We will call the meeting to order.
Welcome to meeting number 27 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of March 8, 2021, the committee is meeting to study Bill .
Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. 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. Just so you are aware, the website will always show the person speaking rather than the totality of the committee. I'd like to take this opportunity to remind all participants, witnesses and members, that screen shots or taking photos of your screen is not permitted under parliamentary rules.
Before we go to the witnesses, as the committee knows, the subcommittee on agenda and procedure met on Monday. There was a report sent out to committee members. I would like to make a couple of changes to that report, if I could.
I will read the report and make the changes as I go, as follows:
1. That, with respect to Bill C-14, An Act to implement certain provisions of the economic statement tabled in Parliament on November 30, 2020 and other measures:
a. The Committee invite witnesses to appear on the Bill on Wednesday, March 17, 2021, from 2:30 p.m. to 5:30 p.m., on Thursday, March 18, 2021, from 10:00 a.m. to 1:00 p.m., and if required during other meetings before Tuesday, March 23, 2021;
b. The Committee proceed with clause-by-clause consideration of the Bill no later than Tuesday, March 23, 2021, at 4:00 p.m.;
It did say “3:30 p.m.” That is amended to read “4:00 p.m.”
c. Amendments be submitted to the Clerk of the Committee in both official languages no later than 12:00 p.m. on Monday, March 22, 2021;
d. The Clerk of the Committee write immediately to each Member who is not a Member of a caucus represented on the Committee and any independent members to inform them of the study of the Bill by the Committee and to invite them to prepare and submit any proposed amendments to the Bill which they would suggest that the Committee consider during the clause by clause study of the Bill. The Clerk should also outline all of the parameters and deadlines mentioned in paragraphs a) to c) of this motion;
2. That the committee hold a 90 minute panel of witnesses on the Covid-19—
It did say “Covid-10” and is amended to read “Covid-19”.
—expenses study on March 25, 2021 followed by a 30 minute discussion on committee business to study various motions on notice (3 motions from Gabriel Ste-Marie (Routine motions), 1 motion from Peter Julian (Tax evasion) and 1 motion from Julie Dzerowicz (interprovincial trade barriers));
It did say interprovincial “tax” barriers. That is slightly amended to read interprovincial “trade” barriers. It's probably due to me being on P.E.I., and people don't understand my island accent anymore.
3. That the committee hold a meeting to study the Main Estimates and invite the Minister of Finance and senior officials;
4. That the subcommittee hold its next meeting on Monday, March 29, 2021 or Wednesday, March 31, 2021 to discuss committee business.
With those slight amendments, does somebody want to move the motion?
All those in favour?
(Motion agreed to)
The Chair: Thank you, all.
We shall now turn to witnesses, but before we get to the witnesses, I'll give you the speaking order for questions. First will be Mr. Kelly, followed by Ms. Koutrakis, Mr. Ste-Marie and Mr. Julian.
Witnesses, welcome, all. I'm sorry for taking a little time with that procedure, but it gets us to where we want to go.
We will turn first to the Quebec Chamber of Commerce. We have Charles Milliard, president and CEO; and Mr. Lavigne, senior consultant.
Mr. Milliard, the floor is yours. If you could hold it to about five minutes, that would be great.
Happy St. Patrick's Day to everyone.
My name is Charles Milliard.
I am the CEO of the Fédération des chambres de commerce du Québec. The FCCQ is an organization that includes both 130 chambers of commerce from across Quebec and 1,100 member companies. We are the largest group of business people in Quebec and we represent all sectors of activity in Quebec.
Thank you for inviting us to testify before you today on Bill , which is a follow-up to the economic statement that was introduced on November 30.
The FCCQ welcomed many of the measures that were presented in this budget update. These include the increase in the wage subsidy rate and its extension to March 13, and June 5 thereafter, as well as significant investments in infrastructure, particularly at major airports. This is noteworthy. However, today we want to focus our comments on the Canada emergency rent subsidy and add some editorial comments on the tourism and pharmaceutical industries.
The Government of Canada has a number of excellent programs in place that are having a major impact on the ability of individuals and businesses to weather the current crisis. These include the Canada emergency commercial rent assistance, CECRA, a program that was put in place quickly and addressed a real and very concrete problem, the difficulty for commercial tenants to pay their rent due to health-related restrictions.
However, problems arose very quickly, and we heard a lot about this at the federation, because it was the building owners who had to apply directly. This proved to be ill-suited to the crisis environment, which complicated the relationship between many tenants and landlords and therefore limited the appeal of the program.
For example, according to a survey conducted by Restaurants Canada, 20% of restaurant owners, or one in five, were not allowed by their landlords to defer rent during the first wave of COVID-19, a criterion that was required to qualify for the CECRA. This made it imperative to change the program. Fortunately, the new Canada emergency rent subsidy, or CERS, addresses this challenge by now providing financial assistance directly to the tenant company, up to and including a 90% subsidy rate. This is major and it was very much appreciated.
On the other hand, it seems unacceptable to us, at this time, to penalize businesses that have not been able to benefit from the CECRA because of its particular mechanics, even though they would have been entitled to it since March 2020. The federation therefore recommends that commercial tenants be allowed to receive the CERS for all months in which they would have been eligible for it since the beginning of the crisis and for which they did not receive the CECRA.
As we all know, government programs are rarely retroactive, and that's fine. However, we are in a more than exceptional situation. Let's be clear: thousands of entrepreneurs were eligible for the CECRA, but they were not able to benefit from the program for reasons that were totally beyond their control. In this case, for us, making the program retroactive would correct an injustice that has been experienced by far too many medium-sized business owners in Quebec and the rest of Canada.
On another note, the FCCQ also looks favourably on the assistance that was announced in the economic statement for the events and arts sector. I know that my colleagues the other witnesses will talk about this at length, so I won't go into detail. However, it should be remembered that the major Quebec and Canadian hotels have seen their clientele of international travellers and conventioneers virtually disappear since last March.
For us, this tourist accommodation sector is important and is still too often left out of the current crisis. For now, unfortunately, the assistance promised by Ottawa is limited to loans, when it is clear to us that hoteliers and tourism businesses still need direct and most concrete assistance, as does the cultural sector, for that matter.
I'll close by quickly talking to you about the pharmaceutical industry, because Bill is preventing and alleviating shortages of therapeutic products, including drugs and medical equipment, in Canada. This is a great opportunity to remind ourselves of the importance of the health and life sciences sector in Canada. Prior to the pandemic, the FCCQ had recommended a massive investment in this sector, and I believe that the federal government has a role to play, among other things, in the local production of manufacturers and, above all, in the rapid review of the proposed reform of the Patented Medicine Prices Review Board, the PMPRB. The crisis has revealed the importance of having a strong pharmaceutical industry in Canada, and I think you have an opportunity as parliamentarians to improve the situation at this time.
In conclusion, the federation recommends the passage of Bill , while reiterating the importance of making the Canada emergency rent subsidy retroactive for contractors who were unable to obtain emergency assistance.
Thank you. I would be happy to answer any questions you may have.
Thank you for this opportunity.
