Finance Committee on April 2nd, 2020

[The Chair, Liberal, Wayne Easter]

We will call this meeting to order.

Welcome, everyone, to meeting number 15 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of Tuesday, March 24, the committee is meeting to discuss the government's response to the COVID-19 pandemic. Before we start, I should inform members that pursuant to this order of reference, the committee is meeting for two reasons: one, for the purpose of receiving evidence concerning matters related to the government's response to the COVID-19 pandemic, and two, to consider a bi-weekly report to be provided by the Minister of Finance or his delegate on all actions undertaken pursuant to parts 3, 8, and 18 of the COVID-19 Emergency Response Act, which was distributed to members earlier. During the study, as I understand it, on interpretation of the motion, no motion can be moved, no vote can be held, and no committee business can take place. The only exception is that if the committee is not satisfied with how the government is exercising its powers under the act, it may adopt a motion to report that finding to the House.

Today's meeting is taking place exclusively by teleconference, and the audio feed of our proceedings is made available by the House of Commons website. Just with regard to some technical issues, before speaking, please wait until I recognize you by name. When I recognize somebody by name, the operator will turn the audio on for that person, which may take a few seconds, so pause a minute before you start. During the questions and answers, I would ask that members please identify the witness to whom they're addressing their question and state their own name as well. As always, all comments by members and witnesses should go through the chair.

That basically covers the preliminaries.

We just had a bit of a steering committee meeting where we worked out an agreement for the week coming. Beyond that, the clerk will be sending that information out as well, but to give you a heads-up, we will now be meeting next Wednesday for four hours and Thursday for four hours and then go back to the format of Thursday and Friday for four hours following that.

At today's meeting we are fortunate to have the Minister of Finance here, who will take a few moments to give us an overview of where things are at. I believe he can be here for only 40 minutes. With him are representatives of the Canada Revenue Agency, the Department of Employment and Social Development, and the Department of Finance, who can answer detailed questions if members have them following the presentation by the Minister of Finance. With that, thank you all.

Minister of Finance, the honourable Bill Morneau, I know they've been strenuous days. Thank you for coming. The floor is yours.

[Bill Morneau, Liberal, Minister of Finance]

Thank you, Mr. Chair.

I understand I'm here until 2:40 and I'm looking forward to answering questions.

All of us know that COVID-19 is causing unprecedented disruption to the economy here at home and around the world. This is a crisis unlike any we've ever faced before. The outbreak of the disease is rapidly evolving, and we know that the government's ability to respond must be equally rapid.

On March 18, the Prime Minister presented Canada's COVID-19 economic response plan. This comprehensive and continually evolving plan is designed to protect Canadian workers and businesses and to ensure that our economy can weather the storm and emerge strong.

To date we've announced the following programs in Canada's COVID-19 economic response plan.

To begin with, yesterday we announced details on the proposed Canada emergency wage subsidy. We know that taking action to protect a strong economy includes taking action to protect Canadian jobs. The subsidy will provide employers who see a 30% or more decline in gross revenue since this time last year with a wage subsidy of 75% for the first $58,700 of normal salary. That goes up to a maximum of $847 a week per employee.

It's available to employers, big and small. It includes non-profits and charities, any of those kinds of organizations, that meet the same eligibility requirements.

We also, as I think you know, have the 10% wage subsidy program, which will provide eligible employers with up to $1,375 per employee and $25,000 per employer.

However, the government acknowledges that, despite this, many Canadians will no longer be earning an income as a result of COVID-19. To ensure that all Canadians can pay for their groceries, housing and necessary medication, we announced the implementation of the new Canada emergency response benefit, or CERB.

This benefit will be provided to Canadian workers who lose all their income as a result of COVID-19. The benefit is for workers who are eligible and for workers who aren't eligible for employment insurance. If a worker is sick, is asked to self-isolate, is caring for an elderly relative, or isn't receiving any wages because they're looking after young children as a result of school or day care closures in response to COVID-19, the worker will be eligible. The CERB also applies to workers on leave without pay, which helps maintain the link between the employer and employee. The CERB is a taxable benefit of $500 per week for up to 16 weeks.

