous, a little bit long and not easy to engage in.
I heard you say we're trying to create 125,000 new units over the next 10 years. I know our need is substantially higher than that.
We're now in the era of agility and flexibility and trying to do the impossible. What can the federal government do at this point to help CMHC accelerate more affordable housing options?
To put it simply, we've become a much more client-centric organization. I think before what we were trying to do did not consider the needs of the client, but tried to fit people into different programs that we have.
The first instance is to understand what the needs of the client are and then try to find a solution for them.
I apologize to your constituents who have had difficulty with our programs. I can assure you that there has been an effort under way for the last eight months to really look at our processes and to make significant improvements, starting with having detailed discussions with the clients before they even start the application process.
I hope the fruits of that effort are slowly being felt. We're always very happy to have discussions with you. We have staff across all regions of Canada, and we're very happy to engage in these kinds of discussions to make sure the money is getting to the people who need it most.
As you probably know, recently the mayor of Toronto announced some modular housing units that are being built in response to the COVID crisis. Again, that's an example of CMHC staff working very constructively with municipal leaders to make sure that money is going where it's needed most.
It's a complicated question. Mercifully, I get to think about it all the time.
The 12% I gave you in terms of deferrals is for insured and uninsured mortgages, so it incorporates numbers that we publish and those from the Canadian Bankers Association. I wouldn't associate even half of that with losses or foreclosures. This is people dealing with uncertainty and conserving cash, just like they hoarded toilet paper, because they could and because banks were offering, and we were. Basically, if you said you were having a hard time, we said, “Take a deferral.”
That compassion is what has happened, and I have to give the banks credit. They've done that on uninsured mortgages, in addition to insured mortgages, and our two private competitors were lockstep with us: Canada Guaranty and Genworth Canada.
The impact is going to be that those mortgage-deferred payments are added to the principal outstanding, so it increases our indebtedness. That's one of the costs behind the numbers I gave you.
I appreciate your availability today.
I'll just get the four out and then you can answer, depending.
First off, when it comes to commercial rent relief, would you agree with many people that the fact that it has to go to landlords who have a mortgage makes it too complicated and that those may be part of the changes hopefully that are brought in very soon? It's certainly an issue in my end of the country, in British Columbia.
Secondly, having CMHC manage the commercial rent relief program, doesn't that also mean that you would be able to—if the government chose to—administer a residential rent relief program? And I know the issue of jurisdictions, but the reality is it's the same jurisdiction whether we're talking about commercial or residential rent relief.
Thanks, Mr. Chair. Now I'll go to my other two questions.
For the 12% of mortgages in deferral, does CMHC track how many of these mortgage deferrals have been approved without the penalties, interest compound fees, that we have seen certainly in my riding so many times?
My final question is in the same vein as Ms. Dzerowicz' question. We have half a dozen sites that the City of Burnaby has set aside for affordable housing. We're finding it very difficult to access this, and when you talk about $18 billion, I'm stunned, because homelessness, of course, is increasing in this country. It's becoming a bigger problem in my region especially.
Is there any type of internal evaluation that CMHC is doing around how difficult it might be to access the current program and whether the monies that are being laid out are actually helping to address the problem?
Yes, that is true, and the taxpayer is backing it up.
In conclusion, one alternative, as I mentioned in my opening remarks, would be to move towards covered bonds. Instead of having a taxpayer backing for all of this debt, the debt would be backed up by a strong and even excessive collateral, which is widely practised in Europe. In Canada, it only represents 9% of Canadian mortgages. According to a report by the Bank of Canada, the reason is, “Instead, banks have been relying primarily on cheap government-guaranteed mortgage funding options.”
Is it possible that CMHC, and the backing of Canada Guaranty and Genworth by the government, is actually pushing out this market mechanism that could give us a secure form of backing up our mortgages without putting the liability on the backs of taxpayers?
We will reconvene. I call the meeting to order once again.
Welcome, witnesses, to meeting number 29, panel number two, of the House of Commons Standing Committee on Finance. We're meeting pursuant to the order of reference of Tuesday, March 24, on the government's response to the COVID-19 pandemic.
We'll forgo the rest of the preliminaries and get on. We have a lot of witnesses today. We have seven on this panel. If you could try to keep your comments fairly tight to the five minutes, it would give us more time for questions.
Welcome, all of you, and thank you for coming.
We'll start with Janet Wardle, with the Aerospace Industries Association of Canada.
The floor is yours.
Thank you. Good evening.
As chair of the Aerospace Industries Association of Canada special COVID-19 economic impact committee and president and CEO of MHI Canada Aerospace, I thank you for the invitation to be here today as you study the government's response to COVID-19.
AIAC is an industry association representing more than 95% of aerospace activity in Canada. Our members are located in all regions of the country and range from very small to very large businesses operating in all three segments: space, aerospace and defence.
MHI Canada Aerospace is a North American tier one heavy aerostructures operation, whose work statement represents the largest on-load of related high-skilled aerospace manufacturing jobs to Canada in the past 40 years. We currently employ 850 employees at our Mississauga facility, along with an estimated 3,000 people indirectly throughout our supply chain, of which 65% is within Canada. We pride ourselves on our team Canada approach, our accomplishments and how we have successfully positioned ourselves for future growth opportunities within the commercial and defence aerospace industry.
More than 80 years ago, decision-makers just like you committed to making Canada a global leader in aerospace. They had the foresight to recognize an industry that, if supported, would add to the overall economic health of the country. We are now one of the five leading aerospace hubs in the world. That is the kind of commitment and leadership required today. Nearly 215,000 Canadian jobs and $25.5 billion annually are contributed to the Canadian economy.
We have faced challenges before, but the impact of the COVID-19 crisis is truly unprecedented. With little demand for flights and most airline fleets grounded for the foreseeable future, the effect on the aftermarket demand has been significant and is expected to remain low. In some cases, new orders have been stalled and airlines have requested delivery delays, leading to reduced aircraft deliveries. Canadian aerospace companies are grappling with cash availability, operational constraints, supply chain impacts and revenue sensitivity.
In fact, EDC's own reporting identifies aerospace manufacturing as one of the hardest hit industries. While some sectoral support has been announced for other industries, that hasn't been the case for aerospace. Now is the time. In addition to your overall economic support, we are once again calling on the government to please work with us on a sectoral strategy for aerospace.
