Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.
Welcome, colleagues. I call this meeting to order.
Colleagues, prior to getting into the introductory remarks, I would like to point out to you that this week marks the 75th anniversary of the liberation of the Netherlands and the victory in Europe. The Prime Minister has asked that at two o'clock all Canadians observe a moment of silence for our veterans who participated in the two conflicts, and I would ask all of you to please join me in a brief moment of silence before we start our meeting.
[A moment of silence observed]
Thank you, colleagues, and thanks to Mr. Kusmierczyk who brought this to my attention.
Colleagues, this is meeting number nine of the House of Commons Standing Committee on Government Operations and Estimates. Pursuant to the order of reference of Saturday, April 11, 2020, the committee is studying the government’s response to the COVID-19 pandemic.
Before we start, I would like to announce that the next meeting of this committee will be Friday, May 8, from 11 a.m. to 1 p.m. eastern time. The schedule for the meetings next week has not yet been published, but it has been agreed upon by the whips. The clerk will be sending out a notice of next week's meetings very shortly.
Lastly, in terms of instructions, we will be having 15 minutes of discussion about future witnesses at the conclusion of today's meeting. Since we have to conclude by 4 p.m. sharp, I will be drawing this meeting to a conclusion by 3:45 this afternoon. Also, colleagues, I would like you to know that the officials from the TBS and the Department of Finance have some very, very brief opening statements and so we will be devoting the entire two hours with all of the witnesses here today to questions from committee members.
Colleagues, you are all aware of what we need to do, having participated in these virtual meetings over the last number of the weeks, but for the benefit of our witnesses I would like to remind you of a couple of quick facts if you haven't participated in virtual meetings before.
Wait until you are recognized before you speak. Make sure that when you are speaking you unmute your microphones or we will not be able to hear you. If you are going to be speaking in English, please, in the interpretation bar at the bottom of your screens, click on the English channel. Conversely, if you are speaking in French, click on the “French” button. If you use the “floor” button, you will be able to speak in both official languages, but I suggest that if you are switching from one language to the other, you pause just for a moment to allow our interpreters to catch up.
Also, on the subject of interpretation, I would ask that all those speaking today speak slowly and clearly so that our interpreters can translate effectively and accurately.
Colleagues, before we get started, I ask, particularly those of you who are new to this committee, that you click on the grid at the top right of your screen. That will take you to gallery view and you will be able to see all participants in this meeting on one screen.
We will begin our meeting.
I will ask Mr. Purves from the Treasury Board Secretariat for any opening comments he may have, followed by officials from the Department of Finance. We'll then go directly into our questions from committee members.
Mr. Chair, I am the senior assistant deputy minister of the tax policy branch at Finance. Let me make some very brief opening remarks.
First, thank you to the committee for the invitation to appear today to answer questions.
As you know, the department has been busy supporting the government's economic response plan, and I think as the committee is also aware, we table, on a bi-weekly basis, a report on that plan with the Standing Committee on Finance. I'm sure committee members have access to that report, so I won't go through the details of it, but I'll just say that it covers many of the measures of direct support, liquidity support and support for specific sectors.
We'd be happy to answer any questions the committee may have today. Thank you.
There was a recent motion that required us to table another appropriation act for main estimates in June and then a final one in December. For main estimates, our plan normally is that we transact in two appropriation acts. This year, we'll be transacting in three appropriation acts. We will be tabling an appropriation act in June that will provide funding until December, and then the final in December for the rest of the year.
At this juncture, I can't comment. I don't.... It's very hard to see week by week whether there is an intention to do so. The only thing I will say is that we are planning—on just part of your last question—alongside providing for full mains supply, to have tabling of supplementary estimates (A) as well.
They remain valid as it pertains to the planning for the year as it pertains to the main estimates. In terms of any updates and so forth through the year, typically those are reported through the departmental results reports.
—for main estimates, but given the fact that it has been an extraordinary year that we're entering, the departmental results reports that report on this current fiscal year would take into account the extraordinary circumstances as well.
In any instance where Treasury Board involvement is required or there are programs or policies pertaining to the spending, Treasury Board, and through TBS, has been involved with respect to ensuring that authorities are in place. There's nothing that's been approved that is proceeding, and where it has required a TB authority to be considered or TB to consider it, it has not been considered.
Well, it's in different categories. If you look at the Canada emergency response benefit and the Canada emergency wage subsidy, they have self-sustaining pieces of legislation, so as a consequence, a lot of the terms and conditions pertaining to those programs have already been approved in statutes, right?
If there's an augmentation to existing programming and it requires a consideration by TB, it has it. If it requires a consideration or a change in authorities that the minister has authority for, then they are reflected there.
I guess the point is that, despite the fact that we face an unprecedented period, the substantive roles of the TB minister and TBS have really not changed.
I'm going to pick up where my colleague Mr. McCauley left off and ask for bit more unpacking of that approval process.
As we all know, the Treasury Board of Canada is responsible for approving the terms and conditions for new transfer payments and new programs. Specifically, as of March 20, the Treasury Board's capacity for emerging spending, especially emergency spending.... For example, PSPC went from $15 million to $500 million.
Can I ask you, Mr. Purves, to unpack the whole approval process and shed some light on the fact that some of these policies and spending are evolving? We add $500 here, and a couple of days later we add another thousand for a specific group.
Do these require constant coming back and revisiting, approval, and all of that?
What I can say from our vantage point at Treasury Board.... Again, you have to remember that when we talk about spending authority—the ability to actually spend dollars—a lot of the legislation that has already been passed in Bills C-13, C-14 and C-15 provides for that authority. There is additional information—details and pieces of legislation—that also provides the policy and the program authorities pertaining to the actual spending of this funding.
In circumstances where an existing program or transfer payment is being augmented, or in any other context, Treasury Board looks at it from the standpoint of the policy, the program authorities and the operational authorities to make sure that if there's anything in their line of sight that they need to consider with respect to what has been put on the table in terms of the spending, they will take that into account. Treasury Board meetings take place in order to examine these issues and approve them, but only where needed and where there are gaps.
There are also considerations from many of these programs where ministers themselves have authorities to authorize and make adjustments. In those instances, the Treasury Board Secretariat works closely with the departmental community to ensure that it's done on a legal basis so that it reflects the legal mandate as set out.