For small businesses and non-profits, we introduced the Canada emergency business account, which will provide interest-free loans of up to $40,000 for small businesses and non-profits, with 25% of it forgivable if paid back by December 31, 2022.

We also launched the new small and medium-sized enterprise loan and guarantee program, which will enable up to $40 billion in lending, supported through Export Development Canada and the Business Development Bank, for guaranteed loans through financial institutions to help small and medium-sized enterprises meet their operational cash flow requirements.

We also announced tax and customs duty deferral measures. Income taxes will not be due until August 31, 2020. In addition, GST and HST remittances and customs duty payments due at the end of March, April or May can now be deferred until the end of June.

We're also supporting families through a one-time top-up of the Canada child benefit of $300 per child this May. For the 12 million families who need it the most, we're making a supplementary GST credit payment, starting on April 9.

We're helping seniors by protecting their savings by reducing the minimum withdrawal from their RRIFs by 25%. To support students and recent grads, effective this past Monday, we put in place an automatic six-month moratorium on Canada student loan repayments.

We're also making sure there is support for those who may need it the most in this challenging time. We've created a distinctions-based indigenous community support fund that will address the immediate needs of first nations, Inuit and Métis nation communities. We have also invested over $200 million to support shelters for women, for children and for Canadians experiencing homelessness.

We're experiencing an unprecedented crisis. We've taken unprecedented action by establishing emergency assistance on a scale that the country has never seen. This is the largest economic program in Canadian history.

We know that Canadians need support urgently, and our government is using all the tools necessary to make sure we can protect Canadians' health and keep our economy strong. These measures are keeping food on Canadians' tables. They're keeping businesses intact, restoring Canadians' confidence, preserving communities' resilience and making sure, importantly, that when this crisis passes—and it will pass—Canadian workers and businesses will be ready to bounce back.

Thank you very much, Mr. Chair, and I am looking forward to the questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Minister. Also, thank you to all the officials who are with you.

I have another technical point before we get started. It is difficult not being in Ottawa; we're all across the country. I will recognize somebody by name. I have the order here, and then the operator will turn on the audio for that person. During the question and answer exchanges, for the member and witnesses, the moderator will leave both microphones on for the duration of that exchange. It should work better that way, after the experience of the health committee on Tuesday.

I should say as well, members, if you want to speak out of order, if you're raising a point of order or some such thing outside of your designated time, press *1 and as soon as the moderator informs me, I will recognize you.

We'll start the first round of questions. There will be six minutes for members.

First up will be Mr. Poilievre, then Ms. Dzerowicz, Mr. Ste-Marie and Mr. Julian.

Mr. Poilievre, you have six minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

Excellent. Thank you very much.

Minister, I appreciate the hard work that you're doing in these difficult times. I hope you and your family are in good health. I thank you for all the work you and your staff are doing.

On March 18, you announced a wage subsidy worth only 10% of wages paid. The opposition and employers told you it was too small to make any difference. You ignored that. On March 25, you introduced a bill in the House of Commons with that 10% wage subsidy and told the Senate of Canada on the same day that employers did not need any more than 10%. Two days later, you did a 180° reversal and announced the wage subsidy would in fact be 75%. You changed all the terms and conditions, but then realized that the wage subsidy you had announced was so different from the one you passed into law that you would need to bring Parliament back to do over what you could have done the first time. We've now lost two weeks because of this mistake and confusion.

On top of that, your officials tell us it will take three to six weeks for the CRA to even begin receiving applications for the wage subsidy.

Minister, thousands of businesses employing millions of workers teeter on the brink of bankruptcy now. There is no more time and no more cash. When will small businesses get the wage subsidy cash in their accounts? When?

[The Chair, Liberal, Wayne Easter]

Mr. Minister.

[Bill Morneau, Liberal, Toronto Centre, ON]

First of all, thank you for the question.

Happily, I can say my family is doing well. Like other families, we're sequestered at home. That's what I hope all Canadians are doing right now to protect themselves and their families.

