Finance Committee on April 8th, 2020

[Michelle Travis, Research Director, UNITE HERE Canada]

Thank you. Good afternoon.

My name is Michelle Travis and I am a representative of Unite Here, a union that represents over 18,000 hospitality workers across Canada. I want to thank the finance committee for giving me the opportunity to address you today.

Our members are the backbone of the hospitality industry. They welcome and serve guests in hotels in diverse communities across Canada. They prepare and deliver food to airlines like Air Canada and WestJet, and they serve you a cup of coffee at airports like the Ottawa, Vancouver, Victoria and Regina international airports. They serve students in university cafeterias and take care of workers at Canada's remote camps.

Hospitality workers are reeling from the economic toll of the pandemic. They are among the first and worst hit by layoffs and closures. Over 90% of our members have been laid off across the industry. They live paycheque to paycheque. I can't emphasize enough how catastrophic the economic impact is for workers in this industry. The road to recovery for hospitality workers is expected to be a long one, perhaps extending beyond the next 12 months. With this in mind, I want to focus attention on how the federal government can better ensure that hospitality workers survive this difficult period and are positioned on the path to economic recovery.

We want to applaud the federal government and all political parties for taking steps to grapple with this tremendous crisis by creating the CERB and by recognizing the need to increase the employer wage subsidy from 10% to 75%. These are positive steps, but we think the federal government has to take more steps. If we are to avert long-term depression-level unemployment for hospitality workers, we need the government to put workers first, not only through the wage subsidy program but also when considering any industry bailout packages.

First, regarding the wage subsidies, we view the announcement today by Air Canada as positive news, provided that they do rehire the thousands of workers who have been laid off. Our chief concern with this program is that it's unclear what, if any, guarantees or requirements are in place to ensure that participating employers retain their workforces. As you've heard before, hotels, airline caterers, airport concessions and other employers have closed or laid off most of their staff since mid-March. We want to know what assurances there are that they'll be reinstated under this program. We think the wage subsidy program will only be successful if workers remain attached to their jobs, even if they aren't able to work at the moment.

Second, the industry sectors that our members work in are looking to Ottawa for additional relief in the form of subsidies, loans, tax and rent relief, and other forms of bailout assistance. Here, too, we urge the federal government to put workers first and to link any assistance with stipulations that workers are brought back onto the payroll—that they are rehired, if they were laid off due to COVID-19—and that their medical benefits are maintained in exchange for relief.

We know this can be done. Take a look at the United States. In exchange for access to billions of dollars' worth of emergency grants, airlines, airline contractors and airline caterers must agree there will be no involuntary layoffs through September 30, 2020, and companies will also agree to pay wages, salaries and other benefits during that period.

We want the government to consider how industry sector bailouts will include contracted workers, whose fates are intertwined with the sectors they support. That includes airline contractors like airline caterers who serve Air Canada and WestJet. It includes contracted concession workers and other contracted workers at Canada's airport authorities that just received rent relief valued at $331 million.

In addition, as the federal government is exploring ways to target relief to the hard-hit hospitality sector, we want the government to figure out how we can encourage companies to address the layoffs that we have seen so far. It's critical that there is a path forward to link employer commitments to recall workers. Without that, workers will have to rely on CERB and eventually EI in order to survive. Workers are going to need real wage replacement in order to be able to get through this period.

That brings us to some concerns we have about CERB and EI.

CERB amounts to less than provincial minimum wage for a full-time hotel or hospitality worker in a lot of our provinces. The average room attendant, working in very expensive cities like Vancouver or Toronto, was making $20 or more an hour. Under the CERB, she's going to be bringing in a little more than she would have under the EI program. Workers have not budgeted for this abrupt loss of income, and it's going to be very challenging in the months ahead.

As we all know, EI wasn't built for this kind of crisis. Unless there is some sort of commitment in the wage subsidy plan to recall laid-off workers, we expect many hospitality workers will eventually have to move to EI in four months. We are concerned that the 55% of income will not be enough for them to get through this period. We want to encourage the government to consider how we can find some sort of wage replacement that would replace 80% or more of their income to get through this extraordinary period. These are not normal times. Workers are expected to stay at home, there are not other jobs to search for, and workers need additional income supports that will keep them as close to pre-crisis levels as possible.

