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Results: 16 - 30 of 172
View Bernard Généreux Profile
CPC (QC)
You know that the Conservatives agree with this proposal. In fact, we are the ones who put it forward so that we only have one tax return, while maintaining jobs and minimizing the effects of this change, obviously.
As I told you, I am an entrepreneur. Like everyone else, we were affected by the pandemic when it started 14 months ago. One of the things that the government had to do was to put aside all of the EI administration to provide the CERB much more quickly, because the EI administrative system was not responding to the demands. In any case, it was impossible to be able to manage the CERB quickly using an absolutely archaic system.
On the other hand, I observed that the financial institutions that supported businesses with $40,000 loans—now $60,000—offered in collaboration with their government relations turned around quite quickly. They have certainly demonstrated that it was possible to do things much faster than normal, that is, when there was no crisis.
Have you seen the same thing with your businesses, not only with the $40,000 to $60,000 loans, but also with the whole Emergency Wage Subsidy and other programs?
Philippe Noël
View Philippe Noël Profile
Philippe Noël
2021-04-22 12:04
I have to tell you that, in general, we've received a lot of positive feedback about the wage subsidy. That is one of the reasons why we asked that it be extended until 2022.
Philip Hemmings
View Philip Hemmings Profile
Philip Hemmings
2021-04-15 17:22
Good afternoon. Thank you for this opportunity to appear before the Standing Committee on Finance.
This presentation draws largely on the OECD economic survey of Canada that was published on March 11. Our report is generally positive about the suite of economic policy measures that was introduced in 2020 and the subsequent evolution of those measures. The initial policy response was viewed as being appropriately rapid. The steps taken were also seen as having performed a reasonably good job in ensuring income support to those households and businesses most severely affected.
Canada was ranked as having one of the largest packages of fiscal support in an international comparison the OECD made in autumn of last year. Canada's package at that time, when we added it up, was worth around 13 percentage points of GDP. Other countries with large fiscal packages in this comparison were Italy, Germany, Australia and Japan. We'd also underscore that prudent fiscal policy in Canada over past years has helped provide scope for this sizable fiscal support.
Canada's menu of support has become more targeted, which is welcome. Notably, there has been the transition from the Canada emergency response benefit to the more focused benefits, including the Canada recovery benefit, the CRB. To be sure, there will be scope for technical improvements to some of these schemes that are still operating. For instance, our report flags that the 50% clawback rate of the CRB could perhaps be dissuasive to individuals in returning to employment.
Our report emphasizes that for the time being, a focus on keeping these supplementary channels of support open is appropriate to help economic recovery. Financial assistance for households should ensure gaps and support are covered. For businesses, continued focus is needed on nurturing their recovery.
It is worth emphasizing, I think, that, even with the retention of supplementary support, the very large deficit generated in 2020 will partially unwind. The shift back from blanket support suggests smaller outlays. Also the recovery process itself, unless reversed by another shock, will bring deficit reduction through revenue increases and diminished spending demands.
The crisis has raised a question as to whether the safety net provisions available in normal times are adequate. The recent commitment to introduce automatic tax filing for simple returns, partly so that more low-income households receive the tax credits as well, is welcome. In addition, permanent change to income support may be required to make social safety nets more reliable, timely and effective. This is challenging to implement. Our report suggests that one route would be for provinces and territories to upgrade their safety net welfare provisions, possibly with financial assistance from the federal government.
In principle, a guaranteed income scheme offers another solution; however, our report concludes that such a scheme is likely to be overly expensive and may reduce incentives to work. While support programs should remain on offer while the economy is fragile, a clear and transparent road map for preventing a spiralling public debt burden is needed. Canada's past record in federal deficit and debt suggests that, to date, broadly defined fiscal rules have worked adequately; however, a more precise rule may provide a useful anchor for reining in the debt burden. Our survey and previous ones have specifically suggested the introduction of a numerical debt-to-GDP target.
Finally, I think it's worth underscoring—and this is something emphasized in our report—that a successful post-COVID economy also requires structural reforms that do not necessarily involve direct fiscal costs. To help the business sector, our report urges faster progress in particular on the removal of non-tariff barriers between provinces. It also supports continued attention to the competitiveness and quality of telecommunication services. In addition, it identifies scope for improving business insolvency processes. For households, the report advocates the creation of more affordable housing through measures that encourage the building of more homes, for instance, through lighter planning regulation.
This brings my introductory comments to an end.
Thank you.
View Peter Fragiskatos Profile
Lib. (ON)
Thank you very much. It's an interesting point.
Economically, this downturn has taken a different form. It's fair to say that it is not quite like economic downturns of the past and therefore requires some creative thinking and pointing towards anything that will boost productivity and competitiveness. We've just given some examples here. I'm sure we could list many more. Your point is well taken.
Mr. Hemmings, I remember about a year or a year and a half ago, when the emergency programs were being put in place and being refined, some of my friends in the opposition and some in the media were saying that the government was doing too much and that the government should hold back. They were more or less making an argument for austerity, in many ways, although they did not use the word.
