Bill C-9 (Historical)

An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy)

This enactment amends the Income Tax Act to revise the eligibility criteria, as well as the level of subsidization, under the Canada Emergency Wage Subsidy (CEWS) as part of the response to the coronavirus disease 2019. It also extends the CEWS to June 30, 2021. The enactment further amends the Income Tax Act to introduce the Canada Emergency Rent Subsidy (CERS) in order to support those hardest hit by the coronavirus disease 2019. This subsidy provides relief in respect of rent and interest on debt obligations incurred to acquire real property used by businesses, charities and not-for-profit organizations in the course of their businesses or other activities. The rent subsidy is effective as of September 27, 2020.

Income Tax Act

[Chrystia Freeland, Liberal, Minister of Finance]

moved that Bill C-9, An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy), be read the second time and referred to a committee of the whole.

Mr. Speaker, I would like to ask for unanimous consent to split my time with the member for Ottawa—Vanier.

[The Speaker, Liberal, Anthony Rota]

This being a hybrid sitting of the House, for the sake of clarity, I will ask only those who are opposed to the request to express their disagreement.

The House has heard the terms of the motion. All those opposed to the motion will please say nay.

There being no dissenting voices, I declare the motion carried.

The hon. Minister of Finance.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Mr. Speaker, I do not think I need to remind anyone in this place that we are battling an aggressive second wave of the coronavirus across Canada and around the world. In order for us to create the conditions for a robust and lasting economic recovery, we must take the right steps now to keep Canadians healthy and safe. We have to do that to flatten the curve, conquer the coronavirus and put it behind us.

While we are doing that, we must mitigate the economic harm of this pandemic in the short term, but also in the long term. That is why I am very happy to speak today in support of Bill C-9, a series of measures that, taken together, will provide Canadians and Canadian businesses with urgently needed support.

We realize that the best economic policy is a sound health policy. Life will not get back to normal in our factories, malls, movie theatres and restaurants until the virus has been eradicated.

We know that the best economic policy is a smart health policy. Normal life, including in our gyms, shopping malls, movie theatres and restaurants, will only resume in full measure once the virus is truly beaten.

The reality is that we must fight against any outbreak of COVID-19 regardless of where that might be. The way we fight this virus is by limiting our social contacts. That also means limiting our economic activities. In return, we must support Canadians and businesses when they face revenue losses. That is the only thing to do that is both fair and practical.

This is precisely what Bill C-9 would achieve.

First, it includes a new Canada emergency rent subsidy to provide direct rent support until June 2021 for businesses and other organizations that are losing revenue because of COVID-19. It allows for coverage of up to 65% of rent or mortgage payments for businesses that suffer a revenue drop of 70% or more. Support will be fixed at this level until December 19, 2020. For businesses suffering a revenue loss of less than 70%, there will still be support in proportion to how much revenue they have lost.

Like the Canada emergency wage subsidy, the new rent subsidy will be delivered through the Canada Revenue Agency, providing easy-to-access support directly to businesses. Critically, it will be directly available to organizations that rent their premises as opposed to requiring participation from their landlords.

In addition to the new rent subsidy, eligible businesses, non-profits and charities will have access to an additional 25% subsidy through our new lockdown support. If businesses have to close their doors because of an emergency COVID-19 lockdown restriction or have to significantly restrict their operations as mandated by a qualifying public health authority, these businesses will have the additional support they need and deserve.

As business circumstances improve, the levels of support we provide will decrease. If, sadly, circumstances worsen, the level of support provided will increase. That is built into these programs, which are designed to be flexible and to provide targeted support where it is needed most.

In addition, Bill C-9 would extend the Canada emergency wage subsidy through to June 2021. This fulfills a commitment in the Speech from the Throne. As we know, the wage subsidy was initially put in place for 12 weeks as an emergency measure to help employers keep workers on the payroll.

Starting last spring, we consulted widely with businesses and their employees. We were told loud and clear that the program was essential. Bill C-9 extends that essential support. It freezes the subsidy rate at 65% until December 19 to ensure that organizations can continue to pay their employees during the second wave.