Again, there are lots of programs and lots of initiatives that are being supported. The Treasury Board role is about ensuring that from a policy standpoint, from a program authority standpoint, it's to the code.
Hi. This is Alison McDermott from the Department of Finance.
I agree with everything you heard Glenn say and will add that, as he mentioned, that quite a bit of the authority for this funding under the emergency response plan is coming from the statutory authority, and that, of course, has all been approved by Parliament.
I'll just note, I think as Andrew did, that the Minister of Finance is presenting regularly to the finance committee on how the government is implementing these elements of the response plan. In fact, although I think we are required to report only on certain parts of that act, Bill C-13, we are reporting on all elements of the plan. It's something that we're going to continue to do.
I will switch and go to a very specific constituent-based question that was put to me.
We have about 5,000 small businesses in Richmond Hill. A lot of those small businesses are working with landlords to be able to secure their premises so they can do their business. From the feedback we are getting, a lot of landlords are not embracing the rent subsidy program being proposed by the government. Some of them don't have mortgages against that land, so they don't qualify.
How is that being taken care of? Are there any amendments or is any consideration being given to this that you could shed some light on?
If I may, Ms. Anderson, we only have about 20 seconds left. If you are unable to complete your full answer in 20 seconds, I suggest that you provide a written response through the clerk to our committee members.
We are continuing to flesh out the program design. We are hearing the comments made by folks. That opportunity will be available to property owners without mortgages; that's very clear in the mechanisms being designed so they can also apply as well to mortgage property owners.
Good afternoon. I'm Alison McDermott. I'm an associate assistant deputy minister at the Department of Finance.
We find that it's early to decide to extend the measures. This is an extraordinary crisis. The support that the government has provided is very important. We hope that economic activity will resume. Of course, should the government decide to extend the measures in the coming months, it would be in a position to do so. However, it's a little early to decide that now.
We're experiencing something out of the ordinary. The last pandemic was 100 years ago. We realize that there are positive impacts on the environment, especially when it comes to air quality.
Does the government intend to take steps to use the current circumstances—which are sad, but which we still have to face—to ensure a viable and responsible economic transition, both ecologically and socially?
If that's the case, how much might such a transition cost?
We're thinking about the next step. Right now, our priority is to provide support to people who have lost their jobs or who can't work. We want to stop the transmission of the virus. That's why we're focusing on that.
In the coming months, we hope to be in a situation where economic stimulus will be necessary. At that time, we could consider the measures you mentioned, including promoting investment in the economy of the future, a more sustainable economy.
Last week, we talked about business subsidies, and I'd like to discuss that further. There was some waffling: we said that companies using tax havens were being given subsidies, then we said the opposite.
So I'd like to know where we stand. Are we giving subsidies to companies using tax havens? If that's the case, why aren't we stopping it? Do we have the names of these companies to tell them that we don't approve of this unethical practice? Are we there yet? If not, is there a problem that would explain why?
The whole issue of tax evasion and tax avoidance is one on which the government has taken a number of important steps. Probably most importantly, recognizing that this is truly an international challenge, we work closely with the OECD and others in building an international architecture that helps us deal with base erosion and profit shifting. The government has invested significant amounts over the past number of years and in recent budgets in bolstering CRA's capacity to address aggressive tax planning.
When you look at the specific measures such as the wage subsidy, in particular, this is about ensuring that employers can keep staff on, can rehire staff, and so on. That's really the objective here. One doesn't preclude the other in the sense that the objective is to preserve jobs, preserve employment, and to position the economy to revive after the crisis. That doesn't mean there aren't important steps being taken to address inappropriate tax avoidance.
For the benefit of those who might be watching at home, I'll just explain that the emergency response benefit, the CERB, provides $500 per week for up to 16 weeks to workers, including self-employed workers, who have involuntarily stopped working due to COVID-19. The government estimates that this program will cost $35 billion. On April 15, the government announced amendments to the CERB that will allow recipients to earn $1,000 per month, and will expand access to some workers and seasonal workers who have exhausted their employment insurance benefits. However, we know, from I believe it was last week or so at the Standing Committee on Finance, there are a lot of people who are still left out of this program.
In the design of these means-based, tested programs, when you are proactively determining and identifying who is eligible for them, can you comment on who's left out?
I can say a few words, and I think my colleague Suzy McDonald might want to add to what I have to say.
In terms of general design principles, the government tried to move quickly with its response, recognizing that it was important to get support out the door to those who needed it most. It has very much been focused on supporting those most affected by the crisis, and that led to the decision to develop the CERB, which is, of course, for folks who have lost their jobs or are unable to work.
Since introducing the first tier of measures, the government has been looking at filling gaps and expanding access, as you've noted, to EI exhaustees and others. That work continues. Our sense is that we have a good deal of support out there that is very generous by international standards in the level of support being provided to them.
Suzy might want to add a little more on other groups. I know we've added support for students recently, not through the CERB but other mechanisms. There has been a lot of support for other vulnerable members of the population, so I'll see if she wants to add anything to that.
Sure. Adding to what Alison has said, we have evolved the policy of the CERB over time to ensure that it meets a broader range of people, including allowing people drawing down dividends to use that as their $5,000 of income. We've extended it to EI seasonal workers who've exhausted their benefits. They are now able to draw from their benefits and still have some income of up to $1,000. We continue to make changes with parental and maternity leave, and medical/disability leave [Technical difficulty--Editor].
I will try my best. I won't repeat what I just said. Hopefully, you've heard most of it.
I'm saying that we are continuing to evolve the program. The CERB is not intended to meet the needs of everyone. It was intended to be used as a complement to the existing systems.
In addition to the CERB, there are a number of other programs we have put in place including, as Alison noted, new supports for students. We're supporting vulnerable populations through other programs, including for people living in homelessness, and providing additional support to not-for-profit organizations to help meet the needs of vulnerable Canadians.
Perhaps just moving on to the last question, which was on the overall costing [Technical difficulty--Editor].
To whomever would like to pick this up, we've heard today from Alison that we wanted to make sure that the government got the money out the door as fast as it possibly could. I couldn't agree more. Certainly, we've been calling for universally applied benefits, avenues that would put money into the pockets of Canadians as quickly as we possibly can.