My name is Pia Bouman. I would really like to begin by expressing my admiration and thanks to the Government of Canada during this time of COVID. It has often been the saving grace for this school.
I would like to point out a few facts about the school.
It was founded by me in 1979. It was granted charitable not-for-profit status in 1987 on a compelling mandate, which is that any child who wishes to learn dance, any child who wishes to create dance and any child who wishes to perform dance should be given the chance to do so in a safe and professional environment.
This mandate enabled us to have a very sizable bursary program, which enabled children from socio-economically challenged situations to express their wish to dance. It gave them any chance to do so, taking part in a full program or in just a small part of the program that we gave.
Pia Bouman School gives a full classical dance education—we follow the Royal Academy of Dance—to children and youth six to 17 years old. Since its inception, hundreds of children and youth aged six to 17 have enjoyed dancing, learning and goal-setting, and have been successful in their pursuits.
Pia Bouman School is also a hub where professional dancers hone their art, visual artists show their work, musicians practise, and independent theatre develops works, rehearses and performs in our studio theatre. We had a presence of 40 years in Toronto's west end, Parkdale, a socio-economically challenged area. In 2019 Pia Bouman School had to move.
We renovated 225 Sterling Road. We built four studios inside a large space, again, with the possibility of a theatre. Theatres are much-needed facilities in the city of Toronto. From September 2020 until now, the school, like all schools, was closed for extended periods. Dreams were lost. A safe home away from home was lost. There is no financial compensation for the loss of a love for dance in a young person's life. At the moment, I am dealing with at least three students who are in situations of serious mental and emotional depression.
PBS was not able to finish its studio theatre because the school had to close; we lost income and we were not able to pursue further building. The revenue PBS receives through rentals of its studios and theatre for productions accounts for a large part of our income and is an essential part of our revenue to help cover our substantial rent.
During the COVID-19 period of March 15, 2020 to August 31, 2020 the school closed its doors. Most office staff were laid off. This means contract teachers and accompanists were temporarily laid off—a harsh situation for people I feel deeply responsible for, people who amaze in dance, in music and in art.
In April 2020, the Zoom classes entered our lives. It was a new way of teaching. In order to keep teachers' income below the maximum allowed if they received CEWS, the number of teaching hours was greatly reduced so as not to exceed $1,000. PBS, the school, lost income. In the period 2019-20, we were obliged to refund class fees to students who could not commit to Zoom classes in their already very stressed and complicated lives. In the current school year, from September 2020 to now, we have less than half of our normal student population.
PBS has lost income that we would have received from rentals by performance companies that rent our spaces and from individual artists who find our studio space a place for incubation and development of their works.
The point I'm trying to make here is that it is not just a school, but an entire population, intertwined with the arts in all different forms, that is greatly and seriously affected by this pandemic.
Pia Bouman School received $60,000 through CEBA, which was a saving grace. Our landlord has not given us any reprieve, and our rent in the centre of Toronto, a bit on the west end, is sky-high. CEBA was incredible. It helped us through this period to some extent; we received $40,000 in April and just this past March we received another $20,000.
The catch for the school is that we need to pay this amount back by December 2022. Not only do we have to pay this back, but we will have, if we make this, a debt of $50,000. We have a rental theatre space that could possibly bring in support for our presence in the city, but we cannot use it because it is not finished. It requires money to finish it.
We have to rebuild our student population. Currently, the student population is less than half. The parents have serious fears for their children, and the fears are transplanted onto their children, specifically the teenagers aged 12 to 17. Not only have these children, these youths, lost the possibility to express themselves through dance, to learn and to enrich themselves with music and personal expression, but they've lost a dream. I have to point out that this dream is the existence of the arts, and in general that has disappeared from our lives.
It only takes all of you a glance at the papers to see that arts are not represented. How can any student who studies art and who loves art continue to believe that art will be an important part of their lives if there is not a voice around them to listen to or to see as pictures? This is a very serious concern of mine.
When we reach the end of the pandemic and Pia Bouman School looks at its debt, I know how much support we will need to be able to keep this school, which is unique—it is the only school that is a charitable not-for-profit organization and enables children to dance. If this school is lost, there is a lot lost for all of us and for our children. It frightens me. It worries me. Obviously, I am more than involved in all these issues as an artist, as a choreographer and as a teacher.
I have given you just a little picture. In a normal year, from September 2019 to March 2020, the income of the school—that's not a full school year—was over $600,000. The income we have now for the same period is a third of that. In rental fees from artists, theatre companies and professional artists, we received in the previous period over $30,000, and to date it is $7,000.
The bursary support that we received from foundations, institutions and very generous individuals over the past so many years has always been between $25,000 and $30,000, which gives as full a dance education as any child could wish or just as little bit as any child could wish.
To date, it is nothing, because the foundation that supported us says it does not know how this will go. There is no revenue for our dancers, and for many that means another dream lost.
I'd like to end with one last observation. For our children and youth, dance, theatre and live music have disappeared from their lives since the onset of the pandemic. In order to learn to appreciate the voices of art and music, one must hear and see the voices to be able to learn it as an expression, and history has told us that.
Festivals and Major Events Canada, or FAME, and the Regroupement des événements majeurs internationaux, REMI, represent more than 500 festivals and events in Canada, through direct and affiliated memberships, in a sector of the tourism and cultural industry that alone generates more than $1 billion of the country's GDP each year.
Today, I will be addressing you on the topic of Bill regarding the implementation of the fall 2020 economic statement, as well as on the heels of FAME's submission of a new three-step roadmap for the recovery of the festival and events sector.
I want to take this opportunity to acknowledge the work you have done here in the pre-budget consultations. We are pleased with recommendation 55 in your report, and we very much hope that the government will take it up in full.
The first phase of our roadmap is a survival phase, which we are still in, where festivals and events are deprived of the opportunity to bring people together and generate self-sustaining revenues, which typically make up more than 80% or 85% of the financial packages, with the rest being grants from cities, provinces and the Canadian government.
It is primarily through the emergency wage subsidy that you can really help us achieve the first step of the plan, keeping teams together and expertise alive. We understand that this program is very expensive for taxpayers. That said, we caution elected officials who would want to end it too soon or opt for declining support. If choices must be made, we believe that fewer businesses should continue to be supported, but at a high rate, keeping eligible only those that continue to be most affected, such as those in the tourism and cultural sectors, where revenue losses can be as high as 100%. We believe the wage subsidy will be vital, until we fully recover our business models, likely in the first or second quarter of 2022.
I also emphasize the importance of thinking about the hyper-seasonality of festival operations and revenues to keep them eligible, especially when it comes to reference periods.
Also related to this stage of the plan, we emphasize the importance of maintaining regular grants as the lifeline for festivals and events, which now account for almost all revenues. As for the Canada emergency rent subsidy, it is an interesting complement for festivals and events, but not in the same way for everyone. On the one hand, there are small festivals run out of a single office, and on the other, there are large institutions, such as the Toronto International Film Festival or the National Bank Open, formerly the Rogers Cup, that have large facilities that are very expensive to maintain and will likely exceed the maximum threshold of the program.
