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 to meeting number 20 of the House of Commons Standing Committee on Finance.
Pursuant to the committee's motion adopted on Friday, February 5, 2021, the committee is meeting to study all aspects of COVID-19 spending and programs. That should be a short issue, you would think.
Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021, and therefore, members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website. The website, as we all know, will only show the person who is speaking.
I have to indicate again, because I understand there have been some problems in the past, that people should not take screenshots or take photos of their screens. It's the same rules as in Parliament.
We have 12 witnesses today, but before I get to them we have a couple of motions that we need to adopt. We missed, when we were dealing with Bill C-224, giving the independents the opportunity to provide amendments so I'll read the motion we require and if somebody wants to move it, we'll move ahead.
That, in relation to Orders of Reference from the House respecting Bills,
a) the clerk of the committee shall, upon the committee receiving such an Order of Reference, write to each member who is not a member of a caucus represented on the committee to invite those members to file with the clerk of the committee, in both official languages, any amendments to the Bill which is the subject of the said Order which they would suggest that the committee consider;
b) suggested amendments filed, pursuant to paragraph (a), at least 48 hours prior of the start of clause-by-clause consideration of the Bill to which the amendments relate shall be deemed to be proposed during the said consideration, provided that the committee may, by motion, vary this deadline in respect of a given Bill, and
c) during the clause-by-clause consideration of a Bill, the Chair shall allow a member who filed suggested amendments, pursuant to paragraph (a), an opportunity to make brief representations in support of them.
That's the motion.
Does somebody want to move that? It is so moved by Mr. Ste-Marie.
(Motion agreed to)
The Chair: Thank you.
The second motion we need to deal with is a budget to deal with the study of Bill C-224. Gabriel is not a very expensive guy, because we're only asking for $1,275 for this study. Does somebody want to move that budget? It is so moved by Ms. Dzerowicz.
(Motion agreed to)
The Chair: We'll move on to witnesses. I believe everyone has the witness list before them.
From the Canada Revenue Agency we have Mr. Vermaeten, assistant commissioner, who has been here many times; and Mr. Gallivan, assistant commissioner. From the Department of Employment and Social Development, we have Elisha Ram, who is associate assistant deputy minister; Mr. Groen, senior assistant deputy minister; Mr. Perlman, chief financial officer and senior assistant deputy minister; and Atiq Rahman, acting assistant deputy minister, learning branch. From the Department of Finance, we have Tushara Williams, associate assistant deputy minister; Galen Countryman, director general; Evelyn Dancey, associate assistant deputy minister; Soren Halverson, associate assistant deputy minister; Alison McDermott, associate assistant deputy minister; and Mr. Jovanovic, associate assistant deputy minister.
I don't know if there are any opening presentations. You'll have to let me know.
It's difficult to even know where to start. Perhaps I will begin with the CRA and talk about self-employed workers who did not qualify but applied for CERB due to misleading or confusing information, either in the written criteria or, more particularly, when given incorrect information about qualification over the telephone from the call centre or from employees at CRA.
Do you know how many workers this was? Can you quantify the number of people?
It's impossible to quantify how many people would qualify for this relief at this point, because we don't know at this point who wouldn't have qualified without this relief provision. That's because we'd need their 2019 tax return and their 2020 tax return. We'd need to see the income they made in those two years and in the 12 months prior to application.
Therefore, in terms of who would have needed this relief, we won't really know until we have all that information and we have done the compliance to verify the information.
That's only part of what my question was. We do know that thousands of Canadians received letters demanding repayment. We know that some of the people who received those letters thought they did in fact qualify. Many even called and spoke directly to employees at the CRA and came away from those conversations misled about their eligibility for the program.
Do you have any numbers you can give to the committee about that?
Yes, certainly. I want to just clarify that in terms of getting incomplete information or not correct information, that certainly was very early in the pandemic. We were rolling out these programs very quickly. The program began on April 6, and it took us around three weeks to clarify that issue of gross versus net. Certainly, in those three weeks there were definitely people who got the wrong information or a lack of clarity in that information.
With respect to the number of letters that were sent out to these individuals, the letters that went out asking people whether they were sure they were qualified, approximately 30,000 individuals who were in that gross-net range received those letters.
It's not quite as clear as that. It's not that we said they didn't qualify; it was that they may not qualify.
Remember, at the time the letters were sent out, all we had was the 2019 tax return. They still may have qualified. If you recall how it works, you can meet that $5,000 threshold, whether it was in 2019 or the 12 months prior. To the extent that individuals actually earned money in the 12 months prior to making the application, they may still have qualified.
The letter was in fact what we'd call more of a nudge letter. Rather than saying that you don't qualify, it was more saying that preliminary data shows that you may not qualify, and if you don't, you should consider repaying. It was more of a nudge letter, I'd say. It was certainly not a demand to repay.
A tax filer getting nudged by the CRA will tend to put tremendous weight on what they receive. What may be thought by the department to be a nudge is often taken very hard by the recipient, especially small business owners.
If I have time, Mr. Chair, I'd like to shift a little and ask the finance officials about businesses that did not qualify, and still do not qualify, for the wage subsidy or the rent subsidy because they don't meet the loss criteria. They either opened in March 2020 as a business or in 2019 had severely reduced revenue because of retooling a plant, rebuilding a restaurant, being closed for much of 2019 and not having the comparable year-over-year loss to qualify for these programs. These businesses have been completely left out in the cold with catastrophic results.
I wonder if I can have the finance officials comment on whether there was any consideration of these businesses or if there will be any future consideration.
What the various changes that have been made to this program confirm is that the government is attentive, in an ongoing manner, to any gaps that may exist with respect to support to businesses and individuals. This is obviously still a consideration as one of the gaps that has been identified along the way, and certainly the government continues to consider it as we speak.
The wage subsidy is still based on the qualifications as of March 15, having a payroll account, for instance. We have to understand this is instrumental and critical to the integrity of the system. This approach has been chosen primarily for these reasons. It is difficult to help all types of situations and maintain proper integrity. At the same time, the government recognizes that the system is not perfect and that there are gaps, and the government continues to consider these gaps. That's all I can say.
I'm saying the government has never stopped considering how best to adjust the various support programs to make sure that businesses and individuals are supported to the best of the government's ability.