There are many global examples of industry and government working together to enable the aerospace, defence and space industries in their countries to achieve a top position in the global market, and that is what we need to do in Canada. For example, the Australian government is investing significantly to build defence capabilities. In the U.K., programs across the space sector are supported to deliver innovation and growth. Likewise, the U.K. has also developed a strategy for defence.
This isn't about bailouts. It's about leveraging a transformational opportunity to catapult to a solid position of strength as a world leader. Canada has been a leader in the past, and we need to get there again. This crisis has reinforced what AIAC has been saying for some time now. Vision, investment and partnership are needed if we are to be the leaders on the world stage.
AIAC issued our “Vision 2025” report last year because Canada was starting to lose ground and we needed to partner with the government. Of course, no one could have foreseen the COVID-19 crisis, but we knew that as an industry we couldn't continue on a downward trend. Too much is at stake. The report's recommendations are more applicable now than ever, and our industry, through AIAC, has also identified some additional priorities to ensure we mitigate these severe challenges and position Canada's aerospace sector moving out of COVID.
One, we need to partner with the government on a plan to allow people to begin flying again in a way that considers safety and respects new social norms.
Two, we need to further reform our existing programs that take into account different timelines faced by our industry compared to others.
Three, building on the work already done through vision 2025, we need the development of a long-term strategy for the sector to ensure our global competitiveness and to ensure we contribute to the economic growth that is required post COVID-19.
Four, we need the rapid implementation of green technologies and supply chain support for SMEs so the sector can establish itself as a world leader in environmental sustainability and ensure that our supply chain can adapt.
Five, we need to expedite public procurement, in particular, defence and space projects, to help stimulate and sustain high-tech jobs and supply chains.
We have a road map for moving forward, but government support is needed to not only allow the sector to recover from the crisis but also recover to a position of strength on the global market. We look forward to partnering with the government to make this a reality.
Thank you for your time and consideration.
Good afternoon and thank you for inviting me here today.
CEPA represents Canada's transmission pipeline companies that operate most transmission pipelines in Canada and many of the large pipelines in the United States. We are pleased to report that our systems continue to deliver this essential service in the face of today's unprecedented challenges. In addition to delivering the energy that enables our essential services to continue operations, CEPA members continue to deliver economic benefits for Canada. In 2018, CEPA spent nearly $14 billion on taxes, goods, services and capital projects in nearly every province and territory and directly employed over 13,500 people.
CEPA members have felt the impacts of COVID-19 too. Transmission pipeline operations, maintenance and construction projects along with their supply chains were designated critical infrastructure quite early, and personnel were designated as essential service workers. Special protocols have been set up to protect vital control room personnel and systems and to ensure that personnel are safe. We transitioned to this new reality swiftly and safely, but we are looking forward to getting fully back to work and contributing to Canada's economy and recovery.
It is important for us to recognize the front-line workers who have kept society going. I would also like to thank the federal and provincial governments, which ensure that our members receive the advice and equipment they need to remain safe and the financial aid and liquidity support that are essential to preserve our capacity to recover quickly. Our industry stands ready to do so.
The new decade began with cautious optimism for the pipeline sector. We remain optimistic, and we have many opportunities to grow. We are seeing progress on major pipeline projects, including Trans Mountain, Coastal GasLink, Keystone XL, Enbridge Line 3 and expansion of TC Energy's NGTL system. Other major projects in the midstream and petrochemical sectors, such as Inter Pipeline's Heartland Petrochemical Complex and Pembina Pipeline's Prince Rupert LNG terminal, will create new infrastructure and value-added processing of natural gas liquids into essential petrochemical products.
Recently, CEPA undertook a survey of members to determine what shovel-ready and shovel-worthy projects could be deployed quickly under the right economic, policy and regulatory conditions. I'm pleased to report that CEPA members identified almost 7.5 billion dollars' worth of new projects, many of which offer significant growth and employment opportunities for Canada.
There will be large and small changes to the lives of Canadians and lessons learned as a result of the pandemic. However, our commitment to be the best in the world in terms of environmental performance will remain. Our operations and the products we transport across the continent and the world are essential and have the best environmental practices.
For CEPA, another reason to be optimistic is Canada's status as a world leader in environmental, social and governance standards, or ESG. We know that capital markets are looking at enhanced ESG reporting and, as Canadians, we know that we produce energy to the highest ESG standards. This is a competitive advantage for Canada that should be leveraged.
Another reason for optimism is the engagement and support we see from indigenous communities that are seeing benefit agreements, community investment, jobs and local supply opportunities from energy projects that will provide economic security and build strong communities for the long term. In 2018, CEPA members spent $240 million on personnel, services, supplies and equipment from indigenous suppliers.
Canada is a leader in responsible energy development, and we have the resource base that can grow to meet energy demand globally. Canada can leverage these advantages as the world recovers.
I'd like to speak a bit about liquefied natural gas, or LNG. Canada has immense natural resources, particularly natural gas which, if converted to LNG to supply global customers, would be a powerful engine for the Canadian economy. LNG can bring thousands of jobs and billions of dollars of revenue to Canada for decades and will help reduce the use of coal around the world.
Beyond LNG, our liquids-rich natural gas offers the potential to expand a major value-adding industry—the petrochemical sector. Again, these are tens of billions of dollars of potential investment that could provide employment, technology development, revenue and products for the whole economy.
As Canadians, we enjoy the security that our resources provide, the security that has ensured the supply chains that feed Canadians, helps to create the fertilizers that grow our food, provides heat and power for our essential services like hospitals and nursing homes, and provides the raw materials for plastics necessary for the personal protective equipment that keeps our front-line workers safe and able to continue to operate.
Global demand for reliable and affordable energy continues to rise, and despite major growth in renewables, oil and natural gas will remain essential parts of the energy mix for decades to come. Natural gas will be foundational as the core to future energy plans and electricity growth. Petrochemical products will also continue to be essential ingredients in new renewable energy production facilities and the systems that connect them.
The ongoing global demand for oil and gas will be met one way or another. Canada should be the first supplier of that energy, as a global ESG leader whose oil and gas resources are developed and transported under some of the strictest environmental standards in the world. Canada should be the first molecule of natural gas or barrel of oil produced and consumed in any market, because no other country produces it more responsibly. The fact is, Canada has the energy that the world will need long into the future. By providing responsibly produced Canadian energy to the world, we will create the jobs and economic and social benefits that our country will need to recover and prosper.