To contain a public health crisis, our government has taken steps to shut down parts of the economy. We think this has been a prudent decision and has saved lives. We are seeing signs that we may be flattening the curve in parts of the country because of government action, but we want government to be just as aggressive in supporting workers, the employers they work for and our economy to avoid an economic spiral into depression.

In order for the billions in wage subsidies and industry bailout packages to be effective, there must be concrete commitments to keep workers employed. Failing that, CERB, and later EI, will not be enough. We are urging the federal government to explore how to help hospitality workers and others stay afloat at a time when they are being asked to stay at home.

Unite Here wants to work with the federal government, our industries and our employers during this difficult time. We are a stakeholder in this challenge and want to be part of any discussion involving relief affecting workers across hospitality sectors. We all want to get through to the other side of this pandemic. In the future, I think the question we don't want to be asking is why the federal government didn't do more during this once-in-a-generation crisis.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Michelle, and thank you all.

According to my clock, we have time to go through two full rounds of questions with six minutes in the first round.

We'll start with Blake Richards, and then go to Mr. Fraser.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thank you, Mr. Chair.

I want to start by thanking all the witnesses, who have done a great job of representing the various concerns that I've heard from so many in the industry. I thank you all for your presentations.

I'm going to ask two questions. The first will be a retrospective question. The second will be looking forward beyond the crisis at what we can do to help encourage the industry to have its full recovery.

Just before I do that, there's some context. Obviously, we've heard very well from many of the people on the panel today about the fact that this is an industry that has been among the hardest hit. It was one of the first hit, and it is going to have one of the most difficult recoveries. I think that's why it has been such a struggle to understand why there has been so little attention paid to the industry. This is a Canada-wide industry. It affects every community, and in some communities tourism is the entire economy. One of those, which is a good example of why this is something we need to be paying more attention to, is a community in my riding of Banff, for example, where essentially before this crisis there was zero unemployment. Now the unemployment is estimated at about 85%. That is the kind of hit this industry has taken.

Many of the businesses are small and medium-sized businesses, and what I'm hearing from the business owners is that the programs that have been put in place aren't going to help them. They're being left out of being able to access many of the programs, like the loan program, for example, and the wage subsidy because of the length of time it's taking. It was put very well by one of the business owners in Banff who came to me saying that, ironically, that program, which is designed to help the employees, is going to actually take so long to come into effect that his business may not be in existence anymore and, therefore, his employees will have nowhere to go back to work when this is all done.

My first question is this. Is the government's response currently adequate to help these operators be able to sustain themselves through this crisis and still see their business exist when this ends?

Second, when we reach the other side of this crisis, what measures will the government need to have put in place to help kick-start the tourism industry once again?

I wish there was time for everybody, but I'll ask three of you—TIAC, the Hotel Association of Canada, and the Indigenous Tourism Association of Canada—if you could respond to those two questions, please.

[Charlotte Bell]

Thank you, Blake. Thanks for the questions and the comments and the support for tourism.

As I said at the outset, I don't think Parliament was designed to deal with this type of situation. I think the government has done a tremendous job putting programs in place. In fact, as I mentioned earlier, we asked for every single one of the measures that have been put in place, but the other thing I always say is that the devil is always in the details. When you start sifting through, there are always unintended consequences when you design something quickly and try to put it into place.

What we're here doing and what we've been advocating to government is to say thank you for what you've done so far, but there are some deficiencies in these programs and we need to fine-tune them to make sure they address the issues that are specific to tourism. I've talked about them. So did Cathie Bolstad.

I think the most important thing we need is liquidity. We are hearing that from everyone. The CERB has been one of those initiatives that were put in place very quickly and very efficiently, and that seem to be working as they've launched this service. I think what we need to do with liquidity measures is also to figure out a program that's going to be simple to use, that people can actually access quickly and that will get money into people's pockets, because that's what we need to do urgently.

[The Chair, Liberal, Wayne Easter]

Thank you, Charlotte.

Susie from the Hotel Association of Canada, do you want to respond?

[Susie Grynol]

Yes, thank you.