I'm sure that there must have been a consideration for a basic annual income, notwithstanding the fact that every step along the way, every policy that's put forward, there seem to be people who are left behind. What would be the net cost, after taxes, of providing a minimum basic income for all adult Canadians?
That's a difficult question. I mean, you can look at it in different ways. If you gave, say, $2,000 to the almost 30 million tax filers, then the mathematics—I can't work that out in my head—it's an awful lot every month if it were $2,000.
Really, my understanding of universal basic income is that it's not just about sending an amount to every adult. It's about, essentially, a universal amount to every adult, but also a tax system that targets that appropriately. In that context, while I appear to be avoiding the question, it's very difficult to answer the question because it goes very much to the design.
The first part of it, the payment to every adult in the country, obviously, is extraordinarily expensive. The net cost depends on the ultimate design.
It just appears, and it's been very clear—and I'm sure every MP who has a constituency office will tell you—that for every announcement that has been made, there have been people who have been systemically left out of this process. I would agree that we need to get money into the pockets of every Canadian as fast as we can, people who need it the most, people who are here, struggling through this unprecedented time. It just seems to me that we're still overburdening the bureaucracy with complicated means testing when we have an opportunity to get that out.
Mr. Chair, do you know how much time I have left in my questioning?
Mr. Marsland, I have a question for you. Usually, during good economic times, the EI account claimed surpluses. What's the status now of the EI account? Is it out of money? Is it exhausted, yes or no? How much, if there are numbers that can be advised?
Actually, I think maybe Suzy could better speak to where we stand in terms of a government policy decision on the EI rate and the timing of any increases. I can certainly say that with the difficulties in getting the EI system to function, as most folks know, we have been using the CERB as a program to support all EI-eligible people who are needing those basic supports, and so the EI system, I think, has been relying on the CERB. I think over the longer run we will be keeping track of the costs of those expenditures, and to my understanding, the decision has not yet been made about when that will be recouped.
I don't know, Suzy, if you're able to say a bit more.
It's not being used right now in the way that it normally would be, because normally when people would be unemployed they would go to the EI program and receive benefits from the account. Because of the fact that's been suspended in favour of providing those accounts through the CERB and because individuals are able to get that from either CRA or Service Canada, it's not a very good gauge right now of what's actually happening to the EI account.
Looking at the labour force survey would probably give us a better sense of how the economy is doing.
On the CERB account, a lot of people who are ineligible are receiving payments. Why are some people who are ineligible receiving money? What is the mechanism to ensure that those who do not qualify do not receive money?
That's being done on an attestation basis right now, but certainly the Canada Revenue Agency, which is going to tax people on that benefit, may require proof from individuals in the future. It will be responsible for administering and enforcing the provisions of the CERB.
How many businesses that applied for the $40,000 have received it? My understanding is that some of them have received a portion of that already. Some are waiting to see the remainder. Do you have any idea how many businesses have applied, and how much money has been committed to that specific program?
I'll just say that in terms of the package itself that has been announced to date, it is quite a generous package of $150 billion or so of direct support, $85 billion of liquidity through the tax system, and very significant additional liquidity support under the business credit availability program. This is not the fiscal cost, but the financial value of those measures comes up to more than $500 billion. It's a very big package and we're—
My first question is for the Department of Finance officials, and it has to do with access to the Canada emergency response benefit in my riding of Nickel Belt.
Could you tell me a little more about the support that has been given recently specifically to seasonal workers and self-employed workers with respect to their eligibility for the Canada emergency response benefit?
With respect to the Canada emergency response benefit, we have designed the program to ensure that those who have exhausted their employment insurance benefits by December 29 can apply for and receive the Canada emergency response benefit, including seasonal workers.
We have also ensured that people can have up to $1,000 of employment income without losing their benefits. As I was saying earlier—I don't know if you were able to hear me—we are still reviewing and adjusting the program to ensure that people get the support they need. However, the program isn't really designed to support everyone. We have a number of programs that need to complement each other to support Canadians.
My second question has to do with loans given by banks. Many of my constituents in Nickel Belt are a little worried. They are wondering if the banks are going to give the money out fast enough and if the federal government has chosen the right intermediary.
At the Department of Finance, do you believe that the procedures in place are rigorous enough to ensure that banks channel funds directly to businesses?
The transmission was very choppy, so as I understand it, you are wondering about the processes in place by the banks to flow money to businesses and whether appropriate controls are in place. I would say, yes, the funding that is being delivered through the Canada emergency business account is being delivered in conjunction with Export Development Canada, and we work very closely with financial institutions to make sure that they have appropriate policies and procedures in place to disburse the funds appropriately.
My next question is related to provincial support. We have provinces, territories and municipalities that are really struggling because of COVID-19. Is there any planned support from the federal government for the provinces? That is one question.
Second, has the federal government looked at removing the debt ceiling for the territories?
All right. I'll answer first, then my colleague can round out my answer if she has anything to add.
The Government of Canada already provides significant provincial and territorial support on an ongoing basis. For example, in 2020-21, the federal government is providing $81.6 billion to provinces and territories through our major transfers. In addition to this, we provided a one-time funding payment of $500 million to provinces and territories, and that was received on March 30.
We're working closely with the provinces and territories to really understand their economic situation and also working with municipalities, which, of course, fall under provincial jurisdiction, but with whom we are having conversations to understand their needs.
With regard to some of the lending that's in place, perhaps Leah could add some more.
We know that Bill C-13 enacted the Public Health Events of National Concern Payments Act, which allows the government to spend “all money required to do anything in relation to that public health event of national concern”. They have that authority until September 30.
I would note that the amount being spent by the government is staggering.
While our focus in this meeting today has been on the cost of the numerous income support programs for Canadians and businesses, I'm interested in knowing how much is being spent by the Departments of Health, PSPC, and, in particular, ISED on the procurement of personal protective equipment.
I would assume that the Department of Finance would be able to provide us with some of those numbers.
I am perhaps not the best person to speak to this, but I will try to answer the question.
In our report to the finance committee, we outlined the amounts dedicated to the areas the member alluded to. The report says that the total amount is $4.4 billion. The largest amount there is for funding to purchase personal protective equipment, but there is also significant funding in there to assist the provinces and territories in the COVID-19 response on a health basis, and support for medical research into vaccine development.