In closing, I would ask you to consider the following.
The crisis has taught us that Canada needs the ability to look after itself in a pandemic. We need shorter supply chains, and we need to enable those supply chains. Fortunately, we have the raw materials we need, the human resources and the ingenuity we need, and the energy we need to be self-sufficient and to help others. What we need is the will to set aside minor differences and work together to leverage all of our natural advantages for the future of all Canadians.
Our industry must be part of that future. We will build it together: safer, smarter.
Thanks for the opportunity to speak to the role of municipal parks and recreation and what we can do to help in the societal and economic recovery of communities from COVID-19.
The Canadian Parks and Recreation Association is the national voice for municipal parks and recreation. We are the arenas, pools, sports fields and playgrounds in your community, and we are the summer camps, yoga classes, sport leagues and swimming lessons in which you and your family participate.
The municipal parks and recreation sector provides facilities, services and programs for both a social and financial return. During the pandemic, as facilities and programs are shuttered, we are losing both revenues and the value we bring to communities and individuals. Returning these services fully, safely and quickly in a post-pandemic context must be a priority for all levels of government. Jurisdictional roles must not be a barrier during this time of crisis for municipalities and non-profits.
The financial impact of COVID-19 on the municipal parks and recreation sector is $221 million monthly, due to the incurred fixed costs of operating facilities against zero financial and social return. When facilities and programs do resume, new public health requirements such as hygiene, cleaning and social distancing could raise facility operating costs by as much as $226 million annually. Lower revenues are expected due to capacity restrictions on facilities and programs under social distancing. The true impact of this is yet to be determined.
Since municipalities do not qualify for the Canada emergency wage subsidy program, thousands of parks and recreation employees have been laid off, and thousands more, including summer students, will not be hired for summer programs.
I will now turn it over to Mike Roma.
When restrictions are lifted, Canadians will want and need recreation and parks services. There will be challenges. C.J. has mentioned some of them.
There will be higher operating and infrastructure costs. There will be limitations on the ability to deliver programs in terms of participant levels and facility and space capacity limitations, while costs will remain the same.
Hiring, training and ramping up staff will be expensive, and municipalities aren't eligible for current wage subsidy programs. As well, participants will need to get over the stigma of being in busy facilities and spaces. That will require enhanced cleaning procedures as well as enhanced promotions and marketing efforts. There will also be capital investment requirements related to those public health restrictions. They will be added to the pre-COVID capital issues the sector had in terms of aging infrastructure.
These challenges will lead to increased costs and user fees and the need for specialty staff, supplies and equipment. In some cases, we fear that these increases will be too much for municipalities and non-profits, leading to reduced service levels and, in some cases, facility and space closures.
We know that recreation, parks and sport will be key to our recovery. We also know that we have a lot to contribute to other federal agendas, such as increasing physical activity levels, addressing climate change and furthering reconciliation.
For these reasons, we call on the federal government for two avenues of support, with the first being a community sport and recreation recovery fund, and the second being investment in sport and recreation community infrastructure. We call upon the federal and provincial and territorial governments to create a joint single-transfer funding program that municipalities can immediately access to help support the costs of returning parks, recreation and sport services to communities.
We applaud the recent commitment by the federal government of $72 million to amateur sports sectors; however, we are representing the places where those activities will occur, and obviously we need to be providing those spaces for sport and play to come back.
We also call for an investment in community sport and recreation infrastructure, not only to address the pre-existing multi-billion dollar recreation infrastructure deficit, but also to address new infrastructure needs in a post-COVID-19 setting. When compared to any other infrastructure system provided by municipalities, it's been proven that recreation most needs investment. Again, we do applaud the federal government for re-profiling existing infrastructure funds to create a COVID-19 fund, but that is only a first step. New money is also needed.
We're hoping that these infrastructure funds, when announced, could be directed to municipalities directly to allow for timely and direct funding to communities, and they should be earmarked for sport, culture and recreation infrastructure, preferably to reinvest in aging facilities, similar to the envelope created in the 2017 federal budget.
With that, I would like to thank you for your dedication and public service in these trying times and also to thank the finance committee for inviting CPRA to appear.
We will welcome any questions during the question period. Thank you.
Thank you, Chairman and distinguished members of the committee, for the opportunity to present as you examine concerning matters related to COVID-19. My name is Denise Allen, and I am the president and CEO of Food Processors of Canada.
For more than 35 years, Food Processors of Canada has been the trusted, leading national voice of the Canadian food and beverage processing sector. Today, we find ourselves in uncharted territory. We have accepted that our future is irreversibly changed by the prolonged effects of this crisis, and this has forced us all, both in business and in our daily lives, to consider the interconnectedness of our societal, food and economic systems. The following submission is intended to respectfully inform you of the impending risks we observe in our food value chain and to offer a suggestion on how to offset the possibility that, if the issue of liquidity is left unaddressed, food shortages and food price inflation will be more severe than necessary.
Since early March, the COVID-19 pandemic has placed extraordinary strain on our entire supply chain. During this time, food processors have continued to manufacture safe, high-quality products under a difficult set of circumstances, which includes reduced operating capacity and sales, higher operating costs and wages, employee absenteeism, sourcing of personal protective equipment and other measures to ensure factories remain open while simultaneously safeguarding our employees' health. These changes to operating procedures are taking place under a backdrop of daily changing public health announcements and a nationwide state of emergency.
The disruption to the food sector in Canada has left certain sectors of our economy devastated. This prolonged disruption is marked like no other in history and bears a combination of unique characteristics that will require remediation to ensure that food products continue to flow uninterrupted to consumers. Our sector's commitment to produce essential products for Canadians during our crisis remains strong. As we look forward, we recognize that social distancing rules will remain in effect for the foreseeable future. This enormous change to how we plan and run our businesses day to day will have an ongoing effect on productivity and profitability, and has, therefore, forced us to broaden our analysis and risk mitigation plans to include the interconnected parts of our food system.