Thank you. That is an issue that I think we all as members are getting some calls on, and we do know it's complicated.
I'll turn to Mr. Fraser. Before I do, I want to remind members that the Library of Parliament has prepared a fairly substantive document on the programs and the expenditures, so if you have that available to you, it will be helpful.
Before I get into my questions I want to start with a message of thanks. I don't think many people appreciate the work that the public service has put in to develop many of the emergency measures that have supported Canadians, particularly in the early days of the pandemic. To have seen behind the curtain to some degree, I want to say that your effort was noted and so greatly appreciated. There are people in my community who were able to keep food on the table and a roof over their head because of the work you've done, so please, on behalf of people who live in Central Nova, I want you to know how appreciated your work has been.
To start off, I want to ask a question on where we might be had some of these emergencies not been advanced. A year ago, no one knew what the coronavirus was except for the snippets we were starting to see on TV.
Mr. Chair, I think we have someone jumping in. I think Pat needs to mute his microphone.
Mr. Chair, I hope you'll indulge me with the few seconds that we lost there.
It wasn't much more than a year ago that the coronavirus was first on the international radar. Obviously, as we got into March and April of last year, it became the only thing anybody was talking about. In those early days, I remember taking calls from people who didn't know where their next paycheque was going to come from or were worried about losing their home, and from businesses that were worried about keeping the doors open or workers on the payroll.
I'll give a quick summary of some of the main programs that people may be familiar with. CERB helped almost nine million people so far. The student CERB helped hundreds of thousands more. The wage subsidy is keeping over four and a half million Canadians on the payroll. CEBA and the regional relief and recovery fund together supported nearly a million businesses.
Although I hear a lot about the quality of life that people were able to maintain because these supports were coming in, I'm wondering if you have any quantitative data on the actual impact of these measures. Where would we have been had these measures not been advanced in a timely way to help keep people and businesses afloat during the emergency?
I'm reaching for my notes from the fall economic statement. We did quite a bit of analysis to try to estimate those impacts. For example, if you look at page 38 of our fall economic statement, we have some estimates of how the real GDP and the unemployment rate would have been different on a very significant magnitude, in our estimation, in the absence of some of this support. For example, direct support measures are expected to result in economic activity being 4.6%—
We estimate, for example, economic activity being about 4.5% higher in 2020 and 4.5% higher in 2021, compared to a scenario that would have occurred in the absence of that support measure. We estimate that this translates into about 1.2 million full-time equivalent jobs protected as a result of these.
Of course, these are just rough estimates, but we know that the impacts are significant.
One of the reasons I ask is that sometimes the argument is made that these measures are so expensive that we can't afford them. My view is that we couldn't have afforded not to implement them in a timely way.
I believe it was Professor Kevin Milligan when he testified before this committee previously who made the point that the virus created significant costs. The federal government was faced with the decision, effectively, as to who should bear that cost and whether the government should step up with emergency supports or whether it should be passed on to households and businesses that, in my mind, could ill afford those measures.
I'm curious, from your perspective, based on the fiscal position that Canada held entering this pandemic and the impact that this pandemic has had on already low interest rates.... I'll simplify the question. Can we afford the emergency response?
You're absolutely right that interest rates are at an all-time low and that certainly makes these kinds of investments a lot less costly than they would otherwise be.
I'll note that we're really not alone in Canada in this kind of a response. This is the kind of advice we've received from the IMF and the OECD. It's very consistent with what all other major economies are doing in terms of seeing that value and providing support to businesses and individuals in order to avoid longer-term economic scarring that might indeed be more costly over the long run.
Since you mentioned the IMF, in the limited time that I have left, I believe it was the chief economist at the IMF, Gita Gopinath, who explained that because of the multiplier effect when you're dealing with economies at the effective lower bound of interest, public investment is not just economically sound but fiscally responsible in the circumstances, for the points you've made.
Mr. Chair, I believe that's pretty close to my time. Is there any time remaining?
I have a final question for you, as a wrap-up. What have we learned?
The response was so effective in some ways, in the early days, that the expectations that Canadians now have looking forward are very high. They've seen that the government, with political will behind it, can actually implement benefits that roll out almost immediately to people in need.
Are there things we've learned about our systems through this emergency response that we'll be able to implement permanently on a go-forward basis?
That's a really big question and I think we'll be giving that a lot of thought.
One thing we know is that one of the reasons we had to go ahead with a fairly blunt approach to the emergency recovery benefit, the CERB, was that we had a failure of ESDC's EI system. I think we've learned the lesson that there would be many advantages to keeping up our existing employment insurance system so that we're prepared in this kind of event and we're not overwhelmed. However, in terms of the broader question, yes, we're definitely taking that back and doing a lot of thinking about our long-term policies as a result.
I would like to begin by acknowledging and thanking each and every representative from each of the departments for being here. I also thank them, as Mr. Fraser said, for the important work they have done since the beginning of the pandemic. It's exceptional.
My questions are addressed to representatives of the Department of Finance and are related to an article by finance columnist Francis Vailles that appeared in today's La Presse. Mr. Vailles raises a really important question about the cost of vaccines. The article is entitled “An $11-billion mystery”. I hope that today we will be able to shed some light on this.
It refers us to line 1.4.1, vaccines and therapeutics, in the fall economic statement 2020, page 8. The forecast is roughly $14 billion, almost equally divided between this year and next year.
In the first category, “Support for Medical Research and Vaccine Developments (2020 Snapshot)”, an amount of approximately $1 billion is projected.
At the next line, “Further support for medical research and vaccine2”, $13 billion is allocated. The small superscript refers to this footnote: “Spending profile adjusted to reflect updated departmental requirements.” What does this include? Mr. Vailles did the math. He takes the average price of a dose of vaccine in Europe or the United States. He calculates two doses for each of the 38 million people and arrives at a total of $2 billion. Even with a slight increase in price, it is difficult to reach $3 billion.
This brings the total to $2 billion and the amount of additional support for medical research and vaccines to $13 billion. If we subtract $2 billion from $13 billion, we get $11 billion, hence the title of the article “An $11-billion mystery”. In his article, he digs deeper. He learns, for example, that $284 million is allocated to the transportation of vaccines and the purchase of freezers, including for the Department of Public Services and Procurement Canada. There is also $800 million this year and next year, or $1.6 billion, for the Canadian research component of the Department of Innovation. So we're still $9 billion short.
