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Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:03
Thank you, Mr. Chair.
Good afternoon. Thank you for the invitation to speak at these pre-budget consultations in advance of the 2021 budget. I commend the committee for reaching out to the academic community of economists for public input on this important process.
It's been said many times that the COVID-19 pandemic is an unprecedented event in recent history, and this context frames my input into this process.
The fall 2020 economic statement documented the unprecedented effects of and response to the COVID-19 pandemic. For fiscal year 2020-21, real per capita revenues have declined by 20% from the previous year, while spending is up by 70%. In real terms, this is the highest per capita amount ever spent in Canadian fiscal history—nearly $16,000. As a share of GDP, the projected deficits will be the second-largest in Canadian fiscal history, exceeded only by those during World War II.
The fall statement reveals that spending will eventually decline and the deficit approach 1% of GDP by 2025-26, but also a federal net debt that will rise to $1.5 trillion and a net debt-to-GDP ratio remaining in excess of 50%. Despite current low interest rates making current debt management look manageable, it remains the case that any sudden future shocks to the economy or to interest rates could be more difficult to manage as debt burdens rise.
The size of the initial fiscal response to the onset of the pandemic in the February-to-April period of 2020 was appropriate. However, the continuing, unprecedented fiscal response generated results that have not paralleled the fiscal support provided. The fiscal assertiveness of the federal response to the pandemic was not matched by assertiveness in targeting the response as might have been afforded under federal spending power or the power of quarantine that exists under the Constitution. Moreover, much of the spending went toward individual income transfers in excess of the pandemic-generated income losses. After all of this unprecedented response, we are now in the midst of a more severe second wave that threatens the economic recovery that began over the summer.
The federal 2021 budget must learn from the past and better target any additional projected fiscal response with a view to long-term economic recovery and growth. The additional spending must be directed towards productivity-boosting investment. Even prior to the pandemic, the business investment-to-GDP ratio had been faltering. While the short-term income support provided at the peak of the pandemic was important, if we are to continue to spend at these record levels, there must be more to show for it.
Government spending priorities should be directed towards initiatives for boosting our long-term productivity via investment in physical and human infrastructure. Public infrastructure in roads and transport; bridges; communications; schools; health care; water, sewer and environmental systems all require investment. Education has taken a major blow during the pandemic, and we need to ensure that students at the elementary, secondary and post-secondary levels do not fall behind in educational achievement and opportunities and reduce future labour productivity growth.
Then there is the matter of our national defence and security in a more multipolar and unstable world that requires equipment and resources and vision.
There is also a need for private sector investment in sectors producing goods and services that we can export so that we can continue to earn our way in the world. If our export markets falter and our incomes drop, there will be no international emergency response benefit payments offered to us. The federal government, therefore, should work with the private sector in assessing its investment needs.
Historically, excessively large amounts of government spending are not well correlated with long-term economic growth. It's not that government cannot help the economy, but that effective government requires knowing when to spend and when not to spend and, more importantly, what to spend the money on.
If we are to embark on a program of infrastructure spending, we must ensure that projects with the best return are selected. Assorted public projects should be assessed by an arm's length panel of key leaders with expertise in business, accounting, engineering and economics who can make recommendations in areas of national interest. It would be extremely unfortunate if federal infrastructure money flowed to community or sports centres rather than, say, roads and sewers, simply because shovel-ready plans exist for the former and not the latter.
Thank you very much for the opportunity to speak to you all, and I look forward to the discussion.
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2020-12-11 13:08
Thank you, Mr. Chair and members of the committee. It's a pleasure to be here virtually today.
In the middle of a once-in-a-century pandemic and a second wave, it is difficult to think beyond confronting the immediate effects of COVID-19. However, even as we continue supporting each other today, we must also begin looking over the horizon to the post-COVID-19 world. We need to start planning how our country and our economy can emerge stronger.
Full recovery is a long way off, but recovery starts with resilience. The emergency supports provided have spared many Canadian businesses from economic disaster, and will help many Canadians through a challenging winter. Measures like the Canada emergency wage subsidy and the Canada emergency business account have provided urgently needed assistance to Canadian workers and businesses, helping to ensure that they will be there to propel our economic recovery. However, these pandemic-related fiscal supports have come at an enormous cost that's estimated at over a quarter of a trillion dollars so far. Their cost will continue to mount for the coming months and beyond. The burden of carrying the cost will be borne by an economic infrastructure that has been badly damaged.
As we prepare for a significant majority of Canadians to be vaccinated, Canada must also prepare for a transition away from a subsidy-based crisis response toward economic stimulus and getting Canadians back to work while ensuring their health and safety. All Canadians understand the need for one-time emergency spending to support people and businesses through the crisis, but now is not the time to add permanent new spending programs that will mortgage the future of the next generation of Canadians by creating structural deficits. We will need to encourage investment and business activities that will create jobs and generate the revenue needed to offset the extraordinarily high levels of public spending during the emergency.
This will be no easy task. Over the coming months and years, our international competitors will be fixated on attracting investment and creating jobs. For Canada's recovery plan to succeed, our policy-makers will need a singular focus on economic fundamentals and promoting growth. Governments must be as agile and determined in pursuing economic growth as they have been in responding to the virus.
The recommendations in our pre-budget submission were developed in partnership with our vast network of over 450 chambers of commerce and boards of trade and more than 100 of Canada's business associations. The submission lays out eight policy areas and specific measures that our political leaders must consider to ensure a sharp and lasting recovery.
Almost 600,000 Canadians are still unemployed due to the pandemic. Priority number one needs to be to get them back to work to drive our recovery. This will require getting local labour market data on what skills employers are demanding and developing talent pipelines with educational institutions at the community level to fill these needs.