I wonder what your thoughts would be if we just imagined for a moment that the federal government did not introduce emergency programs or if they had been much more restrained in nature. The programs that have been introduced have been generous and have held up the Canadian economy, in my view. We've heard that same view articulated here from experts who have testified in recent weeks and months.
What is your view? If the Canadian government had not put in place the various emergency programs, where would the country be right now?
Philip Hemmings
View Philip Hemmings Profile
Philip Hemmings
2021-04-15 17:38
You'd have a lot of households struggling, compared to the way you are now.
In the situation that governments faced in March and April last year, there was a high degree of uncertainty. Many governments, including the Canadian government, were trying to think of ways of supporting households and businesses in a very rapidly evolving situation. Canada was on the right side of the equation in the sense that it moved quickly. It moved quite boldly with support programs. It's quite possible that with hindsight, you can look at the programs. This is not only true for Canada; elsewhere, some of these emergency programs didn't hit the targets as accurately as good programs would. The point was expediency at the time.
You have the fiscal room to do this. You're on the—
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2021-04-13 18:16
My question is for Ms. Drigola.
I love it when witnesses start by saying “the one thing you can do” and then tell us what the one thing we can do is, which is to keep emergency programs in place.
Mr. Stratton referred to the phenomenon of economic scarring, which has been front of mind for us from the very beginning. I'm curious as to whether you can offer perspective into what kind of economic landscape we might have been dealing with, had the government not intervened to put forward measures such as the wage subsidy, such as CEBA and such as CERB in some instances, at the outset of this pandemic.
What would the world we're living in look like in the absence of those benefits?
Alla Drigola
View Alla Drigola Profile
Alla Drigola
2021-04-13 18:17
That's a great question.
We would have seen many more businesses struggling or closing and many more jobs lost. As Trevin said, from the beginning we commend the government for introducing these programs quickly and making them widely available to businesses. We've seen that more than 50% of small businesses have accessed CEBA and CEWS. The numbers are very significant. Without these programs and those supports, we would have seen unemployment numbers that were much larger, with businesses closing.
That being said, this is why today we're calling for these programs to be extended and for businesses to have the certainty that those programs will still be in place past June. We're in the third lockdown now. Many businesses in Ontario have been shut—especially restaurants, for example—since the fall. We really need to make sure that these programs remain in place and that they are still there for businesses that need them, because without them I think we're going to see a lot more devastating consequences.
View Julie Dzerowicz Profile
Lib. (ON)
Thank you so much, Mr. Chair.
I want to thank all the presenters for their very thoughtful presentations.
Mr. Macdonald, I'm going to start with you. I love it when people start off with numbers. It's always helpful to have the latest, so thank you for that. You are a true economist.
You mentioned 92% of every dollar to combat COVID-19 comes from the federal government. We have heard quite a bit of commentary from some of our opposition colleagues that we spent too much money on our emergency programs and that the supports we have implemented have caused us to go into massive debt.
We all know we have very few options to actually fund these types of programs, so we're going to have to increase our debt, raise taxes or cut crucial programs. In your opinion, how should the federal government have financed this emergency and extra spending?
David Macdonald
View David Macdonald Profile
David Macdonald
2021-03-18 10:27
Thanks so much for the question.
Certainly, when it comes to debt and deficits, the federal government does not exist alone. It exists within the Canadian economy, across from other large sectors in the economy, and deficits and debt are fungible. In essence, they can move between sectors. In this case, the federal government took on a massive deficit in this year and what that did was create smaller deficits and in fact some surpluses in other sectors of the economy. For every deficit there's a surplus of equal value in another sector of the economy.
The federal government could have decided to spend none of this money. It could have decided to have no CERB, no support for business, no support for provinces and no support for health care and individuals. What would have occurred in that case is that those deficits would not have occurred on the federal books. They would have occurred on provincial government books as they covered health care costs. They would have occurred on household books that incurred deficits because they lost work but still had expenses, or on business books.
Despite the federal and provincial governments' efforts, we've nonetheless seen increases not only in federal debt but also in household and corporate debt at the same time. In fact, the household and corporate sectors are far more leveraged than the federal government is. If we were to see interest rate increases, they would certainly hit the federal government, but they'd hit the household and business sectors much harder. Not only do they pay higher interest rates, but they have a lot more debt.
I think it's worth understanding the federal government and its deficits not on their own, but by how it and those deficits relate to other sectors in the economy.
View Julie Dzerowicz Profile
Lib. (ON)
Maybe the other question...and I didn't mean to ask this, but I think it was just a comment Mr. Cross made at the end of one of his answers. I think there was a real attempt on the part of our government to make sure that our emergency programs really supported right across the income spectrum. I know a recent Stats Canada report indicated that households in the lowest income quintile increased their share of disposable income from 6.1% in the first quarter to as high as 7.2% in the second quarter of 2020, while those in the highest income quintile decreased their share of disposable income from 40.1% to 37.7% over the same period of time.