What I can tell you is the overall breakdown for vaccines as is in the FES from last November. The total envelope is $14.3 billion: $13 billion of that is for medical research and vaccines; $1.2 billion is for another envelope of medical research; and $126 million is for biomanufacturing.
What I can say today is that the government announced $1 billion to secure access to vaccines up front, but there is an overall envelope, as you have noticed, for vaccines, vaccine supplies and medical research. That's the breakdown that I'm able to talk to you about today.
What the government has done is that we have negotiated agreements with seven vaccine candidates, for a total of 429-million potential doses. I cannot comment from the Department of Finance's perspective as to whether we have too many doses or not. As you know, some of the vaccines—most of them—are still under approval, so we don't know whether they'll be regulated and approved to be used in the Canadian market.
For now, there is a pot of money that has been set aside for vaccine procurement and vaccine supplies. Right now, what we can talk about publicly is the $1 billion that has been allocated to secure access to upfront vaccines from the seven companies.
I understand that it's vague right now, but part of the reason is that this is commercially sensitive information, which is pricing. Health Canada and the Public Health Agency, together with Public Services and Procurement Canada, are still in the process of finalizing some of the terms of the agreements. This is why we are unable to give you a detailed breakdown right now.
In my opinion, it is very important for the committee to be able to understand what is behind this mystery and this envelope. I understand that our meeting is being broadcast publicly and that some issues may be sensitive.
When I speak next, I will ask for an in camera meeting to find out the details regarding the $13 billion. It is important that we understand them. This will allow the government and the departments to be fully transparent before the committee.
Thanks to our dedicated public servants. We appreciate deeply your dedication during this pandemic, and we hope that you and your families continue to remain safe and healthy during this very difficult time. We appreciate your availability today.
I'll get right into it. First off, I would like to say that an in camera session on the distribution of vaccine contracts is something that I support as well.
I'd like to start off with questions around the CERB repayment.
It wasn't considered a “nudge” by my constituents, people who received the bills at the end of December stating that they owed money on CERB repayment—thousands of dollars. People took this as almost catastrophic in terms of their personal finances, as they struggle to put food on the table throughout the pandemic. The government eventually relented, a few days ago, and said that self-employed people don't have to make that CERB repayment, because it was essentially redefining the category.
I'd like to know how many Canadians who received that payment notice in December are still not covered by the exemption for the self-employed that was announced in February.
I think it would be that the vast majority were not covered by the scenario of the gross versus net, and again, I take the point on the letter from the CRA being intimidating. I think the intent was to put people who may be in a position to pay back the government on notice as soon as possible, to minimize the final financial hardship it could have.
I can get back with a firm number, but I would say the vast majority of the recipients of that letter were in different scenarios.
Thank you, Mr. Gallivan. I think those figures would be helpful, so if you could come back to the committee on that, it would be much appreciated.
I'll move on to the finance department and the wage subsidy.
On the Canada emergency wage subsidy, we're aware—because the Financial Post did a lot of digging—that dozens of profitable Canadian corporations have used the wage subsidy for dividend payments, stock buybacks and executive bonuses. Other countries prohibited that. Canada seemed to discourage that.
I wonder what the department estimate is of the sum total of monies spent from the wage subsidy on those three categories—stock buybacks, executive bonuses and dividend payments—and what steps the department is taking to get that money from taxpayers back.
First, as to the total of the CEWS that has been used to pay dividends or to do share buybacks, we do not have that estimate, primarily because we don't have that information right now. That would require access to tax returns and financial statements, and that cannot be done clearly now and there would probably some important challenges in being able to make that assessment.
What I would like to do, and that will be the answer to your second question, is to get back to why we observed that in a way. The wage subsidy was designed to be responsive. The reason the eligibility is based on a month-over-month comparison is to make sure that the subsidy is responsive to sudden drops in business activities, particularly in the environment of a crisis where there would be lockdowns and restrictions imposed.
However, that also means that you might have a situation where a firm rebounds quickly from a bad month, and after a while, overall, might present sound financial statements, while at the same time having benefited from the CEWS. That's not an unexpected outcome given the design of that measure.
Okay. My question remains unanswered, but I'll move on to the next question, which is on the vaccines.
Regarding the $14 billion that has been referenced, how much of that budget has been allocated to research for vaccines in Canada and production of vaccines in Canada?
This, of course, has become a major issue because Canada has not stimulated the domestic vaccine production that other countries have. Therefore, how much of that $14 billion has been allocated to research and production in Canada?
Between the article and the previous question, there have been a lot of numbers that have been indicated. What I would suggest on this is that we follow up on research with respect to your question, Mr. Julian. We would be happy to follow up in writing to help make things clearer.
I don't have specifically at my fingertips right now the precision you're looking for, but it would be possible to provide it, following the meeting.
Thank you, Mr. Chair, and thank you to our witnesses and departmental officials for attending today's committee meeting.
I think we can all appreciate the need for the government to move quickly at the onset of COVID-19. At the same time, we recognize that we also have a responsibility to be good stewards of taxpayers' dollars and to do our due diligence.
I'm thinking specifically of contracts that were awarded to businesses during that time. I'm thinking of a situation in which a company that apparently hadn't even been in existence for a week was awarded a contract for $237 million, and then subsequently sublet that contract to Baylis Medical, the firm of a former Liberal MP.
What criteria did the department use in making decisions such as awarding contracts such as that?
We also know from the labour force survey that, back in March, we lost initially a million jobs. During the month of April, we lost another two million. Then, subsequent to that, the report shows that about another two and a half million Canadians had their hours reduced to about half of what they would typically work.
That's about five and a half million Canadians with either no work or reduced work, but we know that about 7.8 million Canadians applied for the CERB.
Can you comment on the discrepancy between those two numbers?
Certainly we saw significant job losses, as well as people whose jobs were restricted, early on in the pandemic.
When thinking about the CERB, we have to keep in mind that it was really three benefits rolled into one. It was a classic unemployment benefit, which was extended both to the employed and the self-employed, but it also played the part of effectively a sick benefit as well as a caregiving benefit, which are benefits that are not necessarily covered under our existing programs, such as employment insurance.