At the same time, the latest data show that there are also 70,000 fewer businesses in Canada than there were pre-pandemic. Creating the significant amount of business openings and reopenings that will be necessary for recovery will also require a focus on harnessing our tax system for growth—for example, a temporary consumption tax holiday to spur local purchases, or pausing the alcohol escalator tax. It will also require adopting technology and innovation, strengthening supply chain resiliency, reducing regulatory burdens, ensuring a resilient resource sector, planning for small business continuity and strengthening public health infrastructure.
We ask the government to work closely with the business community in developing a road map for a business-led recovery. A growth-focused plan with a clear fiscal anchor based on broad consultation will unlock economic capacity, fuel job creation and promote new business investment. By working together, we can forge a path to recovery that is inclusive, environmentally responsible and innovative.
Just as every downturn is first felt on main street when the lights begin to go out, every recovery starts when the open signs begin to reappear. For all the uncertainty about what to do, we know one thing for sure: The true measure of every recovery is job growth, and everyone recovers when business recovers.
Thank you for the opportunity to meet with you this afternoon. I look forward to our discussion.
Scott Wildeman
View Scott Wildeman Profile
Scott Wildeman
2020-12-11 13:13
Thank you. I really appreciate the opportunity. This is definitely something that I would make time for.
The fitness industry has been decimated by the COVID-19 closures and restrictions. Just to give context, currently facilities that are open are operating at approximately 50% of pre-COVID revenue. Facilities that are closed are operating at less than 10% revenues, yet we still have significant fixed-cost spaces.
On behalf of our members, we appreciate the CEWS and the rent support. Many of the caps that were in place have been lifted. Companies are still experiencing hardships with remaining rent, wages, small business loans and property taxes, along with the debts incurred from securing PPE and enhanced cleaning and safety measures.
However, our operators across the country are looking to the future. We're looking to do our part for the collective health and wellness of Canadians. Today, I am here to speak to you about how our industry can be part of the solution to help Canadians be well and thus be productive.
We know that exercise has many health benefits, which are well documented and researched through organizations such as Exercise is Medicine Canada. We know that physical activity and exercise will reduce hypertension by 33% to 60%, reduce incidence of diabetes by 25% to 58%, reduce incidence of cardiovascular disease by 33% to 50%, reduce risk of stroke by 31% to 45%, reduce risk of some cancers by 30% to 60%, reduce mortality and risk of recurrent breast cancer by 25% to 50%, reduce the risk of developing Alzheimer's by 40% and reduce premature death by 31% to 65%. It can reduce the risk of anxiety and depression, and can actually treat anxiety and depression as effectively as medication or cognitive behavioural therapy.
We know that COVID-19 complications have been largely associated with folks who have one or more chronic condition. We know there's a coming tsunami of anxiety and depression, especially as the recent lockdowns are occurring during the shortest and darkest days and effectively cancelling the holiday season for many households.
How can we part of the solution?
As an industry, we would like to partner with government and provide the following.
First, include fitness memberships and fitness services such as personal training as a health care expense. We have the ability as an industry to provide attendance reports upon request for audit purposes and also show attendance for remote services. Professionals across the country are ready, willing and able to provide both in-person or remote services focusing on long-lasting behaviour change.
We would also like to request that PHAC back funding to expand the Prescription to Get Active program across Canada. This program is unique in that it links prescribers from the medical community to fitness professionals.
We would also like to encourage government messaging that encourages Canadians to seek out professional assistance to create lasting behavioural change with their physical activity.
We believe that we can provide the government with a 500% return on investment by reducing the overall health care burden by motivating and inspiring Canadians to take proactive steps towards their own health and wellness.
I really appreciate your time today. Thank you.
Lynn Napier
View Lynn Napier Profile
Lynn Napier
2020-12-11 13:17
Thank you, Mr. Chair.
Thank you so much for the opportunity to present to all of you as part of the pre-consultation for budget 2021.
I am Lynn Napier, mayor of the town of Fort Smith and president of the Northwest Territories Association of Communities. We proudly represent all 33 communities in the Northwest Territories, which vary in size from 52 to 21,000 residents. Our members are both indigenous communities and traditional municipalities, but all are northern and remote to varying degrees.
As you know, local governments are relied upon to keep essential services running. We are the level of government that most immediately impacts on residents' lives, and I would like to remind you that municipalities cannot legally carry a deficit.
We have really appreciated the first round of safe restart funds. To get this funding out the door as quickly as possible, we worked with the territorial government to have it distributed on an allocation base-plus basis.
With respect to planning for the critical economic stimulus recovery phase, I am pleased to let you know that local governments are agile enough to be important partners. Further, these funds could serve to make headway on the four pillars that I would like to highlight for you as priorities for NWT communities.
Being a jurisdiction, where the lack of infrastructure is readily acknowledged, our first pillar is infrastructure funding. It has been very heartening to see additional funding being allocated to municipal infrastructure in the last few federal budgets. The doubling of the gas tax fund was particularly welcome. We would strongly encourage this to continue and to become permanent and to be enhanced.
The gas tax fund works very well in the territorial north, because of its flexibility and predictability, and because it does not require cost-sharing. Getting funds to community governments is one of the most efficient ways to stimulate the economy in a timely and effective manner and thus make the most effective impact on the recovery from COVID-19. Further, it serves to address long-standing challenges and gaps.
As well, programs that encourage the development of territorial projects that will facilitate trade and resource development, such as the Mackenzie Valley Highway, will have significant impacts on economic development, as well as increasing the resilience of communities to climate change that are on the route, which nicely segues into our second pillar—climate change.
In the Northwest Territories, climate change isn't a distant, abstract problem. It's here now, and Northwest Territories communities are at the forefront of the climate change challenge.