A return to a steadier economic state will require the recognition and support for the incremental expenses beyond PPE incurred to date, as well as a recognition of future financial risk in the form of liquidity in one important selling channel: the food service sector. Our government's recent announcement that it will provide targeted support to food processors by creating the emergency processing fund is welcomed support. However, this pool of funds is inadequate to cover the added operational burden of not only PPE but other incremental costs to ensure the safety of front-line workers and to meet increased demand from retailers.
Through the collection of source data from businesses, we have extrapolated an estimate of approximately $1 billion in added operational expenses assumed by food processors alone. FPC welcomes the assistance and support offered by the emergency processors fund. However, we respectfully ask that consideration be given to expanding this fund to offset the financial burden beyond that of PPE being shouldered by the food and beverage processing sector.
The credit risk posed by the devastation in the food service sector, primarily of independent restaurants, presents significant risk to the efficient workings of the entire Canadian food supply. Recently, government announced a rent subsidy program for independent businesses, which responds to one of the greatest challenges for independent restaurants. However, the sector is reporting low uptake of the benefits of the program. Even more worrisome is the working capital requirement to restock inventories, which will exceed that of rent default risk.
By contrast, the retail sector remains buoyant with little to no liquidity issues reported. Retailers currently have sufficient cash flow to pay food processors within established payment terms. The food service sector has had a significant erosion of sales, which presents liquidity risk in this second major selling channel for food processors and primary producers. This liquidity risk is severe and compounded by rent and other debt, low operating margins and shortened cash cycles. Their liquidity problem is not simply timing but an inability to generate cash from operations or to borrow sufficient funds to replenish inventories required to reopen.
When we examine the total food supply chain, it is apparent that many independent operators in this sector will not be able to honour past food orders and settle rent debt through further borrowing or sales. Unless independent restaurant operators can secure a source of funding in the form of long-term financing or grants, their rent debt alone will be a significant detriment to their ability to reopen profitably.
This gap translates into significant accounts receivable risk for both food distributors and food processors. Without immediate remedy, food distributors will not extend further credit to their restaurant customers, based on this restriction to working capital.
The backbone of the Canadian food supply chain is our farmers. The agricultural sector is the base producer of food for both selling channels. The liquidity issue presented by the food service sector will impact the agricultural sector's ability to see their product effectively reach the consumer market.
Our ability to focus on the total food system and supply chain in Canada will determine if there are food shortages and severe price inflation, which will disproportionately affect those most economically vulnerable. We are asking for an injection of working capital to backstop the credit risk posed by the food service sector and ensure that product continues to flow unfettered while protecting the Canadian small business owner.
In conclusion, Chairman, two immediate opportunities exist to protect and secure food supply for all Canadians.
First, expanding the scope and magnitude of the emergency processing fund to include other incremental operating expenses is needed to offset the increases and support public safety protocols expected to continue far into the future.
Second, an immediate injection of working capital is required to backstop a minimum of three to six months' worth of food orders to offset the receivables risk to distributors and discourage changes to payment terms.
With relative stability restored to our food system, our collective focus must then shift to an exit strategy for COVID-19.
Good morning, committee. My name is Christopher Sheppard-Buote. I'm the president of the National Association of Friendship Centres.
I want to recognize that I'm on Treaty 6. I'm joined by Jocelyn Formsma, the executive director of the National Association of Friendship Centres. We represent over 100 local friendship centres and provincial and territorial associations in every province from coast to coast to coast, except Prince Edward Island.
Friendship centres are urban indigenous community hubs that provide a wide range of programs and services for every demographic of indigenous people, including prenatal, healthy baby, family, children's, youth, adult and seniors programming. We offer services in health, economic development, entrepreneurship and employment and training, housing and homelessness, head start and child care, violence prevention, education, languages, culture, justice, and sports and recreation.
Collectively, we are the largest and most comprehensive urban indigenous service delivery network in Canada. Last year, 93 centres served approximately 1.4 million first nations, Inuit, Métis and non-indigenous people across over 1,200 programs and services in 238 buildings, and employing over 2,700 people. We are proud to be a largely indigenous, women-led network.
What I need you to hear today is this: The federal government needs us to help navigate through the remainder of the COVID-19 response in urban indigenous communities. They will need us to help re-establish Canada's economy after COVID-19, and they need to effectively resource us to do so. The first friendship centres have been on the front lines of support for first nations, Inuit and Métis people for 70 years. COVID-19 is but one emergency that we are helping the communities we serve to navigate. The matters and conditions that we help our community members with every day will still be here, even after this pandemic ends.
Among the systemic barriers to doing this essential work are the distinctions-based approach to COVID-19 funding, which left many of the urban indigenous community members we serve unseen; the ongoing jurisdictional wrangling between federal and provincial governments; the chronic lack of resources, training and personal protective equipment; and not being engaged nationally on urban-specific approaches.
While we are appreciative of the funds we have been able to secure through the indigenous community support fund, we need you to know that this money was spent even before it hit the ground. The $15 million that was set aside for urban indigenous needs was never going to meet those needs. We must see a second wave of funding soon. Urban indigenous people cannot continue to be left behind.
Now is the time to leverage the friendship centre movement's expertise, networks and programs to support urban indigenous people and provide them with the support they need during this crisis and afterward. The NAFC continues to seek funds to ensure that urban indigenous communities are served in this time. Friendship centres should not be decimated because they answered the call when others could not or would not, because they spent and served without proper equipment, and because they put aside their regular fundraising activities or shut down their social enterprises. Our network is highly effective, agile and competent at sharing information and caring for each other.
Instead of looking at us as another handout asking for more, we encourage the federal government to look to us as an answer to the question of how to reach this priority population. Properly equipping and resourcing friendship centres now and including friendship centres in response and recovery strategies is but one way to care for and invest in the viability of urban indigenous communities and economies.
The NAFC has offered and continues to offer its perspective, expertise and knowledge of urban indigenous communities and community members to inform the federal government and guide effective remedies both now and post COVID-19. We look forward to being a part of the ongoing conversation and the continued investment in our work.
Thank you so much.
On behalf of the Public Policy Forum, I thank the finance committee for the opportunity to address the critical issue of how COVID-19 has impacted the economy, and what can be done.
I'll be speaking about the general public interest and not the state of the think tank sector.
PPF is embarking on a post-COVID research and convening project that we call “Rebuild Canada”. Our work starts from the premise that the crisis has thrown up new issues with which we must deal, as well as changing the trajectories of long-standing issues that we have not yet adequately addressed. There are many of them.