We know that people who applied for the CERB applied for a variety of different reasons. For some of them it was because of job loss or income loss due to the impacts of the pandemic, but for others it was because they were under quarantine or in isolation, or because their job was still there but they had to stay home to look after children because schools were closed as well as other care facilities.
I suspect that a big part of the discrepancy you are pointing to has to do with that particular diversity in the reasons for which people were applying for the benefit.
CERB was delivered by both Service Canada and the Canada Revenue Agency. We worked very closely together to use the best information available to us.
We know, of course, that CERB was based on an attestation basis. That was a very deliberate choice that was made at the outset to ensure that we were able to get benefits out to people as quickly as possible. Effectively, that meant that many of the typical integrity measures we take at the outset, when we decide whether someone is eligible for employment insurance, were not done. In fact, we were relying on people to tell us if they were eligible, with the expectation that integrity measures would take place at the back end.
We certainly use techniques, including a large number of...and other measures, to identify situations where people were clearly defrauding the system. However, it's expected that in the vast majority of cases where individuals will be found not to have been eligible, it will be due to honest mistakes.
Looking at the numbers, as we know, letters have already gone out in some cases in situations where we can't tell whether someone was eligible or not and we're looking for additional information. As my colleague has already explained, more will be known when the 2020 tax information comes in.
I used to work for Mr. Page. I'm surprised he said that. That sounds very critical.
Honestly, I'm happy to walk through any part of this with you or with Mr. Page. We do feel that it's a pretty good accounting of the financial aspects of the plan. Particularly in the fall economic statement there are tables, one for each chapter, in which we outline all of the measures that are part of this COVID response plan. We have specific coding for all the new measures. We include that and wrap it up in analysis of all of the existing measures just for completeness. We show the impact value. We show the accrual value, the financial costs and how it will be reflected in our public accounts if we end up being accurate in terms of the costs.
That's all consistent with how we show our summary statement of transactions, where we show what that means for the overall aggregate fiscal situation, so—
Of course we're continuing to update this. We feel that at the time of the FES, we put out the most accurate information we had. We're continuing to work on updating that. We'll put out a budget at some point in the spring. We will have updated figures at that time.
I also want to start off by thanking all three departments for their hard work and their amazing service to Canadians during this unprecedented time.
I have two completely different sets of questions. First, I know that a lot of the emergency funding was provided to the provinces. I want to know whether, on the one hand, there is some monitoring as to whether the funds that have been sent to the provinces are actually being spent. The second part is whether or not the monies that have been spent have been successful in producing a positive public health response and a positive on the jobs recovery front.
I'll give you an example. Nova Scotia has had a 95% recovery of their jobs and they've had a very successful public health response. In Ontario, apparently there's still some money left on the table in terms of the safe restart as well as in terms of safe school funds.
I would love to see if anyone can respond to that.
On the question of transfers to the provinces, yes, for a number of programs, you're quite right, there were funds given directly to the provinces and territories to support them in the fight against COVID -19. Perhaps the principal one among them, as you mentioned, was the safe restart agreement. The safe return to class funding went out in two instalments, one at the end of September and one just a couple weeks ago.
For the safe restart agreement, most of the funding has flowed to the provinces and territories. About $12.2 billion has flowed to them already. In those cases, it was letters that were submitted from the premiers to the Prime Minister—
Mr. Countryman, I'm sorry to interrupt. I don't have a lot of time.
Are we monitoring whether the funds are actually being spent? Of the monies that are being spent, are we trying to determine whether or not there's a correlation with a positive public health response and/or a jobs recovery?
Once the money has flowed to the provinces and their provincial treasury, they are responsible for the spending. We do not have a direct line of sight. We have what their intentions were as they submitted, but we don't have a follow-up mechanism afterwards.
We're not following whether they're spending the money in the areas that we've asked them to spend it: the PPE, the [Technical difficulty—Editor] control, the public health measures, those kinds of things?
Reporting requirements are fairly light on the first cycle of the safe restart. On the safe return to class fund, there was generally high-level reporting from the provinces on what they spent in the first tranche and their plans for spending the second tranche. As a general rule, there is very little line of sight as to how they spent the money and when they spent it.
The sickness benefit, as you know, came out of the conversation with the provinces under the safe restart agreement. The concern expressed at the time was that once the CERB had wound down, there were going to be Canadians who wouldn't have access to paid sick leave. Without access to that leave, individuals would have an incentive to ignore symptoms and go to work because they needed income to survive. Therefore, the Canada recovery sickness benefit was designed to be as flexible as possible to avoid that problem. They way we did it is that it is effectively a universal benefit for individuals who have minimal labour market attachments, which was defined in the same $5,000 way as we originally defined it in the CERB.
If you have that income and you are required to self-isolate or you acquire the virus, you are allowed to take the benefit. We don't ask whether or not you have other forms of sick benefits available to you. If you have sickness benefits from your employer, if you have an entitlement to EI sick benefits, you don't have to take those benefits first. However, we do require that you not receive multiple benefits for the same period of time, so you can't be claiming EI sickness and the recovery sickness benefit for the same period of time. If you do have more than one benefit available, you have the choice as to which one you want to take.
When someone calls my office and says they want to have access to the Canada recovery sickness benefit, I say to them, it's fairly easy to apply and that 98% of those who apply get approved or get their benefit within three to five days. What is the concern? There seems to be some concern about people having access to the Canada sickness benefit. Is the issue that we can only offer it in one-week chunks? We're trying to resolve that issue.
First, could you verify that 98% get approval and that the processing is between three to five days?
Second, could you outline what a key issue is right now and what's being done to resolve it?
On the approval, I'm going to have to defer to my colleagues at the Canada Revenue Agency.
In terms of access, we have heard that some people are concerned, and certainly the one-week application period has come up. When you apply for the benefit, you have to attest effectively that you have been unable to work at least 50% of your regular work week, and this is to ensure that people really are unable to work because of reasons related to self-isolation or sickness.
In some cases, we've heard that people are concerned that they may only be in isolation for a day or two before they get their test results, so the 50% rule does become a problem. From a delivery perspective, we're not able to deliver that benefit in periods of less than a week, so we're aware that this is a gap. However, at this time there's no obvious solution to that problem.