That is $4.4 billion. Can you tell me how much is actually being spent or what kind of funding is available for manufacturers that are retooling right at this time to support our fight against COVID-19?
Recent reports in the media have tagged our deficit at approximately $252.1 billion this year. I know there are questions concerning the sustainability of the programs we have announced, legislated and are now implementing.
Can you tell me how far the amount of money we have announced and are willing to spend this year will take us in our fight against COVID-19?
As mentioned, the authorities in terms of direct support measures come to approximately $150 billion. It really varies, measure by measure, how long or over what period those are expected to be expended.
Some of the big ones, like the Canada emergency response benefit, are available for a longer period of time. If you were on that benefit early in March, I think it would expire within four months, so we're looking at mid-June for that one. I think the CEWS goes through to July, so they're staggered.
As I said before, it's a bit early to have a strong sense of which ones and to what degree some of these may need to be extended. In either case, we wouldn't expect that they would be used at the same level or scope they're being used now. They're expected to be in that —
I have a lot of small and medium-sized enterprises that are not eligible to access the CEBA because they issued T4As rather than T4s. When I look at the CRA definition of income, T4s, T4As, T5s, all become income.
Could you give me the logic behind why these guys cannot access the CEBA, number one?
Number two, some sole proprietorships or enterprises are giving themselves dividends. Even if they give themselves $20,000 worth of dividends, they don't qualify for the CEBA. If you could give me some of the logic behind it, I'd really appreciate it.
Since we launched CEBA, we've been taking a good look at it and it is based on payroll. Since we launched CEBA we have expanded the range of entities that are able to apply, from $20,000 up to $1.5 million in payroll.
We are very aware of the issue you raised, that some did not qualify, and we are taking a very close look at that to see what additional supports are appropriate for those circumstances.
We are closely assessing the issue. We're aware of the concerns and are trying to make the benefit available to the widest range of small businesses that have these kinds of fixed costs and need the extra support.
My second question regards the rent relief. How is it working with the provinces? I ask because certain small landlords don't have any mortgages and don't think they should take advantage of this commercial rent relief, so they don't give relief to their tenants. What should we do about it? How do I convince my businesses to stay open or to take advantage of this when the landlord is probably not willing to take advantage of it?
Since the Prime Minister announced the measure in late April, CMHC came up with further details on their website last week. They have indicated on it that if a landlord does not have a mortgage, they should contact CMHC to go through a different mechanism. We are working on an alternative mechanism for those who do not have mortgages.
What is the province doing about those who have mortgages, but do not wish to participate?
If we want to kickstart the economy, we know that we need to keep these businesses alive and well, and these are small proprietors like acupuncturists or massage therapists, a whole plethora of these businesses. Is there any understanding we can give to these businesses to say, here is something you can look at? I tell them to negotiate with their landlord, but it's beyond federal control.
The federal government is doing this program in partnership with the provinces. We cost shared 75%-25% with the provinces. As you said, it's very important for landlords and their tenants to work together to find appropriate solutions. This program will provide a real opportunity to provide the relief that tenants need at this time. It is directed to tenants who have had a 70% revenue decline—those who are most challenged in these circumstances.
Now I come to the CERB. I have individuals, sole proprietors, who did not pay themselves any wages, and now with COVID-19 they probably cannot show $5,000 in employment income. What do they do? They have no income anymore.
Because we are completely out of time, I would ask, if you can, that you provide that answer to our committee members in writing. You can give that to our clerk so that we can distribute the response to all committee members.
My first question is for the Department of Finance officials.
I've heard fairly frequently from seasonal workers who are afraid they won't be able to access employment insurance or the CERB this year. Changes have been made, but these workers are wondering about next year. If their work season doesn't happen, if they aren't able to pay into employment insurance or if they don't get enough hours of work to receive employment insurance benefits, does that mean they'll have to get through the winter without any other income?
That raises an important question. I want to know if the Department of Finance has thought about it and if it will come up with a solution soon.
My second question is also for the Department of Finance officials, but it has a public policy and taxation aspect to it.
When someone has an income of more than $1,000, they aren't entitled to the full CERB amount. Obviously, this measure was put in place to ensure that people don't just go to work a few hours in order to benefit from the CERB.
As the economy recovers and the lockdown ends, some people may refuse to go to work or may have little incentive to return to work. In some cases, employers won't need a full-time employee because the demand won't be great enough. Instead, the employer may be looking to hire a part-time employee.
Will changes be made to the CERB program to ensure that people don't lose everything?
We need to ensure that employers aren't understaffed and that programs put in place to help employees aren't detrimental to them.
We've heard quite compellingly that there has been work with provinces and a 25%-75% split for commercial small business rent relief. If we can work with the provinces to figure that out for small businesses, why wasn't this extended to renters in the residential market?
This is for the Department of Finance or whoever answered the question around—
Generally speaking, rent is an area of provincial jurisdiction. I think the first question asked what the provinces are doing. Many provinces have taken steps to provide rent relief for residential tenants. For example, in British Columbia there is quite an extensive program, and others have one as well.
In this area for small businesses, given some of the greater systemic impacts, the Government of Canada made a decision to enter into this partnership to fill a bit of the gap.
That being said, we're hearing from municipalities. I'm a former city councillor. There are infrastructure projects across the country that are split a third-a third-a third.
Would the federal government be willing to assume all construction costs for any infrastructure that relates to stimulus funding as we transition out of COVID and look to reopen and restart the economy?
That is exactly the answer I would have given. Certainly, infrastructure is one of the tried and tested stimulus levers. At an appropriate time we would be turning our minds to such things that have worked in the past to stimulate the economy, but we really still need to see our way through the current stabilization and restart activities.
Okay, this is a bit of a strange one. I picked up on this under part 8 of Bill C-13. The Minister of Finance is basically allowed to establish a corporation or entity for the purposes of promoting stability in the financial system.
What is the purpose of the authority to establish a corporation or entity to promote stability in the financial system?
Ms. Anderson, I want to follow up on the question that Ms. Ratansi had about the CEBA, and we heard the answer repeated again on other issues: “We're looking at it, we're looking at it, we're aware of it”. Will we actually have a response to these issues? When will we actually see something, a change around the issues that Ms. Ratansi brought up, regarding the CEBA for those who have been blocked from receiving support? I'm not saying to you specifically, but we have to do more than just say, “We're looking at it, we're aware of that.”