Together, thanks to the measures in Bill C-9, Canadian businesses and organizations will receive the help they need when they need it. Let's be clear: these measures are based not just on our willingness to help people, but also on the economic realities.

Our economic objective is to stave off long-term economic damage, whether for a major manufacturer or a small family restaurant. Every business we lose creates a void in a community and the repercussions of that loss are felt throughout the country. We must put a stop to that.

Our public health objective is to support local public health officials in the agonizing decisions they must make, and are making, in our fight against the coronavirus. If public health officials anywhere in Canada believe that limited local lockdowns are the best way to stop the spread of the virus, our government will step in with additional economic support for affected businesses. That is what these programs, particularly the lockdown support, will provide.

As the Prime Minister has said, we can and will do everything in our power to help Canadians through this pandemic. In doing so, we will build the foundation for a strong, equitable recovery.

I would like to close by briefly addressing some economic fundamentals.

When COVID-19 hit, Canada had the lowest net debt-to-GDP ratio in the G7. Today, following our country's most ambitious emergency response since World War II, we are still expected to have the lowest net debt-to-GDP ratio in the G7. Our borrowing costs are at historic lows. Today's interest charges on Canada's debt as a share of GDP are the lowest in a century.

Our government is aware that the necessary fiscal measures for fighting the coronavirus are not unlimited. These are temporary but essential measures. These investments are a bridge to a safer and more prosperous future.

The proposed measures in Bill C-9, such as the new rent subsidy, the new lockdown support and the extended wage subsidy, are fundamental pillars of that bridge.

I ask all members of the House to join me in supporting Canadians and Canadian businesses as we confront this pandemic, as we conquer the virus and then, ultimately, as our economy comes roaring back. At a time when we see this global pandemic dividing so many societies around the world and thereby paralyzing their responses, I hope and trust Canadians will remain united.

We unanimously supported the income support measures. I hope we can do the same thing with these business support measures. We can get through this together.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Madam Speaker, I want to talk about the rent assistance program. Clearly, the program the government previously introduced was incredibly flawed, and I think everyone in the House knew it, as they were talking to the business owners who were struggling.

The government prorogued Parliament for six weeks to escape the WE scandal, and we have now been sitting in the House for almost seven weeks debating all sorts of legislation. The government says that supporting businesses through COVID is a priority, so why was Bill C-9 not introduced right after the Speech from the Throne? How many businesses in this country have had to shut down because of a program that was deeply flawed to start with and because of the government's unwillingness to move quickly to fix it?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Madam Speaker, let me start by emphasizing, which is really important for Canadian businesses to know, that these programs will be retroactive to September 27. Businesses can get rent support for the month of October. Of course, the previous CECRA program did cover the month of September, so businesses are getting support all the way through.

I would also like to emphasize that, taken together, the income supports the House has unanimously voted in favour of and the business support measures I am speaking about today, which I hope will be unanimously supported, will create an interlocking set of support measures that will be in place until next summer. These measures are targeted and flexible, and together they will get us through.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Madam Speaker, the question is quite simple. We welcome the bill, which includes several proposals the Bloc Québécois has made in the past. This shows that by working together we can come up with something worthwhile.

Nevertheless, there are some major oversights, such as air transportation, airports like the one in Quebec City, located very close to me, the aerospace industry, inter-regional transport, and so on.

Will there be any measures for these major sectors of our economy that have been very hard hit?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Madam Speaker, I thank my colleague for her question.

Our government's approach is to begin by providing general programs targeting all businesses across the country that have suffered losses. I think that is a good start. We have brought in measures to support Canadians until the fall of 2021.

Today we are talking about measures to support all businesses, depending on the losses they have suffered, until the summer of 2021. I agree that after we pass this bill, we can then think about what else can be done.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Madam Speaker, I thank my colleague for her speech.

I am a bit worried about her statement that these measures will not last forever.

Is she setting the stage for budget cuts and a return to austerity? Is that the Liberal plan?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Madam Speaker, I think our government has been very clear. We understand that now is not the time for austerity. At the same time, the measures we are talking about today are targeted measures to help our economy during the fight against the coronavirus. I am convinced the fight will not go on forever, so these measures will not be needed forever.