As I was saying earlier, today, Mr. Vailles published an article entitled “An $11-billion mystery ”. I thought it was timely because we were hosting the officials at the committee. So we could shed some light on this issue.
Based on the responses I have received, I understand that information about additional support for medical research and vaccines is confidential. Therefore, the mystery remains.
I would therefore ask the Department of Finance to provide this committee with a complete and detailed breakdown of line 1.4.1 of the fall economic statement 2020, specifically the breakdown of the $13,087 billion in additional support for medical research and vaccines.
I am also filing this motion with the committee. Mr. Roger, the clerk of the committee, will be able to read the English version to you and he will also be able to send it to you in both languages.
That the government present to the Standing Committee on Finance in an in-camera meeting the details of “Further support for medical research and vaccine” in relation to vaccine contracts, by the end of March 2021 at the latest.
I would like further clarification as to why the motion is in order—that's unclear to me—and I'd like a bit more of an explanation from Mr. Ste-Marie as to what exactly would be the purpose of the meeting. Seeing as though the government has been very forthcoming in question period and in answering questions from media, I'm not so sure that the committee would be well served by focusing on this when issues like this are already being addressed. There are a lot of other things that we could be working on as a committee, whether in camera or out of camera.
We need to understand the financial documents presented by the government, and as Mr. Vailles wrote today in La Presse, there is an $11-billion mystery. Officials have just told us that they are not qualified to explain to us what is behind the $13 billion. We need answers to these questions to fully understand what the government is doing.
Mr. Chair, this is a motion that's in order, as you mentioned. This information has not been forthcoming. We're all aware of the health committee endeavouring to get information in terms of the impacts on vaccine distribution and not being able to get it. The financial side of things is our purview, so this is in order.
I certainly support it. I hope it won't be filibustered. I think we should just proceed to a vote.
I wasn't clear about the motion. My understanding is that there is another committee that might be looking at this—maybe the health committee.
My other issue is that, from a financial perspective, it seems like we are studying the finances right now. We are looking at the vaccines and we are able to ask questions about them, so I guess I just need to clarify a bit with Mr. Ste-Marie.
Are you feeling we need more details about the actual contracts and about exactly how much we have spent for each of the detailed vaccine contracts? Maybe you could talk a little more about specifically what information you feel the motion is going to get us that we are not able to cover under the current motion right now.
My question is very much in line with the finance committee. It relates directly to the fall economic statement 2020. Line 1.4.1 allocates $13 billion in additional support for medical research and vaccines. We are told that this is for the needs of the department, but departmental officials tell us they are not qualified to give us the details.
The government needs to be transparent with us as legislators. I understand that this may be confidential information, but it could be presented to us at an in camera meeting.
Mr. Chair, I'm just wondering, since we have the witnesses here, if we can have this conversation at the end of the meeting, once we've wrapped up the questioning by members. Is it something we could discuss at the end of the meeting?
Thanks, Mr. Chair. I look forward to our discussion.
I appreciate everyone's being here to answer these questions. The Library of Parliament document talks about liquidity supports of $600 billion. When the Office of the Superintendent of Financial Institutions came before us last summer, they stipulated that the overall level of liquidity supports to Canada's big banks was about $750 billion. The banking sector, of course, has reaped enormous profits during this pandemic—$30 billion to date.
I'm asking the officials from the Department of Finance if they can explain the difference between the $600 billion and the $750 billion in liquidity supports. These are enormous amounts, unprecedented in Canadian history, going to the banking sector. There wasn't any quid pro quo asked for.
The other question I had is on the contrast with people with disabilities, who received $600 after a long struggle. It took about nine months, but many, if not most of them, were left off the list. Could the department explain how many people with disabilities, through the disability tax credit, were able to access that $600, out of the three million people with severe disabilities in our country?
I'll take the first part. I believe it will be one of my colleagues who will need to take the second part.
When it comes to the specific crosswalk that the honourable member is looking for between the two numbers he quoted, we will need to come back on that. I'm not familiar with the second number, but I just want to emphasize that those numbers, the build to those numbers.... I hope it's well understood that they don't represent a financial transfer to the financial institutions in question.
Specifically, a very large element of that number refers to changes in the guidelines that the regulator puts onto banks, so they, in fact, are intended to allow banks to lend more, which they did in the early stages of the pandemic crisis. It's not a cash number. It represents items that are different in nature from a financial perspective. I think it's just worth noting that.
To date, about 1.7 million Canadians with disabilities have been issued a payment with a total value of just over $790 million. There's going to be one more final batch of payments going out in the spring to about 40,000 more for all the persons with disabilities who submitted their application by December 31, 2020.
I would also like to congratulate, as many of the members have, our very hard-working civil service. I suspect many of you have not had the opportunity to catch up on the sleep that you lost in the spring. Thank you very much for all of your efforts. I really do appreciate it.
Mr. Fraser talked a little bit about the supports that have been put in place. I want to, of course, put on the record that Conservatives were there to help the government get supports to Canadians. In particular, we pushed to [Technical difficulty—Editor].
I can tell you that we have higher unemployment than the United Kingdom, Germany, France, the United States and many other developed countries. That's despite very high levels of expenditure. I note that we've been provided the chart of debt to GDP, but also important is deficit to GDP, where you would see our ranking as among [Technical difficulty—Editor] developed countries in our expenditures.
Is it fair to say that we have spent the most and gotten the least in the G7?
I'll just note that there are some differences in the way programs work in other countries.
Our unemployment rate did go up a lot higher—so did the Americans', for that matter—as a result of the COVID pandemic and the economic crisis. In part, that's just a reflection of the way our social systems work a little bit differently from some of the supports that are provided in Europe.
In some cases, you saw furloughed workers showing up in Canada as unemployed but showing up in other countries as still retaining employment.
I apologize. I have a limited amount of time and, as I said, I do appreciate all your efforts.
I realize there will be idiosyncrasies in how we all measure things a little bit differently, but overall there's a pretty clear picture that emerges that we have higher unemployment than the G7 average, than most of the countries in the G7, than a lot of the countries in the G20, and higher unemployment than the average across the European Union. I think addressing those to specific idiosyncrasies probably isn't fair. I also think that our expenditures, it's pretty clear, are amongst the highest in the developed world as well.