Okay, but you just repeated what I was asking about. When will we have a response? It's not enough to tell Canadians that “We're looking at it”, hand over heart. When will we actually see a response to this, or will there not be a response to it and we can move on to something else?
We are definitely starting the process of looking at all of the scenarios for the economy. I think we would note that even the Bank of Canada, in its last monetary policy outlook, did not come up with kind of a point estimate, and that's usually what we use for the purpose of fiscal forecasting. A lot of private sector actors are out there with certain numbers for, you know, Q2 and expecting some—
Has Finance looked at scenarios, then, for bailouts or assistance packages for specific industries such as the oil energy industry, the hospitality industry, the airline industry? Have you started putting numbers together for that? If not, have you got numbers put together on what the fallout will be if there is not assistance to those industries?
Broad-based economic supports have been rolled out by the government that are relevant to the vast proportion of Canadian businesses, so the first effort was those responses of general applicability across government in lead portfolios for the last seven or eight weeks now, in terms of the crisis. There has been quite detailed work, engagement, outreach with stakeholders, by the lead portfolios and ministers, and there's quite a fair bit of sectoral intelligence-gathering and understanding around restart. There has been an ongoing surveillance of gaps in the programs on general applicability as well, and any of the iterative improvements to those programs have reflected that intelligence.
I'm looking specifically for an answer. Has Finance put together scenarios, considerations specifically for the airline industry, the hospitality industry, the energy industry, to put together specific support packages for them? If not, have they looked at the scenario of what will happen to those industries and the economy if support is not provided and they implode?
I suppose that in terms of what I was trying to convey, though perhaps not succinctly, was that programs of general applicability are doing very much to support the sectoral challenges that are arising, such as labour bills, for example, and just general liquidity. I was going to offer—
About two weeks ago, the government did announce a package of small business and sectoral assistance measures, which included a few targeted measures for the energy sector. You might be familiar with those already.
Mr. Kelly McCauley: Yes.
Ms. Evelyn Dancey: Very briefly, they included $1.72 billion in support—
I'd like to thank all the witnesses present for our virtual committee meeting.
My first question is for the witnesses from the Treasury Board and the Department of Finance. As you know, when a government program is announced, there is usually a long consultation process. In this case, we didn't have an opportunity for that consultation. So I'd like to know how you reorganized your organization and how you worked with other departments to deliver the benefits.
We recognize that the benefits aren't perfect, which is why the consultation is important. I know that opposition members and other stakeholders across Canada have said that self-employed workers and people who collect a non-eligible dividend, for example, have been forgotten.
Can you tell me a little bit about how you proceeded?
Just to outline the way that most of the spending proposals get examined within the Department of Finance, we do receive them from line departments. These are the departments that are closest to the industry groups, stakeholders and NGOs and so on, so they are in constant communication with those segments of civil society or the private sector in terms of what their needs are. We get proposals from them. They tend to be looked at by the Department of Finance, advice is provided to the minister and the Prime Minister and, of course, decisions are taken by them. We work with TBS in order to implement those measures.
I should note that of course measures relating to the financial sector policy and to direct taxation are internally generated proposals, but we have a lot of.... Andrew could talk more to this, as could Leah. We hear from and have been working quite a bit with the private sector in the development of those measures.
Maybe Leah could tell you a bit more at this point. I know that there has been a lot of collaboration with the financial sector and other members of the private sector in the development of some of the financial measures.
I can start with the financial measures that we announced at the beginning of the crisis. We worked very collaboratively with the financial sector agencies, such as the Bank of Canada, the Office of the Superintendent of Financial Institutions and the Canada Deposit Insurance Corporation. You may be aware that a number of measures were announced, and those were based on what we were hearing from the business sector in terms of what was needed and from financial institutions as well. For example, the Bank of Canada put in place a number of facilities to promote market functioning and also to promote the liquidity of financial institutions.
It's a very interesting question. I'd begin by saying, there's no playback, obviously this kind of crisis is unprecedented, and so on. If we take one example, the wage subsidy, we developed that obviously very quickly. Normally one would develop that over the basis of many months of work and consultation. For a timely and relevant response, that's not possible. We did benefit from a lot of engagement in between releasing the first backgrounder and the passage of the legislation, and continued to benefit from input from industry associations, from specific firms, from parliamentarians, from a whole range of people we talked to in a very compressed time frame. I think the important thing is to listen and to adapt as we get that input. I think we have done that so far. No doubt we'll continue to get input on these programs.
I had said that it seems that many entrepreneurs don't qualify for the Canada emergency business account, the CEBA, and that they don't want to record non-eligible dividends. I know that these dividends can be counted for the Canada emergency response benefit, but not for access to the $40,000 emergency loan from the CEBA. You're working hard on this issue, and I hope we can find a solution as soon as possible.
I want to thank you very much for all these answers or, at least, the announcement of future research.
As soon as the crisis began, a 10% wage subsidy was announced. Then there was the 75% Canada emergency wage subsidy. Does that replace the 10% subsidy, or are these amounts complementary? I'd like to have a better understanding of these two subsidies. Together, how much will these two subsidies ultimately cost?
The first program, the Canada emergency wage subsidy, the 10% one, applies to all small businesses, at least those businesses eligible for the small business deduction, as well as charities and non-profit organizations. All of those businesses are eligible for it. The mechanism of how that works is they deduct that 10% from the amounts they would otherwise remit to the Canada Revenue Agency on account of their employees' tax. Let's just say, it's targeted at small businesses regardless of whether or not they suffered a decline in revenues, but to help them manage in this unprecedented crisis.
The 75% wage subsidy applies only to those firms that have suffered a 15% reduction in revenues from March 2019 to March 2020, or 30% in April. It's targeted at those corporations regardless of their size, and charities and non-profits that have been specifically affected. One is offset by the other, so the maximum is 75%. If a small business is eligible for the 10% and the 75%, then the maximum is the 75%. They complement each other, but they are applied to different populations.
A projection of the cost estimate of the 75% wage subsidy is $73 billion over the course of the subsidy. We would reduce the estimate for the 10% wage subsidy when [Technical Difficulty—Editor].
