Bill C-14 (Historical)

COVID-19 Emergency Response Act, No. 2

A second Act respecting certain measures in response to COVID-19

Part 1 amends the Income Tax Act to introduce an emergency wage subsidy as part of the response to the coronavirus disease 2019 (COVID-19).
Part 2 amends Part IV.‍1 of the Financial Administration Act to provide that certain provisions of that Act, as enacted by the COVID-19 Emergency Response Act, cease to have effect on the day after September 30, 2020.

COVID-19 Emergency Response Act, No. 2

[Bill Morneau, Liberal, Minister of Finance]

moved that Bill C-14, A second Act respecting certain measures in response to COVID-19, be now read a second time and referred to a committee of the whole.

[The Speaker, Liberal, Anthony Rota]

Pursuant to order adopted earlier today, a member of each recognized party and a member of the Green Party may speak to the motion for not more than 20 minutes, followed by 10 minutes for questions and comments. Members may split their time with another member.

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, I will be splitting my time with the Minister of Small Business, Export Promotion and International Trade.

We are living in a strange time. On Wednesday, Passover Seders were moved online. This Easter weekend, churches normally filled with people are standing empty. Towns and cities across this country have strangely empty streets. The public health measures required to stop the spread of COVID-19, such as social distancing and the closing of public and private spaces, are having a profound impact on Canadians and on our economy. All sectors of the economy are being effected by COVID-19 as civil society has mobilized to stop the spread of this disease.

Whether times are good or bad, businesses provide the jobs, products and services that Canadians rely on to keep their communities going.

Small businesses in particular are vulnerable. They are the heart of our communities and they need to be supported. We know non-profits and charities are facing challenges too. Canadians' needs for their services are going up, but their donations are going down.

These employers need our help to protect the jobs of Canadians who work hard and to maintain the resilience of our economy.

As leaders, we need to confront the very real needs of Canadian business owners and workers, and take action to give them the support they urgently need in the face of this pandemic. This is where the Canada emergency wage subsidy comes in. To help Canadians and businesses get through these tough economic times, the government is proposing through this legislation a wage subsidy of 75% for qualifying employers for up to three months, retroactive to March 15, 2020. The Canada emergency wage subsidy is a key measure to ensure that Canadian families can count on a source of income through this difficult time.

The Canada wage subsidy would allow businesses to retain their employees and rehire workers who were laid off to ensure that the Canadian economy can recover from this crisis from a position of strength. It is important to note that by retaining their employees, Canadian businesses will rebound better after the crisis.

The Canada emergency wage subsidy is proposed to apply at a rate of 75% of the first $58,700 earned by employees, representing a benefit of $847 per week, per employee. The program would be in place for a 12-week period from March 15 to June 6 of 2020. Eligible employers would be those who suffer a drop in gross revenues of at least 15% in March, or 30% in April or May, when compared to the same month in 2019 or to an average of January and February 2020 revenues.

This subsidy is being offered to employers of all sizes and in every sector, with the exception of public sector entities. Our government wants employers and employees across the entire country to get the help they need.

Non-profits and registered charities will be able to benefit from all of the additional flexibilities for the revenue drop test that I have just described.

We also know that different types of organizations in this vitally important sector are facing different types of funding pressures. Non-profit organizations and charities will, therefore, be able to choose between including government revenues and excluding them when calculating their drop in revenue. Eligible employers would be able to access the Canada emergency wage subsidy by applying through a Canada Revenue Agency online portal.

The amount of the wage subsidy will be determined on the basis of the actual wages or compensation paid to the employees. We expect every employer to do everything they can to cover the difference to get the wages to 100% of the maximum amount covered.

We have designed the subsidy to provide generous and timely financial support to employers and we expect that employers will use this subsidy to support the health and well-being of their employees. The legislation includes a provision to protect the integrity of the program and to ensure it is not misused. An officer of any organization that applies would have to attest to the accuracy of the claims. Any company that receives the benefit and is then discovered to be ineligible would have to repay the amount of subsidy received, and there would be serious consequences for anyone who tried to take advantage of the subsidy.