What has happened is that, while other countries are getting paycheques, we are putting it on the credit card. I think that's pretty fair to say.
I would just say that you do have to be careful about that. We would say overall that our response has been quite generous, but not wildly more generous than a lot of other countries. There has been somewhat more direct support than liquidity support, which makes it a little bit more costly, in some cases.
Overall I think it would be disputed to say that our response has been less effective than that in other countries, because you have to look at changes. You can't just look at levels of unemployment—
I would, and I think that's the way most of the world works and the way economists work. They look at the unemployment and, quite frankly, families and Canadians would as well, as we see that there are so many Canadians who.... Two thousand dollars is just not enough for a Canadian family to get by on.
They don't want government handouts. They want paycheques, and we need to get paycheques back to Canada. I think that response—having unemployment higher than the EU, higher than most of the G7 and the G20—tells us that the results are not what we need here in Canada.
I think I'll stop. I don't think we'll necessarily come to a consensus on how to view this.
I think, obviously, different people, different economists, would draw different conclusions, but I think our broad conclusion is that this plan has been very effective at stabilizing employment and GDP growth in Canada.
I'll just change subjects, but with a quick one. I do appreciate the chair's gracious time.
With respect, I actually had to deliver food personally to a family in my riding, because they were waiting.... They got caught in the vortex of applying between ESDC and CRA, and those systems not working. They had a legitimate claim to CRB—CRA said so—but because of the systems in between, they had to enter it manually.
How many more families have to go without food until we get that software corrected? How much longer...?
I certainly would not characterize myself as a software specialist, but I will be able to answer that question.
CRA and Service Canada do exchange data because we need to ensure that people are only receiving one of either the recovery benefit or the employment insurance benefit. We do exchange data between the two departments to ensure that there is not that situation.
We are aware that there are a number of clients who are experiencing some delays because of that data exchange. We are working very closely with CRA in addressing that, and for the vast majority of individuals who were affected, those issues have been addressed. Any remaining ones we are doing as quickly as we can. It is certainly a high priority of ours.
Before I turn to Mr. McLeod on that very topic, I'll just put a bee in your bonnet, because this was a new one to me. It first came from an accounting firm, and then I got two more calls about it later in the day. It is the filing time for the wage subsidy, for the CEWS. The deadline is a hard deadline of January 31. In any event, this accounting firm missed the deadline of January 31, and there is no process for late filing and paying a penalty, so it seems.
I sent the information on to representatives at the CRA. They informed me that it wasn't their problem. It was the finance department's, so that question is somewhere in your system. I'll give people a heads-up that this is probably a problem area that has to be addressed. The individual in this case who has the problem figures it will cost him $97,000 if he is not able to file past the deadline even if he has to pay a penalty. It's just a bee in your bonnet to think about for the moment, because the letter is in the system somewhere.
First of all, I also want to say thanks to everybody who did all the hard work or who continues to do all the hard work on the pandemic. I'm quite happy with the response from the government. I think when we compare the government's response here in Canada to the United States', we also have to look at the rate of infection, and of course we're quite a bit lower. We also have to look at the number of deaths that happened in the States and compare it with Canada.
Here in the Northwest Territories we've been very lucky. The Government of Canada and the Government of Northwest Territories have worked very well together, and they've managed to keep the number of cases low in the Northwest Territories. We've not had anyone die from the virus, and it's given us more freedom. We can travel a little more within the territories. We've been able to keep our schools open. We've allowed some businesses to stay open. I think everybody has to have a little bit of a pat on the back when it comes to this. It's because we worked so hard to support businesses and people and marginalized groups. We certainly acknowledge that the north was recognized as an area that needed attention.
Recently, the Government of Northwest Territories' finance minister announced in her chambers that the government spent $156 million trying to address COVID. Out of that, $123 million came from the Government of Canada. For us, I think we are seeing very good unemployment rates here in the north. I was really surprised when I looked at the numbers. Under the Canada emergency business account, we put out about 4,400 loans worth $24 million. Under the Canada emergency wage subsidy, there were 1,490 applications for $40 million in subsidies, paid out to protect 2,960 jobs. As for the Canada emergency response benefit, 12,000 residents claimed it. There were 2,380 people who claimed the Canada recovery benefit. For the sickness benefit, there were 760 people, so the numbers have been really good. On top of that, we received indigenous community support.
The implementation of the seven new programs I just mentioned certainly saw an increase in calls to the centres. Can the people here talk about how much of an increase they've seen and what steps they have taken to address this extraordinary situation?
I'm responsible for the employment insurance call centres. We also had a CERB call centre that we implemented. Back when the pandemic first hit, the volume of calls that came into our call centre was unprecedented. On any specific day, 10, 20 or even 30 times more calls would be received.
Since March, we've implemented a number of measures. There are two main pieces I would flag. We invested a lot in our technology to increase people's ability to access our phone lines. Prior to that, there was a significant blockage. People would just receive a busy signal. They weren't able to even get into our automated response. Through enhancements to technology, that situation no longer occurs. That has not been occurring since May of last year.
Secondly and most importantly, we've invested in a significant number of new call centre agents. Prior to the pandemic, we had about 1,100 EI call centre agents. By the end of March, we will have over 3,000 EI call centre agents, which has resulted in a dramatic increase in the number of calls we are answering. Because the demand continues to be very high, wait times are longer than we would like, but they are actually starting to go down and we anticipate that they will continue to reduce.
There's a question that's always being asked to me as a member of Parliament, and one of you touched a bit on how the CERB program had to kind of fill in for the EI system, which couldn't handle an emergency such as this.
Could you maybe walk us through the decision process behind the creation of the CERB? I think it's important for everybody to understand what was going on.
Thank you. I'll start that off, and maybe colleagues might want to add to it.
With regard to the EI program, when the pandemic first hit back in March, we were closely watching our overall EI claim volume intake. In the first two weeks of March, there was not much of a difference, but then that middle week of March is when claim volumes skyrocketed. We received 87,000 new EI claims in one day, which was by far the most we had ever received in one day, even going back to the global recession in the late 2000s. In subsequent days, we received over 180,000 or 190,000. When that started coming in, we knew that our standard response would not be adequate.