I was struck in the recent jobs numbers that young people make up 14% of the population and have lost 30% of the jobs. Nearly half as many again are still employed but have lost all or a majority of the hours they usually work. Research from previous recessions shows that unlucky timing in entering the labour market reduces earnings for at least a decade.
As with public debt, digital infrastructure, gig work or the decoupling of China and the United States, policy-makers are going to be left with a host of issues with major consequences. Rebuild Canada will gather some of the best established and up-and-coming policy minds and generate fresh ideas for decision-makers such as you.
Our first choice is whether we seek a return to the pre-pandemic status quo or strive to turn this cataclysm into a catalyst for a more productive, resilient and fair economy and society. With that in mind, I'm going to briefly touch on two issues that we will look at.
The first is climate and energy. Nowhere is the crisis more acute than in Canada's oil and gas producing provinces. As policy is considered, three realities stand out. One, climate change is getting worse. Two, an energy transition is already under way, driven by both public opinion and international investors. Three, a move away from fossil fuels will occur over decades, not years.
Just 3.8% of new vehicles sold in Canada today are electric or hydrogen. Internal combustion autos still comprise 99% of the passenger fleet, and the average life span of a modern car is about 13 years. It is clear that we will be running on gasoline for a while yet. If fossil fuels are going to be with us and climate change is getting worse, there's only one possible solution. We need to pursue all four pathways of the government's 2018 Generation Energy Council report, including a cleaner oil and gas sector.
Norway provides a model of climate cleanliness at home and the export of low-carbon oil abroad. The alternative to a cleaner oil and gas pathway, given continued demand, is to become a net importer and forgo the $76 billion that Canada earns toward our balance of payments from oil exports.
One place to start being cleaner and continuing to make this money for our government and for other revenue is by matching U.S. incentives for carbon capture, including the so-called 45Q tax credit. Canada at one time was a world leader in carbon capture, one of many steps in reducing emissions. Today, our homegrown technologies are being tried out south of the border. I see in the PPF's energy future forum project a strong desire to re-establish leadership at home and to sell abroad.
The second thing I want to talk about is quality of information in a democracy. As some of you know, I spent most of my career at The Globe and Mail, including as Ottawa bureau chief, founding editor of globeandmail.com and editor-in-chief. The COVID crisis is having two major effects on the news industry.
First, it is decimating revenues at journalism-based organizations at the very time that demand for reliable and local information is greater than ever. In releasing its first quarter results two weeks ago, Torstar Corporation reported print ad revenues at its dailies and weeklies down 58%. Digital was also down. This is typical of the industry and comes on top of a decade of declines that have taken ad revenues for dailies from $2.5 billion in 2008 to potentially as low as $600 million to $700 million this year. The news media is bleeding out.
A broke press is not a press at its best. Community newspapers are the most vulnerable, because they generally lack any subscription revenue. Weekly publishers are worried that their critical flyer business may never come back as retailers announce plans to go online. Everyone knows the only growth area is digital advertising and that it is thoroughly dominated by Facebook and Google, neither of which employs journalists who can go out and establish whether 5G cell towers cause COVID-19 or whether a conspiracy theory is at work.
There are different ways to rebalance the finances of reporter-based news media and the algorithm-led global platforms. An obvious and overdue point is to finally make foreign digital services subject to the same sales tax obligations as Canadian news media. Some people also think we should finally extend section 19 of the Income Tax Act to the Internet.
As you know, France and Australia have turned to competition law to pressure platform companies to negotiate content payments with news publishers. PPF’s “The Shattered Mirror” report recommended an alternative of imposing some form of levy, as with cable TV, on digital operations that do not invest in Canadian journalism.
We also need to activate the three useful vehicles to support journalism contained in the federal government’s 2019 budget. I’m proud to have played a role in designing the labour tax credit and the extension of charitable status to journalistic organizations. Now, with news media facing a Waterloo moment over COVID, it is time to get the money out the door.
Historically, when Canada’s ability to provide news about the country to its citizens was threatened, we used policy to create a CBC and a section 19 and a split-run magazine policy. We need to be resolute again.
Thank you very much, Mr. Chair and committee members, for the opportunity to testify during this unprecedented and trying time of crisis.
The YMCA has been a part of communities for decades. We've been a place of connection and belonging in times of fortune and celebration, and we've been there in times of recessions, depressions and disasters, helping communities recover. COVID-19 has been no different.
From coast to coast, YMCAs have steadfastly continued to provide services to ensure communities have access to the supports they need during the crisis, either by moving them online or opening our doors wherever possible. We are transforming our facilities to protect the homeless and providing child care for essential workers. Our employment and training, as well as our immigrant and settlement services, are being delivered by phone and online. We have launched virtual workshops to promote physical health and mental wellness. We are leveraging technology and other avenues to reach seniors and young people in isolation.
Through these efforts we are supporting the fight against COVID-19 by providing Canadians with what they need to be on the front lines and remain healthy and physically distant.
YMCAs are responding to the urgent needs of communities, but not in the absence of significant challenges as a result of closures and declining revenues. This comes at a time when the demand for our services has increased as communities look for supports to cope and connect during the pandemic.
We thank the Government of Canada for recognizing the needs of the charitable sector during this pandemic. The Canada emergency wage subsidy has meant that YMCAs can retain and recall staff previously laid off and ensure they remain connected to their employer. The $350-million emergency community support fund will help charities continue to provide emergency services to vulnerable populations today.
While these announcements are a positive step forward, a large financial gap continues to exist in the absence of core stabilization support for the charitable sector. Our cash flow projections have informed that YMCAs in Canada are going to be missing $42 million in the next three months and $84 million in the next six months. This funding is required to keep them all open.
Considering we are now in week 11 of this pandemic, we are extremely concerned with this financial position. That's why YMCA Canada supports Imagine Canada's urgent call for broader sector stabilization to address this financial shortfall. An immediate funding program that will provide us with stability during this precarious time will ensure we can continue to provide programs that communities rely on and that our facilities, spaces that Canadians helped us to build in these communities, remain open once again when we all come together.
As a federation, we're made up of 44 YMCA member associations with reach into communities all across Canada. We have the means to deliver these funds quickly with accountability measures in place to maximize the impact of this investment on Canadians.
