Evidence of meeting #16 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was going.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jack Mintz  President's Fellow, School of Public Policy, University of Calgary, As an Individual
Sherri Torjman  Former Vice-President, Caledon Institute of Social Policy
Luc Fortin  Chief Executive Officer, Guilde des musiciens et musiciennes du Québec
Nora Spinks  President and Chief Executive Officer, Vanier Institute of the Family
Dany Thibault  Chairman of the Board of Directors, Association Hôtellerie Québec
Jocelyn Bamford  President and Founder, Coalition of Concerned Manufacturers and Businesses of Canada
Philip Cross  Senior Fellow, Macdonald-Laurier Institute
Veso Sobot  Director, Coalition of Concerned Manufacturers and Businesses of Canada
Gord Falconer  Chief of Staff, International Association of Machinists and Aerospace Workers in Canada
Ivana Saula  Research Director for Canada, International Association of Machinists and Aerospace Workers in Canada

3:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, both.

We'll turn to the last questioner to wrap up the questions.

Mr. Fragiskatos.

April 3rd, 2020 / 3:50 p.m.

Liberal

Peter Fragiskatos Liberal London North Centre, ON

Thank you, Mr. Chair.

Thank you to the witnesses. My question is for Mr. Mintz.

Professor, I read your recent op-ed in the Financial Post, in which you said, “Future stimulus should focus on smarter government—both better infrastructure and improved education and health-care capacities.”

Obviously, we have immediate concerns, and I think that the wage subsidy program we've introduced, the emergency response benefit that we've introduced and other measures speak to the immediacy of a policy response. Naturally, we are going to have to think about the recovery ahead. However, I want to ask you what exactly you mean when you say that we need to focus on smarter government in terms of better infrastructure, improved education and health care capacity. Can you expand on that?

3:50 p.m.

President's Fellow, School of Public Policy, University of Calgary, As an Individual

Dr. Jack Mintz

When we get out of this—right now everything is about liquidity and I hope we can turn the tide. The more I hear people saying that it is going to be a whole year, I am extremely worried about the effect it's going to have on the world economy if we shut down the economy for a very long period. Assuming that we can get out of this after the spring and start coming back, which I don't think will be fast but there will be a pickup, in the summer, that's the time when we have to start putting in place some policies. The most immediate one, in my view, is health capacity.

If we want to avoid resurgence of the pandemic next year, we need to do several things. We need to make sure we have enough protective gear and equipment. We need to have enough beds available, makeshift hospitals, etc., for any increase in illness. Hopefully, we might have a therapeutic drug. In fact, there's some discussion that there is one, but we should be investing along with other countries in trying to find that. If there is a drug found, we should make sure it's available here in Canada. We also need to do much more testing than we're doing. There are laboratory tests in Germany that are very successful. There's a big concern about making sure we don't have incorrect negatives and things like that. We do need to make sure we have broad testing.

Hopefully, the response in the fall can be not shutting down the economy but dealing with those people who get sick right away and being able to quarantine them, and because we're testing, we can make sure that the spread is limited without having to shut down the economy. I think that should be the goal of governments in the fall, to do everything we can to make that possible.

After that point, we should really ask ourselves if how we've run our health system was basically the cause of disabilities that led to this problem. That's what I mean by investing in health capacity. We need to look at our health system very carefully because, frankly, we're not the only country but we were not prepared for this kind of problem and from now on we should know what to do. Even though we had experience with SARS and H1N1 and things like that, we hadn't undertaken activities or decisions to make sure that we have that capacity.

With regard to education infrastructure, those are things that help with growth in the economy. Those are things I was mentioning in terms of a smarter government. We have to be very careful not to undertake wasteful programs, business subsidies, and end up keeping low-productivity firms around. There's a whole bunch of things that we need to look at because, frankly, the substance is going to change. Also, we're going to be going through a major technological change with artificial intelligence and various other things that we want to be part of. Those are things that we need to create great opportunities for Canadians to build on and grow. In fact, frankly, it's the private sector that's going to drive this economy.

3:55 p.m.

Liberal

The Chair Liberal Wayne Easter

A quick question, Peter, and then we'll have to wrap it up.

3:55 p.m.