I would like to tie in to the question about lessons learned that was answered earlier. I want to be clear that the EI system did not fail. The measures we took in implementing CERB ensured that the EI system wouldn't fail. A key lesson learned was in partnering with CRA. CRA and Service Canada, as part of ESDC, were key partners. We jointly delivered the program to ensure that it would be adequately delivered and we dramatically simplified the EI program. Therefore, we were able to take in those millions of applications that we received in late March and April, and throughout the pandemic.
I want to start off by building on comments that Mr. Fraser made earlier.
This was a historic support program that was rolled out. It was done quickly. It was big. It was done in a way that also provides a cautionary tale, and that is, when you rush these kinds of programs out.... I understand that there was a clear rationale for it and millions of Canadians benefited from it, but a lot of design flaws also occurred. A lot of mistakes were made. A lot of safeguards were missing. My plea to the Liberal members of this committee is to please not reject proper parliamentary oversight.
The Deputy Prime Minister recently claimed that opposition parties, specifically our party, was delaying Bill C-14, which is the fall economic statement. We're talking about hundreds of billions of dollars of spending. We're talking about increasing the debt ceiling to $1.8 trillion. The suggestion is that the opposition members should simply step back and allow these programs and this funding to roll out without much oversight. That is wrong. I think there are some lessons to be learned from the mistakes that have been made, as we've discussed today, and as has been broadly discussed not only in Parliament but across Canada.
First of all, who will be able to respond to questions on the Canada recovery sickness benefit?
The government has announced that this ability will not be respected, going back to.... I don't remember the exact date. I think it's some time in January. That means that when the legislation is in fact introduced and passed, we will have the ability to deny those claims.
The numbers that I have in front of me are that there have been 831,000 loans provided. I don't have the number of applicants. I can tell you that the approval rate is very high on that program, and I'd be happy to follow up with that information and provide it to the committee.
We do not have that specific information. What I can tell you more generally is that the insolvency rates in Canada are extremely low, and our understanding of debt service, ordinary debt service in financial institutions, is that arrears on loans are as low as they have been for a very long time.
With regard to the CEBA program and the service of the loans, the applicants to that program do not have an obligation to repay for some time. In order to secure forgivability, they would need to repay by December 31, 2022, so there will come a point then where there's a test in terms of repayment.
My time is short. I did want to pursue that a little more.
The CFIB has suggested that up to 240,000 small businesses are likely to close up shop by the end of the pandemic. That's a tragedy in the making, and my big concern is that there will be a very significant non-performing loan portfolio outstanding for the government to collect on in the future.
I can't comment on the CFIB's estimate of exit. What I can say is that, when this program was stood up, provisions against loan losses were anticipated. There of course is a significant forgiveness element, and as we stand today, the economy looks as though people in general are very much servicing the debt they have.
As my colleague alluded to, until we get their tax returns for 2019 and for 2020, we can't say that with precision, because some of that eligibility relates to their income for returns that are not yet due.
I have a point of clarification to Mr. Ram, if he's still there.
You indicated that, on the legislation coming in, sick benefits wouldn't be allowed for those folks who travel. I wasn't sure whether you meant that would also include retroactive back to January, and I want to be clear on that.
As I said, the government made an announcement and, again, I'll get back to the committee with a specific date. Yes, once that legislation is introduced and passed, we will be able to deny claims retroactively to that date.
I, too, would like to lend my voice to thank all our officials from the various departments who are here today for the excellent work that they and their teams have done on behalf of all Canadians.
I hope that all of you and your families are healthy and safe.
According to Statistics Canada, household savings have hit all-time highs during the pandemic. Not only has the pandemic curbed Canadians' spending, but direct support programs have provided additional savings.
During our recovery and beyond, how important is it that Canadians have more money saved for the future, and how will these savings boost economic activity and growth as we enter the recovery phase?
At a very high level, I think it's quite intuitive. You're right that there are accumulated savings there. A lot of that would be due to the inability to spend on certain things that we would be able to spend more on normally. We would expect that it would give us a bit of a boost when the economy opens up, when it's safe to go out and consume, and that you would see a little more consumption than you otherwise would.
It also helps support consolidation of debt and households deleveraging and being in more solid situations from an overall debt standpoint.
Personal household debt rising has been a concern for a number of years. There has been a reversal over this period, for the reasons you've outlined. Reducing that and deleveraging is obviously a good thing for the economy and for the stability of individual households.
What impact would you say the CEWS program had on Canada's unemployment rate? How has this program supported a quick return to work for many Canadians, taking into consideration the additional measures like rent support and loans programs and help for the charities? What would have been the consequences of not offering CEWS and this direct support to businesses? How would it have affected unemployment?
Earlier there was a question on the overall impact of all of the measures. The answer I gave looked at them all as an aggregate.
Others on the line would maybe have more to say about the specifics of the CEWS program vis-à-vis the others, but those are the kinds of things we're looking at. I just don't have an answer off the top of my head, but very much, the direction would be the same. This is support that is obviously helpful for jobs and for retaining workers and avoiding scarring impacts on firms.
We had an early estimate when we introduced these deferrals. Overall, we estimated that there would be about $85 billion in debt deferred.
It is not really possible now to assess the implications and how many Canadians and businesses actually took that opportunity. For businesses, for instance, it's going to be difficult until we have returns, so I cannot really answer directly, but as I said, the potential was estimated as about $85 billion.
My question is about sugar shacks. Obviously, they have a seasonal activity and this is the second season that will fail. When the wage subsidy program was introduced, it was not introduced in time for sugar shacks to take advantage of it last year. Now we learn that they would like to take advantage of it this year. But they had no income last year because their season fell apart.
Could they apply now for the wage subsidy?
They want to be able to prepare take-out food. They could use a helping hand. They would like to qualify for the wage subsidy.
Can they do this even if they had no income last year? If not, is the Department of Finance currently working on a solution for sugar shacks?
Earlier this week, I questioned the minister about this.
For the time being, the program parameters have been extended and clarified until mid-March.
At this time, in the case of a January request, the reference period may be January 2020. This is therefore still before the moment when the crisis started. The question will rather arise when the parameters will be announced for the extension after mid-March.
We know that the program will be in effect until June. This is the kind of consideration the government will take into account in determining the parameters for extending the wage subsidy from mid-March to June.