Mr. Clerk, I cannot hear anything at all. Can we perhaps stop right here while our technicians take a look? If we cannot, then I would ask that Madame Vignola perhaps ask a question to a different witness.
The cost of the 75% wage subsidy is projected to be $73 billion. The original cost of the 10% was over $4 billion, but we have reduced that to $975 million because of the way the two measures work together, and since you can't have both, the cost of the 10% original wage subsidy has been reduced.
I'll come back briefly to tax havens. From what I understand, we don't have a clear list of Canadian companies that use tax havens, which is unfortunate given the amounts invested in research in that regard.
What is the estimated amount of money that we miss out on annually and doesn't end up in our coffers because of tax havens?
First of all, I think the challenge is that there is no kind of internationally accepted list regarding what is a tax haven. There are lists that various international organizations have established of non-co-operative jurisdictions, those that don't meet the standards of transparency and so on. Those tend to be fairly short lists.
There are other perceptions of low-tax jurisdictions, which some people might consider tax havens or which might be so called in common parlance. There's no common terminology accepted throughout the world as to what is a tax haven.
The Canada Revenue Agency has done estimates of the tax gap, and I can undertake to ask my colleagues at the Canada Revenue Agency to provide those. Those are not necessarily responsive to your question entirely, because there are tax gaps on the corporate side and so on that include more than just what one might consider planning and tax havens.
As you probably know, the decisions about the restart of the economy are really being driven by health-based considerations, and being made largely at the provincial level, so there's a great deal of collaboration between those levels of government to try to make sure those decisions are well supported and that we don't have a resurgence.
According to the Department of Finance's third biweekly report on parts 3, 8 and 18 of Bill C-13, the estimated financial impact of direct measures for individuals, businesses, tax liquidity support, and other liquidity supports is around $586.5 billion.
How is the government financing all of these new benefits and measures, and are they financed through short-term or long-term financial instruments?
Maybe Mr. Marsland, a tax policy guy, or somebody from the Department of Finance could answer.
We work very closely with the Bank of Canada, which is our fiscal agent, to issue government debt to finance the spending that is occurring. The tenure of the debt falls across the different options that we have, including T-bills of two years, five years and 30 years. We have calibrated that program appropriate to the response.
We certainly are benefiting from the extraordinarily low interest rates that we're currently facing. Indeed, going into this crisis we were in the best fiscal position of all the G7 countries, so we are benefiting from that status as well.
I'm certainly not an economist, but we're hearing new theories, things that might not be traditional, like modern monetary theories. Has there been any discussion around ways, subsequent to Mrs. Vignola's point, that, if we see this again, we certainly can, under the traditional framework, continue to borrow in the way that we do? Have new fiscal theories been bandied about or explored in your department?
Again, going back to how we went into this crisis, we had very sound fiscal capacity, and we do work very closely with the Bank of Canada to explore what the best opportunities are. In working with them and projecting out our financial requirements, we were able to develop a borrowing program that's appropriate for Canada.
Just for the purpose of the viewers who are out there, what does that look like? Is that a transfer from the Bank of Canada to financial institutions to be able to provide them with financial stability?
It's not a transfer to the financial institutions; it's providing liquidity to the market. They have various securities in their books, and they exchange them to the Bank of Canada on a short-term basis, and they provide the liquidity.
Similarly, one of these measures is what we call the “domestic stability buffer”. OSFI provided some capital relief to financial institutions, and this freed up another $300 billion of liquidity for financial sector institutions to be able to provide credit to the economy for support at this time.
I wouldn't necessarily call it quantitative easing. There are different strategies and approaches, but the facilities that we have do enable a greater liquidity.
An important thing was recently done with provincial governments. As they're also issuing debt and going to the market in unprecedented times, the Bank of Canada launched a facility to purchase, on a temporary basis, some of their debt to, again, help with the smooth functioning of the market. These are all very much well-functioning market measures so that the market remains liquid and available to provide credit to business at this time.
I'm going to go back to a question I had in the first round, which is this really interesting thing about establishing a corporation or an entity for the purposes of promoting stability in the financial system. Can you comment on that? What is the purpose of the authority to establish a corporation?
This power, in fact, builds on a power that was provided in the financial crisis, and the Minister of Finance, during that time, was provided the authority to enter into a contract with an entity to provide a loan, a line of credit or a guarantee to an entity. In this very unprecedented time, and our being able to or needing to be able to respond as required, as circumstances warrant, it was deemed appropriate to not just make a guarantee, loan or purchase an entity, but to create one through the government as another tool for financial stability if it's warranted in this time.
My next question is on the CECRA program. The government will put 50%, the landlord will put 25% and the business owner will put 25%. It seems like the landlords are not participating or are refusing to participate in the program. There are a lot of businesses basically facing shutdown, and they cannot come up with the money. We've been receiving a lot of calls in that regard.
Was this program communicated to the real estate owners, the landlords, before it came out? Was there any understanding of this program coming to light so that at least we don't end up with a situation that we're in right now?
The program is expected to launch in mid-May. CMHC will be administering the program, and is working carefully on the program parameters. We are hearing a lot from both landlords and tenants about the operationalization of that program. We've heard from many landlords that they find it's a great opportunity. Otherwise they would have been faced, perhaps, with tenants being able to pay nothing, those who have been deemed non-essential forced to close or have significant revenue decline. They look at this as an opportunity to help weather this crisis.
We wanted to make an amount that was material but not zero, because if a company is facing zero non-essential for us to close, they might not be able to bridge the period. So it's an assessment. If they face that amount of a drop they would have more difficulty paying for that time, and with access to CEBA, for example, would then also be able to pay their 25% of the rent and be relieved of 75%.
So the 70% was not based on any economic or financial measures. It just may be a number that sounds good. Some businesses have lost more than 70%. Of course some of them shut down completely. Some of them are still having some activity.
How much money did you think you would need to spend on this program?
CMHC will be leading the delivery of the program, and they'll release details about the interface to apply once this becomes operational in the next couple of weeks. They've set up a website where businesses can now get further information on how they would apply.
Unfortunately once again we're completely out of time. Ms. Anderson, or whoever has a response to Mr. Aboultaif, please provide it in writing to our clerk, and then we can distribute it to the committee.