[Mona Fortier, Liberal, Minister of Middle Class Prosperity and Associate Minister of Finance]

Madam Speaker, it is a privilege to be here today to support the timely passage of Bill C-9 by Parliament.

Today, I want to speak about some of the measures proposed in this bill that will help Canadians by providing essential support to get through the unprecedented economic crisis caused by the global COVID-19 pandemic.

Since the start of the pandemic, the needs of businesses and workers have been the basis for our actions and our progressive plan for a robust and lasting recovery.

As the Deputy Prime Minister and Minister of Finance stated, to get things right, we have to face the facts. The facts are that to slow the spread of the virus and eradicate it, we must follow public health guidelines, which require us to limit our social contacts and practise social distancing. That is the only way to do it.

This means that we need to ask people who are sick or who have sick children to stay home and not go to work. It means that we need to ask restaurants to serve fewer people or to shut down their dining rooms entirely. It means that we need to limit cross-border travel, even within our own country. It also means that we must ensure that Canadians have the support they need to abide by these restrictions.

It would be unrealistic and certainly unfair to ask workers to stay home or to ask businesses to close their doors without any financial compensation for their lost income. The government has made it clear that we are committed to helping all businesses and workers affected by the pandemic.

In our continued response to COVID-19 and as we look to recovery, we are bringing forward solutions that improve the quality of life of Canadians today and in the months and years to come.

We want to ensure that Canadians do not have to make impossible choices between paying their bills and putting food on the table. By supporting employers to keep their lights on and their employees on the payroll, by supporting workers and by supporting all Canadians through emergency response measures, that is exactly what we are doing.

We are here to bridge Canadians to the other side of this pandemic, and that is precisely what Bill C-9 would do.

The measures contained in Bill C-9 are the result of ongoing consultations with affected businesses. They include a new Canada emergency rent subsidy. This program would provide access to rent support until June 2021 for businesses and other organizations that have lost revenue in this crisis. It would do so by covering up to 65% of rent or mortgage interest payment for the hardest-hit businesses with a revenue decline of 70% or more until December 19. For businesses that have experienced a decline in revenue of less than 70%, there would be a gradually decreasing subsidy in line with the decline in revenues.

In short, all eligible businesses suffering a revenue drop would get rent support that is commensurate with how hard they have been hit. In this regard, the new rent subsidy proposed in Bill C-9 mirrors the successful Canada emergency wage subsidy. It would deliver more targeted accessible rent support to those who would need it most.

Like the wage subsidy, the proposed rent subsidy will be delivered through the CRA to make the application process easier for businesses. It will be available to businesses and other organizations that rent or own their premises. These measures will be directly available to tenants, without the need for intermediation by their landlords. The new rent subsidy represents an important new support to help businesses that are facing significant challenges as a result of COVID-19.

Bill C-9 would provide an additional 25% through the Canada emergency rent subsidy for qualifying organizations significantly affected by a mandatory public health order issued by a qualifying public health authority, as promised in the Speech from the Throne. We are calling this the lockdown support. We know that across the country, as we fight the second wave of COVID-19, public health officials have needed to impose new restrictions. That is their right to do, but it has cost businesses and their employees. By helping to offset up to 90% of rent and mortgage costs for hard-hit employers, the targeted support provided through the Canada emergency rent subsidy and the additional lockdown support would help businesses get through a new lockdown and help us all to do the right thing.

However, the fact is that rental costs are just one category of costs that businesses and employers are dealing with in the wake of COVID.

The need to cover payroll when consumer demand is low is another important part of the big picture. That is why we created the Canada emergency wage subsidy to help businesses, charities and not-for-profit organizations cover labour costs during the pandemic. The wage subsidy protects jobs because it enables those organizations to meet payroll and enables employers to rehire workers so they can continue to serve their communities and position themselves for a strong recovery.