The second phase of our roadmap is about public health and the gradual recovery of our operations. We need to instil confidence in Canadians. We are asking the government to facilitate a discussion between festivals and public health authorities across Canada to see what can be done this summer. We need to do this soon and know within the next month or so what framework we can operate under in June, July, August and beyond.
Events may be held soon. They will not necessarily be cost effective, nor will they be able to take place with the same capacity, but they will be organized in a safe manner from a health perspective. For example, outdoor amphitheatres with facilities that force distance are possible. We have solutions for just about every problem you can think of. So we need to discuss them.
The federal government can play a role by supporting test concerts, for example. This summer, cancelling events altogether or instituting gauges without regard to the capacity of the organizers, for example, limits of 250 people, would be a form of intellectual laziness on the part of the authorities.
The third phase of our plan is to stimulate tourism and economic recovery by reviving festivals and events. Like you, we recommend creating a new program based on the model of the marquee tourism events program, which was established after the 2008 crisis, and funding it with $225 million over three years.
We know that festival-goers spend one-third of their money on food and one-quarter on hotels. So there would be a trickle-down effect to other sectors that are very much affected, not to mention, of course, the artists, musicians and the entire ecosystem, including stage and technical equipment suppliers.
We believe that this program should be managed by the regional economic development agencies, in collaboration with Canadian Heritage. Not all festivals are recognized as cultural, but they all have an economic and tourism impact. Think of sporting events, fireworks festivals, culinary or wine festivals, for example. Tourism and the economy are a common denominator.
In closing, there is also an important social dimension to our project. Canadians will want to come together after the crisis. They will need social healing. In fact, that is why we propose to call the program “Celebrating Together Again.”
I'll just continue from there.
Prior to COVID-19, tourism was one of the fastest-growing industries in the world. We are here today, over a year into the pandemic, and the visitor economy is still in crisis. The tourism economy has lost over half a million jobs. The rate of unemployment in the sector has surpassed the national level, and the impact on tourism has been greater than that experienced after 9/11, SARS and the 2008 economic crisis combined.
Canada's tourism sector was the first hit and the hardest hit, and it will be the last to recover. Before COVID-19, tourism was the fifth-largest sector in Canada, responsible for 10% of Canadian jobs, $105 billion in revenues, and 2.3% of GDP.
Since the onset of the pandemic, TIAC has been advocating for targeted support for the sector, and many of our recommendations require Bill . We applaud the government for the implementation of the HASCAP program. We continue to work closely with government to facilitate open dialogue on feedback from the industry, and we also thank the government for the recent extension and revenue comparison changes for the CERS program.
However, we are still waiting for a sector-specific support package. A large portion of our recovery plan is based on business solvency. Over the past year, tourism businesses have lost revenue and cash flow, but regardless of that, fixed expenses like rent, mortgages and taxes have continued. Without liquidity to stay on top of these costs, these businesses will not be able to survive and reopen.
We have a number of recommendations with respect to improving current support programs, which we have provided to you in writing through our recovery plan, and we will continue to work with the government to provide industry feedback on these programs. We have seen the commitment from the government in the Speech from the Throne, the fall economic statement, and revised mandate letters on supporting the hardest-hit businesses, but now is the time for us to see action and investment in measures to support the rebuilding of our sector.
We are calling on the government for immediate action in this budget. We are specifically asking for the following: a tax incentive for Canadians for the 2021 and 2022 tax years to travel locally or within Canada; the development of a business events and urban recovery funding program; top-up funding for Destination Canada to keep Canadian destinations top of mind; support for destination-marketing organizations to entice the return of high-value travellers; reinstatement of the visitor GST rebate program for international visitors; reintroduction of the federally funded marquee tourism events program; and support to save our airline sector, the backbone of tourism and the economy.
One of our key recommendations is for a tax incentive to help Canadians explore Canada, to stimulate the visitor economy, and to support small businesses. This is an opportunity to encourage domestic travel and unlock the spending power of Canadians. If we can shift just two-thirds of the planned spend on international leisure travel towards domestic travel, it will make up for the forecasted $19-billion shortfall currently facing our visitor economy in 2021.
Recovery of international travel will also depend on border reopening. We need to use current science-based data and effective testing and contact tracing, and commit to adopting proof of vaccination as an additional travel document going forward. We need federal guidance on a policy road map so that tourism businesses can understand what conditions are required before border restrictions are relaxed. We need the government to set out the criteria for reopening.
I'm not sure I understood the question.
A roadmap is certainly essential. What I said to some of you when we met individually was that beyond a vaccination schedule, you need to have an additional step. When we talk about a situation where 20%, 40%, or 60% of the population have been vaccinated, we need to know what that will mean in reality, especially for the tourism and cultural areas.
Once we have almost achieved herd immunity, can we get back audiences comparable to what we had before? That's the question we're asking ourselves right now.
Yesterday, the Premier of Quebec said that by June 24, all Quebeckers who want a first dose will have received it. Does that mean in concrete terms that we can have festivals in June and July? How can we plan for that?
Mr. Kelly, I know that in Alberta, in particular, the government has given some predictability to the sector by releasing a lockdown relief and reopening schedule in four phases. In the fourth phase of that reopening, it is anticipated that festivals and events will be able to resume, which will be when there are fewer than 150 hospitalizations in the province and when that number is going down.
However, in eastern Canada, in Quebec and Ontario, we don't have that kind of predictability. We are dealing with uncertainty.
Thank you, Ms. Koutrakis. That's an excellent question.
We support this investment because our airport infrastructure across Canada, and especially in Quebec, often needs major renovations and revitalization. In my opinion, it's an economic driver.
However, it's good to have airports, but it's even better when planes go to them. There's a serious issue right now in terms of regional air travel, with Air Canada pulling out of some important routes. This is happening in Quebec, Ontario and Atlantic Canada as well. At this point, we're waiting for—if I may say so—a measure from the to see how connections to Baie-Comeau, Val-d'Or and Gaspé, for example, will be maintained. World-class airports, or at least national airports, are needed to attract foreign investors to the regions, but transportation is also needed.
The REM is a major project. It's one of the largest projects in Quebec at this time. It will be a major political legacy for the provincial and federal governments. We need maximum participation from the federal government in this area, particularly in terms of the connection to Montréal-Trudeau International Airport. I understand that the agreement has been sealed in the past few weeks. This issue must be resolved. A major city such as Montreal isn't really a major city if it doesn't have a direct connection to its airport.
Thanks to all our witnesses for coming forward today on Bill and the fall economic statement. We certainly appreciate your willingness to speak with us today at the finance committee. We hope that you and your families continue to remain safe and healthy during this pandemic.
I'm going to start my questions with Ms. Potter.
Ms. Potter, Bill is based on the fall economic statement. The controversial part of the fall economic statement, of course, has been the famous “summary statement of transactions”, page 126, which talks about a cut starting April 1 through the course of the next fiscal year of nearly 50% in terms of program expenses, so a substantial reduction in program expenses.
We know that COVID is continuing tragically. We're seeing a third wave coming. You have mentioned very important initiatives that the federal government could be making this year—you named about five in all—that would make a real difference in Canadian tourism and the tourism industry.