The COVID-19 pandemic is causing disruption across our economy in ways big and small. The Canada emergency wage subsidy is only one of a myriad of measures introduced by the government recently to support Canadians through the outbreak of COVID-19. Over the last three weeks, our government has announced a series of broad economy-wide supports as a part of Canada's COVID-19 economic response plan. This plan will help to ensure Canadians can weather this storm.

Our government is offering the Canada emergency response benefit to anyone who loses all their income because of COVID-19. The application period opened on Monday and millions of Canadians filed their application.

Our government is also allowing businesses, including self-employed workers, to put off their GST/HST payments and import duties owing until June. This measure is akin to giving Canadian businesses interest-free loans worth as much as $30 billion. What is more, our government has extended the deadline for filing income tax returns and remitting income tax owing, which leaves $55 billion circulating in our economy. These measures will help businesses continue to pay their employees and their bills and contribute to controlling the liquidity problems companies are experiencing across the country.

Our government has also introduced the new Canada emergency business account. This program will provide $25 billion to eligible financial institutions to provide interest-free loans that include a partial write-off with conditions to small businesses, including not-for-profit organizations.

These loans of up to $40,000, guaranteed and funded by the Government of Canada, will ensure that small businesses have access to the capital they need at a 0% interest rate so they can pay for rent and other important costs over the next number of months. Additionally, if they pay the loan back before December 31, 2022, 25% of it, up to $10,000, will be forgivable.

For small and medium-sized companies that require greater help to meet their operational cash flow requirements, our government created the new small and medium-sized enterprise loan and guarantee program, which will provide $40 billion in lending support, through the EDC and BDC, for small businesses, to help them weather the impacts of COVID-19.

These are uncertain times. We understand that Canadians urgently need support. We are using all the tools available to make sure we protect Canadians' health and keep our economy strong. Now is the time for us to come together and to work together. Across the country we are seeing civic action on a level not seen in generations. We know Canadians are staying home to help stop the spread of this disease. By doing this, they are saving lives and protecting our front-line workers.

I am calling on all parliamentarians to swiftly pass this bill. Canadian workers and businesses deserve the certainty. We know that when this crisis passes, and it will pass, Canada's workers and businesses will be ready to bounce back, building an even stronger and better Canada.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, I thank the minister for his speech and for the openness with which his office has received our suggestions.

I want to talk about a number of these suggestions that I think he and his office have received favourably.

One, our early concern with the wage subsidy was that an employer would not find out until the end of a pay period whether he or she was eligible to receive a subsidy. In other words, employers would have to make a decision to hire people without knowing, for 30 days, whether their wages would be subsidized. We suggested that they have the ability to get an answer at the beginning of the pay period, as opposed to just at the end.

Two, we raised the concern of owner-operator businesses that do not have $5,000 of wages and therefore earlier did not qualify for the CERB because they paid themselves previously with dividends. This group was not eligible for either a subsidized wage or the CERB under the original iteration. I want to know if the minister can update us on any adjustments he has made to solve that problem. I believe there is some good news for that group.

Third, there is a concern about businesses that are not arm's length from one another; in other words, there is a parent company and a division. The division might have experienced massive revenue drop, but the parent company has not, and therefore the division was not, under the original proposal, eligible for any wage subsidy. I believe the ministry has taken that concern seriously as well.

I wonder if the minister can update us on those three concerns and how he has addressed them.

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, we have been pleased to work with all parties in the House and to work with businesses across the country as we think about putting in place measures that are dealing with a very dynamic challenge. What we have come up with are some ways to ensure that businesses can know that they will be able to continue to have access to the wage subsidy based on having access to it in the month previous. We see that as critically important.

We are continuing to look at how we can make sure that the emergency response benefit supports people who have had $5,000 in income over the past year. Of course, one of the things that people have brought up is how we can deal with dividends in that regard, and that is something we are indeed considering. There will necessarily be some things that we will need to consider as we bring out these measures.