With regard to the government's response, we are in a pandemic. These are unprecedented times and certainly uncharted waters for both government and industry. I think our government has done a very good job of communicating to the general public how it is managing the situation. Some very strong measures have put in place to date, but to echo Charlotte's point, I think there does need to be some fine tuning.

Blake, your comment resonates with me, when you ask whether the sector is being forgotten. I don't think it's being forgotten, but I would certainly like to see it get greater priority, recognizing all of the comments that the witnesses have put forward. Certainly, this has been the hardest-hit industry. We're going to take the longest time to recover; you're absolutely right about that. Liquidity is king here. At the heart of all of it, we have to make sure that these businesses survive. I would really like to see the government put some priority around who can access this funding. It just makes sense that we don't have a mad rush of all industries that have been impacted, but that there be some acknowledgement that some industries have been harder hit and that we allow them to access funding that's been made available. That's just logical in my mind.

Secondly, in terms of a carve-out or sort of special attention, we did see in the U.S. that there was a specific carve-out for the food service and hospitality industry, where each property could apply for the small business and medium business loans that were put in place. If we don't get that definition right, then we are going to see even our medium and larger players potentially go out of business or not be in a position to hire back our workers, which is at the heart of what our businesses want to achieve. We want to be able to bring our workers back as quickly as possible. They're the face of our industry. There's been a best practice, and we'd really like to see the government put some specificity around who can access those loans and make food service and hospitality a priority, as they did in the U.S.

As we look ahead to stimulus, you're absolutely right, we need to have a strong stimulus package. By then, we will be able to see what other countries have done, and what they've done effectively, and learn from those lessons. There are some lessons also to learn from SARS, but there has to be a package for the sector so that we can recover.

[The Chair, Liberal, Wayne Easter]

Keith Henry, can you weigh in?

[Keith Henry]

I appreciate the work of the government; however, our strong assessment is that the current measures will not help indigenous tourism businesses. Of our 1,900 businesses, most of which are completely shut down now, many won't reopen.

It is a liquidity issue, as many are saying. Our challenge is with raising and borrowing money on reserve for about 30% of those 1,900 businesses. We can't borrow money on reserve traditionally, through the banks. There are other realities to borrowing money on reserve, and that's a big challenge for that business sector of our economy. That speaks to the recommendations we made around the importance of flexible funding through the aboriginal financial institutions. We need to get on with that as quickly as possible. While the measures are appreciated, and some off-reserve businesses will access them, they will be very modest. We expect a lot more major challenges for sustainability.

As for the future, the government announcements and a lot of marketing organizations are talking about recovery and how to bring customers back. We know that tourism in Canada is a strong industry, and we know that indigenous tourism has a lot of great experiences, but the fact is, if we don't find short-term cash injections like we've done with the $25,000 grants and then find more stimulus long-term financing options that are indigenized and indigenous-specific, it'll take us 10 years plus to rebuild to where we are today. It's going to be a big challenge for us going forward.

[The Chair, Liberal, Wayne Easter]

Thank you.

We'll go to Sean Fraser and then Mr. Ste-Marie.

Sean.

[Sean Fraser, Liberal, Central Nova, NS]

Excellent. Thank you so much to everyone who has joined us today and for your testimony. It's clear that there is going to be a serious and unprecedented impact on the tourism sector as a result of this pandemic.

Thank you, as well, for your kind acknowledgement of the work that's been advanced from, frankly, all parties and by the government. I must say that a large part of it is owing to the public servants, who've been working so diligently over the past number of weeks to get this in order.

I also appreciate the feedback you've sent. I think I've heard the word “liquidity” more in the past hour and a half of my life than in the rest of it combined, so message heard.

I have two questions I'd like to explore. The first is for our guest from the Northwest Territories, Ms. Bolstad. You mentioned in particular—I think it was alluded to by one of our guests from Quebec as well—that one issue you would like to see rectified is the application of the wage subsidy to seasonal workers. I think the issue you've described is essentially the mismatch between the time of year when seasonal businesses have a heavy labour demand and the time of year when they may be able to demonstrate a decrease in revenue. Do I understand you correctly that, because the revenue loss may not be showing itself until a later time, seasonal employers won't be able to access the wage subsidy right now, for example, when they have people preparing for the tourism season?