We have been working hard over the course of the last number of weeks dealing with what I think we all recognize is an absolutely unprecedented situation. We believe that the number of measures we've put in place are going to support people in all categories who are experiencing a significant challenge as a result of COVID-19. The backdrop to our actions is that the very first thing we wanted to get out was the help for people, the 5.7 million Canadians out of the 19 million employed Canadians who are not attached to an employer. That's why the Canada emergency response benefit, that $500 a week for 16 weeks, was so important to get going rapidly.

We also recognized that the 10% wage subsidy was really to help all small businesses, not related to revenue, but all businesses that are of 18 employees or under, because they're going to experience challenges.

What became clear to us is that we needed to also find a way to make sure that employers could keep their relationship with their employees. That's the reason we moved forward with the 75% wage subsidy. The idea there is that it's 75% of pre-crisis earnings, up to $847.

We haven't lost any time in doing this. We've moved forward, obviously using the Canada Revenue Agency for the Canada emergency response benefit. We believe that's the most efficient way to get that benefit out. We also believe it's the most important and efficient way—

[Pierre Poilievre, Conservative, Carleton, ON]

Minister, when will the cash be in the hands of small business owners?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, is it still my time?

[The Chair, Liberal, Wayne Easter]

Yes, it is.

[Bill Morneau, Liberal, Toronto Centre, ON]

We—

[The Chair, Liberal, Wayne Easter]

You don't have much longer left.

[Bill Morneau, Liberal, Toronto Centre, ON]

We believe that the Canada Revenue Agency is the best way for us to do this. They are standing up the approach for the system right now, and that approach will be that small business owners can go to the CRA to get the money.

They have told us that it can be done within three to six weeks. We expect that it will be closer to three, and we're certainly working towards that.

In the interim, we want small business owners to make sure that they're on direct deposit with the CRA. That, we believe, will enable the payments to happen much more rapidly. We are working as fast—

[Pierre Poilievre, Conservative, Carleton, ON]

When will the businesses get the cash?

I'm not asking when they'll be able to apply, which is within three to six weeks; when will they actually get the cash?

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Minister.

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you.

Well, the way direct deposit works is that if a business is on direct deposit with the Canada Revenue Agency, they'll be able to make that application once the site is up and running, and the CRA will be able to move the cash to them in the very near future after that.

[Pierre Poilievre, Conservative, Carleton, ON]

When...?

[Bill Morneau, Liberal, Toronto Centre, ON]

We'll give an exact number of days after that as we have more details.

I think what's important here is for us to work as hard as we can to get these things out as rapidly as possible for Canadians, and that's what we're committing to doing.

[The Chair, Liberal, Wayne Easter]

Mr. Poilievre—

[Technical difficulty—Editor]

Pierre, go ahead.

[Pierre Poilievre, Conservative, Carleton, ON]

I hope the government's cash distribution will work better than this phone system.

From the minister's answer, it sounds as though he doesn't yet know when small businesses will get the cash for the Canada wage subsidy.

Minister, on March 25, just last week, you criticized Denmark's wage subsidy for “only allowing firms that have a significant reduction in revenue to have access to that wage subsidy”, yet only days later, you reversed yourself and proposed the very same thing.

Why did you change your mind and impose a revenue reduction requirement on businesses in order to get the wage subsidy?

[The Chair, Liberal, Wayne Easter]

Could we have a fairly snappy answer, Minister? Then we'll turn to Ms. Dzerowicz.

[Bill Morneau, Liberal, Toronto Centre, ON]

Sure.

Well, in fact that's a misunderstanding. The important thing here is that the system we've put in place allows for both.

All Canadians who earn $5,000 or more and who have found themselves with no revenue as a result of COVID-19 can get the $500 a week. Then on top of that we have the 75% wage subsidy for those people who are attached to an employer and whose employer wants to continue to do that.

The system is designed for the Canadian situation. The Danish situation wouldn't work for us because it doesn't have the similar approach for those workers who are not attached to an employer, and in fact that's what I was referencing.