These measures, of course, are intended to support the broadest possible cross-section of Canadians as rapidly as possible. We are really pleased that we are able to help so many Canadians. We have seen it this week with the number of people who have applied to and have been accepted into the Canada emergency response benefit. Similarly, we want to see that happen with the wage subsidy. We are seeing businesses already coming out saying that they are going to re-employ the employees they have laid off because of this.

We think that the measures we have taken, again in collaboration with Canadians and with members of the House, are going to have an important impact on allowing us to deal with this crisis.

[Alain Therrien, Bloc, La Prairie, QC]

Mr. Speaker, we all know that this is a huge crisis and that it is having a lasting impact on the economy.

The government responded with some fairly strong measures, which is appreciated, and that is good. All the parties called for such measures, and we joined together to try to give our businesses some breathing room and ensure that workers are not left behind.

The assistance measures are fairly significant and broad. They could be described as wall-to-wall measures. However, we know that some sectors will be more affected than others. Travel agents are one example. We all know that, at the end of the crisis, people will not immediately start travelling again. Travel agents are extremely concerned.

I was wondering, and I would like to take this opportunity to ask the Minister of Finance, whether something will be done in the short term for travel agents or for the sectors that are experiencing greater financial difficulty that will put them at risk after the crisis.

Will there be sector-specific assistance for those people?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, that is a good question.

I know that some sectors are struggling right now. That is why we moved fairly quickly and introduced the Canada emergency response benefit for employees, the wage subsidy and the interest-free loans.

We will look into other measures and other levels of credit, as well as other ways to improve their situation. We are looking at other approaches and, when we come up with other measures, we will be transparent and make them known as soon as possible.

[Mary Ng, Liberal, Minister of Small Business]

Mr. Speaker, as the Prime Minister has said, Canada's small businesses are places that make our communities feel like home. Restaurants and cafes have had to close their doors; tech companies are impacted, and bookshops and clothing stores have had to lay off their staff. Small businesses truly are the heart of our communities, employing 8.3 million hard-working Canadians and accounting for nearly seven out of 10 private sector jobs in the country.

I start with this statistic because Canadians have been hearing a lot about small businesses recently, and although a lot of people can think of a small business owner, or they themselves are small business owners, we do not often think that small businesses are the driver of our national economy. However, they are, and I know that Canadians across the country want to see their favourite business reopen and thrive after all of this is over.

Our economy needs small businesses to remain resilient and to rebuild in the weeks and months to come, so I want Canadians to know that, in the face of COVID-19, we are listening to our business owners and our employers and responding to them. Right now, our goal is to save jobs and save businesses. We know that the single most important asset that businesses have in that recovery are their employees.

Growing up helping my own parents run their small business, I know it can often be a family affair. With 75% of Canadian small businesses having fewer than 10 employees, I have heard from many employers that their teams are so closely knit that they feel like family. If the COVID-19 pandemic has taught us anything, it is that we are all in this together. Whether they are small businesses that have had to temporarily close or lay off employees to reduce hours, or are struggling to pay rent, we know that they have been facing some seemingly impossible decisions recently, and we want them to know that their government is with them every step of the way.

For those business owners who have agonized over how to make their payroll, we have introduced the Canada emergency wage subsidy to support the payment of up to 75% of wages for the first $58,700 of an employee's earnings. This means up to $847 a week for workers who stay on the payroll. This would not only give workers certainty, but it would help keep our businesses in fighting form, ready to bounce back when we are through this. Let me reiterate: The whole point of this is to keep businesses intact because we know that when it is safe to do so, businesses that remain connected to their employees will be in a better position to lead our economic recovery.

Therefore, I am pleased that organizations like the Canadian Chamber of Commerce, the Canadian Federation of Independent Business, and the Canadian Manufacturers and Exporters all agree that the Canada emergency wage subsidy would help employers keep paying hundreds of thousands of their most valued employees during this difficult situation.