The rapid warming, at two to four times the rate of the rest of Canada, is causing significant changes in the natural environment, including to ice, permafrost, water, vegetation and wildlife. The frequency and severity of extreme weather events is also increasing.
Although there are some funds for climate change adaptation that are available in the Northwest Territories, they are chronically over-subscribed and are at a scale to only support studies and/or design. We need to see funding at levels to support construction now.
Our third pillar is actually not a community government responsibility but impacts greatly on the wellness of our communities. With well in excess of 50% of housing overcrowded and insufficient, the likelihood of a rapid spread of COVID-19 in our communities is high.
The Northwest Territories Housing Corporation routinely reports waiting lists for housing units in excess of 400 applicants. Although some progress has been made on this front with the rapid housing initiative, increased investments are still required. Making inroads on the housing deficit in the territory represents a huge economic stimulus, as it has potential to leave more of the benefit and create employment within the communities.
Our final pillar is telecommunications. The many months of COVID-19 have really highlighted the inadequate broadband connectivity in our communities and proven to be a barrier for governance, education, work from home, telehealth and participation in the digital economy on an unprecedented level.
Access to broadband Internet has become essential to living in the modern world, and the lack of access or bandwidth limitations in the north has long been identified as an impediment to the growth of our communities and the Northwest Territories as a whole. Having all telecommunication systems offline for days at a time is unacceptable today, and yet it is a fairly common occurrence in the north.
We were very pleased to hear of significant funding through the CRTC to improve Internet service through the use of fibre and low-earth orbit satellites, but we still have a ways to go.
While considerable improvements have been made to ensure there is cell service for all Northwest Territories communities, there is still considerable vulnerability for the driving public, as there is no cell service between communities—distances of hundreds of kilometres. This too needs to be addressed.
We wish to thank you for the invitation to present to you this afternoon. We appreciate your continued interest in the communities of the Northwest Territories.
Thank you.
View Pat Kelly Profile
CPC (AB)
Thank you.
My first question is for the Canadian Chamber of Commerce.
You talked about a lot of different things that are going to be necessary for economic recovery. I want you to comment on some of the tax increases that are going to be felt especially by small and medium-sized businesses.
Perhaps you can start with the excise escalator in particular, which automatically kicks in. Would you perhaps recommend to this committee that things such as the excise escalator, the increases to the carbon tax and increases to payroll deductions that are borne by businesses be suspended in the name of economic recovery?
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2020-12-11 13:24
Thanks for the question.
I'll start with the alcohol escalator tax, which we do believe should be paused. I'm not sure that I know too many policy experts out there who think it's good tax policy to have a tax that goes up every year in perpetuity without any end in sight, or without a motivation for it, particularly in the middle of the largest economic downturn in almost a century.
That places a significant onerous burden on a number of different businesses, but in particular on some of the hardest hit businesses or the ones in the hardest hit sectors, such as restaurants and bars, or even the arts, for that matter. That is definitely something we have been advocating for very strongly. We believe this should be put on pause before it comes into place I believe next April.
Within this context, we are certainly calling for a number of different tax changes. I know that a number of different business associations have been calling for a comprehensive review for quite a while. I'm not sure if the middle of the pandemic is the best time for a structural review of the tax system. We've been putting that off ourselves.
When it comes to short-term things that governments can do with the tax system to help get us out of this, there are a lot of different options.
In terms of helping individual Canadians, there is simplifying tax filing, so that every Canadian can access their tax benefits, for instance, by automatically filing simple tax returns. As well, enhancing the GST and the HST or low-income credit for all Canadians would be very useful. We certainly appreciated the elimination of the T2200 form for people working from home, as was announced in the fall economic statement. It was a form that employers had to fill out. As well, looking at simplifying the tax on split income rules would be very useful for small businesses within this current context.
We've actually brought together some of the best tax experts in the country to come up with a list of 30 recommendations for what we can do immediately for the tax system. I'd be happy to share that with the clerk of the committee.
View Pat Kelly Profile
CPC (AB)
I'll turn it over to Tamara in a moment, but I think the witness makes a really good point on the extraordinary power of the escalator tax. I think King John himself would blush at having the power to give himself additional revenue each year without a vote in Parliament.
With that, I'll yield to Ms. Jansen.
View Tamara Jansen Profile
CPC (BC)
Thank you.
Thank you, everybody, for your presentations.
I'd like to ask Professor Di Matteo a question. It seems clear that the Liberals' plan to build back better by investing heavily in their green agenda is not necessarily going to be the magic bullet that they claim.
I know that infrastructure worked in 2008 and 2009 because the Conservative government at the time invested in shovel-ready projects that got money circulating immediately, as opposed to the current plan, which looks to take years to implement, and those are years we don't have to waste.
Wouldn't a made-in-Canada approach focusing on manufacturing goods locally so that Canadians can buy from Canadians, rather than purchase offshore goods, be a wiser approach for instant impact?
Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:27
That's an interesting point.
I think if you're going to have federal policies targeted at the manufacturing sector or a specific business sector to produce domestically like that, it's very important to work with firms in that sector when designing those policies.
I think if there's going to be potential there, it's important that you find out what potential manufacturers need, what they can do to create the jobs locally and follow through on the plans. You have to consult with the sector first. I'm not saying it can't be done, but a lot of our manufacturing now is already integrated with facilities in the United States in the cross-border relationship. It won't be easily turned on a dime, but there's certainly potential there.
View Tamara Jansen Profile
CPC (BC)
I have a second question. Well before the pandemic, economic growth was mediocre. Do you think that a recovery plan that focuses on increasing productivity while also aggressively reducing the cost of regulation would be the best path to recovery for Canada rather than the current path we seem to be planning?
Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:28
I think in the long-term, productivity is everything. That's been said by other economists. You have to be able to boost the ability of your factors of production. I know it sounds like such a cold term, but labour and business productivity have to rise. If they don't, in the long run we're going to have increasing difficulty maintaining our standard of living.
A close eye should be kept on the productivity agenda to make sure that investments enhance that type of productivity.
View Tamara Jansen Profile
CPC (BC)
Thank you.
What are your thoughts regarding the current plan, which seems to focus only on domestic issues and does not pay serious attention to possible pressures that will come from our global neighbours?
Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:29
Could you specify what you mean by the current plan and global neighbours? Do you mean the economic plan or the...?
View Tamara Jansen Profile
CPC (BC)
I'm concerned that the finance minister is only looking inward rather than recognizing the outward pressures that will arise.
Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:29
I can't read the mind of the finance minister, but essentially 30% of our output is exports—30% of our national income is exports—so whatever we do, we have to pay attention to our competitors, and it's probably very important that we be as nimble as possible in assisting our firms to take advantage of economic opportunities wherever they may be in the world.
It's important to focus on the domestic agenda, but it's also very important to keep an eye on what everybody else is doing.
View Michael McLeod Profile
Lib. (NT)
Thank you, Mr. Chair.
I'll try to be quick.
Mayor Napier, I want you to speak a little about infrastructure. You mentioned it as your first pillar. While we know that a lot of progress has been made on infrastructure in the north over the last five years, we know there's still a long way to go.
Could you speak on the importance of having infrastructure funding programs that are able not only to address the costs of construction in the north but also flexible enough to be effective?
Lynn Napier
View Lynn Napier Profile
Lynn Napier
2020-12-11 13:31
The unique conditions of the north greatly affect how municipal infrastructure is built and maintained. We face extreme isolation and a shorter and highly variable construction season. We have limited resources and capacity available, limited access to funding. We have growing demands from aging and existing infrastructure and unique project needs.
Because of all of those factors, we find that the gas tax fund works very well in the Northwest Territories because of its flexibility, predictability, and it doesn't require cost sharing. This also helps the communities be flexible so they can manage their projects based on their own priorities. This keeps the focus on our asset management, which has been encouraged by all levels of government.
View Michael McLeod Profile
Lib. (NT)
View Michael McLeod Profile
Lib. (NT)
—is about connectivity. You know that the Prime Minister last month announced $750 million in new funding to get 98% of Canadians connected to high-speed Internet by 2026.
What recommendations would you have to make sure that northern communities are able to benefit as much as possible from this funding?
Lynn Napier
View Lynn Napier Profile
Lynn Napier
2020-12-11 13:33
Thank you.
As the MP is probably well aware, broadband connectivity in northern and remote communities is, I would say, ghastly. We do not even have fibre optic to a lot of communities. As very remote communities, we can't really even connect video. We face challenges all across the north. Connecting our governments is a challenge. In these times especially with COVID, we try to connect, just as we are here today, electronically, by Zoom meetings and we are not able to do that. We don't have consistent, basic, reliable and affordable service across the territory in all of the communities.
I cannot consistently schedule meetings with people and know that I am going to be able to connect with them. We have the same problem with schools, where schools are trying to do education remotely, but it is unaffordable for a lot of families. It is unreliable. And to that end, a lot of families face economic difficulties where they don't have their own equipment to be able to connect.
Affordability, I would say, is number one, and then getting the fibre optic or access to lower orbit satellites, whatever we need to do to get connectivity to the north so that we can even get on par with what is available to the south right now.
View Julie Dzerowicz Profile
Lib. (ON)
Thank you so much, Mr. Chair.
Thanks to everyone for the interesting presentations.
My questions are for Mr. Stratton with the Canadian Chamber of Commerce.
I'm particularly interested in your recommendations under the “Get Canadians Back to Work” section of your written remarks. You talk about labour market strategies and real-time data. One of the things we've heard is that we actually don't collect local and regional skills and labour data.
Could you just confirm that's correct and that it's important for us to do so?
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2020-12-11 13:36
Absolutely, I confirm that's correct. It would be very important for any economic recovery plan to have that data.
View Julie Dzerowicz Profile
Lib. (ON)
Okay. I have a second question for you. This is odd to say, but there's often a huge disconnect between the jobs that are out there and the employers, that is, with matching the employers with the employees.
How can the federal government be helpful on this moving forward?
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2020-12-11 13:37
I think what's going to be very important is creating collaboratives of employers at the local, community level, because there are different.... When it comes to what skills are being supplied in the labour market, we generally know and have information on that. We don't necessarily know what skills are being demanded by employers.
If we can bring together employers at the local community level to be able to talk about what skills they are going to need, looking forward, and to be able to create labour pipelines or talent pipelines with educational institutions in those communities to fill those needs, then that could be a really key program to help bring Canadians back to work.
View Julie Dzerowicz Profile
Lib. (ON)
Is that something you see the federal government being able to do?
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2020-12-11 13:37
Absolutely. We have been looking at a model that's been done by the U.S. Chamber of Commerce down south, which has been piloted in 30 different states very successfully. We're looking at bringing that up to Canada with potentially 150 different pilot projects across the country.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
First, I would like to say good afternoon to the witnesses and thank them for their presentations, which were all very interesting.
My first questions are for Ms. Napier, the mayor of Fort Smith and the president of the association representing the communities of the Northwest Territories.
Ms. Napier, I found your presentation and your answers to Mr. McLeod's questions very moving. So I'm going to pick up where you left off.
In 2020, and even in 2000, Internet access was supposed to be considered an essential service, and it is even more so during the pandemic. You have provided examples demonstrating its importance, such as being able to hold meetings via Zoom or webcast. My understanding is that the communities you represent do not have access to fibre optic Internet services because fibre optics do not reach them.