How important do you think it is for the federal government to realize that the pandemic shouldn't be subject to an arbitrary cutback in program expenses and that the federal government should be looking to provide supports to industries that may not have necessarily received enough supports to date? What would happen to the tourism industry if the programs you have proposed and mentioned in your presentation weren't brought to bear? What would that mean in terms of the tourism industry by the end of the year?
Thank you, Mr. Chairman.
My question is for the Tourism Industry Association of Canada. I represent the Northwest Territories, and up until the pandemic hit, tourism was the sector that was growing by leaps and bounds. We had aurora borealis viewing. People were coming from all over the world. Our hotels were full. Sometimes you couldn't get a room in any of the hotels. New hotels were being built. The airlines were full, totally booked. Restaurants were full. Then the pandemic hit and it really took its toll.
In our discussions with the tourism sector, what we talked about was the vaccine being the key to unlocking travel and getting tourism back to the Northwest Territories, and to the north for that matter.
Now, in this part of the country, in the Northwest Territories, Yukon and Nunavut, everybody who wants to be vaccinated is going to be by the end of April. However, now we're realizing that it's really not going to make much of a difference for the tourism industry because our borders are still going to stay locked and restrictions will still be in place for travel because of what's going on in the south.
Would you agree that the recovery of the tourism industry is going to be based largely on the rollout of the vaccine, getting everybody vaccinated in Canada, and for us especially up in the western provinces? It's really going to be a challenge to get tourism going until the last province gets everybody vaccinated.
Again, thank you to our witnesses. I appreciated hearing all of your testimony.
I'd like to direct my comments and questions to Ms. Potter, from the tourism industry.
I have many tourism operators in my constituency. I want to key in on two of them, in particular, that provide tourism to Canada's north. One of them is Wings Over Kississing. They offer fishing, hunting and sightseeing expeditions to Manitoba's north. They're based here in my riding in southern Manitoba. They also operate a charter air service to first nations and indigenous communities throughout the north.
Recently the Liberals set out a subsidy program for airlines that provide services to northern communities, but the program was flawed in that it was specific to scheduled airline services and not charter airline services that actually sometimes service the same communities and compete for the same business.
The other operator I want to point out is an organization called Churchill Wild, which has had international acclamations for its polar bear experiences, its whale watching and its fishing expeditions.
Both are first-class operators. Both require international tourism to sustain their businesses. Can you talk a little bit more about how important it is to open up our international border, and how we have to somehow figure out how not to use these quarantine hotels?
Thank you so much, Mr. Chair.
I want to thank everyone for their excellent presentations and the discussion today.
My question is directed to Pia Bouman.
Pia, thank you so much for sharing your story, the story of the Pia Bouman School for Ballet and Creative Movement. I think that your story and the experience you've had over the last year are very much reflective of those of many similar types of amazing artistic and creative organizations across the country.
Bill , if it's passed, will actually allow organizations such as the Pia Bouman school of dance to apply for the rent subsidy before actually incurring the cost. I want to know whether you think that would be helpful to you. That's one part.
The second part is this: What more do you think our government can do to be helpful? You mentioned that you'd have to pay back $50,000 of the CEBA. I just want to point out that you actually would only have to pay $40,000 out of the $60,000. It's $20,000 that would actually be forgiven.
My name is Stéphanie Laurin, and I am the president of the Association des salles de réception et érablières du Québec, the ASEQC. I own a sugar shack that welcomes nearly 80,000 people in the spring, over some eight weeks. Our establishment also hosts between 200 and 300 marriage celebrations every year.
Last spring, when COVID-19 arrived, our facility had invested nearly $300,000 to kick off the sugar shack season. Without warning, just before the start of the season, we had to shut down operations. I have personally contributed to the fight against COVID-19. We have manufactured several hundred thousand protective masks. We acquired about 60 sewing machines last spring, and we have transformed our sugar shack into a mask manufacturing facility.
Unfortunately, none of that was sufficient. Last July, we had no income, as all the events and banquets were postponed until 2021. It was a blank calendar and a 95% drop in our sales that made me decide to contact my competitors, owners of reception halls and sugar shacks of Quebec. I then realized how disastrous the situation was for our industry, which consists of sites for large gatherings. So I decided to create the association I now preside over, the ASEQC. This is a registered non-profit organization that represents our establishments in dealings with various government bodies.
After that, we worked on saving Quebec's sugar shacks because there are very few of them. Prior to COVID-19, there were about 240 sugar shacks, and we have already lost about 100 of them so far. There are now fewer than 140 establishments representing sugar shacks and maple internationally.
Faced with this problem and knowing that the 2021 season may also be in jeopardy, we decided to create a project called “Home Sweet Home”.
“home sweet home”.
This is a system of boxed lunches Quebeckers can order to have the sugar shack experience at home. I am seeing little thumbs up on the screen. We went to great lengths to launch this project. With no cash flow and no means, we have created a platform that brings together nearly 75 sugar shacks in a single transactional marketplace. We officially launched on February 22, and so far, 1.5 million people have visited our website. Soon, we will have generated $7 million in income for the participating establishments over slightly more than two weeks.
We are really experiencing incredible success. We have managed to remain resilient. We are part of an industry that decided to roll up its sleeves. Unfortunately, I can tell you today that I am unsure this will be enough, as we are seeing that our calendar for the next 12 months is still empty. Summer marriages and banquets have been postponed until 2022. We have managed to survive without income over the past 12 months, but that could prove much more difficult over the next 12 months.
This is my testimony to you today.
Thank you kindly for having Canadians for Tax Fairness comment on this bill. If I'm not mistaken, members of every party, in the course of speaking to Bill , expressed support for tax fairness. That's music to the ears of our organization. Now we just need to see some real action.
Before I discuss taxes, let me touch on the other side of the ledger—spending. This bill will provide needed funds for some important measures. Unfortunately, it does not go far enough. Parents need more support. Students need more support. People with disabilities, our elders, workers, local businesses and the poor need more support. It was true before the pandemic. The crisis just made it starker.
Predictably, even insufficient support has led to fearmongering about the debt. Most of the concerns are misguided and misleading. The federal government's debt is not like the debts of households or businesses or other levels of government. The federal government literally spends money into existence. There is no limit to its financial resources.
That does not mean there is no limit to the government's spending. The limits are imposed by the real resources that money can command. Eventually, if increases in money circulating in the economy do not increase the products, services and assets that we want to buy, we will get inflation.
At the moment, this is a remote concern. Despite worries at the beginning of the pandemic and misinformed fears recently, inflation remains well below the Bank of Canada's long-standing target of 2%. Taxes are an important tool for controlling inflation, as they draw money out of the economy. However, just as importantly, they are a tool for controlling inequality.
We have a trickle-up economy. Consider the money given directly to people at the bottom of our economic hierarchy. Some of that money gets spent on rent, which goes to a landlord. The landlord uses it to cover the mortgage, which goes to a lender. The lending company uses some of that money to pay its workers, while some will be used to pay its own creditors, and some may go to dividends. Those workers will buy food at a grocery chain, which again will pay workers as well as creditors and equity owners. As the money spent into the economy circulates, portions of it are continually siphoned off to asset owners.