Colleagues, we've got just over 10 minutes left.
As I mentioned, at 3:45 p.m. I'd like to excuse our witnesses so we can then talk about the witnesses and the work plan and study for the week of May 11. Therefore, we will have two more five-minute interventions, starting with Mr. Kusmierczyk, followed by Mrs. Block, and unfortunately, Mr. Jowhari, it looks like you've drawn the short straw.
We have to adjourn our meeting at 4 p.m. sharp to allow the technicians to prepare for the next meeting.
We'll go now to Mr. Kusmierczyk. You have five minutes, please, sir.
Under normal times, thousands of Canadians who are on employment insurance can also benefit from the supplemental unemployment benefit, SUB. That's basically a top-up provided by the employer. It's a formal agreement between the employers, the unions and the government as well. Currently, under the CERB the SUBs are not permitted.
What is Finance's position on the issue of the supplemental unemployment benefits, and what are some of the key considerations?
As you noted, the SUB plans are not being used at the moment. Part of the reason for this is that we are not using the EI system in the way it's traditionally been used. We have moved people to applying for the CERB through the Canada Revenue Agency or through Service Canada, and moved into that CERB usage instead of the EI system. As such, the idea here really is to make sure that we are meeting the needs of Canadians in an urgent time, suspending some of the ways in which EI has traditionally worked.
I know that ESDC has had a number of conversations around the SUB plan. They are the policy lead for this.
Thank you. I just wanted to know whether Finance had any position or any considerations on this particular issue. I'll move on to the next questions.
In terms of the CEWS, the wage subsidy program, can you tell me how many employees are actually utilizing this program? As well, what impact will this have on our ability to recover once the economy is opened up?
I would prefer to consult with my colleagues at the CRA, as these numbers change all the time in terms of how many employees. I believe the last number I saw was 1.7 million, but I will get back to you. The program just opened for applications last Monday. It changes all the time. Perhaps I can commit to getting back to the committee with an update. It will be out of date, unfortunately, as soon as I give it to you, but I can give you the newest information.
The second part of your question is an important one. It goes to the heart and the purpose of the program, which is to encourage employers to retain, to rehire and to avoid layoffs in order to be positioned to restart things as quickly as possible and preserve that productive capacity in the economy. That's really the objective of the measure. We think it will be an important contributor toward recovery.
The Canadian Federation of Independent Business did a survey of about 8,000 of its members. It found that about a third of its membership will have a shortfall of about $10,000 in the next 30 days. That's when they take into consideration all the government benefits and all the revenue they're bringing in, obviously minus all the costs they're facing.
What indicators are we looking at to see whether the programs as designed are actually working, and specifically in the case of some of the programs directed at businesses?
That's an excellent question. I think we have been operating very much in real time in terms of developing these programs as the situation has developed. We are looking at take-up, obviously. We're looking at the feedback we get. We speak to a lot of associations and companies to understand exactly how these programs are working for them. There have been adjustments. While I can't speculate on the future, I think we'll continue to consider whether adjustments are required.
Clearly, we're tracking very closely the take-up of these programs. We are engaging with the finance committee on almost a weekly basis, if not every two weeks. I think we'll continue to track and look at the data and, importantly, seek input from Canadians across the country.
I have one really quick question in follow-up to the previous questions I was asking. I think it was Ms. McDermott who was answering my question.
I want a really short answer about the generous package you've referenced, which was announced to address what we are experiencing with COVID-19. Was that meant to be a medium-term solution, a long-term solution or a short-term solution?
I want to turn the rest of my time over to my colleague Mr. McCauley. I echo his concerns around some of the industries he was asking about, in terms of some sort of package for them. Could I do that, Mr. Chair?
With respect to Finance, 40 days ago now, of course, Finance Minister Morneau announced that support for the energy industry was “hours, possibly days away”. Now, we saw a small bit for the cleanup of wells, which is not going to help the overall industry. When are we actually going to see a support package for the vital oil and gas industry?
Governor Poloz from the Bank of Canada noted it's going to be one of the main driving factors leading us into recovery, but it has to exist if it's actually going to help Canada recover.
When are we going to see the support package promised by Mr. Morneau? If you don't have an answer precisely, please just state that and we'll move on to other questions.
On energy support, the announcement of April 17, in addition to the wells and the emissions fund, there was also a reference to new financing products to be offered by Export Development Canada and the Business Development Bank of Canada. They are a specific response to the particular financing challenges in the energy sector—
The government's response has been iterative, and so it is believed that these instruments will be very relevant, again, for the vast number of companies in the sector. These are mid-sized companies with larger financing needs than had previously been addressed under BCAP.
When he said “hours, possibly days”, he's referring now to the April 17 announcement. Thanks.
Let me just ask you, please, to Finance, with the recent drop of interest rates and obviously the change to the discount rate, how much higher are we going to see the deficit this year because of the change for the discount rates with the public service pensions?
As mentioned, we will be providing a fiscal update at some time in the near future, but we can't give you details on that yet. At that time, when we come out with either an update or a budget, you'll have detailed information on those forecasts.
Okay. Has finance looked at the issues of the unfunded liabilities of any of the public service pension funds, for example, the public service investment board or Canada Post, the issues with their unfunded liabilities? I'm sure they're going to get slammed even more with the drop in the equity markets.
Yes, many of those have been affected by equity market changes recently. I don't have that at my disposal, but we have been in touch. My understanding is that we are not doing too badly. We'll see if we come back with information for the [Inaudible—Editor]
As for the hidden, so to speak, debt of the Crown corporations, which is generally not announced when we talk about the overall public debt, how is that changing from pre-COVID to the current situation? Obviously, they're getting hit, whether on pensions or VIA taking a big revenue hit. How large is the increase in the Crown corp debt that we're seeing year over year?
I apologize. It seems that we never have enough time to fully get questions and answers on the record, so we ask whoever wishes to address Mr. McCauley's question to provide an answer in writing to our clerk so that we can submit that answer to our committee members.
With that, I will now thank and excuse all of our witnesses while the rest of the committee sticks around to deal with some committee business. I remind all committee members that we will be in public.
Once again, to the TBS and Department of Finance officials, thank you very much. You are excused.