Is that correct?
Lynn Napier
View Lynn Napier Profile
Lynn Napier
2020-12-11 13:39
That is correct. Not all communities in the Northwest Territories have fibre optic service.
View Gabriel Ste-Marie Profile
BQ (QC)
How do communities connect to the Internet? Is it through cable or is it old-school satellite?
Lynn Napier
View Lynn Napier Profile
Lynn Napier
2020-12-11 13:40
Many communities still connect through satellite, which is not very reliable. As a personal reference, my parents live in Rankin Inlet, and they have satellite service. I am completely unable to connect with them through video. Their cell service is extremely spotty. I cannot always get through to them on their cellphones. Their community in Rankin Inlet is quite similar to many communities across the north that do not have fibre optic.
When we are looking at health appointments in the Northwest Territories, our major medical service centre would be in Yellowknife. If we are unable to get services in Yellowknife, we go south to Edmonton. Because of COVID, many medical appointments are postponed. In our community, we go to video appointments, but if you are in a northern or extremely remote community, those services are unavailable to you.
View Gabriel Ste-Marie Profile
BQ (QC)
It's really sad to hear that. It should be considered an essential service.
To your knowledge, have any concrete projects been proposed? You talked about the possibility of connecting communities to the Internet through fibre optics. That's what it should be. Otherwise, it could be done using the new technology being announced with low earth orbit satellites, which are more numerous than conventional satellites.
To your knowledge, are there any such projects in the works, with the potential of changing things quickly over the next few months?
Lynn Napier
View Lynn Napier Profile
Lynn Napier
2020-12-11 13:42
I want to clarify what I said earlier. Ten of our communities are satellite communities. I believe Northwestel is working on service to some communities, but I'm not sure that those would affect the current satellite communities. I'm not sure what is to be done in the next couple of months. I don't have that information with me right now.
Additionally, we have the two parts of telecommunications. One would be the Internet fibre optics, and the other is cell service. Both are in need of upgrades. We require accessibility in the north. Just when travelling, there are long distances where there's no cell service between communities, and that has a negative impact. In the past three weeks, I've seen medical incidents or accidents on the highways that could have had a quicker response had there been cell service available for those people.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Thank you for your answer. Hopefully, this will be resolved as soon as possible. I also clearly heard your request to raise gas taxes. The advantage is that it can be implemented immediately for infrastructure. That model works.
Could you give us a few concrete examples of another issue you mentioned, climate change? You said that you are already seeing it where you live. You have named categories, but can you give us some concrete examples?
Lynn Napier
View Lynn Napier Profile
Lynn Napier
2020-12-11 13:44
I can talk about the riverbank in my own community. It has been sliding, and we had a major slide 50 years ago. Because of the impacts of climate change, with permafrost across the north and rising water levels, we are seeing, in communities like Tuktoyaktuk, the water advance into the community. Buildings have had to be pulled back from the shoreline.
This year, the water levels have been “unprecedented”, which is the word for 2020. I think the Great Slave Lake, which is one of the largest lakes in Canada, was five feet higher than normal. The Mackenzie River and the Slave River were high too. A lot of our communities are on the rivers—the Hay River, the Mackenzie River and the Slave River—and on the lakes, and these levels are affecting our community infrastructure, our water intake and our sewer systems. I think there's not any community that is unaffected by climate change in the Northwest Territories.
View Peter Julian Profile
NDP (BC)
Thank very much, Mr. Chair, and thanks to all of our witnesses for being here today. We certainly hope that you and your loved ones have been safe and healthy during this pandemic.
I'd like to start with you, Mayor Napier. I'd love to give a shout-out to two residents of Fort Smith: my former roommate Dennis Bevington and Joan Bevington. Next time you see them in Fort Smith, if you could say hi, I'd appreciate it.
You've spoken very eloquently about climate change, the lack of connectivity and the lack of housing. This week, of course, the Parliamentary Budget Officer revised his estimate of the cost of the Trans Mountain pipeline. Construction costs, now revised, will most probably be $14 billion. Of course, we know that Canadian taxpayers will lose a lot of money on that, which is another conclusion of the PBO report. This is the choice the government can make: to invest in Trans Mountain or make the investments that are actually going to resolve many of the issues you're raising.
I'd like to get a sense from you, with the Northwest Territories Association of Communities, of how much you think it would cost to meet the response on clean energy to make sure the Northwest Territories and northern communities are actually part of the clean energy grid and have those options available to them. How much would it cost to meet housing requirements and address the housing shortage in the north, particularly in the NWT? For telecommunications to get communities interconnected, are there any costs?
I'd like to get a sense of what it would take to resolve those issues in the north.
Lynn Napier
View Lynn Napier Profile
Lynn Napier
2020-12-11 13:48
Thank you, Mr. Julian.
I will certainly say hi to Mr. Bevington. He comes to our “lunch with the mayor” meetings every month.
I'm sorry that I don't have the costs of what that would be. Certainly it is far less than $14 billion.
We know that housing across the territory is dire. We have a lot of what we call “hidden homeless”, where people are not homeless in the same circumstances as you would see in the south. We have overcrowding of housing units at an extreme level.
Just as we've seen in Nunavut in the past month, if we have an outbreak of COVID, it will spread because of the interconnectedness of the communities. We don't have the same medical services you have down south—which, again, are already over-taxed for the people who are being serviced.
The dire state of housing inadequacy and the deficit of housing supply in the Northwest Territories will require an extraordinary allocation of federal funds to overcome. A long-term federal funding commitment is critical to address the unmet housing needs.
I am very sorry that I don't have numbers for you today. We can certainly look into that and get something to the committee as best we can.
View Peter Julian Profile
NDP (BC)
Thank you so much for your response.