Just on that point, though.... I know from experience with maple sugar and maple syrup producers here that syrup doesn't flow here until late March. It may flow earlier in Quebec; I don't know. That's another consideration.
I appreciate our witnesses' being here, and I understand that we need to have the discussion around the motion. I have at least half a dozen other subject areas to ask questions about, so I guess I would flag, Mr. Chair, that I would be hoping to bring our witnesses back without too much delay to answer a bunch of these questions.
Since I have one left, I will ask about the handing of a contract on the Canada emergency rent subsidy program to MCAP. I'm interested in learning what the process was for that company that engages in commercial mortgages to receive the Canada emergency rent subsidy program administration contract—it was an $84-million contract—and how the stipulation was put into place. Originally, of course, it was for rent assistance that was tied to commercial mortgages, so there's a clear conflict of interest.
Could we get information and a reply on how that contract was given?
Mr. Chair, I will take a run at answering that question.
The Canada Mortgage and Housing Corporation was the government's administrator for the program that the honourable member is referring to. The Department of Finance did not have a direct role in the outsourcing that CMHC did to stand that program up.
It's a question that you could direct to CMHC to get more details in terms of what its procurement process looks like.
My question is really this: Why wasn't this delivered to the Canada Revenue Agency, and why wasn't it handled internally through the ministries that are here at present?
When I talk about how that contract was arrived at, it's not so much on the back end with CMHC. It's on the front end of how it was that this contract was given out when, internally, we had the ability to administer the Canada emergency rent subsidy program.
Were the CRA and the Department of Finance asked whether they could administer the program?
I'm not sure my answer is going to be satisfactory.
The responsibility for administering that program was assigned to the Canada Mortgage and Housing Corporation. Decisions with regard to how best to execute that program were delegated as a part of that overall assignment.
I'll go back to the theme of businesses that really haven't been well-served by many of these support programs.
Questions were asked going right back to immediately following the fall statement, the Speech from the Throne or even the summer. I'd like Mr. Halverson to respond about the uptake on programs like the BCAP, the heavily affected sectors credit capital availability program and the regional relief and recovery fund. These are programs that the Minister of Small Business has pointed to at varying times when questioned about companies that don't qualify for the rent subsidy and for the wage subsidy.
What is the uptake on these programs? How much money has gotten out the door on these programs? What are the approval rates?
I will begin with an answer and I will invite my colleague, Evelyn, to come in because I may not be providing the full picture.
Specifically, I'm going to just refer to the business credit availability program, EDC guarantee and BDC co-lending facility. Under those programs, around $2 billion in credit has been extended. That credit is flowing through Canada's financial institutions. It is essentially flowing as—
That's correct. When those programs were initially launched—and it seems like a long time ago—there was really not much clarity in terms of what was going on economically. It was fog of war. Many programs were stood up, including CEBA. Some of those programs experienced greater uptake. I think it's fair to say that programs that involved greater degrees of concessionality were employed more.
Programs such as the BDC co-lending and EDC guarantee, which effectively function as a regular business loan, received less interest from businesses.
All I wish to add on that question is with respect to the HASCAP, which is the newer highly affected sectors credit program. That was just launched at the end of January. At this point, finance officials.... I don't have information regarding take-up at my disposal, but that would be a reasonable question to direct to the Business Development Bank of Canada.
For the regional relief and recovery fund, that of course is a fund that has been topped up a couple of times now by the government. It now stands at about $2 billion of funding that will be made available and is being made available. Once again, that is under the responsibility of another minister. I think the regional development agencies could follow up with respect to the take-up of the RRRF.
Thank you to the witnesses for the outstanding work that you've been doing. I echo my colleagues in that regard. Thank you for being here today.
My question is about the debt-to-GDP ratio. What is it currently for Canada? How does that compare to previous periods in Canadian history, for example the mid-1990s and the early 2000s? Could we compare to those points?
In terms of my question, it's simply good to get this on the record, because there's a lot of fearmongering, particularly among my Conservative colleagues but other opposition parties as well, about the debt level and what has happened now. The Conservatives constantly bring this point up without thinking or reflecting on what would have happened if the government did not introduce emergency programs, which have held up the country, which have supported thousands of businesses and which have supported individuals and families.
I have a lot of time for opposition colleagues, especially on this committee, but it's quite something to hear the Thursday afternoon quarterbacking that's happening.
I'm sorry about that. I've had this written down so many times and we've started our work on the budget process, so I didn't want to be referring to anything that was out of date.
On the federal debt, again, you might recall that in the fall economic statement we showed some scenarios where we were allocating that $70 billion to $100 billion of fiscal stimulus. There were different scenarios and we said we'll allocate, but we weren't actually incorporating it into the full fiscal situation. I'm going to give you the figures that don't have that planned stimulus.
For the 2020-21 fiscal year, federal debt as a share of GDP, according to this statement, was 50.7%. We have that rising to 52.6% in 2021-22. That's sort of its peak, based on the current set of fiscal announcements, and then declining by 2025 to 49.6%.
I'll just note that on the basis of comparisons to other countries in the G7, for example, ours is quite.... I'll just read the numbers out loud, but obviously we're still in the best situation. We have Canada, as a share of GDP, at 46.4%; Germany, 54%; the U.K., 98%; the U.S.A., 107%; France, 110%; Italy, 149%; Japan, 177%; and the G7 average being about 110% of GDP.
Obviously, as you suspected, we're still in good shape right now. Those are the current levels of debt as estimated by the IMF.
Peter, I'm going to be charitable and cut you off, because we have to go to the motion.
As everyone on the committee has said and I know everybody is sincere on this point, we thank you all for your efforts. As someone else said, you probably haven't got back the rest that you missed at the beginning of this pandemic. We know, because members from all parties were on the Wednesday night phone call with officials from many departments who were very much scrambling in the end, so we sincerely thank you all for all those efforts.
With that, we'll let you go and we will go to the motion. Thank you very much for answering our questions today.
I believe there is a little information to come back to us. I believe Mr. Halverson had some information on CEBA, Ms. Dancey and Ms. Williams on the $13 billion, and we'll see where the motion goes.
Thank you very much again. It's much appreciated.
Mr. Ste-Marie, we'll go back to you on your motion. Is there any further discussion, or are we going to the vote?