Liberal

Peter Fragiskatos Liberal London North Centre, ON

Thanks, Mr. Chair.

Professor, in the same op-ed, you talked about the U.S. and China. To what extent will our economic recovery be impacted by how the economic recoveries in each of those countries evolve?

3:55 p.m.

President's Fellow, School of Public Policy, University of Calgary, As an Individual

Dr. Jack Mintz

I'm thinking specifically about China. Its bounceback is not as quick as people think. One of the things holding it back is [Inaudible—Editor]. If we come out sooner in terms of when people can get back to work, one of the things we may have to do is continue travel bans with affected areas, because we want to make sure that we reduce the spread of the virus.

I also think we must learn how to do a much better job at the airports when people arrive. It was terrible. I found out, for example, that in Edmonton, 800 people were crammed into a space, all touching the same screen that was not being cleaned. This is an example of how we were totally unprepared for handling this, and we must do better next time for this sort of thing. If it comes up, we must have the procedures in place to minimize any possible spread.

If the United States takes longer to get out of this, or Europe, which I think is possible, we may not see growth for export markets come back as quickly, and at the same time China is also [Inaudible—Editor] coming back as much. Again, I think there are going to be some security issues that we're going to have to worry about in terms of our trade and supplies that are going to affect the way we're going to look at trade in the future as well.

3:55 p.m.

Liberal

The Chair Liberal Wayne Easter

We will have to end it there. We have run out of time, so I won't be able to give everyone a few minutes to wrap up.

I thank each of you, all of the witnesses, for appearing today. It was a bit difficult with the phone system, but I think it went very well. Thank you for your presentations, your constructive criticism and your advice. We appreciate that as we move forward.

We'll end the first panel.

I understand the witnesses for the next panel are on the line. In order to help the interpreters, who are also on the line, I will introduce each of you. You could maybe say hi and where you're from so they can hear your voice and make the connection in the interpretation booths.

I'll start with the Association Hôtellerie Québec and Dany Thibault, the chair of the board of directors.

Do you want to introduce yourself, Dany?

3:55 p.m.

Dany Thibault Chairman of the Board of Directors, Association Hôtellerie Québec

Good morning, Mr. Chairman. Thank you for having us here.

3:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Where are you from?

3:55 p.m.

Chairman of the Board of Directors, Association Hôtellerie Québec

Dany Thibault

I'm from the Association Hôtellerie Québec.

3:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

Jocelyn Bamford from the Coalition of Concerned Manufacturers and Businesses, would you go ahead and introduce yourself.

3:55 p.m.

Jocelyn Bamford President and Founder, Coalition of Concerned Manufacturers and Businesses of Canada

Hi. I'm Jocelyn Bamford. I'm the founder and the president of the Coalition of Concerned Manufacturers and Businesses of Canada from Scarborough, Ontario.

3:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much.

Next is Ivana Saula, from the International Association of Machinists and Aerospace Workers in Canada. Please go ahead and introduce yourself and tell us where you're from.

Do we have you, Ms. Saula?

David, you'll have to see if we can catch up with Ivana.

Would Philip Cross from the Macdonald-Laurier Institute please go ahead.

3:55 p.m.

Philip Cross Senior Fellow, Macdonald-Laurier Institute

Hello. I'm Philip Cross, senior fellow at the MLI. I'm calling from here in Ottawa.

4 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

Do we have Ms. Saula yet? Okay. We'll have somebody clear up that technology glitch.

We'll have all witnesses make their presentations and then we'll go to the round of questions.

We'll start with you, Mr. Thibault. Please try to keep your remarks relatively close to five minutes.

4 p.m.

Chairman of the Board of Directors, Association Hôtellerie Québec

Dany Thibault

Perfect, thank you very much.

Good afternoon.

We are privileged and pleased to be able to introduce ourselves to you today.

The hotel industry in Quebec is quite unique. It is made up of 85% small and medium-sized businesses, 75% of which are owned by independent entrepreneurs who are not tied to large corporations.

The last few days and weeks have been catastrophic. Between March 10 and 23, nearly 85% of our sales were down. March sales, which are made in two stages, were down by almost 65% compared to last year. A 90% decrease in sales is expected in April and May.