I'm going to move to Mr. Wildeman. I'm very intrigued by your proposal around having fitness training as part of health care. You're certainly making a very strong argument for the positive impacts that would come from that.
Has the Fitness Industry Council done any statistical analysis to know how many Canadians might benefit in that kind of situation? How much would we save the health care system if Canadians were healthier?
Scott Wildeman
View Scott Wildeman Profile
Scott Wildeman
2020-12-11 13:50
That's a great question. We have done modelling. We've looked at, for example, expanding the Prescription to Get Active program over 10 years, leveraging not only federal government investment, but also the facilities. The Fitness Industry Council of Canada is made up of facilities from coast to coast, and those facilities would also fund the initiative.
We believe we can—in the long term, over the course of 10 years—provide savings to our health care system of well over $100 million. In terms of people getting started and continuing with their physical activity, we could get well over 250,000 Canadians who are not currently exercising and being active onto that path. That's where you'll see the health care savings.
View Peter Julian Profile
NDP (BC)
Thank you very much.
I have to move on to Mr. Stratton. I'm a long-time member of the New Westminster Chamber of Commerce and a proud member of the Burnaby Board of Trade.
What small business people raise consistently is that web giants and companies outside Canada are not paying any corporate tax at all. Is the Canadian Chamber of Commerce in favour of levelling the playing field and forcing the web giants to actually pay corporate taxation and pay their fair share in Canada?
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2020-12-11 13:51
We are certainly in favour of the digital sales tax that was just announced.
When it comes to corporate taxes, I think it's very important to understand that there is also an international conversation taking place at the OECD as part of the larger BEPS process for taxation where they're discussing this very issue of corporate taxation for digital technology companies.
Our position has always been that we need to defer to what is decided multilaterally and internationally, instead of going on our own and making a made-in-Canada approach and then having another international system that becomes the standard that we have to adapt to later on.
View Pierre Poilievre Profile
CPC (ON)
I think you'd like to lock me up and throw away the key, Mr. Chair.
The Chair: Not me.
Mr. Di Matteo, you're one of Canada's leading fiscal historians. The Bank of Canada has expanded its balance sheet by $400 billion [Technical difficulty—Editor] 400%. Has this ever happened before?
Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:53
That's a very good question. I guess my first answer is that I actually don't do monetary economic history.
The size of the increase is certainly outside of my living memory and my recollection of similar types of events, even during times of increases in public spending. The last time there was a major ramp-up of this nature—during World War II, for example—most of it was standard deficit financing in terms of Victory Bonds and actual purchases, as opposed to money creation and monetization.
View Pierre Poilievre Profile
CPC (ON)
Right. So even in defending western civilization against Hitler and Mussolini, our government actually raised its money by borrowing real dollars from real people rather than credit creation at the central bank.
Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:53
Well, at that time, that was the approach they used. I mean, with World War II, the debt was contracted at, I guess, what you would term “patriotically low” interest rates, given that it was the fight to save democracy. That, in a sense, assisted the process of borrowing, because the rates were quite low at that time.
View Pierre Poilievre Profile
CPC (ON)
Your research shows that the biggest deficits as a share of GDP in Canadian history happened in the mid part of the war, and those are the only deficits, as a share of the economy, that are bigger than those today. But your research also demonstrates that in 1946-47, we ran the biggest surpluses as a share of GDP in Canadian history, rapidly paying back that debt.
Do you see the current government on track to doing that after this crisis is over?
Livio Di Matteo
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Livio Di Matteo
2020-12-11 13:54
Well, that's a function of two things. In terms of the rapid paydown, first, there was a large demobilization after the war effort, so expenditures, of course, came down very quickly. There was also, in the immediate period right after the war, essentially a very large economic boom. I mean, in terms of the demographic factors at the time, there was the baby boom. There was a natural resource boom with natural resource exports.
The growth rate of the economy, moving into the end of the 1940s and into the 1950s, saw economic growth, in real terms annually, in easily the 4% to 5% to 6% range some years. You have—
View Pierre Poilievre Profile
CPC (ON)
Do you see that kind of growth repeating itself to pay for all of this new spending?
Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:55
You're asking me to conduct a forecast, and I don't really want to make weather forecasters look good.
Essentially, the factors for that type of rebound don't seem to be there. However, the one thing I would offer is that in the wake of the pandemic, if you want to think about human psychology, there might be a lot of consumer spending to make up for lost time, given the restrictions that have been faced. Again, I don't see the signs there—
View Pierre Poilievre Profile
CPC (ON)
Consumer spending is interesting. It increases demand, but in the absence of supply, in fact with a possible supply reduction that has occurred over the last year while supply chains have been downed, there could be faster growth in consumption than there is in production. We know that historically this has led to inflation. None of the experts believe that's going to happen, but the experts are often wrong. In 1978 there was high unemployment and high inflation at the same time, leading interest rates to move from 8% to 22% in 24 months, with no prediction of that from the experts and without the Bank of Canada ever anticipating it.
Is it possible that interest rates could rise faster than all of the experts are predicting, based on your knowledge of history?
Livio Di Matteo
View Livio Di Matteo Profile
Livio Di Matteo
2020-12-11 13:57
Let me answer that in two ways. Unpredicted changes can happen. No one predicted the pandemic and its effect on the economy. The other thing you have to keep in mind is what's happened over the last 20 years. Inflation has been low. Part of that has to do with internationally integrated supply chains.
Basically, the aggregate supply curve, if you want to think of it that way, has stayed flat in response to demand. There's been disruption to that process. There's been a lot more protectionism. If that aggregate supply curve, because of all these disruptions in productions internationally, starts to go upward, at some point, with increased demand, prices will go up. Once prices start to go up, you're going to have to see a response in terms of interest rates if there seems to be any possibility of inflation taking off.