The government's support for small businesses certainly does not end there. We have doubled the maximum length of the work-sharing program, for example. This would provide income support to employees eligible for EI who agree to reduce their normal working hours because of developments beyond the control of their employers. We are doing all of this because we know that people are really the heart and soul of our businesses. We want employers to feel able to keep their families together. I know from my own experience how personal a small business really is.

At the same time, we know that there are plenty of expenses beyond payroll that still need to be covered. That is why we established the business credit availability program, which would help to finance small businesses that are struggling because of COVID-19. As part of this program, we have introduced the Canada emergency business account, which would provide up to $40,000 in loans, interest-free, to help with those short-term costs.

To further help businesses with cash flow, we have worked with the financial sector to open up billions of dollars more in lending capacity through financial institutions such as banks and credit unions, as well as through the Business Development Bank of Canada, Export Development Canada and Farm Credit Canada.

The program will help companies in all regions and in all sectors, all of our small businesses. Whether it is oil and gas, air transportation, or exports and tourism, we are going to help all of these businesses.

Speaking of tourism, Parks Canada is working with tourism entrepreneurs in national parks, historical sites and marine conservation areas to help minimize the impacts of COVID-19 on those industries. The decision has already been made to defer payments on commercial leases and licences of occupation without interest until September 2020. To help the people who feed us, Farm Credit Canada has received an additional $5 billion of support so it can help our farmers and our agri-food businesses. This assistance is both in the liquidity and to help keep people on the payroll.

We have also been introducing ways to defer other kinds of expenses that come up for businesses, to help keep their costs low. We are allowing businesses to defer income tax payments incurred between March and September 2020 until August 31, and we will defer GST and HST remittances and customs duty payments until June 30, 2020. To help small business owners and entrepreneurs who have lost their income, we are helping with the Canada emergency response benefit, giving them $2,000 a month. This will help those sole proprietors struggling with cash flow right now to bridge to better times.

Through these measures, we are offering new flexibility to different types of businesses dealing with the impact of COVID-19. Let me share a couple of examples. We are working with the owners of a wholesale fibre mill at the moment, one that has been operating for 15 years, providing good jobs for its six full-time employees: that is, until two weeks ago, when the mill had to temporarily close its doors due to lack of demand. It plans to gradually restart its operations within a week, and it will conduct the required maintenance during this partial shutdown. We are working with those mill owners so that they can bridge through with the Canada emergency business account to cover the overhead and carry out the required maintenance. We are going to work with the owners to bring back those six employees through the emergency wage subsidy. Given that both of the owners, who were on payroll, have not been taking a wage since the closing, we are helping them so they can access support through the CERB to help them bridge through this difficult period.

Another example I can give is a younger company: a two-year-old bakery with five employees plus the owner. This small business was on an upward trajectory before COVID-19, but now its retail sales have plummeted 50%. With the demand for bread remaining strong, however, the bakery has decided to work through its challenges. Through the emergency wage subsidy, it is going to keep the bakers employed just to make the bread. The bakery has applied for a loan through the business emergency account to bridge the payroll expenses, but also to set up an online ordering system. Like the mill owners, the bakery owner is going to choose to leave cash in the business and draw on the CERB to support it through this time.

There are thousands upon thousands of small businesses just like this bakery and this fibre mill that need help. Through all of these actions, we are trying to give businesses the breathing room so that they can keep their employees on payroll, pay the bills, cover the rent, and know that they will still be on their feet once this crisis has passed.

These decisions and changes will come as a result of direct consultations with businesses from coast to coast to coast. Through conference calls and Skype sessions over the last couple of weeks, our government has been listening and speaking with businesses all across the country, in every sector and in every region. Through these conversations, it has been heartening to hear from small business owners and entrepreneurs and from so many hard-working Canadians about the real difference that the emergency wage subsidy and all the other measures will make to their businesses and to their families: like the restaurant owners in Halifax who wrote in to say that they are going to be able to put their staff back on payroll and they will be ready to open when it is safe to do so, or the dentist here in Ottawa who turned his passion into a successful practice; now he is not seeing patients and is sending his staff home, but he will be able to keep paying the bills and keep paying his employees.