The work of Thomas Piketty and his collaborators shows that the wealthy get wealthier simply by virtue of the highly unequal distribution of asset ownership. Their income from owning assets is not a reward for entrepreneurial risk or innovation. It is not a reward for hard work. They accumulate wealth simply by already being wealthy. The wealthy are able to use their money to shape our society in detrimental ways. They fund think tanks that defend their interests while presenting as neutral commentators. They hire lobbyists to influence lawmakers on policies that benefit them. They employ an untold number of people to bend tax laws and exploit offshore tax havens. This applies to both wealthy families and powerful corporations.
Wealth taxes and excess profit taxes, alongside more progressive income taxes, are powerful tools to address inequality and its myriad harms, as well as being sources of government revenue. Additionally, government should act promptly to close tax loopholes and end the use of tax havens. These measures would create fiscal space for the kind of bold government initiatives that we need to support people and resurrect our economy coming out of the pandemic.
The pandemic teaches us that we are all in this together. The myth that the market justly rewards what is socially valuable must be abandoned. When the pandemic struck and we needed decisive action to keep the essential parts of our economy functioning, it was not wealthy people, via the market, who made that happen. It was government.
The same is even more true of the climate crisis. The government needs to spend large amounts of money to transition our economy to carbon neutrality. That money will inevitably trickle up, where it will unjustly empower the wealthy.
Measures like wealth taxes, excess profit taxes and closing tax loopholes will keep that money moving so that it can serve our shared interests. These must be key components of the fiscal tool kit as we deal with the aftermath of the pandemic and the ongoing climate crisis.
Thank you very much, Mr. Chair, and thank you to the committee, of course, for having me appear again today.
For those who are unfamiliar with the Canadian Taxpayers Federation, we're a national non-profit, non-partisan group. We have 235,000 supporters across the country. Our advocacy is really focused on three general areas: lower taxes, less government waste, and accountable and transparent government.
I don't want to shock anyone on the committee, but the CTF has something of a reputation as being the biggest skinflints around town, and that's a tag that we're not at all ashamed of having in a town where there's really no shortage of people asking for more spending and very few asking for less. We think it's important, as part of that debate, that there be a counterweight to what effectively are endless pleas for “more everything”, and we're very proud to play that role.
Insofar as we apply that lens to a tidal wave of spending, if I can call it that, that has washed over the country during the course of this pandemic, I don't think the concern is about demanding perfection from government, but just asking for a little humility. These temporary emergency programs are very expensive programs, and they're very blunt instruments, which is understandable given that they had to be conceived, designed and implemented in a matter of days or weeks, as opposed to the usual months or years.
Given the circumstances, I think most fair-minded people will agree that a little slack deserves to be cut in terms of their implementation, but it's also fair to ask the government to take steps to improve and recalibrate these programs as they go along, in order to ensure that what is being spent is actually being spent well. A couple of examples can illustrate the ways in which the government arguably has overshot the mark thus far.
When you look at StatsCan data, it shows that between the first and third quarters of last year, aggregate private sector earnings dropped by about $15 billion, a significant sum in terms of lost income, but during the same period, the government sent out $103 billion in transfers, primarily from employment insurance and the emergency response benefit. What that means is that for every dollar Canadians lost in income, the government sent $7 out the door. If the goal of these policies was income replacement, it's an enormously expensive overshoot.
Also, looking at the business side, if you look at the emergency wage subsidy, which was designed to save private sector jobs—an appropriate objective—it has also been incredibly expensive, with each saved job coming at a cost of $180,000 in government spending. This is happening at a time when we're hearing stories in the media of large corporations banking record profits or boosting executive pay or issuing special dividends to shareholders. I don't think that's what most people envisioned in terms of what the wage subsidy was supposed to be used for.
These examples are just two that suggest there's room for improvement in terms of targeting pandemic support to achieve the results we're looking for, but at a lower cost.
With respect to Bill specifically, the main concern we have about this bill is the requested increase in the debt borrowing limit. I know that the and Mr. Fast had an exchange on this issue at a previous meeting, but with respect, the minister's insistence that there's a chart on page 141 of the fall economic statement that explains everything was not very persuasive.
First of all, the chart she cites includes spending projections out to 2024, so that does not explain why the requires such a huge increase in the debt ceiling today, in 2021. It also bakes in the projection of $100 billion in stimulus, which the minister has committed to spend without deciding what she wants to spend it on. In our view, that has it backwards and is putting the cart before the horse.
With all due respect, rather than demanding that the opposition push through the bill and get more borrowing room, we think the 's time would be better spent presenting a federal budget, which we haven't had in two years. I understand that the government insists that things are in flux and presenting one is difficult. I think that was a reasonable argument a year ago. I think it's a lot more difficult to make that argument today, especially when you consider that all our peer countries and every province in Canada except Nova Scotia have managed to present one.
I'm certain that this government does not want to leave the impression that it is somehow uniquely incapable of presenting a budget at this time. We just urge them to get on with that and produce a federal budget at the earliest opportunity.
Good afternoon, committee members. Happy St. Patrick's Day. I see some of you are wearing green, so I hope it's a great day.
Thank you for the opportunity to appear to discuss to Bill .
My name is Kim Moody. I'm a chartered professional accountant and the CEO and director of Moodys Tax Law and Moodys Private Client in Calgary, Edmonton and Toronto. I have a long history of serving the Canadian tax profession in a variety of leadership positions, including chair of the Canadian Tax Foundation, co-chair of the Joint Committee on Taxation of the Canadian Bar Association and CPA Canada, and chair of the Society of Trust and Estate Practitioners, to name a few.
Given the limited time we have this afternoon, I'm going to keep my comments rather short and comment on only two matters: the proposed amendments to the debt ceiling in the Borrowing Authority Act contained in Bill and the fact that Canadians are now approaching the second anniversary, in two days, of the federal budget.
I will start with the proposed amendments to the BAA, the Borrowing Authority Act. While I am a tax specialist and certainly not a BAA expert, currently section 4 provides that the total amount of debt must not exceed $1.168 trillion at any given time. This limit is subject to certain exceptions, provided for in section 4, in conjunction with section 6 of the BAA. Bill proposes to amend both section 4 and section 6 with a highlight amendment, as Mr. Wudrick said, to increase the current upper limit to $1.831 trillion, an increase of $663 billion, or 56.7%, from its current ceiling. That is a material increase by any measurable standard.
With the exceptions provided for in section 6, I guess the question is why there is a need today to increase the ceiling so substantially. Where is the plan? Is the government intending to utilize that increased borrowing capacity? If so, again, where is the plan? Shouldn't that be accompanied by a financial budget? I'll say more on that later.
Further, what will such increased borrowing do to inflation and interest costs? Is that part of the plan too? What about the plan to repay this debt? Does it include a reasonable repayment period that will not saddle our children's future with high borrowing costs that compromise central government services?