Initially, the program was to last 12 weeks, from March 15 to June 6, 2020, and provided eligible employers with a 75% wage subsidy. We set out to improve the wage subsidy by consulting with businesses and employers. They told us that the subsidy was vital to keeping their employees on the payroll and that it had helped them rehire their workers. They shared ideas about how the wage subsidy could be adjusted to support businesses and workers as they continue to adapt to the challenges of COVID-19.

We listened and then did what was necessary. We made changes to the program so that all eligible employers, whose revenue was affected by the pandemic, now have access to it. We introduced a top-up subsidy for the most adversely affected employers.

In recognition of the vital support provided by the wage subsidy, we committed to extending it until June 2021, as we said we would in the throne speech. Over 3.8 million Canadian workers have already benefited from the wage subsidy.

Bill C-9 will make it possible to extend this vital support and make other changes to the program to ensure that it continues to help employers and that it responds to the changing health and economic situation. We continue to listen to businesses and workers about how we can strengthen the program. As part of this bill, we took measures to make the top-up subsidy more adaptable to unexpected changes in revenue.

Rather than using the existing three-month revenue decline test to calculate the top-up subsidy, the base subsidy and top-up subsidy will be determined on the basis of the year-over-year change in the eligible employer's monthly revenue for the current or previous calendar month.

What is more, to ensure these changes do not lead to a less generous wage subsidy, the wage subsidy program would include a safe harbour rule, applicable until December 19. This rule would entitle an eligible employer to a top-up subsidy rate that is no less than it would have received under the three-month revenue decline test.

Taken together, the measures included in Bill C-9 would mean that employers impacted by the pandemic—

[The Assistant Deputy Speaker, NDP, Carol Hughes]

I am sorry, but the time has expired.

I would like to remind the minister that she needs to wear her headset so that her speech can be interpreted properly.

I encourage all members to do the same.

Questions and comments.

The hon. member for Mégantic—L'Érable.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Madam Speaker, I listened carefully to the minister's speech. She repeated several times that they listened. The problem is that it took them six months to take action.

Because of rules set out earlier, many businesses had to voluntarily scale back their activities in order to survive.

The Conservative Party proposed changes in May that have just been introduced now, six weeks into the new parliamentary session after the Liberal government prorogued Parliament. That is not exactly the kind of listening we expect from a government that says it is managing a crisis.

On top of that, we just watched all the Liberal members vote against a motion that would give Canadian businesses a little more breathing room and give them a break from CRA audits as they battle for survival.

Why did the minister's colleagues and cabinet, those who claim to be working hard for the prosperity of the middle class, vote against this motion that was all about helping Canadian businesses get through the crisis?

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Madam Speaker, I thank my hon. colleague for his question.

Since the start of the crisis, the government has implemented many programs for businesses, workers and Canadians to help get them through the first wave and then the second. That is why we introduced Bill C-9, whose objective is to present a new program for fixed costs such as rent.

In our discussions with many businesses from across the country and with chambers of commerce, we listened in order to determine how we could support businesses, not-for-profit organizations and, of course, charities. We believe that we have found an approach that will support businesses in the bill we are presenting today.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Madam Speaker, I thank my hon. colleague for her speech.

Bill C-9 is a good bill, but it does not solve every problem. More specialized sectors such as air transportation and regional airports are going to need more targeted aid. Their losses are in the billions of dollars.

Although there is less air traffic, there is still the financial burden of costs associated with the provision of services such as emergency medical transportation and runway maintenance. In the case of the Mont-Joli airport back home, the losses are substantial. The Gaspé regional airport is running a deficit of $800,000. The government thinks that it is helping air transportation by directly subsidizing the airlines, but that is not going to ensure the survival of airports.

Will the government provide direct financial support to regional airports?

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Madam Speaker, I thank my colleague for her question.

As I mentioned earlier, from the beginning, we implemented many programs to support businesses and various sectors. We wanted to ensure that these programs would apply nationwide.

One such program is the regional relief and recovery fund, and we know that it has supported the efforts of regional development agencies across the country. More than $1.5 billion has been allocated to help affected businesses and communities.

We will obviously continue to monitor changes in the sectors and the economy, and we will continue to support businesses and workers to ensure that we all make it through this crisis.