In this situation we've found an approach that is designed and made for Canada, and we're working hard to make sure we get it in operation as rapidly as possible.

[The Chair, Liberal, Wayne Easter]

Okay. We'll have to end it there.

Ms. Dzerowicz, the floor is yours.

[Julie Dzerowicz, Liberal, Davenport, ON]

Minister, I just want to start off by saying a heartfelt thanks to you and your team. I can only imagine the around-the-clock, non-stop work that has transpired over the last two to three weeks, so a huge thanks to you.

I know that our government has aimed at going as fast as possible and not for perfection. I think Canadians understand this, because we have to do it. The pandemic, as you mentioned, is unprecedented in our history. It required fast action on our part. Literally, in the days after the pandemic was declared, Canadians were losing their jobs and their incomes. Many small businesses had to shut down. I just want to let you know that I'm very proud of the huge and, indeed, historic economic supports we have announced. I know that we worked as fast as we could.

As many other MPs right across the country are in touch with their local leaders, I've been in touch with leaders and residents in my riding of Davenport. While they're very worried about the current situation, the vast majority of those I've talked to are very happy with the measures.

I will say to you, though, that there are a few groups that are asking for some additional supports or feel there are some rules that might be in their way in terms of applying.

The first of these groups are contract workers or those who work in the gig economy. Some of them really want to keep some tiny contracts so that when they actually eventually come out of this crisis they might continue to have some of that business. Some others of those within this group find the 14-day rule of earning no income difficult. Once they wait for 14 days of earning no income and then they apply, they still have to wait a certain period of time before actually getting a first paycheque.

That's the first group. I'll talk about the second group and then I'll ask my question.

The second group is renters. I'm very blessed to live in downtown west Toronto, but the rents are very expensive here. For those who are individually renting places, the $2,000 goes a long way, but it just covers their rental costs and not very much more. They're wondering if there could be some additional supports for them. The part B of renters are small business owners, whose rents tend to be, in my area, around $7,000 to $10,000 a month. With no income coming in, and even with the measures that we've introduced, they wonder if they'll actually be able to survive these next two to four months.

My question to you, Minister, is this. How would you respond to them? Are we also looking at providing some additional supports?

I'll leave it at that.

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you for the question.

These are obviously really challenging times. I recognize that people are concerned about their situations. We're trying to make sure that we get systems up and running that can get people income as rapidly as possible. The decision to have just very simple criteria for the Canada emergency response benefit was designed with exactly that in mind.

The criteria are that people had to be earning $5,000 or more over the last year and that their income has gone down to zero as a result of the COVID-19 crisis. I acknowledge that it presents some situations that are challenging for people if they are still earning some revenue, but we just don't have the capability of administering multiple kinds of plans and also getting the money out to people rapidly.

With that system, we expect to be able get people money next week. That's what we're working towards. We're looking forward to that happening.

For people who are renting, I think many people will know that this is a very important issue, not only for individuals who are renting apartments but for small businesses. For individuals, I have been working together with the provinces. I had extensive discussions with all of the finance ministers earlier this week. In each case they're talking about how they are trying to help on rent. For example, in Ontario, in speaking with the Ontario Minister of Finance, he talked about the importance of no evictions and talked about targeted measures they're trying to do at the Ontario level, as well as having some discussions with large landlords to help people out.

For small businesses, not only are we providing those wage subsidies that are going to help people to retain their workers and pay them 75% of their pre-crisis wages, but also we've put in place a Canada emergency business account, which is going to give small businesses the ability to get a loan, on an interest-free basis, of $40,000. If they pay that off before December 31, 2022, they will get a $10,000 reduction in the amount they need to pay back, so effectively, it's $10,000 to help them through this time.

We know there may be more to do. We're constantly looking at this. It's a dynamic situation. We think those measures are going to go a long way to helping people who are either in the difficult personal situation of having no income or are trying to make sure that they can pay their rent to keep their family, their apartment or their business going. We'll continue to think about ways we can manage through this challenging time.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Julie, you're at the end of your time.

We'll now turn to Mr. Ste-Marie, and Mr. Julian after that.