How will this increased borrowing capacity affect our country's taxation policies? Will we see an across-the-board tax increase, or will the wealthy be asked to pay just a little bit more, thus causing even more capital flight to greener pastures?
What's being asked to be passed in Bill can be depicted in an overly simplistic example of how I disagree with the witness Mr. Cochrane when he says that you can't compare government debt to household debt. Frankly, I think you can, and yes, there are differences, but debt is debt by any measurable standard.
Let's consider the case of Mr. Apple. He lost his job as a result of his employer being forced to shut down because of strict public health restrictions. His savings are rather modest. He does not have the ability to pay his ongoing bills, so he applies for and receives various government support programs. However, the support he receives is not enough to maintain the lifestyle that he is accustomed to, and, being the rational person that Mr. Apple is, he develops a plan and makes necessary adjustments to his lifestyle, cuts back on non-necessities and ultimately tries hard to survive on the reduced income that he has. Eventually Mr. Apple is able to secure new employment and slowly get back to the lifestyle that he is accustomed to.
Now, let's consider the situation of Mr. Apple's friend, Mr. Orange. He's in exactly the same situation as Mr. Apple. He lost his job. He doesn't have enough savings to maintain his normal lifestyle. However, instead of cutting back on non-essential expenditures as Mr. Apple does, he applies to get his credit card limit increased by 56.7% and some crazy credit card company decides to grant him that limit.
He now has the ability to borrow a lot more money. He does that so he can maintain his existing lifestyle. Mr. Orange has no plan to repay. He simply wants to maintain his lifestyle, and he eventually reaches the maximum of his limit and has a large debt to repay. The credit card company is charging interest, which is adding to the debt. Eventually he returns to normal employment, but his earnings are not sufficient to materially reduce the debt. He has a problem and he falls behind on making his normal payments. The credit card company demands that he repay, but he cannot. His options are limited, and ultimately all the options are ugly.
In the above scenario, who's in a better spot? Obviously, it is Mr. Apple. For Canada, for whom do we want to be comparable? Obviously, it is Mr. Apple, with a plan and a path forward.
Do we have a plan with respect to the increased ceiling amount under section 4 of the BAA? If so, it is not obvious to me, and Canadians need that plan, let's say, at this point. I'll share Mr. Wudrick's comments about the fall economic statement. The information in it was lacking, in my view.
This leads me to my second and final comment. March 19, 2019: Does that date mean anything to anyone? Well, it should. That was 730 days ago. That was the last time the federal government released a budget. That's a record.
Our government continues to use COVID as the excuse for not releasing a plan. This is what former parliamentary budget officer Kevin Page said in October of 2020: “Budgets are fiscal plans, and to say that 'because there’s too much uncertainty, we’re going to manage without a plan' is kind of bizarre. The reason we have plans is because there is uncertainty.”
I absolutely agree. In this day and age of uncertainty, a fiscal budget and plan are needed. The recent November 30 fall economic statement is not that plan.
Esteemed economist Dr. Jack Mintz stated the following in the National Post on December 3, 2020:
I was hoping our new minister of finance, once a fine journalist, might produce a fall fiscal statement written clearly and to the point. Instead, we are treated to 237 pages of repetitive back-slapping and cliché-laden phrases that few will bother to read.
Kevin Page stated the following in a CBC News article on December 6, 2020, after the release of the fall economic statement:
We don't really have a good view—almost no view—of the government spending today. We have estimates of what the government thinks it will spend for 2020, 2021. But those are not the actual monies that are going out the door.
Accordingly, it is critical for our country's fiscal future to develop a well-thought-out budget, and to do it quickly. Transparency and accountability are not luxuries. They are requirements for Canadians.
Thank you. I'd be happy to take questions.
Good afternoon, everyone.
I would like to begin by explaining the mission of Travailleurs autonomes Québec. We are trying to get recognition for self-employed workers' rights, and to provide them with support and guidance in running a successful small business.
Another one of our missions is to get self-employed worker status legally recognized, as it is still not legally defined. The lack of a clear and precise definition is hurting many self-employed workers in all facets of their daily lives.
I just want to inform you that Canada had nearly 3 million self-employed workers before the pandemic. Unfortunately, we will certainly have fewer players after the pandemic, if that is not already the case. The pandemic we are going through very clearly shows a deficiency when it comes to that status, as no program is adapted to the reality of self-employed workers.
Let's start with the second version of the subsidy for commercial rent, the Canada emergency rent subsidy. The application form asks for the BN—business number—which is the GST number at the federal level.
Did you know that over 60% of self-employed workers in Quebec earn an income of less than $30,000 and, therefore, have no GST number?
With this being the case in Quebec, we can get an idea of what is happening in the rest of Canada's provinces and territories. If the government was thinking of helping self-employed workers pay their commercial rent, that unfortunately won't happen, as six self-employed workers out of 10 don't have a business number.
Let's now move on to the Canada recovery benefit, or CRB. Once again, we are seeing that the application forms are not adapted to self-employed workers' reality. They are once again asked what their BN is, whether they are seeking employment, whether they left their job voluntarily, whether they refused a job, and so on. Did you know that a self-employed worker is not looking for a job, but is rather looking for clients or contracts?
When businesses are forced to close by our governments because of a lockdown, and they are not deemed essential, self-employed workers are still asked to seek employment. If they say they are not looking for a job when they apply for the CRB, their application is automatically refused. Asking a self-employed worker to look for a job is a lack of respect for their small business and a very clear message that they must be salaried to receive assistance. That is actually what most agents of the Canada Revenue Agency, CRA, are currently saying on the telephone to hundreds, even thousands, of self-employed workers.
Concerning CRA agents, we can imagine that talking to them is often a nightmare and causes significant psychological distress for thousands of self-employed workers, as there is no solution. Since January 18, CRA agents have been conducting mass verifications of taxpayers who have received the Canada emergency response benefit, or CERB. They are checking earned incomes of $5,000 and more before the first CERB application. An announcement was made that it would take two to four weeks to carry out the verifications, but in reality, it is taking from six to 10 weeks and sometimes longer for some self-employed workers. We have seen it take as long as 18 weeks.
It should be pointed out that no CERB applications can currently be made while verifications are being conducted. Imagine the ordeal for those who have no other source of income during that period. Not to mention that the tone of some agents is disrespectful, to put it politely. We agree with verifications being carried out. That is normal. However, can they be limited to $5,000 of income, as stated in the messages?
Why is a self-employed worker who declared more than $25,000 in income and is calling an agent to obtain information on their file suddenly being told that, in the end, the CRA will check a host of other elements in their file? This only excessively extends wait times. That said, we cannot do anything about it, as we are currently somewhat dependent on CRA agents.
When self-employed workers say that, during the verifications, they have no other source of income, CRA agents are telling them all sorts of things. For instance, they tell them there are food banks and social assistance in their province, that it's not the agents' problem they decided to be self-employed, or that they should find themselves a job if they don't want to have problems.
The basic issue is that this status is not recognized. Let's collectively ask ourselves a question: how can we help nearly 3 million self-employed Canadians in a crisis?
Sure. Thank you for the question.