We will continue to listen to the very needs of small business owners and entrepreneurs. We will continue to explore ways to bring more relief, not only for our businesses but also for the hard-working critical workers across this country because we are going to get through this together.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Mr. Speaker, I want to drill down on a question asked by the hon. member for Carleton. There is a lumber mill in my riding that is a division of a larger parent company. The larger parent company also deals in pulp, which has been very successful and going strong during this time, but the particular division located in my riding that provides lumber for decking and construction has seen a 60% to 80% drop in revenue. However, because it is a division of a parent company and cannot demonstrate a 30% drop in revenue, it has had to lay off 60 people and does not qualify for the wage subsidy.

What actions are the government going to take to ensure that divisions of larger companies that may not now qualify for these wage subsidies will qualify?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Mr. Speaker, the whole point of the wage subsidy program is to save our businesses and keep their employees employed. We know that businesses are stronger when their employees are together with them and when that team is together. This wage subsidy is going to help these businesses prime for recovery, and we are going to continue to work with all businesses in Canada so they can support their employees through this very difficult period and can be primed for recovery at that time.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, in times of crisis, not-for-profit organizations and charitable organizations are more vital. In my community of London, I have been participating in some of the local city-run phone calls that have taken place to try to bring forward a lot of the issues and struggles of people, and so I am hearing from them directly.

We certainly welcome the adjustment to the eligibility criterion that the Minister of Finance announced earlier this week, but we hope that the government will continue to work with these organizations to ensure that they can continue to pay their employees and provide the services so desperately needed by a growing number of the public.

Does the minister agree and support the idea that the wage subsidy should apply to charities like food banks that are seeing demands skyrocket while resources are decreasing?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Mr. Speaker, those very charities and not-for-profit organizations do such important work for our communities all across the country, and I am very pleased that the wage subsidy will indeed apply to both charities and not-for-profit organizations.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Mr. Speaker, I want to bring to the attention of the government a group of Canadians who are falling through the cracks.

Recently, Bell, Rogers and Telus announced the lifting of Internet data caps. This is a welcome announcements and will greatly help Canadians living in cities, but millions of Canadians who live in rural areas are not eligible for the lifting of these data caps. Many of these customers rely on products like Rogers' Rocket Hub or Bell's Turbo Hub, and their data caps have not been lifted. For a typical family of mom and dad who have to work from home, with two kids at home who have to do online learning through video, they could easily go through 250 gigabytes of data a month, incurring a $1,000-Internet bill.

Could the government comment on this situation and what steps it is taking to address it?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Mr. Speaker, during this very important time when all of us are doing extraordinary things to plank the curve and to ensure that those very businesses and Canadians are supported through this period, we are working to make sure that these measures and many of our measures are helping those very Canadians in all our communities.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, once upon a time, an angry dog chased a cat. The cat ran up to the top of a tree, and so the cat lived happily thereafter. Right? Well, wrong, because, of course, the cat had to come down the tree at some point, and the dog was still waiting there. We are kind of in the same situation, as Dr. Fisman explained, an epidemiologist from whom I borrowed the analogy. We are all safely in our homes away from the COVID dog, but at some point, we will have to come out into the world if we are going to earn a living and pay our bills. That is ultimately the problem we will be faced with in the medium term.

Today we are debating measures, for example, that are at once both too exorbitant and too inadequate. How is that possible? Well, they are too exorbitant because they will drive our deficit to at least $186 billion this year, almost four times the previous record. That is only to pay for measures that take us to the end of the summer, barely a fiscal quarter into the year. That total does not include provincial deficits or the reduction in the book value of the Canada pension plan investments, which surely will drop given that markets are down by a third since the crisis began. That is why I will be sharing my time with the member for Kelowna who will comment on some solutions to that problem. He will also bring forward concerns from Central Okanagan.