Colleagues, the purpose of this, is to talk about the witnesses coming the week of May 11, which is next week.
May 11 from 2:00 p.m. to 4:00 p.m. will be the first meeting
Friday, May 15 from 11:00 a.m. to 1:00 p.m. will be the second meeting. All times are eastern.
I would ask Raphaëlle—if you want—to start with a précis of the work plans that we have established so far, and then we can ask committee members if they have any additional witnesses they wish to suggest.
I think we should also ask the minister to come back to answer these pressing questions in regard to some of the issues with Amazon and Canada Post, as well as the flip-flopping of the department on some of the PPE issues that were answered here and then contradicted in the House, contradicted by Mr. Matthews, and then contradicted again by her press secretary.
As we all know, the committees are masters of their own agendas. Should there be subsequent or additional witnesses we haven't even considered yet that the committee would like to invite, based on testimony that we're about to hear or yet to hear, we can certainly continue the study as long as we wish.
I'm just suggesting that at this point in time at least, if there are no objections, we'll continue with the meeting work plan that Raphaëlle and the other analysts have suggested. Should a committee member want to take 10 or 15 minutes at the end of a meeting to discuss additional witnesses and future work and studies, we can certainly do that. I look at this as a very fluid, ongoing study that may have several other elements the further we get along into it.
At this point in time, I think all that we have to go on, colleagues, is the work plan that has already been presented to all of you. If there are other comments on that, or suggestions on how we can proceed, I'd love to hear them.
Chair, I have a quick comment on prioritizing our witnesses. I don't have an issue with reinviting some of the witnesses, but I would first like to hear from those we haven't had the opportunity to hear from. Then, if we do feel that we need to hear from other witnesses for a second time, and perhaps a third or fourth time, we can surely send out another invitation.
My second comment has to do with the work that other committees are also doing. I think all of us here have expressed some concerns. We just don't want to be redundant in terms of what the other committees are doing. I would defer to the analysts to say which particular witnesses have been heard at some other committee, unless it was a month and a half ago or something. Then, perhaps there's value in having them in front of our committee. However, in the spirit of redundancy, I would say, let's hear from those who haven't had the opportunity to come forward yet.
Francis, I agree, particularly with your initial comment about prioritizing those ministers who have not appeared before this committee yet. With regard to those committee members who wish to see a minister reappear, we could perhaps put those appearances off until further down the line.
I also agree with your comments.
Raphaëlle, this is perhaps dumping a bit much on your plate and Ryan's plate, but could you take a look at some of the other committees that are currently meeting and do a quick overview of the witnesses and some of the people they're bringing forward, and recommend to our committee, then, if there are any witnesses who would perhaps be redundant? We don't want to have meetings just for the sake of having a meeting. If we don't have to hear witnesses who have already provided testimony in other settings, I think that would probably be the wise course of action. Having said that, if there are witnesses we have not heard from yet and committee members think they would be vital to our study, let's get those names in as quickly as we can to our clerk and our analysts.
I appreciate Mr. Drouin's comment; I don't want us to meet just for the sake of meeting. That being said, I would like us to take a look at it before we zap anyone as duplicating.
We saw today in committee that Ms. Ratansi brought up great questions about the CEBA that had been brought up repeatedly at other committees where they've just been sloughed off.
Even if they've appeared in another committee, I think it would still be valuable to have them before us to explain what they're doing during this crisis, hold their feet to the fire if necessary. I'd hate to dismiss anyone just because they've appeared somewhere else.
From my observation, I guess it's simply that if we have witnesses who can add something and provide new testimony to this committee, I'm all for it. If we're hearing the same old same old testimony, having the same answers we've heard in the finance committee or perhaps other committees, then I'm not sure how productive and useful that would be for this committee.
Again, I'm certainly at the will of this committee as it sees fit.
Raphaëlle, could that be part of your task, to take a look at the witnesses who have appeared at other committees and make a determination, if possible, to see if any of that would be considered new and helpful information for our committee's study? Then we can go ahead and do that scheduling.
If I may, Mr. Chair, to ensure that I am understanding what the committee wants, we will proceed with the fifth and sixth meetings as outlined on the work plan of April 28. The fifth meeting will be Minister Qualtrough, Minister Lebouthillier, and officials from the Canada Revenue Agency. The sixth meeting will have representatives from the PHAC, the Public Health Agency of Canada, in addition to Bill Matthews and Arianne Reza.
The meetings for next Friday were already decided on; I'm talking about the week after that. The fifth meeting here would be for May 11; the sixth meeting that I'm detailing would be for May 15. There are two ministers invited for May 11, according to the work plan, and at the sixth meeting, which would take place on May 15, there is no minister invited but there are two representatives from PSPC.
I'm not sure I understand the reason for this. To examine the procurement of PPE, why would we want the deputy minister and the minister of the department, who are both coming for a second time, incidentally, to appear separately before this committee? Either we have them together or.... I don't understand at all the rationale for doing two separate sessions.
I think Mr. Matthews is more for some of the specifics of PPE. If you want to bring [Inaudible—Editor] at the same time, then if necessary we'll bring them back a third time. I just have great concerns that we will use up time discussing the national stockpile, which we're talking about that day, or other issues and get tied up. I'd like some clearer answers from the minister specifically on some of the back and forth, as they're contradicting themselves, and clear messaging, whether it's on Amazon or something else.
I don't think we'll get that all in a one-hour meeting with Mr. Matthews and the minister, which is why I'm suggesting a separate one.
Colleagues, I can make a suggestion. We have a work plan that takes us until May 15. Under the original parliamentary calendar, we were not sitting the week of May 18. However, that old calendar is out the window and my understanding is there will be virtual parliamentary meetings as well as in-person meetings the week of May 18. Since it is apparent—to me at least—that this study will continue for the foreseeable future, I suggest we defer inviting the minister to come back, as Mr. McCauley suggested, until after May 15. Then during the week of May 11, I will schedule some time at either one or both of our two meetings for committee business and we can talk about the plans for subsequent weeks.
Mr. Chair, the proposal is to invite the witnesses outlined in the fifth and sixth meetings on the work plan. If that's what the committee wants to decide on, it really should be, according to the order of the House, a recorded division.
Do you wish me to proceed with that question for the committee to vote on now?