Look, it's troubling, to say the least. This would be troubling even if we did have a budget. We don't. I think the very fact that the has committed to spend money without knowing what to spend it on is getting the entire budgetary process backwards.
In a policy debate or discussion, normally you figure out what you want to do, you figure out how much money you need for it, and then you make your case for it. That's not what she has done here. She has already committed to spending money, but she doesn't know what she wants to spend it on. That is a recipe for trouble.
What's also curious.... I cited some of the statistics earlier about overspending, and again I am not suggesting that the government had to get it perfect. I understand that they were in a hurry and that not everything was going to be perfect, but by their own admission.... I believe the term she used was “pre-loaded stimulus”. We have seen that even into the lower income deciles, a lot of Canadians are banking a lot of this money, so the has said, “Well, we've preloaded this stimulus, so hopefully when things turn around, people will go out and spend.” However, she also wants to spend the $100 billion in the name of stimulus.
I don't understand. She has spent more than she planned to, but she says, “Don't worry, that will turn out to be stimulus”, and she also says that we still need to spend $100 billion; we just don't know on what.
Look, if the has a plan, I think she's entitled to make the case for that. She should do it in a budget. She should not be asking Parliament to increase the debt ceiling unless she can present a budget and explain what she wants to spend the money on.
Thank you, Chair, and thank you to the witnesses.
Before I turn to the witnesses, there was, in the previous panel, if colleagues will recall, a point raised about rapid tests, I believe by Mr. Kelly. It could have been Ms. Jansen. I'm not sure. I think it's an important question to raise, but I think the record should reflect the actual situation.
Colleagues can find this online. It's available on the Government of Canada website. The federal government has helped to facilitate the shipment of 31.2 million rapid tests from four different companies. Unfortunately, the deployment is where the challenge is. Of those 31.2 million tests that have been shipped to provinces for distribution, we've seen only 5.8 million distributed to communities and to local health agencies specifically.
I don't think this is an opportunity, and I wouldn't want to point fingers. I don't think that's appropriate. Provinces have a very difficult time right now. Health care is their area of jurisdiction. However, if there's a concern about rapid tests being distributed to communities, let's face facts and recognize what the actual situation is, with a view to improving it.
My first question will be for the Canadian Taxpayers Federation.
There are things in the fall economic statement that are expressed now in Bill . This is what we'll see go forward as the vision of the economic statement. There are certainly things in there, Mr. Wudrick, that focus on COVID-19, but also on other priorities that are central to the challenges of our day, such as climate change.
If you look at it—and I hope you've had a chance to read the bill—there's money to help homeowners make energy-efficiency improvements to their homes. There's funding for charging and refuelling stations. These are things that my constituents have certainly called for. It's great to see those put into place.
Do you have a challenge with this sort of approach? Climate change is, I believe, the central challenge of our time. Wouldn't you agree?
Thank you very much, Mr. Ste-Marie.
Indeed, we invested $300,000 to prepare for the season. However, in 2020, my establishment incurred nearly $1 million in debt, taking fixed costs into account. Every establishment that is a member of the association is currently in the same situation.
Are the available programs adapted to our industry? The answer is definitely no. Unfortunately, our businesses have been closed for 12 months. The wage subsidy will come to an end in June 2021, and we won't have resumed our activities. In that sense, the wage subsidy is not adapted to our industry. I am adding to all this the loan system of the regional relief and recovery fund, RRRF. That system provides interest-free loans. We are extremely grateful for it, but a question remains: how can we repay that loan without an income?
We are currently struggling to pay our bills. Some owners had to sell their home and are living in their establishment, as they lack cash flow. The situation is truly disastrous for those business owners.
The only assistance systems available to them are repayable, interest-free loans. We are grateful for those, but we will unfortunately not be able to repay the loans over the medium term. If we consider the Canada emergency business account, CEBA, we see that it's a loan of $60,000, $20,000 of which is subsidized. Thanks to the assistance systems available to our industry, every establishment can receive $20,000 through CEBA. Otherwise, the money provided through other assistance programs is repayable.
So I am confirming that this is not adapted to our needs. $20,000 is equivalent to the fixed costs we have to pay to run the establishment for about two weeks.
They are active in a wide range of sectors. We represent actors, singers and groups, as well as aestheticians, hairstylists, manicurists, social media managers, website creators, business coaches and accountants.
Since a self-employed worker is not clearly defined, there is often confusion among someone who runs a business through a corporation, someone who has no employees and someone who runs a registered or soon-to-be registered business. A self-employed worker is not someone whose business is incorporated. The category is very broad and even includes people who do domestic work. They are people who provide services we all need but whose work is not recognized at the end of the day.
Now I will make a few comments.
What constitutes a self-employed worker is not clearly defined, and that is why our members run into problems with the CRA. Conversely, a wage earner is clearly defined. When a wage earner calls the CRA to find out about the status of their application, they get a clear and specific answer. The person knows what they can and can't do. However, the answers are not as clear when a self-employed worker is asking the questions.
Self-employed workers have to satisfy a number of requirements. Some have been denied access to program benefits outright. In those cases, we have to help them appeal the decision. We manage to win appeals, but the excessive wait times are onerous. If 18 weeks have already gone by and we have to file an appeal, that means the person has to wait weeks longer. When a self-employed worker’s business closes and they aren’t eligible for the Canada recovery benefit, they have absolutely nothing in the way of supports. They are not eligible for the Canada emergency wage subsidy because they don’t have employees. They do not qualify for the Canada emergency rent subsidy because they don’t have a business number. All they have access to are the interest-free loans, but that measure is no help either.
They have no options other than the Canada recovery benefit or the Canada emergency response benefit, which were available last summer. It's incredibly hard on these workers, who experience a high level of distress. I am aware of three suicide attempts since January 18. We do not want things to get to that point.
We would really like to see these workers receiving help. I know full well that some self-employed workers applied for benefits they were not entitled to. However, those who were eligible for benefits really needed them to buy groceries and pay the rent. In 80% of cases, they work from home.
I want to thank Ms. Bédard for her poignant remarks. We will certainly look into the matter.
I will have questions for her a bit later. Now, though, I want to welcome the witnesses.
We hope you and your families are staying healthy and safe during the pandemic. Thank you for appearing before the committee.
My first questions will go to you, Dr. Cochrane.
We are dealing with Bill , which is linked to the fall economic statement. As I'm sure you're aware, the fall economic statement forecasts significant cuts in program expenses for this next fiscal year, which begins in a couple of weeks. There is great concern, I think, that the government is looking to reduce supports at a time when a third wave is hitting Canada, tragically, yet in the fall economic statement and in Bill C-14, in the face of a third wave, there is absolutely no reference to measures that would help bolster the resources available to provide supports for Canadians.
I know that Canadians for Tax Fairness has talked about this, about the importance of establishing a fair tax system and putting in place, as other countries have, a wealth tax, responding to the pandemic in the way we did to the Second World War, when we put in place an excess profits tax. Instead, the government seems to be basically giving a blank cheque to companies that are profiteering during this pandemic. Billionaires have increased their wealth by over $60 billion. Canadian banks are reaping record profits, with government liquidity supports at a record.