In addition to sector stabilization, this pandemic will require us to evolve to return to the next normal. We'll need to retrofit our spaces and purchase PPE to adhere to the health and safety limitations, continue to innovate and deliver programs remotely, introduce new programs and expand existing services to meet demands. This also means updating our operating model to ensure we can be agile in a changing environment and continue to be responsive to the needs of communities moving forward. Financial support to enable this transformation will be critical for the social and economic recovery of our country.
Young people will need greater access to employment services and training to obtain meaningful employment. Demand for immigrant and settlement services will increase once the border restrictions have been lifted and people are able to arrive in Canada. Individuals will be seeking mental health supports to manage stress and anxiety caused by the pandemic. Parents, particularly mothers, will need to know their children are safe and have access to high-quality child care to return to work or to school, or to find a new job.
We recognize these are significant investments. However, the cost to replace the social and community infrastructure built over generations is much greater. Immediate sector stabilization and transformation funding programs will enable our sustainability through this pandemic and our ability to support community recovery, just as we have in trying times before this.
For the YMCA, this means continuing to reach over 2.28 million people and employing over 30,000 staff through 1,700 locations.
Thank you for the opportunity. The has indicated he'll be there for all Canadians, and the charitable sector is telling you we need your support today more than ever.
Thank you to all the presenters today. These were very interesting presentations.
My first question is for the National Association of Friendship Centres. I'm a founding member of the friendship centre in my community. I live in an indigenous community, and I really see the benefit of having friendship centres. I think every indigenous community should have a friendship centre—and an aboriginal head start program, for that matter.
One of our challenges in the north is to have good information. We don't seem to get the same level of tracking that the southern provinces get. Indigenous communities are always looking for better data. If you're going to make good decisions, you need good information.
We're lucky in the Northwest Territories that we have no COVID-19 cases. However, we continue to talk about what kind of data collection would be helpful, so I'd like to ask Chris if he could talk a little about what he would need in terms of information and what his approach would be.
Jocelyn and I have previously stated in front of other parliamentary committees our frustration that the jurisdictional issues around health information and the current structure of case identification do not include urban indigenous people. There's a reason that the cases in La Loche, for example, outnumber the total declared indigenous cases. If you are not on reserve, you typically don't get the same disaggregated data, which you would need to create good policy.
I would also argue that even when we have good data, public policy has not matched what that data tells us. For example, the majority of indigenous people live off reserve, off Inuit-governed territory, off Métis homelands, but the financial contributions have never matched that number.
We've already reached out to try to gather as much data as we can with our partners—I'm sure Jocelyn can follow up with some specifics—but we also want to make sure that this data is communicated in a way that's appropriate and comes from indigenous ways of knowing. Indigenous people don't typically talk about mental health. When we hear that word, it's not something we're comfortable talking about, but if you ask people, “How are you? How are you managing during this time?”, they're much more willing to tell you that they're not doing that well.
Jocelyn has some more specifics on the health data and the work we're trying to do in that area, but I'll just be very clear: We don't know how many urban indigenous people have died from COVID-19, period.
I can jump in and add a bit on the data.
A lot of the indigenous data that's being collected is very rightfully being collected by indigenous entities, such as The First Nations Information Governance Centre, various Métis nations and Inuit-formed entities. What we're saying is that we don't currently have a similar entity that collects the data within an urban landscape.
Anecdotally, we know there have been hundreds of COVID cases in the indigenous population within, say, Toronto, but we do not have any way of formally recognizing those cases of illness or any of the deaths that have occurred. Furthermore, a lot of the community members who have had the virus and passed away from it are largely unseen by society in general, such as the unsheltered homeless. We've had numerous young people in care. It's not to say that they've had the virus, but as a population, unless you know who they are and where they are, it can be very difficult to do outreach.
As our president said, we've been there from the beginning. This is another emergency in a long line of emergencies that friendship centres have responded to. Whether it's flood, fires, extreme heat, extreme cold or previous pandemics, friendship centres have been there on the front line. We were there previously, dealing with violence prevention, trying to advocate for affordable housing and dealing with homelessness for those very.... I don't want to say “vulnerable”, but I'll say they're a population that has been pushed to the margins through systemic measures.
What we're calling for is to look to us as an answer. We know this community very well. We think indigenous people living within urban settings are going to be very key for Canada's economy, not just now, but going into the future. We'll need a workforce. We'll need their thinking, and we'll need their leadership. We'll need young people to have the skills and knowledge to engage with the workforce and lead through entrepreneurship. We need this population, and we need to ensure that the infrastructure is in place to support them to participate fully.
We certainly need the infrastructure. We need the physical space, safer spaces, for friendship centres. We need enhancements to our current programs. This will allow us to not just provide the status quo in the programs and services we currently provide, but also be a lot more innovative with those programs, as we have also had to move to a virtual type of service delivery. Quite frankly, there should also be a vast investment in child care, young children's development, early childhood development and young people.
I think those are the things we would be calling for as part of the recovery for and investment in friendship centres.
Thank you very much, Mr. Chair. I think that's the best way to proceed. Then hopefully the translation will be set by the time it comes back to Mr. Ste-Marie.
My question is for Mr. Sheppard-Buote and Ms. Formsma.
The NDP pushed for friendship centres to be here today because of the important testimony you've offered, and certainly we are completely in alignment on the issue of child care and expanding child care services.
As you so eloquently put it, the initial amount of $15 million was completely inadequate to the needs of the National Association of Friendship Centres and indigenous people living in urban centres. If there is a request to the federal government, I think it would be helpful to know the exact amount of the request. If not, can you give us an idea, in dollar terms, of what would make a difference in order to allow the National Association of Friendship Centres, which does fantastic work across the country, to continue its work and meet the challenges of COVID-19?
Our proposal alone was for $15 million—or just under that, about $14.9 million—for urgent, immediate costs covering staffing, capacity, personal protective equipment, the infrastructure costs of renting equipment such as handwashing stations and porta-potties, fuel and vehicles, because they're delivering food and supplies to people, as well as modifications to the centres, both sanitization supplies and cleaning services, as well as food for the food banks' kitchens and delivery.