[Cathie Bolstad]

Thank you, Mr. Fraser, for your question.

What I was speaking about, for the Northwest Territories in particular, is that a wage subsidy for those who got hit during the aurora season is too late, and that's just the way things landed. I don't think anyone could have predicted when it was going to land. In much of our hotel industry and our larger tour operators, those layoffs were immediate, so a wage subsidy doesn't help and they don't have employees.

As we head into summer—and I think I speak for those who are all-summer operators—your very short window is your wage period, but it's not the time, with the flexibility in that program, to help them with wage subsidies. The time to wait for that is too long. Quite frankly, in front of us it doesn't help them, because everybody's cancelling. They don't have any customers, so they can't hire anyone anyway. Some of them have lost their deposits. It's really created a cash flow issue.

It's a chicken-and-egg syndrome: We don't know when things are going to open up, but the people who were travelling are cancelling. The summer season is lost. That is the season for these small operators, probably across the country, not just in the Northwest Territories. It is their revenue for the entire year. By the time you actually look at it, they'll have no revenue to subsidize.

[Sean Fraser, Liberal, Central Nova, NS]

Is the solution really to get the liquidity tomorrow, that kind of thing? Is that your best recommendation to solve that problem?

[Cathie Bolstad]

I think it's immediate liquidity. Many of those operators are working on very short seasons to get their operations ready, but they have no revenue now because of the cancellations. Being able to maintain their rent, maintain their property, pay their taxes, all those things are critical for them. In many cases....

I think Keith Henry alluded to it, and I think we heard it in Quebec. For a lot of the small communities, in particular in the Northwest Territories, indigenous tourism is what we have. These are small operators who are making income, mom-and-pop shops. They need flexibility and criteria so that the help that comes for them not only offsets their costs but pays them a wage so they can afford to live while they're there, until their revenue comes back down the road.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you.

My next question is for Ms. Bell from the Tourism Industry Association of Canada. Thank you for being with us.

We've heard quite a bit of feedback on the programs that have been introduced recently. We've heard a little bit of feedback on what a potential recovery in the tourism sector could look like. From your testimony today, and from a lot of the conversations I've had at home, it sounds like a lot of tourism operators realize that this year, for the most part, will be a significant loss, but they aren't giving up on the long-term viability of their operations.

We've heard recommendations today around skills training programming, maintaining the attachment to existing jobs and, from our guests from the Hotel Association, an incentive to recommence with business meetings. I'm curious if the Tourism Industry Association has specific feedback on what steps we can be taking now to best set up the tourism sector for a strong and expeditious recovery.

[Charlotte Bell]

I think all of the measures that have already been mentioned are important, but we are in a very competitive industry. Right now the entire world is shut down, but the reality is that we are going to come back at some point and we're going to be competing with other countries that, I think, have given a lot of thought to this.

TIAC has put a committee of leaders together to start putting their heads around what we are going to need coming out of this and how we are going to be successful in doing that. You can see from initiatives that have been taken in Japan, the U.S., Germany and in Taiwan, they're already announcing major packages, 10-point plans, to deal with the return of tourism. I think we're going to be behind the eight ball if we are not in a position to rebound quickly or as quickly as we possibly can.

One of the most important things right now is that—and you're going to hear it again, I'm sorry—we need the liquidity measures to work, to be put in place and to be done immediately so that businesses can stay in business. Most tourism businesses are shut down right now, as you know. I think Susie would tell you that the only hotels that are open are open for humanitarian reasons and they're basically doing a public service. The situation is very dire. The first thing we need to do is to make sure that those businesses stay in business because there will be no recovery if everybody's gone out of business.

For the small and seasonal businesses, if you look at the Maritimes, where you're from, I think you would agree that probably over 80% of tourism businesses are seasonal. Those businesses are the ones that.... In fact, I raised the issue with the wage subsidy that, for these seasonal businesses that don't open until May, there's no point in having a subsidy where you're measuring your losses based on March and April if you weren't even open. The first thing we need to do is to get the relief package right so that the industry can survive, and we need to quickly turn our attention to recovery.