I mean, ninety—
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2020-12-11 13:58
I expect I'll have fairly limited time, so I'll start with one question and see if we get beyond that.
Mr. Stratton, thank you for being here. One thing you mentioned during your testimony was that the success of our response in the long term may depend on ensuring that some of the emergency measures we put in place are temporary. Though they may be necessary now, we don't want to create a structural deficit more than is essential to float households and businesses through this pandemic.
While in many respects I think that's sensible, I have some questions about certain programs we're taking on that I'm supportive of. In particular, I'm thinking of something that will set the stage for long-term productivity growth, such as an early learning and national child care strategy. Would you consider a measure or investment of that nature—one that has the potential to pay for itself, or at least make a significant contribution to it, and set the stage for greater labour force participation, particularly by women—worthwhile, though it may create a permanent expense, given the productivity gains that it could set the stage for?
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2020-12-11 13:59
I think it would depend on what it looks like. If we're talking about child care, for instance, I know we've certainly been advocating for the funding, if there is funding, going directly to day cares or going directly to families, as opposed to creating some sort of national child care program.
We certainly appreciate what the government has done in the last fall economic statement in approaching these issues. I think one of the important things is the urgency of it as well. Creating a plan to create a plan.... There are a lot of women in the workforce who need this support right now, so being able to do that as quickly as possible, I think, is maybe what's important. That's why I think it's very important about the details as opposed to.... We're certainly on board when it comes to the larger issue that needs to be resolved.
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2020-12-11 14:00
I think there are certain measures we've adopted over the past few years, and even as recently as the fall economic statement, to give a boost to the Canada child benefit to get cash directly to the people who are going to be using it for child care.
When you're dealing with a supply problem, it's not as though you can simply create one more space when it's needed. Do you not think an umbrella approach that brings the provinces together to set some sort of a national strategy to ensure that we actually have both the supply that will meet the demand and the financial resources for families so they can afford that care at the end of the day is really what's important?
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2020-12-11 14:00
A national strategy is very good because we need to have all the provinces on board when it comes to this. Obviously, there are jurisdictional issues when it comes to that. I would certainly advocate that, when we're putting together that national strategy, it very much focuses on any funding going directly to child care providers and also that it is not creating a federal program for it but looking at jurisdictional issues and implementing it in that way.
View Peter Fragiskatos Profile
Lib. (ON)
Thank you very much, Chair.
Thank you to the witnesses.
Mr. Wildeman, there are a lot of interesting things put on the table, and as these pre-budget deliberations will continue over the next few weeks we will hear many recommendations from a variety of stakeholders across the country.
If you were to go back to your testimony, what is the key insight, the key recommendation, that you want to give to the federal government?
Scott Wildeman
View Scott Wildeman Profile
Scott Wildeman
2020-12-11 14:01
Messaging supporting Canadians to be proactive with their health care and rewarding their initiatives with allowing them to write off or deduct their expenses against their income tax would be the number one priority.
View Peter Fragiskatos Profile
Lib. (ON)
Point taken there.
How does supporting fitness businesses fit into that? I'll tell you why I'm asking. I have a number of your members in the community here in London, Ontario, including GoodLife, that have reached out to me to make the case for federal funding. There are different ways to look at an ask like that. I have constituents who would, I think, rightly say—maybe critically but still it's a fair question to ask—why would a company like GoodLife, which is an enormous Canadian company and is very successful, with deep pockets it would seem, need federal support? What does your industry council have to say about that? I'm not speaking specifically about GoodLife, but about fitness businesses in that general vein.
Scott Wildeman
View Scott Wildeman Profile
Scott Wildeman
2020-12-11 14:02
That's a great question.
If you look at the rent subsidy, it's been really well received with the amendments by many of the smaller players, the unique boutique studios. A company the size of GoodLife would be capped at $300,000 for that rent support. They have well over 500 locations. The scope of the rent subsidy really doesn't help a company that size. There are other regional players, like Movati or GYMVMT, that are too small to be big and too big to be small, almost.
As an association, we have been lobbying for amendments to the rent support. Many of those amendments were actually completed, and we're very appreciative of that, but for the mid-sized to larger companies, it still misses the mark to an extent.
Having said that, as an industry association we're focused on the recovery and how we can help. The tax incentives, as well as the positive messaging, will get more people started, which will obviously impact facilities in the long term and impact professionals across the country.
Jeff Morrison
View Jeff Morrison Profile
Jeff Morrison
2020-12-11 14:09
Thank you, esteemed Chair, and good afternoon to you and the committee members. Thank you for the invitation to appear today.
For those of you who are unfamiliar with our organization, CHRA represents the social, non-profit and affordable housing sector throughout Canada. Our sector manages approximately 600,000 units of affordable housing, which collectively house approximately over a million people in Canada.
As this committee deliberates on the contents of the next federal budget, which of course will be heavily influenced by the COVID pandemic, I want to remind committee members of the very first public health directive issued to Canadians when COVID hit, which was to stay home.
Mr. Chair, staying home isn't possible if you don't have a home, or if you don't have a home that you can afford or that meets your needs. This year has proven that housing is health care. That's why, as your committee examines the question of how we can build back better through the next budget, we would urge you to put housing at the core of a pandemic and post-pandemic recovery package.
In recent years, a number of programs have been launched under the national housing strategy to strengthen the social and non-profit housing sector. Those programs have provided a solid foundation to build on. In addition to the existing programs, CHRA would recommend expanding the national housing strategy in four key areas.