We also put in support for coordination. We have people who are social workers, executive directors and administrators who now have to respond to a pandemic with no public health background. We wanted to be able to hire some expertise to help guide us through what we should or shouldn't be doing and then be able to connect with each other to do that coordination by just having one staff alone to coordinate the donations that were coming in, food donations, gift cards and those kinds of things.
We also needed support for technology, upgrades to equipment, tablets and phones, both for the staff to move to a virtual environment and for loaning to community members such as elders to combat social isolation, or to young people and families.
Then we also included some support for accessing mental health and to do what we're calling program adaptation.
All of those components, which were based on actual costs that friendship centres were already spending, were the $14.9 million. While friendship centres are accessing other federal government supports, for example the wage subsidy for small businesses, a lot of the food security funds didn't come to friendship centres, so what happened is that friendship centres had to apply for $1,000 here, $5,000 there or $10,000 there. We have some friendship centre EDs who are just exhausted from applying for small grants and also helping community members apply, in a safe way, for CERB and other benefits they have access to.
So, yes, there has been a lot. A lot of the benefits have just kind of flown over our heads and we haven't been able to really grasp a significant portion that would help us do the work we were doing.
Thank you for the question.
To start, we've just done a report on health and science disinformation, which we have not published yet but will publish, and we will have a webinar on June 11 on that question.
I don't think there's anything unique to these forms of disinformation. It doesn't matter whether you go through a public health door, a harm to democracy door, or a public safety door. You end up with the same issues, which come down to, I guess, the responsibility that platform companies should have or should not have for their content.
There are two arguments, two models. One is that they're a telephone company and nobody interferes with telephone calls or tries to regulate free speech. The other is that they are a publisher. I would subscribe to the second view, for sure. They do things that are similar to what an editor does, except that the algorithms do it rather than humans. They decide that you will see something different from what I will see, for instance. That's an intervention in the process that doesn't occur on the telephone.
When I was editor-in-chief at The Globe and Mail, the publisher, the proprietor and I were responsible legally for every image and every word that was in there—for defamation purposes, for hate speech, for obscenity and for whatever laws might be applicable. It seems not unreasonable to me that platform companies should have those same responsibilities for being legally responsible for what appears on their sites.
As well, of course, as I mentioned, we're seeing competition law trying to force them to pay for content they use. We'll see how successful that is. That's being attempted in Australia and France in various ways.
In “The Shattered Mirror”, our report that you're obviously familiar with, we suggested that, as in cable and television, as money moved from the producer to the distributor, there was a policy that came in to try to rebalance that. A 5% levy on revenues was placed on cable and satellite companies. That went into a fund to help pay for production. That seems to me to be a not unreasonable model to be exploring again.
I think there's a series of remedies, which we continue to explore, and which I would urge parliamentarians and governments to do as well, because, as you say, a society that.... Jim Balsillie said to me a couple of years ago that he felt the disinformation problem was even worse than the climate change problem, because you can't even have a debate on climate change if you don't have good information to start with. I think that's the base and the foundation of public debate and political discourse, and we need to clean up those pollutants.
As I said in my comments, it's clear that there's an energy transition under way, and it's clear that energy transitions have historically taken many years to occur. It's going in a single direction, and I think government probably needs to accelerate that direction. I refer to the low sales of electric cars in Canada, for instance. The federal government introduced a subsidy for that last year, and I think it wants to push on that front.
In the meantime, if we're serious about meeting our targets and if demand still exists for oil, we will have to clean up that oil and we will have to form some sort of partnership. The balance sheets of those oil companies have been knocked for a loop over the last couple of months, and they will need some help.
The government has shown that it is going to impose conditionality through the LEEFF program that was referred to previously. I think oil and gas companies had better be prepared for that. In my discussions, certainly the larger ones and the ones that are a little more realistic about the future are preparing for that.
Then there are a series of investments. I don't want to be picking which technologies win or which technologies are best. I just talked about carbon capture, which seems to be an obvious thing. There is a lot of interest in hydrogen, a lot of interest in taking apart hydrocarbons and their hydrogen parts and their carbon parts. I think there's a lot of promise out there.
If we're going to export, we're going to have to export clean barrels of oil. If we don't want to destroy our balance of payments, we're going to have to export, so we're going to have to bring those things together.
Thank you for the question.
I can't underestimate how important the resource sector in general and the oil and gas industry in particular are going to be for driving an economic recovery for Canada. We need to think about the oil and gas industry in a broader way. We have an industry that produces oil, that produces and makes transportation fuels for aircraft, boats, cars and so on. That's going to be the case for the foreseeable future. If we need to get things done, we are going to need that energy.
The second thing is natural gas. Natural gas is a building block for economies across the globe, and LNG is a very important component of that. We can be a major participant in that and create thousands of jobs.
Third, we have petrochemicals. There are tens of billions of dollars of petrochemical facilities that can be built using the feedstock that Canada has. I think the U.S. has spent about $300 billion on developing petrochemical facilities. We need to be a part of that.
When we talk about the energy industry, it's the infrastructure that moves oil and gas to be processed in order to make the products we use to transport ourselves and to make the plastics that provide the ventilators, the masks and all of the infrastructure of medical facilities.
We have the opportunity here, and we do, and we are cognizant that we need to produce sustainable energy. The industry is committed to that. We need to form more of a partnership around realizing this potential and doing it in the best way we can.
I can't underestimate this. It is one of the key building blocks of the economy going forward. We have to survive, and the oil and gas industry is one of the keys to being able to come back and be strong, and to build and do all the things we want to do in the future. However, we need to survive and we need to get a quick start at this. We have the resources and the capability, and we have the record to do it.
Thank you very much, Mr. Chair.
Thank you to the witnesses.
My questions will be for Mr. Dinsdale from the YMCA.
Mr. Dinsdale, thanks very much for your continued advocacy for the not-for-profit sector. We've heard from Imagine Canada and other not-for-profit advocates in the past few weeks.
I want to ask you about the Imagine Canada ask, as a matter of fact. The estimate that I'm running on, and it's the estimate that's been brought to this committee in the past, puts the value of the wage subsidy program and the commercial rent assistance program at over $4 billion for the not-for-profit and charity sectors. The sector, through Imagine Canada, has asked for $6 billion in support of a stabilization fund, as it has been put. I know this ask was significantly higher in the past, but we did hear recently that it has been reduced to $6 billion.