I think there are a number of things that we can do and that we can see other countries have done. For instance, in Japan, they're suggesting that they would subsidize accommodations up to $260 a night. They would provide credits and other incentives for people to go to restaurants and visit local venues, and buy from local merchants, those sorts of things. They've already started putting their heads around this and they've already committed a trillion yen in their aid package, which I think is worth about $13 billion Canadian.

We need to get our relief right in the first place and do that very quickly to make sure the industry's still there, and then we have to turn our attention very quickly to the recovery.

[Sean Fraser, Liberal, Central Nova, NS]

Excellent. Thank you very much.

I assume that's my time, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Yes, you and Blake were both over.

We'll turn to Mr. Ste-Marie, and then to Mr. Julian.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I first want to thank all the witnesses for their presentations. This issue reminds us how much the tourism and hospitality industries play an important role in and form a major part of our economy. These industries are being hit hard by the COVID-19 crisis. It will take a long time for them to get back on their feet. As a result, the industry players need support measures for as long as it takes.

Mr. Hamel, I liked your suggestion to keep the measures in place for 12 months or until sales return to 85% of the normal figures. I also liked your suggestion to cancel fees rather than defer them. I'll try to come back to that point later.

My first question is about the importance of festivals to our economy. Charlotte Bell can also respond if she wishes to do so.

I spoke with Martin Roy from the Regroupement des événements majeurs internationaux, or REMI. He pointed out that, in the festival industry, a great deal of funding is advanced throughout the year to organize an event that takes place over a short period.

He raised three points. First, he spoke of the importance of maintaining government subsidies since a number of expenses have already been incurred. Other measures must also be implemented to support the industry. According to the eligibility criteria for the Canada emergency wage subsidy, if a business basically earns its revenue for one week of the year, at the beginning of summer, for example, the business doesn't qualify for the subsidy. It fails to meet the criterion regarding a 15% to 30% drop in revenue between February and March or between March and March. Lastly, he talked about the importance of creating a recovery program for when the health crisis is over.

Mr. Hamel and Ms. Bell, how do you feel about these proposals?

Can you comment and add details?

[Yan Hamel]

Thank you, Mr. Ste-Marie, for your very relevant question.

It should be noted that, in Canada, we've had the good fortune of living in a very inclusive society. Foreign tourists had a great deal of fun and came to Canada in large numbers for many reasons. These reasons include the fact that our country is known to be safe, welcoming and also very festive because of our many festivals and events.

The current crisis is affecting and will certainly affect festivals in a major way. Many festivalgoers come from foreign countries or other Canadian provinces. We're told that the crisis will affect the behaviour of travellers, particularly with respect to large gatherings. We need Health Canada to look at this rather exceptional aspect of our industry, the issue of gatherings. We understand that the measures regarding physical distancing and gatherings will be among the last to remain in place. This issue will either make or break the economic recovery of our tourism industry.

We need measures to support festivals and events that can't take place this summer. We need to maintain the subsidies provided by the different levels of government. We must also make these sectors eligible for the 75% wage subsidy.

As I said at the start, we're asking the government for more flexibility regarding the eligibility criteria for this subsidy, which is vital to our industry. The seasonal factor and the Canada Revenue Agency's definition of revenue in relation to passes, bookings and so on, must be taken into account.

We'll need special support. As I said, Health Canada must work with the industry and show understanding with regard to the measures implemented so that the industry can get back on its feet as quickly as possible.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

Ms. Bell, do you want to add anything?

[The Chair, Liberal, Wayne Easter]

Gabriel, just before you start, somebody has a microphone open. We can hear background.

I would ask the people who aren't on to speak, to please close their microphones.

Go ahead, Mr. Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I was asking Ms. Bell whether she wanted to add anything.

[Charlotte Bell]

Thank you.

I was just going to say that I completely agree with everything that Mr. Hamel told you, because I'm seeing the same thing.

Festivals are facing the same issue as seasonal small businesses. If a festival was planned for July or August, or even for the fall, the organizers can't show a drop in revenue compared to March and April. The businesses must continue their operations for the rest of the year.

In my opinion, this situation is really the same as the seasonal tourism businesses' situation. I completely agree that the businesses must have access to all the programs.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

Next is Mr. Julian.