First, the most obvious gap in the national housing strategy is the absence of a dedicated urban, rural and northern indigenous housing strategy. With 80% of indigenous people living in these settings, and with indigenous people facing much higher rates of core housing need and homelessness, a dedicated urban, rural and northern strategy is a must. A commitment to develop this urban, rural and northern strategy that is developed and governed by indigenous peoples themselves was actually contained in several ministerial mandate letters. We would urge the federal government and this committee to make that commitment a reality in budget 2021.
Second, in September, the government announced $1 billion for a new rapid housing initiative, which, I should add, was a recommendation that we put in our original pre-budget submission issued this summer, so we thank the government for acknowledging our advice in their announcement. We know from CMHC officials and from speaking to our members that this program is receiving a significant number of applications; therefore, $1 billion is simply not enough. We would call for a minimum of $5 billion in additional funding to meet the demand and increase housing supply, and also that the federal government enter into discussions with provinces and territories to provide the necessary social supports that are required for people who will be housed in these new units.
Third, a program within the national housing strategy with significant untapped potential is the federal lands initiative. This is currently a $20-million-a-year program that transfers surplus federal lands to housing providers to build affordable housing. This program could be significantly expanded to allow federal acquisition of provincial, territorial, municipal and even private sector lands, so that they too can be transferred to affordable housing providers. All housing projects start with land, so this would be a significant shot in the arm to accelerating affordable housing development.
Finally, the national housing co-investment fund is one of the tools CMHC has at its disposal to increase the supply of affordable housing. The fund has $13 billion over 10 years and provides grants and loans to renovate existing housing units and build new affordable ones.
Access to this program is very challenging in terms of administration and timeliness, and the grant-to-loan ratio is very low. We think enhancing the program would help increase the overall supply, but only if administrative and operational improvements are made to the fund.
We know that CMHC has begun the work, and we hope to see a streamlined and simplified process, especially if the fund can be expanded.
Mr. Chair, to conclude, in 2019, Parliament—all of you—recognized housing as a human right through legislation. This year has underscored the importance of housing to health and, of course, to well-being. The question isn't “Should we put housing at the core of a post-pandemic recovery package?” The question is “Can we, as a country, afford not to?”
Thank you, Mr. Chair.
I look forward to your questions.
Margaret Eaton
View Margaret Eaton Profile
Margaret Eaton
2020-12-11 14:15
Good afternoon. Thank you so much for having me here to speak with you today.
I'm Margaret Eaton. I'm the national CEO of the CMHA. We are a nationwide federation of 87 community mental health providers that deliver critical mental health promotion, prevention and care to over one million Canadians across 330 locations annually.
As you know, Canadians have been living through an unprecedented time of extreme national anxiety. A CMHA and UBC survey found that the pandemic has widened persistent mental health inequities, especially among those who were already vulnerable. The most recent wave of these results showed alarming levels of despair, suicidal thoughts and hopelessness in the Canadian population.
In an average year, for example, 2.5% of Canadians experience suicidal thoughts. Our research shows that, this September, 10% of Canadians reported thoughts or feelings of suicide. That means that if you have a bubble of 10 people, that's you or one of your loved ones in crisis. Forty per cent of Canadians say that their health has deteriorated since March, with many more people in certain groups saying that their mental health has deteriorated, especially those who are unemployed, those with pre-existing mental health conditions, younger people, indigenous people and people who identify as LGBTQ2S+. Their mental health has worsened dramatically.
Based on evidence from other pandemics and disasters, we know that mental health issues will persist potentially for years after a vaccine is widely deployed. Further, good mental health is key to economic recovery. To ensure a mentally healthy workforce, we must put mental health supports in place for those who are returning to work or who have been working through stressful and hazardous circumstances.
The government should be commended for its Wellness Together portal, for its funding for mental health and substance use programs and research, for its investments in indigenous mental health, and for the new funds announced in the fall economic statement.
However, we already know that this won't be enough. Even before the pandemic, an estimated 1.6 million Canadians had mental health issues go untreated every year, and 87% of Canadians have told us that they don't have access to the mental health supports they need. However, with proper funding from the government and the right system of supports in place, CMHA believes that we can meet the overwhelming need for care, help Canadians recover, and ultimately save lives.
In our pre-budget submission, we make four recommendations.
First, we need a national mental health recovery plan in order to ensure a mentally and physically healthy population, ready to work and contribute to the national recovery. This plan should be long-term, well funded and focused on mental health promotion, prevention and care efforts at the community level. It must be implemented in a way that reaches out to our most vulnerable, especially in remote communities.
Second, we are asking for a $13.5-million investment to expand our evidence-based cognitive behavioural therapy program, BounceBack, to serve more people experiencing mild to moderate worry, stress and depression. With more funding, we could deliver this cost-effective program to many more Canadians. The program is evidence-based, and it works.
Third, we recommend that the government invest $9 million in CMHA's Resilient Minds peer support program to expand the initiative to provide support to front-line workers. Our health care workers are experiencing unbelievable strain, and CMHA can provide the resources to help them to respond to trauma, deal with psychological stress, and build healthier front-line teams.
Last, we recommend that the government substantially increase funding for indigenous-led mental health care to continue closing gaps in health outcomes between indigenous and non-indigenous communities. Indigenous people have historically high rates of suicide and are a particularly vulnerable population. Their mental health is further compromised by racism. We encourage the government to take the first nations mental wellness continuum framework as its guide and substantially increase funding to the many indigenous-led mental health care organizations.
Let's not wait until our mental health system is in the ICU on a ventilator. Let's invest now. People are struggling, and they can't afford to wait. If we fund community interventions, this will alleviate the pressure on an acute care system already hit hard by COVID-19 and it will get people the help they need sooner.
Full economic recovery requires a mentally healthy populace. We urge you to provide the long-term recovery strategy that will ensure all of our success as a nation.
Thank you. I look forward to your questions.
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