This decrease is mainly related to events and conventions, which are the first big chunk. We are in a period of major events and conventions. We understand the reasons for that, but the majority of the cancellations are for events and conventions, which are basically our bread and butter during the winter.

Currently, 40% of operators in Quebec have suspended operations until further notice. Needless to say, this will create a significant liquidity problem for our companies.

We welcome the fact that the Government of Canada is providing levers and is putting in place standards and aid programs to support our businesses on a temporary basis. The challenge and the fear we have at the moment, beyond the fact that the books are already almost non-existent, is the duration of the measures, because the measures announced will come to an end.

Let's take the example of the 75% wage subsidy for firms whose business has declined by 30%. We expect these needs to continue over time. As long as the tourism machine—business tourism and individual tourism—has not returned to normal, we should continue to support our businesses in terms of cash flow. The end point is difficult to predict, so we have to keep the whole program somewhat open-ended. We have to take that into account, for example by phasing it out gradually.

Many of our businesses are seasonal. Therefore, they were not operating, but they were preparing for the next season with advance bookings for the summer. These bookings are now non-existent, and will probably remain non-existent in the short term.

The 30% loss of revenue in our industry is reflected not only in the losses we have just suffered and which I have told you about, but also in the losses to come, that is to say the bookings planned for the summer. These companies won't be able to operate next summer because they won't have customers.

For us, it is a concern and a fear shared by our members. They are very worried about what will happen next, especially during the high tourist season in July, August and September. We all understand that there will be no tourists. Our livelihood depends on a lot of foreign tourists from Asia. At the moment, all reservations for the fall are cancelled, and cruises are suspended. There is a lot of fear in this regard.

Program eligibility criteria are often difficult to figure out. Some of the measures in place will require further clarification. We are very pleased with these measures, but they need to be clarified.

When the time comes for recovery, we suggest you offer an incentive for companies to hold business meetings. We must not be counterproductive and amplify the health crisis, but once there is some security and it is possible to revive the economy and meetings, there must be a fund available. This could take the form of tax credits for companies to hold events and meetings.

The same is true for Canadians who want to travel in Quebec or Canada. Will it be possible to introduce some form of travel rebate or tax credit that would allow people to spend money at home, whether in their province of residence or elsewhere in Canada? These are the kinds of measures our members are hoping to see in order to make the recovery more dynamic.

Our industry is at a standstill until the health crisis is over. As there is no set date, we have to hold out until the borders reopen. We may have to allow people from the United States and neighbouring countries, as well as Canadians, to travel in our hotels and eat in our restaurants. In the restaurant business it is estimated that one in three restaurants will not be able to reopen. This could also be the case for some small entrepreneurs in Quebec.

It is also important to remember the budget for tourism in Canada. Tourism will need more money in order to properly position Canada's brand. We know that some destinations, such as Las Vegas and Paris, have larger budgets than Canada to promote their destination. As a country, I think we need to reinvest massively in our brand in order to position ourselves at the forefront of the world's top destinations when the health crisis is over.

My last point was raised by the Hotel Association of Canada. The support for small and medium-sized businesses is currently a good program, but it may need to be improved. It is an existing government program. It will have to be redesigned for individual hotels rather than for large companies. Currently, an individual hotel that is part of a large group cannot benefit from the program on its own since it is allocated to the group. Mechanisms may need to be rethought to facilitate entry.

After all, our industry has been badly shaken. We will have a long, painful and difficult way out of the crisis. While we applaud the federal government's very proactive initiatives, I think we need to get closer to the people on the ground to determine how our investors and operators will recover from this unprecedented crisis.

4:05 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much.

I believe—

4:05 p.m.

Chairman of the Board of Directors, Association Hôtellerie Québec

Dany Thibault

Did I use up my five minutes?

4:05 p.m.

Liberal

The Chair Liberal Wayne Easter

Yes, you had five minutes.

Ms. Bamford, just before I go to you, I'll call on Ms. Saula later.

We'll start with you, Ms. Bamford. You have five or six minutes. We're pretty good for time.

4:05 p.m.

President and Founder, Coalition of Concerned Manufacturers and Businesses of Canada

Jocelyn Bamford

My name is Jocelyn Bamford. I'm the president and founder of the Coalition of Concerned Manufacturers and Businesses of Canada.