Would that give an indication that our emergency programs have been helpful and have worked particularly for those on the lower end of the income scale?
David Macdonald
View David Macdonald Profile
David Macdonald
2021-03-18 10:31
I think some of the programs could have been better targeted. We think of top-ups to old age security, for instance, which goes across a large spectrum of seniors. It might have been better to devote that money purely to the guaranteed income supplement. There were broad top-ups across the entirety of people receiving the Canada child benefit, which goes quite a ways up into the income spectrum. Those might have been better targeted particularly to the lower-income recipients of the CCB.
Certainly if we look at some of the big programs to support individuals, like the CERB and its knock-on benefit, the CRB, as well as improvements to EI, the floor for what one can receive in benefits, at $500 a week, would have been a substantial benefit, particularly for lower-income households, which not only benefit from improvements in access in most cases but wouldn't even have gotten into the EI system period. Now even when they get in, they're sustained at a much higher level.
I certainly think that those changes in the CERB, EI and the CRB have been some of the more important ones in supporting low-income households, particularly those attached to the labour force. I certainly hope that going forward those are the types of changes that will be made permanent in upcoming EI reforms, when the CRB program is wound down this summer.
View Peter Fragiskatos Profile
Lib. (ON)
Point taken, but by invoking him, I think you raise someone who's quite relevant and whose thoughts and ideas are quite relevant, specifically with regard to some of the matters that we're discussing at the committee today.
I know you have issues with government spending, and that's fair to raise, but in the context of COVID-19, I wonder what else government could have done.
For example, have you had a chance to read the recent report of the International Monetary Fund, the IMF, that focused specifically on Canada? It was released this month, so it's very recent. If you haven't had a chance to look at it, that's quite understandable.
It did say that if emergency programs such as the wage subsidy and the Canada emergency business account—which is, of course, the loan that now goes up to $60,000 for small businesses—the rent subsidy support, and many other examples that have been introduced, which admittedly are expensive, but have helped to sustain the country.... That's not just political spin here; that is the reflection of the IMF as well. It found, in this report, that unemployment would have risen by 3.2% beyond what we saw last April, which was 13% unemployment in Canada. It could have been even worse. As far as economic output goes, we would have seen, according to the IMF, a decline of 8% beyond what we saw in terms of the GDP decline.
What do you make of this? Absent the introduction of emergency programs, we would have had an enormously difficult time in Canada. We just heard from the Parliamentary Budget Officer, for example, who made clear to this committee that if emergency programs had not been introduced, Canada would have seen a situation of—he didn't use the term, but I think he might as well have—a depression.
What do you make of these things?
Ian Lee
View Ian Lee Profile
Ian Lee
2021-03-18 12:40
To your first question, whether I read the IMF report, yes, I did. Yes, they commended us on our response. I've never suggested—I think you're dichotomizing this or turning it into a Manichaean argument of the light being on or the light being off. I have never said, and I don't think any Canadian has said, that we shouldn't have helped anybody. The issue has never been whether we should help anybody versus not help anybody. The question is targeting, I think, a more precise, surgical targeting. We're the only country—and I've looked at the OECD report on this and at the StatsCan report—that paid out 150% of the total job loss income. That violates, I believe, the principle of the unemployment insurance system that all Canadians have supported all the way back to Mackenzie King. That is that you don't get 150% of your loss. If you're making $1,000 a month, and you go into the unemployment insurance office, they don't give you $1,500. They give you a portion of your job-loss income.
We've paid out more, in percentage terms—so we're comparing normalized data and not absolute data—than has anybody else, and those resources are scarce. Those resources that were squandered with our paying more than we needed to could have been used to pay other people who needed more help.
The issue is not whether we should help people; the issue is can we not ensure that we provide the greatest amount of help to the people who suffer the most.
View Julie Dzerowicz Profile
Lib. (ON)
Thank you so much, Mr. Chair.
My question will be directed to Mr. Robson, but first I want to make sure that something else is on the record around the budget. I don't want Canadians who might be listening to think that there's been a deliberate attempt by our government to not be transparent or accountable. Last year we actually announced a budget date. That was Monday, March 30. We didn't follow through with it, because there was a massive pandemic, and that had to be sidelined.
I also want to remind everyone that we did have reports every two weeks, once we started up with the finance committee, to make sure we were transparent and accountable with our spending. It took part right up until the end of August, when we prorogued. When we came back into session, then we were accountable through our Parliament. There also is an intention to be presenting a budget. I don't want people to think that's not coming—it is—or that we haven't been accountable and transparent.
Mr. Robson, in your opinion, how should the federal government have spent or financed emergency and economic restart programs? We have heard time and time again from many economists that if we hadn't spent what we did, our economy would have been much worse. We also have really good data to show that we're actually doing fairly well, considering. When we look at our labour participation rates, we are doing better than Germany, the U.S. and Japan. When we look at the fourth quarter of Canada's GDP growth, we grew more than the U.K., the U.S., Germany, France and Italy.
If you are worried about our debt levels, how would you have done things differently?
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