In that context, how do you feel about the government's refusal to put in place a wealth tax and a pandemic profits tax so that we have the resources and the wherewithal to provide all the supports for people that you spoke of so eloquently during your presentation?
I think it's incredibly misguided not to have these as part of what I call the “fiscal tool kit”.
I voiced some disagreement from Mr. Wudrick and Mr. Moody, but I will echo their call for a budget. I know that one is coming, but I agree that it's unacceptable that we've been two years without a budget. A budget should have come out, even though it was early days of the pandemic, to state that although there's a high degree of uncertainty, here's what we think we're actually going to do.
There was a lot of goodwill on the part of Canadians for the government muddling its way through, as long as it was doing what it could to support people. If the government does not maintain those supports going forward, it risks letting a lot of people start to fall through the cracks. Even as the economy, the macroeconomy, looks like it's recovering, there will be lot of people left behind in that recovery.
We've heard talk about this K-shaped recovery, in which some people are weathering the situation just fine. As a report from Canadians for Tax Fairness showed, through the first three quarters of 2020, 34 of 100 corporations that we looked at had record profits, so while the economy for most people was not great, for some it was excellent.
We need to use all of the tools that are available to us—like wealth taxes, like excess profit taxes—in order to keep the money moving and ensure that the support exists for those who otherwise will fall through the cracks.
Thanks, Mr. Chairman, and I'm sure you didn't give me a heads-up there so I wouldn't step on Mr. Julian again. Sorry about that, Peter.
Thank you again, witnesses, for your testimony. I appreciate it very much.
You know, the fall economic update provided Canadians with the information that they could expect a $381-billion deficit this year, with maybe another $100 billion more of post-COVID spending. Those are monumental numbers.
Now, this bill we're debating today is asking us to increase our debt ceiling. To use the words of Mr. Moody, I would hate to be considered Mr. Orange's credit card authorization person, the person who's going to authorize an increased spending limit to get us into further debt levels that are possibly unwarranted and certainly unjustified.
I would like to point out that former Parliamentary Budget Officer Kevin Page, who reads financial statements and updates for a living, made the comment that he was unable to follow the money in the fall economic update statement. Now we're being asked to provide approval for increased spending outside of a budget. It is actually budget time. It was budget time over a year ago, and we haven't had a budget.
Mr. Wudrick and Mr. Moody, you both rightly said that it's time for a budget, and if some of these measures would be included in a budget, there would be the opportunity to show Canadians in a transparent way where the money is going to go. As it is, there's a lack of transparency, and Canadians just don't know where the money is going.
Could you comment any further on that?
Thank you very much, Mr. Chair.
I'll take a different view from that of our chairperson when he said that he didn't want a debate between the witnesses. I thought it was one of the most engaging conversations I've heard in committee in quite some time.
Maybe I'll go right to the points of disagreement between—I was going to say “Mr. Cochrane”, but I think you corrected the record and I should acknowledge that—Dr. Cochrane and Mr. Moody. Although I think Mr. Wudrick may have something to add to this debate, I'll limit it to the first two just in the interests of time.
Dr. Cochrane, you've given essentially one of the most concise explanations of modern monetary theory that I've ever heard, in the sense that we can spend money into existence, as you've described, and that the limit is really on the real economy's ability to soak it up.
Mr. Moody, I'm curious, and the first question will be for you.
The Bank of Canada usually sets an inflation target of 2%. We haven't seen inflation to that magnitude in years. In the evidence before the committee over the course of the summer, I think it was former governor Poloz who indicated that deflation represents a very real risk during this pandemic.
I'm curious as to your thoughts on Dr. Cochrane's submission. If you don't agree that MMT is the way to go, which I expect you don't, is there a problem with...? Particularly since we're at the effective lower bound of interest rates presently, is the inflation target wrong or is there a different way to get there?
Thank you very much for inviting this discussion. I will acknowledge that I learned much of this through MMT. The basics of what I described don't actually require MMT. A lot of it is just a straight-up basic Keynesian understanding of how the monetary system works.
When I was first exposed to the ideas of MMT, which I found shocking, I wanted to confirm whether this is how Canada's monetary system works. In the course of that, I found a document from the parliamentary library, entitled How the Bank of Canada Creates Money for the Federal Government, that I would highly recommend to everyone. It describes how, when the federal government is running a deficit, the Bank of Canada creates its liability, the assets of the Government of Canada, and also creates its asset, in the form of the securities it holds, the treasuries. It can then sell a portion of those off to the public while holding on to a certain portion.
During the pandemic, the portion that the Bank of Canada has held has risen, which has allowed the Government of Canada to spend the money it needs to spend.
Now, how do we decide when enough is enough? I will actually affirm in this area something that Mr. Wudrick said, which is that we need more study. We need more understanding of the things that are happening in different parts of the country and in different sectors. Where are prices rising? Where are they falling? The inflation level, this 2%, is a statistical artifact. It doesn't tell us what's happening to the price of toilet paper or the price of houses or the price of something in Calgary. We need more understanding of what's happening in different parts of the country.
That was another key component of conducting the economy during World War II. We had extensive study to understand where actual materials were moving and what prices were being attached to those materials. That then allowed the government to identify where there was profiteering going on or where there were legitimate price increases because of whatever other reasons.
We need to disaggregate our understanding of the macroeconomy and understand the economy through many more lenses. That—
Thank you, Mr. Ste-Marie.
We want to see the Canada emergency wage subsidy extended so we can take advantage of it when we resume operations in 2022. We have nothing on our calendars until the summer of 2022, so we would really like to access the wage subsidy then. We'd also like the regional relief and recovery fund to provide support in the form of a loan where a percentage is subsidizable, given how difficult it will be for our members to repay the loan. Lastly, we would like the Canada emergency business account to be fully subsidizable, so businesses don't have to repay the $60,000 loans.
Of course, an emergency fund would have been most welcome since business owners will remain without revenue for another 12 months. Countless facilities all over the country offer venues for large gatherings, such as hotels and banquet halls, but they have no bookings to speak of. Events that were postponed until 2021 are now being postponed until 2022, and that is having a devastating impact on our industry. Large banquet halls in Canada's major urban centres have been without revenue since last spring and have not received any bookings for the next 12 months. The situation is dire.
I do want to thank you, though, because the Canadian government has done a lot to help our businesses. Without the support of the Canadian government, I would not have been able to appear before the committee today because my business would have unfortunately gone under. I am extremely grateful to the government for how quickly it took action at the beginning of the pandemic.
At this stage in the game, I think the existing programs need to be adapted to industries that were especially hard hit. Since last spring, entire sectors have experienced a 95% drop in revenues, and those losses will continue until 2022. The impact on business owners is devastating. Dozens, if not hundreds, have already closed their doors. The pandemic is taking a great toll. Speaking on behalf of sugar shacks in Quebec, specifically, I can tell you we've already lost 100 of the 240 we had. Had I not worked for free to save them, we'd have no more than 50 or so. I am proud to say I played a part in saving some 100 businesses. I am fighting very hard, but unfortunately, I need help.