For the past three years, since our inception, the coalition has been warning all levels of government that there would be catastrophic effects from policies that had the effect of driving both the manufacturing and the natural resource sectors out of this country. The green energy policy in Ontario has made the price of electricity four times the average in North America. Unaffordable electricity, coupled with even more burdensome carbon taxes, has driven manufacturers out of Canada and into the open arms of other countries that see the importance of affordable energy to attract businesses.

One can't help but ask the question: If Canada had policies that attracted and maintained a robust manufacturing sector, would we be in the same situation with the complete lack of personal protective equipment and medical supplies for our front-line medical workers and our patients during this COVID-19 pandemic?

What has Canada done? It seems that the federal government's policies are designed to push manufacturing out, stifle our resource sector and kill the same plastics industry that is so essential to keeping our front-line medical staff, patients and citizens safe. As the federal government chases its obsession with the new green economy—a strange obsession, given our country's small contribution to global greenhouse gases—it has been blinded to the very real threats to our country; threats that have become very real with COVID-19.

The federal government's push to stifle the resource sector with bills like Bill C-48 and Bill C-69 and the clean fuel standard has served to undermine our resource sector. At a time when we're incurring huge deficits, Canada does not have the income from the resource sector that we could have had if major projects had not been delayed or cancelled. The raising of the carbon tax when many businesses are on the precipice of collapse and the extra cost to transport food and medical supplies to our country seems outright irresponsible.

After the pandemic has passed, we recommend the following to help get Canada on track.

One, we recommend the immediate end of all carbon taxes.

Two, we recommend the end of taxing of passive investments, which many companies use to save in order to upgrade their plants. These are very expensive capital-intensive endeavours.

Three, we recommend a mandate to bring manufacturing back to Canada through competitive offerings and favourable tax programs.

Four, we recommend a recognition of the interconnection between the resource sector and the manufacturing sector. Many in manufacturing supply parts and pieces to the resource sector, and we also rely on affordable energy so that we can compete globally.

Five, we recommend the approval of pipelines so that we can get our resources to market and bring valuable tax revenue back to Canada.

We look forward to working with the government, because we have many ideas on how to get this country back on track and fix the situation.

I'm now going to pass it to my colleague, Veso Sobot, for his remarks.

4:10 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Sobot, go ahead.

4:10 p.m.

Veso Sobot Director, Coalition of Concerned Manufacturers and Businesses of Canada

Mr. Chair, thank you very much.

To add to those five recommendations, we have another five.

Recommendation number six is to introduce a big infrastructure program aimed at improving Canada's infrastructure so that it's world class. Mr. Chair, you'll remember that former prime minister Martin once said that the most ethical government spending is on long-life assets such as roads, bridges, water mains, sewers, the things that are needed for a modern economy to compete. Investing in projects that are 50 to 100 years in lifespan at this low interest rate means future generations will at least receive some benefit, making it the best return on investment of all the stimulative spending options that the government has.

Recommendation number seven is to declare a capital gains holiday for the next 24 months. The economy has sustained an unprecedented blow. Granting a 24-month capital gains exemption will encourage people to invest and turn over otherwise locked-in gains, giving needed resuscitation to the real estate market and the financial sectors.

Recommendation number eight is to allow 100% writeoffs for businesses in the year they make investments for capital equipment. Additionally, allow a 100% writeoff for restaurant dining for business purposes. This will have an immediate beneficial impact on sectors that have been very hurt.

Recommendation number nine is to work to secure a Canadian exemption from the buy American policy and the Buy American Act. This crisis has clearly shown that the dependency on China is dangerous. We must forge closer ties with America and work as a trading bloc in order to be more self-sustaining vis-à-vis the rest of the world. The government has done a good job with USMCA in that it has been signed and passed—

4:10 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Sobot, could I get you to slow down a bit? I just got a note here from the interpreters saying that you're going a little too fast.

We'll find the time. You can take your time.

4:15 p.m.

Director, Coalition of Concerned Manufacturers and Businesses of Canada

Veso Sobot

Absolutely. My apologies.

4:15 p.m.

Liberal

The Chair Liberal Wayne Easter

No problem.