In your mind, what other costs would be captured by this? If it's not rent and wage support because of the existing programs that would help with that, what would a stabilization fund go towards? Over what time frame would you need this support?
We asked our YMCAs specifically about what they needed. Imagine Canada has its own economists and runs its numbers, which is why a subset of us, including the Boys and Girls Club and the United Way, talked about what national federations need in order to survive the pandemic.
We have about 30,000 staff. We laid off 20,000 staff at the start of the pandemic. With the wage subsidy, we've hired back about 40% of them. The reason the uptake has been slow is the attestation requirement. It makes our chief financial officers and finance people anxious about the numbers and the complexity of applying.
There's also the fact that there is still no revenue coming in. Our child care facilities for the most part are not open, and our fitness facilities and community centres are not open. We still have overhead: overhead of all those facilities, overhead of the rent. The rent control measures aren't meeting the needs the YMCAs have. They may be meeting other needs, but they aren't meeting the needs we have.
This is about the ability to have facilities coming out of the pandemic. There are still costs. Even when there's no revenue coming in, there are still costs to operate this infrastructure. That's what's not being addressed. That's what sector stabilization is needed for.
You asked about a time frame. We asked our YMCAs what this looks like and what they need. The three-month number was $42 million for the network of 1,700 locations, and the six-month number was double that. Now that there are no summer camps, that challenge is going to be even harder moving forward.
Yes, or community supports.... I'll give a real-life example.
Last year, we had a YMCA in western Canada—this is not about the pandemic, but it's an example—that was having problems with their operating model. We actually worked with the board to shut them down. We put our own CEO in there. They worked with the board. They sold the assets and they paid back debt. It had really important child care services in that community. We partnered with the neighbouring YMCA to take over the child care program and make sure those essential services weren't lost.
The issue in the pandemic will be that if we lose a facility because of cash flow issues, those services will be lost. You don't have time to put people in place, to liquidate assets slowly and to renegotiate contracts. They'll simply shut their doors and go bankrupt. That's exactly what we're trying to avoid. That's why something like sector stabilization is required.
We had about $16 million a month between child care fees and HFA fees—health, fitness and aquatic—coming in. That's essentially zero now, and all the overhead remains, so we're working hard to make sure we don't lose those facilities.
If it's okay with Chris, I could give the overview. Our president is much closer to the ground and could provide that on-the-ground reality.
I wanted to chime in on the charitable sector in supporting what Peter Dinsdale from the YMCA has said. Friendship centres are also within that charitable non-profit sector. We also support the Imagine Canada call for the sector stabilization and certainly want to ensure that for indigenous not-for-profits, which border both the indigenous world and the non-profit world and have unique needs. We also see ourselves within that sector.
There are a few things on the scrutiny side. Certainly, from indigenous non-profits, we have huge scrutiny for the $375 million. We're getting questions every day, so I definitely look at that. I look at what the government and the municipalities are saving by propping up the sector and ensuring that we're covering off the most vulnerable. We're covering off the people who would otherwise have no place to go, which may drive up costs in other places.
We also have community trust and accountability, which are our anchor. If we didn't have the trust and accountability of our communities, we wouldn't have that same trust and accountability from our funders. The challenges I think are vast. Our president, who works with our friendship centres every single day, would be able to speak better to those on-the-ground realities.
There are a couple of specific points I've made in other committees. I think my first committee was probably with Peter, when I was much younger.
In Saskatchewan, for example, our infrastructure deficit before COVID-19 was $57 million. What kind of economic driver could that be for 11 different communities in Saskatchewan, if that deficit were met just in its current reality? What could it look like if we planned those infrastructure measures to future-proof situations like this?
We already have friendship centres that are literally testing sites in northern Saskatchewan. If we actually purpose-built and purposely drove infrastructure investment on the ground, using networks that exist, whether it's the Y or friendship centres or whatever, it's automatic investment in, for our case, 97 communities across Canada. The majority already own their properties.
When it comes to the reality of what we deal with every day, I will quote a young person who responded to the youth survey we put out, who said, “As a former young person in care, it's extremely hard because I don't have a family to go home to. My foster parents can't take me, and I am currently stuck in a shelter for the remainder of this crisis.” That's just one small reality that we hear 97 times in 97 communities all over the country.
When we come here, we are not just talking about the economy; we're talking about how Canada is investing. We are seeing people die. It is not just about the future economy. It is literally about how we can help the economy but also keep people alive.
My last question is for Ms. Noble and Mr. Roma. Thank you for representing parks and recreation sectors across the country.
In my cities of New Westminster and Burnaby, the recreation facilities have been turned over to assist with the growing homelessness crisis. The Bill Copeland arena in Burnaby is now a homeless shelter. In New Westminster, right across from the local civic arena, we also have a new homeless shelter that was put into place. We're trying to use those facilities.
It strikes me, in addition to what you're requesting, that applying the wage subsidy to municipalities would make a big difference. If the wage subsidy applied to cities, towns and villages so that parks and recreation facilities could be financed, would that make a difference?
I do have one question for Food Processors of Canada.
Denise, you are a big part of the economy and a key cog, if I could put it that way, in the food supply chain. You mentioned the expenses of the processing plants for PPE.
In your remarks, you talked about the need for liquidity. Actually, I think you were saying it goes beyond your own food processors, up the supply chain, in terms of the capital, so you would have some assurances that you'd be paid for the products you sell further up the food chain. Do you want to expand on that a little bit? It's a big system. Expand on that, if you could.
Sure, and thank you very much for that question.
Currently, we're seeing a shortening of payment terms being requested across the board, especially in the food distribution side of the business. A lot of businesses are moving to cash on delivery, or COD. We know this is really challenging if you can't generate cash and you can't access loans in a crisis.
What we're trying to do is inject working capital where we think it can do the most good in the total supply chain. I'm not asking for, with respect to liquidity, a direct ask for food processors, but where the working capital is badly needed which is in independent restaurants.
You're absolutely right that, in injecting working capital there, we are going to help a lot of small business owners. A lot of these businesses are very relevant in their small communities, but in turn, what it's doing is shoring up our receivables so that we don't have to use COD terms to ensure that we get paid.
Again, we've taken a complete and total supply chain view. This is one link in the important food chain that we think we can remedy to ensure we don't have food shortages. As well, we are calling out the warning for severe price inflation if we don't start to remedy this.